Cassini SAS v Emerald Pasture Designated Activity Company

This is an appeal against a decision of His Honour Judge Kramer (sitting as a Judge of the High Court) (the “Judge”) given on 27 August 2021: see [2021] EWHC 2443 (Ch) (the “Judgment”).

After an expedited four day trial with expert evidence, the Judge declared that two of the covenants (the “Covenants”) in a loan agreement dated 28 March 2019 (the “Senior Facilities Agreement” or “SFA”) were enforceable against the Appellant (“Cassini”).

The SFA is governed by English law and the Covenants require Cassini, as borrower, (i) to provide the agent acting for its lenders with information regarding the financial condition, assets or operations of Cassini and its subsidiaries (clause 26.7); and (ii) to permit the agent free access to the premises, assets, books, accounts and records of Cassini and certain of its subsidiaries, and to be able to meet and discuss matters with management (clause 28.25).

The issue had arisen because Cassini, which is a French company, had since 22 September 2020, been in a French insolvency procedure known as sauvegarde, which can be translated as a “safeguard procedure”. This is a form of debtor-in-possession proceeding designed to provide protection for a company in financial difficulties which wishes to propose a restructuring plan to its creditors. The initial period of a safeguard procedure, after the commencement (opening) of the proceedings, but before approval of a restructuring plan by the French court, is what is referred to as the “observation period”.

It is common ground that the legal effects of Cassini’s safeguard procedure, as a matter of French insolvency law, fall to be recognised in England pursuant to the Recast Insolvency Regulation (EU 2015/848), notwithstanding Brexit, because the procedure was commenced before the end of the transitional period: see Article 67(3)(c) of the Withdrawal Agreement.

Cassini contended that the operation of French insolvency law during the observation period of its safeguard procedure had the result that the Covenants were unenforceable against it. It therefore refused to comply with a request for information and access from the agent acting on behalf of the lenders under the SFA.

After the refusal, in March 2021 the Respondents (“Emerald”), who are funds which acquired a significant proportion of the debt under the SFA after commencement of the safeguard procedure, brought a Part 8 claim in England challenging the position adopted by Cassini and seeking a declaration that the Covenants were enforceable against Cassini.

In doing so, Emerald relied upon an exclusive jurisdiction clause in the SFA in favour of the English courts. Zacaroli J rejected a challenge to the jurisdiction of the English court by Cassini: see [2021] EWHC 2010 (Ch).

The sole issue on appeal to this court is whether the Judge was correct in his determination that under French law, the Covenants remained enforceable against Cassini during the observation period of the safeguard procedure.

We were told that after the Judge gave his decision on 27 August 2021, on 7 October 2021 the French court approved the restructuring plans proposed by Cassini and its associated companies. This had the effect, subject to any appeal against the French court’s decision, of bringing the observation period to an end. We nevertheless proceeded to hear the appeal, as the parties informed us that it might still be relevant if any appeal in France against the approval of the plans were to be successful and the observation period resumed. Neither party contended that any of the provisions of the approved restructuring plans cast any light on the issue that we have to determine.

The safeguard procedure is contained in Title II of Book VI of the French Commercial Code (Articles L.620-1 to L.628-10). References below to Articles are, unless otherwise stated, to the Commercial Code.

Article L.620-1 sets out in general terms the structure and purpose of the safeguard procedure,

The procedure leaves the executive management of the debtor in place, subject to supervision during the observation period by a court-appointed receiver and a court-appointed administrator (the “administrator”). The observation period initially lasts for a maximum of six months, but can be renewed: see Article L.621-3.

During the observation period the debtor is protected (subject to certain exceptions) by a moratorium on legal proceedings seeking to recover a money judgment or seeking to terminate a contract for non-payment of money. Article L.622-21 provides,

Consistent with this moratorium on monetary claims, Article L.622-7 provides a prohibition on payment of pre-insolvency claims (other than by set-off). It provides,

The operation of the debtor during the observation period is dealt with by Article L.622-9 which provides,

The provisions of the Commercial Code referred to in Article L.622-9 include Article L.622-10 which provides that the observation period can be terminated by conversion of the safeguard procedure into a court-ordered restructuring, or by a court-ordered winding up.

Importantly, Article L.622-12 further provides that the safeguard procedure will come to an end if the difficulties which justified the opening of the procedure have disappeared and the court ends the procedure.

