Kfw (a German public law institution) v Sanjay Singal
| Jurisdiction | England & Wales |
| Judge | Mr Christopher Hancock |
| Judgment Date | 18 August 2020 |
| Neutral Citation | [2020] EWHC 2214 (Comm) |
| Date | 18 August 2020 |
| Docket Number | Case No: CL-2019-000646 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 2214 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Christopher Hancock QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2019-000646
Jonathan Davies-Jones QC (instructed by Clifford Chance LLP) for the Claimants
The Defendant did not appear and was not represented.
Hearing date: 29 July 2020
Approved Judgment
Mr Christopher Hancock QC sitting as a Deputy Judge of the High Court:
Introduction and factual background .
The Claimants apply for summary judgment in respect of claims under three Guarantee and Indemnity Agreements (“ the Guarantees”). Those guarantees were given by Mr Singal, who is resident in India, in respect of sums advanced by the Claimants under individual loan agreements (“ ILAs”) entered into with an Indian company called Bhushan Power & Steel Limited (“ BPSL”). The ILAs were entered into pursuant to three Facility Agreements between the Claimants and BPSL (referred to below as “ Facility Agreements 1, 2 and 3”). Mr Singal was, at the relevant times, the Chairman and Managing Director of BPSL.
The claims are for USD and EUR sums equivalent to about £150m. The application is made with the Court's permission under CPR 24.4(1)(b)(i), by order of Butcher J dated 2 June 2020. As a preliminary, the Claimants also apply for permission to amend their Particulars of Claim to correct some minor errors in the figures originally pleaded.
The Claimants are German, state-owned financial institutions specialising inter alia in export credit lending. The First Claimant (“KfW”) was established in 1948 under the Marshall Plan. The Second Claimant (“KfW IPEX”) is a subsidiary of KfW. The KfW Group comprises one of Germany's largest financial institutions.
Mr Singal was not present at this hearing and was not represented, although he was at earlier stages represented by Messrs Penningtons Manches Coooper LLP. In these circumstances, Mr Davies-Jones QC for the Claimants, accepted that he was under an obligation to draw to my attention any points, factual or legal, which might have assisted the defendant and been made by him had he continued to participate and file a Defence: see, for example, Habib Bank Ltd v Central Bank of Sudan [2006] 2 Lloyd's Rep 412 at [9].
The application for permission to amend .
The Claimants sought permission to amend their Particulars of Claim in the form of the draft attached to the Claimants' Application Notice, which was served with that Application Notice, as I note below. The amendments are to some of the figures which appeared in in the original Particulars of Claim. The need to make those amendments was identified during the course of preparing Mr Petersen's first statement.
The effect of those amendments was to reduce the claim, and to correct inaccuracies which the Claimants were under an obligation to correct. Since there was no prejudice to the Claimants (because the result of the amendment was that the claim was reduced) and since the new figures had to be included to correct errors, I gave permission at the hearing for permission to amend.
The structure of the remainder of this judgment .
I will deal in this judgment, as did Mr Davies-Jones, with matters in the following order:
(1) Mr Singal's participation in these proceedings;
(2) The factual background:
(1) The Facility Agreements;
(2) The Guarantees;
(3) The sums advanced under the ILAs;
(4) BPSL's failure to re-pay the sums advanced; and
(5) The quantum of the outstanding debt;
(3) The claims under the Guarantees:
(1) Jurisdiction of the English Court;
(2) The terms of the Guarantees and the nature of the obligations created;
(3) The demands served on Mr Singal;
(4) The claims under each of Clauses 2.1, 2.2 and 2.3 of the Guarantees; and
(5) Why summary judgment is appropriate.
Mr Singal's participation in these proceedings .
Mr Singal was, but is no longer, represented by English lawyers in these proceedings and he is not playing an active part in them. Whilst the detailed history of the proceedings is set out in the first witness statement of Mr Petersen, which I have read, the brief summary is as follows:
(1) Mr Singal was served with these proceedings in this jurisdiction as of right on 21 October 2019. Service was effected on Law Debenture Corporate Services Ltd, being Mr Singal's London agent for service irrevocably appointed as such by Clauses 12 of Guarantee 1 and Guarantee 2 and Clause 13 of Guarantee 3. This was good service by virtue of CPR Part 6.11.
