Royal Bank of Canada v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA

A non-exclusive English jurisdiction clause does not necessarily make England the primary forum or entitle a party to insist that an English trial precede a foreign trial. The clause must be construed according to its express terms. Where it expressly permits proceedings in other jurisdictions, an implied term giving the English proceedings priority may be inconsistent with the parties’ bargain.

In the absence of contractual breach, foreign proceedings may be restrained only where their pursuit is vexatious or oppressive. Concurrent proceedings and the risk of inconsistent judgments do not suffice by themselves. The court must consider the natural forum, injustice to both parties and comity. Comity assumes increasing importance as foreign proceedings approach trial after extensive participation by both parties.

Royal Bank of Canada claimed approximately US$523.8 million from Rabobank under a total return swap governed by an ISDA Master Agreement. The agreement was governed by English law and contained a non-exclusive English jurisdiction clause which expressly permitted proceedings in other jurisdictions.

Rabobank had commenced New York proceedings for rescission or damages shortly before Royal Bank of Canada began mirror proceedings in England. Andrew Smith J dismissed Royal Bank of Canada’s application under section 37 of the Supreme Court Act 1981 to restrain Rabobank from pursuing the New York proceedings beyond factual discovery.

The central issue on appeal was whether the jurisdiction clause gave the English proceedings primacy, so that Rabobank’s pursuit of an earlier New York trial was a contractual breach or was vexatious, oppressive or otherwise unconscionable.

1. Appeal dismissed. Evans-Lombe J delivered the principal judgment. Mance LJ agreed with the result and gave additional reasons. Thorpe LJ agreed with both judgments.
2. A non-exclusive jurisdiction clause submits the parties to the English court and prevents objections that England is an inconvenient forum. It does not necessarily require the English court to select itself as the forum for final determination. The court may select another forum or make no selection where the applicable criteria do not rule either forum out.
3. The express wording of clause 13(b) permitted foreign proceedings and contemplated parallel litigation. The parties must therefore have contemplated the possibility of substantially simultaneous trials and their attendant burdens. Construing England as the “primary forum”, or implying a term that the English trial must precede every foreign trial, would add an unwarranted gloss and conflict with the express clause.
4. Rabobank’s pursuit of the New York proceedings to judgment was consequently neither a breach of contract nor vexatious or oppressive. Concurrent proceedings, inconvenience and the risk of an “ugly rush” to obtain an estoppel-producing judgment were relevant but not decisive. The English court was not found to be the more natural forum, Rabobank’s conduct was not vexatious or oppressive, and a legitimate juridical advantage in New York had been found below.
5. Mance LJ explained that the anti-suit jurisdiction should not be reduced to rigid conditions. The court generally considers whether England is the natural forum, whether the foreign proceedings are vexatious or oppressive, and the injustice that granting or refusing relief would cause to each party. Comity requires caution and acquires greater weight as foreign proceedings continue and the parties and foreign court invest in their conduct.
6. The decisions concerning other non-exclusive clauses did not establish English primacy here. Those clauses lacked the present clause’s express contemplation of foreign and parallel proceedings. Stronger circumstances would have been required to restrain a New York action which had been properly commenced, extensively contested and fixed for trial in the ordinary course.

1. Court of Appeal (Civil Division): The appeal was dismissed. The refusal of the anti-suit injunction was upheld: [2004] EWCA Civ 7.
2. Queen’s Bench Division: Andrew Smith J dismissed Royal Bank of Canada’s application under section 37 of the Supreme Court Act 1981 to restrain Rabobank from pursuing the New York proceedings beyond factual discovery. No citation is stated in the judgment.