Caterpillar Financial Services Corporation v SNC Passion

The claimant (Caterpillar) is a company registered in the State of Delaware, USA, with a Head Office in Nashville, Tennessee. It is a wholly owned subsidiary of Caterpillar Inc, the world’s largest manufacturer of construction and mining equipment, natural gas and diesel engines and industrial gas turbines. Caterpillar provides finance solutions and loan facilities for the purchase of Caterpillar equipment, gas turbines and engines and other related products and equipment. Loans are made to customers and dealers around the world. The defendant is a Societe en Nom Collectif ( SNC) incorporated under the laws of France with its Registered Office in Pointe à Pitre Guadeloupe, which is a French territory. The management and administration of the defendant is conducted by SARL L’Investisseur Gestion (IG). IG is a professional management and administration service which from time to time incorporates special purpose vehicles and manages them, as it did for the defendant.

Following a letter of 22^nd December 1998, expressing interest in providing funding and a commitment letter dated 3^rd June 1999, sent by Caterpillar Financial Services (UK) Co Ltd from their UK address to ING Lease Finance and its representative, Mr Chouraki, who contacted IG in connection with the financing project, a Loan Agreement dated 14^th June 1999 was concluded between the defendant as borrower and Caterpillar as lender. Caterpillar claims under the terms of this agreement.

Under the terms of the Loan Agreement, as amended by supplemental Agreements, Caterpillar agreed to make available to the defendant a loan facility in the maximum amount of Euros 5,333,280 to finance, subject to the terms and conditions agreed, the purchase of a high speed Catamaran ferry, the MV Passion, designed to take 387 passengers. There was an initial “construction loan” for the purpose of financing 80% of the basic purchase price of the vessel from the shipyard and, from the delivery of the vessel in Singapore, a permanent loan for a lesser amount.

The Loan Agreement included the following terms:

The Loan Agreement contained provisions for interest to be paid at rates set out, for Default Rates and for Indemnities from the defendant to Caterpillar on the happening of specified events or in the event of various failures by the defendant to observe the terms of the Agreement.

It is common ground between the parties that €5,333,280 was advanced by Caterpillar to the defendant pursuant to three Drawdown Notices of 28^th June 1999, 30^th September 1999 and 19^th November 1999. This led to funds being made available on 1^st July 1999, 8^th October 1999 and 12^th December 1999. It is also accepted by the defendant that there has been a failure to make repayments of the loan in accordance with the Loan Agreement. Following payments made on 15^th June 2000, irregular payments were made between that date and September 2001 and the instalment due on 15^th September was only paid in part and was paid late, whilst the instalments due on 15^th December 2001 and 15^th March 2002 were not paid at all. No further sums have been paid under the Loan Agreement at all.

Caterpillar served a Notice of Default on the defendant on 2^nd May 2002 and, if the Loan Agreement is valid and enforceable, this constitutes good notice accelerating the defendant’s obligation to repay the total principal, accrued and unpaid interest and late charges due and owing under the terms of the Loan Agreement.

On 5^th September 2002, Caterpillar arrested the MV Passion in Guadeloupe to secure any sums which might be awarded in this action. It now claims various additional sums by way of Indemnity under the Loan Agreement in relation to the costs of effecting and maintaining the arrest.

Notwithstanding the terms of clause 25 of the Loan Agreement and the express choice of law as English law, the defendant maintains that the Loan Agreement is illegal as a matter of French law and that it is therefore void or cancellable by the defendant. The defendant’s case that French law applies is founded upon Article 3 (3) of the Convention on the Law Applicable to Contractual Obligations known as the Rome Convention. Article 1 of the Convention provides that the Rules of the Convention shall apply to contractual obligations in any situation involving a choice between the laws of different countries. Article 3 provided as follows:

The defendant does not dispute that the parties have agreed that English law should apply. It maintains however that this choice is invalid because “all the other elements relevant to the situation at the time of the choice are connected with” France and the choice of English law prejudices the application of the law of France which cannot be derogated from by contract. The relevant law of France to which the defendant refers is the law regulating banking transactions and the making of loans. Reliance is placed upon articles 10 and 15 of Law 84-46, Article L511-10 of the French Code Monétaire et Financier (the CMF) and Article 6 of the French Civil Code, with express reliance upon a decision of the Cour de Cassation, Commercial Division of 4^th June 2002, being case number 00-16915.

