Ipsofactoj.com: International Cases [2004] Part 12 Case 10 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

Royal Bank of Canada

- vs -

Cooperatieve Centrale

Raiffeisen-Boerenleenbank BA

LORD JUSTICE THORPE

LORD JUSTICE MANCE

MR JUSTICE EVANS-LOMBE

23 JANUARY 2004


Judgment

Justice Evans-Lombe

  1. This is an appeal, with permission of the Judge from the order of Andrew Smith J made on the 2nd December 2003 whereby the Judge dismissed an application by the claimant, Royal Bank of Canada ("RBC") for an injunction restraining the defendant, Coöperatieve Centrale Raiffeisen-Boerenleenbank BA ("Rabobank") from taking any step to obtain a determination of any issue raised in proceedings instituted by Rabobank against RBC in the commercial division of the Supreme Court of the State of New York save for the purpose of completing party and third party factual discovery.

  2. The case arises from the collapse of the American energy dealing conglomerate Enron. RBC is a Canadian bank having its principal place of business in Toronto. Rabobank is an institution organised under the laws of the Netherlands having its principal place of business in Utrecht. Both parties do business in London and New York. RBC’s claim is based upon a swap agreement with Rabobank recorded in a Total Return Swap Confirmation dated 31st January 2001. By the agreement recorded in the confirmation Rabobank was liable to pay RBC $517m, plus $6m interest, on the 28th June 2002. The Total Return Swap formed part of a structured finance transaction involving a block of shares in a publicly traded company called EOG Resources Inc, the shares being owned by Enron Corporation. The transaction involved two closings. At the first closing on the 29th November 2000 RBC advanced part of the sum equivalent to the purchase price of the EOG shares to an entity called Heracles Trust. By the second closing, which was on the 31st January 2001, RBC had effectively advanced the full sum of $517m. Rabobank’s involvement in the transaction was at the stage of the second closing when it entered into the Total Return Swap with RBC and an Equity Swap with Enron North America, which was guaranteed by Enron Corporation. As part of the arrangement of the second closing, Rabobank assumed part of the Enron credit risk.

  3. The Total Return Swap formed part of, and was subject to an International Swap Dealers Association Master Agreement dated the 9th January 1995. The Master Agreement was expressly governed by and to be construed in accordance with English law and included the following provision:

    13.

    Governing law and jurisdiction

    (a)

    Governing law

    This agreement will be governed by and construed in accordance with the law specified in the schedule (by part 4 of the schedule paragraph (h) English law)

    (b)

    Jurisdiction

    With respect to any suit action or proceedings relating to this Agreement ("proceedings") each party irrevocably:-

    (1)

    Submits to the jurisdiction of the English Courts. If this Agreement is expressed to be governed by English law ....

    (2)

    Waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object with respect to such Proceedings that such court does not have any jurisdiction over such party.

    Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction .... nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction.

  4. This is a "non-exclusive" jurisdiction clause. Whereby, the parties precluded themselves from denying that the English court had jurisdiction to try the issues arising under the Swap Agreement and also from submitting that the English court was not a convenient forum in which to determine those issues. However the clause gives express sanction to the determination of those issues in proceedings in a court other than the English court and also expressly contemplates that proceedings to determine those issues might be run in parallel and simultaneously in a number of jurisdictions in addition to that of the English court. It does not expressly deal with what should happen should parallel proceedings throw up the possibility of simultaneous trials in different jurisdictions where the issues to be tried were substantially the same.

  5. Between paragraphs 6 and 28 of his judgment the judge sets out the background facts of the case and the history of the litigation. The only matter which he does not set out which has emerged since his judgment and since this appeal was launched is that the parties have agreed that, in the event that this appeal fails, RBC will seek to adjourn the English proceedings until after judgment in the New York proceedings in consideration of which Rabobank have agreed to seek the postponement of the commencement of the New York proceedings. .

  6. In summary RBC’s claim is for damages in the sum of approximately $523.8m payable under the contract of the 28th June 2002 but which Rabobank gave notice that it would not pay on the 21st June of that year. On the same day Rabobank commenced the New York proceedings claiming rescission of the Total Return Swap agreement and for damages in the alternative on the grounds of fraudulent misrepresentation the amount of the damages being the same sum of $523.8m. RBC commenced these proceedings on the 24th June 2002 being the next working day after the 21st. The claims and cross claims in the English and New York proceedings mirror each other.

  7. The salient facts which the judge had to consider seem to me to be as follows:-

    1. The case arises from the circumstances of the collapse of the Enron Group whose centre of operations was the USA. Consequently the bulk of the documentary evidence emanates from sources in the United States.

    2. Conversely RBC says that all its witnesses and all those intended to be called by Rabobank, save one, are in London.

    3. The issues in the case are not confined, or not necessarily confined, to issues governed by English law. The judge found that as a result of the possible impact of New York law on the proceedings, Rabobank could point to a legitimate juridical advantage in pursuing proceedings in New York. From that finding there is no appeal.

    4. Conversely the Total Swap Agreement and issues arising from it are governed, as the parties have agreed, by English law.

    5. Rabobank commenced their proceedings in New York before RBC commenced theses proceedings albeit by the narrowest of margins.

    6. RBC have used the New York proceedings in an attempt to obtain an early resolution. They have attempted to obtain summary judgment in their favour albeit the attempt failed.

  8. At paragraph 29 of his judgment the judge summarised the law applicable to an application under section 37 of the Supreme Court Act 1981 for an injunction to restrain proceedings in a foreign court in such circumstances as fall to be considered in the present case. The judge did not understand the principles that he summarised to be disputed and they were not disputed in this court. I will set out the judge’s summary of the applicable legal principles verbatim as follows:-

    29.

