Case No: 2005769
Neutral Citation Number: [2006] EWHC 2887 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

21 November 2006

Before :

THE HON MR JUSTICE TOULSON
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Between :

	                                  IFE Fund SA	Claimant	
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	GOLDMAN SACHS INTERNATIONAL	Defendant	

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Jonathan Nash QC and Rajesh Pillai (instructed by Fox Williams) for the Claimant
Mark Howard QC and David Quest (instructed by Herbert Smith LLP) for the Defendant

Hearing dates: 3rd, 4th, 5th, 6th, 11th and 12th October 2006
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 Judgment

The Hon. Mr Justice Toulson :
Introduction 
1.	On 30 May 2000 the claimant (“IFE”) bought from the defendant (“Goldman Sachs”) bonds and warrants issued by a French company, Autodis SA (“Autodis”), for €20 million. The transaction was part of the provision of syndicated credit facilities to Autodis. The purpose of the credit was to enable Autodis to take over an English company, Finelist Group PLC (“Finelist”). The credit facilities were provided in a number of tiers. IFE contributed to the intermediate tier, referred to as the mezzanine facility. The provision of the syndicated mezzanine credit facilities was arranged by Goldman Sachs, who also underwrote the mezzanine facility. Autodis’s acquisition of Finelist soon proved to be disastrous. It transpired that Finelist’s financial position was not as had been shown in its audited accounts, and that the group had deceived its auditors by transferring money between different members of the group so as to present a false picture of the group’s financial position. In October 2000 Finelist was put into receivership.
2.	IFE claims damages for its loss on the transaction against Goldman Sachs on the grounds of misrepresentation, pursuant to section 2(1) of the Misrepresentation Act 1967, and negligence. The claim in negligence is put in alternative ways, either negligent misstatement or breach of a duty of care to inform. The essence of IFE’s complaint is that it was induced to enter into the transaction by information provided by Goldman Sachs, which presented a picture that was in fact misleading and which was not corrected or qualified after Goldman Sachs had cause to doubt its reliability as a result of receiving two reports (dated 19 and 26 May 2000) from investigating accountants, Arthur Andersen. At the outset of the case Mr Nash QC made it plain that no allegation of dishonesty was made against Goldman Sachs or any of its employees. 
3.	Goldman Sachs’s grounds of defence to the claim under the Misrepresentation Act are in summary as follows:                                            
1)	It did not make the pleaded representations; 
2)	If it did, such representations were confined to Goldman Sachs’s  state of knowledge at the time when they were made and did not give rise to any duty to disclose information subsequently acquired by it; 
3)	In any event, it was reasonable for Goldman Sachs not to consider that the position was materially changed by any further information obtained by Goldman Sachs before IFE became contractually bound; 
4)	IFE did not rely on the alleged representations;
5)	IFE’s claim to recover its loss is excluded by the terms of Goldman Sachs’ Syndicate Information Memorandum (“SIM”), which had contractual effect;
6)	IFE’s claim is barred by the terms of a subsequent Bondholders’ Agreement entered into between IFE, Goldman Sachs and others. 
4.	In relation to the claim based in negligence, Goldman Sachs relies on similar grounds of defence, but also denies that it owed any duty of care to IFE or that IFE’s claimed loss was within the scope of any duty owed to it.
5.	In reply, IFE denies that its claim is barred by the Bondholders’ Agreement. That agreement is governed by French law and gives rise to a number of issues to which it will be necessary to refer. There are also  issues whether Goldman Sachs’  reliance on any exclusionary terms of the SIM is defeated by the statutory controls under the Misrepresentation Act 1967 or the Unfair Contract Terms Act 1977.
The Trial 
6.	The trial was confined to liability (except for an issue of principle as to the scope of  the damages  which might be recovered in negligence).
7.	IFE served statements of five witnesses of fact. The first was Mr Mitjavile. He was a transparently honest witness, who answered the questions put to him in a clear and direct manner. At the end of his evidence, Mr Howard QC indicated that he did not intend to cross-examine IFE’s other witnesses and that he would make a submission that there was no case to answer. He was put to his election and elected to call no evidence. 
8.	On the issues of French law relating to the Bondholders’ Agreement, experts for each party produced a joint memorandum. Before any evidence was called there was some discussion about the meaning and effect of the joint memorandum on certain points. I indicated how I interpreted it and the parties were content to proceed on that basis, so avoiding the need for either expert to be called. 
IFE
9.	IFE stands for Intermediate Finance Europe. “Intermediate finance” is a term used to describe financial instruments which rank above ordinary shares but below bank or trade debt. IFE was established under Belgian law. It was launched in December 1999 by CDC-Participations and Credit Lyonnais. CDC-Participations was the private equity arm of the Caisse des Depots et Consignations and a leading French player in private equity. IFE’s board of directors appointed from among its members an investment committee. This committee included representatives of CDC-Participations, Credit Lyonnais and other investor partners, who contributed to IFE’s fund by way of purchasing shares or bonds issued by it. 
Autodis   
10.	Autodis is the parent company of Autodistribution SA, the leading French independent distributor of automotive parts. Autodistribution SA was bought in July 1999. Goldman Sachs was co-underwriter of the senior debt issued in connection with the transaction and took a significant stake in the mezzanine funding. For present purposes Autodis and Autodistibution SA can be regarded as indistinguishable.
Finelist
11.	Finelist was the holding company of a group involved in the supply of automotive parts to garages in the United Kingdom. The group was assembled during the 1990s by its chairman and chief executive, Mr Chris Swan. Its auditors were PricewaterhouseCoopers (“PWC”). Its accounting year ran to 30 June.
The Finelist Acquisition
12.	In late 1999 Autodis became interested in acquiring Finelist. The commercial rationale for the acquisition was the prospect of benefits arising from the increased purchasing power of the group and savings in internal costs and administration. The acquisition would involve Finelist ceasing to be a listed company and reverting to private ownership. This meant that the amount of pre-completion “due diligence” which could be carried out would be limited, since any information released by Finelist’s management to the offerors would be required to be made available publicly.
13.	Autodis engaged Goldman Sachs to act as its adviser in connection with the transaction. The formal engagement letter was dated 21 January 2000, but Goldman Sachs had begun advising IFE around late October or early November 1999. Under the engagement letter Goldman Sachs would be paid a fee of  £3.5 million if Autodis acquired at least 50% of Finelist’s shares.
