Highland Crusader Offshore Partners LP v Deutsche Bank AG
| Jurisdiction | England & Wales |
| Judge | Carnwath,Toulson,Goldring L JJ |
| Judgment Date | 13 July 2009 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 July 2009 |
[2009] EWCA Civ 725
Court of Appeal (Civil Division)
Carnwath, Toulson and Goldring L JJ.
Timothy Saloman QC and Charles Holroyd (instructed by Cooke Young & Keidan LLP) for the appellants.
Richard Handyside QC (instructed by Allen & Overy LLP) for the respondents.
The following cases were referred to in the judgments:
Ace Insurance SA-NV v Zurich Insurance CoUNK [2001] EWCA Civ 173; [2001] CLC 526.
Airbus Industrie GIE v Patel [1998] CLC 702; [1999] 1 AC 119.
Amchem Products Inc v British Columbia (Workers” Compensation Board)UNK [1993] 1 SCR 897.
Amoco v TGTL (26 June 1996, Waller J).
Antec International Ltd v Biosafety USA IncUNK [2006] EWHC 47 (Comm).
BP plc v National Union Fire Insurance CoUNK [2004] EWHC 1132 (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.
Cannon Screen Entertainment Ltd v Handmade Films (Distributors) Ltd (unreported, 11 July 1989, Hobhouse J).
CEL Group Ltd v Nedlloyd Lines UK LtdUNK [2003] EWCA Civ 1716.
Continental Bank NA v Aeakos Compania Naviera SAWLR [1994] 1 WLR 588.
Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] CLC 579.
Donohue v Armco IncUNK [2001] UKHL 64; [2002] CLC 440.
EI Du Pont de Nemours & Co v AgnewUNK [1987] 2 Ll Rep 585.
EI Du Pont de Nemours & Co v Agnew (No. 2)UNK [1988] 2 Ll Rep 240.
Evialis v SIATUNK [2003] EWHC 863 (Comm); [2003] 2 CLC 802.
Gulf Oil Corp v Gilbert (1947) 330 US 501.
HIT Entertainment Ltd v Gaffney International Licensing Pty LtdUNK [2007] EWHC 1282 (Ch).
Laker Airways Ltd v Sabena, Belgian World Airlines (1984) 731 F 2d 909.
Maxwell Communications Corporation plc, Re (No. 2)UNK [1992] BCC 757.
Mercury Telecommunications Ltd v Communication Telesystems InternationalUNK [1999] 2 All ER (Comm) 33.
Perry v Del RioENR (2001) 66 SW 3d 239.
Royal Bank of Canada v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2004] 1 CLC 170.
Sabah Shipyard (Pakistan) Ltd v PakistanUNK [2002] EWCA Civ 1643; [2004] 1 CLC 149.
S & W Berisford plc v New Hampshire Insurance Co LtdUNK [1990] 1 Ll Rep 454.
Societe Nationale Industrielle Aerospatiale v Lee Kui JakELR [1987] 1 AC 871.
Spiliada Maritime Corp v Cansulex LtdELR [1987] 1 AC 460.
Turner v GrovitUNK [2001] UKHL 65; [2002] CLC 463; [2002] 1 WLR 107.
Conflict of laws — Jurisdiction clause — Anti-suit injunction — Revolving sale and repurchase of securities — Appellant hedge fund agreed to buy tranches of asset-backed collateralised loan obligations from respondent bank — Global Master Repurchase Agreements (GMRAs) providing for English law and nonexclusive jurisdiction — Bank made margin call which fund did not pay — Bank invoked default valuation provisions — Fund filed proceedings in Texas alleging misrepresentation and seeking declarations of non-liability — Bank issued Commercial Court proceedings for amounts stated in default valuation notices with interest — No general presumption in case of non-exclusive jurisdiction clause that parallel proceedings in non-selected forum vexatious or oppressive Parallel proceedings undesirable but an inherent risk where parties used nonexclusive jurisdiction clauseDecision of Texan court to accept jurisdiction not in violation of principles of customary international law — No exceptional circumstances shown for anti-suit injunction — Anti-suit injunction set aside.
This was an appeal against a decision of Burton J ([2009] 1 CLC 535) granting Deutsche Bank (DB) and Deutsche Bank Securities Inc (DBSI) an injunction to prevent the Highland companies (collectively “Highland”) from prosecuting an action in Texas concerning a dispute about which DB and DBSI had brought parallel proceedings in the Commercial Court in London.
DB was a German bank with its principal place of business is in Frankfurt and an office in London. DBSI was an associated company registered in Delaware and having its principal place of business in New York. Highland was a major US hedge fund. The principal place of business of Highland Crusader was Bermuda. The principal place of business of the other Highland companies was Dallas, Texas, where all the investment decisions relating to all three Highland parties were made.
