Renault SAS v Liberty Engineering Group Pte Ltd and another matter
| Jurisdiction | Singapore |
| Judge | Roger Giles IJ |
| Judgment Date | 14 February 2024 |
| Neutral Citation | [2024] SGHC(I) 6 |
| Court | International Commercial Court (Singapore) |
| Docket Number | Originating Applications Nos 3 and 9 of 2023 |
| Hearing Date | 18 December 2023 |
| Citation | [2024] SGHC(I) 6 |
| Year | 2024 |
| Plaintiff Counsel | Liu Zhao Xiang, Chia Shi Mei, T Abirami (WongPartnership LLP) and Laurent Assaya (Vivien & Associés) (registered foreign lawyer) |
| Defendant Counsel | Chew Kei-Jin, Lee Chia Ming, Hannah Alysha Binte Mohamed Ashiq (Ascendant Legal LLC) and Gilles Podeur (Alerion Avocats) (registered foreign lawyer) |
| Published date | 14 February 2024 |
In earlier proceedings, commenced in the High Court and becoming SIC/S 1/2022 (“Suit 1”) in the Singapore International Commercial Court (“the SICC”), the claimant claimed €7 million and statutory interest from the defendant under a Deed of Guarantee dated 5 January 2018 (“the Guarantee”). The proceedings were dismissed:
This judgment is given in two further proceedings, commenced in the SICC, in which the claimant again claims under the Guarantee. SIC/OA 3/2023 (“OA 3”) was commenced before the decision in Suit 1, and SIC/OA 9/2023 (“OA 9”) was commenced after that decision. In each proceeding the claimant claims from the defendant €5,250,025.61 (the one amount, not twice over), the balance of the previous €7 million after a part payment, plus interest.
As will be explained, the three proceedings are because the claimant has sought to rely on successive events as grounds for its claim under the Guarantee, each of the later events occurring after the commencement of the previous proceedings. And the proceedings have evolved. In particular, the present proceedings have come to include as the central question whether the putative principal debtor has any liability to the claimant, and in that connection to raise a pleading issue.
OA 3 and OA 9 have been heard together, with the evidence in one the evidence in the other. For the reasons which follow, the claim in OA 9 should succeed, while OA 3 should be dismissed.
Financial support in the purchase of a business AR Industries, a French-incorporated company, was a manufacturer of wheels for the automobile industry. On 16 January 2018 it was placed under
The claimant, Renault SAS (“Renault”), a French incorporated company and well-known automobile manufacturer, was the main customer of AR Industries. The defendant, Liberty Engineering Group Pte Ltd (“LEG”), a Singapore-incorporated company within the Liberty Group, was willing to acquire the operations and assets of AR Industries, but with financial support from Renault, and the two companies engaged in negotiations to that end. In early May 2018 LEG submitted a “takeover offer” to the administrators in the form of what was referred to as a “sale plan”, by which it or a subsidiary to be incorporated by it purchased the business of AR Industries, the sale plan including that financial support would be provided by Renault. The negotiations then arrived at a Financial Services Agreement dated 28 May 2018 made between Renault and LEG (“the FSA”) by which, amongst other things, Renault agreed to provide financial support to the purchaser of the business. On 29 May 2018 the Court adopted the sale plan and made orders to give effect to it.
The sale plan as submitted or approved was not in evidence, but two of its features relevant for present purposes can be seen in the Court’s reasons and orders.
The first feature is the FSA. I will come to its terms more fully, but in relation to the provision of financial support it recorded an agreement between Renault and LEG that Renault would provide financial support to LEG or to an entity of LEG’s group controlled by LEG, whichever purchased the business. The FSA was noted by the Court in three places. It recorded that LEG had entered into an agreement on 25 May 2018 (sic: I think an error for 28 May 2018) “providing for … the provision of financing”. It recorded as “comments” by Renault, represented at a hearing at which the takeover offer was considered, that “RENAULT-NISSAN state that, after lengthy negotiations, an agreement was signed with LIBERTY ENGINEERING on 28 May 2018 at the end of the day, allowing it to support its takeover project”. And the orders included that the Court “[a]cknowledges the memorandum of understanding dated 28 May 2018 between LIBERTY ENGINEERING and RENAULT-NISSAN concerning the following issues production volume commitments and financing arrangements [sic]”.
