DEUTSCHE BANK AG AND OTHERS V ASIA PACIFIC DROAOBANO WIRELESS COMMUNICATIONS INC. AND ANOTHER
[2008] EWHC 918 (COMM) (QUEEN'S BENCH DIVISION, COMMERCIAL COURT) (FLAUXJ) (30 APRIL 2008)
Whelhef a bank could propose alternative claims against a deiaulling borrower if a credit agreement jurisdiction clause was invalid.
BACKGROUND
Deutsche Bank (the Bank') and other lenders {together the 'Claimants') entered into a USS210m credit agreement
(the Agreement') wirh Asia Pacific Broadband Wireless
Cotnmunications Inc. as borrower and its parent company as guarantor (together the 'Defendants'). Tlie Agreement provided rhar the courts of England and Wales had exclusive jurisdiction in connection with the Agteement. TTie individuals behind. the Defendants were members of the Wang family, certain of whom were made subject to criminal proceedings. This led. to a default under the Agreement and Sl75m remained unpaid.
The Claimants began proceedings in London. Tlieir claim form asserted jurisdiction due co the relevant clause in the Agreemeni to which a n 2J of the Judgments Regulation (Council Regulation
44/201} (the 'Article') applied. The Defendants argued the
Agreement was void as the Wang family members who signed it did not have authority to enter into the transaction. In response, the Claimants applied to amend their pleading to add two additional claims on the basis that if the Agreement was void;
(i) t h e loan monies were paid under a mistake of fact a n d / o r law and/or for a consideration which failed and the Claimants claimed restitution; and (ii) the Wang representative made misrepresentations about the holding of board meetings for which the borrower was liable.
Claimants did have a good arguable case that the proposed additional claims would fall within the jurisdiction clause, the application to add the additional claims must be dismissed. As
[he Bank is domiciled in the EU, the validity of the jurisdiction clause was co be assessed against the Article. T h e interpretation of the Article was a matter of autonomous European case law (not a mattet of English law as the governing law of the
Agreement), English law only became relevant and applicable if the jurisdiction clause was valid under the Article. T h e jurisprudence of the European Court of Justice requires that a jurisdiction clause must be the subject of consensus between the parries, which must be clearly and precisely demonstrared as a good arguable case. T h e ECJ's strict apptoach to the validity of jurisdiction clauses under the Article must be applied and led to the conclusion m this case thar the clause was void. T h e alternative claims were predicared on the defence succeeding that the Agreement was made without authority and void.
The Claimants faced Insuperable difficulties seeking to deinonsttate clearly and precisely consent to English jurisdiction by the Defendants to the requisite standard. The court had to consider the claims and disputes in relation to which the clause was sought to be invoked, against which it judged that the Claimants had not made out a sufficiently arguable case for
Engl ish jurisdiction.
CONCLUSION llie jurisdiction clause was invalid and the additional claims could not be invoked separately by the Claimants. Although the
Jonathan Lawrence
K&L Gate! jomitkanJaivrence^klgiitei.com
Butterworths journal of International Banking and Financial Law June 2008