This relates to a claim brought by a bank incorporated in England against a number of parties (one of which was situated outside of the jurisdiction) and considered whether the English court was the correct forum for the dispute to be heard.
The first claimant was a bank incorporated in England. The first defendant (Just) was a Mongolian company, which was engaged with the sale to Mongolian companies of petroleum products which it bought from countries outside Mongolia. The second to sixth defendants were companies associated with Just. The seventh defendant was a major customer of the eighth defendant, UBR, which was owned by, among others, the governments of Russia and Mongolia and maintained and operated the railway network in Mongolia.
Standard Bank’s main claims were against the first defendant, as borrower, and the second to sixth defendants, as guarantors, following default by the first defendant in the repayment of substantial sums of money advanced by Standard Bank, under a written agreement governed by English law. It was common ground that debts governed by Mongolian law and owed by UBR to the first defendant had been validly assigned under Mongolian law to Standard Bank.
Standard Bank claimed against UBR under what it contended, but UBR denied, that there was a collateral contractual undertaking by UBR. Standard Bank applied, without notice, for permission to serve the proceedings on UBR out of the jurisdiction, contending that it had a good arguable case that, among other things, its claims against UBR fell within a particular jurisdictional gateway and that there was a real issue to be tried as between Standard Bank and those defendants and UBR was a necessary / proper party to the claims made against those defendants. The bank was granted permission for service outside the jurisdiction in respect of the eighth defendant, whose debts to the first defendant had been assigned to the bank.
UBR applied for an order setting aside the claim form and a declaration that the English court lacked jurisdiction.
Three main issues arose for the Court to decide: Firstly, was Standard Bank’s claim against UBR sufficiently strong to give rise to a serious issue to be tried on the merits and, accordingly whether permission to serve a claim form out of the jurisdiction, under CPR 6.36 had been justified.
Secondly, a question arose as to whether Standard Bank had satisfied the requirement in gateway (3) in proving that UBR was a necessary or proper party to the claims against the other defendants. UBR submitted that Standard Bank had not satisfied the second requirement. Standard Bank contended that UBR was a necessary party into the enquiry into Just’s discharge of its obligations under a facilities agreement in 2012 and that the assignment and in particular its obligations as pledger of benefits under the UBR sale contract. It contended that the claims were closely bound up with one another.
The third issue regarded whether or not the English court was the proper forum. UBR relied on the alleged non-disclosure by Standard Bank, which, it contended, ought to have drawn the court’s attention to a jurisdiction agreement in the UBR supply contract which, under Mongolian law, constituted an exclusive jurisdiction clause.
The Commercial Court held that the bank had failed to show that UBR was a necessary and proper defendant to the claim. Further, England was not the proper forum. The application to set aside service and the declaration sought were granted.
This case provides a helpful reminder that the correct forum must be considered carefully when bringing an action against parties residing outside of the UK.