Standard Chartered Bank (Hong Kong) Ltd (A company incorporated in Hong Kong) and Another v Independent Power Tanzania Ltd (A company incorporated in Tanzania) and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux |
| Judgment Date | 09 June 2015 |
| Neutral Citation | [2015] EWHC 1640 (Comm) |
| Docket Number | Case No: 2013 FOLIO 1697 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 09 June 2015 |
[2015] EWHC 1640 (Comm)
The Honourable Mr Justice Flaux
Case No: 2013 FOLIO 1697
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
Fetter Lane, London EC4A 1NL
Mr Jonathan Davies-Jones QC and Mr William Edwards (instructed by DLA Piper) for the Claimants
Mr Matthew Hardwick QC and Mr Ian Higgins (instructed by Hugh Cartwright & Amin) for the 1 st and 3 rd Defendants
Mr Richard Coleman QC and Mr Christopher Knowles (instructed by Charles Russell Speechlys) for the 2 nd Defendant
Hearing dates: 21–23 and 27 April 2015
Introduction
In these proceedings, the first claimant (to which I will refer as "SCBHK" or "the Bank") and the second claimant (to which I will refer as "SCBMB") which are both wholly owned subsidiaries of Standard Chartered Bank ("SCB") claim against the first defendant (to which I will refer as "IPTL") sums due under a Facility Agreement dated 28 June 1997 which was novated to SCBHK by the Malaysian bank which had become the lending bank under that Agreement. SCBMB had become the Facility Agent under that Agreement. SCBHK as Security Agent also claims against IPTL under an independent covenant to pay in the Security Deed entered on the same day and forming part of the same suite of finance documents as the Finance Agreement.
SCBHK also claims declaratory and injunctive relief against IPTL and against the second and third defendants (to which I will refer as "VIP" and "PAP" respectively). VIP was a 30 % shareholder of IPTL and had entered a Shareholder Support Deed and a Charge of Shares also dated 28 June 1997 and forming part of the same suite of finance documents, under which VIP and its fellow 70 % shareholder Mechmar Corporation (Malaysia) Berhad ("Mechmar") undertook, inter alia, to use their best endeavours to procure that IPTL complied with its obligations under the finance documents and independently covenanted not to dispose of their shares. SCBHK's case is that IPTL is in breach of its obligations under the finance documents, putting VIP in breach of the Shareholder Support Deed and that, in breach of the covenant in the Charge of Shares, VIP has purported to transfer its shareholding to PAP. The claims are discussed in more detail below in the context of the various Tanzanian proceedings.
All the agreements in the suite of finance documents contained non-exclusive English jurisdiction clauses with forum non conveniens ("FNC") waivers and an express acceptance of the possibility of concurrent proceedings in different jurisdictions, together with provisions for service in England. The Facility Agreement, Security Deed and Shareholder Support Deed were also expressly governed by English law. The Charge of Shares and Mortgage of land owned by IPTL were governed by Tanzanian law, no doubt because they are concerned with Tanzanian property, but otherwise contained materially identical jurisdiction clauses to the Facility Agreement.
Accordingly, for the purposes of the present applications, clause 33 of the Facility Agreement can be taken as an example of the jurisdiction clauses:
" 33 GOVERNING LAW AND JURISDICTION
(A) Governing law: This Agreement shall be governed by and construed in accordance with the laws of England.
(B) Courts of England and Malaysia: For the benefit of the Arranging Banks, the Facility Agent and each Bank, all parties irrevocably agree that the courts of England and Malaysia are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that, accordingly, any legal action or proceedings arising out of or in connection with this Agreement ("Proceedings") may be brought in those courts and each party irrevocably submits to the jurisdiction of those courts.
(C) Other Competent Jurisdiction: Nothing in this Clause 33 shall limit the right of any party to take Proceedings against any other party in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude a party from taking Proceedings in any other jurisdiction, whether concurrently or not."
(D) Venue: Each party irrevocably waives any objection which it may have to the laying of the venue of any Proceedings in any court referred to in this Clause 33 and any claim that any such Proceedings have been brought in an inconvenient forum.