    (i)

    "Under English law a person has no right to be sued in a particular forum, domestic or foreign, unless there is some specific factor that gives him that right", but a person may show such a right if he can invoke a contractual provision conferring it on him or if he can point to clearly unconscionable conduct (or the threat of unconscionable conduct) on the part of the party sought to be restrained: Turner v Grovit [2002] 1 WLR 107, 118C at para 25 per Lord Hobhouse.

    (ii)

    There will be such unconscionable conduct if the pursuit of foreign proceedings is vexatious or oppressive or interferes with the due process of this Court: South Carolina Insurance Co v Assurantie Maatschappij de Zeven Provincien NV 1987 AC 24 at page 41 D; Glencore International AG v Exter Shipping Ltd 2002 2 All ER (Comm) 1, 14a at para 42.

    (iii)

    The fact that there are such concurrent proceedings does not in itself mean that the conduct of either action is vexatious or oppressive or an abuse of court, nor does that in itself justify the grant of an injunction: Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 817 at page 894c, Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 Lloyd’s Rep. 767 at page 781, Airbus Industrie GIE v Patel [1999] 1AC 119 at page 133G/H.

    (iv)

    However, the court recognises the undesirable consequences that may result if concurrent actions in respect of the same subject matter proceed in two different countries: that "there may be conflicting judgments of the two courts concerned" or that there "may be an ugly rush to get one action decided ahead of the other in order to create a situation of res judicata or issue estoppel in the latter": see The Abidin Daver [1984] AC 398 at page 423H-424A per Lord Brandon.

    (v)

    The Court may conclude that a party is acting vexatiously or oppressively in pursuing foreign proceedings and that he should be ordered not to pursue them if (a) the English court is the natural forum for the trial of the dispute; and (b) justice does not require that the action should be allowed to proceed in the foreign court, and more specifically, that there is no advantage to the party sought to be restrained in pursuing the foreign proceedings of which he would be deprived and of which it would be unjust to deprive him: Societe Aerospatiale ibid at page 895D and 896 F/G.

    (vi)

    In exercising its jurisdiction to grant an injunction, "regard must be had to comity and so the jurisdiction is one which must be exercised with caution": Airbus Industrie ibid at page 133F. Generally speaking in deciding whether or not to order that a party be restrained in the pursuit of foreign proceedings the court will be reluctant to take upon itself the decision whether a foreign forum is an inappropriate one: Turner v Grovit ibid at para 25.

  9. Mr. Malek for Rabobank made the following further submissions of law developing the judge’s summary which, again, were not challenged. Those submissions are set out between paragraphs 16 and 19 of his written submissions to this court as follows:-

    16.

    First, the fact that there are concurrent proceedings does not in itself mean that the conduct of either party is vexatious or oppressive, nor does it justify the grant of an injunction. The court cannot grant an injunction only on the basis that it is undesirable for there to be parallel trials or a competition for judgment. See the Aerospatiale case at page 894C the Airbus Industrie case at page 132H and 133 G and the Credit Suisse case at page 781.

    17.

    Secondly where the foreign proceedings are in breach of contract an injunction is ordinarily granted, provided that it is sought promptly and before the foreign proceeding are too far advanced. See the Angelic Grace [1995] 1 Lloyd’s Rep. 87 at page 96 per Millett LJ; Donohue v Armco [2002] 1 Lloyd’s Rep. 425 at page 433.

    18.

    Thirdly where the foreign proceedings are not in breach of contract, then the English court may intervene only if the pursuit of foreign proceedings would be vexatious and oppressive. There are three conditions that generally have to be satisfied:

    (a)

    First the English court must be the natural forum for the trial of the action.

    (b)

    Secondly the injunction must not unjustly deprive the respondent of advantages in the foreign forum.

    (c)

    Thirdly, the conduct of the respondent must be vexatious or oppressive. See the Aerospatiale case at 896 F-G.

    19.

    Fourthly although the injunction is in form in personam affecting only the parties before the court, it is in substance an interference in the process of the foreign court. Where the ground relied on is unconscionable conduct in a foreign court the principle of comity requires that the jurisdiction be exercised only with great caution. See the Angelic Grace case at page 96; the Airbus Industrie case at page 133; Turner v Grovit at page 119, para 28.

  10. I accept Mr. Malek’s further submissions of law.

  11. In addition to the juridical advantage which I have already mentioned, and which the judge found that Rabobank were entitled to expect, the judge made two other findings from which there is no appeal to this court. These are,

    • first, that the manner in which Rabobank had been conducting the New York Proceedings was not vexatious or oppressive in the sense spoken of in the Aerospatiale case, and

    • second, that the English court was not a more natural or more appropriate forum for the trial of the issues between the parties than the New York Court.

  12. This appeal is concerned with what the judge described at paragraph 41 of his judgment as "RBC’s more general complaint that it is inherently unconscionable for Rabobank to seek the determination of the New York proceedings. RBC does not say that it was vexatious or oppressive for Rabobank to have brought the New York proceedings in the first place. Its complaint is that the only proper purpose for conducting the New York proceedings was in order to use the New York procedures for disclosure and depositions in order to gather evidence, which can be deployed in this action." In the course of argument before this court Mr. Philipps for RBC accepted that at no stage had Rabobank given RBC any representation or reason to assume that, having commenced the New York proceedings they would not be pressed to a hearing and judgment.

  13. At paragraph 53 of his judgment the judge posited, in my view, and with respect, correctly, the central question which he had to decide in the following words:-

    53.

    I come to what seems to me the central question: whether, in view of the jurisdiction clause and the fact that a trial in these proceedings is due to start in March 2004, Rabobank’s conduct in seeking to have the New York proceedings determined earlier (at trial or by way of summary judgment) is to be characterised as oppressive or vexatious, or as an abuse of this Court’s process.

