[See the terms of paras 17, 18 and 19 of the contentions]
75 To my mind also so embraced are questions of breach of such suggested terms and plainly enough, it seems to me, the questions raised by clause 23 of the contentions which makes very plain that questions of the repudiation and acceptance of repudiation of the supply agreement are intimately and necessarily connected with questions of when and if and with what legal consequences, the surety agreement was brought to an end as to all rights and liabilities under it.
76 To do justice to the arguments put by Mr Dubler in support of Mr Cotman's submissions, and as I understand it accepted by Mr Cotman in the same regard, those submissions seek to separate out as different contracts the supply agreement and the suggested agreement to which Gulf, OCE, BMCE and/or the Bank were parties. The submission was that the mere existence, should the Court so hold, of an exclusive jurisdiction clause within the supply agreement, could not possibly, on any basis, be said to extend to other agreements albeit entered into by the plaintiff and OCE, if also party to those other agreements, were third parties, namely here BMCE and/or National Bank.
77 To my mind the submissions of Dr Birch on this area are of substance. His submissions are that the materials before the Court do not suggest there to have been any tripartite agreement nor any agreement between all four parties. On his submissions the dominant and operative question for present purposes is simply whether OCE acted wrongfully against Gulf when making its demand of BMCE, which in turn of course carried through when BMCE made a demand on the Bank. On Dr Birch's submissions the answer to that question can only be given by reference to the terms and conditions express and implied of the supply agreement.
78 To my mind it is plain that any of the implied terms sought to be propounded by Gulf in paragraphs 17, 18 and 19 of the contentions can only be imported by reference to the express terms and conditions of the supply agreement, going outside those terms only by applying usual principles dealing with implied terms. See Codelfa.
79 I turn next to the discretionary considerations which are the subject of submissions.
80 It is common ground, as I understand it, that the Court having held that article VI is an exclusive jurisdiction clause, the forum non conveniens test is not applied and the Court commences from the position that the parties should be held to their bargain. The proper approach is that taken in FAI v Ocean Marine 41 NSWLR at 569 and in particular in the passage earlier referred to under the heading "The exercise of jurisdiction".
81 In short, a stay should be granted unless strong cause for not doing so is shown by Gulf. Has then the plaintiff discharged the burden of proving strong cause for the Court not exercising its jurisdictions by granting a stay?
82 The plaintiff's submissions seeking to discharge this burden of proof involve the following matters.
83 The plaintiff suggests that there was certainly a central issue which arose as between the plaintiff and the first defendant, namely whether the particular documents proffered by OCE as its letters of credit in purported performance of the contract, or any of them, were confirmed irrevocable letters of credit referred to in the supply contract. The plaintiff's submissions in this regard followed submissions as to a number of suggested clear non-issues in the proceedings.
84 The submissions' structure was, firstly, to identify that the proceedings were brought pursuant to the supply agreement Gulf and OCE - claim for damages; secondly, the surety contract Gulf - OCE for restitution or damages; thirdly, the alleged surety contract Gulf - NAB - BMCE - OCE - for an injunction to restrain payment by NAB to BMCE; and fourthly, the insurance contract ABS - EFIC - the claim for indemnity in relation to the loss for wrongful call by OCE on BMCE under the surety contract.
85 Mr Cotman's submissions then were that there is no issue but that OCE called on BMCE to pay the surety bond to it as a result of Gulf's failure to deliver the meat called for under the supply agreement. The submissions were further that the terms of the supply agreement were not in issue. Of course it goes without saying it would seem that the proper construction of those terms may well be in issue.
86 I interpolate that unless and until the defences of the three defendants are before the Court it will not be possible to be entirely clear as to precisely what the issues to be raised by any or all of them are. Plainly enough the first defendant has not yet filed a defence.
87 Mr Cotman's submissions then include that there is no issue but that the only matter raised by Gulf as discharging it from its obligation to deliver the meat is the failure by OCE to put in place a letter of credit complying with the contractual requirements of the supply agreement.
88 A further suggested non-issue is put by the plaintiff in terms of the supply agreement as having required OCE to procure the irrevocable confirmed letter of credit in time for shipment to be made in conformity with the supply contract, it then being submitted that there is no issue but that OCE purported to issue the documentary letters of credit in conformity with the contract.
