Royal Bank of Canada v Cooperative Centrale Raiffeisen-Boorenleenbank Binding Authority
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mance,Lord Justice Thorpe |
| Judgment Date | 23 January 2004 |
| Neutral Citation | [2004] EWCA Civ 7 |
| Docket Number | Case No: A3/2003/2559 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 January 2004 |
[2004] EWCA Civ 7
Lord Justice Thorpe
Lord Justice Mance and
Mr Justice Evans-Lombe
Case No: A3/2003/2559
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION (ANDREW SMITH J.)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Guy Philipps QC and Mr Richard Handyside (instructed by White & Case) for the Appellant
Mr Ali Malek QC and Mr David Quest (instructed by Herbert Smith) for the Respondent
Mr. Justice Evans-Lombe:
This is an appeal, with permission of the Judge from the order of Andrew Smith J made on the 2 nd December 2003 whereby the Judge dismissed an application by the claimant, Royal Bank of Canada ("RBC") for an injunction restraining the defendant, Coöperatieve Centrale Raiffeisen-Boerenleenbank BA ("Rabobank") from taking any step to obtain a determination of any issue raised in proceedings instituted by Rabobank against RBC in the commercial division of the Supreme Court of the State of New York save for the purpose of completing party and third party factual discovery.
The case arises from the collapse of the American energy dealing conglomerate Enron. RBC is a Canadian bank having its principal place of business in Toronto. Rabobank is an institution organised under the laws of the Netherlands having its principal place of business in Utrecht. Both parties do business in London and New York. RBC's claim is based upon a swap agreement with Rabobank recorded in a Total Return Swap Confirmation dated 31 st January 2001. By the agreement recorded in the confirmation Rabobank was liable to pay RBC 517m, plus 6m interest, on the 28 th June 2002. The Total Return Swap formed part of a structured finance transaction involving a block of shares in a publicly traded company called EOG Resources Inc, the shares being owned by Enron Corporation. The transaction involved two closings. At the first closing on the 29 th November 2000 RBC advanced part of the sum equivalent to the purchase price of the EOG shares to an entity called Heracles Trust. By the second closing, which was on the 31 st January 2001, RBC had effectively advanced the full sum of 517m. Rabobank's involvement in the transaction was at the stage of the second closing when it entered into the Total Return Swap with RBC and an Equity Swap with Enron North America, which was guaranteed by Enron Corporation. As part of the arrangement of the second closing, Rabobank assumed part of the Enron credit risk.
The Total Return Swap formed part of, and was subject to an International Swap Dealers Association Master Agreement dated the 9 th January 1995. The Master Agreement was expressly governed by and to be construed in accordance with English law and included the following provision:
"13 Governing law and jurisdiction
(a) Governing law.
This agreement will be governed by and construed in accordance with the law specified in the schedule (by part 4 of the schedule paragraph (h) English law)
(b) Jurisdiction.
With respect to any suit action or proceedings relating to this Agreement ("proceedings") each party irrevocably:-
(1) Submits to the jurisdiction of the English Courts. If this Agreement is expressed to be governed by English law…
(2) Waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object with respect to such Proceedings that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction… nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction."
This is a "non-exclusive" jurisdiction clause. Whereby, the parties precluded themselves from denying that the English court had jurisdiction to try the issues arising under the Swap Agreement and also from submitting that the English court was not a convenient forum in which to determine those issues. However the clause gives express sanction to the determination of those issues in proceedings in a court other than the English court and also expressly contemplates that proceedings to determine those issues might be run in parallel and simultaneously in a number of jurisdictions in addition to that of the English court. It does not expressly deal with what should happen should parallel proceedings throw up the possibility of simultaneous trials in different jurisdictions where the issues to be tried were substantially the same.
