Suzlon Energy Limited v Frankfurter Bankgesellschaft [2012] FCA 465 | Case summary

Federal Court of Australia|2012-05-07|Before: Mr J, Foster J

Introduction 51 The stay judgment and the orders made on 2 March 2012 are interlocutory. An appeal cannot be brought from an interlocutory judgment unless the Court or a judge gives leave to appeal (s 24(1A) of the Federal Court Act). Leave to appeal is, therefore, required in the present case before the Suzlon group can appeal from the stay judgment and the 2 March 2012 orders. An application for leave to appeal must be heard and determined by a single judge unless a judge directs that the application be heard and determined by a Full Court (s 25(2)). 52 During the argument before me, Senior Counsel for the Suzlon group submitted that I should not deal with his clients' application for leave to appeal and that, instead, I should direct that it be heard by a Full Court. On occasion, single judges do refer applications for leave to appeal to a Full Court, usually on the basis that the leave application is to be heard and determined at the same time as the consequential appeal, upon the assumption that leave might ultimately be granted. Referring an application for leave to appeal is not the preferred option under s 25(2) of the Federal Court Act nor is it the preferred option according to the practice of the Court. The decision to refer is a discretionary decision. The discretion must be exercised judicially. There has to be good reason for departing from the more usual course. 53 There is nothing about the present case which would justify my referring the Suzlon group's application for leave to appeal to a Full Court. The matter relied upon by the Suzlon group as justifying such a referral viz the circumstance that the stay granted by the primary judge operates against only some of the parties to the proceedings below, leaving the balance of those proceedings against the remaining parties to be pressed to finality, should the Suzlon group wish to do so, does not justify referral. That circumstance is a factor relevant to the exercise of the discretion whether or not to grant a stay, nothing more. It does not raise any important question of general principle.

The Relevant Principles 54 As I have already mentioned, the decision of the primary judge concerned a matter of practice and procedure and involved the exercise of a discretion. Its impact upon the Suzlon group and upon the three Swiss banks was nonetheless significant. However, the orders of the primary judge did not finally determine the rights of the parties affected by the stay. Neither in a legal nor in a practical sense have those rights been finally adjudicated upon. All that has happened is that, for so long as the stay remains in place, the Suzlon group will be compelled to seek vindication of their alleged rights against the Swiss banks in the courts of another country - most probably in the courts of Switzerland. 55 As the Full Court said in Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156, at [26]-[30]: 26 In this Court, it is well established that the relevant test (or "litmus test") for whether leave to appeal from an interlocutory judgment will be granted, comprises the following two integers: (1) Whether, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant its being reconsidered by the Full Court; and (2) Whether substantial injustice would result if leave were refused supposing the decision to be wrong. (Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400). 27 In Bienstein v Bienstein (2003) 195 ALR 225 at [29] (p 231), McHugh, Kirby and Callinan JJ said that: "The principles that govern the grant of leave to appeal are well established. An applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave. The applicant must also show that substantial injustice will result from a refusal of leave to appeal." 28 The test for leave to appeal explained by the High Court in Bienstein v Bienstein is the same test as the Full Court had earlier articulated in Décor. 29 As the Full Court itself said in Décor, the test which it described is appropriate for the general run of cases. The test should not, however, be applied as if it were some hard and fast rule. Each case must be considered on its merits. 30 In Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564, French J (as he then was) (with whom Beaumont and Finkelstein JJ agreed), when dealing with the principles which generally govern the grant of leave to appeal from an interlocutory decision in relation to a matter of practice and procedure, said (at [43]-[44]) (pp 584-584): 43 Artificial distinctions may be drawn because of the requirement that the Court looks to the legal rather than the practical effect of the order in question - Carr at 248 (Gibbs CJ) 256 (Mason J). But such artificiality as may arise can be overcome by a sensible exercise of the discretion to grant leave informed by the underlying policy of that requirement. Interlocutory orders cover a spectrum from those concerned solely with the mechanics of case management and pre-trial preparation to those which may, for one reason or another, have a significant impact upon the scope and outcome of the proceedings. If the order, the subject of the application for leave to appeal, is concerned with the mechanics of the pre-trial process then the scales are likely to be weighted against the grant of leave. However if while interlocutory in legal effect it has the practical operation of finally determining the rights of the parties "a prima facie case exists for granting leave to appeal" - Ex parte Bucknell (1936) 56 CLR 221 at 225; Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400; Minogue v Williams [2000] FCA 125 at [18]. If a proceeding is dismissed because it is frivolous or vexatious or because no reasonable cause of action is disclosed the decision is treated as interlocutory. However leave will usually be granted in such a case if there is any doubt about the decision at first instance - Little v Victoria [1998] 4 VR 596 at 598-600 and 601 (Callaway JA, Buchanan JA agreeing). 