Trendtex Trading Corporation v Credit Suisse

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date02 May 1980
Judgment citation (vLex)[1980] EWCA Civ J0502-1

[1980] EWCA Civ J0502-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Division

(Mr. Justice Goff)


The Master of the Rolls

(Lord Denning)

Lord Justice Bridge and

Lord Justice Oliver

Trendtex Trading Corporation and Temo Anstalt
Plaintiffs (Appellants)
Credit Suisse
Defendants (Respondents)

MR. S. E. BRODIE, Q. C. and MR. S. NATHAN (instructed by Messrs. Herbert Oppenheimer Nathan & Vandyk) appeared on behalf of the Plaintiffs (Appellants).

MR. R. YORKE, Q. C. and MR. D. HUNT (instructed by Messrs. Theodore Goddard & Co.) appeared on behalf of the Defendants (Respondents)


The Trendtex Trading Corporation (I will call them Trendtex) are elusive. They are a Swiss Corporation with 100 bearer shares all held by a Leichenstein corporation. They have emerged from obscurity. They have provided us with much food for thought - and much material for the law reports. Last time it was the International Law on Sovereign Immunity. This time it is the Common Law of Champerty and Maintenance.


The first part of the story is told in (1977) 1 Queen's Bench 529. You should read it there so as to be able to follow the second part which I will recount now. It concerns the way in which Trendtex financed their dealings. They did it through the well-known bankers, Credit Suisse.




At the end of the first part, Trendtex were in a strong position. They were the beneficiaries under a letter of credit which had been issued by the Central Bank of Nigeria. That bank had defaulted. Trendtex had a good cause of action against the Central Bank for damages. Trendtex put it as $14,000,000. The Central Bank had raised a plea of sovereign immunity but that had been rejected by the Court of Appeal. There was an appeal pending to the House of Lords. So Trendtex were not home and dry. They might lose all if the House upheld the bank's plea of sovereign immunity. Even if the appeal to the Lords failed, Trendtex had still a long way to go. They had to prove the amount of damage they had suffered. It might fall far short of the $14,000,000 they had claimed. The legal position was simply that Trendtex had a cause of action for damages which it had reduced into possession by bringing proceedings in the English courts.




Now in all its transactions Trendtex had been financed by Credit Suisse. When Trendtex bought the 240,000 tons of cement, they asked Credit Suisse to issue a letter of credit for the price. Credit Suisse honoured its letter of credit and debited Trendtex with the amount. When the ships were delayed off Lagos - and demurrage accrued - Credit Suisse paid the amounts and debited Trendtex accordingly. When Trendtex brought proceedings in the English courts against the Central Bank - and instructed Theodore Goddard & Co., English solicitors, to act for them -Credit Suisse guaranteed the payment of the costs. There was some controversy as to the amount which Trendtex owed Credit Suisse: but it seems to have been somewhere between $3,000,000 and $5,000,000.




Trendtex had some other creditors too. These had to be reckoned with some time or other. But Credit Suisse were by far the largest creditor. They had their eyes on the one asset of Trendtex - on its chose in action against the Central Bank of Nigeria. Credit Suisse wanted to get it assigned to them for their own benefit. They appointed a lawyer, Maitre Patry of Geneva, to act for them in relation to all Trendtex matters. He brought pressure to bear on Trendtex by threatening to make it bankrupt unless it assigned to Credit Suisse the benefit of its chose in action against the Central Bank of Nigeria. He also opened up negotiations with the Central Bank of Nigeria to see what they would pay to settle Trendtex's claim against them.


The negotiations were long and complex. But they came to a climax on the 4th January, 1978 at a meeting in Geneva. Maitre Patry of Geneva represented Credit Suisse. Dr. Hauserof Zurich represented Trendtex. There was an important representation made by Maitre Patry to Dr. Hauser which can be interpreted as follows:


I have got an offer from a third party. He will buy the right of action (of Trendtex against the Central Bank of Nigeria) for $800,000. I cannot get more. But I must ask Trendtex to assign the right of action outright to Credit Suisse: and allow Credit Suisse to mate its own terms with the third party. Unless you agree to this, I will force Trendtex into liquidation.




