The Kingdom Bank Corporation v Moorwand Ltd
| Jurisdiction | England & Wales |
| Judge | Ms Clare Ambrose |
| Judgment Date | 01 December 2023 |
| Neutral Citation | [2023] EWHC 3069 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: LM-2023-000190 |
[2023] EWHC 3069 (Comm)
Ms Clare Ambrose
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: LM-2023-000190
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Simon Harding (instructed by Gunnercooke LLP) for the Claimant
Craig Ulyatt (instructed by Keystone Law) for the Defendant
Hearing dates: 21 November 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Ms Clare Ambrose SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 01 December 2023 at 10:30am.
A. Introduction
The Claimant is a company registered in the Commonwealth of Dominica as an offshore bank. In May 2021 it entered into a business agreement with Safe Payment Solutions s.r.o, (“SPS”) an electronic money issuer based in the Czech Republic. Under that agreement SPS opened accounts and the Claimant gave instructions to transfer money in and out. Payments out stopped in around February 2022. At around that time SPS provided the Claimant with the Defendant's address and the details of an account with the Defendant said to be used for receiving and sending electronic payments. SPS then stopped trading and later went into liquidation. The Claimant says that around EURO 1.4 million of its money (and that of its customers) has been paid into the account with the Defendant but the money has now gone missing.
This is the trial of the Part 8 claim by which the Claimant seeks an order against the Defendant requiring disclosure of information relating to the account held by the Defendant (“the Master Account”), into which the Claimant and its customers have made significant payments. The Claimant is asking the court to make a Norwich Pharmacal order (“an NPO”) under the equitable jurisdiction named after a case called Norwich Pharmacal Co v Customs and Excise Comrs [1974] AC 133. It claims that it needs the information in order to determine where its monies are and what claims are to be pursued.
The Defendant is an English company that is authorised as an electronic money institution (“EMI”) by the Financial Conduct Authority (“FCA”) to issue electronic money and to provide payment services. It had initially not objected to the Claimant's application but now opposes it on grounds that:
a) the court lacks jurisdiction since any claim against SPS is subject to an exclusive Czech Republic jurisdiction clause, and to the extent any claim is against the Defendant it should be brought under CPR 31.16;
b) the threshold conditions for Norwich Pharmacal relief are not made out;
c) the Court should refuse to exercise its discretion in favour of the Claimant.
B. The procedural background
There is a somewhat lengthy procedural background, and a bundle going to over 1100 pages, with 6 statements from the defendant's solicitor and 7 statements coming from the Claimant's side. I only summarise the main procedural aspects.
On 16 November 2022 the Claimant issued a Part 8 Claim together with the witness statement of its director, Mr Nebil Zubari. This hearing was originally listed on 12 January 2023 but an application for security for costs intervened. It was listed again for 18 April 2023 but this hearing was ineffective because one counsel had COVID 19. The matter came back for a hearing on the security for costs application on 14 June 2023.
The trial was then due to be heard on 19 July 2023 but Master Stevens adjourned the hearing because of the late notification that SPS had gone into liquidation on 12 April 2023 and also because the time estimate was insufficient. Master Stevens ordered the Claimant to make contact with SPS's liquidator (then Mr Daniel Buzu) to request transactional material, and such requests were made on 25 July 2023. On 16 August 2023 Mr Buzu responded indicating that he was no longer appointed as liquidator, a new liquidator would be appointed and that he had twice advertised for creditors to make claims within a published time limit.
On 21 August 2023 HHJ Pelling KC made an order transferring the matter to the London Circuit Commercial Court.
C. The factual background
As explained above, the Claimant provides offshore banking services. Mr Zubari is its director. He referred to 32 customers who are all corporate entities, with client addresses in a wide range of jurisdictions including Canada, Curacao, Cyprus, Hong Kong, Malta, and many in the UK. He says the Claimant and its customers wanted banking facilities in the UK but they found it impossible or difficult to do so with a mainstream bank. They wanted to transfer funds in and out of the UK efficiently and without bureaucracy.
