Standard Bank Plc v Agrinvest International Inc. and Others
| Jurisdiction | England & Wales |
| Judge | MR.JUSTICE TEARE,MR JUSTICE FIELD |
| Judgment Date | 23 June 2009 |
| Neutral Citation | [2009] EWHC 1692 (Comm),[2007] EWHC 2595 (Comm) |
| Docket Number | Case No: 2007 FOLIO 1180/2007 FOLIO 1156,Case No: 2007 Folio 1156 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 23 June 2009 |
[2007] EWHC 2595 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Mr.justice Teare
Case No: 2007 Folio 1156
Graham Dunning QC and Brian Dye (instructed by Stephenson Harwood) for the Claimants
The Defendants were not represented.
Hearing dates: 5 November 2007
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.
Mr. Justice Teare:
In this Part 8 claim the Claimants seek a permanent anti-suit injunction against the Defendants and also certain declarations of non-liability. The Defendants were not represented at the hearing.
The background to the applications
I can summarise the background from the detailed account of it given in the written evidence of Richard Gwynne, a partner in Stephenson Harwood, the solicitors acting for the Claimants. The first claimant, Standard Bank PLC, is a London bank (“the Bank”). The second claimant, Standard Bank Group Limited, is the Bank's ultimate parent. The first defendant, Agrinvest International Inc. (“Agrinvest”), is a company incorporated in Arizona. Its principal director, Mr. Charles Chawafaty, is the second defendant (“Mr. Chawafaty”). It appears that the third defendant, Cairo Phoenix Foreign Trade Centre (“Cairo Phoenix”), is a trading name used by Mr. Chawafaty.
Agrinvest is a trader in emerging market debt. In May 2000 the Bank granted Agrinvest an option (contained in or evidenced by a facsimile dated 3 May 2000 and signed in London by Mr. Chawafaty on behalf of Agrinvest on 12 May 2000) to purchase US$24.213m. of promissory notes issued by the Government of Kenya. The option was exercisable until 31 July 2000 but was later extended until 14 August 2000. An option fee of US$2m. was payable by 8 May 2000.
There was no express choice of law (or of jurisdiction). If the option contract is to be regarded as a bilateral contract then it is the Bank's performance of its obligation to deliver the promissory notes upon the exercise of the option which is characteristic of the option to purchase contract (by analogy with a sale contract). If the option contract is to be regarded as a unilateral contract then, again, it is the Bank's performance of that same obligation which is characteristic of the option to purchase contract. In either case, since the Bank's place of business is in London, English law is the applicable law; see the Contracts (Applicable Law) Act 1990, Article 4 of the Rome Convention and Dicey, Morris and Collins on the Conflict of Laws 14 th.ed para.32–116.
At the same time Agrinvest entered into a Forward Sale Facility with the Bank. The terms of the facility were set out in a draft Term Sheet, later superseded (save in respect of certain interest obligations) by a Master Sale Agreement (“the MSA”) dated 12 May 2000. The MSA applied to a sale by Agrinvest to the Bank of bonds issued by an Egyptian healthcare company, Lakah, and global depositary receipts representing shares in Lakah (“GDRs”). Agrinvest obtained just under US$10m. in respect of the sale and agreed to buy the bonds and GDRs back from the Bank for forward settlement in November 2000.
The MSA provided for English law and jurisdiction. Clause 19 provided as follows:
19.1 This Agreement and all Trade Confirmations shall be governed by and construed in accordance with the laws of England.
19.2 Each party hereto irrevocably submits to the jurisdiction of the courts in England for the purpose of any action, suit or proceeding relating to this Agreement or any Trade Confirmation and irrevocably agrees that all claims in respect of any such action, suit or proceeding may be heard and determined in any such court.
Agrinvest used US$2m. of the proceeds of the sale of the bonds and GDRs to pay the option fee. However, the share price of Lakah shares (and therefore of GDRs) suddenly fell in early June 2000. In consequence the forward settlement date was extended from time to time, ultimately to 10 September 2004. Also, Agrinvest did not exercise its option to purchase the promissory notes issued by the Government of Kenya.