14.	Arthur Andersen was retained by Autodis under the terms of an engagement letter dated 6 December 1999 to carry out a review of Finelist’s financial affairs, focusing on the two years ended 30 June 1999 (for which there were audited accounts) and three months to 30 September 1999. It would not have access to any unpublished documents of the company, but it would have discussions with PWC and limited interviews with senior members of Finelist’s management.
15.	On 21 December 1999 Arthur Andersen produced its first report on Finelist. Others were to follow.
16.	In the latter part of 1999 and early part of 2000 Goldman Sachs worked on preparing a capital structure for a combined group which would enable Autodis to acquire Finelist and refinance its existing debt. Simultaneously with the execution of Goldman Sachs’s formal engagement letter dated 21 January 2000, Goldman Sachs also signed a commitment letter by which it agreed to make finance available to Autodis for the Finelist acquisition and the restructuring of Autodistribution SA’s existing debt.
17.	On 11 February 2000 a public announcement was made of a recommended cash offer for Finelist by Goldman Sachs on behalf of Euro Autodistribution Limited, which was to be the vehicle for Autodis’ acquisition of Finelist. On the same day Arthur Andersen issued a supplementary report on Finelist. The offer was to become unconditional on 90% shareholder acceptance. It was declared unconditional on 30 March 2000 and was completed on 27 April 2000.
The Syndicated Credit Facilities
18.	The Finelist acquisition was financed by €631 million of senior secured credit facilities (underwritten half by Goldman Sachs and half by BNP Paribas) and €275 million of mezzanine facilities (underwritten by Goldman Sachs).
19.	In early March 2000 Goldman Sachs sent out invitations to selected banks to participate as sub-underwriters of the senior facilities. On 27 March 2000 Goldman Sachs sent out invitations to participate in the syndication of the mezzanine facility. The proposed timetable was that allocations would be made and documents signed on 14 April 2000, but in the event the mezzanine syndication was not completed until 30 May 2000. On 23 June 2000 Goldman Sachs sent out invitations to participate in the syndication of the senior facilities, but because of the discovery of financial irregularities at Finelist that phase was never completed.
Arthur Andersen’s Reports
20.	Since the invitations to participate in the mezzanine syndication went out before the offer to acquire Finelist became unconditional, and the timetable was intended to be short, it was not anticipated that Arthur Andersen would have time to carry out a post-acquisition review of Finelist before the completion of the mezzanine syndication. It was, however, anticipated that the mezzanine lenders would rely on Arthur Andersen’s necessarily limited pre-acquisition reports, and Arthur Andersen prepared a letter to the mezzanine investors stating the terms on which it was content that they should do so. 
21.	The timetable for the general syndication was going to be longer, and Arthur Andersen was instructed to produce a post-acquisition report which would be sent to those invited to participate in it. In a letter dated 14 April 2000 Goldman Sachs told Arthur Andersen that it was intending to launch the general syndication phase by the first or second week of May, and that it would need to have a finalised version of Arthur Andersen’s report within the next 30 days to enable the banks who were being invited to participate in it to obtain final approval from their credit committees. 
22.	On 19 May 2000 Arthur Andersen produced a draft report in which it said that it had received significantly less access to information and materials than it needed to be able to meet the timetable requested by Goldman Sachs, and that on its current timetable it would issue a final report in the week of 12 June 2000.
23.	On 26 May 2000 Arthur Andersen produced a further report in which it said that its work continued to progress slowly due to lack of timely access to management and difficulty in obtaining relevant information.
24.	On 1 June 2000 Arthur Anderson signed a formal engagement letter addressed to Autodis, Goldman Sachs and to the parties who would be participating in the general syndication agreement. The letter identified the scope of the work in two phases. It planned to have the first report available in draft by 14 June 2000 and the second report available in draft by 14 July 2000.
25.	Arthur Andersen produced a draft report on the first phase on 27 June 2000 and a revised version on 20 July 2000. 
26.	On 23 August 2000 Arthur Andersen sent an email to Goldman Sachs and others regarding information which it had received about misrepresentations in Finelist’s accounts (together with a wide draft disclaimer for inclusion in its final report). It was asked to carry out further investigations.
27.	On 29 September 2000 Arthur Andersen produced a supplement to its July report in which it stated:
“Since the departure of Chris Swan and the suspension of [Finelist’s finance director], it has become evident that there has been deliberate manipulation of historic earnings and suppression of the reported debt position of the group.
The inadequacies of the group’s management information and accounting systems have allowed these manipulations to be concealed, and also prevent an accurate evaluation of the impact of certain of the key issues on historic underlying earnings. However, it is clear that the group has been substantially less profitable than has been presented in the management accounts and has absorbed significant amounts of cash, again in excess of that presented in the management accounts. 
There is evidence that on a regular basis unsupported adjustments to earnings reported in the management accounts were made, of which previous group management were aware.”
28.	On 5 October 2000 the directors of Finelist requested the appointment of administrative receivers. 
IFE’s Involvement in the Mezzanine Syndication   
29.	Following an expression of interest by IFE in February 2000, Goldman Sachs sent it the SIM for the mezzanine syndication on 28 March 2000 in electronic form (without appendices) and a few days later in hard copy (with some appendices). It will be necessary to return to the wording of the SIM.
30.	On 3 April 2002 IFE’s investment committee decided in principle to invest €20 million in Autodis, subject to reviewing the full documentation (including the “downside case” which was referred to in the SIM as being available on request) and subject to agreeing a fee for IFE. On 4 April 2000 IFE sent Goldman Sachs a commitment letter based on a form included in the SIM. IFE’s letter read: 
“In reference to your invitation dated 27th March 2000, we are pleased   to confirm our commitment to participate in the above-referenced Mezzanine Facilities. Our commitment amount is a total of €20 million (FF 131 million) for Facility B, subject to documentation, and to a flat fee as per our discussions. Terms defined in the Memorandum dated 27th March 2000 shall have the same meaning herein.”