44 The Full Court in Minogue restated the two tests enunciated in Decor Corporation which have been developed to justify the grant of leave to appeal from an interlocutory order. The first is that the decision at first instance should be attended with sufficient doubt to warrant its reconsideration on appeal. The second is that substantial injustice would result if leave were refused. The present case is one in which the decisions in question have allowed causes of action to go forward which the respondents and other parties say are untenable and should be struck out. It was contended for BHP that, in so far as the decision of 3 March 2000 involves rejection of the contention that the s 52 claim is colourable and that the Court lacks accrued jurisdiction to deal with the common law claim, this was a decision that fully determined the rights of the parties and that leave to appeal was not required in respect of it. The "decisions" referred to however were findings underlying an order, the relevant order being to allow the amendments to the statement of claim. 56 In Ex parte Bucknell (1936) 56 CLR 221 at 225, the High Court held that, when considering an application for leave to appeal from an interlocutory judgment of the Supreme Court of a State or Territory, the Court would examine the circumstances of each case and that, unless the circumstances were exceptional, the Court would not grant leave to appeal if it formed a clear opinion adverse to the success of the proposed appeal. 57 In Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) (2011) 85 ACSR 531 at [11]-[14], Mansfield and Foster JJ, who were in the majority, said: 11 Where the matter concerns a discretionary interlocutory ruling on a matter of practice and procedure, rather than in relation to a substantive right, leave to appeal is less often given. In Hogan v Australian Crime Commission (2010) 267 ALR 12, the High Court (French J, Gummow, Hayne, Heydon and Kiefel JJ) at [34] said: "Appellate intervention in matters of practice and procedure, where no questions of general principle are at stake, has been said to require the exercise of particular caution." 12 That approach reflects the approach of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, and in particular in the joint judgment of the plurality (Gibbs CJ, Aickin, Wilson and Brennan JJ) at 177 where their Honours cited with approval the well known passage of Jordan CJ in Re Will of FD Gilbert (dec.) (1946) 46 SR (NSW) 318 at 323. There his Honour said: " ... I am of opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight reign were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal." 13 In Bomanite Pty Ltd v Slatex Corp Aust Pty Ltd (1991) 32 FCR 379 at 387, Gummow J said: "It is not a matter of saying that the discretion miscarried because the result strikes one as perhaps harsh or because one might have exercised the discretion differently. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course." 14 Hence, there must be some error of law or logic which is apparent on the face of the reasons or which is implicit in the result, and which would cause substantial injustice if the Full Court refused leave to appeal. 58 When considering an application for leave to appeal in a matter such as the present case, the Court will examine the applicant's prospects of success in the appeal, were leave to be granted. In evaluating the Suzlon group's prospects of success in any appeal, the Court is obliged to keep firmly in mind that the subject matter of the putative appeal is an interlocutory judgment in relation to a matter of practice and procedure. In order to succeed in such an appeal, it would not be enough that the appeal court might be persuaded that it would or might have made a different decision had it been in the position of the primary judge (House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ). As their Honours said at 505: 38 In an appeal such as this, it is not enough that this Court might have made a different decision had it been in the position of the primary judge (House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ). As Dixon, Evatt and McTiernan JJ said in House v The King at 505: If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. Unlike courts of criminal appeal, this court has not been given a special or particular power to review sentences imposed upon convicted persons. Its authority to do so belongs to it only in virtue of its general appellate power. But even with respect to the particular jurisdiction conferred on courts of criminal appeal, limitations upon the manner in which it will be exercised have been formulated. See also Norbis v Norbis (1986) 161 CLR 513 at 518-519 per Mason and Deane JJ. 59 In later cases, justices of the High Court have said that, in respect of appeals against decisions involving discretionary judgment, there is a strong presumption in favour of the correctness of the decision appealed from and that that decision should be affirmed unless the appeal court is satisfied that it is clearly wrong (see Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621 at 627 per Kitto J; and Mallet v Mallet (1984) 156 CLR 605 at 634 per Wilson J). 60 I propose to apply these principles in the present case.

