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[View ICLR summary:  WLR(D) 223]
||Neutral Citation Number:  EWCA Civ 411
||Case No: A3/2015/2206 & A3/2015/2221
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
THE HONOURABLE MR JUSTICE FLAUX
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE LONGMORE
THE RIGHT HONOURABLE LADY JUSTICE BLACK DBE
THE RIGHT HONOURABLE LORD JUSTICE HAMBLEN
|| STANDARD CHARTERED BANK (HONG KONG) LIMITED
STANDARD CHARTERED BANK MALAYSIA BERHAD
||- and -
||INDEPENDENT POWER TANZANIA LIMITED
VIP ENGINEERING AND MARKETING LIMITED
PAN AFRICAN POWER SOLUTIONS (T) LIMITED
Mr Matthew Hardwick QC & Mr Ian Higgins (instructed by Hugh Cartwright & Amin) for the 1st & 3rd Appellants
Mr Richard Coleman QC & Mr Christopher Knowles (instructed by Charles Russell Speechlys LLP ) for the 2nd Appellant
Mr Jonathan Davies-Jones QC & Mr William Edwards (instructed by DLA Piper UK LLP) for the Respondents
Hearing dates: 7th & 8th April 2016
HTML VERSION OF JUDGMENT
Crown Copyright ©
See also: Order
Lord Justice Longmore:
- This appeal is about jurisdiction clauses in agreements for the financing of the construction of a power plant in Tanzania in 1997. The plant was built but stopped functioning in July 2007 only to re-open in 2009. There have been a number of court hearings in Tanzania, allegedly unauthorised transfer of funds from an escrow account and findings in November 2014 by the Public Accounts Committee of Tanzania of corrupt payments made to ministers including the Attorney General. It is a case which not unnaturally has generated a great deal of interest in Tanzania.
- The claimant and first respondent to the appeal is Standard Chartered Bank (Hong Kong) Limited ("SCBHK"), a bank incorporated in Hong Kong. The second respondent is Standard Chartered Bank Malaysia Berhad ("SCBMB"), a bank incorporated in Malaysia. Both respondents are wholly-owned subsidiaries of Standard Chartered Bank ("SCB"), an English company. The claim against the defendant and first appellant, Independent Power Tanzania Limited ("IPTL") is for US$145 million alleged to be due under a Facility Agreement dated 28th June 1997 to finance the construction of the power plant and under a related Security Deed of the same date.
- The second appellant is VIP Engineering and Marketing Limited ("VIP"), which was a 30% shareholder in IPTL, the company established to build and operate the power plant. SCBHK claims against VIP under a Shareholder Support Deed and Charge of Shares (both also dated 28th June 1997) forming part of the same set of finance documents. SCBHK's case is that IPTL is in breach of its obligations under the finance documents, putting VIP in breach of the Shareholder Support Deed and that, in breach of a covenant in the Charge of Shares, VIP has purported to transfer its shareholding in IPTL to the third appellant, Pan African Power Solutions (T) Limited ("PAP"). The remaining 70% shareholding in IPTL was held by (and the claimants contend remains held by) a Malaysian company called Mechmar Corporation (Malaysia) Berhad.
- The Facility Agreement, Security Deed and Shareholder Support Deed were governed by English Law; the Charge of Shares and Mortgage of Land were governed by Tanzanian Law. The agreements contained non-exclusive English Jurisdiction clauses and an express acceptance of the possibility of concurrent proceedings in different jurisdictions. The relevant clauses included forum non conveniens ("FNC") waivers and provisions for service in England. Clause 33 of the Facility Agreement was typical and provided:-
"33 GOVERNING LAW AND JURISDICTION
(A) Governing law: This Agreement shall be governed by and construed in accordance with the laws of England.
(B) Courts of England and Malaysia: For the benefit of the Arranging Banks, the Facility Agent and each Bank, all the parties irrevocably agree that the courts of England and Malaysia are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that, accordingly any legal action or proceedings arising out of or in connection with this Agreement ("Proceedings") may be brought in those courts and each party irrevocably submits to the jurisdiction of those courts.
(C) Other Competent Jurisdiction: Nothing in this Clause 33 shall limit the right of any party to take Proceedings against any other party in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude a party from taking Proceedings in any other jurisdiction whether concurrently or not.
(D) Venue: Each party irrevocably waives any objection which it may at any time have to the laying of the venue of any Proceedings in any court referred to in this Clause 33 and any claim that any such Proceedings have been brought in an inconvenient forum.
