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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Merchant International Company Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy & Anor [2014] EWCA Civ 1603 (10 December 2014) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/1603.html Cite as: [2014] EWCA Civ 1603

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
MR JUSTICE BLAIR
[2014] EWHC 391 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/12/2014

Lord Justice Davis:

Introduction

1. The parties appear to be engaged in cat and mouse litigation. The claimant ("MIC") has the benefit of an English judgment, obtained on 28 February 2011, against the defendant ("Naftogaz"). As at 20 September 2013, over $21.75 million remained outstanding on the judgment. MIC has been very anxious to gain satisfaction of its judgment. Naftogaz has been no less anxious to avoid meeting its obligations under the judgment. There has been extensive litigation over the preceding years between the parties. The present proceedings concern an attempt by MIC to achieve satisfaction of the judgment by obtaining third party debt orders under the provisions of CPR Part 72.
2. Blair J, sitting in the Commercial Court, ruled against MIC in its latest efforts to gain satisfaction of the judgment. By reserved decision of 26 February 2012 ([2014] EWHC 391 Comm) he discharged three interim third party debt orders which were obtained on a without notice basis by MIC on 20 September 2013, 8 October 2013 and 22 October 2013.
3. No point of law of wider general importance, as I see it, arises on this appeal. The outcome is to be decided by reference to the particular contractual documentation entered into at the time, which raises points of interpretation, and by reference to the facts and circumstances of the case. The judge held that, properly construed, the contracts made gave rise to no debt due or accruing due from the third party, The Bank of New York Mellon ("BNYM"), to Naftogaz. Accordingly there was no jurisdiction to make the third party debt orders. In the alternative, he held that he in any event, in his discretion, would have declined to make final third party debt orders and would have discharged the interim orders.
4. The question is whether his decision was wrong.

Background

5. The general background can be briefly summarised for present purposes. It gives some context as to how the third party debt order applications came to be made.
6. MIC is a company registered in Delaware, USA. As long ago as 28 December 1998 it took an assignment of contractual rights of a certain Russian company against Naftogaz. Naftogaz is a nationalised energy company owned by the State of Ukraine. There was thereafter extensive litigation between MIC and Naftogaz in the Ukrainian Courts. Eventually on 21 April 2006 judgment was given in favour of MIC by the Kiev Commercial Court. On 29 June 2006 the Supreme Commercial Court of Ukraine varied the judgment by reducing it in amount but otherwise upholding it. The Supreme Court of Ukraine on 7 September 2006 refused, on Naftogaz's application, to permit a Cassation appeal and ruled that the judgment of the Supreme Commercial Court was final. The judgment amount was at that stage $24,719,564 (and costs).
7. Law No. 2711 of 2005 had meanwhile been passed in Ukraine. That suspended enforcement of judgments against Ukrainian energy companies; and doubtless it had the effect of precluding MIC from enforcing its judgment against Naftogaz in Ukraine.
8. MIC thereafter commenced proceedings on 13 April 2010 in the High Court in London to enforce its judgment. On 11 May 2010 it obtained a freezing order from Hamblen J against all the assets of Naftogaz in England and Wales, up to a value of $25 million. After a lengthy dispute relating to the service of the proceedings judgment in default was eventually entered by MIC on 28 February 2011, in the sum of $24,719,564 (plus interest and costs).
9. Naftogaz, however, had by now applied to the Supreme Commercial Court in Ukraine to revisit the decisions of 21 April 2006 and 29 June 2006 on the basis of alleged newly discovered circumstances. In due course the Supreme Commercial Court on 7 April 2011 acceded to this request and remitted the matter for re-trial. On 3 November 2011, at the retrial, the Commercial Court in Kiev this time found in favour of Naftogaz. An appeal by MIC was subsequently dismissed on 27 January 2012.
10. Naftogaz applied, basing itself on these latest Ukrainian decisions, to set aside the English judgment. Its efforts did not prosper: see the judgment of the Court of Appeal dated 29 February 2012: [2012] EWCA Civ 196. Attempts at enforcement by MIC, however, have thus far yielded only relatively modest amounts.
11. This short review of the background at least gives something of the flavour of what was going on. It may be, I know not, that Naftogaz considers that what has subsequently been decided by the Ukrainian courts justifies it in its stance of refusing to pay on the English judgment. But that cannot govern the position under English law or affect the validity of the English judgment.