The Submissions of the Suzlon Group 61 The Suzlon group submitted that leave to appeal should be granted for three reasons: (a) The practical effect of the stay granted by the primary judge is to determine finally the Suzlon group's claims against the three Swiss banks in Australia. (b) The reasons given by the primary judge for granting the stay are attended by sufficient doubt to warrant reconsideration by the Full Court. (c) Because the Suzlon group will now be compelled to pursue their claims against the Swiss banks in a different country, there is a real prospect that injustice will result: … in the form of the additional cost and inconvenience of multiple litigation and the attendant risk of inconsistent judgments. 62 Senior Counsel developed the second and third of these reasons. 63 It was submitted that: (a) The primary judge erred by taking into account the proposition that the Swiss banks would not be able properly to defend themselves in the proceedings below because of the operation of the Swiss banking secrecy laws. His Honour wrongly concluded that those laws would have the consequence that the Swiss banks would suffer significant injustice if forced to defend themselves in Australia. His Honour failed to consider available procedural safeguards or the possibility of seeking the co-operation of the appropriate court in Switzerland. (b) The primary judge erred by concluding that there was an overwhelming preponderance of factors in favour of granting a stay. His Honour failed to take due account of the fact that there are other defendants in the Suzlon group's Cross-Claim in the proceedings below in addition to the Swiss banks. These other defendants comprise individuals and corporations ordinarily domiciled or resident in several countries. Also, Credit Suisse has a presence in Australia. There was, in any event, a connection with Australia given that the initial dispute over the cargo carried by the MV Beluga Fantastic had necessarily commenced in Australia and had ultimately been resolved here. There was no readily available competing forum. Switzerland is not the natural forum in which to litigate the Suzlon group's fraud claims. These frauds were committed "all around the world". The stay will cause the institution of proceedings in multiple fora. This Court is not a clearly inappropriate forum. (c) The primary judge erred in implicitly holding that the Suzlon group bore the onus of establishing that the courts of Switzerland were not an available alternative forum. In truth, it was the Swiss banks that bore the onus of satisfying the Court that there was an available competing forum that could exercise jurisdiction in respect of the claims made by the Suzlon group against the Swiss banks. Those banks failed to discharge that onus. (d) The primary judge erred in concluding that the courts of Switzerland have jurisdiction to entertain the Suzlon group's claims against the Swiss banks and that those courts will exercise that jurisdiction. These propositions have not been tested in the real world given that the Suzlon group has not yet commenced any proceedings in Switzerland. (e) The primary judge failed to take proper account of the fact that multiple litigation would ensue as a consequence of the stay. His Honour did not give proper consideration to the strictures imposed upon him by s 22 of the Federal Court Act. (f) Mr Sridhar has now appeared in the proceedings below. The primary judge's view that the proceedings below would be heard ex parte as far as the defendants other than the Swiss banks were concerned was therefore erroneous. (g) The conditions imposed by his Honour in the 2 March 2012 orders do not adequately protect the Suzlon group. His Honour should have granted to the Suzlon group liberty to apply in the event that the Swiss courts lacked or declined jurisdiction and should have compelled the Swiss banks to accept formally that they were bound by the freezing orders granted against Mr Sridhar and BIP Holdings Limited. 64 I take these submissions to be addressing both limbs of the test for leave to appeal articulated in Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400 as well as the grounds of appeal specified in the Draft Notice of Appeal brought forward by the Suzlon group as part of its application for leave to appeal.

