Gulf Bank K.S.C. v Mitsubishi Heavy Industries Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 22 July 1993 |
| Date | 22 July 1993 |
| Court | Queen's Bench Division |
Queen's Bench Division
Before Mr Justice Hobhouse
Contract - foreign contract - justiciable in English courts
A contract between foreign companies subject to foreign law but with an indemnity clause made subject to English law, and declared void under the governing law of the contract, nevertheless was a matter concerning a contract and therefore remained within the purview of Order 11 of the Rules of the Supreme Court.
Mr Justice Hobhouse so held in the Queen's Bench Division when giving reasons for refusing on July 12 the application of the defendants, Mitsubishi Heavy Industries Ltd, for a declaration that an indemnity clause in the contract between themselves and Gulf Bank KSC, the plaintiffs, did not come within the jurisdiction of the English courts.
Mr Mark Barnes, QC and Mr Kenneth Maclean for the plaintiff; Mr Richard Aikens, QC and Mr Steven Berry for the defendants.
MR JUSTICE HOBHOUSE said that the contract was for the defendants to supply a plant to the Kuwait Ministry of Electricity and Water. An advance payment guarantee was issued by the plaintiff bank to the ministry and a letter of counter-indemnity was given by the defendants to the plaintiffs in consideration of the plaintiffs issuing the guarantee. The supply contract was governed by the law of Kuwait.
But by a governing law and jurisdiction clause the indemnity was to be governed by English law and the parties agreed to submit to the jurisdiction of the High Court in England.
The advance payment guarantee was issued to the ministry on March 22, 1989 at the request of the defendants.
In August 1990 Iraq invaded Kuwait. In January 1991 the government of Kuwait, presumably in exile, adopted a resolution by which public works contracts with the government were declared void and automatically terminated with retrospective effect from August 2, 1990.
A letter from the defendants to the plaintiffs on April 28, 1992, if the counter-indemnity had not ceased to be valid and effective, represented a clear repudiation by the defendants of their liabilities.
The sums involved, together with other similar guarantees, amounted to the equivalent of #172 million. The defendants said...
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