Home Information Cases Banque Francaise De L’Orient v (1) Chesterbrook Financial Corporation (2) Hany Salaam (2001)

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Banque Francaise De L’Orient v (1) Chesterbrook Financial Corporation (2) Hany Salaam (2001)

Summary

The English courts had jurisdiction to hear claims arising from a contract made under French law but in which one party reserved the right to elect any other jurisdiction which was competent under the Brussels Convention 1968 and due to differences between French and English law the English courts were a more convenient forum than the French courts.

Facts

Application challenging the jurisdiction of the English courts in a claim by the bank ('B') for enforcement of a personal guarantee given by the applicant ('S') for liabilities owed to B by the first defendant ('C'). B was domiciled in France and S in Lebanon. The guarantee was made in Monaco and expressly provided that it was subject to French law and that the French courts had exclusive jurisdiction, but that B alone could elect to sue in any other competent jurisdiction. S argued that the English courts should decline jurisdiction on the ground of forum non conveniens and that B's claim should be stayed or set aside. The question of jurisdiction was governed by Art.4 Brussels Convention 1968, incorporated into English law under the Civil Jurisdiction and Judgments Act 1982. Proceedings were served on S while he was in England. S argued that Art.17 of the Convention, coupled with the jurisdiction clause in the guarantee, prevented the English courts from hearing B's claim. B relied on Art.5, which permitted a party to whom choice of jurisdiction was reserved to bring proceedings in any other competent jurisdiction of its choosing. However, S argued that the English courts' jurisdiction did not derive from the Convention but from the guarantee and national law and so Art.4 had no effect and could not confer jurisdiction. S argued that the claim should be stayed or set aside because the French courts were the most natural and appropriate forum and there were no special reasons why the English courts should retain jurisdiction over a matter involving a French bank and a French contract. Moreover, French law was significantly different from English law on matters such as arose here, and under French law S might have had defences unavailable in English law. S argued that this court should decline jurisdiction to avoid the possibility of irreconcilably different decisions in proceedings relating to enforcement of the loan against C and enforcement of the guarantee against S.

Held

(1) The court's jurisdiction did derive from Art.4 of the Convention and not from national law or the guarantee. The underlying objective of Art.4 and Art.17 was to enable proceedings to be brought in any other court that had jurisdiction by virtue of the Convention and had to be intended to include jurisdiction over persons domiciled in non-Convention states which were the subject of Art.4, albeit that the jurisdictional framework of the Convention authorised national courts to apply their own law. Accordingly, the English courts had jurisdiction. (2) Following the Court of Appeal decision in Haji-Ioannou v Frangos (1999) 2 Lloyd's Rep 337, the court did have jurisdiction to set aside or stay proceedings on the ground of forum non conveniens. (3) As the two proceedings were based on the same factual matters and similar defences would be put forward by both S and C, there was a real risk of opposing findings of fact if an English court were to try the claim against S and a French court the claim against C. The two actions were so closely related in their facts that justice required that they should be heard together. They would be capable of being so heard in the English courts but not in French courts. This court therefore could and would entertain jurisdiction.

Application dismissed.

Queen's Bench Division
Toulson J
Judgment date
25 October 2001
References

​LTL 19/4/2002