[1] In his judgment Lord Justice Aikens noted the striking similarity between the case before him, and the long series of decisions in the local authorities swaps litigation relating to similar transactions entered into by English local authorities.

Commercially the effect was similar to a term loan with a backloaded repayment schedule than a true interest rate swap.

He held that there were three issues which arose for consideration on the appeal (although the last issue had two limbs):[5] The Court of Appeal agreed with the trial judge that under the Rome Convention, which was given the force of law in the United Kingdom by the Contracts (Applicable Law) Act 1990, the capacity of parties was excluded from the Convention regime.

Under section 50 of the Norwegian Local Government Act 1992 local authorities were restricted in their ability to borrow loans; the Court was satisfied that under Norwegian law the swaps would have been treated as loans, and that the Kommunes lacked substantive power to enter into those transactions.

The Court of Appeal then embarked upon an exhaustive analysis of the authorities, and in particular to the two House of Lords' decisions in Sinclair v Brougham [1914] AC 398 and Westdeutsche Landesbank Girozentrale v Islington LBC [1996] UKHL 12, but also the decision of the Privy Council in Goss v Chilcott [1996] UKPC 17.

The Court held that there "is no doubt that in English law a restitutionary claim for the return of money may be defeated on grounds of public policy where, on the correct construction of a statute or regulation, recovery in restitution would be contrary to the objective of the statute", and cited various authorities in support.

[11] The Court held that in principle a foreign public policy could provide a basis for refusing to permit a restitutionary claim, but on the facts of this case it did not do so.

The Court of Appeal approach the issue in three stages: First, what are the general principles of the defence of "change of position" in the law of restitution?

[14]Balancing those considerations on the fact, he felt that "[t]he scales fall heavily in favour of Depfa recovering the full amount that it paid over to the Kommunes.

[17] and indicated that they had "advised in unqualified terms that the swap contracts were not loans for the purposes of [relevant provisions of Norwegian law] and that the Kommunes had full capacity to enter into them."

He further noted that "[i]t was common ground that Depfa knew, and was willing to take the risk, that it was not possible to obtain execution against the Kommunes, should there be any need to do so.

Wikborg Rein had advised Depfa that – 'A claim against a Norwegian municipality cannot be enforced, no distress or seizure may be obtained of any of its assets and no bankruptcy or debt settlement proceedings may be initiated against it.

'"[17] The law firm largely defended the claim against it on two ground: first, that Depfa had suffered no loss (because it had a valid claim against the Kommunes as recognised by an English judgment); and secondly, that any loss suffered was outside, or was not on the evidence shown to be within, the scope of Wikborg Rein's duty.

He noted that the bank had willingly undertaken sole credit risk on the transaction if the Kommunes did not perform their obligations, holding: "I conclude that Wikborg Rein is not responsible for any loss with respect to its advances which Depfa may ultimately suffer by reason of the Kommunes' impecuniosity or unwillingness to abide by the decision of the English court which they have invoked.

[21] However, he felt unable to accept that Wikborg Rein could be liable for loss relating to enforcement and credit risks given that their advice had been to the effect that the Kommunes could not be forced to pay.

"[22] Accordingly, it "follows that for Depfa to be entitled to recovery against Wikborg Rein, it is necessary for it to establish that loss has been suffered by reason of the invalidity of the transaction, as distinct from the enforcement and credit risks already discussed.

The Court of Appeal were not required to consider the alternative argument of "no loss", but in his judgment Gross LJ expressed a degree of skepticism.

The complexity of those circumstances is demonstrated by the fact that Tomlinson J and Rix LJ (with whom Gross LJ implicitly sided) disagreed as to whether Wikborg Rein had taken on specific or general duties in relation to the transactions (and therefore whether the case was of category 1 or category 2 under the Saamco principle)", before adding "[a]pplications of the Saamco principle will always be heavily fact sensitive, and it is for that reason that solicitors should consider carefully (and seek to strictly define, if possible) the nature of their duties to their client when providing advice on complex transactions.