Carey Group Plc & Ors v AIB Group (UK) Plc & Anor

A contractual right to assign banking facilities to a financial institution or other entity investing in loans is not restricted by an implied requirement that the assignee must be able to provide every facility previously available. A bank may terminate an overdraft facility before transferring its remaining rights and obligations. Contractual discretions are governed by construction and implication of terms, not directly by public law principles. A foreign public-law scheme may be complied with voluntarily in England unless that compliance infringes an actionable English-law right. Declaratory relief generally requires a real dispute concerning a legal right between the parties.

The claimants, a group of construction companies, were customers of AIB UK under an English-law facility agreement containing overdraft and other banking facilities. NAMA, an Irish statutory body established under the National Asset Management Agency Act 2009, proposed to acquire AIB UK’s rights under the facility as part of the statutory scheme for acquiring bank assets.

The claimants sought injunctions and declarations. They alleged that the proposed acquisition, or NAMA’s proposed assumption of economic responsibility and management, would breach the facility agreement. They also argued that the English courts should restrain enforcement within England of Irish public law. NAMA applied to strike out the claim.

1. Contractual assignment. Paragraph 12.4 of Schedule 9 permitted AIB UK to assign or transfer its rights and obligations to another bank, financial institution, trust fund or other entity regularly engaged in making, purchasing or investing in financial assets. NAMA fell within that broad class. Trade custom or an implied term could not contradict the express wording of the agreement, applying the principle stated in Johnson v Unisys Ltd [2003] 1 AC 518.
2. The claimants had no real prospect of establishing that assignment was prohibited because NAMA could not provide an overdraft. The overdraft was subject to review and was repayable on demand. AIB UK could terminate it before the transfer without breaching the agreement. The authorities concerning fixed-term overdrafts did not assist on these materially different terms.
3. Contractual discretions. The court assumed, without deciding, that the bank’s discretions were subject to implied limits against dishonesty, improper purpose, capriciousness, arbitrariness, extreme unreasonableness and extraneous considerations. Applying the contractual approach stated in Lymington Marina Ltd v MacNamara [2007] Bus LR digest, no term requiring AIB UK to exercise every discretion personally could be implied. The agreement contemplated that management of rights and discretions might devolve upon other persons.
4. Foreign public law. The rule against enforcement of foreign public law did not justify an injunction restraining voluntary compliance outside court proceedings. Pocket Kings Ltd v Safenames Ltd [2010] Ch 438 was distinguishable because there was an underlying contractual cause of action. The reasoning in Re Lord Cable [1977] 1 WLR 7 supported the distinction between compelling compliance with foreign law and declining to prevent a person from complying with it voluntarily. No actionable English-law wrong was disclosed.
5. Declarations and disposition. The claimants identified no legal right between themselves and either defendant which the proposed acquisition would infringe. The conditions governing declaratory relief summarised in Rolls Royce plc v Unite the Union [2010] 1 WLR 318 were therefore not satisfied. The claim, including the proposed amendments, had no prospect of success and the Claim Form and Particulars of Claim were struck out.