The next Article L.622-13 is central to the arguments in this case. That Article provides,

An “ongoing contract” as referred to in Article L.622-13 (in the French original, “un contrat en cours”) is not defined in the Commercial Code. However, the parties were agreed that it has been established by decisions of the French courts that an ongoing contract is a contract whose principal (characteristic) performance has not been completed.

The parties also agreed that a loan agreement where the lender has delivered the characteristic performance of the contract by making the agreed loan to the borrower before the commencement of the safeguard procedure is not an ongoing contract for the purposes of Article L.622-13. Accordingly, they were agreed that the SFA, under which the loan had been fully drawn down by Cassini prior to the commencement of the safeguard procedure, was not an ongoing contract falling within Article L.622-13.

Cassini’s contentions as regards the effect of the commencement (opening) of the safeguard procedure on a non-ongoing contract were set out in a number of propositions in a document served on 23 July 2021 pursuant to an order of Zacaroli J. These were supported by its expert on French law, Professor Michel Le Corre, who is a leading academic and author of one of the main textbooks on French insolvency law.

After setting out the agreed propositions as to the meaning of an ongoing contract and the fact that the SFA was a non-ongoing contract, Cassini’s third and fourth propositions were as follows,

Cassini’s fifth principle gave further detail of the assertion that the “Enforceability Principle” was implicit in certain provisions of the Commercial Code. It drew attention to the provisions of Article L.622-13 II (above) to the effect that only the administrator has the right to demand the performance of ongoing contracts by supplying the promised performance to the counterparty of the debtor. Cassini contended that it was implicit from this that a contract which is not ongoing is unenforceable,

Those propositions were disputed by the expert instructed on behalf of Emerald, Dr. Reinhard Dammann. Dr. Dammann is an experienced commercial practitioner in France specialising in insolvency law. Dr. Dammann denied that there was any such “Enforceability Principle” in French law and pointed out that it was not mentioned in any case law or textbook, including Professor Le Corre’s own work on insolvency.

Dr. Dammann was of the opinion that in accordance with the overarching pacta sunt servanda principle of French contract law embodied in Article 1103 of the French Civil Code, any contract that does not qualify as an ongoing contract is not affected by Article L.622-13. He contended that such contracts continue to be binding on the parties during the observation period, subject to the restriction in Article L.622-21 that a payment obligation cannot be enforced against the debtor during the observation period.

Dr. Dammann further opined that the counterparty to a non-ongoing contract is able to apply to the French court pursuant to Article 1221 of the French Civil Code (as amended by an ordinance of 10 February 2016) for an order for specific performance by the debtor of any obligation not caught by Article L.622-21. On such application, according to Article 1221 of the French Civil Code, the court can refuse to grant specific performance if performance is impossible, or (importantly) if there is a manifest disproportion between the cost to the debtor and the interests of the creditor.

At paragraph 14 of his Judgment, the Judge recorded some common ground between the parties as to the approach of a French court to the interpretation of a statutory provision, and, in particular, to the application of the “a contrario” method of statutory interpretation,

After setting out the relevant statutory provisions, at paragraphs 40-42 of his Judgment, the Judge then summarised the key difference between the experts,

In his Judgment, the Judge then summarised the evidence of the experts in support of their rival theses. Professor Le Corre suggested that the power of an administrator to compel continued performance of an ongoing contract under Article L.622.13 II is designed to allow the administrator to claim the benefits of the contract to enhance the wealth of the debtor, but subject to protection for the counterparty by requiring the administrator to ensure that the debtor can pay for such performance. Professor Le Corre reasoned that a counterparty who had already performed his obligations prior to the opening of the safeguard procedure would be unable to provide any further wealth to the debtor, and so there would no longer be any justification from the perspective of fulfilment of the purposes of the safeguard procedure for the clauses of the contract to continue in force during the observation period.

