Consolidated Oil Ltd (Claimant/Applicant/Appellant) v American Express Bank Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 21 January 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0121-6 |
| Date | 21 January 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Pro Forma |
[2000] EWCA Civ J0121-6
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(His Honour Judge Dean QC)
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand
London WC2
Lord Justice Chadwick and
Lord Justice Clarke
Pro Forma
Mr John McDonnell QC and Mr Sebastian Prentis (instructed by Messrs Bray Walker, London EC4) appeared on behalf of the Applicant/Claimant.
The Respondent/Defendant was not represented.
LORD JUSTICE CHADWICK: I will ask Lord Justice Clarke to give the first judgment.
LORD JUSTICE CLARKE: This is an appeal from an order of His Honour Judge Dean QC, made on 19th January, that is the day before yesterday, refusing to grant an injunction restraining the defendant bank ("the bank") from making a payment under a performance guarantee. The judge granted leave to appeal, but refused a stay; that is, he refused to grant an injunction pending the hearing of an appeal. The bank, however, agreed not to pay under the guarantee until 2.30pm today. It was notified that the appeal might be heard this morning, but elected not to attend, just as it had elected not to attend before the judge.
We heard argument on the appeal this morning from Mr John McDonnell QC, on behalf of the claimant. At the conclusion of the argument, my Lord, Lord Justice Chadwick, announced that the appeal would be dismissed. At Mr McDonnell's request, he also made it clear that the court was not directing the bank to pay under the guarantee, but that it was a matter for the bank whether it paid or not. These are the reasons which led me to conclude that the appeal should be dismissed.
The facts may be briefly stated in this way. The claimant is an oil company based in Nigeria which has been bidding for a 37% stake in the Societe Ivoirienne de Raffinage held by the Government of the Republique Cote d'Ivoire. The bank is one of the claimant's bankers. In about November 1999 the claimant authorised the bank to debit its accounts held with it in the sum of CFA500,000,000 (which is, as I understand it, about £500,000) in order that the bank could provide on the claimant's behalf a guarantee in that sum to the Privatisation Committee of the Republique Cote d'Ivoire ("the Committee"). The guarantee had to be provided as part of the bidding process. The Committee was a body appointed by the Government of the Republique Cote d'Ivoire through the Prime Minister's office.
On 3rd November 1999 the defendant issued a guarantee numbered 94/99 in the form of a letter to the Committee. The guarantee provides as follows:
"We American Express Bank Ltd, 60 Buckingham Palace Road, London SW1W ORR ('AEB') hereby guarantee our commitment to The Committee for the payment of an amount of CFA500,000,000 (CFA Francs Five Hundred Million) on behalf of Consolidated Oil Limited (hereinafter called 'The Bidder').
The conditions of the Guarantee are:
(1)If the Bidder withdraws his offer for the privatisation of the Societe Ivoirienne de Raffinage ('SIR') during the validity period of the offer as defined by the Bidder or
(2)If the Bidder is selected for the final phase of the SIR privatisation, on the basis of his preliminary offer, and accepts the selection, but fails to submit a definitive offer for the final phase; or
(3)If the Bidder having been notified that his offer has been accepted by the Committee,
(a)Does not sign the Shares transfer agreement when called upon; or
(b)Does not pay the amount foreseen in the Transfer Agreement during the validity period of the offer
We undertake to pay the committee the above mentioned amount on receipt of the first written request of the Committee, without the committee having to justify such a request, that payment has been called for and stating which of the above mentioned conditions has or have occurred.
The written request shall be submitted to AEB at the above address or such alternative address as we shall notify to you in writing.
This Guarantee will expire 90 (Ninety) days from 8 November 1999 and all requests relating to this guarantee shall be submitted within this same period. On such date this Guarantee shall become null and void, whether or not returned to us for cancellation.
This guarantee shall be governed by and construed in accordance with the laws of England."
It is important to note that the Committee does not have to justify a request under the guarantee. As I read the guarantee at present (although there may be scope for argument as to its true construction) the Committee simply has to state that payment has been demanded and to identify which of the three conditions has occurred.
