Deutsche Bank AG v Sebastian Holdings Inc. [QBD (Comm)]

JurisdictionEngland & Wales
JudgeBurton J.
Judgment Date01 December 2009
CourtQueen's Bench Division (Commercial Court)
Date01 December 2009

Queen's Bench Division (Commercial Court).

Burton J.

Deutsche Bank AG
Sebastian Holdings Inc.

David Foxton QC (instructed by Freshfields Bruckhaus Deringer LLP) for the claimant.

Tim Lord QC and Jasbir Dhillon (instructed by Travers Smith LLP) for the defendant.

The following cases were referred to in the judgment:

Abidin Daver, TheELR [1984] AC 398.

Ace Insurance SA-NV v Zurich Insurance Co [2001] CLC 526.

Antec International Ltd v Biosafety USA IncUNK [2006] EWHC 47 (Comm).

Aratra Potato Co Ltd v Egyptian Navigation Co (The El Amria)UNK [1981] 2 Ll Rep 119.

Bank of New York Mellon v GV FilmsUNK [2009] EWHC 2338 (Comm).

Breams Trustees Ltd v Upstream Downstream Simulation Services IncUNK [2004] EWHC 211 (Ch).

British Aerospace plc v Dee Howard & CoUNK [1993] 1 Ll Rep 368.

Catalyst Investment Group Ltd v LewinsohnUNK [2009] EWHC 1964 (Ch).

Choudhary v BhatterUNK [2009] EWCA Civ 1176.

CNA Insurance Co Ltd v Office Depot International (UK) Ltd [2007] Ll Rep IR 89.

Donohue v Armco Inc [2002] CLC 440 (HL).

EI Du Pont de Nemours & Co v AgnewUNK [1987] 2 Ll Rep 585.

Equitas Ltd v Allstate Insurance CoUNK [2008] EWHC 1671 (Comm).

Gomez v Gomez-Monche VivesUNK [2008] 1 All ER (Comm) 973.

Highland Crusader Offshore Partners LP v Deutsche Bank AG [2009] 1 CLC 535; [2009] EWCA Civ 725; [2009] 2 CLC 45.

HIT Entertainment Ltd v Gaffney International Licensing Pty LtdUNK [2007] EWHC 1282 (Ch).

Import Export Metro Ltd v Compania Sud Americana de Vapores SA [2004] 2 CLC 757.

Konkola Copper Mines plc v Coromin Ltd [2005] 1 CLC 1021.

Masri v Consolidated Contractors International (UK) LtdUNK [2008] EWCA Civ 303; [2008] 1 CLC 657.

National Westminster Bank v Utrecht-America Finance Co [2001] CLC 1372; [2001] 3 All ER 733 (CA).

Owusu v JacksonECAS (Case C-281/02) [2005] 1 CLC 246; [2005] ECR I-1383; [2005] QB 801.

Reichhold Norway ASA v Goldman Sachs International [2000] CLC 11; [2000] 1 WLR 173 (CA).

Royal Bank of Canada v Coöperative Centrale Raiffeisen-Boerenleenbank BA [2004] 1 CLC 170.

Spiliada Maritime Corp v Cansulex LtdELR [1987] AC 460.

UBS AG v HSH Nordbank AG [2009] 1 CLC 934.

Winnetka Trading Corp v Julius Baer International LtdUNK [2008] EWHC 3146 (Ch).

Stay of proceedings — Forum non conveniens — New York proceedings — Equities trading and FX trading — Numerous agreements between investment company and investment bank — Agreements containing English jurisdiction clauses, exclusive and non-exclusive, and non-exclusive New York jurisdiction clause — Proceedings in New York for declaration of non-liability — Proceedings in London for sums said to be due under agreementsDisputes between parties fell within English jurisdiction clauses and English court had jurisdiction — Whether New York more appropriate forum — Stay could be granted in jurisdiction clause case only for exceptional or very strong reasons — Existence of New York proceedings not sufficient reason for stay — Desirable to have all disputes heard in one place but New York not clearly more appropriate forum — No strong reason for not giving effect to English jurisdiction clauses.

This was an application by the defendant (SHI) for a stay of English proceedings on grounds of forum non conveniens and lis alibi pendens by reference to New York proceedings already instituted between the same parties.

The claimant (DB) was a German investment bank with an office in London. SHI was an investment company incorporated under the laws of the Turks and Caicos Islands.

Between May 2006 and January 2008 DB and SHI entered into a number of equities trading agreements. DB held and operated an equities account on behalf of SHI in London to facilitate SHI's equities trading and to provide prime brokerage services to SHI.