31.	The matter did not proceed as quickly as expected. 
32.	On about 25 April 2000 IFE received a draft of the legal documentation setting out the terms on which the mezzanine facilities were to be advanced. The documentation was executed by Goldman Sachs, Autodis and various other parties on 27 April 2000. IFE was not an original signatory, but it had an interest in the terms as a prospective participant in the syndication and it raised a number of queries about them. Mr Mitjavile had a particular concern about the level of majority required for any decision not to redeem the mezzanine bonds. He set out this and other points in an email to Goldman Sachs on 27 April 2000. This led to a telephone conversation between Mr Mitjavile and Mr Leouzon of Goldman Sachs on 5 May 2000. It was agreed that IFE’s concerns over the process for a decision not to redeem the mezzanine bonds would be dealt with by a side letter. IFE’s fee was also agreed, and Mr Leouzon indicated that IFE’s allocation was €20 million.
33.	Among the documents listed as appendices to the SIM were Arthur Andersen’s December 1999 and February 2000 reports, but these were not included in the hard copy which had been supplied to IFE. The reason was that Arthur Andersen was only willing for those documents to go to potential mezzanine subscribers on their acceptance of the terms on which Arthur Andersen was prepared to provide them. These were set out in a letter from Arthur Andersen, a copy of which was sent to IFE on 9 May 2000. It included the following statement:
“Our presentation reports are dated 21 December 1999 and 11 February 2000 and may only be relied upon in respect of the matters to which they refer. In acknowledging the terms of this letter, you acknowledge that we have no responsibility to and we have not performed and will not perform any work subsequent to 11 February 2000 nor to consider, monitor, communicate or report the impact upon Finelist Group of any events or circumstances which may have occurred or come to light subsequent to 11 February 2000 (or indeed may in future occur), (“Subsequent Events”). To the extent that any such Subsequent Events do or may affect your assessment of the proposed transactions, you agree that the responsibility for identifying and assessing any such Subsequent Events (together with the risk of failing to detect such Subsequent Events) rests entirely with yourselves. We make no express or implied statement or representation regarding the appropriateness of the presentation reports for your purposes so far as any such subsequent efforts are concerned.”
34.	IFE signed and returned the letter to Arthur Andersen on 16 May 2000 and was sent copies of the December 1999 and February 2000 reports probably a few days later.
35.	It was not sent copies of Arthur Andersen’s reports dated 19 and 26 May 2000 and had no knowledge of their existence at the time of the completion of the mezzanine syndication.
36.	On 22 May 2000 Goldman Sachs sent an email to IFE confirming that IFE’s allocation on the mezzanine facility was €20 million. On 25 May 2000 the lawyers retained by Goldman Sachs emailed to parties including IFE, for review, various documents for the completion of the mezzanine syndication.  On the same day IFE gave a power of attorney to Crédit Agricole Indosuez authorising it to execute the documents necessary for IFE’s part in the completion, which took place on 30 May 2000.
37.	The documents prepared by the lawyers at the time of the completion did not include the side letter which was going to deal with the issue raised by IFE regarding one of the terms of the mezzanine bonds.  A draft letter on the subject was prepared a few days later and was agreed by IFE on 7 June 2000.
The Subscription Agreement and the Inter Creditor Agreement
38.	The documentation executed on 27 April 2000 comprised a subscription agreement, by which Goldman Sachs as arranger and underwriter of the mezzanine finance agreed to subscribe for the bonds which were to be issued by Autodis, and an inter-creditor agreement. The inter-creditor agreement provided a mechanism by which a mezzanine bondholder could transfer his bonds to another party, whereupon the new bondholder would become a party to the agreement.  By this means IFE became in due course a party to that agreement, but its details are not important for present purposes.
39.	Under clause 10 of schedule 2 to the subscription agreement, Autodis gave various representations and warranties to Goldman Sachs for the benefit of the bondholders. The effect of these was that Autodis represented and warranted, among other things, that to the best of its knowledge and belief the factual information contained in the SIM and in Arthur Andersen’s December 1999 and February 2000 reports was true and accurate in all material respects and not misleading in any material respects; that any opinions expressed in the SIM or in those reports were reasonable and fair at the time they were made; and that nothing had occurred or come to light since the date of the reports or the SIM which would make any facts stated in the reports or in the SIM untrue or misleading in any material respect, or would make any opinion in the reports or the SIM no longer fair and reasonable, as at 27 April 2000.
The SIM  
40.	The SIM began with an “Important Notice” running to three pages.  It contained a large number of disclaimers of responsibility. The most important were as follows (with paragraph numbers added for ease of reference):
i)	The information contained in this Memorandum has been obtained from the Sponsors [various identified financial institutions], Auto Distribution, Finelist, professional consultants and/or public sources.  The Sponsors have approved the information obtained from them and its inclusion in this Memorandum and have authorised the distribution of this Memorandum.  None of this Memorandum, the information contained in it or any other information supplied in connection with the Facilities shall form the basis of any contract…
ii)	The Arranger [Goldman Sachs] has not independently verified the information set out in this Memorandum.  Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by Goldman Sachs International… as to or in relation to the accuracy or completeness or otherwise of this Memorandum or as to the reasonableness of any assumption contained therein or any other information made available in connection with the Facilities (whether in writing or orally) to any interested party (or its advisors).  … Neither the arranger nor any of its respective directors … shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement contained in this Memorandum or any such other information.
iii)	This Memorandum contains only summary information and does not purport to be comprehensive…
iv)	The information contained in this Memorandum should not be assumed to have been updated at any time subsequent to the date shown on the cover hereof and the distribution of this Memorandum does not constitute a representation by any person that such information will be updated at any time after the date of this Memorandum.  The arranger expressly does not undertake to review the financial condition, status or affairs of Autodistribution, Finelist or any of their affiliates or any obligor in respect of the facilities, at any time or to advise any potential or actual participant in the Facilities of any information coming to the attention of the Arranger.
41.	Part V of the SIM was an overview of Finelist.  It presented a positive view of an expanding group which was now a market leader in the United Kingdom.  Part X B contained a summary of financial information about Finelist, drawn from its accounts audited by PWC, information provided by the group’s senior management and Arthur Andersen’s December 1999 and February 2000 reports.
42.	Mr Mitjavile in his witness statement summarised the way in which he viewed Arthur Andersen’s December 1999 and February 2000 reports.  He stated:
“Our review of AA’s December 1999 and February 2000 reports did not identify anything which was particularly concerning and/or which was inconsistent with the content of the Syndication Memorandum.  They did identify that the reported profits for the year 30th June 1999 had been overstated, but the reasons for this were to do with various issues of accounting treatment/interpretation, none of which AA appeared to consider serious.  The reports made clear that because of UK rules governing public company bids, there were substantial restrictions on the documentary information which AA were able to access, and that accordingly they had had to rely heavily on representations from Finelist’s directors and representatives of PWC (Finelist’s auditors).  This meant that there were a number of areas where AA had to take at face value the statements made to them by PWC and/or Finelist, although they also stated that they had seen no evidence to contradict or challenge these statements.”
