The recent spate of litigation in CMBS transactions by
noteholders to obtain interpretations of their rights directly in
the English courts rather than through the note trustee raises two
distinct questions: do investors have standing as a matter of both
the transaction documents and general contract law to launch such
proceedings and secondly should they be able to?
A typical limited recourse CMBS transaction will contain a
general restriction on noteholders proceedings directly against the
issuer to enforce their rights under the transaction documents
(that right being reserved for the note trustee). On its face that
should prohibit noteholders launching proceedings where the issuer
is named as a defendant. However, depending on the wording of the
clause on question, it could be argued that proceedings launched
under Part 8 of the Civil Procedure Rules ("Part 8
Proceedings") which are aimed at resolving matters of
interpretation are not caught by such restrictions