Involvement of BNYM

12. On 5 November 2009 Naftogaz had issued $1,595,017,000 9.5% Guaranteed Loan Notes, due for repayment on 30 September 2014. The State of Ukraine was the guarantor. There had been a detailed Prospectus publicised in advance and through that MIC was aware of the Loan Note issue.
13. The documentation relating to the Loan Note issue was, as is usual in such transactions, highly complex. There were a Trust Deed, a Guarantee, an Agency Agreement and the Notes themselves. All were stated to be governed by English Law. BNYM (London Branch) was the Principal Paying Agent. BNYM was also – having, of course, a separate function for this purpose – the Trustee under the Trust Deed. MIC was not itself a Noteholder and it was not then aware of the precise terms relating to the issue.
14. For present purposes a key document is the Agency Agreement, which was dated 5 November 2009. Parties to it included (but were not limited to) Naftogaz, as issuer, and BNYM, both in its capacity as Principal Paying Agent and in other capacities.
15. Central to the argument before us were the provisions of Clause 6. That provided as follows, in the relevant respects:

"6.1 In order to provide for the payment of principal and interest in respect of the Notes as the same becomes due and payable, the Issuer (failing which, the Guarantor) shall pay to the account specified by the Principal Paying Agent on or before the date which is one Local Banking Day before the day on which such payment because due, an amount equal to the amount of principal and/or (as the case may be) interest falling due in respect of the Notes on such date.

….

6.3 The Principal Paying Agent shall be entitled to deal with each amount paid to it under this Clause 6 in the same manner as other amounts paid to it as a banker by its customers; provided, however, that:

(a) it shall not exercise against the Issuer, the Guarantor or the Trustee any lien, right of set-off or similar claim in respect thereof; and

(b) it shall not be liable to any person for interest thereon.

6.4 The Principal Paying Agent shall apply each amount paid to it under this Clause 6 in accordance with Clause 7 and shall not be obliged to repay any such amount unless the claim for the relevant payment becomes void under Condition 9, in which event it shall refund at the written request of the Issuer or (as the case may be) the Guarantor such portion of such amount as relates to such payment by paying the same by credit transfer in U.S. dollars to such account with such bank in Kyiv as the Issuer or (as the case may be) the Guarantor has by notice to the Principal Paying Agent specified for the purpose."

(I add that it was common ground before us that nothing has happened to bring into play Condition 9 of the Notes.)

16. Clause 7 related to making payment to Noteholders. Clause 15, in part, provided as follows:

"15.1 Save as provided in Clauses 6 and 8 and in sub-Clause 15.3 of this Clause, the Principal Paying Agent shall be entitled to deal with money paid to it by the Issuer or the Guarantor for the purposes of this Agreement in the same manner as other money paid to a banker by its customers and shall not be liable to account to the Issuer or the Guarantor for any interest or other amounts in respect of the money. No money held by any Paying Agent need be segregated except as required by law.

15.2 Save as provided in Clause 8, in acting under this Agreement and in connection with the Notes the Agents shall act solely as agents of the Issuer and the Guarantor and will not assume any obligations towards or relationship of agency or trust for or with any of the owners or Holders of the Notes."

17. Clause 23 provided as follows:

"This Agreement may be amended by all of the parties, without the consent of any Noteholder, either:

(a) for the purpose of curing any ambiguity or of curing, correcting or supplementing any manifest or proven error or any other defective provision contained in this Agreement; or

(b) in any other manner which the parties may mutually deem necessary or desirable and which shall not be inconsistent with the Conditions and shall not, in the opinion of the Trustee, be materially prejudicial to the interests of the Noteholders."