[…]
(G) Service of Process: The Borrower irrevocably appoints Bank Bumiputra Malaysia Berhad, London Branch and its successors (now of 14 Cavendish Square, London W1M 0HA, England) and Mechmar and its successors (now of No.1, Jalan Perunding U1/17, Seksyen U1, Hicom-Glenmarie Industrial Park, 40150 Shah Alam, Selangor D.E., Malaysia) to receive, for it and on its behalf, service of process in any Proceedings in England and Malaysia respectively. Such service shall be deemed completed on delivery to the relevant process agent (whether or not it is forwarded to and received by the Borrower). If for any reason a process agent ceases to be able to act as such or no longer has an address in London or Malaysia, as the case may be, the Borrower irrevocably agrees to appoint a substitute process agent acceptable to the Security Agent, and to deliver to the Security Agent a copy of the new agent's acceptance of that appointment, within 30 days."
IPTL and VIP were served with the proceedings in London as of right under that service of process provision. They no longer challenge the effectiveness of that service. SCBHK was granted permission by Popplewell J to serve PAP in Tanzania pursuant to CPR 6.37 and PD6B paragraph 3.1(3) on the basis that PAP is a necessary or proper party to the claim against IPTL. It is now accepted by PAP that if the claim against IPTL proceeds in England and is not stayed, then that service out was valid and the claim against PAP should also proceed in England, subject to allegations about a failure to make full and frank disclosure to which I will return at the end of this judgment. So far as the claim against VIP is concerned, during the hearing, the claimants clarified that no claim was being made against VIP by SCBMB.
The applications by the defendants which remained live at the end of the hearing before me were thus:
(1) An application by IPTL and PAP under CPR 11.1(1)(b) and (6)(d) for a stay of the English proceedings on the ground that Tanzania not England is clearly the most appropriate forum for the determination of the dispute between the parties, alternatively for a stay on case management grounds.
(2) An application by VIP to dismiss or set aside the English proceedings as an abuse of process, alternatively an application for a stay of the proceedings on the same grounds as put forward by IPTL and PAP.
The factual background
It is important that the Court should not engage in a mini-trial of the case when considering an application challenging the jurisdiction of this Court or seeking a stay of English proceedings and, in this case, to the extent that there are disputes of fact raised by the witness statements, they simply cannot be resolved at this interlocutory stage. Nonetheless, the complexity of the underlying dispute in this case requires that the factual background is set out in some detail. However, I have not set out every twist and turn in the labyrinthine sets of proceedings which have been taking place in Tanzania for the last seven years, but only those applications and judgments of particular relevance to the issues I have to decide.
In 1994, the Government of Tanzania invited Mechmar, a Malaysian corporation, to submit a proposal for the construction of a power plant in Tanzania and Mechmar entered a memorandum of understanding with the Tanzanian Ministry of Water, Energy and Minerals for the construction of a power plant. In September 1994, VIP and Mechmar entered into a Shareholders Agreement to establish a company to build and operate the plant, on the basis that Mechmar would provide the finance and technical know how and VIP would obtain all necessary government approvals. Under that agreement, although Mechmar was to hold 70% of the shares and VIP 30%, Mechmar contributed all the funds to pay up the share capital of U.S. $1 million. The advance by Mechmar was to be waived upon the fulfilment of various conditions, including the obtaining of all grants and licences for the construction and operation of the plant for 20 years and, until those conditions were fulfilled, VIP undertook not to sell or charge its shares. By clause 6 of the Shareholders Agreement, VIP agreed that Mechmar would have the sole right to "manage and operate [IPTL] for the duration of the project". Under clause 18 all disputes were to be submitted to LCIA arbitration in London. IPTL was incorporated as contemplated by the Shareholders Agreement in December 1994. In May 1995, IPTL entered into a Power Purchase Agreement ("PPA") with Tanzania Electrical Supply Co Ltd ("TANESCO"). By an Implementation Agreement, the Government of Tanzania guaranteed TANESCO's payment obligations.
The lending was set out in the suite of finance documents dated 28 June 1997 which I have already described. Under the Facility Agreement, the original lenders, a syndicate of Malaysian banks, agreed to lend IPTL up to U.S. $105 million and IPTL agreed to ensure that the banks had various security, including a legal mortgage over the land it owned and a charge...
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