Between paragraphs 6 and 28 of his judgment the judge sets out the background facts of the case and the history of the litigation. The only matter which he does not set out which has emerged since his judgment and since this appeal was launched is that the parties have agreed that, in the event that this appeal fails, RBC will seek to adjourn the English proceedings until after judgment in the New York proceedings in consideration of which Rabobank have agreed to seek the postponement of the commencement of the New York proceedings..
In summary RBC's claim is for damages in the sum of approximately 523.8m payable under the contract of the 28 th June 2002 but which Rabobank gave notice that it would not pay on the 21 st June of that year. On the same day Rabobank commenced the New York proceedings claiming rescission of the Total Return Swap agreement and for damages in the alternative on the grounds of fraudulent misrepresentation the amount of the damages being the same sum of 523.8m. RBC commenced these proceedings on the 24 th June 2002 being the next working day after the 21 st. The claims and cross claims in the English and New York proceedings mirror each other.
The salient facts which the judge had to consider seem to me to be as follows:-
i) The case arises from the circumstances of the collapse of the Enron Group whose centre of operations was the USA. Consequently the bulk of the documentary evidence emanates from sources in the United States.
ii) Conversely RBC says that all its witnesses and all those intended to be called by Rabobank, save one, are in London.
iii) The issues in the case are not confined, or not necessarily confined, to issues governed by English law. The judge found that as a result of the possible impact of New York law on the proceedings, Rabobank could point to a legitimate juridical advantage in pursuing proceedings in New York. From that finding there is no appeal.
iv) Conversely the Total Swap Agreement and issues arising from it are governed, as the parties have agreed, by English law.
v) Rabobank commenced their proceedings in New York before RBC commenced theses proceedings albeit by the narrowest of margins.
vi) RBC have used the New York proceedings in an attempt to obtain an early resolution. They have attempted to obtain summary judgment in their favour albeit the attempt failed.
At paragraph 29 of his judgement the judge summarised the law applicable to an application under section 37 of the Supreme Court Act 1981 for an injunction to restrain proceedings in a foreign court in such circumstances as fall to be considered in the present case. The judge did not understand the principles that he summarised to be disputed and they were not disputed in this court. I will set out the judge's summary of the applicable legal principles verbatim as follows:-
"29(i) "Under English law a person has no right to be sued in a particular forum, domestic or foreign, unless there is some specific factor that gives him that right", but a person may show such a right if he can invoke a contractual provision conferring it on him or if he can point to clearly unconscionable conduct (or the threat of unconscionable conduct) on the part of the party sought to be restrained: Turner v Grovit [2002] 1WLR 107, 118Cat para 25 per Lord Hobhouse.
(ii) There will be such unconscionable conduct if the pursuit of foreign proceedings is vexatious or oppressive or interferes with the due process of this Court: South Carolina Insurance Co v Assurantie Maatschappij de Zeven Provincien NV 1987 AC 24at page 41 D; Glencore International AG v Exter Shipping Ltd 2002 2 All ER (Comm) 1, 14aat para 42.
(iii) The fact that there are such concurrent proceedings does not in itself mean that the conduct of either action is vexatious or oppressive or an abuse of court, nor does that in itself justify the grant of an injunction: Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 817at page 894c, Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd's Rep. 767at page 781, Airbus Industrie GIE v Patel [1999] 1AC 119at page 133G/H.
(iv) However, the court recognises the undesirable consequences that may result if concurrent actions in respect of the same subject matter proceed in two different countries: that "there may be conflicting judgments of the two courts concerned" or that there "may be an ugly rush to get one action decided ahead of the other in order to create a situation of res judicata or issue estoppel in the latter": see The Abidin DaverELR [1984] AC 398 page 423H-424A per Lord Brandon.
(v) The Court may conclude that a party is acting vexatiously or oppressively in pursuing foreign proceedings and that he should be ordered not to pursue them if (a) the English court is the natural forum for the trial of the dispute; and (b) justice does not require that the action should be allowed to proceed in the foreign court, and more...
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