18. MIC was aware from the publicly available information that a half-yearly interest payment was due under the Notes on 30 September 2013. It took the position that in receiving from Naftogaz the money needed to pay that interest BNYM would be acting as Naftogaz's agent and so would be holding such money for Naftogaz until it was actually paid over to the Noteholders.
19. In such circumstances it applied on 19 September 2013 for a third party debt order in the sum of $21,762,323 (the amount then outstanding on the judgment debt). It also - in part because it did not know how the payment of the interest money would be routed – applied for saisie-arret conservatoire orders, directed at BNYM, in Brussels and Luxembourg. The interim third party debt order as sought was made on the papers by Master Kay QC on 20 September 2013, with a return date of 5 November 2013. The orders in Brussels and Luxembourg (in an unlimited amount) were made on 27 September 2013. All these orders were sought without prior notice to Naftogaz.
20. Naftogaz, not knowing of those orders, on 30 September 2013 made payment, via the banking system, of the money ($75,763,307) needed for the half-yearly interest payment. That (styled "the First Coupon Payment") was received for value by BNYM in London on 1 October 2013. By this time, however, the order of 20 September 2013 had been served on BNYM (as had the Belgian and Luxembourg orders). The judge inferred that the London third party debt order played an important part in preventing payment to the Noteholders.
21. This created a real problem for Naftogaz. If the interest payment due on the Notes was not paid within ten days of 30 September 2013 an Event of Default would arise. In the result, and to avoid such a consequence, Naftogaz decided to pay to BNYM a further sum of $75,763,307 (styled "the Second Coupon Payment"). This was done on 8 October 2013 and the Noteholders then were paid the interest due to them out of that sum. An Event of Default was thereby avoided.
22. The position that had arisen was addressed by a short Supplemental Agreement made between Naftogaz and BNYM (as Principal Paying Agent) on 8 October 2013. This provided, in the relevant respects, as follows:

"1. In order to facilitate the prompt payment of the Interest due to noteholders under the Issuer's $1,595,017,000 9.5% Guaranteed Note program, due 2014 ("the Notes") and solely in order to avoid any potential event of default under the Notes, the Issuer will pay to the account designated by BNYM in its letter dated 8 October 2013 a further USD 75,763,307.50 (the "Second Coupon Payment"), being the same amount paid by the Issuer on 30 September 2013 for the purpose of such payment to noteholders (the "First Coupon Payment").

2. Until the earlier of the return date of 5 November 2013 for the interim Third Party Debt Orders made by the English High Court on 20 September 2013 and 8 October 2013 (the "interim TPDOs") or any further order(s) of a competent court in any jurisdiction the Issuer and BNYM agree that the First Coupon Payment will continue to be held in Account Number 8881018400. Notwithstanding the Second Coupon Payment and/or subsequent payment to the noteholders as contemplated below, until any order of a competent court or further written agreement in terms acceptable to BNYM, the First Coupon Payment will continue to be held by BNYM on the same basis as originally paid, being subject to the terms of the Agency Agreement dated 5 November 2009 (the "Agency Agreement"), except insofar as they conflict with the following terms, which shall amend and supplement the Agency Agreement in relation to the First Coupon Payment only:

a) without prejudice to the terms of the Agency Agreement and, in particular (but without limitation) Clause 6.4 and 7 thereof, the Issuer undertakes not to instruct BNYM to make any payments out of the First Coupon Payment to any parties; and

b) without prejudice to the recovery of any such costs from Merchant International Company Limited ("MIC"), the Issuer confirms that it will pay, within 14 days of demand, all BNYM's and BNYM SA/NV's legal costs in relation to the interim TPDOs, the attachments made by the Belgian court dated 27 September 2013 and 2 October 2013 (the "Belgian Attachments") and the attachment made by the Luxembourg court dated 27 September 2013 (the "Luxembourg Attachment") pending the return date of 5 November 2013 and/or until BNYM and BNYM SA/NV's obligations are fully discharged under those orders.

….

4. For the avoidance of doubt, in entering into the arrangement at 2 above:

a) the Issuer hereby releases BNYM from any cost, claim, loss, liability or expense which it has incurred or may incur with respect to it continuing to hold the First Coupon Payment and confirms that, for the avoidance of doubt, Clause 14.5 of the Agency Agreement shall apply to the matters the subject of this arrangement; and

b) BNYM will acquire no obligation or liability over and above that which is set out in the Agency Agreement.

5. It is agreed that, once payment in full in accordance with paragraph 1 above has been received, BNYM will forthwith make the full payment of the Second Coupon Payment due to noteholders under the Notes."