This reasoning also led Professor Le Corre to give the opinion which was reflected in Cassini’s fifth principle,

In his report, Professor Le Corre also sought to explain how the commencement (opening) of the safeguard procedure affected a non-ongoing contract,

Professor Le Corre was cross-examined on this evidence. The Judge summarised his explanation as follows,

The Judge then summarised aspects of Dr. Dammann’s evidence, noting in particular at paragraph 58 of his Judgment that,

The Judge also summarised Dr. Dammann’s answer to the contention that it would be illogical for it to be easier for a counterparty to be able to enforce a non-monetary obligation in a non-ongoing contract than in an ongoing contract,

The Judge then turned to consider a number of cases decided by French courts that were said by each side to support their respective positions. The Judge had earlier noted that French law does not include a doctrine of precedent in relation to the decisions of courts in the same way as English law, albeit that a lower court might “face censure” if it failed to follow a decision of the Cour de Cassation.

The main authority to which reference was made was a decision of the Court of Appeal of Versailles, 13^th Chamber, of 28 February 2013 in the cases of Heart of La Defense SAS (“HOLD”) and Dame Luxembourg SARL (“DAME”) (the “HOLD” case). In the HOLD case, the Versailles Court of Appeal considered a challenge to the approval by the Paris Commercial Court of a safeguard plan which involved the rescheduling of two loans totalling €1.6 billion owed by HOLD to a securitisation fund (“FCT”) and which were guaranteed by DAME. The loans had a variable interest rate and were repayable according to their terms on 10 July 2012, or on 10 July 2013 or 2014 at the election of the debtor if certain formal and substantive conditions were met.

HOLD and DAME had gone into a safeguard procedure in November 2008, and the Paris Commercial Court approved safeguard plans in September 2009 which extended the maturities of the loans to 10 July 2014. The argument on appeal by the Public Prosecutor, supported by FCT, was that the Paris Commercial Court could not approve a plan providing for the extension to the maturities of the loan other than in accordance with the relevant contractual conditions for extension in the loan agreements, and these had not been met.

The Court of Appeal rejected these arguments. It first held that because the loan agreements were not ongoing contracts, they could be modified by the plan to impose longer repayment periods than specified in the loan agreement, provided that the plan did not exceed the statutory maximum of ten years provided by Article L.626-12. The judgment stated,

The Court of Appeal then also rejected an argument by FCT that the plan could not extend the duration of the loans other than in accordance with the conditions for extension in the loan agreements,

In cross-examination, Professor Le Corre accepted that the decision of the Versailles Court of Appeal dealt with the effect of the approval of the plan on the loan agreements and that it did not deal expressly with the effect of the opening of proceedings on the loan agreements. He also accepted that the Court of Appeal had not said that the loan agreements in the case had become caduc on the opening of the safeguard procedure.

The Judge explained the conclusion that he had reached in paragraph 108 of his Judgment as follows,

On appeal, Cassini’s main contention was that the conclusion reached by the Judge on the basis of Dr. Dammann’s evidence produces an illogical result which is contrary to the purpose of the safeguard regime. Cassini also contended that the Judge placed too much reliance on the French cases that he had considered; that he misconstrued Dr. Dammann’s evidence on one aspect of the decision of the Versailles Court of Appeal in the HOLD case; and that he was unduly influenced to reject Professor Le Corre’s analysis by a number of unjustified criticisms of his evidence.

Of these grounds, by far the most significant is the first contention. Reflecting Professor Le Corre’s evidence, Mr. Allison contended that if regard were to be had to the purposes of the safeguard procedure set out in Article L.620-1, it was illogical and perverse that non-monetary obligations in non-ongoing contracts (the performance of which could not produce any benefits for the debtor in the safeguard procedure) should be easier to enforce against a debtor than non-monetary obligations in ongoing contracts (the performance of which could be capable of producing benefits for the debtor).

Mr. Allison contended that it had been incumbent upon Dr. Dammann to explain why, on his thesis, such anomalies existed and how they could be reconciled with the statutory purposes of the safeguard regime. He submitted that in light of the fact that Dr. Dammann could not account for such anomalies, the Judge was wrong to accept his evidence.

In assessing these criticisms of the Judgment, it is important to appreciate that the Judge was faced with two experts espousing very different theories to predict how a French court would decide what we were told was a novel point of French law. Ultimately the question is whether the Judge was wrong to prefer the analysis advanced by Dr. Dammann over that advanced by Professor Le Corre.

