- Banking—construing standard terms in facility agreements (Lamesa Investment Ltd v Cynergy Bank Ltd)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Dispute Resolution analysis: The court observed that when construing a standard form clause in a facility agreement, the context in which the parties had entered into the agreement is of little relevance. The clause, effectively enabling the borrower to justify non-payment rather than be in default, had been included in the specific context of Tier 2 Capital loans to non US international banks to avoid an event of default when the bank is unable to pay sums due under the facility for fear of infringing US sanctions legislation. It held that the clause applied thus preventing an event of default arising when the bank refused to pay sums for fear of infringing US blocking legislation in relation to the Ukraine Freedom Support Act 2014. This decision is particularly relevant to practitioners advising on the construction of standard form contracts or contracts containing standard form terms, particularly in specialist markets. Written by David Fisher, barrister, and associate member of New Square Chambers.
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