23. By this time, however, MIC had appreciated that its first third party debt order may have been ineffective, as it had been served before any monies had been received by BNYM. So it applied without notice for, and obtained after an oral hearing before Cooke J, a second third party debt order. This was on 8 October 2013.
24. MIC then applied without notice on the papers, on 16 October 2013, for a third third party debt order. By this time it knew, from intervening correspondence, that Naftogaz had made the Second Coupon Payment to BNYM in order to achieve payment of the interest due to the Noteholders. It made this third application on the basis that, even if the first two orders may not have been effective to achieve the required result, at all events money (the First Coupon Payment) was now held by BNYM which – the purpose of the original payment (viz. paying the interest due on the Notes) having been achieved by utilisation of the Second Coupon Payment – would be, as it reckoned, money repayable to Naftogaz on demand. An interim third party debt order, pursuant to this third application, was made on the papers by Master Kay QC on 22 October 2013.
25. There had been, as will have been gathered, an amount of correspondence between the respective solicitors for the parties and BNYM during this period. That is fully set out by the judge in his judgment and I need not replicate the details. I should however note that at the time the third order was made the amount of the First Coupon Payment was indeed still held by BNYM. On 22 October 2013, however, Naftogaz "requested" BNYM to transfer to Naftogaz $50,763,307 from the relevant account into which the First Coupon Payment had been paid. On 28 October 2013 BNYM responded. It stated the view that $25 million must remain in the account by reason of the freezing order of Hamblen J. Subject to that, it indicated that it was able to process the "instruction" (as it styled it) of 22 October 2013. We were told that the remaining balance is still held pursuant, or purportedly pursuant, to the order of Hamblen J.

Third Party Debt Orders

26. Third party debt orders are the subject of CPR Part 72. They are the successors to garnishee orders.
27. I need not here set out the full provisions of Part 72. The applicable procedure is clearly set out there. It is sufficient to note that (as corresponded with garnishee orders) there is a requirement that the debt to be attached should be "any debt due or accruing due" to the judgment debtor from the third party: see Part 72.2(1).
28. It is well established for this purpose that the debt must either be due (in the sense of instantly payable) or accruing due (in the sense of being payable in the future but by reason of an existing obligation). As stated by Lindley LJ in Webb v Stenton (1883) 11 QBD 518 at p.527:

"I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing; but it must be a debt, and a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in presenti, solvendum in futuro. An accruing debt, therefore, is a debt not yet actually payable, but a debt which is represented by an existing obligation."

There are other authorities to like effect. I need not set them out, as the legal position was agreed before us for the purposes of this appeal.

29. Further, and as a reflection of that principle, there ordinarily can be no attachment of a debt under Part 72 if the sum is only payable subject first to satisfaction of a condition precedent. This is demonstrated by Dunlop & Ranken Limited v Hendall Steel Structures Limited [1957] 3 All ER 344. In that case, payment was not due to a sub-contractor until receipt of an architect's final certificate. At the time the garnishee order was sought and made a final certificate from the architect was outstanding. It was thus held that, until such certificate was issued, there was no debt due or accruing due to which a garnishee order could attach. Until such certificate was issued there was no right to be paid.
30. I might just draw attention, in general terms, to the impact an interim third party debt order potentially can have. If one is made, it not only has a broad effect akin to a freezing order with regard to payment of the debt but also potentially confers a proprietary right on the person obtaining it, who thereby stands to gain a degree of priority over other unsecured creditors: when, moreover, such order is not, unlike in the case of an injunction, required to be backed by any cross-undertaking in damages. Such orders are a valuable and important enforcement weapon in the armoury of unpaid creditors. But I venture to suggest that if interim third party debt orders, when sought on a without notice basis, are to be made then a clear and ostensibly uncontentious case should normally be expected. If there is potential contention, however, a party making a without notice application for an interim third party debt order is ordinarily to be relied upon to draw to the court's attention any point which the respondent may be anticipated to take (together with the applicant's own response to such point). To expect such an approach is consistent with what is generally expected in the case of without notice applications for injunctions and also is, I apprehend, consistent with the broad intent underpinning paragraph 1.2 of Practice Direction 72.

