Cantor Fitzgerald & Co vs YES Bank Limited

This case concerned the proper construction of a provision in an engagement letter between Cantor Fitzgerald & Co, a US broker-dealer, and YES Bank Limited, an Indian commercial bank, specifically regarding the interpretation of 'private placement' in the context of a financial advisory agreement.

TLDR:

• Dispute over the interpretation of 'private placement' in an engagement letter.
• Court ruled that 'private' qualified all forms of financing covered by the engagement.
• Cantor Fitzgerald's claim for additional fees was dismissed.

The appellant, Cantor Fitzgerald & Co ('Cantor'), a US-based broker-dealer, investment bank, and financial adviser, entered into an engagement letter with the respondent, YES Bank Limited ('YES Bank'), an Indian commercial bank, in December 2019. The engagement letter outlined Cantor's role in assisting YES Bank with its financing needs, which included a US$500,000 retainer and 2% of funds raised from specified investors.

In March 2020, the Reserve Bank of India (RBI) imposed a moratorium on YES Bank, leading to a substantial capital infusion from the State Bank of India (SBI). YES Bank subsequently raised further funds through a public offer (FPO) in July 2020. Cantor claimed entitlement to 2% of the amounts subscribed in the FPO by three investors listed in the engagement letter's schedule, totaling approximately US$373.4 million.

YES Bank argued that the FPO did not fall within the scope of 'Financing' as defined in the engagement letter, contending that 'private' qualified all forms of financing covered by the engagement. The High Court agreed with YES Bank, and Cantor appealed.

The Court of Appeal upheld the High Court's decision, ruling that the term 'private' in the phrase 'private placement, offering or other sale of equity instruments' qualified all forms of financing covered by the engagement. The court emphasized that the ordinary meaning of the words, the contractual context, and the surrounding circumstances supported this interpretation.

The court noted that the engagement letter's specific provision for Qualified Institutional Placements (QIPs) and the absence of any reference to public offers or rights issues indicated an intention to limit the scope of 'Financing' to private forms of equity financing. The court also found that the factual matrix, including YES Bank's urgent need for funds and the unlikelihood of a public offer at the time of the engagement, supported this interpretation.

As a result, Cantor's claim for additional fees based on the FPO was dismissed. The court also addressed other issues, including an alternative claim by Cantor for an implied term or unjust enrichment, which were not upheld.

The Court of Appeal's decision provides important guidance on the interpretation of financial advisory agreements, particularly in cross-border contexts, and underscores the significance of precise language in contractual provisions.

Legal representatives: Adrian Beltrami KC and Ravi Jackson (instructed by A&O Shearman) for the Appellant, John Taylor KC and Christopher Langley (instructed by Hogan Lovells International Llp LLP) for the Respondent.

Judicial Panel: Sir Julian Flaux, Chancellor of the High Court, Lord Justice Popplewell, and Lady Justice Falk.

Case Citation Reference: [2024] EWCA Civ 695