  14. The judge having considered the jurisdiction clause and its significance to the issue and three authorities where the English court considered the granting of injunctions against the bringing of foreign proceedings where the agreement between the parties to those intended proceedings contained a non-exclusive jurisdiction clause concluded that "while it might well be convenient to grant the injunctions sought by RBC it would not be just to do so ...." In summary Mr. Philipps for RBC submits that this conclusion was wrong because it failed to give proper effect to the jurisdiction clause. In particular, Mr. Philipps submitted that the judge ought to have construed the jurisdiction clause as conferring on the English court the status of the "primary forum" for the resolution of the issue between the parties so as to resolve the difficulty and consequent oppression to RBC from the prospect of having to contest the same issues in two separate courts simultaneously, by making an order restraining the New York proceedings.

  15. In my view Mr. Philipps’ submissions involve a progression through the following series of stages:-

    1. The jurisdiction clause conferred on the English court, by contract, an unchallengeable jurisdiction to adjudicate on the dispute between the parties.

    2. This carried with it a jurisdiction to rule on where (i.e. in which national court) that dispute was to be finally determined by trial and judgment. In Pathé Screen Entertainments v Hand Made Films unreported 11th July 1989 Mr. Justice Hobhouse said this at page 52 of the transcript of his judgment considering a case where a disputed agreement contained a non-exclusive jurisdiction clause:-

      There is upon any view an agreement between Cannon UK and the defendants to submit to the jurisdiction of the English courts. Therefore it cannot be said that as regards the matters to which that cause relates it is an arrogation of jurisdiction by the English courts to decide where those matters should be tried. Those parties have agreed to submit to the English jurisdiction: they cannot object to its accepting that jurisdiction.

      See also per Lord Justice Waller in Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan 2003 2 Lloyd’s Rep. 571 at page 581 paragraph 39 reviewing the speech of Lord Hobhouse in Turner v Grovit ibid at page 118.

    3. "The policy of the law must .... be to favour the litigation of issues only once in the most appropriate forum" see per Lord Justice Bingham in Du Pont v Agnew [1987] 2 Lloyds Rep. at page 589.

    4. Whereas RBC accept that the jurisdiction clause contemplates parallel proceedings up to the point of trial, "the parties cannot be taken sensibly to have contemplated that their rights would proceed to a final determination, or that they would be required to prepare for and commence two trials, in two jurisdictions, simultaneously. See paragraph 8(4)(a) of RBC’s grounds of appeal.

    5. The jurisdiction clause is to be construed as the parties’ acceptance of the English court as the "primary forum" to determine any dispute arising from the Total Swap Agreement. "It is quite clear that proceedings brought in England are agreed to have a different status to proceedings brought in any other jurisdiction." See paragraph 40.1 of Mr. Philipps’ written submissions.

    6. Thus were there to be a prospect of simultaneous trials a term is to be implied into the jurisdiction clause that either party would be able to insist that trial take place and be completed first in the English court. See paragraph 8(4)(b) of the grounds of appeal. At paragraph 40.2 of his written submissions Mr. Philipps submits that "one consequence of the parties’ agreement that proceedings brought in England have a different status to proceedings brought in any other jurisdiction is that they must be regarded as having agreed and understood that, in the event that proceedings were commenced simultaneously in England and in another jurisdiction then:

      40.2.1

      Absent exceptional circumstances, the English action would proceed to trial in the ordinary way;

      40.2.2

      The action in the other jurisdiction might not proceed to trial (because unlike the defendant in the English action, the defendant to that action is not precluded from objecting to it).

    7. Thus any attempt to bring about a trial in a jurisdiction other than England would be "to seek to re-write the parties’ bargain" and to "deprive RBC of its contractual expectation that, if there were proceedings in England, then, absent exceptional circumstances (which are not suggested) the parties’ rights would be determined in those proceedings ...." See paragraphs 8(4)(c) and (d) of the grounds of appeal.

  16. At paragraph 84 of the judgment the judge states that he had considered the application "primarily in terms of whether Rabobank’s conduct is, or would if continued be, vexatious or oppressive" and that is how it is put in the application notice. The judge continues:-

    It will be obvious from the way that Mr. Philipps formulated his argument that it makes no difference in substance if the case is considered in terms of whether Rabobank’s conduct is, or would be, in breach of contract. That is, as Mr. Philipps rightly characterised it, merely a question of "labelling".

    In this court Mr. Philipps puts his case firmly in contract and breach of implied term.

  17. I now consider each of the stages of Mr. Philipps argument which I have set out above in turn.

  18. The first stage is uncontroversial. I accept the submission of law in the second stage. However it does not seem to me to follow that the English court, in the exercise of its jurisdiction to choose the forum where the issue is to be tried, necessarily chooses itself and Mr. Philipps accepts this. The choice will involve all the now familiar considerations, rehearsed in this and the judge’s judgments, to be considered in coming to the conclusion as to which forum is the most natural and appropriate for the trial of the issues. The English court may elect not to make a selection if the choice is between two fora for example, and the appropriate criteria for ruling out either of them are not met.

  19. As to stage three the submission of law is again uncontroversial. The judge cites from the judgment of Lord Justice Bingham in Du Pont v Agnew the passages which I have set out at paragraph 85 of his judgment but he continues

    however, as Bingham LJ also recognised, this is never the only consideration to be brought into the balance:

    The general undesirability of such concurrent proceedings is .... but one consideration to be weighed as part of the overall assessment. It cannot necessarily lead to a stay or setting aside of English proceedings. It may, on the facts, be correct to restrain the pursuit of the foreign proceedings .... or to make no order.