89 As to the suggested central issue, paragraphs 15 to 18 inclusive of the plaintiff's submissions have already been set out. The plaintiffs further submitted as follows:
'It is submitted that one reason the Court would not grant a stay is that if the contract that contains the exclusive jurisdiction clause itself calls for a matrix of other contractual arrangements, some of which will not be connected to the jurisdiction nominated in the contract, the Defendant cannot complain if the Plaintiff seeks to litigate those issues in another jurisdiction. That is the case here where the Supply Contract, by calling for a Performance Bond, calls up a series of contracts extending from ABS Gulf through NAB to BMCE top OCE to provide the guarantee itself and a contract ensuring loss under that guarantee between ABS Gulf and EFIC.
In fact, the only issue in the case that is to be litigated wholly within the four corners of the Supply Agreement, is the claim for damages for breach of the Supply Agreement ABS Gulf against OCE.
All other issues in the case fall to be litigated under or in relation to the Surety Agreement. While the obligation to produce a surety arises under the Supply Agreement, the Surety Agreement itself does not. The Surety Agreement is a four party arrangement between ABS Gulf, NAB, MBCE and OCE. Under that contract NAB at the request of ABS Gulf requested BMCE to go surety to OCE. BMCE did so by the correspondence annexed and translated in the affidavit of Mr Colinard of 26 May 1999, see Annexures 'A', 'B' and 'C' to that affidavit.
A relevant issue is whether there are domestic Australian proceedings raising the same issues as the proceedings that it is sought to stay: see LEP International Pty Limited v LAN Traffic Expressed Service Inc (1987) 10 NSWLR 614 at 620.
If the analysis of the issues of the case set out above is correct, there is no domestic Moroccan evidentiary issue that can concern the various people listed in Mr Hilmer's affidavit. That is because the only issue in contest is whether OCE produced an irrevocable confirmed letter of credit in satisfaction of its contractual obligations. It is common ground that no letter of credit was ever confirmed. Therefore the issue can only be whether what was supplied by OCE, via BMCE, to ABS Gulf was confirmable but was not confirmed for some reason unrelated to the position of OCE and BMCE. It is for that reason that Mr Colinard deposes that it is anticipated the principle evidentiary issue will be whether what was received by ABS Gulf could have been confirmed. As the Plaintiff would understand it, that is a matter for bankers other than BMCE. It is conspicuous that the BMCE expectation was of confirmation by an Australian Bank in that it requested that ANZ to confirm the documents in favour of ABS Gulf, which ANZ declined to do: see affidavit of McGuid, 14 October 1998, Annexure 'B' being ANZ letter of 19 September 1998 and McGuid affidavit of 17 September 1998 Annexure 'D' being ANZ letter of 28 August 1998 and the same affidavit Annexure 'I' being ANZ letter of 9 September 1998, each of which letters notifies ABS Gulf that ANZ declines to confirm the documents notwithstanding the request of BMCE. Prima facia the relevant population of bankers for the purposes of ascertaining whether the letters of credit were confirmable, though not confirmed, is Australian bankers.
In relation to the proceedings concerning the surety sum and the insurance thereof, the most convenient forum for determination of those issues is Australia.
As to the elements relevant for consideration in relation to forum non-conveniens the following matters are submitted to be relevant:
(a) There is no issue of fact as to the only matter contended to be a breach of the Supply Contract that would justify seizure of the deposit being, the Plaintiffs' failure to deliver meat in conformity with the time schedules provided for in the Contract.
(b) On the other hand, there is no issue that the contract provided for the First Defendant to supply a confirmable irrevocable letter of credit to the Plaintiff in sufficient time to allow shipment to Morocco in conformity with the contractual time stipulations in the Supply Contract. The only evidence before the Court is that while a great many documents were submitted by the First Defendant to the Plaintiff as letters of credit satisfying its contractual obligations no banker, including BMCE at its Paris branch, or ANZ in Australia (BMCE's local correspondent) would confirm the documents.
In the absence of a Defence it is impossible to know whether OCE:
(a) disputes that it was in breach of its obligation to supply a confirmable irrevocable letter of credit but contends that it was nonetheless entitled to seize the Performance Bond; or
(b) asserts that what it supplied was a confirmable irrevocable letter of credit conforming to the contract, so that the Plaintiff was in breach of contract in failing to deliver.
On either of the positions the Defendant might adopt there is no "Moroccan" issue. The first of the contentions must simply arise on a construction of the Supply Contract in order to determine whether the Plaintiff could be in breach of the contract by non-delivery notwithstanding that it had not been provided with a confirmable irrevocable letter of credit. On the second issue, that what was provided by OCE as a confirmable irrevocable letter of credit was such notwithstanding the Plaintiffs' failure to obtain confirmation of the document from any bank, that is an issue to be resolved according to the law and practices of bankers outside Morocco because it is to bankers in the exporters country that one would first look for confirmation and finance based on that confirmation.
