Middle Eastern Oil LLC v National Bank of Abu Dhabi
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 27 November 2008 |
| Neutral Citation | [2008] EWHC 2895 (Comm) |
| Docket Number | Case No: 2008 FOLIO 285 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 November 2008 |
[2008] EWHC 2895 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Mr. Justice Teare
Case No: 2008 FOLIO 285
David Chivers QC (instructed by Stockinger Solicitors) for the Claimant
John Taylor (instructed by Simmons and Simmons) for the Defendant
Hearing dates: 30 October 2008
Introduction
This is an application by the Defendant for an order staying the proceedings which have been commenced in this Court by the Claimant. It was not so described in the Application Notice but it is common ground that that is the order sought by the Defendant. The stay is sought on two grounds; firstly, that the Claimant is obliged by contract to sue in the United Arab Emirates (the UAE) and there are no strong grounds for not enforcing that contract and, secondly, that the UAE is clearly and distinctly the more appropriate forum for the determination of the claim and justice does not require that this court should refuse to grant a stay.
The Claimant is a company incorporated in Dubai in the UAE. The Defendant is a bank incorporated in Abu Dhabi in the UAE. It has a branch in Dubai where the Claimant held a US dollar bank account. It is common ground that, although there was no express choice of proper law, the proper law of the contractual banking relationship between the parties is that of the UAE. Clause 9 of the contract provided as follows:
“The Bank and the Customer submit to the jurisdiction of the Civil Courts of the United Arab Emirates but without prejudice to the Bank's general right to take proceedings, where necessary, in any court wheresoever.”
The factual basis of the claim sought to be made in this court is that the Defendant, in March 2002, failed or refused to comply with the instructions of the Claimant to transfer a sum of US$1.6m. from the Claimant's account in Dubai to an account in London in the name of Emir8 Petroleum PLC (“Emir8”), a company in which the Claimant held shares. The sum of US$1.74m. had been paid into the Claimant's account in Dubai from the Lebanon on the instructions of a Kazakhstani company. The sum was not transferred to Emir8 by the Defendant because, on 25 March 2002, the Defendant had received instructions from the Central Bank of the UAE to place the sum in a suspense account pending satisfactory explanation from the Claimant as to the source of the funds. Those instructions were given in the context of the money laundering laws of the UAE. On 20 July 2002 the Attorney General of Dubai placed a lien on the sum. Subsequently, in April 2005, the Dubai Court of First Instance ruled that money laundering offences had been committed but in May or June 2005 the Appeal Court allowed an appeal from that decision. The sum of US$1.74m. was eventually released to the Claimant in September 2005.
In the meantime, so it is alleged, the operations and cash flow of Emir8 had been affected by the non-payment of the sum of US$1.6m. leading to a liquidity crisis causing it to enter a creditor's voluntary liquidation in March 200The Claimant's case is that it has lost the value of its shares in Emir8, almost US$6m.
The causes of action to be relied upon by the Claimant are in contract and in tort. The contractual cause of action is a complaint that the Defendant failed or refused, in breach of contract, to comply with the Claimant's instructions. It is said that the Defendant, having received information from the Defendants as to the source of the funds, ought to have transferred the funds to Emir8 before the lien was placed on them in July 2002. There are two causes of action in tort, one alleging breach of a duty of care and the other alleging breach of a duty under the UAE money laundering statute. Both of those causes of action, like the contractual cause of action, focus upon the Defendant's failure to transfer the funds in question before the lien was placed on them in July 2002.
The Claimant commenced proceedings before this court on 20 March 2008, almost 6 years after the intervention by the UAE authorities in 2002. The Claimant was able to establish jurisdiction in this court as of right because the Defendant carries on business in London through a branch and so service was effected upon the Defendant at that branch, shortly before the expiry of the 4 month time limit for such service.
The jurisdiction clause
It is submitted on behalf of the Defendant that the jurisdiction clause, so far as it affects the Claimant, is an exclusive jurisdiction clause in the sense that it binds the Claimant, if it wishes to sue the Defendant, to do so in the courts of the UAE. By contrast it is submitted on behalf of the Claimant that the clause is not an exclusive jurisdiction clause. It is said that whilst both parties have agreed that if one party brings proceedings in the courts of the UAE the other will submit to the jurisdiction of the courts of the UAE yet both parties retain their right to bring proceedings against the other wherever they can found jurisdiction.
