In the context of the claimant Afghan bank's entitlement to enforce certain counter-guarantees provided by the defendant Indian bank, the High Court has granted limited declaratory relief confirming the exclusive jurisdiction of the English court: Afghanistan International Bank v Yes Bank Ltd [2023] EWHC 3294 (Comm).
The decision is an interesting one for financial institutions facing disputes relating to cross-border trade finance documents (such as letters of credits and demand guarantees), which are governed by English law and which confer jurisdiction on the English courts. The decision continues the trend that the English court will take steps to respect and protect parties' choice of English law and exclusive jurisdiction in trade finance documentation (please see our previous blog post).
The decision was made against the backdrop of proceedings initiated by a third party in India, in which the Bombay High Court had granted interim injunctions prohibiting payment under the counter-guarantees (and related agreements). The English court was persuaded that the declaration would have some utility in assisting the Indian court to determine that it did not have jurisdiction over the counter-guarantees, and that granting such a declaration in respect of an English law contract between parties who were before the court would not interfere with the principle of judicial comity.
The present decision illustrates that the English court may be willing to grant a declaration as to its own jurisdiction over an English law governed contract, where it considers that such a declaration may have some effect on the relevant foreign court and can be granted consistently with the principle of comity. The more usual route by which the English court will police its own jurisdiction is by issuing an anti-suit injunction against a party that brings or threatens foreign proceedings in breach of an English jurisdiction clause (typically where the party that has brought the foreign proceedings is a party to the relevant contract containing the English jurisdiction clause, which was not the case here).
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