(G) Service of Process: The Borrower irrevocably appoints Bank Bumiputra Malaysia Berhad London Branch and its successors (now of 14 Cavendish Square, London W1M 0HA. England) and Mechmar and its successors (now of No 1, Jalan Perunding UI/17, Seksyen U1, Hicom-Glenmarie Industrial Park. 40150 Shah Alam, Selangor D.E. Malaysia) to receive for it and on its behalf, service of process in any Proceedings in England and Malaysia respectively. Such service shall be deemed completed on delivery to the relevant process agent (whether or not it is forwarded to and received by the Borrower). If for any reason a process agent ceases to be able to act as such or no longer has an address in London or Malaysia, as the case may be, the Borrower irrevocably agrees to appoint a substitute process agent acceptable to the Security Agent, and to deliver to the Security Agent a copy of the new agent's acceptance of that appointment, within 30 days."
The Essential Facts
- The judgment of Flaux J now reported at  1 All ER (Comm) 233, contains a masterly synthesis of a complex factual story to which the reader is referred. Paragraphs 1-80 of his judgment are essentially uncontested and I only repeat the salient features necessary for this judgment.
- In May 1995, IPTL had entered into a Power Purchase Agreement ("PPA") with Tanzania Electrical Supply Co Ltd ("TANESCO"), whose payment obligations were guaranteed by the Tanzanian Government. On 5th July 2006, an Escrow Agreement was entered into between the Government and IPTL, the Bank of Tanzania being the Escrow Agent. Pursuant to this agreement an Escrow Account was set up to receive money from the Government in sums equivalent to whatever was due from TANESCO to IPTL under the PPA.
- On 4th August 2005 Danaharta which had acquired the rights of the original lender under the 1997 loan facility, sold the loan facility and security to SCBHK, and on 22nd September 2005 SCBMB was appointed the Facility Agent, which (in addition to SCBHK) had the right to pursue any relevant proceedings against IPTL. In April and May 2006, payments which fell due under the loan facility were not made by IPTL; that failure resulted in an Event of Default under the Facility Agreement. The power plant ceased to be operational in July 2007. On 15th December 2008, RHB Bank Berhad, then the Security Agent under the Facility Agreement, appointed a Share Receiver, Ms M. Renju, over VIP's shares in IPTL pursuant to the Charge of Shares. The following day, the Tanzanian court made an order allowing VIP's application (in furtherance of winding up proceedings of IPTL initiated as long ago as 2002) for the appointment of a Provisional Liquidator. This appointment made it impossible for the Share Receiver to control IPTL through control of the entire shareholding.
- On 23rd January 2009 and 17th September 2009 SCBHK issued applications before the Tanzanian High Court for the appointment of an Administrator over IPTL. The former application was originally granted but subsequently dismissed by the Court of Appeal of Tanzania in April 2009 because it was not served on the Provisional Liquidator and the latter application was stayed by the Court in November 2009. By this time the Provisional Liquidator had taken control of the power plant and the plant had recommenced operation. Also in November 2009, SCBHK replaced RHB as Security Agent and by deed of appointment dated 21st December 2009 appointed Ms Renju as Administrative Receiver over all the assets of IPTL, but her control of the assets was similarly hampered by the presence of the Provisional Liquidator.
- This effective stalemate continued until 5th July 2011 when, on an application by VIP, the Tanzanian High Court made a winding up order in respect of IPTL on VIP's petition dated 24th February 2002 notwithstanding the existence of the stayed application for the appointment of an Administrator. On 17th December 2012 the Court of Appeal of Tanzania, on an application by SCBHK, found that winding up order to have been made in error (because the application for the appointment of an Administrator should have been decided first) and set it aside. By that date neither SCBHK nor SCBMB had issued proceedings for the recovery of sums due against IPTL, nor had IPTL indicated that there might be any defence to any such claim.
- On 7th June 2013 VIP decided to commence proceedings in the state court of New York against SCB (the parent company of the present respondents) alleging among other things that SCB falsely claimed to own VIP's interest in IPTL primarily on the ground SCB was not a creditor of IPTL as the novation from Danaharta to SCB in 2005 was void under Tanzanian Law. The judge noted that it was striking that it was alleged that SCBHK had acted as agent for SCB for this purpose. There was a damages claim of US$485 million for loss of investment opportunity. The case was in due course transferred to the US District Court for the Southern District of New York.
- On 24th July 2013, SCB filed a motion seeking inter alia to have the New York proceedings stayed or dismissed on the grounds of forum non conveniens in favour of Tanzania. Following a telephone conference on 5th August 2013, Judge Marrero issued a decision and order dated 10th September 2013 in which he dismissed the case on forum non conveniens grounds, and held that Tanzania was indeed the appropriate forum for VIP's suit.