The words used in the phrase “The Bank and the Customer submit to the jurisdiction of the Civil Courts of the United Arab Emirates” are capable of meaning that the bank and the customer agree that they will submit disputes concerning their banking relationship to the jurisdiction of the Civil Courts of the UAE. But they are also capable of meaning that the bank and the customer agree that if one commences proceedings against the other concerning their banking relationship in the civil courts of the UAE the other will submit to the jurisdiction of those courts, leaving untouched the parties' right to commence proceedings elsewhere is they are able to do so. However, the clause must be construed as a whole. The clause ends by saying: “but without prejudice to the Bank's general right to take proceedings, where necessary, in any court wheresoever.” This indicates that the draftsman has addressed the question of proceedings concerning the banking relationship being brought in other jurisdictions and has expressly provided that the bank may do so. No mention is made of the customer being able to do so. In my judgment the obvious inference to be drawn from that omission is that, properly construed, the jurisdiction clause was intended to oblige the customer to commence proceedings concerning its banking relationship in the courts of the UAE but not to oblige the Bank to do so. The customer's general right to do so was prejudiced. The bank's general right to do so was not prejudiced. That is the meaning which, in my judgment, the clause would convey to a reasonable person in the situation of the parties at the time they entered into their banking relationship.
I was referred to Austrian Lloyd Steamship Company v Gresham Life Assurance Society [1903] 1 KB 249. That case concerned a life assurance policy which provided that “For all disputes which may arise out of the contract of insurance, all the parties interested expressly submit to the jurisdiction of the Courts of Budapest having jurisdiction in such matters”. It was held by the Court of Appeal that those words meant that the parties mutually agreed that if any dispute arose under the contract it shall be determined by the Courts of Budapest. I am not convinced that that case gives much assistance since the clause, though similar to the clause which I must construe, is not identical. At any rate there is nothing in that decision which suggests that the construction of the jurisdiction clause which I favour is wrong.
Strong reason
I have therefore concluded that the Claimant was contractually bound to commence proceedings concerning his banking relationship with the Defendant to the civil courts of the UAE. That being so the burden lies upon the Claimant to show that there is a strong reason for not enforcing the exclusive jurisdiction clause by granting a stay; see El Amria [1981] 2 Lloyd's Rep.119 at pp.123–124 per Brandon LJ and Donohue v Armco Inc. [2002] 1 Lloyd's rep. 425 at pp.432–433 per Lord Bingham.
Counsel for the Claimant did not expressly address the question of “strong reason” because, for forensic reasons, he preferred to submit that the jurisdiction clause, properly construed, was not an exclusive jurisdiction clause and then to address the question whether the Defendant could establish that the UAE was a jurisdiction which was clearly and distinctly the more appropriate forum for the resolution of the Claimant's claim. However, it is plain from the evidence placed before the Court that the Claimant maintains that there was strong reason for not enforcing the jurisdiction clause. Firstly, it is said that the Claimant's loss was sustained in England. It maintains that it lost the value of its shares in Emir8, a company incorporated here, as a result of the wrongful actions of the Defendant. That was a strong connection with this jurisdiction. Secondly, it is said that there were other connections with this jurisdiction. Thirdly, it is said that the applicable law of the claim in tort was English law. Fourthly, it is said that the quality of justice in this jurisdiction is (as it was put by counsel in his Skeleton Argument) “significantly superior to that which would be obtained in the UAE” in the light of (a) the failed criminal proceedings in the UAE, (b) the Bank's perceived political interrelationship with the UAE state and (c) the absence of a developed insolvency or commercial law in the UAE. As a result the Claimant “does not believe that it will receive a fair trial in the UAE.”
The Claimant's loss
The loss which is claimed by the Claimant was sustained in this jurisdiction. I accept that that is a strong connecting factor with this jurisdiction. Moreover, to the...
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