England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMMERCIAL COURT
The Hon Mr Justice Langley
2007 EWHC 1428 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/02/2008

Sir Anthony Clarke MR:

Introduction

This is the judgment of the court.

1. This is an appeal from part of an order made on 28 June 2007 by Langley J in which he granted three declarations arising out of his construction of two Option Agreements made in 2004. They were to the effect that Credit Suisse entered into the Option Agreements through Barclays Bank Plc ('Barclays'), that Credit Suisse is a party to the Option Agreements and bound by the restrictions in clauses 31 and 39 of them respectively and that entry into a transaction known as the Ampere Transaction would be a breach by Credit Suisse of clauses 31.2.1 and 39.2.1 respectively. The judge described the issues which led to the first two declarations as 'the Party Issue' and those which led to the third declaration as 'the Breach Issue' and we will do the same.
2. The judge refused permission to appeal but permission was subsequently granted by Rix LJ. The appellants say that the judge was wrong on the Party Issue. At the hearing of the appeal they abandoned their appeal against his decision on the Breach Issue and accepted that if, contrary to its submission in this appeal, Credit Suisse is a party to and bound by clauses 31 and 39 of the option agreements, entry into the Ampere Transaction would be in breach of them. The appeal was argued on that basis and, subject to the postscript to this judgment, we will consider it on that basis. There was a third point before the judge, namely whether the restrictions on the exercise of the options in clauses 31 and 39 are contrary to public policy. This was called 'the Public Policy issue' but is not an issue in this appeal.

Factual background

3. Eggborough is a coal fired power station in North Yorkshire, which we will call 'Eggborough'. It is owned by the second respondent ('EPL'). The third respondent ('EPHL') is the holding company of EPL. All the respondents are part of the British Energy group, which we will together call 'British Energy'. Eggborough is the only coal fired power station operated by British Energy, which operates six nuclear power stations. Eggborough was acquired by British Energy in March 2000 for £646 million using the group's own funds. In July 2000 the acquisition was re-financed by a project loan of £550 million. The loan was advanced by a group of lending banks on the security, among other things, of the shares in and assets of EPL.
4. In 2002 British Energy announced that it had serious financial difficulties and that Eggborough was worth considerably less than the debt it carried. The issues in this appeal arise out of the further refinancing agreements which were entered into on 30 September 2004 and which we will together call 'the Agreements'. There were numerous Agreements which were all executed on the same day and which it is common ground all form part of the factual matrix of each other. This appeal is concerned in particular with four of those Agreements as follows: an Amended and Restated Credit Agreement ('RCA'), an Amended and Restated Intercreditor Deed ('ARID'), a Share Option Agreement ('SOA') and an Asset Option Agreement ('AOA'). The SOA and the AOA are in very similar terms; so we will for the most part refer to the SOA.
5. In essence the restructuring involved the writing off of about £340 million of the debt outstanding under the July 2000 agreements and replacing it with a loan for £150 million. In return, the British Energy Group provided 76.6 million new shares, £20 million of bonds and security of various kinds and also granted both a share option and an assets option. This was a syndicated financing arrangement of a kind which is, as we understand it, not uncommon in the market. When the RCA was entered into there were 15 lending banks, often described as the Lenders of Record. They included Barclays and Credit Suisse (then called Credit Suisse First Boston), whose commitments were £18,344,058.10 and £1,773,633.44 respectively. It can thus be seen that Credit Suisse was initially committed in respect of a very small share of the total of £150 million.
6. By the time these proceedings began Credit Suisse had succeeded to almost 90 per cent of the interests of the banks. It is important to note that the banks lent the monies severally and not jointly. It is common ground that, when the Agreements were made in September 2004, it was contemplated that the banks would or might enter into sub-participation agreements with other financial institutions and that such agreements would not create legal relations as between the British Energy Group and the sub-participants. There is, however, an issue as to the extent to which sub-participation was permissible under the terms of the Agreements.
7. The dispute which has led to this appeal arises out of a proposed sub-participation agreement between Credit Suisse and Ampere Limited and Ampere 1 Limited, which we will together refer to as 'the Ampere Companies'. They were incorporated for the purpose of consolidating various sub-participation rights in relation to the facilities granted under the Agreements. The Ampere Companies were separately represented before the judge but they are now represented by Mr Sumption QC and Miss Sarah Love, who also represent Credit Suisse. The holders of the sub-participation rights include but are not limited to hedge funds.

The issues

8. The principal issues in this appeal turn on the true construction of clause 31 of the SOA, which is set out in paragraph 47 below. In particular, as we see it, the principal question is whether Credit Suisse is bound by restrictions in clause 31.2 on the exercise of the option rights created by the SOA. The judge held that it is, whereas the appellants say that it is not. They say that Credit Suisse is not a party to or bound by the obligations in clause 31.2 and that the clause binds only Barclays as Security Trustee. If the appellants' principal submissions fail, they have a subsidiary point on the form of the order.

The Agreements

The RCA

9. The RCA is described as the Amended and Restated Credit Agreement because it is, at any rate formally, "the credit agreement originally dated 13 July 2000 as amended and restated by an amendment and restatement agreement dated 30 September 2004". The facility is of £150 million, with 15 Lenders of Record. These were the same banks as were the lending banks under the previous agreements as at 30 September 2004. They were not the same as the original Lenders of Record because some of those banks had novated their rights and obligation to others under the previous agreement.
10. The RCA, although formally an amendment of the earlier agreements was in truth a fresh agreement. It was expressed to be made between EPL as "the Borrower"; Barclays Capital, which is the investment banking division of Barclays Bank Plc as "the Arranger"; "The Financial Institutions listed in Schedule 1 as Banks (the Banks)"; Barclays Bank Plc "as Agent (in this capacity the Agent)"; and Barclays Bank Plc "as Security Trustee (in this capacity the Security Trustee)." As already stated, Barclays Bank Plc was one of the Banks of Record and, again as already stated, we will call Barclays Bank Plc 'Barclays'. As can be seen, Barclays had and has a number of hats. We are principally concerned in this appeal with its hats as Agent and as Security Trustee. We note in passing that we do not have the signature page of the RCA.
11. Clause 1.1, which is the Definitions clause, included:

"[AOA] means the asset option agreement between the Borrower and the Security Trustee … under which the Borrower grants an option to the Security Trustee to acquire the Business and Station Assets (each as defined in that agreement).