The judgment of Blair J

31. Blair J discharged all three orders. MIC conceded that the first order had to be discharged, if only because it was served before the First Coupon Payment had been received by BNYM. The second order was discharged, because (as Blair J held) there was no debt due from BNYM to MIC – that, he found, was precluded by Clause 6.4 of the Agency Agreement (a point which would have been in any event fatal to the first order as well). There is no appeal against those aspects of his decision.
32. This appeal is against the decision of Blair J as to the third order. The argument of MIC was that once the Noteholders had been paid by means of the Second Coupon Payment on 8 October 2013 the amount of the First Coupon Payment still held by BNYM then became a debt due from BNYM to Naftogaz. The judge rejected the argument. He held that it was precluded by the terms of the Supplemental Agreement. That, as a matter of construction, had not altered the status of the First Coupon Payment. That had been paid under Clause 6.1 of the Agency Agreement and was subject to Clause 6.4. The Supplemental Agreement was designed to provide, and by its express terms actually had provided, that the First Coupon Payment remained subject to Clause 6 of the Agency Agreement. Accordingly, since Clause 6.4 in terms provided that BNYM was not obliged to repay any amount paid to it under Clause 6 (save in one situation which, as was agreed, did not apply here) there could be no "debt due or accruing due" from BNYM in favour of Naftogaz which could be the subject of a third party debt order. He thus held that the terms of the Supplemental Agreement were sufficient to negate a debt coming into existence once the Second Coupon Payment had been utilised to pay off the Noteholders.