The Submissions of LB Swiss and Credit Suisse 65 LB Swiss and Credit Suisse submitted that: (a) The primary judge correctly instructed himself as to the relevant principles and correctly applied them in a perfectly orthodox fashion. (b) When considering an appeal from a trial judge's decision to grant a stay on forum non conveniens grounds, an intermediate appellate court should not pour over the primary judge's reasons looking to find error with a view to revisiting what is a practical judgment given by the primary judge. (c) Special restraint must be exercised by appellate courts when considering interfering with a trial judge's exercise of a discretion to grant a stay on forum non conveniens grounds (per Kirby P (as he then was) in Bank of America v Bank of New York (1995) ATPR 41-390 at p 40,336). (d) There has been no final determination of the Suzlon group's substantive rights. The application for leave to appeal should not be approached upon the basis that there has been such a determination. (e) The following central findings made by the primary judge cannot seriously be challenged: (i) The claims made by the Suzlon group against the three Swiss banks have very little connection with Australia. (ii) The only arguable connection with Australia is an entirely adventitious event being the cargo dispute which was the subject of the interpleader proceedings when the proceedings below were commenced. (iii) The law of Australia has no application to the claims raised by the Suzlon group other than as currently being the law of the forum. (iv) If no stay were granted, Australian law, as the law of the forum, would be the law applied to ascertain the rights of two groups of foreigners whose relationships and their legal consequences have absolutely nothing to do with Australia in any substantive sense. (v) The impact of the Swiss banking secrecy laws upon the Swiss banks will limit their capacity to defend themselves in Australia. (vi) Swiss law almost certainly provides the Suzlon group with adequate and appropriate remedies if the Suzlon group can make out their case against the Swiss banks. (f) No lay witnesses likely to be called by any of the parties in the proceedings below have any connection with Australia. None of them live here. They are all foreigners. The mere fact that the Suzlon group may have qualified a local Australian expert after proceedings had commenced is neither here nor there. (g) The analysis undertaken by the primary judge in Suzlon Energy v Bangad (No 2) as to the meaning and impact of the Swiss banking secrecy laws was not challenged before the primary judge when his Honour was considering the stay application but rather was taken as a given for the purposes of that application. (h) Under the principles enunciated in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538, the focus is on the local forum as distinct from competing fora. The primary judge was entirely correct to emphasise that the only connection with Australia was completely adventitious. (i) The primary judge did not inferentially impose an onus upon the Suzlon group to establish that its claims could not be satisfactorily prosecuted in Switzerland. Before the primary judge, the Suzlon group pointed to no reason why it could not litigate satisfactorily in Switzerland and the evidence of Dr De Bizzozero suggested that they could do so within the framework of criminal proceedings that have already been commenced in Switzerland. (j) From time to time in its submissions, the Suzlon group has impermissibly conflated the relevant test under Voth with the English Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 or natural forum test. Australian courts do not engage in a search for the natural forum but rather focus upon the inappropriateness or otherwise of Australia as a forum for the resolution of the particular dispute. (k) The present case is a paradigm case where Australia is "a clearly inappropriate forum". (l) The Suzlon group is not permitted to rely upon the recent application by Mr Sridhar in which he seeks to stay the proceedings below as against him. If the material relied upon by the Suzlon group is to be considered at all, it only reinforces the inappropriateness of proceedings continuing in Australia. On the material before the Court, Mr Sridhar will not be permitted to leave India in the immediate future and will not be able successfully to defend himself in Australia. (m) His Honour did not fail to impose adequate conditions upon the Swiss banks. (n) The participation of the alleged "villains" (Messrs Sridhar and Bangad and their corporate associates) in proceedings between the Suzlon group and the Swiss banks is not necessary for the Suzlon group adequately to prosecute its claims against the three Swiss banks in Switzerland.

The Submissions of Merrill Lynch 66 Merrill Lynch submitted that: (a) In order to succeed in its application for leave to appeal, the Suzlon group must establish that there is some prospect of proving in the appeal itself that the primary judge was clearly wrong. In the present case, the Suzlon group has no prospect of establishing that matter. (b) The primary judge instructed himself correctly. There was no error of principle made by the primary judge. The primary judge exercised his discretion appropriately. (c) Even if the Court were to come to the view that the decision of the primary judge has the practical effect of determining the claims of the Suzlon group against the Swiss banks and therefore has the potential to cause substantial injustice, the Court must nonetheless be satisfied that the decision was attended by sufficient doubt to warrant reconsideration by the Full Court before it would grant leave to appeal (see eg Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) at [10] (p 534) and at [102] (p 550)). The decision is not attended by any doubt let alone sufficient doubt to warrant reconsideration by the Full Court. (d) Particular caution must be exercised in the present case because leave is sought to appeal from a discretionary decision made in relation to a matter of practice and procedure. Special restraint must be exercised in respect of decision of the present kind. (e) No substantive rights have been finally determined. (f) For the reasons stated by the primary judge at [50]-[61], the present case was a remarkably strong candidate for a stay and the decision of the primary judge was plainly correct. (g) The Suzlon group has failed to demonstrate any error on the part of the primary judge. His Honour addressed in a most satisfactory way all of the matters which are encompassed within the putative grounds of appeal notified by the Suzlon group and the submissions made by it in support of its current application.