In May 2021 Mr Zubari attended a foreign exchange trade exhibition in Dubai with suppliers from the digital and e-banking industry. He met representatives of SPS and they suggested a solution. SPS traded under the name KoalaPays. At the time SPS was authorised by the Czech National Bank to operate as a small-scale electronic money issuer. It had also previously been registered with the FCA as an EMD 1 agent of a separate UK based EMI, namely CFS-ZIPP Limited, that was formerly authorised by the FCA.
On 28 May 2021, the Claimant entered into a Business Agreement (“the Business Agreement”) with SPS under which SPS agreed to provide services to the Claimant including the issue of e-wallets. The Business Agreement is governed by Czech law and is subject to the exclusive jurisdiction of the Czech courts.
Under the Agreement, SPS is described as the Company and the Claimant as the Merchant, and the customers of the Merchant are described as the Customer.
Clause 1 provided that “ Safe Payments Solutions s.r.o…is registered by the Czech National Bank (“NCB) as an electronic money issuer, trading as “KoalaPays” and is the issuer of the electronic money to you, in the future referred to as Merchant”.
The following definitions provide some explanation of the services agreed.
a) “Account” means an Account that is provided by the Company, through its Regulated Provider, which includes at least one e-wallet and may include multiple e-Wallets”.
b) “ Account Holder” or “ Holder” means an individual or an organisation that is rightfully in possession of an Account.”
c) “ API” means an Application Program Interface which the Company may supply to the Merchant or which the Company and the Merchant may work together to develop and implement to allow program-to program communications between the Company and the Merchant.
d) “Merchant account” means the Account that is to be provided to the Merchant by the Company. Such Merchant Account will consist of one (1) or more e-Wallet(s)”.
e) “e-Wallet” means the Account that is provided to each Account Holder into which funds can be loaded, transferred or spent using methods provided by the Company. e-Wallets may be provided in different currencies”.
f) “Regulated Provider” means KoalaPays and any appropriately regulated company or companies selected by the Company to provide payment services and/or issue electronic money (which services/issuance, notwithstanding anything herein, shall be subject to the law of the jurisdiction of such company) on behalf of the company who are also principal members of the relevant Card Organisation for issuing payment instructions and/or acquiring payment transactions.”
g) “Services” means the standard e-Wallet Account, all Account maintenance functionality, all transaction processing functionality and all other functionality provided by the Company. Directly or through its Regulated Provider all Services are presented and branded with the Company logos and other product/services identifications. The Services include currency exchange.”
h) “Segregated Account” means the Account in which are deposited Account Holder funds. The Merchant's funds are deposited in this Segregated Account until they are paid out to the Merchant”.
i) “ Transaction(s)” means an exchange or transfer of funds from a Customer or an Account Holder to the Merchant for the purchase of goods and/or services offered by the Merchant to Customers. The Customer will, under the terms of this Agreement, have the ability, via conducting a Transaction, to redeem its electronic money.”
Clause 4(a) provided that:
“ Services. The Company will, following provision and approval of Know Your Customer documentation, provide the Merchant the Merchant Account and allow the Merchant to commence utilisation of the Services as are presently operational to process Transactions.”
Clause 5(a) provides that:
“ Merchant Account.
(a) Merchant Account receipt of funds via a “Request Payment Users' transaction” (“RPU transaction”) or through the dedicated SEPA IBAN. Through this process the Merchant shall have the ability to receive funds into its Merchant Account from Customers Transactions where their Customer does not hold an Account.
(i) The Merchant may provide a payment reference number to their Customer and the Company will allow the Customer to instruct the Customer's bank to transfer the funds identified by that payment reference number to the Company and the Company will transfer such funds directly to the Merchant's Account.
(ii) The Merchant may also utilise an API, as agreed between the Company and the Merchant, to initiate an incoming RPU transaction.
(iii) The Merchant's Customer does not have to hold an Account for the Merchant to receive payment by...
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