Unik Bond SA v Catbalogan Holdings: Court of Appeal upholds contractual waiver of enforcement challenge rights

The Court of Appeal has dismissed an appeal concerning the interpretation of a standstill agreement, holding that Unik Bond SA had contractually surrendered its right to challenge enforcement actions in French proceedings. The decision, handed down on 9 December 2025, reinforces the principle of party autonomy in complex commercial contracts whilst clarifying the scope of non-contest clauses.

The dispute arose from bonds issued by Hotel de Mandelieu La Napoule S.à.S. and its parent company, with Unik Bond SA holding a 50% shareholding in the parent through a chain of ownership. Security for the bonds comprised three instruments: a Luxembourg law share pledge, a Luxembourg law receivables pledge, and a French law fiducie arrangement. Each contained exclusive jurisdiction clauses favouring their respective governing law jurisdictions.

Following payment defaults in September 2024, the parties entered into a Standstill Agreement on 11 November 2024, granting time for refinancing. Concurrently, an Additional Agreement was executed, containing critical provisions that would later form the basis of the dispute.

The enforcement and French proceedings

When refinancing efforts failed and the standstill period expired, enforcement action commenced on 28 May 2025. The share pledge and receivables pledge were enforced through appropriation and sale. The bondholder also exercised rights under the fiducie, removing management and installing new directors.

Unik Bond subsequently initiated proceedings in the Tribunal de Commerce in Paris, challenging the validity of the assignment, the lawfulness of enforcement steps, and compliance with French law obligations of good faith. The critical question became whether Unik Bond had contractually precluded itself from bringing such challenges.

Contractual interpretation principles

The court applied established principles of contractual interpretation, emphasising that in professionally drafted agreements, textual analysis carries particular weight. Central to the analysis was the principle that parties do not typically surrender valuable rights without clear language, though freedom of contract remains paramount in commercial arrangements.

Lord Justice Lewison rejected the appellant's contention that the contract must "admit of no other meaning" to establish waiver of court access rights. Distinguishing constitutional challenges to state-imposed barriers from consensual contractual arrangements, the court confirmed that parties regularly curtail court access through time bars, jurisdiction clauses, arbitration agreements, and covenants not to sue.

Clause 5(d) and the scope of waiver

The decisive provision, clause 5(d) of the Additional Agreement, required company parties to "agree and acknowledge that no Company Party shall contest, or seek to contest or otherwise prevent, the validity of, or exercise by the Agent of its rights under, any Finance Document". This language was reinforced by an express release of "any rights or claims they may have now or in the future in this regard".

The court held this language was sufficiently clear to preclude challenges to enforcement actions. The obligation extended both temporally and geographically without limitation. Notably, the court rejected arguments that the clause applied only to lawful exercises of rights, finding such interpretation would deprive the provision of commercial efficacy by permitting challenges that ultimately might fail on the merits.

The appellant's attempt to distinguish between cooperation in future enforcement and challenges to completed enforcement was also rejected. The court confirmed that an undertaking to "co-operate fully" necessarily encompasses refraining from actions that would impede or undermine the enforcement process.

The judgement underscores the courts' willingness to give full effect to clear contractual language limiting recourse to litigation, particularly in sophisticated commercial transactions where parties negotiate standstill arrangements as an alternative to immediate enforcement.

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