Cargill Financial Markets plc v KPN BV
On 25 April 2012, the District Court of Amsterdam gave judgment in a case arising out of the syndicated loan financing of a telecoms joint venture.
In 2001 and 2002, KPNQwest, a joint venture between Dutch and US telecoms businesses, arranged a credit facility of up to €525 million with a syndicate of lenders including amongst others Citibank NA, Barclays Bank plc, Deutsche Bank AG and Bank of America NA.
KPNQwest drew down €300 million under the credit facility, before being declared bankrupt by the Dutch courts.
A number of the original members of the loan syndicate purported to assign any causes of action which they had in connection with the arrangement of the credit facility, including against third parties, to Cargill Financial Markets plc.
Claims were brought against 16 Defendants, including the parent companies of KPNQwest and a number of individuals concerned in the management of KPNQwest and of its parent companies. In a nutshell, the Claimants alleged that the Defendants had caused or allowed KPNQwest to enter into the credit facility on the basis of misrepresentations as to its financial position and despite knowing that it would be unable to repay the sums drawn down.
The proceedings raised a number of issues of Dutch and English law, including in particular as to the validity of the purported assignments of causes of action.
The District Court of Amsterdam dismissed the claims, finding that the Claimants had failed to establish that the Defendants knew or ought to have known when the credit facility was agreed that KPNQwest would be unable to meet its obligations under it.
Tim Lord QC and Sarah Abram provided expert evidence on English law to the Dutch court, instructed by Boies, Schiller & Flexner LLP in Washington DC on behalf of one of the successful Defendants.