Deutsche Bank AG v Highland Crusader Offshore Partners LP [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 03 April 2009 |
| Neutral Citation | [2009] EWHC 730 (Comm) |
| Docket Number | Case No: 2008 FOLIO 1156 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 April 2009 |
[2009] EWHC 730 (Comm)
Before: Mr Justice Burton
Case No: 2008 FOLIO 1156
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Richard Handyside QC (instructed by Allen & Overy) for the Claimants
Mr David Allen QC (instructed by Cooke, Young & Keidan) for the Defendants
Hearing date: 2 April 2009
Mr Justice Burton :
This has been the hearing of three applications in proceedings brought in the Commercial Court by Deutsche Bank AG (“the Claimant”) against three defendant companies, who are associated, and in relation to which there needs to be no differentiation in the course of this judgment so that I shall refer to them as “Highland”. One application is by an associate company of the Claimant, Deutsche Bank Securities Inc (“DBSI”) to be joined as a Claimant to the proceedings, one is for amendment of the Claim Form and the Particulars of Claim, largely but not wholly consequential upon such joinder if permitted, and one is by the Claimant and, if joined, by DBSI, for an anti-suit injunction against Highland in respect of proceedings commenced by Highland in the District Court of Dallas County, Texas, Cause No 08–13187 (“the Texas proceedings”). Both these proceedings and the Texas proceedings relate to, or arise out of, three Global Master Repurchase Agreements (“GMRAs”), pursuant to which, in these proceedings, the Claimants claim that Highland are indebted to them in a sum of more than $70m. I do not need to deal in this judgment at all with the details of these finance agreements. Written Notice of Margin Calls was given to Highland on 30 September 2008, and default and default valuation notices were served, respectively, on 1 and 8 October 2008, pursuant to which it was clear that proceedings would be issued by the Claimant to enforce Highland's indebtedness.
The two relevant clauses in issue before me were as follows:
i) Each GMRA, signed, after some alterations and amendments, on 23 October 2007 by the Claimant, by the respective Highland company and by DBSI under the rubric “(as described in Annex I hereto)”, contained a choice of law and jurisdiction clause by Paragraph 17 as follows:
“17. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of England. Buyer and Seller hereby irrevocably submit for all purposes of or in connection with this Agreement and each Transaction to the jurisdiction of the Courts of England.
Party A hereby appoints the person identified in Annex I hereto as its agent to receive on its behalf service of process in such courts. If such agent ceases to be its agent Party A shall promptly appoint, and notify Party B of the identify of, a new agent in England.
Party B hereby appoints the person identified in Annex I hereto as its agent to receive on its behalf service of process in such courts. If such agent ceases to be its agent, Party B shall promptly appoint, and notify Party A of the identity of, a new agent in England.
Each party shall deliver to the other, within 30 days of the date of this Agreement in the case of the appointment of a person identified in Annex I or of the date of the appointment of the relevant agent in any other case, evidence of the acceptance by the agent appointed by it pursuant to this paragraph of such appointment.
Nothing in this paragraph shall limit the right of any party to take proceedings in the courts of any other country of competent jurisdiction.”
ii) Annex I to each GMRA, above referred to, was headed up as “Supplemental Terms or Conditions to the [GMRA]”, and the relevant clause is at clause 5, namely as follows:
“5. The following additional supplemental terms and conditions shall apply to Transactions with respect to which Party B has dealt with an officer of … DBSI, an affiliate of Party A (“Applicable Transactions”):
(a) As a broker-dealer registered with the US Securities and Exchange Commission (“SEC”), DBSI, as agent, will be responsible for (a) effecting Applicable Transactions under the Agreement, (b) issuing all required confirmations and statements to Party A and Party B in connection with Applicable Transactions, and (c) maintaining books and records relating to Applicable Transactions as required by SEC regulations. Notwithstanding the foregoing, transfers of funds and securities in connection with Applicable Transactions shall be directly between party A and Party B (or their respective agents or custodians) and DBSI, as agent, will not be responsible for receiving, delivering and safeguarding funds and securities in connection with Applicable Transactions under this agreement.