In short, it appearing from the affidavit of Mr Collinard that the law of Morocco is the same as the law of England and Australia as to the interdependent nature of the obligation to pay and the obligation to deliver goods under a contract for supply and the nature of the payment called for under the contract being described in uncontroversial and unambiguous terms, the only issue is whether there is some answer to the experience of the Plaintiff that the documents proffered by the First Defendant did not answer to contractual description in that no bank would confirm them.
In short, in relation to the present claim in relation to the wrongful appropriation of the Performance Bond there is simply no pressing reason why that issue would not be determined in Australia.
The determination of that issue will also affect two pieces of litigation which are wholly domestic:
(a) the injunction against National Australia Bank paying the monies called for under the Performance Bond; and
(b) proceedings against Export Finance Insurance Corporation, the Plaintiffs' insurer under a "unfair call" policy in relation to the Bond.'
90 Mr Dubler, in adding to those discretionary considerations and by and large supporting Mr Cotman's submissions, submitted that a further discretionary consideration which weighed strongly against the Court here staying the proceedings, involved the fact that the parties have taken as a given that the proceedings in so far as issues between the plaintiff and EFIC are concerned can on no conceivable basis be otherwise than dealt with by this Court. In those circumstances Mr Dubler raises a spectre, should these proceedings in so far as they involve the plaintiff, the first defendant and the National Bank be stayed. There is, it is submitted, a possibility that the courts of Morocco may find one way on the question of whether or not the letter of credit proffered complied with article VI, only to find that the very same issue but with other witnesses and evidence might have to be determined again in this jurisdiction, when and if the plaintiff's proceedings against the third defendant would be pursued.
91 To my mind, and having taken into account all of those discretionary considerations, the position on the evidence is that the plaintiff has not shown strong cause for the Court not to exercise its jurisdiction by granting a stay.
92 Whilst it is clear that the submissions opposing the grant of a stay seek to rely upon the several sets of issues now raised, there having been brought into existence following the supply agreement the so-called ancillary agreements or arrangements, the most significant matter is simply that the parties have solemnly and in writing, regardless of which of the translations be preferred, by article VI in the supply agreement clearly stated their mutual agreement that disputes arising from, ensuing from or relating to the supply agreement, are to be determined by the courts of Casablanca.
93 I am by no means satisfied that any of the discretionary factors put forward by Mr Cotman or Mr Dubler are sufficient to require the Court's discretion to be exercised otherwise than by granting a stay of the proceedings. It is common ground, as I have understood it, that the courts in Casablanca are competent to hear the proceedings in so far as the respective rights and obligations of Gulf and OCE are concerned. The position in so far as other parties are concerned and the contractual relationships between other parties are, subject to the question of EFIC, likely to be determined when the courts of Casablanca determine the issues of fact and law which separate Gulf from OCE.
94 There are a number of discretionary considerations which plainly, it seems to me, favour the courts in Casablanca hearing the matters which separate OCE and Gulf. Importantly of course the contract was written in French. French is a language regularly used in the courts of Morocco. The Laws of Morocco and the codes, civil code, commercial code and criminal code are published both in Arabic and French. Contracts under Moroccan Law may be written either in French or Arabic to be valid. The civil and commercial codes are either those codes established in Morocco during the French Protectorate or those which are drawn on essentially French sources. To the best of the knowledge of the Moroccan Consul there are no Moroccan lawyers in Australia nor any Australian lawyers with any expertise in Moroccan law. [See affidavit of B. Hillman of 13 May 1999, paragraphs 1-12].
95 There is then as a discretionary consideration also, the question of what is the proper law of the supply contract.
96 The question of whether or not the proper law of the supply contract is the law of Morocco, I accept, may be reached in the first instance by inference from the form of the contract and its terms - this occurs where there is no express choice of law clause, as opposed to a choice of jurisdiction clause. I accept that the appropriate test is to ask whether in the contract:
". . . the parties have by its express terms or by necessary implication from the language used evinced a common intention as to the system of law by reference to which their mutual rights and obligations under it are to be ascertained" - see Amin Rasheed Shipping Corporation v Kuwait Insurance Co (1984) AC 50 at 61.
97 I accept that, if no inference can be drawn as to the unexpressed intention of the parties, then the proper law of the contract is to be determined as that system of law "with which the transaction has its closest and most real connection", re United Railways of Havana v Regla Warehouses Ltd (1960) Ch 52 at 91 and see Conflict of Laws in Australia, 6th edition by P E Nygh pp 292-301.