Finance Document means (a) this Agreement; (b) the Amendment and Restatement Agreement [ie the deed bringing the RCA and ARID into effect]; (c) a Security Document; … (e) [the ARID]; … (g) an option Agreement or any other document designated as such by the Agent and the Borrower.

Finance Party means the Arranger, a Bank, the Security Trustee, the Account bank or the Agent (and together the Finance Parties).

Majority Banks means, at any time, Banks whose participations, in the Loans then outstanding aggregate more than 66 ? per cent of the Loans then outstanding.

Option means an option to acquire the assets of or shares in the Borrower granted to the Security Trustee under either of the Option Agreements.

Option Agreement means:

(a) the [AOA]; or (b) the SOA.

Security Documents [is defined in terms which it is agreed do not include the Option Agreements].

[SOA] means the agreement between EPHL and the Security Trustee … under which EPHL grants an option to the Security Trustee to acquire all the shares of EPHL in the Borrower."

12. The facility is described in clause 2. Clause 2.2 provides that the obligations of each Finance Party are several not joint, that no Finance Party is liable for the obligations of any other Finance Party under the Finance Documents, that the rights of a Finance Party are "divided rights" and that, except as otherwise stated, a Finance Party may separately enforce those rights. Clause 5 provides for repayment and sets out a schedule ending in 2022, subject to prepayment or acceleration under the RCA.
13. Clause 9 is of some importance in this appeal. It provides:

"OPTIONS

The Security Trustee will only exercise an Option on the instructions of the Majority Banks and in accordance with the terms of the relevant Option Agreement."

The significance of clause 9 is that it makes it clear that it is the Security Trustee which has the right to exercise the options under the SOA and the AOA, albeit on the instructions of the Majority Banks and in accordance with the terms of the SOA or the AOA as the case may be. This must of course be read with the definitions in clause 1 set out above. The definitions of Option, AOA and SOA, read together, make it clear that the Option is "granted to the Security Trustee" under the SOA and the AOA. Thus the Options are granted to Barclays, as Security Trustee, to be exercised under the terms of the Option Agreements. By clause 10, by contrast, except where otherwise provided, all payments by the Borrower or a Bank under the Finance Documents are to be paid to Barclays as Agent.

14. Clause 17 sets out various classes and examples of Events of Default and clause 18 provides for their consequences. In particular it provides for acceleration of the obligation to pay the principal debt. It also provides by clause 18.2.2(a) for the exercise by the Security Trustee of an Enforcement Option, which is one of the two types of option provided for in the AOA and the SOA. In providing for the exercise of the Enforcement Option, clause 18.2.2(a) is thus consistent with clause 9, which (as already stated) provides for the exercise of the Break Option by the Security Trustee.
15. Clause 19 is concerned with "The Agent and the Arranger", although the focus of this appeal is only on the roles of Barclays as Agent and Security Trustee. Clause 19 provides, so far as relevant:

"19.1 Appointment and duties of the Agent

(a) Each Finance Party (other than the Agent) irrevocably appoints the Agent to act as its agent under and in connection with the Finance Documents.

(b) Each party appointing the Agent irrevocably authorises the Agent on its behalf to:

i) perform the duties and to exercise the rights, powers and discretions that are specifically delegated to it under or in connection with the Finance Documents, together with any other incidental rights, powers and discretions; and

ii) execute as agent for that Party each Finance Document to which the Agent is a party.

(c) The Agent has only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature.

….

19.3 Relationship

The relationship between the Agent and the other Finance Parties is that of agent and principal only. Except as contemplated by the Security Documents, nothing in this Agreement constitutes the Agent as trustee or fiduciary for any other Party or any other person and the Agent need not hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys.

19.4 Majority Banks' instructions

(a) The Agent will be fully protected if it acts in accordance with the instructions of the Majority Banks in connection with the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Banks will be binding on all the Banks. In the absence of such instructions, the Agent may act as it considers to be in the best interests of all the Banks.

…."

16. At [16] the judge described those parts of clause 19 as clearly important provisions. He observed that, by clause 19.1(b)(i), Credit Suisse appointed Barclays to execute each of the Option Agreements as its agent, no doubt on the basis that, as the Definitions Clause shows, the Finance Documents include the Option Agreements. The judge added that, by clause 19.1(a), Credit Suisse appointed Barclays to act as its agent under and in connection with the Option Agreements. Further, he noted that Barclays' duties under the Option Agreements are said to be "solely of a mechanical and administrative nature" and, save as contemplated by the Security Documents, Barclays' relationship with Credit Suisse is "that of agent and principal only."
17. As we see it, the difficulty with that analysis is the point made above that clause 9 and the definitions make it clear that the Options were given not to the Agent, or indeed, to the Banks, but to the Security Trustee and clause 19 only provides for the incidence of the rights and obligations of the Agent and not the Security Trustee.
18. On the other hand, on its face clause 19 gives Barclays power to enter into the Option Agreements on behalf of the Banks, even though the Option Agreements were bound to provide for the Options to be exercised by Barclays as Security Trustee in order to be consistent with clause 9 of the RCA. We see no inconsistency between the provisions of the RCA and a construction of the Option Agreements by which Barclays is for some purposes the Security Trustee and for some purposes the agent of the Banks.
19. Clause 25 of the RCA is another important provision. It is entitled "Changes to the Parties". Clause 25.2 provides, so far as relevant:

"25.2 Transfers by Banks

(a) A Bank (the Existing Bank) may, subject to paragraph (b) below, at any time assign, transfer or novate any part of its Commitment and/or any of its rights and/or obligations under the Finance Documents to either:

(i) another bank or financial institution; or

(ii) to a limited liability company, provided that:

(A) and, for so long as, such company's entire share capital is owned by banks and financial institutions;

(B) such company has been established for the sole purpose of owning power generation assets in the United Kingdom; and

(C) all other existing Banks also transfer their rights and/or obligations under the Finance Documents and the Share Subscription Agreement to such company.

(the New Bank), in each case which is a Qualifying Bank.

(b) Any assignment, transfer or novation pursuant to Clause 25.2(a) shall:

(i) if of part of a Commitment only, be in a minimum amount of at least £5,000,000; and

(ii) require the prior written consent of the Borrower unless (A) the New Bank is another Bank or an Affiliate of a Bank; or (B) the New Bank is an OECD Bank. However, the prior consent of the Borrower must not be unreasonably withheld or delayed and will be deemed to have been given if, within five days of receipt by the Borrower of an application for consent, it has not been expressly refused.

(c) ….

