English High Court Affirms Exclusive Jurisdiction in Afghanistan International Bank v Yes Bank Ltd Case Amid Political Challenges in Afghanistan

Citation: [2023] EWHC 3294 (Comm)
Judgment on

Introduction

The case of “Afghanistan International Bank v Yes Bank Ltd” in the English High Court’s Commercial Court centers around a dispute concerning guarantees for a project in Afghanistan, jurisdiction issues, and the applicability of contractual terms in the context of a challenging political situation in Afghanistan. This analysis summarizes the key points of law and the consequential decision of the court, offering insight into how these principles were applied to the case at hand.

Key Facts

The Afghanistan International Bank (Claimant) and Yes Bank Ltd (Defendant) are both banking entities involved in the issuance and backing of guarantees. The Claimant, based in Afghanistan, and the Defendant, based in India, were implicated in a contract involving guarantees related to the installation of power transmission lines in Afghanistan by KEC International Limited (KEC) contracted by Da Afghanistan Breshna Sherikat (DABS), a company operating Afghanistan’s electricity infrastructure.

Following the Taliban’s rise to power in August 2021, force majeure notices were exchanged between KEC and DABS. Subsequently, KEC initiated proceedings in India, obtaining injunctions to restrain the enforcement of the guarantees issued by the Claimant and the counter-guarantees issued by the Defendant.

A contention arose regarding the jurisdiction and procedural propriety of the Indian court in granting these injunctions. The Claimant sought in English court declaratory relief as to the obligations of the Defendant under the counter-guarantees and the exclusive jurisdiction of the English courts over the matter.

Several legal principles were pivotal in the case:

  1. Exclusive Jurisdiction: The court considered whether the English courts were conferred exclusive jurisdiction under the terms of the counter-guarantees as governed by English law (paras 25-41). The court cited the Court of Appeal’s decision in “Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd” [2015] EWCA Civ 401, which acknowledged materially identical language as providing exclusive jurisdiction, and “AIG Europe SA v John Wood Group Plc” [2021] EWHC 2567 (Comm), which similarly upheld the exclusivity of jurisdiction clauses.

  2. Contractual Interpretation: The exercise of contractual interpretation was employed to determine the effect of the jurisdiction clause within the counter-guarantees (paras 32-40).

  3. Principles of Comity: The court observed principles of comity between jurisdictions, considering that the Indian court might find an English court’s declaratory judgment helpful in making its decisions (paras 21, 31).

  4. Utility of Declaratory Relief: There was a careful consideration of whether granting declaratory relief would serve a real utility, ultimately influencing the exercise of the court’s discretion (paras 19-20, 30-31).

  5. Costs: The approach of each party in litigation strategy, including the pursuit of declaratory judgment and the question of issuing a formal position on exclusive jurisdiction, greatly influenced the final decision on costs (paras 44-50).

Outcomes

The court granted declaratory relief to the Claimant, confirming exclusive jurisdiction vested in the English courts as per the contract provisions. However, the court was reluctant to grant a declaration in the absence of an active dispute on other aspects between the parties (paras 41-43).

The court did not grant the full range of declarations sought by the Claimant but acknowledged the relevance of its granted declaration towards aiding the proceedings in the Indian court. The final resolution on costs was that no order was given, taking into account the Defendant’s conduct and the Claimant’s failed aspects of relief sought (paras 44-50).

Conclusion

The judgment effectively clarified the exclusive jurisdiction of the English courts to deal with disputes under the counter-guarantees, reinforcing the English legal system’s approach to jurisdiction and contractual interpretation. The case illustrates the High Court’s willingness to grant declaratory relief where it has utility, particularly when there is an uncontested matter that nonetheless requires formal judicial articulation for effect in foreign proceedings. Moreover, the ruling cautionary speaks to litigants’ strategies, signalling that the success in a limited aspect of a claim may not safeguard against adverse costs consequences, highlighting the risks involved in litigation.