  20. The judge deals with stage four between paragraphs 78 and 82 where, having set out the problems caused by simultaneous trials he then says:-

    82.

    All this is unattractive: it presents an extreme example of the "ugly rush" that concerned Lord Brandon. However this cannot, in my judgment, justify the court in interfering with Rabobank’s prima facie right to choose where it litigates, given that the chosen court has internal jurisdiction over the defendant and the dispute, and to pursue the litigation to a determination. The matter, as I see it, must be tested by considering whether Rabobank is guilty of conduct or threatens conduct, that can properly be said to be in breach of any right enjoyed by RBC or otherwise unconscionable, vexatious or oppressive, or an abuse of the English Court. Otherwise, it is for the English Court to manage the proceedings before it so as best to minimise these problems and to leave the New York Court to handle the impact of these problems in the New York proceedings.

  21. I agree with the judge. I would only add that it seems to me that by entering into an agreement containing a jurisdiction clause with provisions similar to the final paragraph of the jurisdiction clause in issue in this case, the parties must have had in contemplation the possibility of virtually simultaneous trials with all the additional burdens which the judge describes since such is an obvious possible consequence of permitting parallel proceedings in the absence of provision in the jurisdiction clause, or elsewhere in the agreement, for the means of avoiding those consequences.

  22. The judge deals with stage five at paragraph 69 and 70 of his judgment. He was unable to accept that the jurisdiction clause was to be construed so as to confer on the English court the title of "primary forum" in the sense that, in any conflict between the English forum and any other forum, as to the place of trial, the English court should take precedence. He said:-

    70.

    .... the submission does not reflect what the jurisdiction clause says, and I do not accept that this is what Moore-Bick J had in mind when he adopted the term "primary forum." It is a gloss on the agreement to interpret it as requiring a party who conducts proceedings elsewhere than England so to excuse or explain his decision, and, it seems to me, an unwarranted gloss, especially given that the jurisdiction clause expressly contemplates litigation elsewhere than England and indeed, ex consessu, parallel proceedings in England and elsewhere.

  23. I agree with the judge.

  24. As to stage six for a combination of the reasons set out under stages four and five above I cannot accept that the court should imply a term into the jurisdiction clause that in the event that parallel proceedings throw up the possibility of simultaneous trials and one of the sets of proceedings is in the English court, either of the parties is entitled to insist that the English trial should take precedence and be completed before any trial in another jurisdiction can start. Any such implied term would be inconsistent with the express term of the jurisdiction clause.

  25. Since I do not accept that it is possible to imply the term proposed at stage six into the jurisdiction clause, it follows that Rabobank’s pursuit of the New York proceedings to a hearing and judgment, being permitted by the terms of the agreement between the parties, cannot constitute a breach of contract by Rabobank nor vexatious and oppressive conduct.

  26. As before the judge Mr. Philipps cited to us the decision of Mr. Justice Hobhouse in the Pathé case, the unreported case of Amoco v TGTL of 26th June 1996 a decision of Mr. Justice Waller which followed it, and the recent decision of the Court of Appeal in the Sabah case. These were all cases which involved non-exclusive jurisdiction clauses. They were cited in support of the proposition that where parties have agreed a non-exclusive jurisdiction clause it is not necessarily offensive to comity to grant an injunction restraining proceedings in a court other than that specified in the clause and, secondly, that the presence of such a clause may have the effect of lightening the burden on the applicant of establishing vexatious or oppressive conduct by the other party in pursuit of parallel proceedings where there is no contractual bar. The judge expressly accepts the second proposition and he was correct to do so. See the judgment of Lord Justice Waller in Sabah at page 581 at paragraph 40. The whole of his judgment proceeds on the basis of the first proposition. I do not regard either proposition as inconsistent with the conclusion to which I have arrived.

  27. In the Sabah case the Court of Appeal was considering a case in which the applicant for an anti-suit injunction had entered into a contract for the supply of design construction and operation of electrical facilities to a Pakistan state owned company whose performance was guaranteed by the government of Pakistan. The contract contained a non-exclusive jurisdiction clause by which each party consented to the jurisdiction of the English courts to resolve any dispute between them and to enforce its terms. The contract also contained an arbitration clause. A dispute having arisen it was referred to arbitration and the arbitrator awarded a sum in favour of the applicant supplier whereupon the government of Pakistan issued proceedings in the Pakistan court claiming declarations that the award had been obtained by fraud and that Sabah should be permanently restrained by injunction from making any demand under it. The Court of Appeal upheld the order of the judge granting an anti-suit injunction against the government of Pakistan. In his judgment at page 581 of the report (paragraph 42) Lord justice Waller says this:-

    42.

    As already indicated it seems to me that if proceedings had been commenced in England before the GOP commenced their proceedings in Pakistan, then the commencement of such proceedings in Pakistan would be vexatious and oppressive unless the GOP could show some exceptional reason why parallel proceedings were justified. The GOP could not show any exceptional reasons. They rely simply on matters of convenience all of which would have been in the contemplation of the parties when they agreed the clause that they did. To have sought an injunction to seek to prevent English proceedings being the parallel proceedings in those circumstances would have demonstrated even more clearly that the GOP’s conduct was oppressive and vexatious. Does the fact that the GOP commenced their proceedings first change the position? In my view it does not. The proceedings were commenced it is plain, as a pre-emptive strike, and in the hope of preventing Sabah starting proceedings in the country to which both parties had agreed. The only basis for suggesting that the proceedings should be allowed to continue is that Pakistan is the convenient forum. It simply cannot have been contemplated that if proceedings were commenced in the forum each had agreed as convenient parallel proceedings would still take place in Pakistan.

  28. Lord Justice Pill at page 583 paragraph 52 says:-

    52.

