“Adequate Reasons & Proportionate Conditions” – The Court of Appeal’s Re-statement of CPR 3.1(3) Principles in GLAS SAS (London Branch) v European Topsoho SARL ([2025] EWCA Civ 933)

1. Introduction

The Court of Appeal (Falk, Snowden & Underhill LJJ) has delivered a significant judgment in GLAS SAS v European Topsoho SARL, refining two intersecting strands of civil-procedure law:

• the duty of first-instance judges to give adequate reasons, even on short, ex tempore rulings within busy interim lists; and
• the circumstances in which a court may attach substantive conditions—including mandatory conduct and payments into court—when granting relief from sanctions under CPR 3.1(3) and 24.6.

The immediate dispute concerned whether the fourth defendant, Wuhu Ruyi Xinbo Investment Partnership Enterprise (“Xinbo”), could defend serious fraud proceedings without first (a) causing its alleged nominee company (Dynamic) to restore €250 million-worth of French shares and (b) paying €10 million into court. The Deputy High Court Judge below imposed those conditions but offered only a two-paragraph ruling. Xinbo appealed, alleging both procedural unfairness and substantive error.

Key Parties

• Claimant / Respondent: GLAS SAS (London Branch) – security trustee for €250 million exchangeable bonds.
• Fourth Defendant / Appellant: Xinbo – PRC limited partnership linked to Shandong Ruyi group.
• Other Defendants: European Topsoho SARL (issuer), Dynamic Treasure (alleged nominee), and Ms Chenran Qiu (controlling mind).

Core Issue on Appeal

Whether the judge’s conditions were:

1. vitiated by a failure to provide adequate reasons; and/or
2. wrong in principle, disproportionate or beyond the scope of CPR 3.1(3).

2. Summary of the Judgment

The Court of Appeal held:

• The Deputy Judge did err by failing to give adequate reasons – breaching the Flannery/English v Emery standard.
• Nevertheless, the appellate court could (and did) substitute its own reasoning on the fully-argued record. On the merits, the conditions were proportionate and justified.
• The appeal was therefore dismissed and the conditions remained intact.

New Precedent: Where a first-instance ruling on an interim application lacks sufficient reasons, the Court of Appeal may uphold the order if (i) the record allows the appellate court to reconstruct the reasoning, and (ii) no useful purpose would be served by remittal. Simultaneously, the judgment clarifies the proper structuring and purpose of conditions under CPR 3.1(3), stressing proportionality, linkage to relief sought, and the “proper price” test.

3. Analysis

3.1 Precedents Cited & Their Influence

• English v Emery Reimbold & Strick [2002] – bedrock authority on the duty to give reasons. Relied upon to show that “justice will not be done” unless parties understand why they won or lost.
• Flannery v Halifax [2000] – reasons as a facet of due process; adopted for the same proposition.
• Simetra Global Assets v Ikon Finance [2019] – Males LJ’s practical checklist for succinct yet adequate judgments; used by Falk LJ to craft guidance for busy lists (para 32).
• Huscroft v P&O Ferries [2011] – controlling principles for attaching conditions under CPR 3.1(3); emphasised the need to identify purpose and proportionality.
• Deutsche Bank AG v Unitech Global [2016] – reiteration that conditions must attach to an order (not stand alone) and cannot circumvent other CPR provisions.
• Broughton v Kop Football [2012] & Global Torch [2014] – appellate restraint in interfering with case-management discretion; cited to define the “plainly wrong” threshold.
• Gama Aviation v Taleveras [2019] – burden on party to prove inability to comply with a condition.

