Winnetka Trading Corpn v Julius Baer International Ltd
| Jurisdiction | England & Wales |
| Judge | Mr JUSTICE NORRIS |
| Judgment Date | 26 November 2008 |
| Neutral Citation | [2008] EWHC 3146 (Ch) |
| Docket Number | Case No: HC08C02033 |
| Court | Chancery Division |
| Date | 26 November 2008 |
[2008] EWHC 3146 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London
WC2A 2LL
Mr Justice Norris
Case No: HC08C02033
Winnetka Trading Corporation is a Panamanian company. Julius Baer International Limited is, I am told, an English company; although in the proceedings commenced by Winnetka, it is said to be a Swiss corporation. I will refer to it as JBIL. It operates through a branch in Guernsey known as Bank Julius Baer & Company Limited (“BJB”). On 29 th December 2005, Winnetka and BJB entered into a bank account mandate. By Clause 26 of the General Banking Conditions the mandate was to be governed by and construed in accordance with the laws of Guernsey and, 'The parties hereby submit to the non-exclusive jurisdiction of the courts of Guernsey'. There is an issue about whether that term was in fact incorporated into the banking arrangements between Winnetka and BJB.
On 20 th January 2006, Winnetka and BJB entered into a second agreement for the provision of credit. It is not directly relevant to any matter before me, but it contained an applicable law clause. By that Winnetka agreed, 'That any legal action or proceeding arising out of or in connection with the credit agreement may be brought in the Royal Court of Guernsey and/or the High Court of Justice in England as the bank may determine and the client irrevocably submits to the non-exclusive jurisdiction of those courts'.
On 1 st May 2006, Winnetka and BJB entered into a third agreement which lies at the heart of the issue. In this investment management agreement, there was a governing law clause. It provided, 'The mandate between the client and the bank including these terms and conditions shall be governed by the laws of the island of Guernsey and the client and the bank hereby agree to submit to the jurisdiction of the Royal Court of Guernsey'. It will be noted that the word 'exclusive' is absent from the agreement to submit to the jurisdiction of the Royal Court of Guernsey. There is no doubt (subject to questions of whether that term was incorporated or not) that Winnetka did agree to submit to the jurisdiction of the Royal Court of Guernsey.
The nature of the claim commenced by proceedings begun in July 2008 is that Winnetka engaged BJB to purchase two tranches of shares in a company called Inyx Pharmaceuticals and although it paid for the shares, there was no delivery of the share certificates relating to the entire holding. Winnetka claims that this is a breach of its investment instructions.
In detail it says that both BJB (with whom it entered into the agreements) and JBIL owed it express duties in contract to comply with the terms of the portfolio guidelines which are governed by the provisions of the bank mandate and correctly to execute signed orders placed with it which are governed by the investment management agreement. It alleges that both BJB and JBIL owed identical duties in tort. It claims compensation for breach of contract or negligence in the execution of its instructions.
When those proceedings were launched, BJB brought an application in the Royal Courts of Guernsey for an anti-suit injunction. The terms in which the order was sought are unclear, as are the terms in which the order was granted. However, BJB was granted what has been referred to as “an anti-suit injunction.”
It is necessary to note only three points in the reasoning which led to that order being made. First the Deputy Bailiff decided that he had to take a preliminary decision, but not reach a conclusive view, about whether the jurisdiction clauses were incorporated in the agreements, namely the mandate and the investment management agreement, on which Winnetka relied. His preliminary decision was that the written agreements should prevail and Winnetka's allegation of an oral agreement to exclude their terms should be rejected.
Secondly, he decided that upon the true construction of the applicable law clause in the investment management agreement, the parties agreed an exclusive jurisdiction provision in favour of Guernsey. He held that when the parties had omitted the words 'non exclusive' it would be wrong for the court to insert them. He also held that the difference in wording between the investment management agreement and the banking mandate and the credit agreement suggested that something other than the arrangements made in those cases was intended in the case of the investment management agreement.
Thirdly, he took the view that there were no strong reasons not to give effect to the exclusive jurisdiction agreement (as he held it to be) in the investment management agreement. In particular, he decided that the fact that there was a claim pleaded in negligence against JBIL was not a factor which should weigh with him.
Following the making of that order on 18 th November, JBIL and BJB now pursue an application launched in September 2008 that the Court should stay generally the English proceedings commenced by the claim form because inter alia on its true construction, and having regard to the choice of Guernsey law and the fact that the Guernsey courts have exclusive jurisdiction to determine all disputes arising out of the agreements relied on, the English courts have no jurisdiction.
At the time when this application is prosecuted, Winnetka is considering an appeal against the Guernsey order for an anti-suit injunction to issue, based on three groups of reasons. First, they say that the Guernsey court made an error of fact in proceeding on the footing that JBIL was a Swiss corporation whereas it is in fact an English company. They say secondly that there was a consequential failure to address the possible impact of Article 2 of the Judgments Regulation which is not expressly mentioned in the judgment of the Royal Court but which, if Winnetka is right, has a significant influence on the correct answer to the questions raised. Thirdly, they say there has been an error of reasoning in the Royal Court judgment in dismissing the negligence claim against JBIL as being of insufficient weight. The error of reasoning is that the Deputy Bailiff appears to have assumed that if it was said that an agency relationship existed between JBIL and BJB in the making of the relevant agreements it must inevitably follow that JBIL itself could not be personally liable. It is said that that is not a correct appreciation of the law. It is in these circumstances that I have heard the application.
Mr Fulton, counselfor JBIL and BJB made initial submissions that Winnetka's very attempt to oppose the prosecution of the banks' September application was contempt of the Guernsey court and it was open to me simply to refuse to hear Winnetka. That application was rightly not pressed. The banks' position therefore proceeded upon two parallel lines.
The first was to submit that, there having been a judgment of the Royal Court, considerations of comity required me here and now simply to grant a stay of the proceedings. In support of that line of argument the banks relied on the observations of Sedley LJ in Donohue -v- Armco where the learned judge is reported as saying,
'At the back of our decision in this problematic appeal is the fact that an orderly use of available national forums depends upon a combination of mutual respect and self denial on the part of their respective courts. The risk inherent in an anti-suit injunction if unwisely granted is that it will not succeed in stopping a party whose assets are located outside the jurisdiction from litigating abroad nor dissuade the courts of other countries from entertaining the litigation against this. It is universally contrary to comity for courts to stand-by whilst a party who has contracted to litigate in one county reneges on that agreement. Comity creates an expectation that the courts of other countries will collaborate in holding the parties to the terms of an exclusive jurisdiction clause.
The present case poses these problems sharply because in a carefully reasoned judgment Judge Swartz of New York has already accepted jurisdiction on behalf of the courts of the state of New York in all matters in contention before it. As between two independent justice systems, no question of issue estoppel can arise but equally it cannot be right that the first party to get to court can by that means alone determine the nationality of the forum. In my view, the correct approach for us is to give real and respectful weight to the decision of Judge Swartz in coming to what is nevertheless our own conclusion as to whether an anti-suit injunction is appropriate.'
Now as that quotation itself recognises it is necessary for me to come to my own conclusion as to whether to grant a stay of the English proceedings; although,...
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