As a result of these provisions the defendant contends that credit institutions which make loans must be authorised before starting business in France and that institutions which have not been so authorised are prohibited from carrying out any banking operations. The provisions are mandatory provisions which cannot be derogated from. The conclusion of the Loan Agreement and the performance of it by making advances are said to be banking operations carried out by Caterpillar in France and since Caterpillar is not an authorised credit institution, the Loan Agreement is illegal and void.

By contrast Caterpillar contends that none of the provisions upon which the defendant relies apply to the Loan Agreement because it is an international commercial agreement between business entities with relevant elements connected to jurisdictions other than France so that, on any view, it does not fall within the terms of Article 3.3 of the Rome Convention. Furthermore, Caterpillar maintains that the French law provisions relied on by the defendant do not have the effect contended for.

Finally, there is a dispute as to the effect of any invalidity of the Loan Agreement. The defendant accepts that if the Loan Agreement is void, it cannot retain the sums advanced and that, when sued in an appropriate jurisdiction, it would be obliged to make restitution of the sums advanced together with interest, setting off against that sum the paymens made by it, including capital payments, contractual interest payments and contractual late payment charges. It would only be obliged to repay the principal and such interest as the Court chose to award. The defendant maintains that, if the Agreement is invalid by reason of the compulsory application of the French law provisions to which I have referred, French law determines the consequences and this Court has no jurisdiction to determine those consequences.

In paragraph 14 of the Defence, the defendant pleaded that if (contrary to its primary case) Caterpillar was entitled to maintain any claim against it, the claim would not be made under the Loan Agreement terms and could only be for return of the capital sum advanced, taking into account total payments made by the defendant. In these circumstances, having raised that defence, it is clear that the defendant has accepted the jurisdiction of this Court to determine the position should this Court find that the Loan Agreement is unenforceable.

In consequence of that plea, Caterpillar pleaded in reply an entitlement to sums as a matter of French law, should it be wrong in contending that the Loan Agreement could be enforced. It did not at that stage raise such an alternative claim for this in its Particulars of Claim however. Only recently did it seek to further amend its Amended Particulars of Claim and its Amended Reply. On receipt of the drafts, by a letter of 1^st March 2004, the defendant’s solicitors raised no objection to the amendment. Objection was however taken to the prospective new paragraph 16 of the Particulars of Claim for the first time on Thursday of last week. In that paragraph Caterpillar asserted that, if contrary to its primary case, the Loan Agreement was illegal, unenforceable or void, it would contend that it was entitled, whether under English or French law, to repayment of the capital with interest as a restitutionary remedy. Much the same point was made in the Re-Amended Reply.

In circumstances where the defendant had accepted the jurisdiction of the Court to determine this point in its own Amended Defence and subsequently, I had no hesitation in giving Caterpillar permission to amend so that the points at issue could be determined in the same proceedings as the dispute over the Loan Agreement, should that prove necessary. Furthermore I took the view that clause 25 of the Loan Agreement was wide enough, in any event, to encompass the restitutionary claim, notwithstanding the decision of the House of Lords in Kleinwort Benson v Glasgow City Council [1997] 4 AER 641. The claim does, in my judgment, arise out of or in connection with the Loan Agreement, since without that agreement no sum would have been advanced at all.

The parties differed as to the starting point for the Court’s investigation. Caterpillar maintains that the first question to decide was whether or not all the elements relevant to the situation at the time of the choice of law, apart from that choice, were connected solely with France, since if this question was decided in its favour, the defendant’s argument based on Article 3.3 of the Rome Convention fell at the first hurdle. The defendant submitted that this issue could not be determined in isolation from a proper consideration of the provisions of French law and that those matters should first be determined. Both parties submit that the Court should give Article 3.3 a purposive interpretation and agree that its purpose is to prevent parties contracting out of provisions in law which would otherwise compulsorily apply to the transaction. The defendant says that the concept of relevant elements has to be construed against that background and the question of relevance has to be approached on the basis of the mandatory rules which would otherwise be applicable. It is then said that if those rules treat certain factors as relevant and certain factors as irrelevant, the same criteria should be applied by the Court when considering Article 3.3. Thus it is said that it is only the provisions of French banking law which should be considered when determining “the other elements relevant to the situation at the time of the choice”.

