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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Macquarie Bank Ltd v Banque Cantonale Vaudoise [2024] EWHC 114 (Comm) (26 January 2024) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2024/114.html Cite as: [2024] EWHC 114 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
B e f o r e :
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MACQUARIE BANK LIMITED |
Claimant |
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– and – |
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BANQUE CANTONALE VAUDOISE |
Defendant |
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Sean O'Sullivan KC and Thomas Steward (instructed by Holman Fenwick & Willan LLP) for the Claimant/Respondent
Hearing dates: 23 January 2024
Draft Judgment Circulated: 24 January 2024
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Crown Copyright ©
The Honourable Mr Justice Foxton:
The background
4. MBL is an international bank, incorporated and existing under the laws of Australia.
9. BCV issued two SBLCs on 9 and 23 January 2020:
i) SBLC No. IX01117010308925 dated 15 January 2020 in the amount of US$4,340,000.
ii) SBLC No. IX01117010309522 dated 28 January 2020 in the amount of US$4,410,000.
The consequences of the parties' choice of English law as the governing law of the SBLCs
"It has been long established that when a letter of credit is issued and confirmed by a bank, the bank must pay it if the documents are in order and the terms of the credit are satisfied. Any dispute between buyer and seller must be settled between themselves. The bank must honour the credit. That was clearly stated in Hamzeh Malas & Sons v British Imex Industries Ltd [1958] 2 QB 127, Jenkins L.J. giving the judgment of this court, said, at p. 129:
'… it seems to be plain enough that the opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of the goods, which imposes upon the banker an absolute obligation to pay, irrespective of any dispute there may be between the parties as to whether the goods are up to contract or not. An elaborate commercial system has been built up on the footing that bankers' confirmed credits are of that character, and, in my judgment, it would be wrong for this court in the present case to interfere with the established practice.'
To this general principle there is an exception in the case of what is called established or obvious fraud to the knowledge of the bank."
"If the court of any of the countries should interfere with the obligations of one of its banks (by ordering it not to pay under a letter of credit) it would strike at the very heart of that country's international trade. No foreign seller would supply goods to that country on letters of credit — because he could no longer be confident of being paid. No trader would accept a letter of credit issued by a bank of that country if it might be ordered by its courts not to pay. So it is part of the law of international trade that letters of credit should be honoured — and not nullified by an attachment order at the suit of the buyer.
Added to this, it seems to me that the buyer himself by his conduct has precluded himself from asking for an attachment order. By opening the letter of credit in favour of the seller, he has implicitly agreed that he will not raise any set off or counterclaim — such as to delay or resist payment. He has contracted under the terms of the Uniform Customs and Practice by which he promises that the bank will pay without regard to any set off or counterclaim: and implicitly that he will not seek an attachment order …"
"We can see no relevant distinction between the guarantee in that case and the guarantees presently under consideration. The purpose of both was to ensure immediate payment if the principal debtor did not pay. Indeed the present cases make it the more necessary that the court should not interfere, for here the parties have specifically provided both in the loan agreement and the guarantees that payment should be made free of any set off or counterclaim. It would defeat the whole commercial purpose of the transaction, would be out of touch with business realities and would keep the bank waiting for a payment, which both the borrowers and the guarantors intended that it should have, whilst protracted proceedings on the alleged counterclaims were litigated. We do not doubt that the court has a discretion to grant a stay but it should in our view be "rarely if ever" exercised, as Lord Dilhorne said in relation to claims on bills of exchange. Guarantees such as this are the equivalent of letters of credit and only in exceptional circumstances should the court exercise its power to stay execution."
See also National Infrastructure Development Co Ltd v Banco Santander SA [2017] EWCA Civ 27, [45].
i) First, BCV has been able to prevent MBL enforcing the SBLCs while third party investigations into a potential fraud taking place, when BCV is not even in a position to present an arguable case of fraud against MBL, still less present "clear evidence" of MBL's knowledge of the fraud.
ii) Second, BCV has been able to use Swiss procedural law as a basis for not performing its substantive obligations under the SBLCs.
The forum conveniens analysis
i) The "fundamental principle" is that the court "has to identify in which forum the case could most suitably be tried for the interests of all the parties and for the ends of justice".
ii) In a "service out" case, the burden is on the claimant not merely to persuade the court that England is the appropriate forum, but "to show that this is clearly so".
iii) Factors which have been held to be important, depending on the nature of the case, include governing law, the factual focus, and the location and language of witnesses and documents.
iv) Delay can be relevant but is likely to be a sufficient factor on its own only in extreme cases.
i) It was MBL which commenced the Swiss Civil Proceedings and MBL which wishes to end them at an early stage in their life. I am unable to see how an order which permits MBL to pursue proceedings in another jurisdiction rather than the one in which it initially chose to pursue its claim involves any form of interference with the process of or an affront to the Swiss Courts.
ii) There has been no substantive progress in the Swiss Civil Proceedings, the claim having been put on hold. This is not a case, therefore, in which a party has permitted the foreign proceedings to advance to any considerable extent before seeking to bring them to an end.