An alleged fraud (relating to a sale of Indian cotton) between an Indian, a Malaysian and a Hong Kong company has generated multiple claims in Singapore and one in London, Detusche Bank AG v CIMB Bank Berhad. These arise from the typical web of letters of credit, finance facilities and guarantees found in international commodities finance. In London, Deutsche Bank (DB) claim reimbursement from CIMB (a Malaysian bank) of sums paid out under letters of credit issued by CIMB.
Of interest for this blog is the Commercial Court’s decision last week ( EWHC 81 (Comm)) refusing to grant CIMB a stay of the London proceedings on the basis of forum non conveniens. Teare J’s judgment is a pithy demonstration of the English court’s approach to such arguments applying the Spiliada principles (discussed below).
A key point to note is that the mere risk of inconsistent decisions on a factual point and the duplication of costs was not enough to justify a stay of English proceedings. The case also should give parties pause to consider before beginning parallel proceedings in another jurisdiction (see my final thoughts on tactics)
20 Essex Street’s Andrew Fulton appeared for Deutsche Bank.
The relationship between DB and CIMB was simply that of “confirming bank” and “issuing bank” under several letters of credit (the LCs). DB had, with CIMB’s authority, confirmed the LCs. The LCs’ beneficiary (Global) presented the apparently requisite documents to DB. In February 2016, DB paid out the sums secured. As is routine, DB claimed an indemnity (of nearly USD 10 million) from CIMB as the issuing bank.
CIMB refused to pay. DB brought the English claim in October 2016.
CIMB said its defence would, it said, be based on an allegation that the tendered documents were forged and that DB had sufficient knowledge of this before accepting them. CIMB further said it would allege that the LCs were procured by fraudulent misrepresentation although, as the judge found, this was not a defence to DB’s claim.
The transactions leading to the issue of the LCs and the Singapore claims are a little more complicated. CIMB’s customer Cashcot (a Singapore company) wished to purchase Indian cotton from a Hong Kong company, Global. CIMB issued the LCs in favour of Global at Cashcot’s request. CIMB and Cashcot were party to a Facility Letter including an indemnity in CIMB’s favour and an Indian company, Bhadresh, had issued two guarantees of Cashcot’s obligations to CIMB. As things turned out, following presentation of the LCs, neither Cashcot nor Bhadresh indemnified CIMB.
In July and August 2016, CIMB thus began proceedings in Singapore against Cashcot and Bhadresh. Cashcot was wound up in November. In late November, CIMB applied to stay the English proceedings. In December 2016, CIMB issued a fresh claim in Singapore alleging fraud against Bhadresh, Global and Cashcot. Those proceedings also joined DB and CIMB sought a declaration that it was not obliged to indemnify DB under the LCs (a “negative declaration”).
CIMB did not challenge the service upon it of DB’s claim. Jurisdiction was thus prima facie established by service.
The basis of service is not set out in the judgment. However, on the basis that CIMB had a branch registered in London, DB would have been entitled to rely on CPR 6.9(2) para 7 (a company may be served at “any place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction.”) Particulars provided by CIMB under the Companies Act 2006 and the Overseas Company Regulation 2009/1801 would also provide a basis for service. (For more about these routes to service, see Teekay Tankers Ltd v STX Offshore & Shipping Co  EWHC 2612 (Comm).)
CIMB did, however, try to obtain a stay of the DB claim on the grounds of forum non conveniens. To obtain a stay, under the Spiliada principles, CIMB was required to “show that Singapore is clearly or distinctly more appropriate than England for the trial of DB’s claim against CIMB”.
CIMB failed to do so.
CIMB’s reliance on the risk of duplicative proceedings and inconsistent decisions because CIMB had sought a negative declaration in Singapore about its liability to DB was rejected. That “spectre” had been brought about by CIMB’s decision to bring the second set of proceedings.
The other Singapore proceedings (against Cashcot and Bhadresh) had been issued before DB’s London claim, however. The judge accepted that there was a common issue of fact involved in these proceedings and the London claim: were the documents compliant or not? Nevertheless, because the issue was to be determined solely on the basis of the documents (and not, for example, requiring expert evidence from surveyors) Teare J held it could be determined in England as easily as Singapore. He concluded that the risk of inconsistent decisions and the duplication of costs on the issue “does not point to Singapore being the more appropriate forum”.
In relation to the location of evidence, CIMB prayed in aid the issues which would be raised by its defence of forgery. It argued that the evidence of fraud would be located in or near Singapore (not London) so pointed to Singapore as the more appropriate forum. The judge disagreed. He found the “crucial enquiry” was DB’s knowledge when accepting the documents as compliant. The evidence of this knowledge was in London. Thus, the judge found a balancing factor and could conclude that “The court in Singapore is no better placed to determine that question than is the English court.”
Finally, CIMB relied on more procedural points. The judge rejected both. Firstly, he held that the stage of the Singapore proceedings did not justify a stay. They were not “significantly further advanced” than the London proceedings. Secondly, he held that the absence of the other parties from the London proceedings did not favour Singapore. Those other parties could be joined as Part 20 Defendants.
It is tolerably clear that Teare J was unsympathetic to problems caused by CIMB’s issue in Singapore of a claim against DB for negative declaratory relief. Even if these proceedings had not been issued, though, there is no reason to suppose that the judge’s decision would have been any different.
A party in CIMB’s position will have to weigh carefully the potential advantages of being able to get an issue determined in a different forum against the costs risks which would follow from duplicative proceedings. Whether inconsistent decisions are a disadvantage may well depend on the likely jurisdiction for enforcement of any claim.
 Spiliada Maritime Corp v Cansulex Ltd  AC 460, 475-478.
 In fact, Global had obtained loans from DB and the obligation to repay them was discharged on presentation of the LCs, thus DB might “be regarded as having paid out”.
 Part of a residual class.
 Judgment .