98 The principle is that where the parties to the contract have expressly chosen a foreign court or tribunal for the determination of disputes under the contract, then while not conclusive, this will usually raise a strong presumption that the proper law of the contract is the law of that foreign court or tribunal (see John Kaldor Fabric Maker v Mitchell Cotts Freight (Aust) Pty Ltd (1989) 18 NSWLR 172 at 187:
"Prior to the decisions in James Miller & Partners Ltd v Whitworth Street Estates and Compagnie d'Armement Maritime SA v Compagnie Tunisienne, it was generally thought that an express provision in a contract referring disputes under the contract to arbitration in a particular country, or to resolution by reference to the laws of a particular country justified the conclusion that the law of that country was the proper law of the contract, either on the basis that the appropriate inference was that that was the actual intention of the parties, or on the basis that that provision justified the imputation to the parties of that intention: see Hamlyn (at 207-208, 212-213, 215 and 216); Spurrier v La Cloche [1902] AC 446 at 450; NV Kwik Hoo Tong Handel Maatschappij v James Finlay and Co Ltd [1927] AC 604 at 608 and 609-610 and Tzortzis v Monark Line A/B [1968] 1 WLR 406 at 414; [1968] 1 All ER 949 at 954.
However, since the decisions in James Miller & Partners Ltd v Whitworth Street Estates and Compagnie d'Armement Maritime SA v Compagnie Tunisienne, it has been accepted in England (see, eg, Astro Venturoso Compania Naviera v Hellenic Shipyards SA (The "Mariannina") [1983] 1 Lloyd's Rep 12 at 14) that the effect of those decisions is to reduce the importance of an arbitration clause. As Lord Wilberforce put it in Compagnie d'Armament Maritime SA v Compagnie Tunisienne (at 600):
"My Lords, for the reasons given I am of opinion that this language is too strong, too absolute. Neither authority nor commercial reality supports the necessity for so rigid a rule. An arbitration clause must be treated as an indication, to be considered together with the rest of the contract and relevant surrounding facts. Always it will be a strong indication; often, especially where there are parties of different nationality or a variety of transactions which may arise under the contract, it will be the only clear indication. But in some cases it must give way where other indications are clear."'
99 To my mind the proper law of the supply contract is the law of Morocco. That the proper law of the supply contract is the law of Morocco is of course of relevance as a discretionary consideration.
100 Since French is a language regularly used in Moroccan courts, plainly enough there would not in Moroccan courts be the same requirements concerning interpretation of the contract as would have to occur in Australia through translators. An example of the difficulties in different translations has already been referred to in relation to the proper construction of article VI.
101 The contract, namely the supply contract, the written contract of 22 May 1998, was entered into in Morocco. The principal place I accept, of performance of the contract, is Morocco. BMCE is a Moroccan corporation, OCE is a Moroccan corporation. A further discretionary consideration is that proceedings on the contract in Morocco are able to be conducted in the language of the contract.
102 Returning briefly to the implied terms upon which the plaintiff founds earlier referred to.
103 Dr Birch submitted that effectively the plaintiff, in seeking to make good its implied terms case, is seeking to read into article V after the words "Moroccan Bank" on the second line, words to the effect "and that OCE will not call upon the bank under the instrument unless there has been a breach by the supplier of the terms of the contract". It seems to me that that is a submission of substance. In short, the undertaking of Gulf to deliver to OCE referred to in article V is, and its proper construction and any implications to be imported in relation to that matter are, the essential gravamen and basis of the matters put in para 17 to 19 of the amended summons.
104 It is necessary then to deal with two particular further topics and costs. The first relates to the position which is to obtain in relation to the existing interlocutory regime in place by the injunctions against the bank. The second relates to the discrete question of the way forward as between the plaintiff and EFIC.
105 Following the reasons above given, it will be apparent that the Court is disposed to stay the proceedings permanently in so far as the plaintiff's proceedings against the first defendant is concerned.
106 I have no doubt but that the injunctions presently extant against the bank require to be continued until further order, the spirit and intent of the short minutes of order being that those injunctions will continue up to a point in time when there is an application to discharge the injunctions, again depending as the Moroccan proceedings are determined one way or the other.
107 I will hear from the parties in a moment on the subject of costs but the question which counsel can see I have had some requirement for assistance on your submissions is the formal order as far as the proceedings against the National Australia Bank are concerned.