Metliss v National Bank of Greece and Athens S.A.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DENNING,LORD JUSTICE ROMER |
| Judgment Date | 18 March 1957 |
| Judgment citation (vLex) | [1957] EWCA Civ J0318-1 |
| Court | Court of Appeal |
| Date | 18 March 1957 |
[1957] EWCA Civ J0318-1
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Denning,
Lord Justice Romer and
Lord Justice Parker
MR HAROLD LEVER and MR J.H.R. NEWEY (instructed by Messrs Stibbard Gibson & Co.) appeared on behalf of the Appellants (Defendants).
MR JOHN G. FOSTER, Q.C. and MR MARK LITTMAN (instructed by Messrs Hardman Phillips & Mann) appeared on behalf of the Respondents (Plaintiffs).
On 1st December, 1927, the National Mortgage Bank of Greece (a company incorporated under Greek law) issued £2,000,000 seven per cent sterling mortgage bonds. In each of the bonds the National Mortgage Bank of Greece promised to pay the bearer the principal moneys on the 1st December, 1957, and mean while interest half-yearly at 7 per cent. Payment was to be made in sterling at the offices of Hambros Bank Ltd. or Erlangers in London, and at the option of the holder at the National Bank of Greece in Athens by cheque on London. In case of any question arising, it was to be settled by arbitration in London in accordance with the laws of England. The bonds were guaranteed by the National Bank of Greece (a company incorporated under Greek law) in these words: "The National Bank of Greece hereby unconditionally guarantees the due payment of the principal moneys and interest and the due performance of all the conditions of this bond".
On 1st December, 1935, the provisions of the bonds were modified so as to reduce the rate of interest from 7 per cent to 4 per cent. Bondholders resident in Greece were to be paid only in drachmae. Bondholders permanently resident outside Greece were to be paid in sterling. This modification was stamped on the bonds by an over-stamp. The National Bank of Greece agreed to this modification and their guarantee was continued in full force notwithstanding the modifications.
On 27th April, 1941, the Germans captured Athens and occupied Greece: and in the result the National Mortgage Bank of Greece was left with nothing with which to pay the bonds. No further payments have been made on the bonds, either during the occupation or since.
In November, 1949, the Government of Greece passed a law which suspended all obligations on the bonds. It set up a moratorium. The substantive rights of the bearers of the bonds were suspended. The remedies by action or otherwise were suspended. It was illegal for the debtors to pay either principal or interest. This moratorium continued at first until 30th June, 1952, but it has been renewed from time to time and is still in being.
Notwithstanding that moratorium, if an English bondholder had brought an action in the English Courts for the interest due to him, either against the principal debtor, the National Mortgage Bank of Greece, or against the guarantors, the National Bank of Greece, or against both, the English Courts would without doubt have given judgment for the interest due. The English Courts would not have recognised the moratorium. The proper law of the contract was English law and no enactment of the Greece Government could affect the matter: see ( Kleinwort v. Ungarische 1939, 2 King's Bench, page 678). A judgment of the English Courts against those Greek Companies would, however, have been of little use to an English bondholder because it was not enforceable in Greece, as the moratorium law forbade its enforcement there: and it would have been of little use in England because, so far as we know, neither the National Mortgage Bank of Greece nor the National Bank of Greece had any assets in England on which a creditor could levy execution. No English bondholder thought it worth while to seek to obtain a judgment in the English Courts against those companies for the interest due to him.
Then in 1953 came the event which lies at the root of the present proceedings. The Greek Government passed a law amalgamating the National Bank of Greece (the guarantor of the bonds) with the Bank of Athens (a bank hitherto unconnected with the bonds). Those two banks are now amalgamated into one new banking company called the National Bank of Greece and Athens. Let me pause a moment to state the importance of this amalgamation in these proceedings. Mr Metliss, the holder of some of the bonds, now seeks to recover the interest on the bonds from this new company: and he brings this action in the English Courts for the purpose. The reason is not far to seek. The Bank of Athens had, before the amalgamation, carried on business in this country for many years. It presumably had assets here. If the new amalgamated company has taken over those assets, they may be available to satisfy any judgment which Mr Metliss may obtain in the English Courts.
