Re Credicom Asia Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Moore J |
| Judgment Date | 30 July 1999 |
| Neutral Citation | VG 1999 HC 14 |
| Docket Number | Civil Suit No. 20 of 1999 |
| Court | High Court (British Virgin Islands) |
| Date | 30 July 1999 |
High Court
Moore, J.
Civil Suit No. 20 of 1999
J.S. Archibald Q.C. Paul Webster and Dawn Smith for the petitioners
Gerard Farara Q.C. Ann Louise -Robinson for the applicants
Conflict of laws - Exclusive jurisdiction clause in contract — Dispute — Whether local jurisdiction ousted — Judicial discretion — Doctrine of forum non conveniens.
Facts: A petition was filed for the compulsory winding up of Colorado Credicom Asia Limited, an international business company in B.V.I. The petition was opposed by Credicom NV a creditor, who brought a Notice of Motion to dismiss the action. The opposer claimed that contract documents between the parties provided for mediation and failing that resolution of disputes under the exclusive jurisdiction of the courts of the State of New York.
Held: Parties should be bound by the terms of contracts which they have made regarding the jurisdiction in which their disputes would be settled. That factor alone and based upon authorities, entitle the judge in the exercise of his judicial discretion to grant a stay. Accordingly, it is ordered that the winding up proceedings be stayed with liberty of the parties to apply.
This matter began with a petition issued jointly by Colony Credicom, L.P. a Delaware Limited partnership with its principal place of business in Los Angeles California and Colorado Credicom, L.L.C, a Colorado Limited Liability Company with its principal place of business in Denver, (the petitioners) for the compulsory winding up of Colorado Credicom Asia Limited (the Company), which is a British Virgin Islands Company incorporated under the International Business Companies Act Cap. 291(the IBC Act). They also sought the appointment of Messrs Marcus Wide and Meade Malone as joint official liquidators. The petitioners relied on two statutory grounds prescribed by s.115 of the Companies Act. Cap 285, namely:
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(1) The company is unable to pay its debts; and
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(2) Alternatively that it was just and equitable that the company be wound up.
The company has not filed a notice of opposition to the petition and was not represented. The petition was however vigorously opposed by Credicom NV (the poser) which claims to be a creditor and contributory of the company. By notice of motion to dismiss action, the opposer urged that the suit be dismissed on the grounds that:
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(1) It was not open or permissible for the petitioners to commence compulsory liquidation proceedings before this court because of the existence of contract documents between the parties which provided for mediation and, failing that, for resolution of disputes under the laws of the state of New York under the exclusive jurisdiction of the courts of the State of New York in the United States of America.
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(2) The winding up petition brought in the BVI was in violation of contractual terms agreed between the parties which stipulated the application of New York Law and the exclusive jurisdiction of the Courts of New York.
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(3) Alternatively, the BVI is not the forum conveniens.
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(4) The petition is an abuse of the processes of the court.
The opposer also claimed damages and costs.
The petitioners responded to the motion to dismiss by branding it as being devoid of merit, as being a mere technical jurisdiction point, and as being a delaying tactic designed to thwart and frustrate them. They urged the dismissal of the Motion because:
“(1) this court has jurisdiction to wind up the company and is the only court which has the ability to wind up and dissolve the company;
(2) New York courts--the courts which NV say should determine whether the company should be wound up--have no authority to wind up the company and, if asked, would decline to exercise such authority;
(3) in any event, the private agreements on which NV relies in seeking to oust the statutory jurisdiction of this court do not apply to the relief requested in the petition-- namely, the compulsory winding up of the company; and
(4) even if he private agreements did purport to apply to the involuntary winding up of the Company (which they do not), this court should not exercise its discretion to stay or dismiss the petition because British Virgin Islands is both the necessary, and the most convenient, forum to wind up the company.”
The petitioners contended very powerfully that the Courts of the BVI are with the jurisdiction to wind up an International Business Company incorporated here. I agree. But that, with the greatest respect, is not the principal question which I am required to determine upon the hearing of the motion. The issue before the court upon the notion is this: Assuming that the courts of the BVI, do have jurisdiction to wind up an International Business Company incorporated here, is that jurisdiction ousted by the contract of the parties in which they stipulate that the laws of the State of New York should be applicable to the resolution of their disputes under the contract, and that the courts of that state should have exclusive jurisdiction o determine such disputes.