    As to the grant of an injunction and the refusal to stay English proceedings, I agree with the reasoning and conclusions of Lord Justice Waller. Whatever label is attached to it the intention and effect of clause 1.9 [the jurisdiction clause] is that, if proceedings were commenced in England, parallel proceedings could not, in the absence of exceptional reasons be pursued elsewhere. Moreover that intention is not defeated by the government of Pakistan having commenced proceedings in Pakistan first. Once the English proceedings were commenced clause 1.9 operated to confer a jurisdiction on the English court which requires the court in the present circumstances to act by way of injunction to give effect to the agreement of the parties.

  29. Mr. Philipps cited those passages as authority for his proposition that the jurisdiction clause in the present case was to be treated as conferring "primacy" on the English court in any conflict arising from the existence of parallel proceedings and the prospect of virtually simultaneous trials.

  30. Mr. Philipps however was bound to acknowledge that the jurisdiction clause in the Sabah case contained no such provisions as those in the present jurisdiction clause which expressly contemplate parallel proceedings taking place. He submits, however that the parties did not contemplate parallel trials and that if "trials" is substituted for "proceedings" in the above quoted passages from the judgments in Sabah they constitute authority for his submission.

  31. As I have already explained I do not accept that the parties in the present case who entered into this jurisdiction clause can be taken not to have contemplated the possibility of simultaneous trials. In any event it is clear that the proceedings commenced by the government of Pakistan to restrain any demand by Sabah for the sum awarded, thus making the commencement of proceedings in England impossible, was a plain breach of the terms of the jurisdiction clause in that case by which the parties accepted the jurisdiction of the English court. It does not seem to me that the decision of the Court of Appeal in the Sabah case assists RBC.

  32. In his judgment in the Sabah case at paragraph 40 Lord Justice Waller accepted that although anti-suit injunctions are theoretically in personam "foreign courts do consider such injunctions as an interference with proceedings in that country and that English courts for that reason should be cautious before granting such an injunction." In the present case the judge had a discretion whether or not to grant the injunction sought. His approach to his decision to refuse the injunction does not reveal any error of law and, in my judgment, he was right to refuse it. In any event it is clear that he was entitled to arrive at that conclusion on the material before him.

  33. I would dismiss this appeal.

    Lord Justice Mance

  34. This appeal centres around the effect of clause 13(b) of the Master Agreement of the International Swap Dealers Association, Inc. ("ISDA"), as incorporated into the parties’ agreement dated 9th January 1995. We were told that a similar clause appears in the modern version of the ISDA Master Agreement. Evans-Lombe J has set out clause 13(b) and referred to the circumstances which lead to the appeal.

  35. The second paragraph of clause 13(b) could, if read in the widest and most literal sense, permit any duplication of proceedings whatsoever. I would question whether it should be so read. In particular, I question whether its concluding phrase ("nor will the beginning of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction") is capable of referring to the bringing of such proceedings by different parties in different jurisdictions. It seems more likely that what was in mind was the duplication of proceedings by the same party. On that basis, the first part of the second paragraph may be read as referring to the bringing of proceedings outside England by one party before any proceedings have been begun by the other party in England. In the present case, however, Rabobank’s proceedings in New York were begun before, albeit only just before, any proceedings were brought by RBC in London. I would not, as presently advised, find it possible to read into clause 13(b) any implied contractual exclusion of the right to continue any foreign proceedings begun by a party in this way prior to any English proceedings against that party. In any event, and no doubt bearing in mind the late stage which the New York suit had reached by the time when the present application was made, Mr. Philipps QC representing Royal Bank of Canada ("RBC") has not argued for so broad a proposition. The key to this appeal is, in his submission, that Rabobank’s pursuit of the New York suit has, recently and at a late stage, become oppressive by reason of the assignment to it in October 2003 of a trial date in early 2004 (which would precede the trial date fixed for the English action) and the circumstances in which this occurred.

  36. The general principles, which govern the exercise of the English court’s jurisdiction to grant an injunction restraining a party from pursuing foreign proceedings in the absence of any non-exclusive jurisdiction clause, are well-established. The judge set out six principles with references to relevant authority in paragraph 29 of his judgment, quoted by Evans-Lombe J in paragraph 8 of his judgment. But caution is required in relation to the fifth suggested principle. It is couched in words echoing those of Lord Goff at p.895D in Société Aerospatiale v Lee Kui Jak:

    To justify the grant of an injunction, the defendant must show: (a) that the English court is the natural forum for the trial of the action, to whose jurisdiction the parties are amenable; and (b) that justice does not require that the action should nevertheless be allowed to proceed in the foreign court.

    However, it is crucial to note that Lord Goff was in this passage summarising the principle which would apply if applications to stay English proceedings and to restrain foreign proceedings were treated alike. He went on immediately to make clear that they could not be treated alike, so that the principle he had stated could not be accepted:

    In practice, however, the principle so stated would have the effect that, where parties are in dispute on the point whether the action should proceed in an English or foreign court, the English court would be prepared, not merely to decline to adjudicate by granting a stay of proceedings on the ground that the English court was forum non conveniens, but, if it concluded that England was the natural forum, to restrain a party from proceeding in the foreign court on that ground alone. Their Lordships cannot think that is right.

  37. In the second passage referred to by Andrew Smith J, at p.896F-H Lord Goff further explained the correct principle as follows:

    .... the English .... court will, generally speaking, only restrain the plaintiff from pursuing proceedings in the foreign court if such pursuit would be vexatious or oppressive. This presupposes that, as a general rule, the English .... court must conclude that it provides the natural forum for the trial of the action; and further, since the court is concerned with the ends of justice, that account must be taken not only of injustice to the defendant if the plaintiff is allowed to pursue the foreign proceedings, but also of injustice to the plaintiff if he is not allowed to do so. So the court will not grant an injunction if, by doing so, it will deprive the plaintiff of advantages in the foreign forum of which it would be unjust to deprive him.

