Mid-East Sales Ltd v United Engineering and Trading Company (PVT) Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 09 May 2014 |
| Neutral Citation | [2014] EWHC 1457 (Comm) |
| Docket Number | Case No: Claim No 2007 Folio 988 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 09 May 2014 |
[2014] EWHC 1457 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Burton
Case No: Claim No 2007 Folio 988
Hugo Page QC and Oliver Jones (instructed by Mackrell Turner Garrett) for the Claimant
Alexander Layton QC and Mahnaz Malik (instructed by Thomas Eggar LLP ) for the Second Defendant
Hearing dates: 7, 8, 9 and 10 April 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Second Defendant, the Islamic Republic of Pakistan ("IRP") applied (inter alia) to set aside service or for a stay on grounds of forum non conveniens, in relation to a claim brought against it by the Claimant, Mid- East Sales Limited, a company incorporated in Liberia. The grounds relied upon were not of state immunity, because the claims arise out of a commercial transaction, into which IRP allegedly entered, but upon grounds of lack of jurisdiction, absence of arguable case and non-disclosure. Such is commonplace in respect of challenges in this Court by a Defendant on grounds of jurisdiction. But there is an unusual feature. The proceedings now challenged on grounds of jurisdiction were issued on 11 June 2007; the Order granting leave to serve out of the jurisdiction, by Gloster J, was made on 4 December 2007 (more than 6 years ago); proceedings were served, after considerable difficulty, on 15 January 2009 (more than 5 years ago); judgment was entered in default by my order of 14 January 2011 (more than 3 years ago); the default judgment was served, again after difficulty, on 3 September 2012 (1 1/2 years ago) and the Defendant has issued (but only after the issue by the Claimant of third party debt applications to enforce the judgment) this application on 10 April 2013, together with an application for an extension of time to file a Part 11 application.
The context therefore is an application which Mr Alexander Layton QC, who appears for IRP together with Ms Mahnaz Malik, recognises is way outside the normal timescales for promptness in bringing an application to set aside a judgment, but he seeks to explain the earlier periods, emphasises that the last period is most relevant and relies on what he submits to be the strength of IRP's case to set aside the judgment.
The history
Mr Rafiuddin on behalf of the Claimant negotiated in 1994–5 with Mr Ahmad Bhatti on behalf of one or other or both of the entities known as United Engineering & Trading Company (PVT) Limited ("UETC"), now the First Defendant, and Dr AQ Khan Research Laboratories ("KRL"), both involved in a Pakistan Government Research Laboratory conducting inter alia nuclear weapons' development, which came under the control of the Strategic Plans Division ("SPD"), which is responsible for all aspects of Pakistan's nuclear security or atomic energy, to supply and equip two power stations. Mr Rafiuddin's case is that he made it clear to Mr Ahmad Bhatti of KRL that he wanted to contract on the basis of the Claimant's standard conditions so as to incorporate provision for English law and jurisdiction. Mr Bhatti objected to this, pointing out that payment was to be made for the plant under a confirmed letter of credit. Mr Rafiuddin explains (paragraph 6 of his first witness statement of 3 May 2007) that:
" In the end, we agreed that with payment being guaranteed via letter of credit to be confirmed by the paying bank, the contract for the power stations would specify neither law nor jurisdiction. However I knew that in a contract of this type it was certain that KRL would require further services and spares. I therefore insisted and Mr Bhatti agreed that the Claimants would draw up Special Conditions of Contract specifying English law and jurisdiction and that these wouldapply, as well as the Claimant's general conditions, to any further transactions not paid in advance or covered by reconfirmed letters of credit."
This is corroborated by the preamble and the terms of a Modification to [Claimant's] General Conditions of Sale, signed by Mr Rafiuddin on 5 March 1995. He says he delivered the Purchase Contract for the plant (dated 6 March 1995) together with the Special Conditions to Mr Bhatti on 5 March (although the Particulars of Claim at paragraph 3 erroneously recite 5 th May) 1995. The General Conditions provide for English law, but not jurisdiction. The Special Conditions provided as follows:
" Unless it is specifically mutually agreed otherwise in writing any questions relating to any quotation, contract or supply made subsequent to the completion of deliveries of stores/goods/services ordered under [the Purchase Contract] shall be subject to the [Claimant's] General Conditions of Sales (November 1994) and to the above-mentioned Special Conditions of Sale or agreed written amendments of these conditions and shall be determined in all respects by the laws of England, and any dispute(s) incapable of amicable resolution shall be tried and adjudicated in the appropriate UK Court irrespective of where the cause for action may arise. Jurisdiction for the said action will rest in the UK."