In that regard, although findings as to foreign law are treated as findings of fact by the English courts, it was common ground between the parties that they are different from other findings of fact and are not subject to the same restrictions on scrutiny by an appellate court. Although an appellate court will bear in mind that the trial judge had the advantage of seeing and hearing the expert witnesses, and of clarifying their evidence directly with them, the appellate court is entitled to consider the expert evidence afresh and form its own view of the cogency of the rival contentions in determining whether the trial judge came to the correct conclusion: see Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223 at 286 per Megaw LJ. That is certainly so where, as here, the appellate court has been provided with the reports and a full transcript of the evidence and cross-examination of the experts.

I also agree with the Judge that the reputation of the experts is a factor to take into account in the assessment of expert evidence, but it is by no means determinative. It is the substance of the evidence and the cogency of the opinions and analyses offered by the experts, both in their reports and when they are tested under cross-examination, that is of primary importance.

In analysing the rival opinions of the experts, in my view the Judge was clearly correct to take as the default position and starting point the pacta sunt servanda principle. Both experts accepted that this applied to all contracts entered into by a company and in force immediately prior to the opening of a safeguard procedure. In the case of a loan agreement, this would mean that the creditor is able, prior to the opening of the safeguard procedure, to take various courses of action to vindicate his rights in the event of a default by the debtor. The available options would include bringing proceedings under Article 1221 of the Civil Code for specific performance of non-monetary obligations; bringing proceedings to recover a money judgment for sums due; and ultimately terminating the contract and bringing proceedings for damages for breach.

The Judge was also correct then to ask whether the provisions of the Commercial Code derogate, expressly or by implication, from the general pacta sunt servanda principle after the opening of a safeguard procedure.

In that regard, it is clear that the Commercial Code contains a number of express derogations which apply to all contracts. These include Article L.622-21 imposing a moratorium on proceedings seeking a monetary judgment or the rescission of the contract for non-payment, and Article L.622-7 prohibiting the payment of pre-existing claims.

The Judge was also clearly right to accept Dr. Dammann’s evidence that the provisions of Article L.622-13 amounted to a derogation from the pacta sunt servanda principle in respect of ongoing contracts. Article L.622-13 clearly modifies the pre-safeguard position in respect of enforcement of such contracts in the manner outlined by the Judge in paragraph 108(f) of his Judgment.

Accordingly, I consider that the Judge was right to hold in paragraph 108(e)(iii) and at the end of paragraph 108(f) of his Judgment that the application of the a contrario method of statutory interpretation would support Dr. Dammann’s contention that no equivalent derogation to Article L.622-13 was intended by the legislature in respect of contracts that were not ongoing.

Prima facie, this would mean that, subject to the express moratorium and prohibitions in Articles L.622-7 and L.622-21, the pre-safeguard regime for non-ongoing contracts continues after the opening of the safeguard procedure. Non-monetary obligations in such contracts would therefore be potentially enforceable against debtor companies during the observation period on an application by a creditor pursuant to Article 1221 of the Civil Code. I say “potentially enforceable” because Article 1221 of the Civil Code makes it clear that the court could refuse such an order if the cost to the debtor company of complying with the obligation would be manifestly disproportionate to the interests of the creditor.

I do not consider this proposition is cast into any doubt by Professor Le Corre’s evidence, recorded by the Judge in paragraph 58 of his Judgment (see above) that Article 1221 of the Civil Code might only be applicable to an ongoing contract and would not be applicable to a non-ongoing contract. That distinction between ongoing and non-ongoing contracts does not appear in Article 1221 itself, it is not one that Professor Le Corre had drawn in his own published work on insolvency, and it is not supported by any other material.

As Arnold LJ commented during the appeal hearing, assuming that the French legislature did not simply make the mistake of failing even to consider the treatment of non-ongoing contracts, an alternative approach to the a contrario method of statutory interpretation would be to ask whether it is so obvious that the pre-safeguard regime for enforcement of non-monetary obligations in non-ongoing contracts could not continue during the observation period that the French legislature thought it unnecessary to make express provision to that effect.

In that respect, as I have indicated, Cassini’s contention was that the conclusion reached by the Judge is manifestly inconsistent with fulfilment of the purposes of the safeguard procedure, that it would be absurd if it were easier for a creditor to enforce an obligation in a non-ongoing contract than in an ongoing contract, and that the only logical solution consistent with the safeguard procedure is that advanced by Professor Le Corre.

