First National Bank of Boston v Union Bank of Switzerland
| Jurisdiction | England & Wales |
| Judge | THE PRESIDENT,SIR MICHAEL KERR,LORD JUSTICE RUSSELL |
| Judgment Date | 19 July 1989 |
| Judgment citation (vLex) | [1989] EWCA Civ J0719-6 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 89/0732 |
| Date | 19 July 1989 |
[1989] EWCA Civ J0719-6
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL. (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT.
MR JUSTICE STEYN
Royal Courts of Justice
The President (Sir Stephen Brown)
Lord Justice Russell
Sir Michael Kerr
89/0732
1988 FOLIO No. 3503
MR. D. DONALDSON Q.C. and MR. G. CLARKE (instructed by Messrs Herbert Smith) appeared on behalf of the Appellants (First Defendants).
MR. C. CLARKE Q.C. and MR. M. HAPGOOD (instructed by Messrs Clifford Chance) appeared on behalf of the Respondents (Plaintiffs)
I will ask Sir Michael Kerr to give the first judgment.
This is an appeal from a judgment of Steyn J. given in the Commercial Court on 4th May 1989. He refused an application by the first defendants, the Union Bank of Switzerland ("UBS") that a claim by the plaintiffs, First National Bank of Boston (to which I will refer as "FNBB"), against UBS should be struck out or stayed under Order 18, Rule 19 of the Rules of the Supreme Court or the inherent jurisdiction of the court on the ground that it was an abuse of the process of the court and/or that England was not the forum conveniens and/or that there were current proceedings in Switzerland between the parties dealing with the same dispute. The Swiss proceedings referred to are currently in Geneva, in which UBS as plaintiffs are claiming some $5.3 million from FNBB. In the English proceedings their roles are reversed in that FNBB is claiming against UBS as the first defendant a declaration that FNBB is under no such liability to UBS.
FNBB is a bank incoporated in Massachusetts in the United States It has a branch in London and another branch in Geneva. UBS is a bank incoporated in Switzerland with many branches, including one in Frauenfeld in the Canton of Thurgau.
It also carries on business in London.
I then come to the other defendants in the English proceedings whose activities gave rise to the dispute between FNBB and UBS. (I will refer to them collectively as the "second to fifth defendants").
The second defendant, Assetgrant Ltd., is an English company which is a customer of FNBB in London. Notwithstanding its name it appears to have no assets.
The third defendant, Max Buteau, was an employee and Vice-President of FNBB working in their London branch. He is now in custody awaiting trial on various charges, including charges arising out of this transaction. He evidently had business connections with all the other defendants.
The fourth defendant, Tina Jeffe, was the moving spirit behind Assetgrant and I think also a customer of FNBB. She is a National Equatorial African whose present whereabouts are unknown.
The fifth defendant, Joachim Gramm, is a German businessman resident in Hamburg. He evidently had an account at UBS's branch at Frauenfeld in Switzerland and was a business associate of the fourth defendant, Tina Jeffe.
Putting it broadly, FNBB contend that there was a fraudulent conspiracy between the second to fifth defendants designed to extract the sum of $5.3 million from the banking system as between FNBB and UBS, and it is this sum which UBS are now claiming from FNBB. What happened was that after various preliminary communications between the third defendant Buteau on behalf of FNBB and UBS's branch at Frauenfeld—which were no doubt designed to lay the ground—Buteau sent the following tested telex on 11th December 1987 from the London branch to UBS, Frauenfeld:
"With value Wednesday, 16th December 1987, your account in New York will be credited for US $5,300,000 for the credit of Mr J. Gramm, by order of Dr. T. Jeffe. Please avoid all possible duplication since other messages will be sent to you in that respect. Best Regards, Max Buteau, Vice-President, Bank of Boston, London".
UBS claim that following some further communication from Gramm and/or Buteau this telex was treated as an instruction to pay $5.3 million to Gramm and that they did so. Later on they discovered that no account of theirs in New York had received any such credit.
