Deutsche Bank AG London Branch v Petromena Asa (in bankruptcy, represented by the chairman of the board of directors, Enterprise No. 987 727 713) (First Defendant) Petromena ASA Konkursbo (represented by the Administrator, Enterprise No. 994 922 270) (Second Defendant(discontinued)

JurisdictionEngland & Wales
JudgeLady Justice Gloster
Judgment Date14 October 2013
Neutral Citation[2013] EWHC 3065 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: 2012 FOLIO 842
Date14 October 2013

[2013] EWHC 3065 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice Gloster

Case No: 2012 FOLIO 842

Between:
Deutsche Bank AG London Branch
Claimant
and
Petromena Asa (in bankruptcy, represented by the chairman of the board of directors, Enterprise No. 987 727 713)
First Defendant
Petromena ASA Konkursbo (represented by the Administrator, Enterprise No. 994 922 270)
Second Defendant(discontinued)

Mr Richard Handyside QC and Mr David Murray (instructed by Allen & Overy LLP) for the Claimant

Mr David Wolfson QC and Mr Henry Forbes Smith (instructed by Quinn Emanuel) for the Defendant

Hearing dates: 4th March 2013

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.

Lady Justice Gloster

Introduction

1

This is an application by the First Defendant, Petromena ASA ("Petromena"), for a declaration that this Court has no jurisdiction over this Claim. By the action, the Claimant, Deutsche Bank AG ("DB"), seeks declarations of non-liability in respect of claims which Petromena has brought against DB in Norway. The issue is where Petromena's claims should proceed.

2

In summary, Petromena submits that its claims cannot be heard in England and should continue in Norway on the basis that:

i) the English Court does not have jurisdiction under Article 5 of the Lugano Convention 1 ("the Convention"); Petromena's claims fall to be characterised as contractual for the purposes of the Convention, and England is not the place of performance of the obligation in question under Article 5.1; even if (as DB contends) Petromena's claims are to be characterised as tortious, rather than contractual, the harmful event did not occur in England for the purposes of Article 5.3;

ii) in any event, even if Article 5 conferred jurisdiction on the English court, that jurisdiction is ousted in favour of Norway under Article 23, because the claims fall within the scope of a Norwegian exclusive jurisdiction agreement contained in a loan agreement dated 22 May 2006 pursuant to which Petromena issued certain bonds ("the Loan Agreement").

3

DB, on the other hand, contends that its action should continue in England on the grounds that:

i) Article 5.1 of the Convention does not apply, since the claims sought to be asserted by Petromena, are plainly claims in tort/delict and not contractual; accordingly, the English Court has jurisdiction under Article 5.3 on the basis that the place where the harmful event alleged by Petromena occurred was England;

ii) the Norwegian jurisdiction clause is irrelevant since the claims made by Petromena against DB do not arise out of, or in connection with, the Loan Agreement; the causes of action asserted by Petromena are founded upon an allegation that DB assumed the role of an adviser to Petromena, in addition to its role as bondholder; and it is DB's alleged assumption of that role of adviser to Petromena, rather than any term of the Loan Agreement, that is said to have given rise to the various duties that were allegedly breached.

The relevant provisions of the Convention

4

In so far as material, the relevant provisions of the Convention provide as follows:

" General provisions

Article 2

1. Subject to the provisions of this Convention, persons domiciled in the State bound by this Convention shall, whatever their nationality, be sued in the courts of that State…..

Special jurisdiction

Article 5

A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued:

1. (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

—in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

—in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

(c) if subparagraph (b) does not apply then subparagraph (a) applies;

…….

3. in matters relating to tort, delict or quasi-delict, in the courts of the place where the harmful event occurred or may occur;

…….

5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

Prorogation of jurisdiction

Article 23

1. If the parties, one or more of whom is domiciled in a State bound by this Convention, have agreed that a court or the courts of a State bound by this Convention are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless agreed otherwise….."

Factual background

5

The basic facts were not materially in dispute for purposes of this hearing. Rather the dispute between the parties focused upon how Articles 5 and 23 applied to those facts. I summarise the undisputed facts as follows.