- After the telephone conference but before the judge made his order, events occurred in Tanzania which led to SCB requesting a reconsideration of this order:-
i) On 15th August 2013 VIP sold its shareholding in IPTL to PAP (SCBHK alleges this was in breach of the Charge of Shares). PAP paid US$75 million for the shares with monies apparently received from the Escrow Account. SCHBK seeks relief against VIP and PAP in respect of this transaction in these English proceedings.
ii) On 5th September 2013 the Tanzanian court ordered the withdrawal of VIP's winding up petition and ordered further that the Provisional Liquidator was to hand over the affairs of IPTL, including the power plant, to PAP. The hearing of the application, on 3rd September 2013, took place without representatives of SCBHK, the Administrative Receiver, or the liquidators of IPTL's 70% shareholder (Mechmar) being allowed to be heard. Not surprisingly, Flaux J described this as "extraordinary".
- Following SCB's application to vary or set aside the New York order, Marrero J issued a second order on 23rd September 2013 adhering to his first order on the basis that SCB had previously represented to the court that Tanzania was the appropriate forum. A further challenge was again rejected on 4th October 2013 and on appeal the Court of Appeals for the Second Circuit upheld the orders on 15th December 2014.
- Meanwhile, back in Tanzania, on 6th September 2013 the Administrative Receiver of IPTL issued a claim in the High Court of Tanzania against VIP and PAP. The claim stated that IPTL owed SCBHK some US$141 million under the Facility Agreement and by reason of IPTL's default the Administrative Receiver had been appointed. It was said that the effect of that appointment was that IPTL's assets and, in particular, the monies in the Escrow Account could not be disbursed without the Administrative Receiver's consent. SCBHK sought permanent injunctions preventing VIP and PAP from taking monies from the Escrow Account and interfering generally with the rights of the Administrative Receiver. On 11th September 2013, following her unsuccessful attempt the previous day to enter the power plant, the Administrative Receiver issued a further claim in the High Court of Tanzania seeking a permanent injunction restraining IPTL from preventing the Administrative Receiver from entering the power plant and taking possession of the assets. On 31st October 2013 both applications came on for an inter partes hearing. On the morning of the hearing and without prior notification, the representative for the Administrative Receiver told the court that the applications were being withdrawn. Flaux J accepted on the evidence before him that the reason for doing so was a loss of confidence, on the part of SCBHK and the Administrative Receiver, in a fair and reliable result in the Tanzanian courts.
- Following the New York decision, VIP commenced proceedings in Tanzania against SCB, SCBHK and SCB Tanzania ("SCBTZ") on 13th November 2013, raising essentially the same arguments that were put before the New York court. SCBHK submitted a defence, objecting to Tanzania as the correct forum. On 6th June 2014, the Tanzania High Court dismissed that objection.
- On 23rd December 2013 SCBHK commenced the present English proceedings seeking, inter alia:
i) as against IPTL, judgment for all sums accruing under the Facility Agreement; and
ii) as against VIP and PAP:
a) declaratory relief in relation to the Charge of Shares and Shareholder Support Deed;
b) a declaration that SCB, SCBHK and SCBTZ are not liable to VIP under any of the heads pleaded in the Tanzanian proceedings;
c) injunctive relief in relation to the security and assets of IPTL;
d) orders regarding the sums received under the share sale agreement with PAP; and
e) further or alternatively, equitable compensation.
- In July 2014 IPTL and PAP applied under CPR 11.1(1)(b) and (6)(d) for a stay of the English proceedings on the grounds that Tanzania and not England was the most appropriate forum for the dispute; alternatively a stay on case management grounds. VIP also applied to set aside or dismiss the English proceedings as an abuse of process in the light of what had been decided in New York or because they should be stayed for the same reasons as those given by IPTL and PAP. It was these applications that came before Flaux J on 21st April 2015.
- The judge considered the law relating to non-exclusive jurisdiction clauses and clauses waiving a party's right to object that proceedings had been brought in an inconvenient forum and said this in para 109:-
"… even where there is an FNC waiver with a non-exclusive jurisdiction clause, if very strong or exceptional grounds for granting a stay are demonstrated, the Court may in an appropriate case grant a stay, provided that the grounds in question can properly be described as unforeseen and unforeseeable at the time the agreement was made. In other words, the bargain which the defendant makes in entering a contract with an FNC waiver is that he will not seek to argue that England is not an appropriate forum in relation to forum non conveniens grounds which were foreseeable at the time that the relevant agreement was made."
