BNP Paribas Trust Corporation UK Limited v URO Property Holdings, S.A

On a summary judgment application involving complex financial contracts, the court must assess whether the claim has a realistic prospect of success. Contractual interpretation remains a unitary exercise. The court considers the language, the agreement as a whole, the relevant factual matrix and the commercial consequences of competing constructions.

A contractual requirement to certify a make-whole premium by a specified date does not necessarily operate as a condition precedent extinguishing the underlying payment obligation. The consequence of late certification depends on the contract construed in its commercial context. Where contractual machinery for calculating a payment fails, the court may, depending on the agreement and circumstances, determine the amount itself. The claim therefore should proceed where these arguments have a real prospect of success.

The claimant, BNPP, as assignee of an issuer’s rights, claimed approximately €251 million from Uro under a loan agreement forming part of a securitised bond-financing structure. The sum was a Bond Make Whole Premium said to be payable after Uro lost its SOCIMI tax status and was required to repay the loan early.

Uro applied for summary judgment or strike-out. It argued that the contractual calculation machinery required live quotations from German Bund dealers at the specified time and that certification of the premium five business days before repayment was a condition precedent. Neither requirement had been met on time. BNPP argued that retrospective quotations were permissible or, alternatively, that the court could calculate the premium itself, and that late certification did not extinguish liability.

The central issue was whether BNPP’s claim had a real prospect of success.

1. Application dismissed. Uro’s application for summary judgment and strike-out was dismissed. The court was concerned only with whether BNPP’s case had a real prospect of success, not with finally determining the construction issues.
2. Under Part 24, a realistic claim is one carrying some degree of conviction, rather than a merely fanciful or arguable claim. The court may decide a short point of law or construction summarily where the evidence is complete, but should proceed cautiously where potentially material factual-matrix or expert evidence could affect the iterative construction exercise.
3. The wording of clause 7.1(c)(iii) did not clearly make timely certification a condition precedent to Uro’s obligation to pay the BMWP. The payment obligation arose upon satisfaction of the stated conditions, while the certification words appeared principally directed to quantifying the amount. The contract imposed no express sanction, time-is-of-the-essence provision or clear provision that late certification caused permanent loss of the payment.
4. Uro’s construction produced a commercial cliff edge under which a short delay could destroy a potentially substantial payment. The contractual machinery could also be difficult to complete within the available period, particularly where third-party financial advisers and dealers had to be appointed. BNPP therefore had a realistic prospect of showing that late certification was a breach potentially sounding in damages, rather than a permanent release from liability.
5. There was also a realistic prospect that the court could determine the BMWP if the contractual calculation machinery had not been properly operated. The authorities concerning failed or invalid determination machinery supported the view that the parties may be taken to have contemplated judicial determination where the contractual mechanism was non-essential and sufficient market evidence existed.
6. The court did not finally resolve whether quotations could be obtained retrospectively. BNPP had a real prospect of establishing that written quotations referring to prices at the specified time could be obtained later, particularly given the liquid Bund market, the availability of historical data and the limited likely difference between contemporaneous and retrospective figures.