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$84 Million Awarded in Cross-Border Bonds Tussle

Gas StorageIn a case which raised issues in respect of cross-border litigation, an international bank which acted as trustee of a series of bonds, worth $80 million, issued to an Indian oil and gas exploration company, has been granted summary judgment for the entire sum owing after the latter defaulted on interest payments.

The bonds were issued pursuant to a trust deed that conferred exclusive jurisdiction on the Court of England and Wales to resolve any dispute arising. After the Indian company failed to make a $2 million interest payment, the bank declared an event of default and sought recovery of the value of the bonds plus interest, a total of more than $84 million.

The bank had simultaneously issued a winding up petition against the company in the High Court of Delhi, alleging that it was unable to pay its debts. That court had granted various forms of interim relief against the company, including restraining its disposal of assets and a requirement to provide fortnightly bank statements.

The company, which insisted that it was ‘viable and solvent’, argued before the High Court in London that the bank should be required to elect between pursuing the English or Indian proceedings. Whilst it was accepted that the English High Court had jurisdiction to resolve disputes relating to the proper interpretation of the trust deed, it was submitted that those proceedings should be stayed pending the outcome of the proceedings in India.

Rejecting those arguments, however, the Court noted that, given the terms of the trust deed, any challenge to English jurisdiction would have been hopeless. Ruling that the proceedings in England and India could fairly proceed simultaneously, the Court observed that the interpretation issue was a narrow one and its resolution in England was unlikely to inconvenience the court in Delhi.

The company insisted that it had a viable substantive defence to the bank’s claim. However, the Court found that its arguments faced ‘fatal objections’ and had no reasonable chance of succeeding. In the circumstances, summary judgment was entered for the full amount claimed by the bank.