Dealing with the first point, I do not accept that the regime which the Judge accepted is inconsistent with the fulfilment of the purposes of the safeguard procedure. On the contrary, Article 1221 of the Civil Code expressly enables the court hearing an application for specific performance to consider whether the cost to the debtor of performing the obligation would be “manifestly disproportionate” to the interest of the creditor. This plainly requires a judgment to be made, balancing the interests of creditor and debtor.

In that regard, although Cassini’s argument and Professor Le Corre’s evidence both focussed on the example of an insolvent debtor seeking to use the safeguard procedure to formulate a restructuring plan to put to creditors to compromise their claims, it should be recalled that Article L.620-1 provides that the availability of the safeguard procedure does not depend upon the debtor being insolvent, and Article L.622-12 provides that the procedure can be ended without a plan if the difficulties which justified the opening of the procedure have disappeared.

So, for example, if an insolvent debtor was using its limited resources to formulate a restructuring plan to compromise the claims of creditors, the court hearing an application under Article 1221 of the Civil Code might well conclude that it was manifestly disproportionate to require it to expend significant time and money complying with requests for performance of non-money obligations from an individual creditor who was subject to the moratorium on debt claims in any event.

But in contrast, the debtor might have entered the safeguard procedure as a result of cashflow problems to obtain a temporary moratorium from claims, and might be intending to exit the safeguard procedure, resume its normal operations and pay all of its creditors in full once those problems had disappeared. The debtor might also be able to comply with the requests for performance of its non-monetary obligations at minimal cost or expenditure of resources. In such cases, it is difficult to see why ordering specific performance of the non-monetary obligation would be contrary to the purposes of the safeguard regime.

I also do not accept Mr. Allison’s submission that it is obviously illogical for there to be what he characterised as an “easier” regime for enforcement of a non-ongoing contract than an ongoing contract. That submission needs to be unpacked. The contention is that it would be illogical for a non-ongoing contract to be capable of enforcement by court order under Article 1221 of the Civil Code provided that that the cost of performance was not manifestly disproportionate; but on the other hand for an ongoing contract only to be capable of enforcement if the judicial administrator consented on the basis that the debtor company had the funds to pay for the performance.

Professor Le Corre’s thesis was that the regime for ongoing contracts enables the administrator of the debtor to choose which contracts he wishes to have performed by the counterparty to enhance the wealth of the debtor, subject to the safeguard for the counterparty that the administrator should ensure that the debtor has the funds to pay for the performance. He was of the opinion that the debtor should not be required to perform its obligations under non-ongoing contracts because the debtor’s performance of its remaining obligations could not enhance its wealth, and the amounts owing to the counterparty would be dealt with under a restructuring plan.

As I see it, that thesis approaches the safeguard procedure entirely from the perspective of an insolvent debtor and assumes that a restructuring plan will be promulgated to compromise creditor claims. I do not see why the French legislature should be assumed to have taken that restricted view when, as I have indicated, the debtor is able to enter the safeguard procedure whether or not it is insolvent, and the procedure can lead to several outcomes, including the resumption of normal trading. Nor do I think that it is obviously illogical that a counterparty which has fully performed its side of the contractual bargain should at least have the possibility of obtaining a court order for specific performance of non-monetary obligations for which it has paid in full.

Both in cross-examination of Dr. Dammann, and at the hearing of the appeal, Mr. Allison illustrated his arguments by using the example of a €600 million loan facility which was either (a) fully drawn, or (b) had €10 million undrawn at the commencement of the safeguard procedure. Dr. Dammann accepted that the loan agreement in the first scenario would be classified as a non-ongoing contract at the opening of the safeguard procedure and was of the opinion that the information covenants in the loan agreement would remain in force and would be potentially enforceable by the counterparty during the observation period. Dr. Dammann also accepted that in the second scenario, if the administrator considered that the debtor did not have the money, he could decide that the company should not draw down the last €10 million and could terminate the loan agreement under Article L.622-13 II. Dr. Dammann agreed that in such a situation, the information covenants in the loan agreement would no longer be enforceable after the contract had been terminated.

The illustration selected by Mr. Allison seems to lead to an incongruous outcome because of the very small difference of €10 million which he postulated had not been drawn down at the opening of the safeguard procedure. The contrast in outcome might, however, not appear so odd if the facts were different. Assume that in the second scenario the amount which had been drawn down at the opening of the safeguard procedure was only €10 million out of the €600 million agreed facility. In that scenario I would not find it surprising that the counterparty that had performed all of its obligations by lending €600 million should at least be able to apply to the court for specific performance of the information covenants; whereas the lender who had advanced only a very small fraction of the facility might be unable to enforce such covenants if the administrator did not think that it was in the interests of the debtor to draw down any further monies during the safeguard procedure.