In October 2007 DB and DBSI entered into agreements with the Highland companies on materially identical terms by which, broadly speaking, Highland agreed to buy from DB tranches of asset-backed collateralised loan obligations (the underlying assets being predominantly US based real estate) with a face value of about US$600 million. The agreements took the form of Global Master Repurchase Agreements (GMRAs), a standard form of international finance agreement.
Paragraph 17 of the GMRA provided for the agreement to be governed by English law and for the parties to submit to the jurisdiction of the English court, although proceedings in the courts of any other country of competent jurisdiction were permitted. Clause 5 of Annex 1 to the GMRA provided that DBSI acted solely as agent and that DB and Highland would proceed solely against each other to collect or recover any amounts owing or to enforce any rights in connection with transactions under the agreement.
Highland failed to pay margin calls under the GMRAs and DB served default notices and default valuation notices claiming sums amounting to over US$70 million excluding interest.
Highland filed proceedings against DB and DBSI in Dallas alleging that DB and DBSI had induced Highland to buy the securities by fraudulent or negligent misrepresentations and had wrongfully induced Highland to pay margin calls and seeking declarations of non-liability and rescission of the GMRA. DB then issued proceedings against Highland in the Commercial Court for the amounts stated in the default valuation notices with interest.
A challenge by DB and DBSI to the jurisdiction of the Texan court was dismissed. They then sought an injunction to restrain the Texan proceedings. The judge granted an injunction holding that where there was a contractual non-exclusive jurisdiction clause, a party would ordinarily act vexatiously and oppressively in pursuing proceedings in the non-contractual jurisdiction in parallel with proceedings in the contractual jurisdiction, unless there were exceptional reasons, not foreseeable at the time when the contractual jurisdiction was agreed.
Highland appealed arguing that the judge failed to give proper effect to the last part of paragraph 17 which permitted the parties to take proceedings in the courts of any other country of competent jurisdiction; vexation or oppression was not established by the mere fact that Highland intended to continue with proceedings properly commenced in Texas. Secondly, the judge was wrong to hold as a matter of principle that where there was a contractual non-exclusive jurisdiction clause, a party would ordinarily act vexatiously and oppressively in pursuing proceedings in the non-contractual jurisdiction in parallel with proceedings in contractual jurisdiction, unless there are exceptional reasons, not foreseeable at the time when the contractual jurisdiction was agreed.
Held, allowing the appeal:
1. The starting point for considering the effect of a non-exclusive jurisdiction clause was the wording of the clause. In terms of contract law, a party could not ordinarily be said to be in breach of a contract containing a nonexclusive jurisdiction clause merely by pursuing proceedings in an alternative jurisdiction. It was conceivable that a jurisdiction clause which was not fully exclusive might nevertheless be drafted in such a way as to have the effect of barring parallel proceedings in certain circumstances, but that was a matter of individual contractual interpretation. Where a non-exclusive jurisdiction clause did not clearly indicate whether prior or subsequent parallel proceedings in a non-selected forum were permitted or prohibited, the best interpretation would usually be that, by contracting for non-exclusive jurisdiction, the parties anticipated and accepted the possibility of some parallel proceedings, and as a result, only foreign proceedings which were vexatious and oppressive for some reason independent of the mere presence of the non-exclusive clause would be restrained by injunction. It would not be right to start with a general presumption that parallel proceedings in a non-selected forum were to be regarded as vexatious or oppressive and that there was a burden on the party responsible for prosecuting them to make out a strong case to justify them on grounds of matters unforeseeable at the time of the contract or other exceptional circumstances. There was no rule that the prosecution of foreign litigation in parallel with litigation in England pursuant to a non-exclusive jurisdiction clause was per se vexatious and oppressive unless exceptional circumstances could be shown to justify it. (EI Du Pont de Nemours & Co v Agnew (No. 2)UNK[1988] 2 Ll Rep 240andRoyal Bank of Canada v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA[2004] 1 CLC 170applied; Cannon Screen Entertainment Ltd v Handmade Films (Distributors) Ltd (unreported, 11 July 1989), Amoco v TGTL(26 June 1996) andSabah Shipyard (Pakistan) Ltd v PakistanUNK[2002] EWCA Civ 1643; [2004] 1 CLC 149considered.)
2. The judge misdirected himself in principle when he said that, absent some unforeseeable change since the contract, which was not suggested, it was vexatious and oppressive for a party to pursue proceedings in the noncontractual forum. Accordingly it was necessary to reconsider whether an anti-suit injunction ought to have been granted. The wording of the contract was inconsistent with the suggestion that the prosecution of parallel proceedings in another jurisdiction would be oppressive or vexatious. Little significance should be attached to the fact that the Texan...
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