(d) A transfer of obligations will be effective only if either

(i) the obligations are novated in accordance with clause 25.3

(ii) the New Bank confirms to the agent and the Borrower that it undertakes to be bound by the terms of this Agreement as a Bank in a form and substance satisfactory to the agent. …

(e) Nothing in this Agreement restricts the ability of a Bank to sub-contract an obligation if that Bank remains liable under this Agreement for that obligation.

…."

20. The judge summarised the effect of these provisions at [21]. Their effect is that a Bank can only "assign, transfer or novate any part of its Commitment and/or any of its rights and/or obligations" under the Finance Documents (which include the Option Agreements) to a New Bank, which has also to be a "Qualifying Bank" as defined. A New Bank includes a "financial institution". This may be done without consent provided that the transfer (etc) is to a New Bank which is also another Bank (or an OECD Bank as defined). Mr Sumption stresses that this covers a very large number of banks in the developed world.
21. Mr Sumption also invites our attention to the decision of this court in The Argo Fund Ltd v Essar Steel Ltd [2006] EWCA Civ 241, [2006] 2 All ER (Comm) 104, where the court, comprising Auld, Rix and Hallett LJJ, held that, in a syndicated loan contract in which the phrase "a bank or other financial institution" was used in a not dissimilar context, in order to be an "other financial institution" the entity concerned did not have to be a bank or akin to a bank, nor did its business have to include bank-like activities. We accept Mr Sumption's submission that, so construed, the expression is likely to cover a large number of entities, including hedge funds, although any transferee under clause 25.2(a) must fall within the definition of a Qualifying Bank. It is only in the case of a transfer to a particular type of limited company that both consent and the satisfaction of paragraphs (A), (B) and (C) of clause 25.2(a)(ii), including transfer of the rights and obligations of all other existing banks, are required. Mr Sumption observes that by clause 25(b)(ii), where the consent of the Borrower is required, it must not be unreasonably withheld or delayed.
22. We accept Mr Sumption's submission that clause 25 gives the Banks wide powers to novate all or part of their rights and obligations under the various Agreements, including the RCA and the Option Agreements. Thus, where the conditions are met, which they will be in very many cases, the Banks can sell the debt and the Options or sell only the debt or, at any rate in theory, sell the Option and not the debt.
23. The judge added at [22] that it was the operation of clause 25.2 which enabled Credit Suisse to acquire the interests of the other Banks so as to acquire majority voting rights.
24. At [24] the judge drew attention to the reference in clause 27 to participation as showing, as is common ground, that sub-participation was contemplated. We should add that it is also common ground that, although there are standard forms of sub-participation arrangement, no particular form of sub-participation was contemplated. It was not, we think, contemplated that, in the event of sub-participation, the sub-participant would be in contractual relations with any part of the British Energy group.

ARID

25. As its name suggests, this agreement essentially governs the relationship between the creditors inter se and between the creditors and Barclays. Its parties are EPL as Borrowers, British Energy Power and Trading Limited ('BET'), EPHL, Barclays "as Security Trustee and agent for the Finance Parties and in its personal capacity" and "Certain Financial Institutions", which are listed in Schedule 2 and are the 15 Lenders of Record and which are named as the Finance Parties. Mr Sumption points to the fact that on the signature page Barclays signed "as Security Trustee and Facility Agent as agent for the Finance Parties". Curiously, it does not seem to have signed expressly in its personal capacity.
26. Clause 2 shows that EPHL was not only the owner but also a creditor of EPL. By clause 10, the ARID provides for how the proceeds of the enforcement of the security were to be dealt with. More importantly, clause 12 provides for the appointment and duties of the Security Trustee and may be compared with clause 19 of the RCA, which provides for the appointment and duties of the Agent. Clause 12 provides, so far as relevant:

"(a) Each Secured Creditor [ie a Bank, EPL or BET] (other than the Security Trustee) appoints the Security Trustee to act as its agent in respect of the Security.

(b) Each Secured Creditor (other than the Security Trustee) irrevocably authorises the Security Trustee to:

i) perform the duties and to exercise the rights, powers and discretions that are specifically given to it under the Security Documents, together with any other incidental rights, power and discretions; and

ii) execute each Security Document expressed to be executed by the Security Trustee.

(c) The Security Trustee has only those duties which are expressly specified in this Deed and the Security Documents. Those duties are solely of a mechanical and administrative nature."

Clause 12 also makes detailed provisions for the protection of the Security Trustee.