Before I discuss the amalgamation, however, I must complete the history. The new amalgamated company was of course protected in Greece by the moratorium law just as its predecessors had been: and it seems to have assumed that it was protected in England too. It did not anticipate an action by a bondholder in England like Mr Metliss. On this assumption, the principal debtor, the National Mortgage Bank of Greece, on 27th October, 1955, made an offer to the English bondholders to pay them in sterling on these terms: The principal debt was to be reduced by one-half; all interest from the 1st June, 1941, to 50th November, 1954, was to be waived: and the interest on the bonds from 1st December, 1954, onwards was to be 2 per cent only. The new amalgamated company (the National Bank of Greece and Athens) guaranteed the performance of those terms by the principal debtors. If the offer was not accepted, the bondholder remained subject to the moratorium law. That offer was advertised in the Financial Times: and Hambros and Erlangers were authorised by the Bank of England to say that permission had been given under the Exchange Control Act, 1947, for bondholders to accept the offer if they so desired. Some English bondholders may have accepted that offer but Mr Metliss did not. On 6th December, 1955, he brought this action in the English Courts against the new amalgamated company. He is the holder of bearer bonds to a total of £21,900, and he claimed interest at 4 per cent on £21,900 for 14 years from 1st June, 1941, to 1st June, 1955, inclusive. That interest amounted to £15,083. 12s. 6d. The Judge has not given him interest for 14 years but only for 6 years before writ and has entered judgment against the new amalgamated company for £6,241. 5s. Id. The Company appeals to this Court.
There was a great contest in the Court below as to whether the proper law of the contract contained in the bonds is English law or Greek law. The Judge decided that it is English law, and there is no appeal from his decision on that point.
The two points raised in the appeal are these. First, the new amalgamated company says that it is not liable to be sued in the English Courts on the bonds because it was not a party thereto; secondly, it says that if it can be sued, it can pray in aid the moratorium law of Greece to avoid the liability.
The first point raises a question of great importance in private international law. The Plaintiff says that by Greek law the new amalgamated company is the universal successor of the old National Bank of Greece and that the English Courts will recognise that succession so that he can sue the new amalgamated company without more ado. The Plaintiff does not allege any novation by way of contract with the new company. His Statement of Claim recites the bonds and the guarantee by the National Bank of Greece, and the only paragraph which brings in the new amalgamated company is this: "The Defendants are a corporation constituted under the laws of Greece and carrying on business interalia at 6, Old Jewry, E.C.2., in the County of London. By a Greek decree dated 26th February, 1953, the entire assets of the National Bank of Greece (including their liability under the said guarantee) were assigned and transferred to the Defendants". In the Reply the Plaintiff sought to rely on an estopped but it was not pursued before us. The Plaintiff rests his case solely on the Greek law relating to the amalgamation. I will therefore state what it is:
By an Act No. 2292 made on 18th February, 1953, the amalgamation or merger of banking companies was authorised, and it was enacted that "The Company which absorbs another company by merger, or the new company formed by the amalgamation, becomes the universal successor to the rights and obligations in general of the amalgamated companies, without any further formality or act whatsoever".
By a Royal Decree dated 27th February, 1953, made in pursuance of that Act it was enacted that "as from the publication of the present decree, the National Bank of Greece Ltd. and the National Bank of Athens Ltd. would cease to exist and the entire property of each of them in its whole (assets and liabilities) on the day of publication is considered as being automatically contributed to the new Limited Liability Banking Company (the National Bank of Greece and Athens Company) constituted by virtue of these presents, which is substituted, ipso jure and without any other formality in all rights and obligations of the said amalgamated Banks, as their universal successor".
The English Courts will recognise the Greek law as effective to dissolve the two former banking companies. They were Greek companies. It is only by Greek law that they gained any existence at all. If we recognise their existence by Greek law, we must also recognise their dissolution by the same law see ( Lazard Bros, v. Midland Bank Ltd. 1933 Appeal Cases at page 297 by Lord Wright). We also recognise the existence of the new amalgamated company just as we recognise the existence of any other foreign company. But the question is, do we...
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