He concluded that it was foreseeable that proceedings might take place in Tanzania as well as in England. He accepted that, if the Tanzanian proceedings were ready or nearly ready for trial of the issues in the English proceedings, there might be a case for the action against IPTL in England to be stayed but he held that the Tanzanian action brought by IPTL was not sufficiently near trial for a stay to be justified. Nor, with reference to VIP, did he consider that it was an abuse for SCBHK to be litigating against VIP in England when SCB had procured a judgment in New York that VIP's proceedings in tort against SCB should be heard in Tanzania. Both IPTL (together with PAP) and VIP now appeal with permission of Gloster LJ.
- Mr Matthew Hardwick QC for IPTL and PAP accepted the judge's conclusions about the law but submitted in broad outline that, if one had regard to the totality of the Tanzanian proceedings which had begun as long ago as 24th February 2002 with VIP's petition for the winding-up of IPTL and the fact that IPTL had themselves brought proceedings in Tanzania (albeit after SBCHK had begun the English proceedings) which could conclude within a reasonable time, so much time and money had been spent on those Tanzanian proceedings that the English action against IPTL should be stayed. He focused, in particular, on the inter partes hearing for injunctive relief before Makaramba J on 31st October 2013 at which, without prior warning, counsel for the Administrative Receiver said that the applications were being withdrawn; at that point, said Mr Hardwick, the parties were ready for a final hearing.
- Mr Richard Coleman QC for VIP repeated VIP's assertions that SCBHK's English proceedings against VIP were abusive in the light of SCB's contentions in New York (amounting to representations on which VIP had relied by beginning their Tanzanian proceeding) that Tanzania was the appropriate country in which VIP's claims in tort against SCB should be pursued. He submitted that SCB was acting with SCBHK's knowledge and authority in making such representations and SCBHK were accordingly bound by them even in relation to SCBHK's claims under the Financial Documents. He relied on the fact that SCBHK were claiming in England that they were not liable to VIP in respect of the claims being brought against them in Tanzania and also on the fact that VIP had brought their claims in Tanzania before SCBHK had instituted the English proceedings. A stay on case management grounds was, therefore, appropriate.
- Mr Davies-Jones QC for SCBHK and SCBMB supported the judge's conclusions but argued in his respondent's notice that he had stated the law too generously to the defendants in that both IPTL and VIP had agreed not to make a forum non conveniens application and that even unforeseeable factors should therefore be irrelevant. For this purpose he relied on para 23 of the judgment of Clarke LJ in National Westminster Bank v Utrecht-America Finance Company  2 All ER (Comm) 7 with which Aldous and Laws LJJ agreed.
Strong grounds for a stay (1) Readiness for trial of SCBHK's claim and/or IPTL's defence in Tanzania
- This submission has to be assessed against the background of the authorities on non-exclusive jurisdiction clauses. In S & W Berisford v New Hampshire Insurance  2 QB 631, Hobhouse J famously held that the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (now the Judgments Regulation) entitled a claimant to sue in England his insurer who had a branch or agency in London because the insurer/defendant was deemed to be domiciled here and the doctrine of forum non conveniens did not apply to cases governed by that Convention. There was, however, a non-exclusive jurisdiction clause for England which, had the judge been wrong in his primary decision, would have entitled the claimant to sue in England in any event. As to that Hobhouse J said (page 638B):-
"If the contract says that the assured is entitled to sue the underwriter in the English court, then it requires a strong case for the courts of this country to say that that right shall not be recognised and that he must sue elsewhere."
At a later stage he returned to the same point saying (646A):-
"… the fact that the parties have agreed in their contract that the English courts shall have jurisdiction (albeit a non-exclusive jurisdiction) creates a strong prima facie case that their jurisdiction is an appropriate one; it should in principle be a jurisdiction to which neither party to the contract can object as inappropriate; they have both implicitly agreed that it is appropriate."
- These passages were followed by Waller J in British Aerospace Plc v Dee Howard Company  1 Lloyds Rep 368, a case in which the defendants had begun proceedings in Texas in spite of what the judge held was an exclusive jurisdiction clause. He did, however, consider what the position would have been if he had held the clause to be a non-exclusive jurisdiction clause. After referring to Berisford Waller J said (page 376):-
"It seems to me on the language of the clause that I am considering here, it simply should not be open to DHC to start arguing about the relative merits of fighting an action in Texas as compared with fighting an action in London, where the factors relied on would have been eminently foreseeable at the time that they entered into the contract. Furthermore, to rely before the English Court on the factor that they have commenced proceedings in Texas and therefore that there will be two sets of proceedings unless the English Court stops the English action, should as I see it simply be impermissible, at least where jurisdiction in those proceedings has been immediately challenged. If the clause means what I suggest it means that they are not entitled to resist the English jurisdiction if an action is commenced in England, it is DHC who have brought upon themselves the risk of two sets of proceedings if as is likely to happen, BAe commence proceedings in England. Surely they must point to some factor which they could not have foreseen on which they can rely for displacing the bargain which they made i.e. that they would not object to the jurisdiction of the English Court.
Adopting that approach it seems to me that the inconvenience for witnesses, the location of documents, the timing of a trial, and all such like matters, are aspects which they are simply precluded from raising. Furthermore, commencing an action in Texas, albeit that may not be a breach of the clause, cannot give them a factor on which they can rely, unless of course that action has continued without protest from BAe. One can well imagine that if BAe had taken part in the proceedings in Texas without protest and if the proceedings had reached the stage at which enormous expenditure had been incurred by both sides and the matter was accordingly nearly ready for trial in Texas, that such factors would obviously lead the English Court to exercise its discretion in favour of setting aside service of proceedings. That is very far from being the situation in relation to the Texas proceedings so far commenced.
It is thus clear to me that the proper approach to a case of the sort that I am considering is to consider it as equivalent to proceedings commenced as of right, to apply the passage in Lord Goff's judgment in The Spiliada dealing with such actions but to add the consideration which he did not have in mind as pointed out by Mr Justice Hobhouse in Berisford, that there is a clause under which DHC had agreed not to object to the jurisdiction. That being the proper approach, and additionally, it being (as in my judgment it is) right only to consider the matters which would not have been foreseeable when that bargain was struck, I would dismiss both summonses of the defendants."
- It was these, as well as other later, authorities that led to Flaux J's statement of the law in para 109 of his judgment which I have already cited (in para 18 above) and to his conclusion that there was nothing unforeseeable about proceedings in Tanzania which might or might not be more advanced than any proceedings in England. That might alone have justified the judge's refusal to stay the English proceedings but he went further and engaged with the submission that expenditure had been incurred in Tanzania and that "the matter was accordingly nearly ready for trial" in Tanzania. He had already observed (in para 70) that the hearing of 31st October 2013 was an inter partes hearing for interlocutory injunctive relief and later concluded (para 124) that SCBHK's claim was not ready for trial and that accordingly, no "strong or exceptional grounds for granting a stay" had been demonstrated.
- In this the judge was correct. The proceedings ready to be determined on 31st October 2013 were:-
i) as against VIP and PAP (in case 123 of 2013 issued on 6th September 2013) that, despite VIP's purported transfer of its shares in IPTL to PAP, neither VIP nor PAP should interfere with the Administrative Receiver's conduct of IPTL's business and, in particular, that money in the Escrow Account should not be paid out of that account without the Administrative Receiver's consent; and
ii) as against IPTL (in case 124 of 2013 issued on 11th September 2013) that IPTL should be restrained from refusing the Administrative Receiver's right of entry to the plaint.
Those proceedings were, no doubt, premised on SCBHK being entitled to declare an Event of Default under the Facility Agreement (a fact which the provisional liquidator appointed at the instance of VIP or IPTL sought to challenge) but there was no evidence that that issue was going to be conclusively determined at the hearing of 31st October 2013. It is true that the defence of 1st October 2013 to the Administrative Receiver's plaint in the first proceedings claimed that the assignment of the loan was disputed by VIP and that the novation to SCBHK was "legally void" but the main focus of the argument seems to have been that the security deed pursuant to which the Administrative Receiver had been appointed had not been registered and was therefore void.
- In these circumstances the judge was amply justified in concluding in para 124 that, although considerable sums of money had been spent in Tanzania, they had been spent "essentially on interlocutory battles", that in both England and Tanzania proceedings were still in their preliminary stages and that the case was "nowhere near ready for trial in any jurisdiction". His evaluation of the complex procedural history cannot, in my judgment, be faulted. Mr Hardwick accepted that his appeal was an appeal on fact and, as such, it must, in my opinion, fail.
- The judge further pointed out (para 125) that in the present case there was an express waiver of the right to argue that an alternative venue was a more appropriate forum for the resolution of the parties' dispute and that no such express waiver had existed in British Aerospace v Dee Howard. In those circumstances he thought that the advanced stage of proceedings in Tanzania, had it existed, would have been irrelevant because alternative proceedings were always foreseeable. It is not necessary for us to express any view about that and I do not do so.
