Camdex International Ltd v Bank of Zambia

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date03 April 1996
Judgment citation (vLex)[1996] EWCA Civ J0403-8
Date03 April 1996
Docket NumberQBCMI 95/1495/B

[1996] EWCA Civ J0403-8




Royal Courts of Justice


London WC2


Lord Justice Neill

Lord Justice Peter Gibson

Lord Justice Hobhouse

QBCMI 95/1495/B

Camdex International Ltd
Bank of Zambia

Mr T WALKER QC and MR R HANDYSIDE (Instructed by Lovell White Durrant, EC1A 2DY) appeared on behalf of the Appellant

Mr M HOWARD (Instructed by Baker & McKenzie, EC4V 6JA) appeared on behalf of the Respondent


The appeal will be dismissed with for the reasons set out in the judgments handed down.


This is an appeal (brought with the leave of a member of this court) by the Defendant in the action, the Bank of Zambia, from the judgment of Mr Justice Longmore of the 18th September 1995 sitting in the Commercial Court when on an application for summary judgment under RSC Order 14 by the Plaintiffs, Camdex International Ltd, he ordered that judgment be entered for the Plaintiffs in the sum of Kuwaiti Dinars 20,595,557.429 and interest amounting to Kuwaiti Dinars 15,411,866.


The action was commenced by writ dated 26th May 1995. In their Points of Claim the Plaintiffs pleaded that on 18th May 1982 the Central Bank of Kuwait deposited with the Defendant the sum of Kuwaiti Dinars 15,000,000 for a period of a year at an agreed rate of interest. The deposit was renewed in a number of subsequent years with the interest being accumulated. On 19th May 1988 the Central Bank of Kuwait and the Defendant entered into two further agreements which had the effect of rescheduling part of the Defendant's interest liability and extended the deposit of the principal sum and the balance of the interest for a further year. The Defendant paid a sum of 616,098 Kuwaiti Dinars during 1990 but otherwise failed to pay the sums due under the 1988 agreements. Having pleaded the indebtedness of the Defendant to the Central Bank of Kuwait, the Plaintiffs pleaded that the Central Bank of Kuwait by a document in writing dated 27th April 1995 assigned absolutely to the Plaintiffs the debts due under the 1988 agreements and that the Plaintiffs had given written notice of the assignment to the Defendant and that they had accordingly become entitled to the payment of the debt to them.


The 1988 agreements referred to the Central Bank of Kuwait as the 'Depositor' and the Defendant as the 'Obligor'. The main agreement included clauses —

"This Agreement shall be binding upon and enure to the benefit of each party hereto and its successors and assigns."

"The Obligor shall not assign or transfer all or any of its rights, benefits and obligations hereunder, without the written consent of the Depositor."

"Law and Jurisdiction:

(a) This agreement shall be generally construed and interpreted in accordance with the laws of England. The English courts shall have non-exclusive jurisdiction in any dispute arising thereunder.

(b) To the extent that the obligor may in any jurisdiction in which any act or proceeding may at any time be taken for the enforcement of this agreement claim for itself or its assets immunity from suit, judgment, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets any such immunity (whether or not claimed), the obligor hereby irrevocably agrees not to claim and hereby irrevocably waives any such immunity to the full extent permitted by the laws of such jurisdiction. The obligor hereby irrevocably consents generally in respect of any such action or proceedings to the giving of any relief or issue of any process in connection with any such action or proceedings, including without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such action or proceedings."


The other 1988 agreement contained clauses which were obviously intended to be similar. Before Mr Justice Longmore the Defendant disputed that the Central Bank of Kuwait was entitled to assign the debts or the benefit of the agreements. The Judge held that the Central Bank of Kuwait was so entitled and there is no appeal against that part of his decision.


The Defendant does not dispute its indebtedness to the Central Bank of Kuwait or the amount of the debt. It solely disputes the validity and enforceability under English law of the assignment of the debt by the Central Bank of Kuwait to the Plaintiffs. The Defendant makes three submissions:

"(1) It is submitted that the correct test as to whether the assignment of a debt may be champertous is not the 'bona fide dispute' test, but rather whether the assignment was made in circumstances in which (assuming no adequate pre-existing commercial interest) it was known or expected that the underlying debt would have to be sued for: see Laurent v Sale [1963] 1 WLR 829 and Trendtex Trading Corporation v Credit Suisse [1982] AC 679 (per Lord Wilberforce at p.695C). Whether the debt is 'disputed' or not (see Trendtex [1980] 1 QB 629, CA, at p.654G) goes only to whether it is known or expected that the debt will have to be sued for (cf Laurent at p.833).

(2) It is further submitted that it is at the very least arguable that the bona fide dispute test (even if generally applicable) does not exclude champerty in the particular circumstances of the present case. The [Defendant] Bank is a central bank which is unable to pay its debts, which cannot avail itself of any insolvency procedures, which has grouped creditors into classes in an attempt to treat them equitably within the constraints of its limited resources, which has offered the same repayment terms to Camdex as have been offered to its other creditors, and which must meet certain targets and make certain other loan repayments to the international community if it is to receive donor aid upon which the Zambian economy is largely dependent. [references given.] The Bank contends that, on these facts, it is at least arguable that the debt now said to be owed to Camdex is and was known at the date of assignment to be sufficiently disputed for the law of champerty to apply.

(3) Even if the bona fide dispute test is applied, it is submitted that it is in any event satisfied. There is no bad faith involved in the stance adopted by the Bank, as the facts set out above make clear. The Bank genuinely disputes and has consistently disputed the debt in the sense that it has made clear its inability to treat Camdex as an exception to the rules applied by it to other creditors. It has not simply refused to pay what it knows that it must pay out of obstinacy or caprice."


The Defendant does not suggest that the second and third submissions provide it with any defence to the claim whether in the hands of the Plaintiffs or of the Central Bank of Kuwait. Mr Timothy Walker QC who appeared on behalf of the Defendant in this Court expressly adopted a similar concession which had been made before Mr Justice Longmore. (See p.5 of the judgment.) The affidavit evidence filed by the Defendant refers to the fact that it is the central bank for the Republic of Zambia and that it is unable to meet all its outstanding liabilities. Various groups of its creditors have made arrangements with it for the postponement of its debt—"the "Paris Club" creditors being mainly OECD countries; the "rights accumulation programme" under the aegis of the IMF; and so on. The Defendant accepts that the debt the subject matter of the present action does not fall within any of these schemes. In November 1994, it made an offer to the Plaintiffs to reschedule the Kuwaiti deposit debt (writing-off 50% and postponing the remainder for up to 20 years at a "highly concessionary" rate of interest) or to include it in a debt buy-back operation at 11¢ in the $ excluding accumulated interest. These offers were refused. It is not suggested that either the Central Bank of Kuwait or the Plaintiffs were under any obligation to accept any of these offers or to join in any of the other arrangements. It is fair to point out that the indebtedness which is the subject of those other schemes is on a wholly different scale to that which is the subject of the present action.


The second and third submissions are relied upon to support the first. The Defendant says, as is self evident, that this is a debt which cannot be recovered without the assistance of the courts—ie without recourse to litigation. It is clear upon the affidavit evidence that by the time of the actual legal assignment, that is to say, 27 April 1995, it was apparent that the Defendant was unwilling to pay the debt voluntarily and that a legal judgment would have to be obtained before it could be compelled to do so. The Defendant says that, in adopting this stance and in defending this action, it is, as they put it, acting bona fide in the interests of its other creditors.


But the Defendant cannot take the further step and say that the debt is disputed, bona fide or otherwise. The Defendant has no basis for disputing the debt and does not and never has sought to do so. The debt is undisputed. The only dispute raised in the Defendant's affidavits is as to the legality and enforceability of the assignment of the debt to the Plaintiffs. Any questions about the insolvency of the Defendant and any competing claims to its inadequate assets will arise, if at all, at the stage of the execution of the judgment and do not affect the entitlement of the Plaintiffs (or the...

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