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Journal of International Banking & Financial Law/2009 Volume 24/Issue 1, January/Articles/Exclusivity of
Jurisdiction Clause - (2009) 1 JIBFL 23
Journal of International Banking and Financial Law
(2009) 1 JIBFL 23
1 January 2009
Exclusivity of Jurisdiction Clause
Feature
Middle Eastern Oil LLC v National Bank of Abu Dhabi [2008] EWHC 2895 (COMM) (Queen's Bench
Division, Commercial Court) (Teare J) (27 November 2008)Facts
Jonathan Lawrence
K&L Gates LLP
jonathan.lawrence@klgates.com www.klgates.com
© Reed Elsevier (UK) Ltd 2009
FACTS
Middle Eastern Oil LLC ('MEO') is a company incorporated in Dubai in the United Arab Emirates ('UAE'). National Bank of Abu Dhabi ('NBAD') is a bank incorporated in Abu Dhabi in the UAE. MEO held a US dollar
bank account in NBAD's Dubai branch. The account contract provided that '[NBAD] and [MEO] submit to the
jurisdiction of the Civil Courts of the UAE but without prejudice to [NBAD]'s general right to take proceedings,
where necessary, in any court wheresoever' (the 'Clause').
MEO claimed that in 2002 NBAD failed to comply with MEO's instructions to transfer US$1.6m to an account
in London in the name of Emir8 Petroleum plc ('Emir8'), an English company in which MEO held shares. The
money was released to MEO three years later, following a UAE Court of Appeal decision. In the meantime,
MEO alleged, Emir8's operations had been affected and Emir8 entered a creditors' voluntary liquidation.
MEO claimed it had lost the value of its shares in Emir8, almost $6m.
MEO commenced proceedings in the English courts in 2008. MEO was able to establish jurisdiction as of
right because NBAD was served at its London branch.
CONCLUSION
The Clause was exclusive and bound MEO to the UAE courts. Properly construed, the Clause was intended
to oblige MEO to commence proceedings in the UAE courts but not to oblige NBAD to do so. That is the
meaning which the Clause would convey to a reasonable person in the situation of the parties at the time
they entered into the banking relationship. Therefore the burden lay upon MEO to show there was a strong
reason for not enforcing the Clause. The court did not regard the fact that loss was sustained in England as
such a reason.
The applicable law of the claims in tort depended upon s 11 of the Private International Law Act 1995. The
general rule was that the applicable law was the law of the country where the property was when it was
damaged. The court was not persuaded that the curtailing of rights and cancellation of value contributed
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'damage' to the shares. The value of the rights conferred by shares was always going to be minimal in the
event of an insolvent liquidation. The most significant elements of the events constituting the tort occurred in
the UAE. It was substantially convenient for UAE law to be the applicable law for determining tort claims.
The court could take into account whether MEO would be prejudiced by having to sue in the UAE due to lack
of a fair trial for political or other reasons. MEO failed to provide clear and cogent evidence to support this
claim. Especially given that MEO's appeal against the freezing of the funds at first instance had been accepted by the UAE Court of Appeal.