6

At all material times, Petromena was a holding company registered in Norway which undertook no operational activity of its own. It had four wholly owned subsidiaries, Petromena Limited, PetroRig I Pte Ltd, PetroRig II Pte Ltd and PetroRig III Pte Ltd. The first of these subsidiaries was registered in Cyprus and the other three were registered in Singapore. Petromena Limited owned an oil drilling ship (SS Petrolia), and the other subsidiaries were the owners of oil rigs which were being constructed for them at the Jurong Shipyard in Singapore. Petromena was listed on the Oslo Stock Exchange, but it is now in bankruptcy in Norway. It raised funds to finance the construction of oil rigs through its subsidiaries, which are now also in bankruptcy. Petromena was represented in the relevant events by its director, Mr Berge Gerdt Larsen, and by its managing director, Mr Lars Moldestad, both based in Norway.

7

DB is a German financial institution incorporated under the laws of Germany. It has a London branch, registered in London as such ("DB London"). Under English law, the place of registration of DB London, DB London is not a separate legal entity from DB. The complaints made by Petromena against DB, all relate to the alleged conduct of DB London. DB London was represented in the relevant events by Mr Ivan Capriello and Mr Håkan Wohlin. Mr Capriello is a structured credit trader and, at the time, was a director in DB London's Credit Solutions Group. He was based in London at DB London's office at 1 Great Winchester Street. From time to time Mr Capriello was assisted by Mr Wohlin, who was then the Co-Head of the Western Europe Desk in the Debt Capital Markets team and covered inter alia the Nordic market.

8

In about May 2006, Petromena issued a series of bonds ("the Bonds") in the amount of NOK 2 billion in order to raise funds that would be lent or contributed by Petromena to PetroRig 1 Pte Ltd and PetroRig II Pte Ltd in order to part-finance the rigs that were to be constructed for them. The terms of the Bonds were contained in a Loan Agreement dated 22 May 2006 (which I have already defined as "the Loan Agreement") between Petromena as borrower and Norsk Tillitsmann ASA ("Norsk Tillitsmann"), a Norwegian company based in Norway, as trustee ("the Loan Trustee") on behalf of the holders of the Bonds ("the Bondholders").

9

Clause 21.1 of the Loan Agreement contained a Norwegian jurisdiction and choice of law clause in the following terms:

"Disputes arising out of or in connection with the Loan Agreement which are not resolved amicably, shall be resolved in accordance with Norwegian law and in the Norwegian courts."

10

By purchasing Bonds, Bondholders acceded to and became bound by the Loan Agreement (including the Norwegian exclusive jurisdiction clause). The Loan Agreement provided on page 3:

"Through their subscription in the Loan the Bondholders have acceded to the Loan Agreement (i.e.):

* The Bondholders are bound by the terms of the Loan Agreement provided that information about the accession was given in the subscription documents. …"

11

Clauses 3 and 4 of the Loan Agreement provided for the Bonds to be listed on the Oslo Stock Exchange and registered with Verdipapirregisteret ('VPS'), a Norwegian depositary. The Bonds were registered with VPS, but in fact were never listed or traded on any Norwegian stock exchange. Sales of the Bonds were settled through the Euroclear trading platform, based in Brussels, Belgium.

12

The Loan Agreement provided that Bondholders could not sue Petromena directly to enforce the Bonds, but could only recover the Bonds through action taken by the Loan Trustee. Thus clause 15.5 provided that 'the individual Bondholder cannot of his own accord recover his bond(s) directly from the Borrower'. However, the holder(s) of at least 10% of the Bonds had the right under clause 17.1(b) to call a Bondholder meeting and the holder(s) of at least 20% of the Bonds had the right under clause 15.3(a) to require the Loan Trustee by written demand to accelerate the Bonds on a defined Event of Default.

13

In the autumn of 2008, the Petromena Group was facing considerable financial difficulties, in that significant additional funding was required in order to complete the three rigs that were under construction in Singapore. At this time, DB, through DB London, was the holder of approximately 26.3% of the Bonds, which were trading well below par.

14

In or around November 2008 Mr Capriello was asked by his superiors at DB...

To continue reading

Request your trial
2 cases

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT