An alleged fraud (relating to a sale of Indian cotton) between an Indian, a Malaysian and a Hong Kong company has generated multiple claims in Singapore and one in London, Detusche Bank AG v CIMB Bank Berhad. These arise from the typical web of letters of credit, finance facilities and guarantees found in international commodities finance. In London, Deutsche Bank (DB) claim reimbursement from CIMB (a Malaysian bank) of sums paid out under letters of credit issued by CIMB.
Of interest for this blog is the Commercial Court’s decision last week ( EWHC 81 (Comm)) refusing to grant CIMB a stay of the London proceedings on the basis of forum non conveniens. Teare J’s judgment is a pithy demonstration of the English court’s approach to such arguments applying the Spiliada principles (discussed below).
A key point to note is that the mere risk of inconsistent decisions on a factual point and the duplication of costs was not enough to justify a stay of English proceedings. The case also should give parties pause to consider before beginning parallel proceedings in another jurisdiction (see my final thoughts on tactics)
Last week, in Standard Chartered Bank (Hong Kong) Ltd v Independent Power Tanzania Ltd  EWCA Civ 411, the Court of Appeal (judgment by Longmore LJ) allowed English proceedings to continue in parallel with Tanzanian proceedings involving the same parties and issues.
The case is of particular interest because the contracts included both a non-exclusive jurisdiction clause and a forum non conveniens (FNC) waiver clause (i.e. a clause by which each party irrevocably waived, among other things, any claim it might otherwise make that proceedings had been brought in “an inconvenient forum”).
The combination of those clauses ought severely to restrict the possibility of one party resisting proceedings on jurisdictional grounds. On the other hand, the Court of Appeal’s decision in this case makes clear that such clauses cannot always prevent parallel proceedings being used to justify a stay of English proceedings, at least on case management grounds.
In general, though, non-exclusive jurisdiction clauses and FNC waiver clauses give rise to a real risk of parallel proceedings. When deciding whether to include these types of clauses in a contract, this risk needs to be weighed carefully against the benefit of a choice of jurisdictions.
In addition, the court’s treatment of an abuse of process argument (not dependent on the jurisdiction clause points) provides a helpful outline of the relevant principles. Continue reading →