Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd

Should the judgment be stayed?

1. This Court will not enforce a contract where performance of the contract is forbidden by the law of place where it must be performed. [4]
2. The Bank, or at least its Shanxi branch, remains constrained by the Civil Ruling from making payment under the Letter of Credit.
3. The Bank submitted that the judgment should be stayed until the earlier of the discharge of the Civil Ruling or the recognition of this Court's judgment by a court of competent jurisdiction in the People's Republic of China.
4. The Bank pointed to the decision of Ramsey J in AES-3C Maritza East 1 Eood v Credit Agricole Corporate and Investment Bank (previously known as Calyon Corporate and Investment Bank). [5]
5. In that case, injunctions issued by the Tribunal de Commerce de Nanterre prevented payment under the bond in question, but were silent as to a payment that took a different form, for example payment pursuant to a judgment.
6. In those circumstances, Ramsey J concluded: "What the French injunctions do is to prevent Calyon from currently complying with their obligations under the Bond or that judgment. What Ralli Bros [6] establishes is that the English court will not, in such circumstances, require Calyon to act in a manner which is illegal under French law because of the existence of the injunctions. The expectation would be that on the basis of this judgment, handed down by a court which has jurisdiction to determine liability under the Bond, the French Court would discharge the injunction. That however is matter for the French Court." [7]
7. The Bank should be encouraged to do what it can to draw this Court's decision to the attention of the Chinese Court and, now that the merits of the parties' competing contentions concerning the Letter of Credit have been determined in Gosford's favour, seek to have the Civil Ruling discharged.
8. The Bank is the "Third Party" named in the Civil Complaint and is bound by the Civil Ruling. Although in one sense it might be thought not to be in the Bank's interest to seek to have the Civil Ruling discharged, it is my expectation, now that I have decided the case adversely to it, that it will do all that it can to achieve that result.
9. I am confident that this will be the Bank's position.
10. It will be recalled that in March 2023, and independently of these proceedings, the Bank sought to have the Civil Ruling discharged. [8]
11. Gosford has not yet been served with the Civil Complaint although Mr Galvin, who appeared for Shinetec on 14 December 2023, stated that this would shortly occur.
12. Whether Gosford would be seen by the Chinese Court as having standing to make an application for the discharge of the Civil Ruling is by no means certain.
13. But what Gosford can do is now to seek to have the judgment entered in its favour recognised in a court of competent jurisdiction in China.
14. In those circumstances, yesterday I ordered that the judgment against the Bank be stayed until further order.
15. I now make the following directions: 1. Direct that the parties notify my Associate by 1 March 2024 of such steps as have been taken in relation to the Civil Ruling and for the recognition of this Court's judgment in China and the outcome of those steps. 2. List the matter for directions before me at 9.30am on 8 March 2024 for the purpose of considering whether the stay on the judgment should be lifted.
16. I respectfully invite the Taiyuan Intermediate People's Court of Shanxi Province and, if appropriate, the Shanxi Higher People's Court, to consider this Court's reasoning for concluding that Gosford is entitled to judgment against the Bank arising from the Letter of Credit, and to consider whether the Civil Ruling should be discharged, now that the parties' competing contentions concerning the Letter of Credit have been dealt with and determined by this Court.

Costs

1. The Bank wishes to make submissions as to the extent to which it should bear Gosford's costs of the proceedings in circumstances where, at hearing, Gosford did not press a number of contentions that it had hitherto agitated.
2. Gosford and the Bank will now agree a timetable for any evidence, and short submissions on that topic.
3. I will deal with that question on the papers, unless either party seeks a hearing.

Endnotes

1. Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405 ("Principal Judgment").
2. Principal Judgment at [165].
3. Principal Judgment at [176]-[239].
4. Principal Judgment at [254]-[255].
5. [2011] EWHC 123 (TCC).
6. Ralli Brothers v Compania Naviera Sota v Aznar [1920] 2 KB 287.
7. At [67].
8. Principal Judgment at [76]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2023