During the same period DB and SHI also entered into a number of FX agreements concerning foreign exchange, precious metals and options trading by SHI. SHI, through its agent based in Connecticut, entered into trades in DB's name with third parties. Each such trade was the subject of an offsetting contract between SHI and DB. The trades were processed by DB's FX prime brokerage operations group in New Jersey. The associated account into which debit or credit entries were made was held and operated by DB on behalf of SHI in London.

In October 2008 DB became concerned about losses on SHI's FX trading. It made margin calls in mid-October. Those were followed by various transfers and liquidations, leading (among other things) to demands by DB under the equities agreements and the FX agreements. The demands were not met. Legal proceedings ensued. SHI began proceedings against DB in New York some two months before DB issued proceedings in London.

There were three areas of dispute between DB and SHI. (i) As asserted by DB, a claim in respect of SHI's trading in equities, as a client of DB London. This was governed by one or more of four equities agreements, all of which were subject to English law and contained exclusive or non-exclusive jurisdiction clauses and waivers of any objection on forum grounds. The equities trading was carried out in london. A claim was made by DB in the London proceedings in respect of the sum allegedly due on SHI's equities account of US$125,523,086.

(ii) A dispute about SHI's FX trading, as a client of DB New York. There were two relevant agreements relating to FX trading, one governed by English law and one by New York law. DB claimed, in the London proceedings, US$120,650,166, as the deficit on the FX account. SHI relied on alleged oral agreement limiting SHI's maximum exposure in connection with the FX trading to US$35m.

(iii) SHI alleged that DB had acted wrongfully in closing out positions both in the equities and FX accounts, and transferring substantial sums from the equities account to cover the purported shortfall on the FX accounts. SHI asserted that there should be no liability on the equities account, because there should not have been a close out and transfer to meet alleged debts on the FX account. DB denied that there was any breach of contract or duty and asserted an entitlement to transfer sums from the equities account to the FX account pursuant to the terms of the relevant agreement.

SHI challenged the jurisdiction of the English court. Walker J ([2009] EWHC 2132 (Comm); [2009] 2 CLC 908) held that all three aspects of the disputes between the parties fell within the English jurisdiction clauses in the relevant agreements.

SHI's further application was for a stay on the ground that New York was a more convenient forum. SHI argued that the substantial dispute was that of SHI, relating to FX trading and its handling, which could and should be resolved in New York. Even if consideration had to be given to the exclusive English jurisdiction clauses in two of the equities agreements, there were strong or exceptional reasons for not giving effect to them, by reference to the interests of justice, namely the multiple and conflicting jurisdiction clauses and the existence of the centre of gravity of the dispute in New York, where there was an existing lis. New York was clearly the more appropriate forum, by reference to the location of the witnesses in relation to the FX dispute.

Held, dismissing SHI's application:

1. If there was to be an exceptional case, where forum non conveniens arguments were to prevail, a fortiori in an exclusive jurisdiction or FNC waiver case, but even in the case of non-exclusive jurisdiction, the burden on the applicant to establish such a case must be a heavier, perhaps, in exclusive jurisdiction cases, a much heavier, one than if there were no jurisdiction clause at all. If the parties entered into a series of interlinked agreements with different jurisdiction clauses, then it would not be possible to suggest that it was not foreseeable that a clash or contest of jurisdictions might arise. In the absence of unforeseeability and any impact on third parties, then the strong or very strong or exceptional grounds, said to engage the interests of justice and satisfy the necessary burden, had to be all the more compelling. (Ace Insurance SA-NV v Zurich Insurance Co[2001] CLC 526andAntec International Ltd v Biosafety USA IncUNK[2006] EWHC 47 (Comm)applied.)

2. The geographical location of the disputes, the subject matter of the claims, was not so clearly New York that the applicability of the New York jurisdiction clause to claims relating to the detail of FX trading (which might not in the event require examination) should carry more weight.

3. Strong reasons did not include the mere existence of a lis between the parties in a foreign court. Plainly it was desirable to have all the disputes heard in one place. But it was far from clear that, if a stay was refused, that place might not be London. The English court was the first court to decide the issue of stay. The New York court might come to a decision to the same effect. In any event, it was not clear on the evidence that, whereas all the issues could be resolved in London, as a result of the conclusion of Walker J, that was necessarily the case in New York.

4. New York was not clearly and distinctly the appropriate forum for the trial of the disputes and there were not exceptional circumstances or strong or very strong reasons why New York was the clearly more appropriate forum orwhy, exceptionally, the parties should not be kept to their bargain for English jurisdiction in five of the relevant agreements.

5. It was not necessary to decide whether a court having exclusive jurisdiction under the Judgments Regulation could stay proceedings on forum non conveniens grounds in a case where that jurisdiction arose in respect of a person who was not domiciled in a member state. (Owusu v JacksonECAS(Case C-281/02)[2005] 1 CLC 246; [2005] ECR I-1383considered.)


Burton J:

1. There are at present two pending proceedings between the same parties, the...

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