Zakir Haroon Mussa v Zubair Osman Gani Issa & Ors
[2024] EWHC 763 (Ch)
Macquarie Bank Limited v Banque Cantonale Vaudoise
26 January 2024
[2024] EWHC 114 (Comm)
High Court
A bank (MBL) wants to get paid under some financial guarantees (SBLCs) from another bank (BCV). BCV says the case should be in Switzerland, but the Swiss court has put the case on hold indefinitely. The English court decided the case should be in England because English law says these types of guarantees should be paid quickly, and the Swiss delay prevents this. The English court is better suited to deal with it.
Key Facts
- •Macquarie Bank Limited (MBL) sought declarations in England to enforce two Standby Letters of Credit (SBLCs) issued by Banque Cantonale Vaudoise (BCV).
- •MBL previously commenced proceedings in Switzerland for the same relief, but these were stayed pending a criminal investigation.
- •The SBLCs were subject to English law.
- •BCV challenged the English court's jurisdiction.
- •The key issue was whether England was the most appropriate forum.
Legal Principles
Letters of credit governed by English law must be paid if documents are in order and terms satisfied; disputes between buyer and seller are settled separately.
Edward Owen Engineering Ltd v Barclays Bank International Ltd [1979] QB 159
Courts will rarely interfere with payment under letters of credit, even with injunctions from the bank's domicile court.
Power Curber International Ltd v National Bank of Kuwait Sak [1981] 1 WLR 1233
To prevent a bank from paying on fraud grounds, fraud must be 'established or obvious'.
Edwards Owen, Alternative Power Solution Ltd v Central Electricity Board [2014] UKPC 31
Courts will not stay enforcement of a judgment under a letter of credit except in exceptional circumstances.
Continental Illinois v National Bank Trust Company of Chicago [1986] 2 Lloyd’s Rep 441; National Infrastructure Development Co Ltd v Banco Santander SA [2017] EWCA Civ 27
Forum conveniens: The court must identify the forum where the case can be most suitably tried.
Spiliada Maritime Corp v Cansulex Ltd [1987] 1 AC 460
Outcomes
BCV's jurisdiction challenge was dismissed.
England is the clearly more appropriate forum because the Swiss proceedings are indefinitely stayed, preventing enforcement of the SBLCs while potentially irrelevant investigations continue. This conflicts with MBL's substantive rights under English law governing the SBLCs. The English court is better placed to apply English law to the SBLCs.
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