1) Standard Chartered Bank (Hong Kong) Ltd and Another v 1) Independent Power Tanzania Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore:,Lady Justice Black,Lord Justice Hamblen |
| Judgment Date | 28 April 2016 |
| Neutral Citation | [2016] EWCA Civ 411 |
| Docket Number | Case No: A3/2015/2206 & A3/2015/2221 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 April 2016 |
[2016] EWCA Civ 411
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE FLAUX
Royal Courts of Justice
Strand, London, WC2A 2LL
The Right Honourable Lord Justice Longmore
The Right Honourable Lady Justice Black DBE
and
The Right Honourable Lord Justice Hamblen
Case No: A3/2015/2206 & A3/2015/2221
Mr Matthew Hardwick QC & Mr Ian Higgins (instructed by Hugh Cartwright & Amin) for the 1 st & 3 rd Appellants
Mr Richard Coleman QC & Mr Christopher Knowles (instructed by Charles Russell Speechlys LLP) for the 2 nd Appellant
Mr Jonathan Davies-Jones QC & Mr William Edwards (instructed by DLA Piper UK LLP) for the Respondents
Hearing dates: 7 th & 8 th April 2016
Introduction
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 28 th 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 28 th 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 [2016] 1 All E.R. (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 5 th 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 4 th 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 22 nd 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 15 th 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 23 rd January 2009 and 17 th 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 21 st 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 5 th 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 24 th February 2002 notwithstanding the existence of the stayed application for the appointment of an Administrator. On 17 th 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 7 th 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...
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