    I think it unwise to paraphrase this passage or to reduce it to a series of strict conditions. Subject to that observation, paragraph 18 of Mr. Malek’s skeleton (cited by Evans-Lombe J at paragraph 9 of his judgment) reflects most of the factors which appear in it, though failing to refer to the element of injustice to the plaintiff if no injunction is granted.

  38. As to paragraph 16 of Mr. Malek’s skeleton, it is worth noting that, immediately after the passage in Aerospatiale at p.894B-C, Lord Goff went on to refer with approval to the words of caution of Bowen LJ in McHenry v Lewis 22 Ch.D. 397, 407-408, and to say, in their light, both that it was "wise to remember the breadth of the jurisdiction" (being to restrain not merely where proceedings were vexatious, in the sense of frivolous or useless, but also where they were oppressive) and that everything depended on the circumstances of the particular case. Bowen LJ said this:

    I agree that it would be most unwise, unless one was actually driven to do so for the purpose of deciding this case, to lay down any definition of what is vexatious or oppressive, or to draw a circle, so to speak, round this court unnecessarily, and to say that it will not move outside it. I would much rather rest on the general principle that the court can and will interfere whenever there is vexation and oppression to prevent the administration of justice being perverted for an unjust end. I would rather do that than attempt to define what vexation and oppression mean; they must vary with the circumstances of each case.

  39. Turning to paragraph 19 in Mr. Malek’s skeleton, the authorities stress the importance of comity and that there is a resulting need for caution. The adjective "great" which is added in Mr. Malek’s skeleton does not appear in the authoritative statements in Aerospatiale at p.892E-F, Airbus Industrie at p.133F and Turner v Grovit at paras. 25-28. However, Lord Goff went on to say in this connection in Aerospatiale at p.892F that:

    All of this is uncontroversial; but it has to be recognised that it does not provide very much guidance to judges at first instance who have to decide whether or not to exercise the jurisdiction in any particular case.

    The guidance that Lord Goff went on to give at pp.892G-897A included the statements of principle identified in paragraphs 36-38 above.

  40. Clause 13(b) requires us to consider the impact on these general principles of a non-exclusive jurisdiction clause. It is common ground that, in consequence of its terms, neither party can object to the exercise by the English courts of jurisdiction on the ground that England is not a convenient or natural forum. But it is also common ground that it permitted the commencement and pursuit of the New York suit, unless this was oppressive. As I have already said, I cannot see how this contractual permission could be affected or withdrawn by the subsequent commencement of English proceedings; and it has not been submitted by RBC either here or below that it is. What is submitted is that the parties cannot have contemplated that both English and foreign proceedings should go to trial, and that an English non-exclusive jurisdiction clause not only "lightens the burden" on the English court of showing oppression, but also enables the English court "more readily [to] assume the task of deciding where the dispute between the parties should be determined". That the burden of showing oppression must be lightened in the sense that the clause establishes as a starting point that England is a natural forum is clear. That the English court assigned by a non-exclusive jurisdiction clause cannot be regarded as "arrogating" jurisdiction if it decides where the dispute should be tried, and that this creates "a radical difference to the situation referred to by Lord Goff" in Aerospatiale, was stated by Hobhouse J in Pathe Screen Entertainment Ltd. v Homemade Films (Distributors) Ltd. (Comm. Ct. 11th July 1989) at p.52, and supported by Waller J in Amoco v TGTL (Comm. Ct. 26th June 1996). Hobhouse J was dealing with a party who brought proceedings abroad, when England was on any view the natural forum, and then raised some of the same claims by way of counterclaim in English proceedings. Waller J was dealing with a situation where, at a time when the English proceedings were well on the way to trial, the English defendants commenced Texan proceedings on the same subject, which they sought to justify as aimed at obtaining discovery under Texan procedures. Waller J said this:

    .... I respectfully agree with the approach of Hobhouse J and just add a word or two of my own. First, to agree non-exclusive jurisdiction in my view means as Hobhouse J held in that case, and, as I followed him in holding in British Aerospace v Dee Howard & Co. [1993] 1 LL 368, that the parties agreed to submit to that jurisdiction and cannot object to that court accepting jurisdiction, and that the parties are implicitly agreeing that jurisdiction as appropriate. They are not so agreeing in relation to any other jurisdiction by the term non-exclusive. All the term non-exclusive means is that there is no contractual bargain not to start proceedings elsewhere; any other relevant point for contesting jurisdiction (other than in the place expressly chosen non-exclusively) will be open to the parties. Second, in addition to there being no question of the English court arrogating to itself a decision as to the natural forum when there is a non-exclusive jurisdiction clause, it seems to me much less likely that a foreign court will be offended if the court to whose jurisdiction the parties have agreed to submit, grants an injunction, particularly where that court’s resources are being used and where proceedings in the foreign court might affect English proceedings, e.g. by the risk of witnesses having to be in two places or by the English process being lengthened by the examination of witnesses who have already given depositions under a foreign procedure. Third, I am doubtful whether a party can rely on a procedural advantage in some country other than the one to whose jurisdiction he has on any view submitted, as a juridical advantage. Putting this point another way, can it seriously have been contemplated that when these parties agreed a non-exclusive jurisdiction clause in favour of England that they were agreeing that if the English courts and its procedures were adopted for the purpose of any action, that, in addition, the same issues could be litigated elsewhere if there was some procedural advantage in the sense of discovery to be gained by so doing.

