The Court of Appeal has upheld a decision of the Commercial Court refusing a stay of English proceedings where the contracts contained a non-exclusive English jurisdiction clause combined with a forum non conveniens (FNC) waiver clause: Standard Chartered Bank (Hong Kong) Limited and another v Independent Power Tanzania Limited and others[2016] EWCA Civ 411.

The Court declined to give guidance on whether the effect of a FNC waiver clause was to preclude only those arguments on forum which were unforeseen and unforeseeable at the time of contracting (as the Commercial Court held – see our blog post here) or whether it would preclude raising any arguments whether or not foreseeable (as the obiter comments of Clarke LJ suggest in Westminster Bank v Utrecht-America Finance Company [2001] E All ER (Comm) 7).

In practice however this may not matter greatly as the Court of Appeal accepted that a FNC waiver clause did not preclude an application for a case management stay of the kind ordered in Reichhold Norway ASA v Goldman Sachs International [2001] 1 WLR 173, namely where there is a "rare and compelling case". In effect, therefore, the court has retained the power to order a stay when it considers it appropriate.

Background

The facts are complex but in summary the claimants brought proceedings against the defendants in the English courts for sums due under finance documents. All of the documents contained non-exclusive English jurisdiction clauses with FNC waivers and an express acceptance of the possibility of concurrent proceedings in different jurisdictions.

A FNC waiver clause is essentially an agreement that a defendant will not argue that proceedings commenced in the chosen court or courts are inconvenient and that there is some other more suitable court (the forum conveniens) in which the case should be heard. For an example clause see our previous post here.

The defendants sought to stay the English proceedings on the basis that Tanzania was the most convenient forum, notwithstanding the FNC waiver.

The Commercial Court took the view that a non-exclusive jurisdiction clause combined with a FNC waiver did not preclude the court from granting a stay of English proceedings in favour of another jurisdiction. The court would however only grant a stay if there were very strong or exceptional grounds that were unforeseen and unforeseeable at the time the agreement was made. He concluded that none were made out in this case. The defendants appealed.

Decision

The Court of Appeal dismissed the appeal.

The defendants accepted the judge's statement on the law relating to FNC waivers but challenged the judge's decision on its application to the facts.

The claimant argued that the judge had stated the law too generously, relying onWestminster Bank v Utrecht-America to submit that, since the defendants had agreed a FNC waiver, even unforeseeable factors were irrelevant.

The Court of Appeal decided that even applying the judge's test in relation to FNC waivers, the appellants had not made out their case as to the presence of unforeseeable factors. It was therefore unnecessary to go on to consider the claimant's argument that there should be no stay even if unforeseeable factors were shown.

The defendants also argued that there should be a stay of the English proceedings as a matter of case management. This was on the basis that related proceedings in Tanzania were more advanced than the English proceedings, and it was more convenient that the Tanzanian proceedings should be the main proceedings rather than that there be an unseemly rush to judgment in both jurisdictions.

The Court of Appeal agreed with the judge that there was no good reason, as a matter of case management, to stay the English proceedings. However, it accepted in principle that a FNC waiver did not preclude an application for a case management stay in "rare and compelling cases". When that will be is not made clear but may include where the proceedings in the competing jurisdiction are nearing trial and large sums have been spent. Whatever the correct test may be, therefore, the court retains a residual discretion to stay in exceptional cases.