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Impala Warehousing and Logistics (Shanghai) Co Ltd v Wanxiang Resources (Singapore) Pte Ltd

25th Mar 2015

On Thursday 26 March 2015, the Honourable Mr Justice Blair handed down judgment in a dispute arising out of the major fraud that appears to have occurred in connection with a vast quantity of metal held in a bonded warehouse at the port of Qingdao in China.

Wanxiang, as the endorsee of two Warehouse Certificates that had been issued for a cargo of 5004.343 metric tonnes of aluminium stored at the warehouse, had commenced proceedings against Impala Shanghai in China seeking the recovery of the goods, alternatively damages. Impala Shanghai, however, sought mandatory and prohibitory injunctive relief from the English Court, requiring

Wanxiang to discontinue the Chinese proceedings and restraining it from commencing or prosecuting any claim otherwise than before the English Courts, on the basis that the Warehouse Certificates incorporated an exclusive English jurisdiction clause: “All contracts between the Company and the Customer and any claims relating to the Goods shall be governed by the law of England and disputes dealt with exclusively by the English courts.” Wanxiang sought to argue that its claim in China should be characterised as a non-contractual claim, with the consequence that Chinese law would apply to determine whether it was subject to the exclusive English jurisdiction clause, and the Chinese Courts had already determined that it was not. Blair J disagreed. The Chinese courts themselves had classified the claim as a contractual one and it was to be understood, in English terms, as a claim in bailment on terms. As the Judge held: “In a commercial transaction like this, no warehouse would accept goods for storage except on terms.”

Wanxiang alternatively argued that the exclusive English jurisdiction clause had not been incorporated into the Warehouse Certificates, as the terms of a Collateral Management Agreement, which Wanxiang had concluded with its financier, Rabobank, and another company in the Impala group of companies, Impala UK, was said to be the controlling agreement. Again, Blair J disagreed. Whilst Impala UK had agreed to provide services under the terms of the CMA, the contractually agreed structure also provided for Warehouse Certificates to be issued by Impala Shanghai on the terms in which they were in fact issued. In any event, the CMA ceased to have any relevance to the facts of the present case once Wanxiang had repaid its borrowing from Rabobank.

It followed, as a matter of principle, that the Court should give effect to the exclusive English jurisdiction clause, unless Wanxiang could establish a strong reason for departing from it. Donohue v Armco Inc [2002] 1 Lloyd’s Rep 425 applied. The real issue in this regard focused on the prejudice Wanxiang would suffer in light of the fact that any judgment of the English Court would not be enforceable against Impala Shanghai in China, given the absence of a reciprocal enforcement arrangement.

As to this, the Judge accepted that, in a rare case, the fact that an English judgment would not be enforceable in a foreign country could amount to a strong reason for refusing to grant an anti-suit injunction. On the facts of the present case, however, Impala Shanghai had sought to meet any prejudice by indicating a willingness to arbitrate the underlying dispute with Wanxiang, it being common ground that an arbitral award would be enforceable in China. In these circumstances, the Judge granted Impala Shanghai the mandatory and prohibitory injunctive relief sought, on condition that it formally made an offer to arbitrate the underlying dispute in Hong Kong.

To view the judgment please click here.