(2) Mr Singal instructed Penningtons Manches Cooper LLP as his solicitors on the record and he filed an Acknowledgement of Service which indicated an intention to contest jurisdiction. Because the Guarantees contain exclusive jurisdiction clauses in favour of England and express waivers of any right to contest this jurisdiction, Penningtons were asked to articulate the basis for challenging jurisdiction, but did not do so. I address issues of jurisdiction below.
(3) Various extensions of time were agreed for the service of Mr Singal's application to challenge jurisdiction and/or a Defence. The last of those extensions expired on 7 January 2020. On that day, Penningtons issued an application of a different nature, which was said to arise from the fact that Mr Singal was then in custody in India, having been arrested in late 2019. The application sought either (i) an indefinite stay of these proceedings pending Mr Singal's release or (ii) a further extension of six weeks in which to file his jurisdiction challenge.
(4) In fact, no steps were taken by Penningtons to list that application or to co-operate with any steps taken by the Claimants' solicitors (Clifford Chance) to have it listed. On 31 January 2020 Penningtons came off the record.
(5) In the meantime on 24 January 2020 Mr Singal had been released from custody, as is recorded in Mr Petersen's first witness statement, and the foundation for his indefinite stay application therefore fell away. In the time since 24 January 2020, no application to challenge jurisdiction has been filed by him either, and the 6 week extension period Penningtons sought expired many months ago. Nor has Mr Singal responded to any correspondence from Clifford Chance.
(6) Permission for this summary judgment application was granted by the Court on 2 June 2020, as I have noted, and the application was served on Mr Singal in the following ways: (i) by email and courier on his designated service agent in London; (ii) by email and courier on his Indian lawyers in New Delhi; and (iii) at two addresses for BPSL in New Delhi.
(7) Mr Singal has not, however, responded to the application in any way. He did not file any evidence in response and he did not provide his email address so that the link for this hearing could be provided to him. In short, he is not participating.
I am satisfied that there has been valid service of the application on Mr Singal by service in accordance with a contractually agreed method, pursuant to CPR 6.11. I am also satisfied that, on the balance of probabilities, the application will also have come to his notice by virtue of the service on his Indian lawyers and BPSL in New Delhi.
The factual background relating to the Facility and Loan Agreements .
I turn to the factual background relating to the loans. Between 2009 and 2013, the Claimants and BPSL entered into three loan facility agreements, dated 14 May 2009, 17 December 2009 and 13 August 2013 (referred to below as “ Facility Agreement 1”, “ Facility Agreement 2” and “ Facility Agreement 3” respectively, and together as the “Facility Agreements”).
The Facility Agreements provided for individual loans to be advanced by the Claimants up to maximum aggregate amounts specified in each Facility Agreement. The individual loans were to be documented under a series of ILAs, the form of which was pre-determined and set out at Annex 2 of each Facility Agreement. Each of the ILAs relevant to these proceedings was exhibited to the first witness statement of Mr Petersen.
The loans to be advanced under the Facility Agreements and the ILAs thereunder were intended for BPSL to acquire machinery and equipment for what was known as Stage IV and Phase VI of a construction project at a BPSL facility in Orissa, India.
The Facility Agreements are governed by German law. Their key terms are set out at paragraphs 5, 14 and 21 of the Amended Particulars of Claim for each of Facility Agreements 1, 2 and 3 respectively. Because their operative terms were substantially similar, the key terms below from Facility Agreement 3 can be taken as broadly representative of the corresponding provisions in Facility Agreements 1 and 2, and they are as follows:
(1) Clause 2 (Amount and Purpose): “ 2.1 Subject to the conclusion of individual loan agreements, each substantially in the form as set out in Annex 2 (the “ Individual Loan Agreements”) … the Finance Parties [being KfW and KfW IPEX] are prepared to make available to the Borrower [being BPSL] Loans [being each amount to be made available under the facility or the principal amount outstanding for the time being under an Individual Loan Agreement] …”;
(2) Clause 6 (Interest) provided for interest to be payable at the fixed or floating rates specified in Clauses 6.2 and 6.3 respectively;
(3) Clause 7 (Repayment): “ 7.1 The Borrower must repay the relevant Finance Party each Loan in EUR and in...
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