SOA

27. This is the most important Agreement for consideration in this appeal because the outcome of the appeal depends upon the true construction of the SOA (and the AOA). It must of course be construed having regard to its language, which must be considered in the context of the SOA as a whole and the SOA must be set in its factual matrix, which, as already stated, includes all the Agreements executed on the same day. In addition regard must be had to the commercial purpose of the SOA, to which we return below.
28. The Security Documents do not include the Option Agreements. Mr Popplewell stresses that this is because the Option Agreements are not part of the security for the loan facility. That is so but Mr Sumption correctly retorts that they are an important part of the consideration given by British Energy for the release of £340 million of debt. Thus, although they are not security strictly so called, they are indeed an important part of the whole arrangement.
29. The SOA is expressly stated to be between EPHL (the "Seller"), Barclays "acting as agent and security trustee for the Finance Parties (the "Buyer")", EPL (the "Company") and "BET". In the Definition Clause "Finance Parties" are stated to have the same meaning as in the RCA, which is quoted above and is a wide expression which includes the Banks and the Security Trustee. Mr Popplewell stresses the reference to Barclays "acting as agent and security trustee for the Finance Parties" and the further reference to the "Buyer". Mr Sumption, by contrast, points to the signature page, on which there is no reference to Barclays having signed in a particular capacity or capacities.
30. In this regard we were referred to a number of passages and examples in paragraphs 9-036 to 9-038 of the 18^th edition of Bowstead on Agency and to Tudor Marine Ltd v Tradax Export SA; The Virgo [1976] 2 Lloyd's Rep 135. All depends upon the construction of the particular document and upon the circumstances of the case. We accept Mr Popplewell's submission that there is no presumption that more weight is to be attached to one part of the document (such as the signature page) than any other part.
31. In the present case the indications do not all point in the same way. We agree with Mr Sumption that the fact that Barclays' signature is unqualified is a pointer against the Banks being parties to the SOA, especially when compared with the signature page on the ARID. It is also fair to say that the banks are parties to the RCA. On the other hand, the reference to the SOA being made by Barclays "acting as agent and security trustee for the Finance Parties" suggests that Barclays was not acting throughout the SOA as Security Trustee but, at least in some respects as the agent of the Finance Parties. Thus, while we agree with Mr Sumption that the mere fact that Barclays is a party to the SOA does not make the banks a party to it, if they are a party to it, it is because they are a Finance Party and Barclays entered into the SOA as agent on their behalf, as well as on its own behalf as Security Trustee.
32. The description of the parties is in our view of considerable importance. One possibility is that the "Buyer" means and only means the Banks. That would be the construction most favourable to the respondents' case, although in a written note summarising his submissions, which was put in at the end of his submissions, Mr Popplewell does not contend for such an extreme case. He submits that Barclays entered into the SOA both as Security Trustee and as agent for the Banks. He submits that the particular capacity in which Barclays made the agreement depends upon the particular right or obligation provided for in the particular clause under consideration.
33. Another possibility is that the "Buyer" means, and means only, Barclays as Security Trustee, which would be the construction most favourable to the appellants' case. In Mr Popplewell's note he characterised the appellants' case in that way. However, in the course of his reply, Mr Sumption said that he was not saying that Barclays was not also an agent for certain purposes. What he was saying, he said, was that Barclays were not agents for the purpose of making their principals (ie the Banks) party to the SOA. He identified as one of the reasons for that conclusion that the functions being performed by Barclays were not the functions of the Banks.
34. It thus appears that both parties accept that in entering into the SOA Barclays were acting, at least in part, as agents. In any event, whether they do or not, it seems to us that the natural construction of the expression "Barclays acting as agent and security trustee for the Finance Parties (the "Buyer")" is that Barclays was entering into the agreement in two capacities, one being "as agent" and the other being "as security trustee". Mr Sumption points out that the "Finance Parties" include the "Security Trustee" but if Barclays was entering into the agreement solely as Security Trustee or solely as agent for the Security Trustee, there would have been no need for any reference to their role as agent. They could simply have been described as "Barclays Bank as Security Trustee (the "Buyer")". While this documentation, like most documentation in a complex deal, contains infelicities, it has been very carefully thought through by lawyers and others with considerable experience of syndicated loans of this kind, and the language used does seem to us to be a potentially significant pointer to the correct construction.
35. The language is that of agency and, not of Barclays acting as agent for the Security Trustee, but of Barclays acting as agent for someone other than the Security Trustee, at least in part. The language seems to us naturally to lead to the conclusion that Barclays entered into the contract both as Security Trustee and as agent for "the Finance Parties", which of course includes the Banks. On this basis, it is a matter of construction of the particular terms of the SOA in which capacity Barclays was making the promise, whether as Security Trustee or as agent for, say, the Banks or, perhaps both. On this approach the expression the "Buyer" might have a different meaning in different clauses of the SOA.
36. This approach may be unusual but it does not strike us as odd in a transaction of this kind where it is common ground that Barclays has a number of different hats in connection with different parts of the deal. Thus, depending on the true construction of the particular clause, the "Buyer" might be the Security Trustee or the Banks or, perhaps, both. This seems to us to make sense because, although Barclays acts as a principal when acting as Security Trustee, it only does so on the instructions of the Banks as beneficiaries. So too, when it is acting as agent it again does so in accordance with the instructions of the Banks. The Banks must of course act in accordance with the terms of any of the Agreements to which they are parties.
37. We return to the terms of the SOA. Mr Popplewell relies in particular upon clause 3 of the SOA. In considering its provisions it should be borne in mind, as the judge observed at [30], that the "Close Period" is the period from the date of the SOA until the earlier of an Option Completion Date or 31 March 2010. The "Option Shares" are the whole share capital of EPL, the owners of the power station. The SOA provides for two Options, namely the "Break Option" and the "Enforcement Option". The Options are mutually exclusive. The Enforcement Option applies only on breach by British Energy of its obligations. This appeal is concerned only with the Break Option.
38. Clause 3 provides so far as relevant:

"3. GRANT OF CALL OPTION TO BUY SHARES

3.1 In consideration of £2,500,000 satisfied by the Buyer agreeing to the reduction by that amount of the amount owing by the Seller to the Buyer under the Novated Debt, the Seller irrevocably grants to the Buyer:

3.1.1 an option to buy, and to require the Seller to sell, all of the Option shares on the Break Option Completion Date ("the Break Option") and

3.1.2 an option to buy, and to require the Seller to sell, all of the Option Shares at any time after the Enforcement Notice Date but prior to 31 August 2009 (the "Enforcement Option"),

in each case, in accordance with the terms and conditions of this Agreement.

… "

39. Like his predecessor before the judge (Mr Mark Howard QC), Mr Popplewell places some reliance on this clause because the £2,500,000 price for the Option is stated to be satisfied by reduction in the debt agreed to by the Buyer. Barclays, of course, was not owed the debt nor entitled to the money; so that it is submitted that this was a clear example of Barclays acting as agent for the Banks so as to bind them. The judge agreed. However, as Mr Sumption demonstrated, the position is not we think quite as simple as Mr Popplewell's submission suggests and, although the point has a superficial attraction, we attach little, if any, significance to it, or to a similar (but somewhat different) point under the AOA.
40. Clause 4 provides:

"4. EXERCISE OF BREAK OPTION

4.1 The Break Option may be exercised by the Buyer only:

4.1.1 in whole and not in part; and

4.1.2 by the delivery by the Buyer to the Seller of a Share Option Notice at any time after the Restructuring Date but no later than 31 August 2009.

…."

4.4 It shall be a condition of the exercise of the Break Option that on the Break Option Completion Date, the Buyer (acting in its capacity as security trustee for the Finance Parties) shall fully and irrevocably discharge, or procure the full and irrevocable discharge of, all the Finance Party Liabilities and fully and irrevocably release, or procure the full and irrevocable release of, the Security."