3.2 Legal Reasoning Re-constructed by the Court

1. Inadequate Reasons Yet Curable on Appeal
   The Deputy Judge’s skeletal ruling omitted specific engagement with Xinbo’s objections. Applying English v Emery, this was an error. However, because the Court of Appeal possessed a full transcript, skeletons and a full day’s argument, it could reach a “safe and final” conclusion without remittal—serving the overriding objective (CPR 1.1).
2. Attribution of Dynamic’s Defaults to Xinbo
   Xinbo’s own pleaded case asserted that Dynamic held the SMCP shares as nominee. Having “approbated” that relationship, Xinbo could not “reprobate” it to evade responsibility for Dynamic’s procedural abuses (doctrine of election). Consequently, Dynamic’s long-running recalcitrance (failure to pay €9 m, breach of Knowles J’s order, failure on freezing-order disclosure) was properly imputed to Xinbo.
3. Purpose of the Conditions
   a) Ensure Xinbo put up “earnest money” (Payment Condition) commensurate with the conservative damages estimate previously articulated by Bright J.
   b) Compel remediation of an existing contempt (restoration of the Unpledged Shares) before Xinbo could deploy a defence premised on entitlement to those very shares (Transfer Condition).
   These aims fell squarely within the Huscroft notion of exercising “a degree of control over the future conduct of litigation”.
4. Proportionality Analysis
   • Weak defence: Bright J’s earlier judgment catalogued “significant difficulties” (constitutional invalidity, sham documentation, suspect arbitration award).
   • Delay & disrespect to court orders: Dynamic/Xinbo’s conduct undermined “the dignity of the court process”.
   • Quantum: €10 m sat between Bright J’s per-defendant €9 m figure and the full €18 m originally sought—therefore within the range of legitimate discretion.
   • Optionality: Because the order operates as a condition, not direct coercion, Xinbo retains the choice whether to comply; hence it is not a “stealth injunction”.
5. No Bar on Post-Joinder Conditions
   CPR 3.1(3) empowers the court to add conditions at any stage; the Trustee’s previous consent to joinder did not estop it from later seeking control measures once Xinbo defaulted in filing its defence.

3.3 Impact on Future Litigation

The judgment will resonate in at least four areas:

1. Drafting of Ex Tempore Rulings – The Court’s step-by-step “toolkit” (para 32) will likely find its way into Judicial College guidance; expect more reference to “building blocks” and explicit identification of losing arguments.
2. Conditional Orders Strategy – Litigants seeking to police recalcitrant opponents gain a roadmap for attaching robust conditions to relief from sanctions. Conversely, defendants must anticipate sizeable “entry fees” where their proxies have flouted orders.
3. Nominee / Agency Relationships – Parties asserting beneficial ownership cannot later hide behind separate corporate personality to escape procedural consequences. This will influence asset-recovery, fraud and crypto-asset litigation where nominee structures are common.
4. Appellate Practice – The Court underscores its readiness to dispose finally of adequacy-of-reason appeals rather than remitting, provided the factual matrix is complete. This may shorten appellate timelines and discourage tactical appeals.

4. Complex Concepts Simplified

• CPR 3.1(3) – Allows courts to put conditions (e.g., payments into court, undertakings) on orders they make. Think of it as a “terms & conditions” clause attached to judicial permissions.
• Relief from Sanctions – When a party breaches a rule or order, it is “sanctioned” (e.g., barred from defending). The party can ask the court to forgive the breach; the court may do so but often imposes terms.
• Appropriation vs. Reprobation – A party cannot blow hot and cold: if it benefits from a factual stance, it must live with its consequences throughout the litigation.
• Ex tempore judgment – Delivered orally at the end of a short hearing, usually without written reasons circulated in advance. Must still be coherent and give losing parties clear answers.
• Nominee Shareholder – A person/entity that holds shares on behalf of another (the beneficial owner). Legally distinct but bound to act on the beneficial owner’s instructions.

5. Conclusion

GLAS SAS v European Topsoho provides a dual lesson: (1) busy judges must still map out the losing side’s arguments and briefly explain why they fail, and (2) parties who choreograph litigation through alter-ego entities will be held to account for those entities’ defaults. The Court of Appeal’s willingness to uphold a stringent €10 million payment and a share-transfer condition—despite acknowledging inadequacy in the first-instance reasoning—signals firm judicial intolerance toward procedural gamesmanship, particularly in complex fraud and asset-holding structures. Practitioners should treat this judgment as an authoritative checklist when seeking (or resisting) conditional relief and as a cautionary tale on the perils of minimalist oral rulings without structured reasoning.