(b) DBSI is acting in connection with Applicable Transactions solely in its capacity as agent pursuant to instructions from Party A and Party B. DBSI shall have no responsibility or liability to Party A or Party B arising from a failure by Party A or Party B to pay or perform any obligation under the Agreement, and is acting as guarantor of either Party A or Party B in connection with any obligation under the Agreement. Each of Party A and Party B agrees to proceed solely against the other to collect or recover any amounts owing to it or to enforce any of its rights in connection with or as a result of Applicable Transactions under the Agreement.
(c) Any and all notices, demands or communications of any kind relating to Applicable Transactions hereunder shall be transmitted exclusively through DBSI, notwithstanding anything to the contrary contained in Annex I, par.4 hereto …
Paragraph 17 is, as can be seen, a non-exclusive jurisdiction clause. Clause 5 has been referred to as a “no action clause”. There were further negotiations after the execution of the GMRAs, and the parties entered into Amendment Agreements on 15 August 2008, the purpose of which was to accommodate arguments that Highland had put forward in relation to the calculation of net asset value. In addition to that amendment, contained in clause 2 of each Amendment Agreement, again signed by the Claimant, the relevant Highland company and DBSI, there were the following clauses:
“4. No Modication
This Agreement is limited to the amendments to the GMRA set forth in [clause] 2 above and shall not constitute a medication, acceptance or waiver of any other provision of the GMRA.
6. Governing Law
Paragraph 17 of the GMRA shall apply to this Agreement as if that paragraph were expressly set out herein.”
On 16 October 2008, eight days after service of the default valuation notices and at the same time as representatives of the Claimant were attempting to communicate by telephone and/or email with representatives of Highland, Highland issued the Original Petition in the Texas proceedings. In those proceedings Highland sued the Claimant and DBSI. The proceedings were largely, if not wholly, defensive, in that the first relief sought was a claim for a declaration of non-liability under the GMRAs. There was a subsidiary claim of fraudulent, alternatively negligent, misrepresentation by a Mr Newell on behalf of the Claimants and DBSI, said to have been made in writing, in an email by Mr Newell, in the course of negotiations for an extension of the financing in September 2008, which would mean that Highland would be entitled to some relief or set off in relation to the claims under the GMRAs.
A Letter Before Action was sent to Highland's solicitors in the UK by the Claimant's solicitors on 22 October, which led to a Claim Form and Particulars of Claim filed by the Claimant on 7 November 2008, and served, in accordance with the provisions of Paragraph 17, on that day. Meanwhile the Original Petition in the Texas proceedings was served on DBSI, a Delaware Corporation, on 23 October; and on the same day Highland filed in those proceedings its First Amended Petition. This considerably expanded the case sought to be brought by Highland against the Claimant and DBSI. It now alleged a fraudulent misrepresentation by Mr Newell on behalf of the Claimants and DBSI, again said to be in writing and contained in emails, in October 2007, alleged to have fraudulently induced Highland to enter into the GMRAs, such that Highland was entitled to rescission of them: there were also pleas of other tortious claims relating to the GMRAs, a breach of the contract in relation to the alleged inadequacies of the Default Valuation Notices and a claim by Highland for unjust enrichment and promissory estoppel. This First Amended Petition was served on DBSI on 24 October 2008, and DBSI filed on 17 November a motion to dismiss, alternatively stay, for forum non conveniens: after the Claimant was served with the First Amended Petition on 23 December 2008, it joined with DBSI in an amended motion to dismiss or stay the Texas proceedings on 20 January 2009.
Meanwhile in the Commercial Court proceedings, on 16 December 2008 Highland, after acknowledging service, on 21 November 2008, indicating an intention to dispute jurisdiction, issued an Application Notice on 16 December seeking an extension of time to challenge jurisdiction. That was heard and dismissed by Tomlinson J on 29 January 2009. He was satisfied that no ground had been shown for an extension of time. Further, and in any event, there was discussion before him as to what ground there would be for challenging the jurisdiction if an extension were granted. I have seen the transcript of the argument before him, and in particular where he said that he could not see how Highland could challenge the English jurisdiction (as opposed possibly to having some ground for a stay) a factor which, he said, would weigh in his discretion as to whether or not he thought...
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