The appeal to the judge was supported by an affidavit of Mr Tunde Akinyera, who says that the claimant was one of three companies selected for the final stage of the bidding process. As I read his evidence, he accepts that the claimant accepted the selection within the meaning of condition (2). He said in paragraph 3 of his affidavit:
"The Claimant was one of three companies selected for the final stages of the bidding process. More disclosure of the company's affairs was made to us so we could prepare more accurate final bids. Some of that disclosure showed that it would be very difficult for any bidding party to meet criteria required by the tender document. We pursued enquiries as to these matters, but received no answers until after the date for submission of final bids, which was 16th December 1999. Although we were keen to do so, we could make no proper final bid until we had received the information. So none was made."
I do not read that paragraph or the remainder of the affidavit as saying that, apart from the continued existence or authority of the Committee (to which I shall return in a moment), the bank could refuse to pay under the guarantee. As I understood him, Mr McDonald confirmed in argument, at any rate for the purposes of this appeal, that that was the case. Thus this appeal has proceeded on the basis that condition (2) in the guarantee is satisfied.
On 29th December 1999 a Monsieur Jean-Claude Brou wrote a letter to the bank. It was headed, "REPUBLIQUE DE COTE D'IVOIRE, CABINET DU PREMIER MINISTRE, COMITE DE PRIVATISATION, Le President". It was in these terms:
"Re:Privatization of The Refinery of Cote d'Ivoire (SIR)
First request of the Privatisation Committee of Cote d'Ivoire ('the Committee') related to the GUARANTEE No 94/99
Dear Sirs,
We The Committee request hereby the payment of the guarantee no. 94/99 (a copy is attached), dated 3 November 1999, issued by American Express Bank on behalf of Consolidated Oil Limited, according to the conditions mentioned in the guarantee.
We state that Consolidated Oil Limited has been selected for the final stage of the privatization of The SIR, on the basis of its preliminary offer. While Consolidated Oil Limited had accepted the selection, it failed to submit a definitive offer for the final phase, on 17 December 1999.
We The Committee therefore request the transfer of the amount of CFA 500,000,000 (CFA francs Five Hundred Million) of FRF 5,000,000 (French francs Five Million) into the following bank account, in accordance with the terms of the guarantee:
TRESOR PUBLIC
Produit de la Privatisation
BCEAO —ABIDJAN
No. 305.1000.5100
We thank you for your prompt attention to this matter.
Regards,
Jean-Claude BROU"
The letter is addressed to the bank at 60 Buckingham Palace Road, London. In the vicinity of the signature there is a stamp bearing the notation "Cabinet du Premier Ministre".
On the face of it, the bank is liable on the guarantee. However, the claimant seeks an injunction restraining the bank from making a payment under it. That application was, as I have indicated, refused by the judge and the claimant now appeals from that refusal with the permission the judge.
The way in which the case is now put may be summarised in this way:
(1)The bank owes the claimant a contractual duty to take reasonable care to ascertain that the demand of 29th December is in accordance with the guarantee. The claimant relies upon the decision of the Judicial Committee of the Privy Council in Gian Singh & Co Ltd v Banque de l'Indochine [1974] 1 WLR 1234.
(2)On the facts of the instant case, that duty involves taking reasonable care to satisfy itself that the Committee continues to exist as a body empowered to conduct the sale by tender of state property.
(3)No reasonable bank could be satisfied that that is the case.
(4)It follows that for the bank to threaten to pay under the guarantee amounts to a threat to break its contract with the claimant.
(5)The balance of convenience favours the grant of an injunction.
(6)Decisions such as Harbottle (Mercantile) Ltd v National Westminster Bank Ltd [1978] 1 QB 146 and Edward Owen Engineering Ltd v Barclays Bank International Ltd [1978] 1 QB 159 are distinguishable and to be distinguished.
I shall consider first the factual basis of the claimant's submissions. The facts relied upon are set out in Mr Akinyera's affidavit in this way:
"4.On 24th December 1999 there was a military coup in Ivory Coast. My information remains as set out in the Particulars of Claim: the military government dissolved the old institutions. In particular it dissolved the office of prime minister. The former prime minister fled the country, and there has been and is no present intention for there to be a replacement. At pages 3–4 of the exhibit is a list of members of the military government. It will be seen that there is no prime...
To continue reading
Request your trial