Renault SAS v Liberty Engineering: Guarantee Construction & Bankruptcy Event
In Renault SAS v Liberty Engineering Group Pte Ltd, the Singapore International Commercial Court dismissed Renault's claim for €7 million against Liberty Engineering under a Deed of Guarantee. The court, presided over by Roger Giles IJ, held that the bankruptcy event of Liberty Wheels France (the Purchaser) did not accelerate Liberty Engineering's liability as guarantor. The court construed the guarantee in conjunction with a Financial Services Agreement, finding that Liberty Engineering's obligation was coextensive with the Purchaser's payment schedule, and no amount was payable at the time of demand.
1. Case Overview
1.1 Court
Singapore International Commercial Court1.2 Outcome
Claim dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Renault's claim against Liberty Engineering under a guarantee was dismissed. The court construed the guarantee, finding no accelerated liability upon a bankruptcy event.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Liberty Engineering Group Pte Ltd | Defendant | Corporation | Claim Dismissed | Won | |
| Renault SAS | Plaintiff | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Roger Giles | International Judge | Yes |
4. Counsels
4. Facts
- Renault provided financial support to AR Industries, later acquired by Liberty Wheels France (Alvance).
- A Financial Services Agreement (FSA) was signed between Renault, Liberty Engineering Group (LEG), and Liberty House Group.
- LEG provided a Deed of Guarantee to Renault, guaranteeing the obligations of the Purchaser (Alvance) under the FSA.
- Liberty Wheels France (Alvance) entered redressement judiciaire proceedings.
- Renault demanded €7 million from LEG based on the bankruptcy event.
- The first repayment installment was made by a related company of LEG.
- The redressement judiciaire proceedings were converted into liquidation judiciaire.
5. Formal Citations
- Renault SAS v Liberty Engineering Group Pte Ltd, Suit No 1 of 2022, [2023] SGHC(I) 8
6. Timeline
| Date | Event |
|---|---|
| AR Industries placed under redressement judiciaire | |
| Financial Services Agreement signed | |
| Deed of Guarantee signed | |
| Paris court opened redressement judiciaire proceedings for Liberty Wheels France | |
| Renault issued a letter of demand for payment by LEG | |
| Renault commenced proceedings in the High Court | |
| Redressement judiciaire proceedings converted into liquidation judiciaire | |
| Renault commenced further proceedings against LEG | |
| Judgment reserved | |
| Judgment issued |
7. Legal Issues
- Construction of Guarantee
- Outcome: The court held that the bankruptcy event did not accelerate Liberty Engineering's liability under the guarantee.
- Category: Substantive
- Sub-Issues:
- Interpretation of 'that amount' in guarantee clause
- Whether bankruptcy event accelerates liability under guarantee
- Primary vs. secondary liability of guarantor
8. Remedies Sought
- Monetary Damages (€7 million)
- Statutory Interest
9. Cause of Actions
- Breach of Guarantee
10. Practice Areas
- Commercial Litigation
11. Industries
- Automobile
- Manufacturing
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Vossloh Aktiengesellschaft v Alpha Trains (UK) Ltd | Not Available | Yes | [2011] 2 All ER (Comm) 307 | England | Cited for the extended discussion on the differences between a guarantee and an indemnity, and the descriptors of primary and secondary liability. |
| TA Private Capital Security Agent Ltd v UD Trading Group Holding Pte Ltd | Singapore High Court | Yes | [2023] SGHCR 1 | Singapore | Cited to sum up the discussion in Vossloh Aktiengesellschaft v Alpha Trains (UK) Ltd regarding primary and secondary liability in guarantees and indemnities. |
| Moschi v Lep Air Services Ltd | House of Lords | Yes | [1973] AC 331 | England | Cited for the principle that the classification of a contractual promise as a guarantee depends on the words used by the parties. |
| CIFG Special Assets Capital I Ltd (formerly known as Diamond Kendall Ltd) v Ong Puay Koon and others and another appeal | Court of Appeal | Yes | [2018] 1 SLR 170 | Singapore | Cited for the summary of the approach to construction of a contract, including the consideration of text and relevant context. |
| PT Bayan Resources TBK and another v BCBC Singapore Pte Ltd and another | Court of Appeal | Yes | [2019] 1 SLR 30 | Singapore | Cited for affirming the approach to construction of a contract as summarized in CIFG Special Assets Capital I Ltd v Ong Puay Koon. |
| Y.E.S. F&B Group Singapore Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) | Not Available | Yes | [2015] 5 SLR 1187 | Singapore | Cited for the explanation that in the process of interpretation, text and context interact, but the text is the first port of call, and context cannot be used to rewrite the terms of the contract. |
| Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd | High Court | Yes | [2008] 3 SLR(R) 1029 | Singapore | Cited for the principle that the court will have regard to established canons of construction as a guide to the parties’ objective intention. |
| Yap Son On v Ding Pei Zhen | Not Available | Yes | [2017] 1 SLR 219 | Singapore | Cited for the principle that the meaning ascribed to the terms of the contract must be one which the expressions used by the parties can reasonably bear. |
| Travista Development Pte Ltd v Tan Kim Swee Augustine and others | High Court | Yes | [2008] 2 SLR(R) 474 | Singapore | Cited for the established principle of documentary interpretation that a clause must be considered in the context of the whole document. |
| Total Transport Corporation v Arcadia Petroleum Ltd | Not Available | Yes | [1998] CLC 90 | England | Cited for the doubt about the value of the presumption against surplusage in the interpretation of commercial contracts. |
| Swallowfalls Ltd v Monaco Yachting & Technologies SAM and another | England and Wales Court of Appeal (Civil Division) | Yes | [2014] EWCA Civ 186 | England | Cited for the doubt about the value of the presumption against surplusage in the interpretation of commercial contracts. |
| Antigua Power Co Ltd v A-G of Antigua and Barbuda | Privy Council | Yes | [2013] UKPC 23 | Not Available | Cited for the statement that on issues of interpretation, arguments based on surplusage are rarely of much force. |
| Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore) Ltd | Court of Appeal | Yes | [2016] 1 SLR 1069 | Singapore | Cited as the starting point is that one looks to the text that the parties have used |
| Sembcorp Marine Ltd v PPL Holdings Pte Ltd | Court of Appeal | Yes | [2013] 4 SLR 193 | Singapore | Cited as the reason the court has regard to the relevant context is that it places the court in “the best possible position to ascertain the parties’ objective intentions by interpreting the expressions used by [them] in their proper context” |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Guarantee
- Financial Support Agreement
- Bankruptcy Event
- Redressement Judiciaire
- Liquidation Judiciaire
- Purchaser
- Guarantor
- Obligations
- First Demand Guarantee
- Financial Support
15.2 Keywords
- guarantee
- financial support
- bankruptcy
- contract construction
- Singapore International Commercial Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Contractual terms | 80 |
| Contract Law | 75 |
| Interpretation of contractual terms | 70 |
| Deed of Guarantee | 65 |
| Guarantee | 60 |
| Commercial Disputes | 40 |
| Banking and Finance | 30 |
| Civil Procedure | 20 |
| Arbitration | 15 |
16. Subjects
- Contract Dispute
- Guarantee
- Financial Services