Factual and Procedural Background
The case concerns two loan agreements executed in January 1984 between Company A (the principal debtor) and two creditor banks. The loans, governed by English law, included provisions whereby Company A agreed to submit to the jurisdiction of the English courts and waived sovereign immunity. The total indebtedness exceeded €70 million.
In 2019, the debts were assigned to Company B, a fund established to acquire and enforce distressed sovereign debt. Company A's consent to this assignment, required by the loan agreements, was given via email by a manager at Company A and later confirmed by a director. A dispute arose over whether this consent was valid and effective, leading to litigation.
In April 2023, the trial judge declared that the debts had been validly assigned to Company B and dismissed Company A's challenge to the jurisdiction of the English courts. Company A appealed that decision. A related application by a third party guarantor was allowed by the trial judge without appeal.
Legal Issues Presented
- Whether the debts were validly and effectively assigned to Company B in 2019.
- Whether the email of 13 June 2019 from Company A's manager constituted valid prior consent to the assignment under Cuban law.
- Whether the signature requirements under Company A's internal rules (the Signature Rules) were met to authorize the consent.
- Whether notice of the assignment was properly given to Company A in accordance with contractual provisions.
- Whether, alternatively, Company A unreasonably withheld consent to the assignment.
Arguments of the Parties
Appellant's Arguments
- The 13 June 2019 email was not valid prior consent because it did not comply with Company A's Signature Rules, which require two category A signatures for banking operations such as consent to assignment.
- Consent to assignment is a banking operation under Section 15(l) of the Signature Rules, thus requiring two signatures, which were absent.
- The trial judge misunderstood the expert evidence concerning the Signature Rules, particularly failing to properly consider Section 15(l).
- Notice of assignment was ineffective because it was not sent to the initial address designated in the loan agreements.
Respondent's Arguments
- The manager who sent the 13 June 2019 email had delegated authority from the President of Company A to give prior consent, making the email valid.
- The Signature Rules confer additional authority but do not restrict existing delegated authority; thus, two signatures were not required for the preliminary consent email.
- The trial judge correctly found that consent to assignment is not a banking operation requiring two signatures under the Signature Rules.
- Notice of assignment was effectively given to Company A's offices in Havana, which had been designated as the place for delivery by Company A itself.
- If prior consent was not given, Company A unreasonably withheld consent, which supports upholding the assignment.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Perry v Lopag Trust Reg [2023] UKPC 16, [2023] 1 WLR 3494 |
Standard of appellate review for findings of foreign law as findings of fact. |
The court applied this precedent to treat the trial judge's findings on Cuban law as findings of fact, to be reviewed accordingly on appeal. |
Court's Reasoning and Analysis
The court began by identifying that the central issue was whether Company A's manager's email of 13 June 2019 constituted valid prior consent to the assignment under Cuban law. The trial judge found that the manager and another official had delegated authority from the President of Company A to consent to such assignments.
The court analysed the relevant Cuban statutory provisions, Company A's internal statutes, and the Signature Rules, which regulate delegation and signature requirements. The Signature Rules require two category A signatures for banking operations that create obligations, but the court found that consent to assignment does not create a new obligation; it merely permits the transfer of existing rights.
Expert evidence was considered, including conflicting views on whether consent to assignment qualifies as a "banking operation" under Section 15(l) of the Signature Rules. The trial judge focused on Section 12, which applies to operations creating obligations, and concluded that consent to assignment was not such an operation, and thus two signatures were not required.
On appeal, the court found that the trial judge misunderstood the expert evidence concerning Section 15(l), as both experts agreed that consent to assignment is a banking operation under that section, implying a two-signature requirement.
However, the court held that the Signature Rules confer additional authority but do not limit the existing delegated authority of officials. Therefore, the manager's email was sent with valid delegated authority, notwithstanding the absence of two signatures.
Regarding notice of assignment, the court upheld the trial judge's finding that notice was effectively given at Company A's current Havana offices, which Company A had designated for communications, and that this complied with the contractual provisions.
Given these conclusions, the court found it unnecessary to address the alternative argument that Company A ratified the assignments by subsequent correspondence or that consent was unreasonably withheld.
Holding and Implications
The court DISMISSED the appeal, thereby upholding the trial judge's decision that the debts were validly and effectively assigned to Company B.
The direct effect of this decision is that Company B holds the debts and may enforce them against Company A under the loan agreements. No new legal precedent was established beyond the application of Cuban law and Company A's internal rules to the facts of this case.