Discussion and Conclusion

33. I am in no real doubt at all that the judge was right in his conclusion.
34. The case for MIC was presented on this appeal by Mr Jonathan Crow QC (who did not appear below) leading Mr Michael Lazarus. The case for Naftogaz was presented by Mr Adrian Beltrami QC (who did not appear below) leading Mr David Head. I would pay tribute to the careful and thorough arguments, oral and written, presented by the respective legal teams.
35. Mr Crow rightly acknowledged that the crucial document was the Supplemental Agreement.
36. In this respect, Mr Crow, although clearly regarding the Supplemental Agreement as a device or stratagem on the part of Naftogaz to keep the First Coupon Payment out of the reach of MIC, expressly accepted that the Supplemental Agreement was not to be regarded as a sham. He was right to do so. Not only was it drafted and signed (on behalf of their respective clients) by highly reputable City solicitors acting for Naftogaz and BNYM, it plainly was designed to achieve the purpose set out in Clause 1. There was an obvious underlying commercial purpose which was reflected in the actual wording of Supplemental Agreement.
37. It was common ground before us that sums held by a bank in a current account (and notwithstanding that a demand for repayment is formally first required) are generally capable of being the subject of a third party debt order.
38. Mr Crow submitted that, once the Noteholders had been paid the interest via the Second Coupon Payment, the First Coupon Payment was indeed to be regarded as held by BNYM as repayable on demand to Naftogaz. He said that Naftogaz had an entire right to demand the money in a way no different in substance from that of a current account holder: the position was thus different from Dunlop & Ranken, where the certificate of a third party was needed before the payment could become due. He submitted that it was wrong to focus solely on the provisions of Clause 6.4 of the Agency Agreement: one had to look at the entirety of the events which had happened, as the relevant factual matrix, and one had to look at the arrangements as a whole. He submitted that Clause 2 of the Supplemental Agreement made clear that the First Coupon Payment was not to be treated as a transfer to BNYM in order to put it in funds for any future interest payments to Noteholders. It connoted – as he said at one stage of his oral argument – a variation of the Agency Agreement as to the terms on which the First Coupon Payment was held, in the light of the supervening events which had occurred. At another stage of his argument, however, he said that no variation was made – rather, the First Coupon Payment had, as it were, simply dropped out of the Agency Agreement by reason of the Second Coupon Payment having been made and used for payment of the interest. It was "overtaken by events", as he put it.
39. Mr Crow was asked in argument, if the position was as he contended, as to the import of the words contained in Clause 2 of the Supplemental Agreement "or further written agreement in terms acceptable to BNYM". For, on the face of it, such words are entirely inconsistent with Naftogaz being entitled to payment by BNYM of the First Coupon Payment on demand: rather, the agreement of BNYM – which may or may not be forthcoming – was first required. Mr Crow seemed somewhat reluctant to accept that these words in the Supplemental Agreement were, on his argument, legal surplusage. But he said that there was "no substance" in the words. He said that there could be no reason why BNYM should or would seek to hold on to the money or seek to impose terms before releasing that money. The realities, he said, were in fact illustrated by BNYM acceding to the subsequent "request" (or "instruction") of Naftogaz for repayment (subject to retention of the sum needed to comply with the freezing order of Hamblen J).
40. For quite a number of reasons I do not think these arguments tenable, with all respect to the skill and force with which they were deployed. It seems to me that they involve a violation of all ordinary principles of construction and stand on its head the evident intent of the Supplemental Agreement, on the natural and ordinary meaning of the words used.
41. The purpose of the Supplemental Agreement is made explicit in Clause 1. Mr Crow placed emphasis on the words "solely". In my view, however, that word in essence reinforces the reason why the Second Coupon Payment had been made and was designed to avoid the setting of any precedent. It had no other material significance.
42. The effect of the crucial Clause 2 is, in my view, plain. It makes explicit that, notwithstanding the Second Coupon Payment, the First Coupon Payment is to continue (I note this word) to be held by BNYM on the same basis as originally paid, being subject to the terms of the Agency Agreement. Mr Crow's argument is contrary to all those express words. Furthermore, Clause 2(a) also expressly confirms ("without prejudice to") the continued application of Clause 6.4 (and Clause 7) of the Agency Agreement. The Supplemental Agreement, by its terms, therefore was not creating an obligation which was not there before.
43. Further, the provision as to "further written agreement in terms acceptable to BNYM" is not, in my view, empty wording. These are words of content. The First Coupon Payment had originally been paid under Clause 6.1. Clause 6.4 expressly required BNYM to apply "each amount paid to it under Clause 6" in accordance with Clause 7 (payment to Noteholders). Consequently, pace Mr Crow, one can see a strong argument that BNYM was required under the Agency Agreement to retain the First Coupon Payment, notwithstanding the subsequent Second Coupon Payment, for future purposes of payment of further interest instalments to Noteholders. Certainly BNYM could reasonably think so and not wish to expose itself to complaint or claim from Noteholders were there to be difficulties in making any subsequent interest payments. (For Mr Crow to appeal, as at one stage he did, to Naftogaz's asserted financial "muscle" is no answer to this point.) Moreover, BNYM might want, say, an indemnity or undertaking from Naftogaz before making any repayment: for example as to outstanding legal costs relating to the dispute or by way of protection from any claim under the freezing order of Hamblen J. It might also wish to require the prior written consent of the Trustee, whose task it was to have regard to and safeguard the interests of Noteholders who would expect further interest to be paid in due course. In short, one can think of various contexts whereby BNYM would, in order to protect its own legitimate interests, wish to have the right to refuse repayment absent an agreement on terms acceptable to it. The words in Clause 2 to that effect are therefore not devoid of content. They preclude Naftogaz from being entitled to repayment of the First Coupon Payment on demand.
44. Yet further, aspects of Mr Crow's argument connoted that the Supplemental Agreement had varied the Agency Agreement. But that has problems. For one thing, if that were so, it would potentially be an infringement of Clause 23 of the Agency Agreement: something one would not, objectively speaking, have expected BNYM to intend in entering into the Supplemental Agreement. Moreover, as it seems to me, such an argument would contradict the wording of Clause 4(b) of the Supplemental Agreement: because, if the argument were right, BNYM would have acquired an obligation – viz. to repay the First Coupon Payment on demand – which was not set out in (and would be contrary to) Clause 6 of the Agency Agreement.
45. I consider, overall, that whichever way one looks at MIC's arguments they founder on the actual terms of the Supplemental Agreement. As I see it, the First Coupon Payment was paid under the terms of Clause 6.1 of the Agency Agreement and thereafter always remained governed by Clause 6 (including Clause 6.4). That is confirmed by Clause 2 of the Supplemental Agreement. That, I think, is the correct analysis; and it defeats the argument. But even if, as Mr Crow sought to say, the First Coupon Payment somehow potentially stood to change its character and somehow potentially stood to fall outside the ambit of Clause 6 by reason of the fact of the intervening Second Coupon Payment, then the express terms of the Supplemental Agreement have, as it were, retained the First Coupon Payment within the ambit of Clause 6 (including Clause 6.4). Moreover, on either scenario the money still could not be repayable on demand: because the consent of BNYM, on terms acceptable to it, was first needed. So that defeats that argument too.
46. Mr Crow did seek to argue for a contract to be implied from conduct. To the extent I understood the argument, I reject it. There is no place here for an implied contract. The parties had chosen to regulate the position that had arisen by the express provisions of the Supplemental Agreement.
47. I also note that it was conceded by MIC before Blair J (as he records) that the purpose of the Supplemental Agreement was to ensure that the First Coupon Payment remained subject to the Agency Agreement. It is a point of comment that Mr Crow's present arguments would defeat that purpose.
48. Although Mr Crow forensically viewed the ostensible intended effect of the Supplemental Agreement with a degree of outrage, I thought in fact that Mr Beltrami's measured response on this was justified. This response was to the effect that the Supplemental Agreement was in truth designed to preserve the status quo: in view of the unexpected impact of the first third party debt order and/or Belgian and Luxembourg orders which MIC had obtained without notice. This is not, perhaps, a case to dwell on the underlying merits, one way or another, at this stage of the argument. But the natural and ordinary meaning of the words of the Supplemental Agreement overall do accord with a perceived and understandable aim to preserve the status quo and to fulfil a clear commercial purpose in that regard. At all events, in my view it simply is not acceptable to say that what the parties to the Supplemental Agreement were plainly striving to achieve, legitimately and consistently with the Agency Agreement, was impossible of achievement. BNYM and Naftogaz had to decide how the First Coupon Payment was to be dealt with in the light of the unanticipated actions of MIC in obtaining the first third party debt order and/or the saisie-arret orders: and the Supplemental Agreement, in clear language, records their mutual arrangements in this regard.
49. I do not propose to say more. I think that the judge was quite right to conclude that the terms of the Supplemental Agreement negated the coming into existence of a debt due from BNYM to Naftogaz. The fact that BNYM was prepared subsequently to pay back (part of) the First Coupon Payment to Naftogaz is, as he held, beside the point. It was not paid under an immediate and unconditional obligation to do so.
50. For these reasons, and for the reasons given by the judge below, I would dismiss the appeal.