41. By clause 7 the exercise of the Break Option required payment by the Buyer to the Seller of a sum based on a Break Fee of £104 million. In argument the cost of exercising the Option was treated as £104 million together with discharge of the outstanding indebtedness.
42. As the judge observed at [35], the effect of clause 4 is that exercise of the Break Option can only be achieved for 100% (and so by all the Banks with the Majority able to bind the minority) and by delivery by the Buyer of the prescribed Notice by no later than 31 August 2009 for completion seven months later on 31 March 2010. The prescribed Notice for the exercise of both the Break and Enforcement Options (and the Asset Option) provided for signature "for and on behalf of Barclays … acting as agent and security trustee for the Finance Parties."
43. Mr Popplewell relies on the terms both of clause 4 and of the required form of the Notice. His submissions have some force. There seem to us to be three points of some significance. The first is that clause 4.1.1 (and clause 5.1.1 in the AOA) provide that the option can be exercised in whole but not in part, which reflects the fact that the Banks' rights are held severally and not jointly but that the right to exercise them is all or nothing. This would be odd if the rights were held by Barclays alone. The second is that clause 4.4 expressly refers to the Buyer "acting in its capacity as security trustee for the Finance Parties". If Barclays was acting as Security Trustee throughout the Option Agreements, there would be no need to state that it was so acting in clause 4.4.
44. The third point is that the Notice of the exercise of the Option must state that, in serving the Notice, Barclays is "acting as agent and security trustee for the Finance Parties". The point here is essentially the same as that discussed earlier in relation to the description of the parties, where the description of Barclays' role in entering into the Options is essentially the same. So, for the same reasons as stated above, this seems to us to be a strong pointer that, both in entering into the Agreement and in serving the Notices under it, Barclays was acting in two capacities, one as Security Trustee and the other as agent for the Finance Parties, including in particular the Banks.
45. Mr Popplewell's primary submission is that Barclays was acting solely as agent for the Banks both in entering into the SOA and in taking other steps including exercising the Option and giving Notice of its exercise. However, we do not accept the submission that Barclays was acting solely as agent of the Banks because it is contrary to the description of the parties, which includes Barclays as Security Trustee, and because there are a number of provisions which plainly refer to the Security Trustee. We do not think that Mr Popplewell can escape the conclusion that it was for the Security Trustee (or the security trustee if that is different) to exercise the Option, as provided in clause 9 of the RCA and discussed above.
46. On the other hand, we accept Mr Popplewell's alternative submission, which is that Barclays entered into the SOA in part as agent for the Banks and that it is a question of construction of each of the provisions of the SOA (and the AOA) whether the Buyer is Barclays as Security Trustee or the Banks or both. In this regard, for the reasons we have already given, we agree with the view expressed by the judge at [37] as follows:

"It is of course entirely possible for an agreement to impose primary obligations on an agent, or a person acting as agent, as well as binding the principal to obligations contained in it. The fact that Barclays has a principal role to play is not inconsistent with the Banks being parties to the Agreement."

As to the authority of Barclays to enter into the SOA, to the extent that it did so as agent for the Banks, this seems to us to be found in clause 19 of the RCA to which we referred earlier. Clause 19 does not specify the capacity in which Barclays must enter into an option agreement. Thus there was nothing to stop it entering into the SOA as Security Trustee. On the other hand clause 19 provides the authority for it to enter into such a contract as agent for the Finance Parties, including the Banks.

47. We turn to clause 31 of the SOA, which is the critical provision, together with clause 39 of the AOA which is in what for present purposes are the same terms. Clause 31 provides:

"31. ASSIGNMENT

31.1 No party may (nor purport to) assign or transfer, or declare a trust of the benefit of, or in any other way dispose of any of its rights under this Agreement, in whole or in part, without first having obtained the other parties prior written consent, save that:

31.1.1 the Buyer shall be entitled to make a Disposal to a Third Party in accordance with Clauses 32 to 35; and

31.1.2 the Seller shall be entitled to assign and/or transfer all (but not part only) of its rights under this Agreement to BEH by way of security for the First Intercompany Loan Agreement.

31.2 Subject to Clause 31.1.1, during the Close Period the Buyer may not enter into any agreement or other arrangement:

31.2.1 that relates to the exercise of any of its rights under this Agreement; or

31.2.2 to assign or transfer or declare a trust of the benefit of or in any other way dispose of all or any of the Option Shares after an Option Completion Date."

48. As the judge said at [39], the effect of clause 31.1.1 (read with the definition of "Disposal" and the provisions of clauses 32 to 35) is that the Buyer can (without consent) only assign or transfer all (and not part) of the Buyer's rights under the Agreement to a Third Party after making an offer to EPL to sell the rights to EPL on substantially the same terms as those offered to the Third Party for "the Purchase Price", that is 105% of the price offered by or agreed with the Third Party. Clause 32 requires the Buyer to serve a Disposal Notice to that effect "signed by the Buyer". The prescribed form of Notice is again to be signed by Barclays "as agent and security trustee for the Finance Parties". The judge correctly added that this right of pre-emption would therefore operate to protect British Energy against the loss of the power station provided that it was both able and willing to meet 105% of the price agreed with a potential third party purchaser.
49. The judge addressed the effect of clause 31.2.1 at [40] and [41]. It is that until 31 March 2010 the Buyer may not enter into "any agreement or other arrangement" that "relates to the exercise of any of its rights under this Agreement." The critical questions before the judge were whether or not Credit Suisse as the Majority Bank is bound by this restriction and has rights under the Agreement on the ground that the Banks are parties to it (the Party Issue) and, if so, whether or not the Ampere Transaction "relates to" those rights ("the Breach Issue"). As stated earlier, it is now accepted that if Credit Suisse is bound by clause 31.2.1 and has rights under the SOA, the Ampere Transaction does relate to those rights under clause 31.2.1.
50. At [41] the judge expressed what he said was the rationale for the restriction in clause 31.2.1 applying until 31 March 2010. It must be (he said) to provide more protection for British Energy than can be found in the pre-emption rights in clause 31.1.1. As he put it, exercise of the Break Option was not subject to pre-emption rights but had its own price, namely £104 million together with discharge of the outstanding debt. We agree.
51. This appeal depends entirely upon whether the Banks are bound by clause 31.2 or whether it only binds Barclays as Security Trustee. Of course, if the Buyer as defined in the description of the parties' clause at the outset is (and is only) the Security Trustee, then it follows that the judge was wrong and that the appellants are entitled to succeed in this appeal. However, if that is wrong and the Banks are bound by some at least of the provisions in the SOA, it becomes a question of construction of clause 31.2.1 in its context. We are bound to say that we have found much more difficulty with the identity of the Buyer and with the construction of the SOA than the judge did but, substantially for the reasons which we have already given, we have reached the conclusion that the language supports the conclusion that Barclays entered into the SOA in two capacities, namely as Security Trustee and as agent for the Finance Parties, including in particular the Banks and that it is a question of construction of each provision in the agreement whether it was doing so in one or other or both capacities.
52. The particular provision with which we are concerned is of course clause 31. We turn first to its commercial purpose. Mr Popplewell submits that the commercial purpose of including pre-emption rights in the Option Agreements would be frustrated by a conclusion that the Banks were not parties to them so as to be bound by the restrictions in them. His submissions under this head may be summarised as follows:

i) The effect of the pre-emption rights conferred on British Energy is to require the Buyer to exercise the options seven months before they receive the fruits of them, and still longer before they can sell them onwards (because of the obligation in clause 31.2 not to make even an arrangement as to what is to happen to the fruits of the options until after the Option Completion Date). The exercise is essentially irrevocable because, under clause 6, an Option Notice can only be revoked with the consent of the Seller or after a Frustration Event has occurred. Also, the Buyer is only entitled to limited information from the Seller in order to evaluate the Option.

