Sebastian Holdings Inc. v Deutsche Bank AG
| Jurisdiction | England & Wales |
| Judge | Mummery,Thomas,Pitchford L JJ |
| Judgment Date | 20 August 2010 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 August 2010 |
[2010] EWCA Civ 998
Court of Appeal (Civil Division).
Mummery, Thomas and Pitchford L JJ.
Tim Lord QC and Jasbir Dhillon (instructed by Travers Smith Solicitors LLP) for the appellant.
David Foxton QC and Sonia Tolaney (instructed by Freshfields Bruckhaus Deringer LLP) for the respondent.
The following cases were referred to in the judgment:
Ace Insurance SA-NV v Zurich Insurance Co [2001] CLC 526.
Antec International Ltd v Biosafety USA IncUNK [2006] EWHC 47 (Comm).
British Aerospace v Dee Howard CoUNK [1993] 1 Ll Rep 368.
Choudhary v BhatterUNK [2009] EWCA Civ 1176.
Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] CLC 579.
Donohue v Armco IncUNK [2001] UKHL 64; [2002] CLC 440.
Fiona Trust & Holding Corp v PrivalovUNK [2007] EWCA Civ 20; [2007] 1 CLC 144.
Goshawk Dedicated Ltd v Life Receivables Ireland LtdUNK [2009] IESC 7.
Import Export Metro Ltd v Compania Sud Americana de Vapores SA [2004] 2 CLC 757.
Owusu v JacksonECAS (Case C-281/02) [2005] 1 CLC 246; [2005] ECR I-1383; [2005] QB 801.
Premium Nafta Products Ltd v Fili Shipping Co LtdUNK [2007] UKHL 40; [2007] 2 CLC 553.
Royal Bank of Canada v Coöperatieve Centrale Raiffeisen-Boerenleenbank BAUNK [2004] EWCA Civ 7; [2004] 1 CLC 170.
Satyam Computer Services Ltd v Upaid Systems LtdUNK [2008] EWHC 31 (Comm); [2008] EWCA Civ 487; [2008] 2 CLC 864 (CA).
Sigma Finance Corp, Re [2009] UKSC 2.
Spiliada Maritime Corp v Cansulex LtdELR [1987] AC 460.
UBS AG v HSH NordBank AGUNK [2009] EWCA Civ 585; [2009] 1 CLC 934.
Conflict of laws — Banking — Jurisdiction clauses — Agreements relating to trading in financial markets providing for English and New York jurisdiction — Losses of $750m made by investment company — Bank brought proceedings in England to recover $250m under two agreements containing English jurisdiction clauses — Company brought proceedings in New York claiming damages under agreement providing for New York jurisdiction — Bank entitled to bring claims in England under two agreements containing English jurisdiction clauses — Parties plainly intended bank to be able to bring claim under agreement under which debt due in jurisdiction provided for in that agreement — English proceedings not stayed in favour of New York proceedings on forum grounds — Parties held to contractual choice of English jurisdiction in absence of very strong reasons — New York not clearly more appropriate forum.
This was an appeal by an investment company (Sebastian) from a decision that the respondent bank was entitled to bring proceedings in England under the jurisdiction clauses in agreements between the parties.
The agreements related to trading in the financial markets over a two-year period. Most provided for the jurisdiction of the English courts; one provided for the jurisdiction of the courts of New York. The trading ended in October 2008 when losses in the region of $750m were made by Sebastian.
Sebastian brought proceedings against the bank in New York to recover approximately $750m as damages for breach of one of the agreements. The bank brought proceedings in London to recover approximately $250m which it contended Sebastian should have paid under two agreements each of which contained English jurisdiction clauses. Sebastian contended that the English court did not have jurisdiction under the jurisdiction clauses in the agreements on the true construction of the series of agreements looked at together or that if it had, the claim should be stayed in favour of New York.
Walker J held that the bank was entitled to bring the claim under the jurisdiction clauses in the two agreements under which the outstanding sums were claimed by the bank (see [2009] EWHC 2132 (Comm); [2009] 2 CLC 908). Burton J then refused to stay the English proceedings in favour of the New York proceedings (see [2009] EWHC 3069 (Comm); [2009] 2 CLC 949). Sebastian appealed against the former decision and sought permission to appeal against the latter.
The bank contended that its claims were brought for debts arising under the Master Netting Agreement and the FX Master Agent Agreement and those claims fell within the jurisdiction clause of each of those agreements.