They then claimed to recover this sum from FNBB. FNBB denied liability on various grounds. On 17th November 1988 UBS informed FNBB that legal proceedings would be instituted in Geneva, since discussions for nearly a year had produced no result, unless payment was made by 25th November. There was no compliance with this request. Accordingly, on 15th December 1988 UBS attached the sum of $5.3m. by a sequestration order against FNBB's branch in Geneva. This was of course the first step in proceedings to obtain judgment for this sum, and FNBB were informed of this order on the following day, Friday 16th December. But on Monday 19th December FNBB issued the present writ in England against UBS and served it on their nominee in London pursuant to section 695(1) of the Companies Act.
Against the first defendants they claimed a declaration
"that the telex dated 11th December 1987 from the Plaintiffs' London Branch to the First Defendant's, Frauenfeld branch does not render the Plaintiff's liable to pay the First Defendants the sum of £5.3 million referred to therein."
In the alternative they made various claims against the second to fifth defendants based on conspiracy, inducement of breach of Mr Buteau's contract of employment and for an indemnity of any liability they might have to UBS.
It is common ground that the claims against the second to fifth defendants are in the alternative as stated in the writ, in the sense that they will only arise for decision if the negative declaration against UBS, which is primarily claimed in the writ, is refused. There is no suggestion of any complicity by anyone on behalf of UBS in the allegations against the second to fifth defendants. But the subsequently delivered points of claim show that FNBB allege that if UBS made the payment to Mr Gramm then they were negligent in doing so. FNBB also deny that the telex constituted an instruction to make any payment.
The second to fifth defendants (except the fourth) have filed formal defences denying liability. Mr Gramm has also claimed that he never received the sum in question so far as he is aware.
On 22nd December UBS validated the sequestration as required by Swiss law by commencing the substantive action in Geneva against FNBB for $5.3 million.
On 17th February 1989 UBS issued the summons to strike out or stay the claim for the negative declaration against them. The judge refused this application. In his judgment he said that he found the matter difficult and that his mind had wavered about it. UBS now appeal to this court.
The arguments in favour of the application to strike out or stay have centred on two aspects of this unusual case. The first concerns the claim for a negative declaration. The second was what was called the Spiliada aspect, the undesir ability of the same issues being raised in litigation between UBS and FNBB both in Switzerland and here. This turned on the remarks of Lord Goff of Chievely in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460, at pages 476 and 477 when he was dealing with considerations affecting the doctrine of forum non conveniens.
The judge preferred the submissions of UBS on both these aspects. However, at the end of an admirably cogent judgment on both of them he decided to reject UBS's application because, and solely because, of FNBB's alternative claims against the second to fifth defendants, which can be pursued in England but not in Switzerland. The position is that the courts in Geneva have no equivalent to our Order 11 permitting service out of the jurisdiction and they also have no power to allow third party proceedings, at any rate against persons who are not amenable to their jurisdiction. It is therefore not possible to litigate in Switzerland both UBS's claim against FNBB and FNBB's claims against the second to fifth defendants in the event of FNBB being held liable to UBS.
Although Mr Christopher Clarke Q.C., on behalf of FNBB, has challenged the judge's expression of view both on the aspect of negative declaration and on Spiliada, I remain wholly unconvinced that he erred in any respect in this, the main part of his judgment, in preferring the submissions of Mr Donaldson Q.C. on behalf of UBS on both aspects.
In the end the issue turns on whether the judge was right in holding that all the factors which weigh in favour of UBS and against FNBB are ultimately out-weighed by the fact that FNBB's alternative claims against the second to fifth defendants could, as between Switzerland and England, only be brought in England. As regards the two main aspects to which I have referred, it seems to me that the whole case is over-shadowed by the nature and effect of the claim for a negative declaration, or declaration of non-liability, which FNBB seek against UBS. In comparison with this aspect the Spiliada considerations are in themselves of little direct relevance. Once the claim sought to be stayed in England is seen to be a claim for a declaration of non-liability, Spiliada takes on a wholly different aspect. (There was of course no such element present in Spiliada or in anything which was there considered by Lord Goff.
But it is nevertheless convenient to begin with a consideration of the factors which are relevant to the appropriateness of Geneva as the forum for the resolution of the issues between UBS and FNBB. These were helpfully summarised by Mr Clarke and are set out at page 4C of the transcript as...
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