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Success for Justina Stewart in Anglo-Indian $17 million banking claim

Justina Stewart successfully secured summary judgment in the sum of over $ 17 million and an award of indemnity costs.

The hard-fought application involved a plethora of interesting issues – including regarding the Hague Convention on Service and whether the High Court’s jurisdiction was supplanted in the context of a suite of documents containing different dispute resolution clauses.

In Punjab National Bank (International) Ltd v MBL Highway Development Company Ltd, Justina Stewart, instructed by Milan Kapadia of Royds Withy King, acted for the claimant in proceedings against the subsidiary of an Indian entity which delivers and operates large-scale infrastructure projects.

The Bank provided financing for an Indian highway / toll road project, in the context of a complex collection of related security and other documentation.  The Bank alleged that all sums due under the facility had become due following an event of default, and sought permission to apply for, and, summary judgment.

Over the course of several remote hearings, MBL raised myriad grounds of opposition – both factual and legal, including that the English High Court proceedings ought to be stayed (under s.9 of the Arbitration Act 1996) on the basis that an arbitration clause in an agreement connected with the main facility agreement supplanted the High Court’s jurisdiction.

In decisions given by Mr Justice Foxton, the Bank obtained summary judgment and indemnity costs.

The case raised a number of interesting issues:

Service – Hague Convention on Service / CPR r.6.15 / non-existence of contractual service agent

  • whether the court was entitled to enter judgment under Article 15 of the Hague Convention on Service, even though the Indian Ministry of Law and Justice had provided a letter to the effect that, despite an extensive search, it had found no record of numerous letters sent by the Foreign Process Service;
  • whether an applicant for alternative (retrospective) service under CPR r.6.15 need show “good reason” or “exceptional circumstances” given that India is a signatory to the Hague Convention on Service and has entered an objection under Article 10;
  • whether the Bank could rely upon service within the jurisdiction under a contractual service clause in circumstances in which the precise corporate identity of the agent was unclear and/or in which the agent no longer existed at the time of service;

Inconsistent dispute resolution clauses

  • whether a connected agreement, which provided for dispute resolution in accordance with the Rules of Arbitration of the Indian Council of Arbitration and subject to the Arbitration and Conciliation Act 1996, meant that the English proceedings ought to be stayed. Mr Justice Foxton relied upon the decision in Albion Energy Ltd v Energy Investments Global BRL [2020] EWHC 301 (Comm) (which, for those interested in such issues, is well worth a read);

Concurrent proceedings

  • whether it was in any event appropriate to bring proceedings in England in view of two extant proceedings in India (a petition and arbitration proceedings);

Finance agreements

  • questions of contractual interpretation in relation to a non-recourse loan and whether the fact that certification that the ‘Commercial Operation Date’ of the highway / toll road had not been obtained affected the Bank’s ability to rely on an event of default and serve a notice, accelerating all payments due;
  • whether the Bank was entitled to rely upon a calculation based on 365 rather than 360 days in relation to 6 month LIBOR; the contract specifying the former, but this clearly being a mistake as the latter was the market norm, and the parties had conducted themselves on that basis;

Insolvency & restructuring

  • whether, under Indian Law, the defendant could rely upon its parent company entering the Indian corporate insolvency resolution process (CIRP);

Indian enforcement issues and coronavirus

  • the extent to which the court should and will grant a party indulgence in light of Covid-19 (particularly relevant as Indian lockdown was especially draconian); and
  • the advantage of allowing a respondent to a summary judgment application extensive time to respond in the context of likely subsequent enforcement in a jurisdiction in which a decision on the merits is required.

Despite the copious documents, the remote hearings ran smoothly, efficiently and with no fuss – credit and thanks to the court, and all the parties and their representatives.  Dare it be said that remote hearings are preferable (irrespective of Covid-19) – even for heavy interlocutories / applications?

However, the key message to take from this decision is that, even when faced with numerous grounds of opposition to a summary judgment application, in appropriate cases and where the applicant has methodically disentangled those grounds, the Commercial Court will not hesitate to engage with the issues and take a robust approach.

Justina Stewart is ranked as a Leading Junior in Banking & Finance and Insolvency, and is appointed to the Attorney General’s Panel of Junior Counsel to the Crown. A former economist and investment banker, she is described in directories as “incredibly impressive and a force to be reckoned with”, and a “highly intelligent and tenacious litigator”  who is “also far more financially literate than most barristers”, and with “a very good commercial application”.

Find Out More

If you would like to discuss any of the issues covered in this article please contact Justina directly or via her practice management team; Matt Sale (+44 (0)20 7427 4910) or Peter Foad (+44 (0)20 7427 0807) who would be happy to have a discussion in the strictest of confidence.

Banking, News 24 Jun, 2020

Authors

Justina Stewart

Call: 2010

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