Standard Bank Plc and Another v Just Group LLC and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Walker,The Hon Mr Justice Walker |
| Judgment Date | 10 October 2014 |
| Neutral Citation | [2014] EWHC 2687 (Comm) |
| Date | 10 October 2014 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2013 Folio 965 |
[2014] EWHC 2687 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
Fetter Lane, London, EC4A 1NL
The Hon Mr Justice Walker
Case No: 2013 Folio 965
David Joseph QC and Edward Brown (instructed by Clifford Chance LLP) for the Claimants
Daniel Toledano QC (instructed by Sidley Austin LLP) for the Eighth Defendant
Hearing dates: 14 to 16 April 2014, 31 July 2014; written submissions were received during the period 23 April to 17 June 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.
| A. Introduction | 3 |
| B. Background and Standard Bank's claims | 6 |
| B1. Background and Standard Bank's claims: general | 6 |
| B2. Background: the parties | 6 |
| B3. Background: events before 2007 | 7 |
| B 3.1 Events before 2007: general | 7 |
| B3.2 The UBR supply contract | 7 |
| B3.3 The supplementary agreements | 8 |
| B3.4 The freight agreement | 8 |
| B4. An overview of Standard Bank Group's involvement | 9 |
| B5. Initial involvement of Standard Bank Group | 10 |
| B5.1 The 2007 facilities agreement and the February 2007 assignment | 10 |
| B5.2 The February 2007 Just UBR notice | 10 |
| B5.3 The February 2007 UBR acknowledgement | 11 |
| B6. February 2007 to August 2009 | 13 |
| B7. The EMC supply contract | 14 |
| B8. September to November 2009 | 14 |
| B8.1 September and October 2009 | 14 |
| B8.2 The 2009 facilities agreement and 2009 assignment agreement | 14 |
| B8.3 The 2009 Just UBR notice and the 2009 UBR acknowledgment | 15 |
| B8.4 Payments in November 2009 to the Standard Plc nostro account | 15 |
| B9. December 2009 to January 2011 | 15 |
| B9.1 Payments, and an amendment to the 2009 facilities agreement | 15 |
| B9.2 The 2010 assignment agreement | 15 |
| B9.3 The 2010 Just UBR notice and the 2010 UBR acknowledgment | 15 |
| B10. February 2011 to December 2011 | 16 |
| B10.1 The 2011 facilities agreement and the 2011 assignment agreement | 16 |
| B10.2 The 2011 Just UBR notice and the 2011 UBR acknowledgment | 16 |
| B10.3 Amendments to the 2011 facilities agreement | 16 |
| B10.4 Payments and the August 2011 debt instrument | 16 |
| B11. January to March 2012 | 17 |
| B11.1 The 2012 facilities agreement | 17 |
| B11.2 The 2012 Just UBR notice and 2012 UBR acknowledgment | 17 |
| B11.3 Payments and deferred payments, January to March 2012 | 18 |
| B12 April 2012 onwards | 18 |
| B12.1 More deferred payments | 18 |
| B12.2 "Savings Bank" payments 1 to 3: April to June 2012 | 18 |
| B12.3 Debt instrument repayment 1: 27 June 2012 | 19 |
| B12.4 Savings Bank payment 4: July 2012 | 19 |
| B12.5 Savings Bank payments 5 and 6: August 2012 | 20 |
| B12.6 Debt instrument repayment 2: 13 August 2012 | 20 |
| B12.7 The period from September to December 2012 | 20 |
| B12.8 Standard South Africa and the 2013 facilities agreement | 20 |
| B12.9 The pattern continues: January 2013 onwards | 21 |
| B13. Termination of the UBR supply contract | 21 |
| B14. Default under the amended 2012 facilities agreement | 22 |
| C. Serious issue to be tried | 23 |
| C1. Serious issue: overview and legal principles | 22 |
| C2. The expert evidence of Mongolian law | 25 |
| C3. Analysis of UBR's "serious issue" challenge | 28 |
| D. Gateway | 31 |
| D1. Gateway: general | 31 |
| D2. Gateway (3): legal principles | 32 |
| D3. Route A to gateway (3) | 34 |
| D4. Route B to gateway (3) | 39 |
| D5. Gateway: Conclusions | 41 |
| E. Proper forum | 42 |
| E1. Proper forum: general | 42 |
| E2. The Mongolian exclusive jurisdiction clause | 43 |
| E3. England as the natural forum | 51 |
| E4. Forum and gateway (3) factors | 51 |
| E5. Criticisms of Mongolia | 55 |
| E6. Proper forum: conclusion | 56 |
| F. Standard Bank's breach of duty to the court | 56 |
| G. Conclusion | 59 |
A. Introduction
By an application dated 27 September 2013 (the "set aside application") the eighth defendant ("UBR") sought an order setting aside service of the claim form upon it. It also sought a declaration that the court has no jurisdiction to hear the claim against it. Oral submissions were advanced at a hearing before me on 14 to 16 April 2014, and were followed by written submissions during the period 23 April to 17 June 2014. On 31 July 2014 I granted the order and declaration sought by UBR, having provided the parties with part 1 of my draft reasons for that course. I now set out my full reasons.