43.	I have no doubt that this was an honest statement of the way in which IFE viewed those reports and it was a reasonable approach.
The Construction and Effect of the SIM 
44.	The general scheme of the syndication was not uncommon. To make the point, Goldman Sachs produced an example of a SIM containing broadly similar disclaimers where IFE was the arranger.
45.	Common features of such a syndication are that the parties introducing the equity into the venture (“the sponsors”) retain a bank (“the arranger”) which arranges and sometimes underwrites the facilities; the arranger prepares a SIM; the debtor accepts responsibility for the accuracy of the information contained in the SIM at that date; and the arranger disclaims any legal responsibility for its accuracy.  Mr Mitjavile accepted in cross-examination that these were standard features of a syndication of credit facilities.  Towards the end of the cross examination,  Mr Howard put to Mr Mitjavile a number of short points as follows:
“Q I am going to make a number of short points to see whether we agree or disagree.  The first thing is: you did not understand that Goldman Sachs had made any representations to you on which you could rely; Correct? 
A I agree.
Q  Secondly, you understood that Goldman Sachs were saying to you: I will have no legal responsibility to you in relation to your acquisition of these bonds?
A I agree.
Q Thirdly, Goldman Sachs were making it clear that if you suffered any loss as a result of  relying on the syndication information memorandum or any other information that you were provided with they would not have any responsibility to you for that ?
A I agree
Q…You had no objection to proceeding on that basis; correct?
A I agree.
Q And the reason you had no objection was that this type of syndication information memorandum and there being no legal responsibility on the part of Goldman Sachs was something that you regarded as perfectly standard and acceptable?
A I agree.”
It was in the light of such answers that Mr Howard elected not to call evidence.
46.	IFE’s pleaded case is that by referring to Finelist’s financial performance and to Arthur Andersen’s December 1999 and February 2000 reports in the SIM, and by arranging with Arthur Andersen for copies of those reports to be sent to IFE, Goldman Sachs impliedly represented that:  
(1) It was not aware of any facts which showed that the statements about Finelist’s financial performance made in the SIM were or might be incorrect in any material way; and/or
(2) It was not aware of any facts which showed that the facts stated in the Arthur Andersen reports were or might be incorrect in any material way, and/or which showed that the opinions expressed in those reports were not or might not be reasonable; and/or
(3) So far as it was aware, Arthur Andersen considered that the facts stated in those reports were correct and that the opinions stated in them were reasonable.
47.	It is also pleaded that those representations were continuing representations which IFE was entitled to, and did, regard as remaining true until completion of the transaction on 30 May 2000.
48.	In summary Mr Nash submitted that by issuing the SIM and procuring that the Arthur Andersen reports were sent to IFE for the purpose of enabling IFE to consider whether to take part in the syndication, Goldman Sachs impliedly represented that it knew nothing which showed that the information in the SIM or in the reports was or might be materially incorrect, and that this representation continued until completion of the syndication.
49.	Mr Howard in the course of argument put forward alternative propositions.  The first was that Goldman Sachs made no representation of any kind.  Fraud is not alleged in the present case, but it would follow from that proposition that if Goldman Sachs had put forward information which it positively knew to be misleading, with intent to mislead or being reckless whether IFE was mislead, there would be no liability in deceit, because there was no representation. Mr Howard’s alternative submission, which I understood him ultimately to adopt, was that there was an implied representation by Goldman Sachs that it was acting honestly, meaning in this context that it was not putting forward information which it actually believed to be misleading, but no wider representation.
50.	In determining whether there has been an express representation, and to what effect, the court has to consider what a reasonable person would have understood from the words used in the context in which they were used.  In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it has to consider what a reasonable person would have inferred was being implicitly represented by the representor’s words and conduct in their context.
51.	Mr Nash submitted that Goldman Sachs’s conduct in providing the SIM and procuring the provision of the Arthur Andersen reports to IFE carried with it naturally the “no inconsistent knowledge” representation for which he contended, and that the disclaimers in the important notice were in the nature of exclusion clauses which should be construed contra proferentem (the proferens being Goldman Sachs). He fortified his argument by reference to the Misrepresentation Act 1967 and the Unfair Contract Terms Act 1977, to which I will return.  Mr Howard submitted that this approach put the cart before the horse by presuming the existence of an implied representation before examining the express words of the document, which on their plain meaning prevented any such implication from arising.
52.	It would not be right to approach the SIM as if it were a document issued to members of the public unversed in financial matters and unlikely to have professional advice.  It was a document issued to financially sophisticated entities operating in a specialist market.  The structuring of syndicated mezzanine finance is a complex business, but one that is understood by its participants.
53.	In Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 843, Lord Wilberforce said:
After this Act [the Unfair Contract Terms Act 1977], in commercial matters generally, when the parties are not of unequal bargaining power, and when risks are normally borne by insurance, not only is the case for judicial intervention undemonstrated, but there is everything to be said, and this seems to have been Parliament’s intention, for leaving the parties free to apportion the risks as they think fit and for respecting their decisions.
54.	Similarly, in the specialised world of syndicated finance there is everything to be said for leaving the participants to determine the respective responsibilities and risks of the sponsors, the debtor, the arranger and the investors, and for respecting their decisions. The SIM has to be read as a whole in order to see what a reasonable participant would understand was the scope of the responsibility undertaken by the arranger in relation to its contents.
55.	In addressing the effect of the notice at the beginning of the SIM, Mr Nash highlighted the opening words of  paragraph (ii):
“The Arranger has not independently verified the information set out in this Memorandum. Accordingly, no representation… is made and no responsibilities accepted by Goldman Sachs … as to or in relation to the accuracy or completeness or otherwise of this Memorandum…” (His emphasis).
56.	Mr Nash drew an analogy between this case and Hummingbird Motors Ltd v Hobbs [1986] RTR 276, where the seller of a car gave an express warranty that to the best of his knowledge and belief the odometer reading was correct.  Kerr LJ said at page 281 that: 
“…it is clear from Smith v Land and House Property Corporation (1884) 28 Ch D 7 that this statement imports something further by way of implication.  It imports an implied assertion that the defendant knew of no facts leading to the conclusion that the odometer reading was or might be incorrect.”
