Bankers Trust International Plc v PT Dharmala Sakti Sejahtera [QBD (Comm)]

JurisdictionEngland & Wales
JudgeMance J.
Judgment Date19 October 1995
CourtQueen's Bench Division (Commercial Court)
Date19 October 1995

Queen's Bench Division (Commercial Court).

Mance J.

Bankers Trust International plc
and
PT Dharmala Sakti Sejahtera and counterclaim

Ian Milligan QC and David Owen (instructed by Linklaters & Paines) for the plaintiffs.

Stuart Isaacs QC (instructed by Ince & Co) for the defendant DSS.

The following cases were referred to in the judgment:

Euromepa SA v R Esmerian IncECAS 51 F 3d 1095 (2nd Cir 1995).

Ketteman v Hansel Properties LtdELR [1987] AC 189.

Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [l987] AC 871.

South Carolina Insurance Co v Assurantie Maatschappij “de Zeven Provicien” NVELR [1987] AC 24.

Discovery — Foreign proceedings — Order for discovery overseas — Action tried in England — Judgment reserved — Plaintiffs commenced US proceedings — Application in US court for discovery in order to obtain evidence for production in English proceedings — US orders for disclosure in relation to defendants' transactions with other clients — whether foreign proceedings abusive and oppressive — Whether costs to be taken into account — Whether English or US court to judge whether US proceedings oppressive.

This was an application for an order requiring the plaintiffs to apply to the US District Court to discontinue the proceedings commenced there, to set aside its ex parte orders for discovery and to restrain further proceedings.

In this action the plaintiffs, Bankers Trust International plc (“BTI”) claimed that the defendant, PT Dharmala Sakti Sejahtera (“DSS”) owed nearly $65m in relation to transactions in derivatives which the parties had entered into. BTI had acted through Bankers Trust Co (“BTCo”). DSS counterclaimed for rescission of the transactions, and damages for deceit and negligence. The proceedings were commenced in England. DSS made interlocutory applications, which were largely unsuccessful, for discovery in relation to BTI's transactions with other clients. The applications were based on a claim that BTCo had been fraudulent. The trial of the claim and counterclaim took place in July 1995 and judgment was reserved.

In August, DSS obtained a copy of an article published in the “Washington Post” relating to an action in America against BTCo and BTI. DSS believed it showed that a fraudulent “system” of conduct had been operated by BTCo in relation other clients as well as themselves. DSS also believed that there were a number of other actions which endorsed their belief. As a result DSS applied, unsuccessfully, to the trial judge for leave to amend its pleadings to include a claim of systematic fraud. DSS then applied to the US District Court for an ex parte order for disclosure directed to BTCo and its parent and associated company. The US court granted the orders. DSS hoped that as a result new and relevant information would emerge that would enable them to reapply to the trial judge for leave to amend in order to assert systematic fraud.

BTI and BTCo applied for an order that DSS apply to the US District Court to discontinue the proceedings there and for the setting aside of the US District Court's orders.

Held, allowing the application and making the appropriate order to restrain the US proceedings:

1. Although in principle foreign proceedings could be used to gather evidence in a foreign jurisdiction for use in English proceedings, the court had jurisdiction to restrain a party to English proceedings from pursuing foreign proceedings where they were oppressive or vexatious. DSS had produced insufficient new evidence of a systematic fraud to warrant pursuing US proceedings in order to adduce fresh evidence or amend in England at a time when the English actions had already been tried.

2. It was for an English court to judge whether foreign proceedings in a US court constituted an abuse or were otherwise oppressive in the context of English proceedings. Taking into consideration all the circumstances, including the fact that costs could not be recovered in the New York court, and the speculative nature of the proposed large-scale investigation into the plaintiffs' business which, if it produced material to support the fraud allegations would require the reopening of the English trial, the US proceedings were both abusive and oppressive and ought to be restrained. (South Carolina Insurance Co v Assurantie Maatschappij “de Zeven Provicien” NVELR[1987] AC 24distinguished)

JUDGMENT

Mance J: These actions relate to transactions in derivatives-entered into by PT Darmala Sakti Sejahtera (“DSS”) with Bankers Trust International plc (“BTI”) acting through Bankers Trust Company (“BTCo”). BTI claims that DSS owes it nearly $65m. DSS counterclaims for rescission of the transactions and/or for damages for deceit and/ or negligence and/or negligent misstatement. An expedited trial was ordered by Waller J on 5 May 1995. Applications by DSS for discovery were determined by Longmore J on 9 June 1995 and by myself on 4 July 1995. The trial took place between 10 and 28 July 1995 when I reserved judgment. Judgment has not yet been given.

On 14 September 1995 DSS applied ex parte to the US District Court, Southern District of New York for, and on 20 September 1995 they were granted orders for the taking of depositions and production of documents directed to (a) BTCo and (b) BTCo's ultimate parent company, Bankers Trust New York Corp (“BTNYC”) and another subsidiary of BTNYC, BT Securities Corp (“BTSC”). On 21 September 1995 they served three subpoenas addressed to each of these Bankers Trust companies. The subpoenas identify as persons sought to be deposed seven named witnesses, from the chairman and president down, together with a custodian of records in relation to the documentary requests and:

“a witness designated pursuant to Fed.R.Civ.P 30(b)(6) with knowledge of: (a) policies and practices of Bankers Trust in 1994 with respect to marketing and selling derivatives; (b) complaints and/or claims asserted by Bankers Trust customers arising out of or relating to the marketing and sale of derivatives; and (c) investigations by regulatory authorities relating to the marketing and sale of derivatives by Bankers Trust.”