Mr Layton points out the provision (clause 20.1) in the Purchase Contract providing for amendment to be made in writing, but there was, on the Claimant's case, no amendment of the Purchase Contract, but a specific agreement for the incorporation of conditions into the subsequent supply of any services or spare parts.
There was such a subsequent contract, for the purchase of spare turbines, originally supplied on loan and subject to an agreement, made in July 1995 between Mr Rafiuddin and Mr Bhatti and Mr Badr-ul-Islam of KRL, that the spare parts would in due course be purchased, and they were invoiced by an invoice dated 31 July 1995, by a footnote to which it was provided that the turbines were to be sold " subject to the provisions of our General and Special Conditions of Contract, a copy of which will be forwarded on request." In 1998 the Claimant's charged the then current price for the two turbines of $1,674,503, and a balance remains unpaid and payable of $1,024,453.
Further parts were supplied and services provided on the same terms:
(i) Modified fuel inlet nozzles for the units at $7,500;
(ii) The supply of resident technical experts in the sum of $535,029;
(iii) Subsequent repair works at $11,250.
These sums remained outstanding, despite repeated requests by the Claimant and, according to Mr Rafiuddin, repeated assurances by Mr Bhatti and the eponymous Dr AQ Khan of KRL.
Mr Rafiuddin describes a meeting at KRL's offices on 18 February 2001 with Dr Khan and five other representatives of KRL, including Mr M.A. Khan, at which he continued to press for payment, and Dr Khan laughed off his threat of legal proceedings, because of the context of national security. Mr Rafiuddin reminded Dr Khan that satisfactory commissioning of both power stations had been certified in March 1998, and that the plant had operated thereafter without criticism until damage to one of the units in circumstances not his responsibility. Mr Rafiuddin says that Dr Khan offered to pay off all that was due if the Claimant assisted in the repair of such damage so that it could be re-commissioned, and (paragraph 22 of his first witness statement) that Dr Khan confirmed that the balance owing would be paid as soon as the Claimant had arranged for the unit to be repaired and re-commissioned: and that this agreement is evidenced by a minute incorporating such agreement, signed by Dr Khan and Mr M.A. Khan on that day in those terms.
The works were done and Mr Rafiuddin pursued payment, referring to the agreement of 18 February 2001 by a letter dated 21 March, and particularly 22 March 2001, the latter of which ended in " we shall be most grateful if you could look into this matter urgently and sanction our payments as already agreed between us, and minuted by Mr M.A. Khan on February 18 2001".
There are further references to this in Progress Reports, and there were further meetings between the parties in March and April 2001. The Defendants have now produced a handwritten amendment to the minute of 18 February, seeking to detract from the agreement there recorded, but Mr Rafiuddin does not accept that it is genuine or consistent with the contemporaneous correspondence, including the Claimant's consistent reliance upon, and the lack of any rejection or questioning of, the agreement as contained in the 18 February minute. The Claimant then gave in his second witness statement dated 22 November 2007, an account not contained in his first witness statement:
" 4… In about May or June 2001 I attended a meeting at Dr AQ Khan's office, attended by Dr AQ Khan and Mr Mohammed Fahim, KRL's member of Finance. At that time Dr Khan no longer headed KRL but he worked for the President of Pakistan as Chief Scientific Advisor with special responsibility for KRL affairs.
5. As I was well aware, at that time Pakistan had difficulties finding foreign currency to meet its foreign currency obligations. An organisation like KRL could not simply pay my company out of its own resources. It needed to apply to the Special Projects Directorate for funding out of the Ministry of Defence budget. Nevertheless, because of its importance to the Ministry as the source of nuclear weapons, such applications by KRL were always granted.
6. At that meeting it was agreed between the Claimant and the Defendants that KRL would apply to the Special Projects Directorate of the Ministry of Finance for funds to...
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