The second limb of the Issue is this: If the jurisdiction of the courts of the BVI is not ousted, does this court have the power to stay proceedings initiated here pending the hearing and determination of disputes in the designated courts of the state of New York U.S.A. applying the laws of that state; or is this court's only option the dismissal of the petition; or is it bound, as the petitioners demand, to hear and determine the petition upon its merits since the BVI is both the place of incorporation and the place of the company's domicile, and is the forum conveniens.
Mr. Webster, who at that stage had sole carriage of the case for the plaintiffs argued passionately that the jurisdiction of this court should be guarded jealously and that parties cannot oust the court's jurisdiction by private contract in favour of a foreign court. The Fehmarn [1958]1 All ER 333, Evans Marshall v Bertola S.A. [1973] 1 All ER 999; Pirrana Small Car Centres Ltd v Rumm, Measures and Kathcare Enterprises Ltd [1981] 5 WWR 79.
It must be noted at once that the two relevant clauses in the Fehmarn read as follows at page 334 F-G.
“Condition 26 says:
‘All claims and disputes arising under and in connection with the bill of lading shall be judged in the USSR’
Condition 27 says:
‘All questions and disputes not mentioned in this bill of landing shall be determined according to the Merchant shipping Code of the USSR.’
Those clauses cannot be described as ‘Exclusive jurisdiction’ clauses as on their face they do not seek to oust the jurisdiction of the English Courts. Lord Denning had no doubt that that was a case which properly belonged to the English Courts. However at page 335 H he observed” But still the question remains: ought these courts in their discretion to stay this action.” His Lordship did not regard the choice of law as decisive. He preferred to look to see with what county the dispute was most closely concerned. The Russian element seemed comparatively small. The case depended substantially on evidence in England and most important, the German shipowner did not object to the dispute being decided in England but wished to avoid the giving of security. The dispute was more closely connected with England than with Russia. So Lord Denning agreed with the judge that sufficient reason had been shown why the proceedings should continue in the English Courts and should not be stayed.
Hodson, L. J., came straight to the most salient point of the case in the opening limes of his judgment at p 336c when he said:
“The learned judge stated in his judgment [1957] 2 All ER at p 710) that:
‘Where there is a provision in a contract providing that disputes are to be referred to a foreign tribunal, then, prima facie, this court will stay proceedings instituted in this country in breach of such agreement ….”
That principle is well established and has been applied in a number of cases. MacKinnon L.J. in Racecourse Betting Control Board v. Secretary for Air [1994] 1 All ER 60 at 65) made it plain that that general principle was quite independent of s.4 of the Arbitration Act, 1889 (now s. 4 of the Arbitration Act, 1950) although in a number of cases where applications for stay have been made, argument has been addressed to the court and judgments have been delivered as if section 4 itself were being invoked.”
Referring to the case of the Athenee (1922) 11 Lloyd's Rep. 6) Hodson L.J. continued at page 336 E-F.
“I notice, however, that Atkin, L.J did not proceed on that basis, (s. 4 of the Arbitration Act) but founded himself on the general principles, which the learned judge stated and to which Mac Kinnon L.J. referred, that where parties have agreed that disputes should be referred to a foreign tribunal, there is no indisposition on the part of the courts of this country to give effect to such a bargain. He went on to say that such a bargain is treated to the equivalent of an arbitration clause, that is to say, the discretion is to be exercised- on the same lines as where there is an arbitration clause.”
Emphasis added.
Hodson, L.J. then commented upon the exercise of the discretion of the trial judge these terms at p 336:
“The learned judge in my view was quite correct in saying that on the authorities, particularly having regard to what was said in the Athenee, he had a discretion in considering whether a stay should be granted and he was entitled to take into consideration in exercising his discretion matters of convenience. For my part I cannot see that he erred in any way in so doing and, if that is so, it is not for this court, in my judgment, to substitute its discretion for his.”
Morris, L.J. was of the same opinion. He too endorsed the views of MacKinnon, L.J. in the Racecourse Betting Control Board Case...
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