Afghanistan International Bank v Yes Bank Ltd

A contractual provision stating that an agreement is subject to the jurisdiction of the courts of a named country may confer exclusive jurisdiction, even without the word “exclusive”. The court must construe the language in its contractual and commercial context. Where the default rule is itself exclusive, a departure from it will ordinarily require clear language if the parties are said merely to have added a permissive jurisdiction. Declaratory relief may properly be granted where a genuine dispute existed when proceedings were commenced and the declaration has practical utility, including potential assistance in related foreign proceedings. The court should not issue declarations that merely record matters which are undisputed and have not been judicially determined.

The claimant and defendant were banks involved in counter-guarantees supporting guarantees issued for power-transmission works in Afghanistan. Following injunctions obtained by KEC International Ltd in proceedings before the Commercial Division of the High Court of Judicature at Bombay, the claimant sought declarations concerning the defendant’s obligation to honour future demands and the jurisdiction clause in the counter-guarantees.

The defendant did not positively contest the claimant’s construction but had not admitted that the English jurisdiction was exclusive. The claim proceeded under CPR Part 8 and was determined finally on the summary judgment hearing. The central issue was what declaratory relief, if any, should be granted.

1. The court granted declaratory relief only as to the exclusivity of the English courts’ jurisdiction under the counter-guarantees. The wider declarations failed because they would merely have recorded matters that were not disputed and would not have represented a judicial determination.
2. The counter-guarantees incorporated the ICC Uniform Rules for Demand Guarantees 2010 revision. Articles 34(b) and 35(b) provided default rules on governing law and exclusive jurisdiction, unless the counter-guarantee provided otherwise.
3. The clause stating that the counter-guarantees “shall be governed by and construed in accordance with the English laws and shall be subject to the jurisdiction of the courts of England” conferred exclusive English jurisdiction. The absence of the express adjective “exclusive” was not decisive. The relevant question was whether the language required disputes to be determined in the chosen jurisdiction, rather than merely making that jurisdiction available.
4. The court applied the reasoning in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd [2015] EWCA Civ 401, involving materially identical language, and AIG Europe SA, formally AIG Europe Ltd v John Wood Group Plc [2021] EWHC 2567 (Comm). The contractual context reinforced the conclusion: the same linguistic structure replaced both the default governing law and the default jurisdiction.
5. Declaratory relief was not academic. A genuine dispute existed when proceedings began because the defendant had not admitted the exclusivity of the jurisdiction clause. The declaration also had potential practical utility in the Indian proceedings and did not infringe comity. The approach to declaratory relief was consistent with Rolls Royce PLC v Unite the Union [2009] EWCA Civ 387 at [120].
6. The claim substantially failed. The appropriate costs order was no order as to costs.