Knowledge Counsel London
"…equity grants the Claimant rights which cannot be overridden under English law once it has been determined that the Loan Agreement is a secured loan rather than a contract of sale with a right to repurchase the Pledged Securities…"
SECURED FINANCE
The Commercial Court has decided in favour of a claimant borrower in relation to repayment of a loan from the defendant bank. The loan was secured by 1,800,000 shares in a company called Humacyte Inc. Following an event of default, the loan became immediately due and payable but when the claimant tendered repayment of the approx. US$2m owing, the bank refused and claimed entitlement to seize the pledged shares. The court held that it was a loan agreement rather than a sale agreement for the shares with repurchase option. The agreement was therefore subject to the equity of redemption and the doctrine restricting clogs or fetters on the equity of redemption. The court held that certain clauses of the agreement were therefore void as a clog on the equity of redemption. The defendant was in breach of contract by refusing to accept the offer of repayment and should have complied with its implied duty to cooperate with the claimant to enable repayment and redemption of the securities. The court awarded summary judgment and a provisional interim payment of US$5m to the claimant with damages to be assessed.
Shukla v St James Bank & Trust Company Ltd and another [2026] EWHC 851 (Comm), 14 April 2026
CONSTRUCTION – CONTRACT INTERPRETATION
The Technology and Construction Court has dealt with Part 8 proceedings between contractor Sumitomo and its subcontractor GMC, together with two applications by Sumitomo. The Part 8 proceedings arose out of delays under a subcontract for the construction of an undersea electricity interconnector. Following a call by Sumitomo on the performance bond and discussions between the parties to avoid payment of the performance bond, the parties entered into an escrow arrangement and GMC paid the sum demanded into escrow. However, the escrow arrangement itself gave rise to a dispute, which led GMC to commence both Part 8 proceedings in respect of the escrow dispute and Part 7 proceedings in respect of the underlying delay issues. The subcontract itself contained an arbitration agreement, but the escrow agreement contained an English court jurisdiction clause. Sumitomo counterclaimed in the Part 8 proceedings for payment out of escrow and made applications to stay the Part 7 proceedings to arbitration and strike out part of GMC’s reply evidence in the Part 8 proceedings (for payment out of escrow). The court held that the parties had concluded an agreement in November 2024 in respect of the escrow arrangements. A separate escrow agreement was then concluded in December 2024 but the court found that it had not superseded the November agreement. GMC had satisfied the clause in the November agreement that required it to commence proceedings before 7 March 2025 to prevent the escrow sums being paid to Sumitomo. However the court also held that all the disputes contained in the Part 7 proceedings fell within the scope of the arbitration clause. Therefore a stay of the Part 7 proceedings in favour of arbitration was mandatory and Sumitomo’s application for a stay was granted. The court also granted Sumitomo’s application to strike out GMC’s request for payment out of escrow.
GMC Utilities Group Ltd v Sumitomo Electric Industries Ltd [2026] EWHC 885 (TCC), 16 April 2026
PRIVILEGE
The Commercial Court has provided guidance on the scope of legal advice privilege within companies in the context of concerns raised by the claimants as to the approach taken by Glencore in claiming privilege over and therefore withholding certain documents during disclosure. The issue before the court was the extent to which legal advice privilege applied to internal communications between or documents created by members of the client group, as opposed to communications between members of the client group and non-members of the client group. Where those documents are created with the dominant purpose of being part of a process of seeking legal advice or assistance (for example to identify facts or issues on which to seek legal advice), they were covered by legal advice privilege. There was no distinction in principle between a document intending to be communicated to a lawyer and a document containing information that was intended to be communicated to a lawyer (but the document itself was not intended to be sent). Glencore was therefore able to assert privilege over any documents that satisfied this test.
Aabar Holdings SARL v Glencore Plc [2026] EWHC 877 (Comm), 16 April 2026
REAL ESTATE
The Privy Council held that the priority scheme set out in the Registration of Deeds Act of Trinidad and Tobago s. 16(1) that was based on first registration applied to all registrable deeds affecting land, including voluntary deeds. The language of the Act did not make any distinction between volunteers or purchasers in relation to whether the deed should be registrable. In considering the interpretation of this Act, the Board considered similar legislation in Ireland and England. The result was that a party who had obtained land through inheritance by deed of assent was able to take priority over a conveyance of land that took effect earlier than the assent but was registered later.
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