Strong grounds for a stay? (2) New York proceedings
- VIP associated themselves with IPTL's submissions that there were strong grounds for a stay but added that the representations made by SCB in New York should be taken into account as well. Mr Coleman's main argument was that it was an abuse of process for SCBHK, in the light of SCB's conduct in New York, to institute or continue the English proceedings. That argument is a different one from the argument that there are strong grounds for a stay on forum non conveniens grounds but, as the judge pointed out, if it is a good argument it stands on its own; if it is a bad argument and there is no abuse it can hardly add relevant weight to other (inadequate) grounds. The clauses contemplate proceedings in other jurisdictions; no doubt they do not contemplate abusive proceedings but that is as far as the matter can go. I turn then to the abuse arguments.
Abuse of process
- Flaux J decided that there was no abuse of process in SCBHK instituting proceedings because there was no estoppel arising from the New York proceedings begun by VIP and because, in the absence of an estoppel binding on SCBHK preventing it from suing in England, there was no applicable abuse in the English proceedings. There was no estoppel because SCB in New York was not the same party as SCBHK or SCBMB who were litigating in London nor were SCBHK or SCBMB to be treated as the privies of SCB for the purpose of any issue estoppel; in any event the issue litigated in New York (which country was the appropriate forum for VIP's claim in tort against SCB?) was not the same issue as that arising in England (which country was the appropriate forum for SCBHK's and SCBMB's contractual claim against VIP under the Shareholder Support Deed and Charge of Shares?). The judge was in my opinion correct on both matters and was also right to hold that, in the absence of an estoppel, there was no abuse.
- The requirements for issue estoppel are set out in The Sennar (No. 2)  1 WLR 490, 499:-
"… in order to create an estoppel of that kind, three requirements have to be satisfied. The first requirement is that the judgment in the earlier action relied on as creating an estoppel must be (a) of a court of competent jurisdiction, (b) final and conclusive and (c) on the merits. The second requirement is that the parties (or privies) in the earlier action relied on as creating an estoppel, and those in the later action in which that estoppel is raised as a bar, must be the same. The third requirement is that the issue in the later action, in which the estoppel is raised as a bar, must be the same issue as that decided by the judgment in the earlier action."
- It is obvious that the defendant in the New York proceedings is not the same as the claimants in the English proceedings; the question therefore is whether SCBHK is a privy are privies in the sense used in the quotation from The Sennar. For this purpose it is sufficient to cite Resolution Chemicals v Lundbeck A/S  RPC 5 in which Floyd LJ at para 32 said:-
"…a court which has the task of assessing whether there is privity of interest between a new party and a party to previous proceedings needs to examine (a) the extent to which the new party had an interest in the subject matter of the previous action; (b) the extent to which the new party can be said to be, in reality, the party to the original proceedings by reason of his relationship with that party, and (c) against this background to ask whether it is just that the new party should be bound by the outcome of the previous litigation."
It may be that SCBHK and SCBMB had a general commercial interest in the outcome of the New York proceedings but that, on its own, is insufficient to make them privies to SCB. If one asks whether they were "in reality the party to the original proceedings", the only answer can be a negative one. Unlike SCB, SCBHK was not itself present in New York and were thus, in principle, not available to be sued in New York; but, whether or not, if sued, they could have been made subject to New York's jurisdiction, the fact is that they were not sued. That was a decision made by VIP for whatever reason; it hardly lies in VIP's mouth now to assert that they were in reality parties to the original proceedings.
- Mr Coleman made much of the fact that SCB's motion to have the New York proceedings stayed or dismissed was supported by a declaration of Mr Casson who was the manager of SCBHK and a Memorandum of Law which stated that all VIP's claims concerned SCB's or SCBHK's equity rights in IPTL and relied on the fact that VIP itself had contended that the Tanzanian court was the only court which could establish SCBHK's rights regarding IPTL and in which all parties could be heard. It was then said that these facts, together with the oral submissions made to Judge Marrero in New York, amounted to representations as to the appropriateness of Tanzania as a forum for resolution of the dispute with SCBHK on which VIP had relied by subsequently starting its own proceedings in Tanzania, so as to make it just that SCBHK should be bound by the outcome in New York.
- I cannot accept these submissions; it was natural that Mr Casson, who had all the material knowledge relating to the loans made for the construction of the power plant in Tanzania, should be the person to deal with the proceedings brought in tort in New York; his knowledge of the history and his position as managing director of SCBHK may show that SCBHK did indeed have a general commercial interest in the litigation but that is not enough to show that SCBHK was "in reality party to the proceedings" against their parent company in tort. As the judge said, that would be a failure to recognise the distinct corporate personalities in the case and lead to a piercing of the corporate veil contrary to the limited scope ascribed to that doctrine in Prest v Prest  2 AC 415. Any representation that can, with difficulty, be elicited from the Memorandum of Law or the oral submissions made to Judge Marrero cannot be construed as any representation made on behalf of SCHBK that, if proceedings were necessary to recover monies due in respect of the loan, SCBHK would waive its entitlement to rely on the contractual terms which permit it to sue in England.