ii) On the respondents' case the bargain protects both British Energy and the Banks. The Banks can trade the options, either by novating them within the wide class of transferee permitted under clause 25 of the RCA discussed above, so that the new Banks will be bound by clause 31 of the SOA, or by selling in the market and obtaining 100 or 105 per cent of the market value, depending upon whether British Energy exercises the pre-emption rights. For their part British Energy have a valuable pre-emption right which is enhanced by clauses 6, 12 and 31.2, which make it more attractive for the Banks to trigger the pre-emption rights than to hold on to the option.

iii) If clause 31 binds only Barclays, the Banks are free to pre-sell their option rights and the pre-emption rights are meaningless.

iv) It is not in dispute that the Banks had at the least a beneficial interest in the Options and that Barclays had only a bare legal or holding interest and it would make no sense to restrict them from dealing with the benefits of the Option (as clause 31.2.2 does) in circumstances in which only the Banks and not Barclays have a beneficial interest in them.

v) There will be no ill-effects of the respondents' construction on the secondary debt market because the SOA and the AOA are, as Mr Popplewell puts it, unique bespoke Option Agreements in terms which are unlikely to be repeated.

vi) The respondents' case is in accordance with the parties' commercial understanding as expressed in the listing particulars.

vii) Finally, when set against the commercial purpose of the SOA and clause 31, the appellants have failed to identify any commercial purpose that would be served by the appellants' construction of clause 31.

53. In short Mr Popplewell is, as we see it, submitting that it is plain that the purpose of the restriction in clause 31.2 was essentially to benefit British Energy and that it makes no sense to conclude that the clause was included in order only to restrict the activities of Barclays as Security Trustee. The parties must have intended to restrict those with a beneficial interest in the exercise of the option, namely the Banks, and not Barclays, which did not. Those are in our opinion compelling considerations. The judge expressed his conclusions on this point at [79] as follows:

"This is not, in my judgment, simply a powerful case; it is really unanswerable and fully accords with commercial reality and sense. British Energy would have no commercial interest in restricting assignment by Barclays, or transfer of rights held by Barclays, but not, or not also, by the Banks. Clause 31 of the Share Option Agreement is plainly intended to provide protection for British Energy by restricting rights to dispose of the power-station and the rights granted by the Options. The limits of the protection are of course to be found in the negotiated and agreed wording. But if the words are to be read as imposing only obligations and restrictions on Barclays leaving the Banks free to do as they please the protections are virtually illusory, as the Ampere transaction itself (if it is permissible) demonstrates. Barclays had no financial interest in its role as agent and security trustee in the power-station or the Options. The protections, even if they do bind the Banks, are not absolute. The Banks (in effect now Credit Suisse) would be entitled to exercise the Options. But they could do not hand over the right to do so and the commercial risk, attendant on that, in particular, it might be, from the seven-month period which must elapse between exercise of the Option and acquisition of the power-station. Banks do not normally own let alone operate power-stations. They could be expected to be far more circumspect in deciding whether or not to exercise an Option than, say, a competitor of British Energy or a less risk-averse entity. British Energy, if the Banks were bound by the restrictions, would be in a strong position to retain ownership of the power-station, if it was in its commercial interests to do so and the Banks would still be able to secure for themselves the market value of the power-station."

We would not go as far as the judge and say that the case for British Energy is unanswerable but we agree with him that these are compelling considerations in support of the respondents' construction.

54. In response, Mr Sumption submits that for the respondents to say that to adopt the appellants' submission deprives them of the pre-emption rights is to beg the question what function the pre-emption rights were intended to serve. His submissions may be summarised in this way:

i) The reason for restricting Barclays' right as Security Trustee to dispose of the Options is to prevent the Security Trustee (presumably on the instructions of the Banks) from trading the options separately from the debt. This was an important consideration. The Enforcement Option is a remedy by way of enforcement of the debt on an Event of Default under clause 18.2(a) of the RCA. Moreover the cancellation of the outstanding debt is part of the consideration payable on the exercise of both Options: see eg clause 4.4 of the SOA. Those provisions make no sense on the footing that the debt may belong to one person and the Options to another. The protection against unwelcome transfers by Banks in clause 25 of the RCA is limited.

ii) It is not correct that the object of clause 31 is to ensure that control of the options remains in the hands of entities which are unlikely to exercise them or that it is to prevent the shares or assets from coming into the hands of competitors of British Energy. There is no reason to think that Banks would refrain from directing the exercise of a profitable option and certainly no reason to think that institutions not akin to banks would do so.

iii) It was always implicit in the grant of the Options that, if the shares rose in value, the Options would be exercised and the shares and assets sold, presumably to power generators, as expressly contemplated in clause 11 of the SOA and in the listing particulars.

iv) The Banks could in any event achieve the same result under clause 25.

55. On this last point, Mr Sumption submits that clause 25.2(a) of the RCA includes any of its rights or obligations under the Finance Documents and that clause 31.2 of the SOA is inconsistent with clause 25.2(a) if it binds the Banks. We see the force of that submission, even though, as explained above, the right under clause 25.2(a) is subject to the restrictions (such as they are) in clause 25.2(b). However, the Agreements have to be read together and, as we see it, clause 31 of the SOA, sensibly construed, has to be read as a limitation on clause 25.2 of the RCA for the part protection of British Energy's continued ownership of the power station through the shares held by EPHL. It is distinctly unlikely that the rights in the Options would be divorced from the debt because to do so would not be commercially sensible. We should however add that the parties agree that the fact that the right under clause 9 of the RCA to direct the exercise of the Options passes with the novation of the debt does not mean that the novation of the debt with the corresponding rights under the RCA infringes clause 31.1.2 of the SOA.
56. At the conclusion of the argument, when asked what the essential purpose of clause 31.2 was, Mr Sumption recognised that it was to ensure that any exercise of the Options by Barclays was by Disposal to a Third Party under clause 31.1, which would in turn trigger the pre-emption rights discussed above. The object, he submitted, was to prevent Barclays marketing the Option before it falls to be exercised, so that it acquires an existence independent of the debt. He ultimately submitted that the provision was not in the interest of one party or the other but in the interest of what he called the coherence of the transaction, which it is only if the option and the debt remain together. He further accepted, in our view correctly, that there is no analysis that provides, as he put it, a 100 per cent answer to every commercial problem.
57. We are not persuaded that the purpose of clause 31.2 was the coherence of the transaction. We prefer the submissions of Mr Popplewell and the reasoning of the judge to the submissions made by Mr Sumption. The judge held at [80] that it makes no commercial sense for Barclays to have entered into the Option Agreements as, and only as, principal. He added:

"The Defendants' submission was that the commercial rationale was to give British Energy the comfort of knowing that they had a first-class name (Barclays) with whom they could deal. That is, as was discussed in the course of submissions, to secure and restrict a first-class mechanic as distinct from securing and restricting anyone with a real commercial involvement. In my judgment, the submission really seems to demonstrate the improbability of parties such as these making such an agreement. Moreover there were restrictions on a change of Agent and Security Trustee provided for in the Restated Credit Agreement (clause 19.15) and the Intercreditor Deed (clause 12.11)."

It can be seen that, before the judge, the rationale for the provision advanced on behalf of the appellants was rather different from that being advanced now.

58. We can well understand a provision that entrusts Barclays with the exercise of the Options as Security Trustee, if only because all the shares were being sold and it was appropriate for Barclays as Security Trustee to hold the shares as legal owner on trust for the Banks. The same considerations do not, however, seem to us to apply to the restrictions on the assignment or transfer of the Options in clause 31. For the reasons given by Mr Popplewell (and the judge), the obvious parties to restrain from assigning or transferring the Options which the parties, and in particular British Energy, wished to restrain were the Banks and not Barclays, or at any rate not Barclays alone. Simply looking at clause 31.2.2, which expressly prohibits, among other things, the assignment or transfer or declaration of a trust of the benefit of the Options, it seems to us to be much more likely that the parties intended to bind the Banks than that they did not, if only because they were entitled to the benefit of the Options, whereas Barclays was not. We therefore hold that clause 31.2.1 was intended to bind both the Barclays and the Banks and that, at any rate for the purposes of the restriction in the clause, both were the "Buyer".
59. In all the circumstances, which include a consideration of the language of the Agreements, the commercial purpose of the clause and the surrounding circumstances, we have reached the conclusion that the respondents' submissions are to be preferred to those of the appellants.
60. There remains one small point on the form of the order. Paragraph 3 of the order made by the judge on 28 June 2007 was a declaration as follows:

"Entry into the Ampere Transaction would be in breach of the First Defendant's obligations under clauses 31.2.1 and 39.2.1 (respectively) of the Option Agreements, and instructions pursuant to the Ampere Transaction from [Credit Suisse] to Barclays to exercise the options or either of them, and/or any purported exercise of the options or either of them pursuant to such instructions, would be invalid."

Mr Sumption submits that the parts of that declaration which we have italicised are not justified and should be deleted. However, so far as we can see, whether instructions were given to exercise the Options "pursuant to the Ampere Transaction" or instructions were given to do so "in purported exercise of the Options", does not matter. Any instructions given by Credit Suisse to Barclays to exercise the Options would be invalid in the sense that they would be in breach of clauses 31.2.1 or 39.2.1 as the case might be. In these circumstances we are not persuaded that the form of the declaration is objectionable.

CONCLUSION

61. For the reasons we have given, we would dismiss the appeal on the basis upon which it was argued at the hearing of the appeal.