The other feature is that, as indicated above, the purchase of the business was to be by LEG or a yet-to-be incorporated subsidiary of LEG; more accurately, that LEG could be “substituted” as purchaser by its subsidiary. The Court’s reasons recorded this, and its orders made provision for it. The reasons included that “[t]he offer is presented by the Singaporean company LIBERTY ENGINEERING with a full substitution clause for the benefit of a subsidiary to be established, SAS LIBERTY WHEELS France…”, and the orders included, after the adoption of the sale plan:
The Financial Services AgreementOrders the transfer of the assets of the Company AR INDUSTRIES SAS … for the benefit of the company under Singaporean law LIBERTY ENGINEERING … with the option of substitution according to the terms provided for in the offer, the additional offer and the information provided at the hearing…
…
Authorises the full replacement, in accordance with Article L.642–9 of the French Commercial Code and the terms and conditions set out in the offer, of LIBERTY ENGINEERING by LIBERTY WHEELS FRANCE, which is in the process of being incorporated,
LIBERTY ENGINEERING shall remain jointly and severally liable for the performance of the commitments it has entered into …
The FSA was in English. It said in its opening that it:
… acts the terms and conditions agreed between Liberty Group and Renault within the frame of the sale of the activity and assets (the “
Sale Plan ” ) of AR Industries (under“redressment judiciare” ) to Liberty Engineering [ie LEG] or to any entity of Liberty Engineering’s Group (“Newco”) which might be substituted to Liberty Engineering in the benefit of the Sale Plan (the “Purchaser ”).[bold italics in original]
The parties to the FSA were expressed in Article 1 to be Renault, said to be thereafter referred to as “Renault“ or “the Car Manufacturer”; LEG, said to be thereafter referred to as “Liberty Engineering“ or “the Guarantor 2”; and Liberty House Group Pte Ltd (“LHG”), described elsewhere in the agreement as “the mother Company of the Liberty Engineering Group” and said to be thereafter referred to as “Liberty House” or “the Guarantor 1”. However, the Article added, “The Car Manufacturer, the Purchaser and the Guarantors 1 and 2 being hereafter referred to, collectively, as ‘
Article 3 of the FSA described its purpose as being to specify “the respective and reciprocal commitments of the Parties within the frame of the acquisition, by the Purchaser, of the operations and assets of AR Industries”. In Article 4 it was provided that:
The terms and conditions of the Agreement have been agreed in consideration of an acquisition of the operation and assets by the Purchaser, which will carry out the activity within its Group.
The Purchaser shall be Liberty Engineering or any entity of Liberty Engineering’s Group controlled by Liberty Engineering.
Article 5 dealt with the provision of funds by Renault and the repayment of the funds. It began:
Upon special request of the Purchaser and of AR Industries’ Receivers (
Administrateurs Judiciaires ) to which the present Agreement has been communicated, the Car Manufacturer commits to support the acquisition of the activities and assets of AR Industries by the Purchaser through a financial support of 7,000,000€ granted to the Purchaser according to the following payment schedule (the “Financial Support ”) …[bold italics in original]
In summary as to the provision of funds, Renault agreed to provide the financial support by payments of €1,500,000 on 1 July and 30 October 2018, €2,500,000 on 1 July 2019, and €1,500,000 on 1 July 2020. All payments were subject to the Purchaser complying with its commitments under the FSA, and the 2019 and 2020 payments were subject to provision of a guarantee by Aluminium Dunkerque, a company which the Liberty Group was in the process of acquiring, or agreement on an “alternative first demand guarantee of equivalent efficiency”.
As to repayment of the funds, the Article provided:
The Financial Support offered by Renault will be totally reimbursed by the Purchaser to Renault over 4 years, as of 2022 (year 1) to 2025 (year 4), through a cash payment of 1.750.000
€ per year made by the Purchaser to Renault on June 1st of each year (i.e. for the first time on June 1st, 2022), except if the Purchaser fails to comply with any of the repayment terms, in which case the amount of the Financial Support already paid will become immediately refundable by the Purchaser and the Guarantors 1, 2 and 3.
It will be recalled that LHG was entitled Guarantor 1 and LEG was entitled Guarantor 2. From Article 10 next referred to dealing with the provision of guarantees, Aluminium Dunkerque was Guarantor 3.
Article 10 of the FSA was lengthy. It began:
In case of the opening of bankruptcy proceedings towards the Purchaser (
sauvegarde, redressment judiciare orliquidation judiciare ) and/or if the Purchaser fails to reimburse the Financial Support in due time (as referred to in Article 5) for any reason whatsoever, Liberty House Group, as Guarantor 1, commits to reimburse to Renault the Financial Support paid to the Purchaser, on first demand, in place of the Purchaser, within the same schedule. For the sake of clarity, it is specified that in case the amount of the Financial Support already paid becomes immediately refundable by the Purchaser, it will also become immediately refundable by the Guarantor 1.Moreover, in case i) the Purchaser is an entity of Liberty Engineering’s Group substituted to...
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