I am unable to accept this submission. The terms of Article 3(1) give the parties a freedom to choose the law applicable to the Agreement they are making. Article 3.3 provides an exception to this in the case where the Agreement is entirely domestic in content so that the choice of a foreign law is designed to circumvent the mandatory rules of the country which alone is concerned with the transaction. If however there are other elements, outside the choice of law and jurisdiction clause, relevant to the situation at the time of concluding the Agreement, which are connected with other countries, the Agreement is not a domestic Agreement of concern only to one country so that Article 3.3 would not apply. It is noteworthy that Article 3.3 refers to elements “relevant to the situation” which is wider than “elements relevant to the contract” which again is different from and much wider than “elements relevant to the “mandatory rules” of the law of any one country”. To approach the matter in the way the defendant wishes is to put the cart before the horse and would have the effect of making the law of the country decisive on its own, without reference to the criteria set out in Article 3(3) itself.

In Plender & Wilderspin, the European Contracts Convention, 2^nd Edition at page 105, the authors say that the object of Article 3.3 is “designed to prevent parties from circumventing the mandatory rules in a country in a wholly domestic situation by the simple expedient of selecting as an applicable law some legal system which fails to contain those rules”. The authors of Dicey & Morris, the Conflict of Laws 13^th Edition, Volume 2, at paragraph 32-069 say this in relation to the application of Article 3.3:-

The initial inquiry is therefore to determine whether, at the time that agreement was made to choose English law, all the other elements relevant to the situation are connected with France or whether there are connections between such elements and other jurisdictions.

The defendant points to all those matters which connect the transaction to France or Guadeloupe, as a territory of France. Thus the financing transaction was originally set up by ING Lease France, IG and Brudey to facilitate the purchase of the passenger ferry with the use of an SNC as the owning vehicle. The use of an SNC had advantageous tax consequences for investors in France and it was a requirement of the Loan Agreement that the relevant provisions of French tax law were complied with. Thus it is that the defendant is such an SNC. ING, Brudey and the defendant are all domiciled in France and the vessel was always to sail under the French flag with a charter party subject to French law.

The Loan Agreement itself was drafted by Watson Farley & Williams’ Paris Office (WFW) and it is said that a contract was concluded between the parties on that basis by the defendant’s execution of the document in France on 14^th June 1999, the subsequent execution of the document by Caterpillar being unnecessary for this purpose. Attention is drawn to the letter of commitment of 3^rd June 1999 and the signature to that document by the defendant and by Brudey in France.

Nonetheless, there remain significant elements of the transaction which involve a connection with a jurisdiction other than France. The most significant of these is the fact that Caterpillar is a Delaware Corporation which acts through its office in Nashville, Tennessee. Both the letter of 22^nd December 1998 and the letter of commitment of 3^rd June 1999 were sent by Caterpillar Financial Services (UK) Limited from the United Kingdom Offices. The letter of commitment and the Loan Agreement provided for loans in connection with the shipbuilding contract of the vessel which was governed by English law and provided for London Arbitration. The vessel itself was to be built by a Singapore Company in Singapore and delivered in Singapore.The contract provided for “actual delivery” to take place in Singapore with a protocol of delivery and acceptance, and for risk and title to pass at that point, There remained however a liability to repair on the builder until “final delivery” in Guadeloupe which was required to take place by 28^th February 2000.

The 3^rd June 1999 letter of commitment set out the terms of the proposed loan by reference to the shipbuilding contract and the purchase of the vessel. Among the conditions for funding was the requirement that Caterpillar should receive a number of documents duly executed by the defendant and Brudey in a form satisfactory to Caterpillar. Those documents included signature of the letter of commitment, an assignment of the construction agreement and the Loan Agreement with promissory notes or other forms of security agreed and accepted by Caterpillar. Guarantees from the Singapore shipbuilder were required in respect of refunds of milestone payments and performance under the shipbuilding contract whilst a guarantee was also required from ING in respect of that part of the purchase price which was not to be funded by the loan.

Paragraph 32 of the conditions for commencement of the loan provided that “it must appear that ….. the execution, delivery and performance by Borrower of the Loan documents will not violate any provision of any law or rule or regulation… in effect as of the closing date having applicability to the Borrower ….”, whilst the provision for the applicable law was to lie in the choice of Caterpillar. The parties were alive to possible infractions of law and were desirous of avoiding them. For a French party to pray in aid illegality under French law is therefore less than meritorious in the current context. Paragraph 10 of the general conditions provide that “the laws of the State of Tennessee USA, France, Singapore or other appropriate law in the event of the vessel being moved from the original operating area shall apply to the interpretation and validity of the loan documents and associated agreements as shall be determined by Caterpillar Financial”. There followed a jurisdiction provision under which the defendant expressly submitted to the Courts of Tennessee, the Court where the vessel was located and the Courts of the defendant’s domicile.