57.	Mr Nash submitted that the fact that Goldman Sachs had not independently verified the information in the SIM made it understandable that it was not prepared to give a positive representation as to its accuracy or completeness, but this did not preclude an implied representation that it was unaware of any facts showing that the information was or might be materially incorrect.
58.	In Hummingbird Motors Ltd v Hobbs the seller of the car made an express representation that the odometer reading was true to the best of his knowledge and belief, whereas in the present case Goldman Sachs expressly stated that it made no representation as to the accuracy of the information provided. Of equal or greater significance is the difference in the nature and circumstances of the transaction. An implied representation that Goldman Sachs did not know of any facts showing that the statements in the SIM “were or might be incorrect in any material way”, or that the opinions in the Arthur Andersen reports “were not or might not be reasonable”, would open up wide and uncertain territory.
59.	The Arthur Andersen pre-acquisition reports had made it clear that it had limited information about Finelist.  It could therefore be difficult to judge whether some particular piece of information “might” make the statements about Finelist’s financial performance incorrect, and, if so, “in a material way” (whether by reference to the materiality test applied by PWC as Finelist’s auditors, materiality in the view of Arthur Andersen or materiality in the view of a potential investor).  An implied representation of the scope contended for by IFE would potentially require Goldman Sachs to carry out an evaluation in order to decide what information it was required to disclose, inconsistent with the express language of the SIM (“The Arranger expressly does not undertake to review the financial condition, status or affairs of …Finelist… at any time or to advise any potential or actual participant in the Facilities of any information coming to the attention of the Arranger”).
60.	Mr Mitjavile’s evidence did not support IFE’s case that a reasonable person would have understood that Goldman Sachs was making any such implied representation, and I do not accept that there was any such implied representation.  That is not to say that Goldman Sachs made no representations at all.  I do not doubt that there was an implied representation that in supplying the SIM it was acting in good faith, that is, not knowingly putting forward information likely to mislead; or that this was a continuing representation, so that if, after the issue of the SIM but before a recipient acted on it, Goldman Sachs became aware that the information which it had supplied in good faith was misleading, it would be under a duty to disclose this (at all events unless it honestly believed that the error was a matter of no importance). There is, however, a difference between actual knowledge that the information previously supplied was misleading and acquisition of information which merely gave rise to a possibility that the information previously supplied was misleading. In the latter case, Goldman Sachs would not be under a duty to the prospective participant to investigate the matter further, or to advise the participant, in view of the terms of the SIM. 
Negligence
61.	IFE’s allegation of misrepresentation and negligent misstatement involve the same allegations of implied representations, which I have rejected.
62.	IFE also alleges that a relationship existed between itself and Goldman Sachs such that Goldman Sachs owed it a duty to take reasonable care to inform it if, before completion of the mezzanine syndication, Goldman Sachs became aware of any facts and matters which showed that:
(1) The statements about Finelist’s financial performance made in the SIM were or might be incorrect in any material way;
(2) The facts stated in Arthur Andersen’s December 1999 and February 2000 reports were or might be incorrect in any material way, and/or that the opinions expressed in those reports were not or might not be reasonable; and/or
(3) Arthur Andersen no longer considered that the facts stated in those reports were correct and that its opinions in them were reasonable.
63.	The mezzanine syndication involved a number of interlocking contractual relationships giving rise to rights and obligations defined in documents drafted by specialist lawyers.  In such circumstances the court should be very slow to superimpose any obligations in negligence going beyond those carefully defined in the contractual documentation.
64.	Goldman Sachs was not acting as an adviser to IFE or purporting to carry out any professional service for IFE, as the terms of the SIM made plain.  It was acting for the sponsors and not on behalf of the recipients of the SIM.  In general a party involved in negotiations towards a commercial venture owes no positive duty of disclosure towards another prospective party.  A duty of disclosure may be undertaken, but no such duty was undertaken in this case either expressly or impliedly.  The expression “assumption of responsibility” has on occasions been used in cases where it would be more accurate to speak of the court imposing a responsibility, but I can see no ground on which it would be fair to impose on Goldman Sachs the duty of care contended for by IFE.
Misrepresentation Act 1967 and Unfair Contract Terms Act 1977  
65.	Section 3 of the Misrepresentation Act prevents a person from excluding or restricting liability for misrepresentation, or any remedy available for misrepresentation, by a contractual term unless it satisfies the requirement of reasonableness.  Section 2 of the Unfair Contract Terms Act provides that a person cannot exclude or restrict liability for negligence by a contractual term or notice unless it satisfies the requirement of reasonableness. Mr Nash argued that in substance the terms of the SIM purported to exclude or restrict Goldman Sachs’s liability for misrepresentation or negligence. On a point of detail, the Misrepresentation Act, section 3, only applies to contractual exclusions and therefore would only be directly relevant if the terms of the SIM had contractual force, which IFE denies. But Mr Nash submitted that the terms could not be more effective as mere notices than if they had contractual force.  I agree. A mere declaration by a misrepresentor that he does not accept liability for the consequences which the law attaches to a misrepresentation would be ineffectual and therefore did not need to be covered by  the Misrepresentation Act.
66.	More importantly, I do not accept that the provisions of either Act affect the issues whether Goldman Sachs made the implied representations or owed the duty of care alleged.
67.	As to the claim under the Misrepresentation Act or for negligent misstatement, the question is whether the relevant paragraphs of the SIM are properly to be understood as excluding a liability for misrepresentation or as going to the question whether the alleged representation was made at all.  If the latter, neither Act has any relevance to them. (See William Sindall PLC v Cambridgeshire County Council [1994] 1WLR1016, 1034, per Hoffmann LJ.)
68.	The question is one of substance and not form.  If a seller of a car said to a buyer “I have serviced the car since it was new, it has had only one owner and the clock reading is accurate”, those statements would be representations, and they would still have that character even if the seller added the words “but those statements are not representations on which you can rely”.  Cremdean Properties Ltd v Nash [1977] EGLR 80, which Mr Nash cited, is authority for the principle that a party cannot by a carefully chosen form of wording circumvent the statutory controls on exclusion of liability for a representation which has on proper analysis been made.