Postscript

62. After sending a draft of this judgment to the parties, we received written submissions on behalf of the appellants inviting us to consider submissions on three aspects of the case, which Mr Sumption described as 'the breach point', 'past novations' and 'other corrections' respectively. We held a further hearing in which we considered submissions on each of those topics. As a result of those submissions we have made a number of corrections to the draft which we have incorporated in the above judgment. There was little, if any, dispute about the 'other corrections'. We have made such corrections as seem to us to be appropriate and there is no need to say anything further about them.
63. As to 'past novations', it was suggested that the effect of our draft judgment might be to enable anyone wishing to challenge past novations to suggest that a novation of the RCA infringed the SOA. However, it was certainly not our intention to say any such thing and Mr Popplewell accepted that a novation of the RCA does not infringe the SOA. It was agreed that this could be made clear by an addition to paragraph 55 above. We accordingly added what is now the last sentence of 55 in terms that were suggested by Mr Sumption and agreed to by Mr Popplewell.
64. The remaining issue relates to the 'breach point' which the parties were not able to resolve by agreement. The point arose in this way. As explained at [1] and [2] above, the judge declared that Credit Suisse entered into the Option Agreements through 'Barclays', that Credit Suisse is a party to the Option Agreements and bound by the restrictions in clauses 31 and 39 of the SOA and AOA respectively and that entry into a transaction known as the Ampere Transaction would be a breach by Credit Suisse of clauses 31.2.1 and 39.2.1 respectively.
65. As stated at [2] above, at the hearing of the appeal the appellants conceded that, if, contrary to their submissions, Credit Suisse was a party to and bound by clauses 31 and 39 of the Option Agreements respectively, entry into the Ampere Transaction would be in breach of them. For convenience we again refer only to the SOA. We held that, contrary to the appellants' submissions, the Banks (and therefore Credit Suisse) were, at least for some purposes, a party to the SOA and that they were bound by clause 31. We took the view that, given the concession, it followed that entry into the Ampere Transaction would be a breach of the SOA.
66. Mr Sumption has now submitted that his concession on the Breach Issue was made on a particular and narrow basis, namely that the judge was correct to hold that the options were granted to and exercisable by Barclays as agent for the Banks and that its role as Security Trustee was for this purpose irrelevant. In the judgment we held, for example at [13], [14], [17] and [45], that the Options were granted to Barclays as Security Trustee and not as agent for the Banks and were exercised as Security Trustee. We did not accept the judge's view on this point.
67. Mr Sumption submitted that it follows from that reasoning that, although (for the reasons given in the judgment) the Banks are bound by clause 31, they are not in breach of it because, to be in breach of clause 31, the Banks would have to have rights 'under this Agreement', ie the SOA, to which the Ampere Transaction could be said to 'relate', whereas they had no such rights because, on the basis of our reasoning, the Ampere Transaction related to the Options, but the Options were not rights of the Banks. He further submitted that this point was not part of a respondents' notice, that it was not advanced by Mr Popplewell at the hearing of the appeal and that we should not have considered or resolved it without at least giving the Banks an opportunity to be heard.
68. Mr Popplewell made detailed submissions to the effect that it was open to us to approach the matter in the way we did and that, applying the principles in cases like Robinson v Fernsby [2003] EWCA Civ 1820, [2003] All ER (D) 414 (Dec), we should not re-open the Breach Issue. We see the force of those submissions but we have decided that the appropriate course on the particular facts of this case is for us to consider Mr Sumption's submissions on the Breach Issue on their merits.
69. The question is a simple one. It is whether, assuming the Banks are bound by clause 31, the proposed Ampere Transaction involves agreements "that relate to the exercise of any of [the Banks'] rights under this Agreement". Mr Sumption submitted that they do not because the options were granted to the Security Trustee and not to the Banks and that the options cannot themselves be included in the Banks' "rights under this Agreement". He submitted, however, that it was only the Security Trustee that had rights "under this agreement".
70. He correctly submitted that as Security Trustee Barclays was a principal and that it had never been disputed that the grant of the Options to the Security Trustee does not in itself give rise to any contractual rights and obligations as between the Banks and EPHL. In this regard he relied upon the general principles to that effect stated in Lewin on Trusts, 17^th edition, 2000, para 21-04. We entirely accept those submissions but they do not in our opinion meet the case advanced by Mr Popplewell.
71. Mr Sumption submitted that the expression 'rights under this Agreement' in clause 31.2.1 of the SOA means contractual rights and is a reference to the rights of Barclays as Security Trustee. We accept that the expression includes those rights. Indeed, although he would like to argue the contrary, Mr Popplewell accepts that, on the basis of our conclusions that the right to exercise the Option was that of Barclays as Security Trustee under clause 9 of the RCA and that Barclays is a party to the SOA as Security Trustee, the Banks did not have a contractual right to exercise the Option. The question is however whether the expression 'rights under this Agreement' includes the beneficial rights of the Banks.
72. We accept Mr Popplewell's submission that it does. Every clause in a contract must be construed in its context. The context is important here. We have held that both the Security Trustee and the Banks are parties to the SOA, that it is a question of construction of the particular terms of the SOA in which capacity Barclays was making the promise, whether as Security Trustee or as agent for the Banks or both, and that the promise in clause 31.2.1 was given by Barclays both as Security Trustee and as agent for the Banks. In the light of our conclusions, Mr Sumption did not seek to argue to the contrary. He submitted that Credit Suisse was not in breach of clause 31.2.1 because the expression 'rights under this Agreement' do not include beneficial rights.
73. In our above judgment we have set out our conclusions as to the commercial purpose of clause 31.2. As appears in [53] and [57-58] above, we have accepted Mr Popplewell's submissions (and the conclusions of the judge in his [79] and[80]) that the commercial purpose of the clause was to bind the Banks as well as the Security Trustee because it is the Banks that have the beneficial interests in respect of which British Energy require protection. We have explained in [58] why it seemed to us to make sense to provide for the Security Trustee to exercise the option but also to provide that the Banks should be parties to and bound by the promise in clause 31.2.1. In these circumstances it would in our judgment make no sense to hold that the parties intended the expression 'any of its rights under this Agreement' in clause 31.2.1 to be limited to the contractual rights of the Security Trustee. We accept Mr Popplewell's submission that the compelling reasons which led to the conclusion that clause 31 should bind the Banks equally lead to the conclusion that their beneficial interests should be caught by clause 31.2.1.
74. There is in our opinion no difficulty in holding that the language of clause 31.2.1 is wide enough to include the Banks' beneficial rights. Since we have held that [the Buyer] in clause 31.2.1 includes the Banks, the question is whether the Ampere Transaction is "an agreement or other arrangement that relates to the exercise of any of [the Banks'] rights under the [SOA]". We accept Mr Popplewell's submission that the answer is yes.
75. The expression 'rights under the Agreement' is capable of being widely construed. Thus for example, albeit in the context of arbitration clauses, in Premium Nafta Products Limited Fiji Shipping company Limited [2007] UKHL 40, Lord Hoffmann, with whom the other members of the appellate committee agreed, said at [11] and [12] that distinctions between disputes 'under' or 'relating to' or 'arising out of' or 'in connection with' a contract should be avoided. It was there held that a claim to rescind time charterparties on the ground that they were induced by bribery was a claim 'under' the charterparties. The same approach is in our opinion appropriate in the present context, especially where, for the reasons we have given, the clause being construed was intended to benefit British Energy and to control both how the Banks exercised their beneficial rights and how the Security Trustee exercised its legal right.
76. We accept Mr Popplewell's submission that it is the SOA that creates the rights which the Banks have in the Options. The SOA identifies the parties as including the Security Trustee for the Banks as Finance Parties. It is the SOA, not the RCA, which enables the Banks to say that they are entitled to the proceeds of the Option when it is exercised. The Banks are entitled to the benefits in the Options irrespective of the size of the debt. Thus the SOA creates both the legal right of the Security Trustee to exercise the Option and beneficial rights of the Banks as beneficiaries to the proceeds of the Option.
77. However, even if that is not correct and the beneficial rights are conferred by the creation of Barclays as Security Trustee and clause 9 of the RCA, which provides that it will only exercise the option on the instructions of the Majority Banks, or indeed if the rights arise from Barclays' equitable obligation as a trustee, they are in our opinion in any event beneficial rights which arise out of the SOA. This is on the simple basis that in the absence of the SOA there would be is no Option and no rights in the Option could arise. It is those very beneficial rights that we have already held that clause 31 was aimed at. Approaching the issue of construction in the way approved by the House of Lords in the Premium Nafta case (and indeed many other cases) we conclude that the Banks' beneficial rights in the proceeds of the Options arise "under the Agreement" within the meaning of clause 31.2.1 and entry into the Ampere Transaction is or would be a breach of the clause.
78. We should add that that in reaching those conclusions we have adhered to the conclusion in the judgment that only the Security Trustee had the right to exercise the Options. We do not think that it is appropriate for us now to re-open that question and decline Mr Popplewell's submission that we should do so. Nor do we accept his submission that there is any inconsistency in our judgment in that regard.
79. However, having considered Mr Sumption's submission that on basis of the conclusions in our judgment entry into the Ampere Transaction is not or would not be a breach of clause 31.2.1 by Credit Suisse, we are not able to accept it for the reasons we have given. It follows that we adhere to our decision that the appeal must be dismissed.