China Export & Credit Insurance Corporation -v- Emerald Energy Resources Limited

On 22 June 2018, following a two day hearing, Sir Richard Field in the Commercial Court handed down judgment rejecting an application to stay a claim commenced in England under a non-exclusive jurisdiction clause.

The Claimant (“Sinosure”) is a Chinese insurance company. The Defendant (“Emerald”) is a Nigerian oil company.

On 30 June 2008, Emerald issued a 3-year promissory note (“the Promissory Note”) in the amount of US$66.5 million as part of a refinancing facility issued by Standard Chartered Bank (Hong Kong) in order to enable Emerald to discharge a liability relating to an oil project in Nigeria. The Promissory Note was governed by English law and contained a non-exclusive jurisdiction clause providing that “The Issuer [Emerald] hereby submits to the non-exclusive jurisdiction of the English courts in respect of any legal action or proceedings arising out of or in connection with this Promissory Note”.

The Promissory Note was subsequently assigned to Sinosure, which had provided an insurance policy to Standard Chartered Bank on which it had called following Emerald’s default on the Promissory Note in June 2011. The loan documentation made it clear that, in such eventuality, the Promissory Note could be assigned to Sinosure.

Emerald defaulted on the Promissory Note, after having made a number of payments.

Sinosure commenced proceedings against Emerald in debt or damages under the Promissory Note, relying on the non-exclusive jurisdiction clause in favour of the English courts. Subject to the following arguments, it was accepted that Sinosure’s claim fell within Article 25 of the Recast Judgment Regulation and that there was no jurisdiction to stay the claim on forum non conveniens grounds. However, Emerald argued that the Court  should stay Sinosure’s claim either (a) under s9 of the Arbitration Act 1996; (b) on case management grounds; or (c) because of an alleged compromise agreement entered into between Sinosure and Emerald relating to a payment plan agreed in 2013.

Sir Richard Field rejected each of Emerald’s arguments. In particular, he held that:

(1)    Sinosure’s claim fell within the scope of the non-exclusive jurisdiction clause in the non-exclusive jurisdiction clause. It did not fall within the scope of an earlier arbitration agreement in a contract between Sinosure and Emerald relating to the underlying oil project. Nor were the proceedings brought in respect of a matter that was to be referred to arbitration under the arbitration agreement;

(2)    There were no rare and compelling grounds for a case management stay;

(3)    No binding compromise agreement was reached in 2013, alternatively (if there was) Emerald’s failure to meet the payment plan revived its liability on the Promissory Note.

A copy of the judgment is available here.

In addition, at the handing down of the judgment, Sir Richard Field issued an interim anti-anti suit injunction preventing Emerald from carrying out threats to obtain an anti-suit injunction from the Nigerian court to stop the English proceedings from going ahead. This was on the basis that there was at least a serious issue to be tried that the proposed Nigerian anti-suit injunction was a breach of contract and/or vexatious and oppressive and that there was a real risk that, unless restrained, Emerald would carry out its threat. The return date at which Sinosure will seek a final anti-anti-suit injunction is due to take place on 10 August 2018.