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Banking Litigation – Pursuing a Claim in England against a Foreign Bank (11 December 2018)

Date: 11/12/2018
Duncan Lewis, Legal News Solicitors, Banking Litigation – Pursuing a Claim in England against a Foreign Bank

Do you want to sue a bank based abroad by bringing a claim in England?

Are you worried that you will not get access to justice in a foreign jurisdiction?

Such questions may raise an eyebrow or be perceived as remarkable to some, but these sentiments resonate through justice systems in multiple parts of the world. Independence of the judiciary is a salient feature in our law of jurisprudence and ought to be in any developed constitution.
However, there are many enquiries that have come my way where individuals feel, and hold genuine concerns, that they will not get access to justice in the relevant foreign jurisdiction and are convinced that justice can only be achieved through litigation in England.

Currently, the English courts are struggling to meet the demand of caseloads and some courts are working on a “10-day backlog”. As most of us in the legal profession have experienced, you will not hear from a county court clerk until the lapse of 10 days after initially filing any document/pleading.

This would not, however, prevent the English courts from hearing your case if your case meets jurisdiction criteria. Banking and financial disputes are sophisticated and usually involve elaborate contractual terms. If a properly formulated claim could be pleaded against defendants (even if based abroad) the English court would have jurisdiction to hear them. These will be considered on a case specific basis, as jurisdiction rules can be very complex.

Jurisdiction Guide

The first question in a civil claim is: is the defendant domiciled in this jurisdiction? A company is domiciled in England if it has its seat, central administration or principal place of business here as specified in Council Regulation 2001/44 on Jurisdiction and Recognition and Enforcement of Judgments (“the Brussels I Regulations”) Art 63.1

  1. If the defendant is “domiciled” in the jurisdiction, a claim can be brought against that defendant and the English court has no jurisdiction to stay the claim on the grounds that it is an inappropriate forum (forum non conveniens as it is usually referred).

  2. To serve a defendant, who is NOT domiciled in England or in any other EU or EFTA state, with proceedings out of the jurisdiction, the claimant must show that:
    1. There is a good arguable case that one or more of the grounds of jurisdiction set out in CPR Practice Direction 6B applies;

    2. The claim raises a serious issue to be tried on merits;

    3. England is clearly the appropriate forum for the dispute.

The Civil Procedure Rules (CPR) specifically set out the grounds on which service can be based. These are the only grounds on which service out of the jurisdiction (outside the European Free Trade Association and the European Union) can be founded. The court has no inherent jurisdiction to authorise service on any other grounds.

On overcoming that hurdle, a claim issued and served, can be met with an immediate application to stay proceedings by the defendant on the ground that England is not the appropriate forum; that the claimant could have brought it in the foreign court; and that the claimant can expect substantial justice. In such instances the English courts are reluctant to interfere as they consider it to be contrary to judicial comity to criticise the judicial system of a foreign state.

In recent years the courts have rejected a number of applications to stay proceedings in England on the ground that the claimant could not expect to receive substantial justice in the proposed alternative foreign forum, as held in Alberta Inc v. Katanga Mining Limited (2008) (Democratic Republic of Congo); Korea National Insurance v. Alliance Global (2008) EWCA Civ 1355 (North Korea); Yukos Capital v. OJSC Rosneft (2012) EWCA Civ 855 (Russia).

Agreement and Exclusive Jurisdiction Clauses

If you have entered into an agreement with the bank for a specific transaction, such an agreement would usually contain a “jurisdiction clause”. This would commonly take the form of exclusive or non-exclusive jurisdiction clause. There are further agreements called “asymmetric jurisdiction agreements” which are widely used in financial markets. Should there be such an agreement, various rules will apply alongside the Recast Brussels 1 Regulations.

In BNP Paribas SA v. Anchorage Capital Europe LLP [2013] EWHC 3073 (Comm), para. 88, Males J held:

“…the terms “exclusive” and “non-exclusive” themselves are merely convenient labels... I prefer to ask the question whether commencement and pursuit of the foreign proceedings in question are things which a party has promised to do”.

In the recent case of Deutshce Bank AG v. Comune de Savona [2018] EWCA Civ 1740:

The court considered the effect of a “competing jurisdiction clause”. In the first instance judge HHJ Wakeman QC took into account the foreign law evidence and stayed the English Proceedings applying Articles 25 and 31(2) of the Recast Brussels 1 Regulation in favour of Italian proceedings. This decision was reversed by the Court of Appeal with Longmore J giving the judgment noting that “theoretically a dispute could fall within the ambit of more than one jurisdiction clause” and spoke of “considerable unease” on the “proliferation of expert evidence of foreign law jurisdiction applications”.

In essence, Longmore J held that (para. 15): “the task of the English court is merely to inform itself of any relevant different principles of construction there might be in the foreign law and, armed with such information, look at both jurisdiction clauses and decide whether the English claim falls within the English clause. That should be a comparatively straightforward exercise”.

In order to keep up to date with England and Wales jurisdiction in relation to banking litigation, we must watch this space for a Brexit deal! In the absence of an agreement between the UK and EU, on what the jurisdictional rules will be between the UK and member states, Recast Brussels 1 Regulations will cease to have effect.

Author, Sobashni De Silva, is a director in the litigation department at Duncan Lewis with 10 years’ experience dealing with high net worth clients. She litigates across a broad range of areas such as those involving professional negligence, banking disputes, builder's disputes, defamation, contractual disputes, civil fraud, misrepresentation claims and international cross-border litigation.

She has extensive experience in the high court and the county courts litigating numerous matters. She recently advised a client on a complex £300m High Court litigation involving international law.

For advice on this, or anything other litigation matter, contact Sobashni on 020 3114 1180, or sobashnis@duncanlewis.com.

Duncan Lewis Commercial and Civil Litigation Solicitors

Duncan Lewis is one of the leading solicitors in England and Wales offering expert litigation and alternative dispute resolution services, with expertise in ADR and mediation, bankruptcy, banking and finance, company and commercial, contentious probate, defamation, debt recovery, fraud, international, property and professional negligence.

The firm regularly handle claims at the County Court as well as high-value claims at the High Court, the Commercial Court and the Court of Appeal.

If you have a litigation issue which you wish to discuss in confidence, please do not hesitate to call us on 033 3772 0409.

1The Recast Brussels Regulations contain amendments to the act on the 2001 Brussels Regulation and would apply to proceedings instituted on or after 10 January 2015.

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