69.	If, however, the seller of the car said “The clock reading is 20,000 miles, but I have no knowledge whether the reading is true or false”, the position would be different, because the qualifying words could not fairly be regarded as an attempt to exclude liability for a false representation arising from the first half of the sentence.
70.	In the present case Goldman Sachs supplied information obtained by it from other sources. The statements made by it in the SIM regarding its non-verification of the accuracy or completeness of that information, and its non-acceptance of any responsibility for reviewing the information, went to the scope of the representations being made and cannot properly be characterised for the purposes of either Act as attempts to exclude liability for misrepresentation. The sentence in paragraph (ii) which stated that Goldman Sachs should not be liable for any loss or damage suffered by any person as a result of relying on any statement in the SIM is arguably different, but is not in any event relevant to the issue what representations were made.
71.	As to IFE’s alternative formulation of a duty of care in negligence, based not on negligent misstatement but on a duty of care to provide information to it, the same reasoning applies. IFE relies on the publication of the SIM to give rise to the alleged duty of care. The relevant paragraphs of the SIM are not in my view to be characterised in substance as a notice excluding or restricting a liability for negligence, but more fundamentally as going to the issue whether there was a relationship between the parties (amounting to or equivalent to that of professional adviser and advisee) such as to make it just and reasonable to impose the alleged duty of care.
72.	My conclusions on the alleged representations and duty of care dispose of the claim, but I should shortly state my conclusions on the other main issues if I am wrong in my primary conclusions.
The significance of Arthur Andersen’s reports dated 19 and 26 May 2000
73.	Mr Nash attached to his written opening submissions a schedule containing a detailed comparison of the information provided about various aspects of Finelist’s financial affairs in the SIM, in Arthur Andersen’s December 1999 and February 2000 reports referred to in the SIM, and in its 19 and 26 May reports.
74.	In his evidence Mr Mitjavile was categorical that if he had seen the May reports at the time of their production IFE would not have proceeded with its investment.  He emphasised that in its earlier reports Arthur Andersen had to take a lot on trust from Finelist and PWC. The later reports raised significant concerns about the reliability of those representations.  Among other things, the February report had recorded that consolidated management accounts were produced on a monthly basis, but the 26 May report indicated that a full consolidation had not been performed since June 1999.  Moreover the 26 May report also recorded that it appeared from Arthur Andersen’s discussions with local management that historically there had been “considerable override by central management with respect to local provisions in order to meet group targets”.  As Mr Mitjavile put it in his witness statement, the clear implication from this statement was that provisions which central management knew ought to be made were nevertheless overridden if those provisions would prevent group targets being met, or in plain language that a part at least of Finelist’s financial results had been fabricated by central management.
75.	Mr Howard suggested in his cross examination of Mr Mitjavile, and in his submissions, that the significance sought to be given by IFE to the contents of the May reports, in comparison with the information contained in the earlier reports, owed much to hindsight, and that IFE would not have been seriously troubled by the May reports if it had seen them at the time.  Mr Howard did not suggest that Mr Mitjavile was consciously trying to mislead the court in his evidence, but rather that Mr Mitjavile’s view was unavoidably and subconsciously coloured by hindsight. Mr Howard also observed that Arthur Andersen was content for its pre-acquisition reports to be sent to the mezzanine investors well into May 2000, because IFE did not receive its copies until sometime after 16 May 2000.
76.	Mr Mitjavile’s evidence was supported by IFE’s other witnesses, who were not cross examined.  For example, Mr David Savage (a member of IFE’s investment committee) said in his witness statement that if he had been shown the May reports before the completion of IFE’s investment, he would have made it very clear that in his view a decision to invest should be deferred until such time as a significant proportion of the uncertainties outlined in the reports had been satisfactorily clarified or resolved.  He went on to explain:
“The AA reports summarise a number of classical issues and concerns which would have sent off warning bells to me.  Amongst others, these include: inter-company accounts (inconsistencies), consolidation (“informal”, slow and unresolved inter group transactions), cash flow (very delayed availability of historical information), debtor provisioning policies (only when debtor in liquidation), poor internal management information systems, “central override” of the information flow relating to subsidiaries/affiliates, bad current operating environment, inconsistencies in purchase and stock ledgers, and unavailability of key management for discussion of these and other issues during the due diligence process.”
77.	If there had been implied continuing representations that Goldman Sachs was not aware of any facts which showed that the statements about Finelist’s financial performance in the SIM and Arthur Andersen’s pre-acquisition reports were or might be incorrect in any material way, I would have concluded on the evidence that there was a misrepresentation.  I also accept the evidence put forward on behalf of IFE that if it had been shown the May reports it would not have proceeded with its investment in Finelist.
Inducement
78.	As stated in Chitty on Contracts, 29th Ed (2004) at Para 6-031, it is essential for a misrepresentation to have legal effect that it should have operated on the mind of the representee.  It follows that if a representation did not affect the representee’s mind, because he was unaware that it had been made, or because he was not influenced by it, or because he knew that it was false, the representee has no remedy.
79.	In Horsfall v Thomas (1862) 1 H&C 90, a seller delivered to a buyer a gun which was in a dangerous condition. The buyer alleged that the defect had been hidden at the time of the sale.  The buyer’s claim failed because he had not examined the gun before buying it, and therefore if there was a fraudulent concealment of the defect it had no influence on him. Mr Howard submitted that the same principle applied in this case, because Mr Mitjavile accepted that he did not understand that Goldman Sachs was making any representation. Therefore, if there was a misrepresentation by the non-disclosure of the May reports, it did not operate on Mr Mitjavile’s mind.
80.	Mr Nash submitted that although Mr Mitjavile agreed that he did not understand that Goldman Sachs was making any representation to him, to take that piece of his evidence on its own would be an over simplification of his mental state.  Mr Mitjavile also said that he believed the arranger had an overall commercial responsibility, if it knew or had a strong hint of the “the real state of things”, to let the market know, and that if it failed in that responsibility IFE would look to the court to decide the legal question of responsibility.  Mr Nash further submitted that the misrepresentation did operate on the minds of IFE’s decision makers, because if the May reports had been disclosed IFE would not have gone ahead with its investment.
81.	It is not necessary and I do not propose to lengthen this judgment by exploring those legal arguments, particularly since I am conscious of the artificiality of doing so in the context of my finding that there was no implied representation as alleged by IFE.