The letter of commitment was issued by Caterpillar and provided that the terms and conditions outlined therein should only become binding upon execution of the document by Caterpillar in Nashville, Tennessee. Furthermore, the commitment to finance was only to be binding upon completion of the conditions and could not be amended or modified except in writing signed by Caterpillar and the defendant. The letter included the following words: “completed loan documents remain conditions to financing and will take precedent (sic) over the terms and conditions as outlined in this commitment letter”. The letter was then signed by Caterpillar Financial Services (UK) Ltd, signed by the defendant and Brudey and contained a further signature by way of “authorised acknowledgement by Caterpillar” in Nashville, Tennessee.

The Loan Agreement itself was a transaction in which an American company based in Tennessee provided finance for the construction of a vessel by a Singaporean company in Singapore. Both the borrower (the defendant) and the operator of the vessel were French but, following notices of drawdown sent to the USA with copies of the documents required for payment under the Shipbuilding contract, the advances were not made to the defendant or operator in France but were made directly from the USA to the shipbuilder in Singapore as envisaged by the Drawdown provisions in clause 2 of the Loan Agreement. Furthermore, by clause 12 of the Loan Agreement, all loan repayments of the loan to be made by the defendant were to be made in London to Citibank London by SWIFT transfer to be forwarded to Citibank Dublin for credit to Caterpillar (unless another account was notified). Performance of the Loan Agreement, in the sense of the provision of funds and repayment of funds therefore occurred outside France, although such repayments as were made were initiated in France. The intimate connection of the Loan Agreement with the Shipbuilding contract, together with these factors are strong elements connecting this transaction with countries other than France.

Although the defendant maintains that its signature on the Loan Agreement was sufficient to bring it into force and relies on the fact that it was put forward by WFW for execution, it is not easy to see how this could be binding upon Caterpillar without its signature, notwithstanding an execution meeting in Paris on 14^th June, attended by representatives of WFW, ING Lease, the defendant and Brudey. No-one attended at that meeting on behalf of Caterpillar. The documents show that WFW acted for ING whilst Caterpillar looked to Constant and Constant for advice in relation to this transaction. It appears that ING took responsibility for putting together the whole scheme and gave instructions to WFW in relation to the Loan documentation. Plainly, however, Caterpillar did execute the Agreement subsequently, although the date in unknown and without that signature the defendant could not know whether or not Caterpillar had truly agreed to the terms and conditions therein set out, at least until an advance was made following notice of drawdown. A letter from WFW to Constant and Constant indicates that Caterpillar would not sign the Loan Agreement until some points had been resolved between its associated company and the Shipbuilders, presumably in connection with the supply of engines for the vessel. There was a shortage of evidence and documents on this aspect but I find that there was no concluded Loan Agreement until all the parties had signed or, if earlier, the date of first advance of monies from the USA on 28^th June 2002, following receipt of a conforming notice of drawdown. It would not however affect my decision even if the contract was concluded in France because of the strong international element of the transaction when seen as a whole.

Two further factors fall to be taken into account. The first of these is that the Loan Agreement is written in the English language and the second is the nationality of the lender, Caterpillar. When these two further elements are considered in the context of the other matters to which I have made reference, it is, in my judgment, impossible to say that “all the other elements relevant to the situation at the time of the choice” of law are connected with France. Mr Smith who appeared for the defendant submitted that the domicile of the lending banker was an irrelevant element but I cannot see that this can be so. For a bank in one country making a loan to a borrower in another, in respect of a transaction to be performed in a yet further country, both choice of law and jurisdiction are highly significant. In NM Rothschild Ltd v Equitable Life Assurance Society [2002] EWHC 1021 (QB) I held that the domicile of a lending bank was plainly a relevant element for the purposes of Article 3.3 and although, in that case, the bank’s choice of law corresponded with its domicile, the point remains the same in so far as the nationality of the lender is clearly a crucial point for it in deciding what law it would like to see applied, whether that of its own or that of a “neutral” jurisdiction.

The position therefore is, in my judgment, clear, Article 3.3 has no application to this dispute and Caterpillar are entitled to recover from the defendant under the terms of the Loan Agreement.

In the light of the judgment which I have formed on the first issue, I do not need to determine the issues of French law which arise. I proceed to do so however because of the arguments raised, the evidence adduced and the inter-relationship of this point with the issue which I have already decided.