- The unsurprising fact (unsurprising in the light of the claims made by VIP in New York) that SCBHK in England (subsequently to the New York Proceedings) is seeking a negative declaration in para 94 of its particulars of claim that neither SCBHK nor SCB are liable under any of the heads of claim pleaded by VIP in Tanzania cannot mean that SCBHK is a privy to the issues decided in New York; it merely shows a natural desire that all matters in contention should be dealt with at one and the same time.
- Mr Coleman criticised the judge for failing to hold that SCBHK had authorised the stance taken by SCB in New York. But the judge was correct to make no such finding. In the first place it would be meaningless since there was no need for any such authorisation. Secondly it would mean promoting the subsidiary of the parent company to a principal of that company, an exercise totally at variance to VIP's actual contention in New York that SCBHK was SCB's agent, see para 144 of the judgment.
- Mr Coleman accepted in argument that, if the case in New York had proceeded to a conclusion that SCB was (or was not liable) to VIP, such a conclusion would not have bound SCBHK. It would, therefore, be curious if SCBHK could be bound by interlocutory decisions along the way.
(b) Same Issue?
- It is worth while setting out the relevant parts of Marrero J's admirably concise judgment of 10th September 2013:-
"Under the forum non conveniens doctrine, the court "assesses the appropriateness of litigating the action in the plaintiff's choice of forum, as opposed to the alternative venue, by balancing the private interests of the litigants and the public interest concerns of the court". Turedi v Coca Cola Co. 460 F. Supp. 2D 507, 521 (S.D.N.Y. 2006), aff'd, 343 Fed. App'x 623 (2d Cir. 2009); see also Gilbert, 330 U.S. at 508-09 (outlining relevant public and private interest factors). The private interests in this case, including access to relevant documents and witnesses, suggest that the Republic of Tanzania is the proper forum for this action. See Piper Aircraft, 454 U.S. at 257; Gilbert, 330 U.S. at 508. Public interests also weigh in favour of trying this action in the Republic of Tanzania. All of the operative facts occurred in the Republic of Tanzania, and both VIP and IPTL are based in the Republic of Tanzania. See Piper Aircraft, 454 U.S. at 260 ("[T]here is "a local interest in having localized controversies decided at home"". (quoting Gilbert, 330 U.S. at 509)).
In short, the court finds that the Republic of Tanzania is an available and adequate forum for VIP's suit and that "in the interest of justice and all other relevant concerns the action would be best brought in" the Republic of Tanzania. Turedi, 460 F. Supp. 2d at 521."
- It is evident that the sole focus of the judgment is on a comparison of the competing merits of Tanzania and New York for the purpose of resolving VIP's claim. There is no mention of England or the jurisdiction clause entitling the creditor to sue in England nor could there have been since SCBHK's contractual rights were no part of the picture. In these circumstances it cannot be said that the same issue was tried in New York as is currently being tried in England, namely in which country is SCBHK to be allowed to bring its claim? The requirement, for the purposes of issue estoppel, that the issue in the current action be the same as the issue in the earlier action, is not made out.
- Mr Coleman again relied on the negative declaration sought by SCBHK in its particulars of claim to say that the issue of venue at any rate in relation to that claim was the same issue as decided in New York. But that would be to let the tail wag the dog with a vengeance, since that declaration claim is subsidiary to the essence of the claim now being brought in England.
(c) Collateral attack on judgment of Marrero J?
- If there is no issue estoppel, I cannot see that there is any question of an impermissible attack on the judgment of Marrero J. The issue which he was considering is just not the same as the issue of where SCBHK's claim can be brought.
- For much the same reasons, the submission that the judge failed to stand back from the detailed facts and ask himself the general question whether SCBHK's claim was abusive cannot be accepted. Of course there can be abuse in circumstances in which there is no issue estoppel but such cases will, in general, be rare and any decision that a litigant is not entitled to have its dispute in the courts of the country permitted by the terms of the contract will be rarer still. The further one stands back from the detailed facts of this case, the less abusive it looks.
Case Management stay?
- Lastly Mr Coleman argued that there should be a stay of the English proceedings as a matter of case management. This resolved itself into a submission that, since VIP's proceedings of November 2013 in Tanzania were more advanced than SCBHK's proceedings of December 2013 in England, it was more convenient that the Tanzanian proceedings should be the main proceedings rather than that there be an unseemly rush to judgment in both jurisdictions.