    Thus, when I come to examine the facts to which I will now turn, I am unpersuaded that the Defendants, the Enron parties, are entitled to start from the point of view that they had an agreement under which they were entitled to litigate in Texas contemporaneously with any proceedings which were at that stage being litigated in the United Kingdom.

  41. The difficulty about transposing either Hobhouse J’s or Waller J’s statements to the present case is that clause 13(b) did here expressly contemplate both the commencement of foreign proceedings prior to any English proceedings and, as a result thereof, the concurrence of parallel proceedings here and abroad. The third case relied on by the appellants is Sabah Shipyard (Pakistan) Ltd. v Islamic Republic of Pakistan [2002] EWCA Civ 1643; [2003] 2 Lloyd’s Rep. 571. A guarantee granted by the Republic to Sabah contained a non-exclusive jurisdiction clause in favour of England. Sabah obtained an arbitration award against the principal debtor in Singapore, and the Republic commenced proceedings in Islamabad to obtain an order restraining Sabah from making any demand whatsoever against the Republic, so having the effect of preventing Sabah commencing proceedings in England. This court upheld the grant of an injunction to restrain the Republic from continuing the Islamabad proceedings. The Pathe Screen and Amoco cases were cited. Waller LJ, with whom Nourse LJ agreed, said that it was clearly a breach of contract to seek to prevent Sabah commencing proceedings in the agreed English jurisdiction. But he and Pill LJ also stated that, in the light of the jurisdiction clause, parallel proceedings could not have been intended, in the absence of exceptional circumstances (cf paras. 36 and 52), so that, even if the case had simply been one of concurrent proceedings with the English and Pakistan proceedings covering the same ground (and, apparently, in whatever order they were begun), it would have been vexatious and oppressive to pursue the Pakistan proceedings. Again, the present case differs in so far as clause 13(b) expressly contemplates that either party might issue proceedings abroad instead of in the agreed non-exclusive English forum.

  42. Clearly, the English court could still intervene to restrain such proceedings, or their pursuit, if they or it could be categorised as oppressive. Andrew Smith J was prepared to accept that clause 13(b) still had the effect that the English court would "more readily assume the task of deciding where the dispute between the parties should be decided". Mr. Malek for Rabobank challenges the correctness of the statement. But, even assuming it to be correct, the English court can only assume such a task within the parameters of clause 13(b). The premise of RBC’s case on this appeal is that the mere issue of the New York suit was not oppressive – on which basis it follows that there can be no suggestion that the late stage which that suit has reached or RBC’s participation therein to date prejudices the present application. In the same sense, RBC positively accepts as a second premise that the New York proceedings could, after the commencement of the English action, properly be continued by Rabobank for the purpose of obtaining depositions and third party discovery. Rabobank for its part has not of course advanced or examined the possibility that the New York suit might have been viewed as oppressive either as commenced or once the English suit was itself commenced or firmly established (as it was on any view after Moore-Bick J had refused a stay on 23rd January 2003). In these circumstances, we are not in a position to express any concluded view about the position if an application to restrain the New York suit had been made at an earlier stage in the present proceedings. But I should not be taken as necessarily accepting the correctness of RBC’s stance, in particular the second premise.

  43. RBC’s submission before us is that, while the New York suit may have fulfilled a relevant function in enabling evidence to be gathered, with depositions and third party discovery, primacy should now be conceded to the English proceedings when it comes to trial. Rabobank has, however, never accepted that the New York suit should be confined to evidential purposes or to purposes collateral to the English proceedings, or that it should not go to trial, or not go to trial prior to the English action. Further, the normal and natural intention when commencing proceedings is that they should go to trial, with all and any consequences that that may have for any other proceedings, whether as a result of res judicata or issue estoppel.

  44. If RBC’s submission were otherwise good, then I would agree with the judge that RBC has not prejudiced its position regarding the primacy of English proceedings for the purposes of trial by leaving it until October 2003 to seek an injunction. As the judge pointed out, it was only in October 2003 that Justice Ramos, sitting in the New York, indicated that there could be a trial date as early as January 2004. Until that date, it cannot be said to have been unreasonable to think that the New York proceedings would be decided after the English proceedings, which were on 28th January 2003 fixed for a trial commencing on 8th March 2004. The present application was brought without delay as soon as it became apparent that the New York proceedings were likely to go to trial before the English action. (Subsequently, in order to obtain a postponement of the New York trial until 1st March 2004, RBC has agreed that, if its present application to restrain the New York suit fails, the English proceedings should be stayed pending the outcome of the New York suit.)

  45. The judge accepted the burden of having two trials in two jurisdictions. But he pointed out that it was unlikely that two trials would come on at the same time. If there was a risk that they would, then RBC could, if necessary, have the English trial date postponed. Viewed in this way, RBC’s real objection was to having a New York trial first, the outcome of which would in probability determine much if not all that was in issue in England, by virtue of principles of res judicata or issue estoppel. In the event, any risk of concurrent trials has been avoided by the agreement which I have indicated.