Maître Willi, the defendant’s expert on French law gave evidence that the application of French law was mandatory in nature because of article 15 of the French Law 84-46 of 24^th January 1984 (the French banking law) as codified under Article L 511-10 in the CMF and because such laws were “police laws” which were part of the French Ordre Public and therefore fell to be applied as a matter of public policy. His view was that Caterpillar, in concluding the Loan Agreement with the defendant, effected a banking operation, as defined in Article 11 311-1 of the CMF. Under Article 11 511-10, authorisation as a credit institution is required for making loans as part of banking operations in France. In this context, reliance was placed by the defendant upon a decision of the Commercial Chamber of the Court of Cassation of 4^th June 2002. Professeur Audit, Caterpillar’s expert in French law accepted the position so far as domestic contracts governed by French law were concerned. Where he parted company with Maître Willi was on the issue of the applicability of French law to this transaction. Because this was a contract of an international character between commercial entities where there was an express choice of English law, a French Court would, in his judgment, hold that the parties’ choice of English law was valid, in accordance with Article 3.1 of the Rome Convention. He concluded that Article 3.3 of the Rome Convention would not be viewed by a French Court as applicable here, for much the same reasons as I have already given.

It is again clear in my judgment, as a matter of French private international law that the first question to decide is the nature of the contract in order to determine what law is to be applied. The parties’ express choice determines the proper law of the contract under French rules of private international law as in English law, unless Article 3.3 or Article 7.1 require the application of French law. The trans-national reach of French banking law depends on the nature of the contract, since self evidently it cannot apply universally regardless of the identity of the parties, the subject matter and the location of the transaction.

In order to ascertain whether Article 3.3 applies under French law, I accept Professor Audit’s evidence that the question which the Court has to resolve is whether or not this is a domestic contract or, because there are international elements relevant to the transaction, it is an international contract. It would perhaps be surprising in the light of the decision which I have already reached on Article 3.3 as a matter of English law, if I did not accept the evidence of Professor Audit that the application of French law would give rise to the same result, notwithstanding that Article 7.1 is also in force in France. The application of Convention provisions should give rise to essentially uniform results in contracting states.

There are “abundant French precedents which have acknowledged an international character even to contracts concluded between parties who are both established in France, stating either that the contract involved a flow of securities across borders or that it involved interests of international commerce”, both of which are present in this transaction. The international character of this loan is not in doubt and once that is recognised the same answer follows in French law as it does in English law. There is no basis for making a US Bank, as a matter of French private international law, submit to French substantive law when making an international loan. I find that, under French law, Article 3.3 would not be applicable.

Although Article 3.3 is inapplicable, there remains the possibility that Article 7.1 applies, although the defendant placed no reliance on it. Reliance was placed on Article 6 of the French Civil Code however, which provides that “statutes relating to public policy and morals may not be derogated from by private agreements.” Beyond this, the principle of freedom of contract applies. As a matter of the domestic law of France, reliance on Article 6 is unnecessary for the defendant, because of its reliance on the French Banking Law and the CMF. Once outside the domestic context however, public policy and morals in the context of the enforcement of international agreements, according to Professor Audit, have more limited scope. There is a well recognised distinction between ordre public interne and ordre public internationale.

It is inherent in the principle of autonomy of choice in matters of international contract that the designation of a foreign law may give rise to a different result from the provisions which are mandatory as a matter of domestic law, so that only those matters which are contrary to the “international public policy” of France will impugn international contracts. Leaving aside the question of enforcement of a foreign law contract which runs counter to public morals (eg a contract for child prostitution or slave trading) it is Article 7.1 of the Rome Convention which is relevant.

Article 7.1 of the Rome convention (applicable in France but not in England) provides for a permissory application of the compulsorily applicable provisions of a foreign law with which the situation has a close connection, taking into account the nature and purpose of the provisions and the consequences of applying them.

When the object of the French Banking law regulations are taken into account it can be seen that there is no basis for applying them as a matter of French law to this Loan Agreement. The element of policy which lies behind French Banking Law is, in particular, the protection of individual consumers in France in their dealings with banks in France which would otherwise be unregulated and harmonisation of solvency and other requirements for Banks in France so as to ensure compliance with the EC banking directives which regulate banking in the European Community. The application of such matters to France is however a matter of order public interne. There can be no equivalent public policy for commercial international agreements where French commercial borrowers choose to take loans from foreign entities which are not subject to the regulation of French Banking Law, for the purpose of funding foreign transactions, whether or not the Loan Agreement is concluded in France. (There is no provision in the directive against contracting for a bona fide choice of law which does not incorporate these provisions unlike the position in Ingmar GB Ltd v Eaton Technologies Inc Case C-381/98, judgment of the European Court of Justice, 9^th November 2000, where Article 19 of the relevant directive so provided).