Sebastian contended that the parties must have intended claims to be brought in the forum specified in the agreement from which the claim had its cause or origin or the agreement which was at the commercial centre of the dispute which was the FX Prime Brokerage Agreement which provided for New York jurisdiction.
Held , dismissing the appeal:
1. The agreements under which debts or other obligations to the bank would actually become due (whatever their origins) gave the bank the express right to bring proceedings for debts due under those agreements in named jurisdictions; that right to bring proceedings for debts arising under each agreement in its chosen forum was inconsistent with Sebastian's suggestion that the bank had to analyse its claim and ascertain under which agreement the cause or origins of the debts arose before issuing its proceedings. Rational businessmen entering into agreements relating to different aspects of trading in the financial markets would understand that the bank would wish to be entitled to bring proceedings to enforce payment of debts under each agreement which gave rise to the specific debt. In this case, it was clear from the language of the agreements looked at as a series that both the bank and Sebastian intended that result in the agreements; each had specific obligations that debts under those specific contracts, including debts under the FX Agent Master Agreement, could be enforced by the bank in its chosen forum.
2. Businessmen agreeing to different jurisdiction clauses in a series of related contracts could not have intended that the entitlement to bring that claim in the chosen forum in respect of one contract should depend on whether a defence had been raised prior to the bringing of the claim and that the defence to that claim might place the centre of gravity of the dispute as being related to a different contract with a different jurisdiction clause. It was not possible to treat all the claims between the bank and Sebastian and the defences to those claims as if they gave rise to a single dispute which must be allocated to a single contract.
3. Parties would be held to their contractual choice of English jurisdiction, unless there were very strong reasons for departing from that rule. The decision of the judge on the stay application, based as it was on the correct application of principle, was well within the discretion open to him. He carefully reviewed the availability of witnesses, the prior existing proceedings in New York, its ability to deal with the issues, the scope of the action in England and all relevant matters. The decision that he made was one with which the appeal court should not on well established principles interfere. (Import Export Metro Ltd v CSAV[2004] 2 CLC 757andAntec International Ltd v Biosafety USA IncUNK[2006] EWHC 47(Comm)considered.)
Thomas LJ:
1. The principal issue in this appeal is the construction of jurisdiction clauses in a series of agreements between a bank and its customer; most provided for the jurisdiction of the English courts; one provided for the jurisdiction of the courts of New York. The agreements related to trading in the financial markets made over a two year period. The trading ended in October 2008 when losses in the region of $750m were made by the appellant (Sebastian) in trading through the respondent (the Bank); the Bank claims unpaid debts due under two of the agreements and Sebastian claims damages in respect of the losses it has funded.
2. Sebastian wishes to pursue its claims in New York; accordingly in November 2008 it brought proceedings against the Bank in the Supreme Court of New York to recover approximately $750m as damages for breach of one of the agreements. The Bank wishes to pursue its claim in England; accordingly in January 2009, the Bank brought proceedings in the Commercial Court in London to recover approximately $250m which it contends Sebastian should have paid under two agreements each of which contained English jurisdiction clauses. Sebastian contends that the English Court does not have jurisdiction under the jurisdiction clauses in the agreements on the true construction of the series of agreements looked at together or that if it has, the claim should be stayed in favour of New York.
3. In the Commercial Court Walker J held on 14 August 2008 that the Bank was entitled to bring the claim under the jurisdiction clauses in the two agreements under which the outstanding sums were claimed by the Bank. On 1 December 2009 Burton J refused to stay the proceedings brought in the Commercial Court in favour of the New York proceedings. In New York, Kapnick J on 10 December 2009 refused the Bank's application to stay the proceedings in New York on the ground of forum non conveniens, but also refused Sebastian's application to restrain the proceedings in the Commercial Court. Kapnick J's decision has been appealed. Sebastian appeals by permission of Moore-Bick LJ against the decision of Walker J and applies for permission to appeal against the decision of Burton J.
4. Before turning to the issues in more detail it is necessary to provide an outline of the agreements, the factual background and the issues, so far as they have emerged at this stage. The Bank, one of the world's largest banks, is incorporated in Germany and has offices throughout the world, including London, New York and Geneva. Sebastian, a company incorporated in the Turks and Caicos Islands, was wholly owned by Alexander Vik, a resident of Monte Carlo, Monaco. It was formed by him for the purpose of holding securities and dealing in the financial markets. In 2004 Sebastian became a customer of the Bank. In...
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