- I would, for my part, accept that a FNC waiver clause does not preclude an application for a case management stay of the kind ordered by the court in Reichhold Norway ASA v Goldman Sachs International  1 WLR 173 in what Lord Bingham CJ called in that case "rare and compelling cases" particularly if such a stay were to promote (as in that case it did) an orderly process of litigation. Indeed the example given by Waller J in the British Aerospace case of large sums being spent and a case being nearly ready for trial in one jurisdiction perhaps justifying a stay, even when there is a non-exclusive jurisdiction clause, may be more appropriately viewed as a case management stay rather than a forum non conveniens stay.
- The judge summarised VIP's claim in paragraph 73 of his judgment and Mr Coleman submitted that these matters had begun to be heard in Tanzania in February of this year (2016) in a series of two week slots in which evidence was already prepared. While that may be the case, the judge could find no good reason, as a matter of case management, to stay the English proceedings which SCBHK and SCBMB were entitled to bring as a matter of agreement and neither can I.
- I agree also, however, with Mr Davies-Jones' submission that one has to be careful about the timing of such arguments. The jurisdiction applications have necessarily taken over a year to be determined in England. The question for us is whether, at the time the stay application was made, case management considerations compelled a stay not whether they do so now. That is a matter which was essentially a matter of the judge's discretion, with which there is no reason to interfere.
- For all these reasons these appeals must be dismissed, even on the basis, which we accept for present purposes, that the judge's statement of the law in para 109 of his judgment was correct. It is, therefore, unnecessary to consider the respondent's notice although it is perhaps apposite to add that, in the National Westminster Bank case, there was no application to stay on the grounds of abuse of process and no appeal was pressed from the Judge's refusal of a stay on case management grounds.
Lady Justice Black:
- I agree.
Lord Justice Hamblen:
- I agree also.
THE RT HON LORD JUSTICE LONGMORE, THE RT HON LADY JUSTICE BLACK, AND THE RT HON LORD JUSTICE HAMBLEN
|IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
On Thursday 28th April 2016
B E T W E E N :
(1) STANDARD CHARTERED BANK (HONG KONG) LIMITED
(a company incorporated in Hong Kong)
(2) STANDARD CHARTERED BANK MALAYSIA BERHAD
(a company incorporated in Malaysia)
(1) INDEPENDENT POWER TANZANIA LIMITED
(a company incorporated in Tanzania)
(2) VIP ENGINEERING AND MARKETING LIMITED
(a company incorporated in Tanzania)
(3) PAN AFRICAN POWER SOLUTIONS (T) LIMITED
(a company incorporated in Tanzania)
UPON the Appellants' appeals against the Order of Mr Justice Flaux dated 19th June 2015
AND UPON HEARING (i) leading counsel for the Respondents, (ii) leading counsel for the First and Third Appellants, and (iii) leading counsel for the Second Appellant
IT IS ORDERED THAT:-
- The Appeals be dismissed.
- The Appellants shall pay the Respondents' costs of the Appeals, to be assessed on the standard basis if not agreed. The said costs shall be borne as to 50% by the Appellants in Appeal A3/2015/2206 and as to 50% by the Appellant in Appeal A3/2015/2221.
- The Appellants in Appeal A3/2015/2206 shall pay £40,670 on account of the costs referred to in paragraph 2 above by 4.30 pm on 26th May 2016.
- The Appellants in Appeal A3/2015/2221 shall pay £40,670 on account of the costs referred to in paragraph 2 above by 4.30 pm on 26th May 2016.
- The Appellants shall pay interest on the Respondents' costs of the Appeals (a) from the date of payment of such costs to 28th April 2016 at the rate of Base Rate + 1% and (b) from 28th April 2016 at the Judgment Act rate.
- The sum of £150,000 paid into Court by the Appellants in Appeal A3/2015/2206 and the sum of £150,000 paid into Court by the Appellants in Appeal A3/2015/2221, pursuant to paragraphs 7 and 8 of the Order of the Honourable Mr Justice Flaux dated 19th June 2015 and to paragraphs 1 and 2 of the Order of the Right Honourable Lord Justice Lloyd Jones dated 1st March 2016, be paid out to the Respondents forthwith.
- In order to give effect to paragraph 6 above, the Master or a Deputy Master shall provide to the Accountant General a payment schedule signed and authenticated by him under rule 22(1) of the Court Funds Rules.
- The Appellants shall have until 12 noon on 5th May 2016 to apply in writing to the Court of Appeal for permission to appeal.
- Matters consequent on that application to be delivered thereafter.
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