In any event, as the Judge rightly appreciated, the alleged illogicalities which Cassini contended resulted from the regime advocated by Dr. Dammann are only part of the equation. It was equally important for the Judge to consider the cogency of Professor Le Corre’s alternative thesis, and in particular his explanation of how non-ongoing contracts become unenforceable on the opening of the safeguard procedure.

As the Judge noted in his Judgment, Professor Le Corre’s ultimate thesis was that the effect of the opening of the safeguard procedure is to render all non-ongoing contracts null and void (“caduc”) and at an end within the meaning of Articles 1186 and 1187 of the Civil Code. That suggestion does not, however, appear in any academic or practitioner literature, or in any decided case. It had also not been advanced by Professor Le Corre in his two reports, which had referred instead to an “erasure” of the contractual terms and conditions of the loan. As the Judge noted, the reference to Articles 1186 and 1187 of the Civil Code and caducité only made a belated appearance during Professor Le Corre’s cross-examination.

In his evidence, Professor Le Corre did not identify which “essential element” of the contract had “disappeared” on the opening of the safeguard procedure within the meaning of Article 1186 of the Civil Code. I agree with the Judge that because the element which Professor Le Corre contended disappeared on the opening of the safeguard procedure was the ability to enforce the contract, his thesis was rather self-supporting and circular. The Judge was also correct to point out that Professor Le Corre provided no explanation of why, if Article 1186 of the Civil Code applied at all, it should not apply to ongoing contracts as much as non-ongoing contracts.

Significantly, I also do not think that Professor Le Corre had any coherent explanation of his assertion (recorded at the end of paragraph 50 of the Judgment) that a non-ongoing contract which had become caduc on the opening of a safeguard procedure would in some way revive and cease to be caduc if the safeguard procedure came to an end without a restructuring plan having been approved. Article 1187 of the Civil Code simply provides that “caducité puts an end to the contract” and there is no suggestion that this is reversible or temporary.

The point is plainly important, because as I have indicated, Article L.620-1 of the Commercial Code makes it clear that a debtor company need not be insolvent to enter the safeguard procedure. The company might, for example, simply be suffering from temporary cashflow difficulties, but have sufficient assets to be able to pay all of its creditors in full. It would thus be entirely possible for the company to use the safeguard procedure to obtain the benefit of the moratorium on enforcement of money claims for a short period, and then exit the safeguard procedure under Article L.622-12 and resume normal trading once those problems had been resolved. It is wholly unclear how that would occur if the all of the company’s non-ongoing contracts had automatically come to an end on the opening of the safeguard proceedings.

Nor did Professor Le Corre explain why, if the loan agreements in the HOLD case had been rendered caduc on the opening of safeguard proceedings in that case, the Versailles Court of Appeal did not simply make that point in answer to the argument that the court that approved the safeguard plan had been required to abide by the formal conditions of the loan agreements.

These are powerful points that in my view entirely justify the Judge’s conclusion, in paragraph 108(e) of his Judgment, that Professor Le Corre’s caducité (or erasure) theory was not consistent with the provisions of the Commercial Code as regards the safeguard procedure.

Taking these points together, in my view the Judge was entitled to come to the view that Dr. Dammann had provided the more cogent explanation of the approach that a French court would be likely to take of the enforceability of the Covenants in the SFA during the observation period.

I would therefore reject Cassini’s main challenge to the Judge’s conclusion.

I can deal more quickly with the other points raised on appeal.

The second ground of appeal was that the Judge placed too much reliance upon his analysis of French cases, especially given the absence of the doctrine of precedent in French law. I do not consider that there is anything in this point. It is true that the Judge took some time to set out the facts and explain the decisions in the cases, but I do not think that this was unreasonable given that such cases had been referred to by both parties.

