Finance litigation update - July 2022

FINANCE LITIGATION UPDATE – JULY 2022 15 In Byers v SNB (the background to which is set out in our article here), the Court of Appeal dismissed the appellants' arguments that concepts found in Saudi Arabian legislation, an Islamic system of law "far removed" from English law, fell into the second category. Not only was it an unfamiliar system of law but the question had to be determined against a background of the capital markets culture and practice in Saudi Arabia, with which the English courts had no "inherent familiarity". It would have been wrong in principle, and impossible in practice, for either the trial judge or the Court of Appeal to have attempted to interpret the provisions themselves as a matter of construction. In Cassini v Emerald, where the concept derived from the French Legal Code, there was seemingly no attempt by either party (or the judge at first instance or on appeal) to suggest that this was a case in which an English judge could provide their own legal input. Whose evidence is presented more expertly? In Cassini v Emerald, the court was asked to consider the impact of a French Sauvegarde procedure (a form of restructuring) on the obligation to provide information under a loan agreement subject to English law and jurisdiction. French law applied to the question of interpretation of the Sauvegarde because it was a main proceeding under the Recast European Insolvency Regulation. At first instance, HHJ Kramer determined that the information obligations continued despite the Sauvegarde, dismissing Cassini's argument that the Sauvegarde rendered them unenforceable. The Court of Appeal upheld that decision. The principal grounds of appeal were as follows: 1. that the conclusion reached by the judge produced an 'illogical result' contrary to the purpose of the Sauvegarde regime; 2. that the judge placed too much reliance on the French cases he had considered; and 3. that the judge was unduly influenced to reject Cassini's expert analysis by a number of unjustified criticisms of his evidence. On the first point, the Court of Appeal found there was no 'illogicality' in deciding that the information obligations continued. It was not illogical for a counterparty which had fully performed its side of a contractual bargain to be able to enforce nonmonetary obligations for which it had paid in full. The Court of Appeal also dismissed the criticisms of the way in which the trial judge evaluated the evidence on foreign law. In his judgment, HHJ Kramer helpfully articulated his approach to the assessment of the expert evidence, with which the Court of Appeal agreed: • Generally, foreign law is proved by expert evidence. Legal texts and foreign case law can only be placed before the court as part of the expert evidence. Experts can be legal practitioners or academic lawyers specialising in the law of that country. • Where the evidence of each party's expert witness conflicts, the court must look at the evidence to reach a decision "using its own intelligence", as on other questions of evidence. • While the reputation of an expert is relevant, it is only one factor to be taken into account. The greater renown of one expert over another is not determinative as to who is correct. While HHJ Kramer did make criticisms of the French law expert instructed on behalf of Cassini, the Court of Appeal found that these were on peripheral matters and did not affect his analysis of the key points. Further, it held that he was right to prefer the evidence of Emerald's expert, and he had not improperly 'descended into the fray' in his analysis of the evidence. For practical purposes, the trial judge's task was to decide which of the two experts was likely to be correct. In circumstances where the experts were presenting very different theories to predict how a French court would decide a 'novel' point of French law, the Court of Appeal held a judge might 'naturally and legitimately engage more actively with the expert legal witnesses and counsel in the course of cross-examination'. Further, the Court of Appeal held that HHJ Kramer had not approached the French cases as if they were common law authorities or sought to place too much weight on them, given the absence of the doctrine of precedent in French law. Both parties had put the