Commerzbank Aktiengesellschaft v Liquimar Tankers Management Inc. (Defendant/Applicant)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Cranston,Mr Justice Cranston |
| Judgment Date | 03 February 2017 |
| Neutral Citation | [2017] EWHC 161 (Comm) |
| Docket Number | Claim No. Cl 2016-000316 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 February 2017 |
[2017] EWHC 161 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr. Justice Cranston
Claim No. Cl 2016-000316
Claim No. CL 2016-000564
Ms Poonam Melwani QC (instructed by Stephenson Harwood LLP) for the Claimant
Mr James Brocklebank (instructed by Reed Smith LLP) for the Defendants
Hearing dates: 12 January 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
The central issue in this case is whether so-called asymmetric jurisdiction clauses confer exclusive jurisdiction on the court or courts of a Member State within the terms of Article 31(2) of Regulation (EU) 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("Brussels 1 Recast" or "the Regulation"). As described in greater detail below, asymmetric jurisdiction clauses are clauses which contain different provisions regarding jurisdiction depending on whether the proceedings are initiated by one party to the agreement rather than the other. They are widely used in international financial markets.
Under a typical asymmetric jurisdiction clause X (say a bank) and Y (say a borrower) agree that Y may sue X in the courts of jurisdiction A only but that X may bring proceedings against Y elsewhere. If such a clause is an exclusive jurisdiction agreement under Brussels 1 Recast, Article 31(2) provides that if Y sues in the courts of jurisdiction B in the above example, those courts must stay proceedings in favour of the courts of jurisdiction A, even if they and not the courts of jurisdiction A were first-seized of the matter. There is no EU jurisprudence on the issue.
The present applications of the defendants are being made in the course of proceedings in this court by Commerzbank Aktiengesellschaft ("the Bank") in two separate actions in relation to the repayment of loans which the Bank extended for the building of a number of ships. The applications are made in circumstances where there are ongoing proceedings taken by the defendants against the Bank in the Court of First Instance of Piraeus in Greece concerning the same and/or related issues.
What the defendants apply for at this point in the two applications is for a stay of the Bank's case until the Greek cases are heard. They also apply for the setting aside of the service of process on them in Liberia. The applications are made in reliance on Brussels 1 Recast and under the Civil Procedure Rules ("CPR") 11.1.
BACKGROUND
The claimant in the proceedings initiated in this court is a German bank, which has had a presence in London for some four decades. It is the successor to the rights of Deutsche Schiffsbank Aktiengesellschaft, which entered into various loan agreements and related contracts with the defendants. For present purposes nothing turns on the distinction between the Bank and its predecessor.
Liquimar Tankers Management Inc ("Liquimar"), a defendant in this case, is a ship management company registered in the Republic of Liberia but with its principal place of business in Athens, Greece. In the second action, Pauline Shipping Ltd ("Pauline"), a ship owning company managed by Liquimar, is also a defendant. It is the former owner of a vessel named Adriadni.
During the period 2006–2008, the Bank entered into three loan agreements to finance the building of ships. The first was between the Bank and Islander Maritime SA, a ship owning company managed by Liquimar. It was dated 26 May 2006 and, as with the other agreements in this case, was signed by all parties in Greece. The loan was in respect of a vessel, High Nefeli. There was no guarantor of that loan.
The second loan agreement was dated 4 July 2008 between the Bank and Androniki Navigation Limited, another of Liquimar's ship owning companies. The loan was for a new build vessel which Androniki was to acquire. Over US$ 7.6 million was drawn down under that agreement. With repayments the Bank claims that around US$ 6.6 million is outstanding. In the event the construction contract was cancelled and the vessel was never built. The second loan agreement was guaranteed by Liquimar and it is Liquimar's guarantee which has given rise to what are described below as the First Greek and First English proceedings.
The Liquimar guarantee contained a governing law and an asymmetric jurisdiction clause, which was essentially similar to that in this and the other loan agreements. It provided:
"16 Law and Jurisdiction
16.1 This Guarantee and Indemnity shall in all respects be governed by and interpreted in accordance with English law.
16.2 For the exclusive benefit of the Lender, the Guarantor irrevocably agrees that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Guarantee and Indemnity and that any proceedings may be brought in those courts.
16.3 Nothing contained in this Clause shall limit the right of the Lender to commence any proceedings against the Guarantor in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Guarantor in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.
16.4 The Guarantor irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any jurisdiction …".
The third loan agreement was between the Bank and Pauline and dated 9 October 2008. It was for a new build vessel, the Adriadni, which was completed in the early part of 2009 and registered in Liberia. As with the second loan agreement, it was guaranteed by Liquimar. The loan agreement and the guarantee contained a proper law and a jurisdiction clause along the same lines as in the documentation for the second transaction. The third loan was discharged with the sale, as explained shortly, of the Adriadni but the transaction is the basis of what are outlined later as the Second Greek and the Second English proceedings.
From December 2009, Androniki fell into arrears in the repayment of the loan, as did Pauline from mid-2012. These failures constituted events of default, which were notified by the Bank pursuant to the loan agreements. They culminated in demands for repayment of the moneys lent and for payment under the guarantees.
On 30 September 2014 the Bank entered forbearance agreements with the ship-owning companies in respect of the amounts owed under the loan agreements. The construction and effect of these forbearance agreements, in particular the release provisions, are in issue in the Greek and English actions. As part of their terms the forbearance agreements cross-refer to and incorporate the jurisdiction clauses of the underlying loan agreements.
Under the forbearance agreements the vessels had to be sold by the end of 2014 to discharge the Bank's loans. The High Nefeli was sold by that date, but not the Adriadni. On 29 December 2014 the Bank had the Adriadni arrested in South Africa. There were legal proceedings in that jurisdiction but it was sold there in April the following year by Pauline.
The proceeds from the sale of the two vessels satisfied the sums due from Pauline. There were sums still outstanding from Androniki, but Pauline did not agree to the surplus moneys from the sale of Adriadni being used towards repayment. The Bank's case is that over US$ 6 million is due to the Bank in respect of that loan and is payable by Liquimar under the guarantee. On 9 June 2015 the Bank warned Liquimar of its intention to commence proceedings in England if no proposals for settlement were received by 16 June 2015. No such proposals were received by that deadline.
On 16 June 2015 Liquimar issued proceedings against the Bank in the Piraeus Court of First Instance ("the First Greek Action") seeking orders that the guarantee of the loan was discharged and it was not liable to the Bank. Then in December 2015, Liquimar and Pauline issued proceedings against the Bank in the same court (the "Second Greek Action"). In the Second Greek Action, Pauline seeks damages from the Bank in tort and under the Greek Civil Code for loss of the use of the Adriadni consequent on the arrest, and Pauline and Liquimar seek moral damages under Article 919 of the Greek Civil Code for reputational loss.
There was some delay in the service of these proceedings on the Bank, but on 23 May 2016 the Bank commenced action against Liquimar in this court ("the First English Action") under the Androniki guarantee. That is for the amount outstanding under the Androniki loan, as well as an indemnity or damages in the same amount and interest, together with an indemnity in respect of associated costs and expenses. The Bank also seeks declarations and damages and/or an indemnity regarding breach by Liquimar of the jurisdiction clause in the Androniki guarantee by suing in Greece.
On 19 September the Bank commenced the Second English Action in which it seeks declarations of...
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