If the transaction and the situation are truly domestic and have no foreign connection so that Article 3.3 of the Rome Convention applies, that provision can be invoked and applied. If not, there is no basis here for the application of French law under Article 7.1. French Banking Law and the CMF may be compulsorily applicable to domestic transactions but cannot impact where there is a valid choice of law under Article 3.1 which is unaffected by Article 3.3 of the Convention.

When the consequences of applying such provisions of French banking law are considered, it can be seen that the effect of applying such provisions would be to allow a commercial entity to escape from the bargain it had freely negotiated and to deprive a lender of some part of the agreed benefits earned by the outlay of monies which had been used by the defendant. There is no known case in French law where Article 7.1 has been applied to a contract of this kind which was expressed to be subject to a choice of foreign law and if Article 3.3 is not satisfied, the Defendants cannot succeed on this point.

The defendant’s expert’s first report did not refer to the Rome Convention at all because he did not consider it to be relevant. He simply took the view that the provisions of French banking law were compulsorily applicable because the terms of the Loan Agreement had been accepted in France at the meeting in Paris on June 14^th 1999. This ignores the express terms of Articles 1, 3 and 7 of the Rome Convention which govern the position and cannot be right as a matter of French law. In cross examination he accepted that if regard to the Convention resulted in the non application of French law, then it could not be applied.

As to the decision of the Commercial Chamber of the Court of Cassation of 4 June 2002, I find that this does not assist the defendant’s arguments. It is of course the case that decisions of the Court of Cassation do not constitute precedent but they are of strong persuasive authority. There the Court applied French law to a loan agreement concluded in France between a Belgian Bank and a Frenchman, secured by a mortgage on his property in France, for the purpose of his French business, where the Bank was not authorised to conduct banking business in France. The loan may only have been one of a kind made on an occasional basis by that Bank, but there was a trend of Belgian Banks seeking to obtain French business before the entry into force of the relevant EEC Council Directive. There was no express choice of law provision in that contract, but there was express reference in it to a French statute so that there was a strong indication of agreement to French law. The Court of Appeal found that French law therefore applied. The Cour de Cassation agreed, holding that the terms of the offer of the loan were accepted in France. There was therefore no basis for the application of Belgian law by virtue of Article 3.1 so issues under 3.3 did not arise. A more pertinent example than this decision was the Baciocchi decision where there was a conflict issue of the kind which arises in the present case and the choice of Swiss law was determinative, as I find it to be here.

The law of France in the shape of its Banking Law and the CMF is therefore inapplicable to this transaction.

If, contrary to what I have held, the Loan Agreement and its performance falls foul of the compulsorily applicable provisions of French law, which are to be held to apply by virtue of Article 3.3 of the Rome Convention, it is necessary to determine the effect of this. According to Maître Willi, the Loan Agreement is void and unenforceable – “frappés de nullité”. This does not appear to be disputed as a matter of French law and the two experts agree that when a contract is declared null and void, the parties have then to be put back into the position in which they were at the time of its conclusion. As indicated earlier in the Judgment, the defendant accepts that, if the Loan Agreement is void, it cannot retain the sums advanced to it.

Whether the issue is determined by the application of English or French law, the position appears to be identical. In order to restore the status quo ante, the principal of the loan must be repaid. The contractual provisions are inapplicable but, because the defendant has had the benefit of Caterpillar’s money, interest will be payable in respect of it. Whether the claim is treated as money had and received to Caterpillar’s use under English law or as a restitutionary remedy under French law, the result, in justice, must be and is the same. Caterpillar would, on this basis, be entitled to the return of its principal plus a rate of interest which reflects what it would cost Caterpillar to borrow the Euro sum in question, such interest to run from the date of the advances to the date of Judgment. The figure for principal is €3,520,841.82 with simple interest at the EURIBOR 3 month rate on:

€2,666,640 from 1.7.99 – 7.10.99

€3,999,960 from 8.10.99 – 11.12.99

€3,520,841.82 from 12.12.99 to date.

As however I have found the Loan Agreement to be enforceable, Caterpillar is entitled to Judgment for the sum calculated in accordance with its terms, including principal, interest, late charges and the expenses for which it is entitled to Indemnity. The known figures are as follows, with interest and late charges to be calculated up to the date of formal judgment.

It follows, subject to the parties addressing me in any matters which have not been brought to my attention, that Caterpillar is entitled to its costs of this action.