Unik Bond SA v Catbalogan Holdings SaRL

Commercial contracts are interpreted objectively, as a whole and in context. Where a party is said to relinquish a valuable right, clear words are required, but the contract need not admit of no other possible meaning. The court must use textual, contextual, purposive and common-sense analysis to determine its meaning. A sufficiently clear promise not to contest or prevent the exercise of rights under finance documents may waive challenges to enforcement, whether before or after the event and without geographical limitation. An undertaking to co-operate fully may also require a party not to impede the agreed result. The recognised limits include fraudulent or dishonest conduct and conduct manifestly outside the exercise of contractual rights.

Unik Bond SA appealed against the decision of Fancourt J in the High Court, reported at [2025] EWHC 2673 (Ch). The High Court held that an Additional Agreement made in the context of a standstill arrangement deprived Unik Bond of the right to challenge enforcement of security supporting bond liabilities. The appeal concerned the construction and effect of clauses 5(a) and 5(d), including whether the agreement barred proceedings in the Tribunal de Commerce in Paris challenging enforcement under the bonds and fiduciary security. The central issue was whether the contractual wording clearly relinquished that right.

1. Disposition. Lewison LJ delivered the leading judgment. Arnold and Miles LJJ agreed. The appeal was dismissed, and the Court adopted and affirmed the High Court’s reasoning.
2. Interpretation and clear words. The Additional Agreement was professionally drafted, so textual analysis carried substantial weight. The court applied the objective and unitary approach summarised in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2. The presumption that valuable rights are not surrendered without clear words forms part of the interpretation exercise. It does not require the agreement to have only one possible meaning. If linguistic, contextual, purposive and common-sense analysis establishes the meaning, the court must give effect to it even though a legal right is lost. This approach was followed from Scottish Power UK Plc v BP Exploration Operating Company Ltd [2016] EWCA Civ 1043.
3. Access to court. The constitutional importance of access to justice and the clear-words approach discussed in R (Unison) v Lord Chancellor [2017] UKSC 51 did not impose a stricter standard here. That case concerned state action. Contractual freedom and party autonomy, particularly in complex financial instruments, supported giving effect to the parties’ agreement, as recognised in Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2011] UKSC 38.
4. Clause 5(d). The prohibition on contesting, seeking to contest or preventing the validity or exercise of rights under any Finance Document was a binding promise about future conduct, not merely a contractual estoppel. Together with the irrevocable release, it covered challenges to enforcement before or after the relevant action, including challenges based on formal invalidity, breach of the Finance Documents or illegality. It had no geographical limitation. The argument that the clause applied only where the Agent actually possessed the right being exercised would deprive it of commercial utility and was rejected.
5. Clause 5(a) and limits. An undertaking to co-operate fully required the Company Parties not to impede the enforcement result. The accepted construction did not extend to fraudulent or dishonest conduct, or conduct manifestly outside the exercise of rights under a Finance Document. Neither qualification applied on the facts. The court therefore held that the Paris proceedings were barred by the Additional Agreement.

• Court of Appeal (Civil Division): Unik Bond SA’s appeal was dismissed. The court adopted and affirmed the High Court’s reasoning.
• High Court of Justice, Business and Property Courts, Financial List (ChD): Fancourt J held that the Additional Agreement relinquished the right to challenge enforcement of the bond security: [2025] EWHC 2673 (Ch).