Between 2000 and 2003 Agrinvest made certain payments to reduce the amount it would have to pay to repurchase the bonds and GDRs. In addition extra GDRs were provided and these, or the original GDRs or both, were sold to reduce Agrinvest's liability between December 2000 and February 2001. Agrinvest also gave the Bank charges over land in Mississippi in January 2002 and provided three promissory notes in the sum of US$5.36m. in February 2002. But after 2003 no further payments were made. Agrinvest failed to repurchase the securities and its three promissory notes were dishonoured when presented for payment.
The current position is therefore that the Bank has monetary claims against Agrinvest of almost US$6m. plus interest arising out of the MSA as amended and the associated agreements. These claims have been advanced in proceedings issued in this court. In February 2006 claim form 2006 Folio 59 was issued. Although a default judgment was entered the Bank later agreed to have it set aside, essentially because the claim form should have been served out of the jurisdiction and it had not been. Due to the passage of time the claim form could no longer be served out of the jurisdiction and so a fresh Part 7 claim form was issued, 2007 Folio 1180, in July 2007. Permission to serve this claim out of the jurisdiction in Arizona was granted by Christopher Clarke J. on 24 July 2007.
Mississippi
Meanwhile, in September 2005, the Bank had issued notices of a trustees' sale of the land in respect of which charges had been given in favour of the Bank. This was a non-judicial process and did not involve an application to the court for judicial foreclosure. However, the land had been affected by Hurricane Katrina and Agrinvest obtained an order from the Chancery Court of Harrison County, Mississippi, restraining the Bank from foreclosing. The Bank applied to discharge the order (whilst being careful not to submit its monetary claims to the Mississippi court). Agrinvest then, in February 2006, issued a motion in the Mississippi Court to amend its complaint against the Bank to set out the grounds on which it said that it was not liable to the Bank for any monetary claim and that the Bank was liable to it for alleged breaches of contract in relation to the sale of Lakah bonds and GDRs. Agrinvest alleged “unfair trading” in GDRs and that the bonds had been sold at a “concocted” and “artificial” price. However, no steps have been taken to have this motion heard.
Egypt
On 1 May 2007 the Bank received a document in Arabic described as a “subpoena” purportedly by way of service. When translated it appeared to be notice of a substantive claim brought against the Bank and the Second Claimant (and others) in the Court of First Instance of South Giza for the sum of US$15.8m. plus interest. The Egyptian claimants appear to be not only Agrinvest but also Cairo Phoenix and Mr. Chawafaty. The Egyptian claimants appear to be alleging that they were unable to exercise the option to purchase the Kenyan Government promissory notes because the Bank wrongfully caused the price of GDRs to fall and/or because the Bank acted wrongfully in connection with the sale of GDRs. As a result the Egyptian claimants have sustained loss. It may also be alleged, though the matter is far from clear, that the Bank “refused to implement” the option contract. Although there is a lack of clarity as to the detail of these claims there is little doubt that the claims are said to arise out of the option contract and out of the transaction governed by the MSA. That is because extensive reference is made to contractual obligations. It is further to be observed that the document assumes that Egyptian law applies because extensive reference is made to that law.
The Part 8 claim
The Bank and the Second Claimant decided to obtain an injunction restraining both the Mississippi proceedings (save in relation to legitimate Katrina relief protection) and the Egyptian proceedings. They also sought declarations of non-liability. These are the proceedings with which I am concerned. They were issued on 26 July 2007 and on that day Christopher Clarke J. granted permission that they be served out of the jurisdiction.
The application of the Bank and Second Claimant for an interim anti-suit injunction was heard before Steel J. on 31 August 2007. The Defendants did not appear at that hearing. Steel J. was satisfied that the proceedings had been properly served on the Defendants and he granted interim relief. On 15 October 2007 Andrew Smith J. ordered that the claim for final relief be heard on 5 November 2007 because a hearing was due to take place in Egypt on 10 November (now postponed until 13 November 2007). Agrinvest and Mr. Chawafaty have acknowledged service but have not filed any evidence or appeared at the hearing before me.
Agrinvest has however sent a “Memorandum” which is to constitute its “response”. It alleges that Mr. Gwynne had failed to disclose certain documents, seeks to cast doubt on the Bank's substantive monetary claims, alleges that the funding of the option agreement to purchase the Kenyan Government promissory notes was dependent upon the sale of the Lakah bonds and GDRs, states that the Bank owes monies to Agrinvest and not vice versa and, finally, that the anti-suit injunction is abusive because it “thwarts other competent and prevailing forums and laws.”
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