Lamesa Investments Ltd v Cynergy BankLtd [2020] EWCA Civ 821 (30 June 2020)

Lamesa Investments Ltd v Cynergy BankLtd [2020] EWCA Civ 821 (30 June 2020)

The Court of Appeal held that Cynergy Bank was entitled to rely on clause 9.1 of the Facility Agreement to withhold payment of interest to Lamesa Investments Limited, as the risk of US secondary sanctions constituted compliance with a 'mandatory provision of law' within the meaning of the clause. The clause was interpreted in its standard form context, balancing the interests of both parties, and recognizing that the effect of US secondary sanctions legislation was to impose a prohibition relevant to the borrower's business. The appeal was dismissed.

Citation
[2020] EWCA Civ 821
Parties
Claimant/appellant: Lamesa Investments Limited; Defendant/respondent: Cynergy Bank Limited
Jurisdiction
England and Wales
Judgment Date
30 June 2020
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeal dismissed
Legal Topics
Interpretation of Standard Form Contracts, Sanctions Compliance, Loan Agreements, Secondary Sanctions, Mandatory Provisions of Law
Contract Law Banking Law International Law Interpretation of Standard Form Contracts Sanctions Compliance Loan Agreements Secondary Sanctions Mandatory Provisions of Law

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 17 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Lamesa Investments Limited

Claimant/appellant

Cynergy Bank Limited

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether Cynergy Bank was justified in refusing to pay interest under a Facility Agreement due to US secondary sanctions legislation
  2. 2 Proper interpretation of 'mandatory provision of law' in clause 9.1 of the Facility Agreement

Ratio Decidendi

The Court of Appeal held that Cynergy Bank was entitled to rely on clause 9.1 of the Facility Agreement to withhold payment of interest to Lamesa Investments Limited, as the risk of US secondary sanctions constituted compliance with a 'mandatory provision of law' within the meaning of the clause. The clause was interpreted in its standard form context, balancing the interests of both parties, and recognizing that the effect of US secondary sanctions legislation was to impose a prohibition relevant to the borrower's business. The appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • Cynergy Bank Limited is entitled to rely upon Clause 9.1 of the Facility Agreement and shall not be in default of any payment obligation under the Facility Agreement for as long as Lamesa remains a Blocked Entity.