On the faith of that representation, an agreement was drawn up in writing and signed in Geneva on that very day, the 4th January, 1978. It was long and detailed. But its principal terms were:


(1)Trendtex assigned to Credit Suisse all its rights of action against the Central Bank of Nigeria - not as security but out and out for the sole and exclusive benefit of Credit Suisse (or the third party purchaser): and Trendtex acknowledged that they had no further interest in the legal action conducted in London.


(2) Credit Suisse paid off all the other creditors of Trendtex or put money at their disposal to pay them.


(3)Trendtex gave Maitre Patry a power of attorney to enable him to settle its claim against the Central Bank of Nigeria.


(4)Dr. Hauser deposited 90 per cent of Trendtex's shares with Maitre Patry so as to give him full control over Trendtex. (Note: Trendtex was a Swiss corporation. It has a capital of 100 bearer shares of 1,000 Swiss francs each. Those 100 bearer shares were owned by Temo Anstalt, a Liechtenstein corporation. Temo Anstalt had bearer shares which were owned by Mr. Londonof New York. Under the assignment 90 of Trendtex's shares were deposited with Maitre Patry).


Finally, there was this important clause:


"This Agreement is governed by Swiss law. Any dispute regarding its conclusion, interpretation or fulfilment shall be judged by the Court of Geneva, exclusive of any other jurisdiction".




That agreement was signed on Friday, 4th January, 1978. Then on Wednesday, 9th January, 1978 Maitre Patry on behalf of Credit Suisse assigned to a third party all the rights of action (of Trendtex against the Central Bank of Nigeria) for $1, 100,000. So over the weekend Credit Suisse (or Maitre Patry) had got an increase of $300,000 - over and above the $800,000 which they had said was the uttermost offer. An increase of 37½ per cent.




A bigger surprise was yet to come. Five weeks later, on the 12th or 13th February, 1978 Maitre Patry went out to Nigeria. He took with him the power of attorney authorising him to act on behalf of Trendtex. He also took his 90 bearer shares to support it. He negotiated with the Nigerians a settlement of the action of Trendtex against the Central Bank of Nigeria. They paid $8,000,000 to settle the case. Presumably Maitre Patry handed it over to the third party. So the third party made a profit of $6,900,000. He only paid $1,100,000 on the 9th January, 1978 for the rights of action: and here he was in February 1978 getting $8,000,000 for them.




Who was this mysterious third party who made this huge profit? Maitre Patry refuses to disclose his identity. In an affidavit he says:


"It was agreed and stipulated with the purchaser that the identity of the purchaser should not be disclosed. That stipulation was and continues to be binding upon me as the person who acted on behalf of Credit Suisse in relation to the transfer and I am not, therefore, at liberty to disclose the purchaser's identity without permission of the purchaser which is not forthcoming".




Now, apart from Dr. Hauser in Switzerland, Trendtex had other representatives, Mr. London and Dr. Kennedy. They had participated in all the negotiations. When they discovered that the Nigerians had paid $8,000,000 to settle the claim, they were furious. They felt that Maitre Patry had played a dirty trick on Trendtex. They thought that he must all along have had - hidden up his sleeve - this settlement of $8,000,000. And yet he had put forward the offer by a third party of $800,000 as all that could be obtained.




So Mr. London and Dr. Kennedy went to Herbert Oppenheimer Nathan & Vandyk, solicitors, in London and issued a writ in the High Court of Justice in England. They named as plaintiffs Trendtex and its holding company Temo Anstalt. They named Credit Suisse as defendants. They claimed that the assignment of the 4th January, 1978 was invalid and should be set aside. They claimed that the $8,000,000 belonged to them and asked for an account of what had become of it. Temo Anstalt asked for the return of the 90 per cent of the shares which Maitre Patry had kept.


Credit Suisse retaliated by an application to strike outthe name of Trendtex on the ground that Mr. London and Dr. Kennedy had no right to use it; and also to stay the proceedings on the ground that the parties had agreed to the exclusive jurisdiction of the Swiss courts.


On the 30th March, 1979 Mr. Justice Goff stayed the proceedings. He was influenced considerably by the exclusive jurisdiction clause. On the appeal before us, two points of law were argued: First - Was the assignment of the 4th January, 1978 valid or invalid? If it was invalid, that was decisive of the whole case. The exclusive jurisdiction clause fell with it. There was no bar to the proceedings continuing in England. Second - Even if the assignment of the 4th January, 1978 was valid, it was submitted that the proceedings should continue in England, because discovery of documents could be had...

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