I also do not consider that the Judge approached the French cases as if they were common law authorities or sought to place too much weight on them. His main point, as expressed in paragraph 108(d) of his Judgment was simply that they did not demonstrate the existence of the “Enforceability Principle” propounded by Professor Le Corre, and that some of them would have been decided differently if it did exist. That was primarily making the point that if Professor Le Corre had been right, one might have expected a number of the cases – including those aspects of the HOLD case to which I have referred - to have been argued or decided in a different way. That is an entirely legitimate observation on the evidence that does not depend upon whether one is a common lawyer or a civil lawyer, or whether there is or is not a doctrine of precedent in French law.

The third ground of appeal related to the Judge’s treatment of an answer by Dr. Dammann when he was cross-examined about one part of the decision of the Court of Appeal of Versailles in the HOLD case. The relevant part of the decision was the observation by the Court of Appeal that I have set out in paragraph 39 above, in which the court stated,

In cross-examination, Dr. Dammann was asked a series of questions about this statement, at the end of which the following exchange took place,

The Judge dealt with this evidence (and in particular the last answer) in paragraphs 64-67 of his Judgment as follows,

Although the Judge seemed to think that Dr. Dammann had misspoken, I believe that his answer was entirely accurate, and the problem perceived by the Judge may have been caused by the form of the question.

The simple point is that, as I have indicated above, the Versailles Court of Appeal in the HOLD case was dealing with the arguments whether, in approving a plan to extend the maturity date of the loans to 2014, the Paris Commercial Court had been bound by or obliged to follow the formal and substantive conditions in the loan agreements for such extension. The court was not considering the effect of the opening of the safeguard procedure on the continuation of contractual provisions in the loan agreement during the observation period. Accordingly, the statement of the Versailles Court of Appeal which referred to “the terms of the loan being suspended during the execution of the plan”, plainly addressed the status of the contractual terms after approval of the plan.

In his cross-examination, Dr. Dammann was also clearly addressing his mind to the period of time after approval of a safeguard plan. That is readily apparent from his answer to the question asked by the Judge in the extract set out above. Dr. Dammann contrasted the type of clauses in a loan agreement that might necessarily be suspended during the operation of the restructuring plan, and those that might continue in force “because they are totally compatible with the court imposed restructuring plan”.

Accordingly, when Dr. Dammann was then asked by Mr. Allison,

The point that I think that Dr. Dammann was making was that the pre-existing rights of creditors to seek general information to enable them to protect their contractual rights to repayment under their loan agreements, might well become otiose if and when those rights had been replaced by the rights to repayment in accordance with a court-approved plan. But in any event, Dr. Dammann’s answer was manifestly not addressing the status of the Covenants during the observation period. As such, I do not consider that this answer was inconsistent with Dr. Dammann’s main contention that the Covenants continued to apply during the observation period in the instant case.

Accordingly, although the Judge appeared to think that Dr. Dammann had misspoken, and sought to correct his answer in the Judgment, I think the Judge was wrong. In my view, Dr. Dammann’s evidence was consistent and I do not think that the Judge’s misunderstanding casts any doubt upon his central thesis which the Judge accepted.

The final ground of appeal relates to a number of criticisms made by the Judge of the manner in which Professor Le Corre had approached giving evidence in the case, and the way in which the Judge had intervened in Mr. Allison’s cross-examination of Dr. Dammann. It is suggested that the Judge’s criticisms of Professor Le Corre were unfair and tainted the Judge’s assessment of the evidence, and that the Judge descended into the fray when intervening.

It is unnecessary to deal with those points in any detail. Whether or not the Judge’s criticisms of Professor Le Corre to which reference is made were or were not well-founded, they were on peripheral matters, and it is clear to me that they did not affect the Judge’s analysis of the key aspects of the expert evidence. Specifically, the matters to which objection is taken do not include the far more substantial matters which the Judge identified in paragraph 108 of his Judgment as having shaped his view of Professor Le Corre’s evidence.

Likewise, having considered the transcript of the hearing, I do not think that there is the slightest merit in the criticisms of the Judge’s interventions in cross-examination. It cannot sensibly be suggested that Mr. Allison was prevented from conducting the fullest examination of the issues with Dr. Dammann.

It should also be borne in mind that this was a case involving expert foreign lawyers. In such a situation involving legal concepts and the need to come to grips with foreign legal materials, including decisions of foreign courts, a judge might naturally and legitimately engage more actively with the expert legal witnesses and counsel in the course of cross-examination.

For these reasons I would dismiss the appeal.

I agree.

I also agree.