  46. There appears to me some force in RBC’s objections to Rabobank’s attitude and statements in the New York suit during the application which led to Justice Ramos proposing a January 2004 trial date. Rabobank put forward an inaccurate and potentially misleading account of Moore-Bick J’s attitude to a stay of the English action, and urged that an early trial date in New York would be the key or "ticket" to such a stay. I have been concerned that Rabobank may have obtained an unfair advantage as a result of such statements. But Andrew Smith J held (at paras. 23-24, 27, 37 and 39) that these were innocent mis-statements and that there was every indication that Justice Ramos was not influenced by them, and, further, that Justice Ramos gave a January 2004 trial date in the ordinary course (this being a relatively old case and it being his court’s aim to try any such case within 18 months from its commencement), and that the New York proceedings "will not have been pursued with unusual or unexpected speed if they are tried in January 2004". On this appeal, RBC does not seek to revisit these conclusions. It does not suggest that Rabobank was in any way acting in breach of New York law or procedure. It does not dispute that, if the New York court was in any way misled, that is a matter for it and not the English court. It does still suggest that it was unconscionable for Rabobank to seek an early trial date as the key to an English stay, and that the English proceedings ought to have been given primacy. However, in the light of the judge’s conclusions that January 2004 represented a normal trial date in New York terms, and that Justice Ramos was not influenced by Rabobank’s statements, I have come to the conclusion that there cannot be any decisive significance on the present application in statements made by Rabobank which, even if inaccurate and inappropriate in themselves, had no relevant effect on the New York judge.

  47. Rabobank submits and the judge accepted that, in addition to the fact that the New York suit is coming on for trial within a usual period and without any undue acceleration which can be attributed to any misrepresentation, trial of the issues in New York is of legitimate juridical advantage to it, in so far as its claims include some claims, notably in deceit and fraud which are (Rabobank will submit) subject to New York law and fall outside clause 13(a). The judge accepted this as a valid point and gave it some weight (paragraph 75). However, he also refused to accept that the trial of the New York suit prior to that of the English action would be oppressive unless Rabobank could identify some juridical advantage in the New York suit (paragraph 87). Bearing in mind the limited pleading, the breadth of the non-exclusive jurisdiction assigned by clause 13(b) and the very sparse explanation provided by Rabobank when asked in correspondence to explain the suggested advantage, I prefer not to rest my judgment on any such suggested advantage. However, I agree with the judge that it is unnecessary under clause 13(b) for Rabobank to identify any continuing positive juridical advantage at this stage of the New York suit in the circumstances of this case.

  48. In my view, it cannot be right for this court to contemplate interfering indirectly with the trial of the New York suit at this stage, in circumstances when it must be taken, on RBC’s own case, that

    1. the New York suit was properly commenced and

    2. the New York suit offered Rabobank perceived procedural advantages in terms of pre-trial discovery including oral depositions, which RBC itself has not before us sought to deny; and when, further,

    3. both parties have, subsequent to the commencement of the English action, vigorously participated in the New York suit over a very considerable period, without any agreement by Rabobank that the New York suit should not go to trial,

    4. the New York court was asked to stay its own proceedings on grounds of forum non conveniens and refused in early 2003 in a decision upheld on appeal in June 2003 and

    5. the New York trial date has now been fixed in the ordinary course of the New York court’s practice in relation to such a suit, as far as the New York judge is concerned.

  49. Amplifying some of these points, the New York suit was the first suit commenced, and so a suit of a kind expressly contemplated by clause 13(b); and it is a premise of RBC’s case (although not one the correctness of which we should be taken as necessarily endorsing) that it could be and was properly pursued by Rabobank with a view to obtaining the advantages of depositions and third party discovery in New York. Extensive discovery, both documentary and in the form of some 53 depositions has been sought and obtained. On 31st July 2002 RBC moved for dismissal of the New York suit on the merits, at the same time as moving to stay on grounds of forum non conveniens. Extensive evidence and argument took place on the motion to dismiss, including evidence of English law from Professor Ewan McKendrick and Mr. Robin Potts QC. The motions were denied on 31st January 2003 and RBC’s appeal was dismissed on 26th June 2003. When the present English action was before Moore-Bick J in January 2003 on Rabobank’s unsuccessful application for a stay (which was carefully put on the basis of case management, not forum conveniens, having regard to clause 13(b)), RBC also expressly contemplated during submissions that, unless the New York judge ordered a stay, the New York suit might go first to trial and give rise to "estoppel consequences" (Core C2 p.424F-G)).

  50. I would not rule out the possibility of an English court concluding that a foreign suit, properly commenced and pursued at the outset, had become oppressive during its course. But proceedings once begun are normally intended to be pursued to trial; and there may be consequences which are difficult to foresee or cover, in costs and otherwise, if parties who have fought foreign proceedings in depth and over a long period are at a late stage required by an English court to abandon or stay them. I am prepared to assume, for present purposes, that even a non-exclusive jurisdiction clause in the form of clause 13(b) can still somewhat relax the inhibitions which an English court may otherwise feel in interfering with a foreign suit and that the English forum may in that way be given a certain "primacy". Even so, considerations of comity grow in importance the longer the foreign suit continues and the more the parties and the judge have engaged in its conduct and management. Indirect interference with a foreign trial date engages this consideration in a most obvious way. It would in my view require stronger circumstances than the present before a New York suit which had been so fully and properly contested up to a point near trial could be characterised by an English court as having become oppressive, or as having been conducted oppressively by the foreign claimant, on the ground that the foreign claimant had sought a trial date which, when fixed in the ordinary course as far as the New York judge was concerned, preceded the trial date in the non-exclusive English forum provided by clause 13(b). I would therefore agree with the judge and dismiss this appeal.

    Lord Justice Thorpe

  51. I agree with the result proposed by my Lords and with their reasons.


Cases

Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 817; Pathé Screen Entertainments v Hand Made Films (unreported 11th July 1989, Hobhouse J); Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan 2003 2 Lloyd’s Rep. 571; Turner v Grovit [2002] 1 WLR 107; Du Pont v Agnew [1987] 2 Lloyds Rep. 589; Amoco v TGTL (unreported 26th June 1996, Waller J); McHenry v. Lewis 22 Ch.D. 397

Representations

Mr. Guy Philipps QC and Mr. Richard Handyside (instructed by White & Case) for the Appellant

Mr. Ali Malek QC and Mr. David Quest (instructed by Herbert Smith) for the Respondent


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