The Contract between IFE and Goldman Sachs
82.	It is admitted in the pleadings that Goldman Sachs purchased €20 million of bonds from IFE on 30 May 2000, but Goldman Sachs asserts that a contract for the purchase was concluded on 5, 23 or 25 May, so that if there had been any continuing representation by Goldman Sachs it would have ended on one of those dates.
83.	I do not accept this argument.  Although IFE had reached a commercial understanding with Goldman Sachs, it could in law have required that it be satisfied about the terms of the side letter to be produced by the lawyers instructed by Goldman Sachs before concluding any agreement, notwithstanding that in fact it proceeded to completion without the letter being finalised.
84.	Goldman Sachs also asserts that the purchase contract incorporated the paragraphs of the SIM relied on by it. Those paragraphs included the statement that none of the memorandum was to form the basis of any contract.  Although those words may have been inserted for a different purpose, I am not persuaded that the paragraphs were contractually incorporated into the purchase agreement.
The Bondholders’ Agreement
85.	After the collapse of Finelist, an operation was mounted to rescue Autodis.  It involved investors injecting more funds under the terms of a Bondholders’ Agreement.  Clause 16.4 of the agreement provided in its English translation as follows:
“The Parties, both on their own behalf and for and on behalf of their Affiliates, for which they shall be answerable, undertake (i) to cooperate and provide every assistance with the preparation and conduct of Proceedings, (ii) not to conduct proceedings relating to the Proceedings and, more generally, to any facts and circumstances which may be the subject of the Proceedings other than in the context of and in accordance with the provisions of the Participating Capital Loan and (iii) not to bring any proceedings of any kind whatsoever against (x) Autodis or its subsidiaries, (y) any of the members of the Supervising Board or Managing Board of Autodis or Autodistribution, or (z) any of the Parties, or their Affiliates, with regard to the Finelist Group plc, its acquisition and all events, actions or omissions linked to this acquisition which have preceded or followed this (including with regard to corporate offices within the Finelist Group plc).”
86.	On the face of things, this action is barred by that clause, but IFE advances various arguments why the clause does not have that effect.
87.	First, it argues that as a matter of construction the clause is not directed at actions of the present kind.
88.	The French experts’ joint memorandum states as follows:
“Under French law, judicial interpretation of a contractual clause is possible only where the meaning of that clause is not clear and precise due to ambiguities, contradiction, deficiency or other obscurities.
Where interpretation should prove necessary for those reasons, Articles 1156 – 1164 of the French Civil Code apply. The guiding principle underlying each of these provisions is that, in interpreting a contractual clause, the courts should seek to identify the common intention of the contracting parties behind the clause …
In order to determine the parties’ common intention, it is evidently necessary to consider the aim pursued by them, as well as the context in which the contract stands…” 
89.	I cannot detect any relevant ambiguity or obscurity in the language of the clause. It seems to me that the present claim is plainly excluded by it.
90.	Next, IFE relies on a reservation which it entered at the time of signing the agreement. Mr Mitjavile did not like clause 16.4, because he was concerned that it might prevent IFE from taking legal action against a party whose acts or omissions had led it to invest in Autodis. He wanted to have the clause amended, but the bondholders had an official representative, Mr Sauvage, who insisted that the agreement should be signed as it stood without delay. So Mr Mitjavile decided to sign the document, but only after writing a side letter. On 3 July 2001 he wrote to Mr Sauvage referring to clause 16.4 and saying (in translation):
“It goes without saying that our company’s fiduciary duty towards IFE Fund’s subscribers prevents us, both on behalf of our company and IFE fund, from waiving the right to potentially try to find any persons involved liable, whose action or omission would have provoked or encouraged our investment decision.
Therefore, we would like to point out that based on our understanding of the above-mentioned clause, the purpose and effect of this clause is not to prevent us from taking such action in the future, if this proves to be necessary and appropriate.
We would like to specify that we accept to sign the above-mentioned legal documents as currently drafted based on this understanding and at your express request.”
91.	On the following day Mr Mitjavile signed the Bondholders’ Agreement.
92.	Mr Sauvage replied on 9 July 2001:
“It is definitely not my role to express an opinion on the interpretation of a contractual clause, which moreover is contained in a contract that I am not a party to.  However, I consider that it is wise for the parties to such a complex restructuring to undertake not to take legal action against each other throughout the duration of the implementation of the turnaround and the Shareholders’ Agreement, as the company would not survive it.
As you are aware, when IFE entered into the Agreement between the Holders of Securities in Autodis, these agreements were already signed by all of the other parties and they consequently entered into these agreements without taking into account your interpretation.
In my capacity as the representative of the body of Autodis’ Bondholders and given your consent, I shall disclose the contents of your letter of 3 July 2001 and this reply to all of the bondholders in Autodis.”
93.	The joint memorandum of the French experts states as follows:
“The ‘essential elements’ of a contract are those elements as to which the parties must be agreed if the particular contract is to come into existence.  These elements are either identified by the French Civil Code for certain types of contract (e.g. contracts of sale), or by virtue of the parties’ common intention.  In the latter case, the parties either expressly stipulate for a particular element of their agreement to be rendered “essential”, or, in the absence of such express provision, the court determines the “essential” elements of a contract in light of the will of the parties….
Where an initial offer has been made by one party to the other, a reservation issued by the offeree in relation to that offer itself constitutes a contractual counter-offer which must be agreed to by the other parties before the reservation can take effect to modify the content of the contract proposed under the initial offer.  Further, the issuing of a reservation in relation to an “essential element” of the contract as proposed under the initial offer reveals the absence of agreement of the parties over the elements necessary to bring the contract into existence.  In such a case, the conclusion is that there can be no contract between the parties unless and until the offeree of the contractual counter-offer (the reservation) accepts that counter-offer… Whether or not a reservation relates to an “essential” element of the contract, or can itself be deemed as “essential” to the party issuing it, is to be determined in accordance with the principles governing the identification of “essential elements” in contracts generally, which we have outlined above…
When no explicit acceptance has been expressed by an offeree, the general rule in French law is that silence cannot constitute acceptance as it is equivocal with regard to the underlying consent of the offeree.  It follows that exceptionally where silence ceases to be equivocal in light of the circumstances, that is to say when it effectively conveys the assent of the offeree to the terms of the offer, silence can exceptionally constitute acceptance.  Such is the case where the offeree did not react or protest to the offer and spontaneously performs his obligations as envisaged under the contract, at a time when he was fully informed of the terms of the offer.”