The first claimant ("Standard Plc") is a bank incorporated in England and is part of the Standard Bank Group. It operates a branch in Hong Kong. The second claimant ("Standard South Africa") is a bank incorporated in South Africa and is also part of the Standard Bank Group. In this judgment I describe events involving entities forming part of the Standard Bank Group over a period of seven years. For convenience I shall use the term "Standard Bank" to mean the entity or entities comprising the relevant part or parts of the Standard Bank Group in relation to the matter under discussion.
At the hearing before me Mr David Joseph QC and Mr Edward Brown appeared on behalf of Standard Bank. Mr Daniel Toledano QC appeared on behalf of UBR. I am grateful to the legal teams on both sides for the clarity and care with which the arguments were presented.
UBR maintains and operates the railway network in Mongolia, where it is incorporated. It is owned by, among others, the governments of Russia and Mongolia. It says that it has no business beyond Mongolia. Standard Bank did not dispute this at the hearing. In written submissions lodged after the hearing they made allegations that UBR operated in Russia and China, and purchased commodities internationally. However no evidence was relied upon to support these allegations.
Standard Bank served these proceedings on UBR out of the jurisdiction pursuant to an order of Eder J dated 23 July 2013 ("the permission order"). In the usual way that order was made on consideration of an application notice ("the permission application", which in this case sought permission to serve not merely UBR but also the ninth defendant), without a hearing and without notice. Included in the papers lodged in the present case by Clifford Chance LLP ("Clifford Chance"), who act as solicitors on behalf of Standard Bank, was a witness statement ("Yates 1") made on 19 July 2013 by Mr CJ Yates, a solicitor employed by Clifford Chance. It recorded Mr Yates's belief that Standard Bank had a good arguable case that, among other things, their claims against UBR fell within a particular jurisdictional gateway. The gateway in question was said to apply because the claim form would be served upon the first to seventh defendants, there was a real issue which it was reasonable for the court to try as between Standard Bank and those defendants, and UBR was a necessary or proper party to the claims made against those defendants. Earlier in his witness statement Mr Yates explained that Standard Bank would serve the proceedings upon the first to sixth defendants within the jurisdiction under CPR 6.11 at a place specified in the relevant contract, and upon the seventh defendant within the jurisdiction under CPR 6.9 at its place of business in London.
Notable features of the present case are that:
(1) Standard Bank's main claims are against a Mongolian company (the first defendant) as borrower and its associated companies in Mongolia and Hong Kong (the second to sixth defendants) as guarantors following default by the first defendant in the repayment of substantial sums of money advanced by Standard Bank pursuant to a written agreement governed by English law;
(2) Standard Bank are entitled to bring the main claims in London and serve proceedings on the first to sixth defendants here in accordance with jurisdiction and service of suit clauses in the written agreement;
(3) as to those claims, the first to sixth defendants have been duly served by delivery of the claim form and accompanying documents to their appointed agent in London on 19 July 2013;
(4) none of the first to sixth defendants has disputed jurisdiction, nor has any of the first to sixth defendants disputed liability;
(5) subject to sub-paragraph (6) below, it is common ground that debts governed by Mongolian law and owed by UBR to the first defendant were validly assigned under Mongolian law to Standard Bank, that UBR received notice of that assignment, and that UBR nevertheless did not pay to Standard Bank substantial sums due under the assigned debts;
(6) however UBR asserts that despite receiving notice of the assignment it is not liable to Standard Bank as assignee because it has defences that (a) certain of the sums were paid to the first defendant by the seventh defendant pursuant to a pre-existing contract between UBR, the first defendant and the seventh defendant, (b) payment obligations for certain of the sums were satisfied by debt instruments as agreed with the first defendant, and (c) it paid, and was entitled to pay, the remainder of the sums in question at the direction of the first defendant;
(7) Standard Bank does not sue UBR as assignee;
(8) UBR asserts that the reason for not suing as assignee is because the assigned debts arise under a supply contract containing a clause conferring exclusive jurisdiction on the Mongolian court;
(9) Standard Bank claims against UBR under...
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