BTI and BTCo now apply by summons dated 27 September 1995 for an order requiring DSS to apply to the US District Court to discontinue the proceedings and to set aside its orders dated 20 September 1995 and restraining DSS from seeking to enforce the orders or to commence or continue any further like application. The summons also seeks declarations that any application by DSS for leave to re-amend its pleadings in the present actions to allege facts founded on evidence obtained in the New York proceedings would be refused and that the evidence to which the New York orders and subpoenas relate would not be admitted. I do not consider that this court can make any such prospective declarations in respect of applications for leave to re-amend not yet formulated or made and evidence not yet identified. I say no more therefore about the claim to these declarations. It was and is the claims requiring withdrawal of the US proceedings and restraining further such proceedings which are central to this application.

That there is jurisdiction to restrain a party to English proceedings from pursuing foreign proceedings in certain circumstances is beyond question. The nature of the jurisdiction and of the circumstances in which it may be exercised was considered in the House of Lords and Privy Council in South Carolina Insurance Co v Assurantie Maatschappij “de Zeven Provincien” NFELR[1987] AC 24 and Societe Nationale Industrielle Aerospatiale v Lee Kui JakELR[1987] AC 871. The present is not a case where BTI or BTCo can or do suggest that DSS by its proceedings in New York has invaded or is invading any legal or equitable right of any Bankers Trust company. These two cases show that, at least generally speaking, the only other circumstances in which an English court will restrain a party from pursuing foreign proceedings are when to do so would be “unconscionable”, a term which “includes, at any rate, conduct which is oppressive or vexatious or which interferes with the due process of the court” (see per Lord Brandon in the South CarolinaENR case at pp. 40F and 41D and per Lord Goff in the Aerospatiale case at p. 896F-G). In judging whether this is the case, the court must take into account not only the potential injustice to the one party if the other is allowed to pursue the foreign proceedings, but also the potential injustice to the latter if he is not so allowed (Aerospatiale at p. 896G).

The most common situation in which these principles come before the court for consideration is when there are two competing sets of proceedings, in both of which one or other party claims determination of the substantive dispute. An example occurred in the present case when BTI and BTCo applied unsuccessfully to Waller J in May 1995 for an injunction restraining the pursuit by DSS of concurrent Indonesian proceedings against them. The present situation is different in that the avowed aim of the New York proceedings is to complement and provide material “for use in” the present English proceedings. This was also the situation in the South CarolinaSC case. The House of Lords decision there shows that there is nothing axiomatically unacceptable about the use of s. 1782 to gather evidence in the US for use in English proceedings, although the means by which such evidence is gathered would not be available under English law and might involve the taking of depositions from and pre-trial discovery against third parties who were not parties to the English proceedings. To use s. 1782 was not to interfere with the English court's control of its own process: see per Lord Brandon at p. 41G. The defendants who were making use of s. 1782 were simply trying to obtain in a foreign country, by means there lawful, evidence which they believed that they needed for their case. Whether they applied to this...

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4 cases
  • Walter Tzvi Soriano v Forensic News LLC
    • United Kingdom
    • King's Bench Division
    • 10 February 2023
    ...have restrained an application under 28 USC §1782, two such cases being Bankers Trust International Plc v PT Dharmala Sakti Sejahtera [1996] CLC 252 and Omega Group Holdings Ltd v Kozeny [2002] CLC 25 In relation to these, Lord Falconer submitted that the facts were materially different. In......
  • Walter Tzvi Soriano v Forensic News LLC
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 1 March 2023
    ...ground). v) Should have allowed the judge to provide “helpful instructions” to the DCSDNY (as referred to in Bankers Trust International Plc v. PT Dharmala Sakti Sejahtera [1996] CLC 252 ( Bankers Trust) at page 273) to the effect that the nature and scope of what was sought by way of disc......
  • The Royal Bank of Scotland Plc v Thomas O. Hicks and Others
    • United Kingdom
    • Chancery Division
    • 17 February 2011
    ...to restrain such orders being obtained or worked through: see for example Bankers Trust International v PT Dharmala Sakti Sejahtera [1996] C.L.C. 252; Omega Group Holdings Ltd v Kozeny [2002] CLC 132. It has done so, however, where the procedure was likely to burden English proceedings with......
  • Vitapharm Canada Ltd. et al. v. Hoffmann-La Roche (F.) Ltd. et al., [2001] O.T.C. 47 (SupCt)
    • Canada
    • Ontario Superior Court of Justice of Ontario (Canada)
    • 12 January 2001
    ...v. Sperry Corp. (1985), 754 F.2d 132 (3rd Cir.), refd to. [para. 33]. Bankers Trust International plc v. P.T. Dharmal Sakti Sejahtera, [1996] C.L.C. 252 (Q.B.), refd to. [para. 37]. Stern v. Imasco Ltd. et al., [1999] O.T.C. Uned. C80; 38 C.P.C.(4th) 347 (Sup. Ct.), refd to. [para. 38]. Ont......
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