94.	There are three theoretical possibilities:
i)  That there was no contract;
ii) That there was a contract, the parties to which agreed that clause 16.4 should be interpreted in the manner stated in Mr Mitjavile’s letter of 3 July 2001; 
iii) That there was a contract, the parties to which did not agree as to the proper interpretation of clause 16.4.
95.	As to the first possibility, it is plain that the parties intended there to be a contract and acted on the basis that there was a contract.  Moreover it was intended to be a contract in terms of the Bondholders’ Agreement, because all the parties signed that document as constituting an agreement.  Even if the parties cannot agree about how a term should be interpreted, that need not prevent a common intention that a contract should come into existence. It sometimes happens that two parties sign a document each asserting that it means different things, but recognising that ultimately it would be a matter for a court to determine in the event of a dispute.
96.	As to the second possibility, the other parties never expressed their agreement to Mr Mitjavile’s interpretation of clause 16.4.  They had already signed the agreement before he set out his interpretation.  I can see no basis on which it can be inferred from their silence that they were willing to accept his view.
97.	The third possibility is in my view the right one.  Mr Mitjavile pushed the matter as far as he could by setting out in his letter of 3 July how he intended that clause 16.4 should be interpreted. Mr Sauvage’s response as representative of the body of bondholders was to note Mr Mitjavile’s intention as to the interpretation of the contract, without expressing any opinion on it, and to say that he would pass the correspondence to the other parties.  There was no consensus, express or implied, that Mr Mitjavile’s understanding of the clause was legally correct.  The only consensus which could be found was that all parties by signing the Bondholders’ Agreement bound themselves to it.
98.	Finally, IFE contends that the Bondholders’ Agreement does not have the effect under French law of barring the present claim by reason of the doctrine of dol par reticence.  It is submitted that the present claim constitutes a dol par reticence under French law, and that it is not possible to exclude liability for this by contract other than by a waiver with full knowledge of all the relevant facts, which IFE did not have when it entered into the Bondholders’ Agreement.
99.	 The French experts’ joint memorandum explains that dol in the context of contractual formation denotes a type of conduct which is regarded as vitiating the consent of the victim, who is therefore entitled to treat the contract as void or, as in the present case, to claim damages for loss suffered as a result of the dol. Dol involves bad faith, and it can include cases of omissions in bad faith, when it is known as dol par reticence, but the concept of bad faith has been  extended beyond cases of subjective bad faith. It can include cases where one party has wrongly withheld information from the other which, viewed objectively, was of such importance to the decision making of the other party that any reasonable person in the position of the non-disclosing party ought to have realised its importance.
100.	It is not easy to apply that test in this case, because I have already concluded that a reasonable person would not have understood that Goldman Sachs made the implied representations which IFE alleges. If, on the contrary, such implied representations were made, the question would then be whether from an objective point of view the information in Arthur Andersen’s May reports was so important that a reasonable person could not have failed to appreciate its relevance to IFE’s decision to enter into a contract.  I have no evidence from Goldman Sachs, but there is contemporaneous evidence that Goldman Sachs was aware of its potential significance to participants in the general syndication.  A member of Goldman Sachs’s team dealing with the matter wrote the comment on one page of the 19 May report “not going to help syndication!” The same person wrote on 21 May 2000 to Arthur Andersen saying that the report “does not sound too rosy”, but that she was looking forward to Arthur Andersen’s final conclusions.  I do not detect from the contemporaneous documents that Goldman Sachs had a sense of alarm at that stage, but it had concerns and was wanting to know what further information Arthur Andersen would be able to provide.
101.	I consider on balance that if  Goldman Sachs had been under the duty alleged by IFE, on an objective view point the significance of the May reports was sufficient that their non-disclosure to IFE would have been likely in French law to constitute dol par reticence.
102.	There remains the question whether clause 16.4 constitutes an effective waiver.  The French experts’ joint memorandum states:
“Lastly, the victim of a dol in the formation of the contract has the option to affirm the contract, by issuing a waiver of his right to avoid it. However, such a waiver is effective only if it is issued by the claimant after he has become aware of the essential element of the agreement which was hidden from him as result of the actions or omission of the defendant: indeed, if the claimant issues a waiver before that time, his consent is still vitiated by the effect of the initial dol which is still operative; as a result, he cannot offer that consent in order to seek to mend an agreement already deficient for want of valid consent.”
103.	It was agreed during the hearing that in the present context the reference to “the essential element of the agreement” may be read as a reference to the essential facts relating to the claim.  The argument has been over what was essential for the purposes of determining whether clause 16.4 was a valid waiver.
104.	By the date of the Bondholders’ Agreement, Mr Mitjavile knew that Arthur Andersen had produced a report dated 19 May 2000. He learned this at a meeting of the mezzanine steering committee on 22 January 2001, which was attended by Ms Margaret Cole of the law firm White and Case.  She referred to parts of it, which Mr Mitjavile described in his witness statement as “much more negative in tone than the December 1999 or February 2000 reports”.  Although Mr Mitjavile knew those matters, Mr Nash submitted that IFE did not have the essential knowledge required for waiver because it did not have full details of the 19 May report and it knew nothing of the 26 May report.
105.	However, Mr Mitjavile knew that Arthur Andersen had provided an additional report, more negative than its previous reports, which had not been disclosed to it.  He had this very much in mind at the time of the Bondholders’ Agreement, because he wanted to amend clause 16.4 precisely so that IFE did not lose its right to pursue any party whose acts or omissions had contributed to its decision to invest in Autodis. I do not consider that the non-disclosure of the May reports can fairly be regarded as operative on Mr Mitjavile’s mind in determining whether to enter into the Bondholders’ Agreement.  He knew that there had been non-disclosure; he did not know the extent of it; but he entered into the Bondholders’ Agreement knowing that he did not have full details of what Arthur Andersen had reported in May 2000.  I conclude that he knew all that was essential for clause 16.4 to constitute a valid waiver.
Conclusion
106.	I conclude that IFE’s claim fails because (1) Goldman Sachs did not make the implied representations or owe it the duty of care alleged, and (2) it is barred by clause 16.4 of the Bondholders’ Agreement.