Discretion

51. The judge had also indicated that he would in any event have found against MIC as a matter of discretion. Mr Crow attacked the judge's conclusion. He said that, in exercising the discretion, the judge had mistaken or misapprehended certain of the facts and/or mistaken the causative effect of the first third party debt order. He also submitted that the judge had paid insufficient regard to the important policy consideration that judgment debts should be paid and had paid insufficient regard to the attempts over the years of Naftogaz to avoid making such payment.
52. Given that I have reached the – I have to say, clear – conclusion that the appeal fails on the first ground, I think it unnecessary to express a view on this second ground. I should, nevertheless, add this. The judge was critical of the application dated 19 September 2013 for the first third party debt order. That had been signed, with a statement of truth, by a partner in MIC's solicitors. The application stated, in paragraph 3, that BNYM "owes money to (or holds money to the credit of) the Judgment Debtor". That, as has since been accepted, was wrong. At that time, BNYM did not owe money to Naftogaz or hold money to its credit. But paragraph 5 of the application notice had made reference to the Prospectus (MIC did not, of course, then know the precise terms of the contractual arrangements) and it had made clear that the anticipated payment to BNYM by Naftogaz of the half-yearly interest instalment was to be on or shortly before 30 September 2013. So the court was not misled in this regard. I say that because in paragraph 82 of his judgment the judge had said:

"It is however also important that the court's enforcement procedures are properly used, which in my view did not happen on this occasion."

There is perhaps some ambiguity here. But at all events I should record my own view that it is not to be said that MIC or its solicitors behaved improperly in making the application for the first order as it did.

Lord Justice Sales:

53. I agree.

Lady Justice Arden:

54. I also agree.