Bank of New York Mellon v GV Films

A jurisdiction clause stating that the courts of England are to have jurisdiction, coupled with an express liberty for one party but not the other to sue elsewhere, may be exclusive against the party lacking that liberty. Where proceedings are brought in breach of an exclusive jurisdiction clause, the English court will ordinarily enforce the contractual bargain unless strong reasons justify departure. An express waiver of objections based on inconvenience is highly significant and requires especially strong grounds before the clause is displaced. Participation in foreign proceedings does not necessarily waive the clause, particularly where the participation occurred before service and was later maintained under protest.

The claimant, a bank acting as trustee for holders of dollar and euro convertible bonds issued by the defendant, commenced English proceedings following acceleration of the bonds. The defendant had also commenced proceedings in the High Court of Madras seeking declarations that alleged events of default were invalid and an injunction restraining enforcement.

The defendant applied for a stay of the English proceedings. The claimant sought an anti-suit injunction, contending that the trust deeds contained an exclusive English jurisdiction clause. The central issue was whether clause 25.2 was exclusive as against the defendant and, if so, whether the defendant had shown strong reasons for departing from it.

1. Construction of the jurisdiction clause. Clause 25.2, construed as a whole and in the context of the corresponding bond terms, was an exclusive jurisdiction clause so far as proceedings brought by GV Films were concerned. The words providing that the English courts were to have jurisdiction, together with the express liberty given to the trustee and bondholders to sue in any other competent court, showed that GV Films had no equivalent liberty.
2. The court regarded Continental Bank NA v Aekos Cia Naviera SA [1994] 1 WLR 588 as effectively deciding the construction issue. The reasoning in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 All E (Comm) 237 was also persuasive. Sabah Shipyard (Pakistan) Ltd v ROP [2003] 2 Lloyd’s Rep 571 involved materially different wording and did not govern.
3. Strong reasons. A party seeking a stay in the nominated forum must show strong reasons why an exclusive jurisdiction clause should not be enforced. The same principle supported an anti-suit injunction against proceedings brought in a non-contractual forum. An express waiver of objections based on venue or inconvenience was a matter of very considerable significance, so especially strong grounds founded on convenience would be required.
4. The claimant’s participation in the Madras demerger proceedings was consistent with the clause, since those proceedings concerned approval of the scheme in the court required to determine it. Its limited participation in the later Indian proceedings did not amount to a sufficient reason for refusing enforcement: the initial appearance preceded service, the subsequent appearance was under protest, and the English proceedings had already made the claimant’s position clear.
5. The Indian proceedings were in plain breach of the exclusive jurisdiction clause. The English court was plainly the appropriate forum because the contractual issues were governed by English law. The defendant’s stay application was dismissed. The claimant’s anti-suit injunction was granted, subject to argument on its precise wording.