Consideration 67 At [39] above, I have extracted [52]-[54] of the Reasons for Judgment published by the primary judge. I need not repeat what is there extracted. No party in the present application submitted that his Honour's exposition of the relevant principles at those paragraphs in his Honour's Reasons was in some way faulty or in any material respect incomplete. I would simply add, by way of supplement to his Honour's summary of the relevant principles, a reference to some further remarks made by the majority in Voth at 565. In that passage, their Honours said that the question whether the Australian court is a clearly inappropriate forum for the purposes of considering an application for a stay focuses upon the inappropriateness of the Australian court and not upon the appropriateness or comparative appropriateness of the suggested alternative foreign forum. 68 As already noted at [54] above and also submitted by the Swiss banks, the stay granted by the primary judge did not finally determine any substantive rights raised by the Suzlon group's claims against the three Swiss banks. This is so, both as a matter of law and as a matter of practicality. The Suzlon group's application for leave to appeal must therefore be considered for what it truly is: An application for permission to bring forward an appeal in respect of a discretionary judgment in relation to a matter of practice and procedure. Further, the application does not raise any matter of general principle. 69 The Suzlon group must bring itself within the principles which I have explained at [54]-[60] above. 70 The essence of the Suzlon group's challenge to his Honour's judgment is its contention that the exercise of the discretion reposed in his Honour miscarried. The principal contention of the Suzlon group is that his Honour took into account irrelevant considerations and failed to take into account important relevant considerations thereby producing an outcome which is obviously wrong or which suffers from an error of law or logic. 71 I do not agree that his Honour's discretion miscarried. To the contrary, his Honour's approach to the resolution of the problem before him was impeccable. I accept as correct the submissions made by the Swiss banks and reject those advanced on behalf of the Suzlon group. 72 I shall briefly address each of the errors which the Suzlon group submitted were made by his Honour. 73 First, as I have already observed (at [54] and at [68] above), the practical effect of the stay was not to finally determine the Suzlon group's claims against the Swiss banks. The stay does not have that effect. Nor does it operate to finally determine those claims as far as Australia is concerned. The stay may be lifted if changed circumstances warrant its being removed. 74 Second, in my view, the primary judge did not err in taking into account the effect of the Swiss banking secrecy laws upon the capacity of the Swiss banks to defend themselves in Australia and the effect of those laws upon their capacity to defend themselves in Switzerland. His Honour did not conclude, as was submitted by the Suzlon group, that the Swiss banks could not defend themselves at all: His remarks were not expressed in such absolute terms. His Honour correctly analysed the Swiss banking secrecy laws in Suzlon Energy Ltd v Bangad (No 2) and appropriately took into account the effect that those laws will inevitably have upon the capacity of the Swiss banks to defend themselves in Australia. By way of contrast with the position in which they find themselves in the Australian proceedings, the banks will be able to invoke the exception to which I referred at [29] above in proceedings in Switzerland. Given his Honour's careful analysis of the Swiss banking secrecy laws in Suzlon Energy Ltd v Bangad (No 2), it is difficult to see any room for any effective procedural safeguards to be put in place which would overcome the fundamental difficulty confronting the banks as defendants in the Cross-Claim in the proceedings below. 75 Third, the presence of other foreign defendants in the Cross-Claim brought by the Suzlon group in the proceedings below is not a matter which carries much weight in favour of refusing a stay. None of those defendants had appeared in the proceedings below by the time his Honour came to deal with the stay application. There is no suggestion that any of them has assets in Australia. None was resident or domiciled here. 76 Fourth, Australian law would not apply to the claims made by the Suzlon group were it not the law of the forum. In truth, neither the parties involved nor the claims made by the Suzlon group have any real connection to Australia. None of the impugned transactions took place in Australia nor have the proceeds thereof been secreted here. None of the likely witnesses live here and none of the relevant records are kept here. It was but a happenstance that the MV Beluga Fantastic sailed into Port Kembla thereby enabling the proceedings below to be commenced. His Honour correctly concluded that there was an overwhelming preponderance of factors in favour of granting a stay. 77 Fifth, in its submissions made to me in support of its leave application, at times the Suzlon group impermissibly strayed into the language of Spiliada. His Honour did not make a similar error. His Honour did not undertake an exercise of comparing the appropriateness of various fora. His Honour assessed whether Australia was a clearly inappropriate forum and found that it was. No question of onus in relation to proving the existence of an available alternative forum arose. 78 Sixth, his Honour assumed, in the absence of proof to the contrary, that the law of Switzerland permitted claims of the kind sought to be advanced by the Suzlon group to be brought and that the Swiss courts would exercise jurisdiction in the present matter. This was an entirely reasonable approach. 79 Seventh, his Honour considered the prospect of multiple litigation and the terms of s 22 of the Federal Court Act. His Honour reasoned that the obviously desirable aim embodied in s 22 did not outweigh or overcome the interests of justice and the requirements of the law articulated by the High Court in Voth. His Honour was not bound by s 22 to come to a different conclusion. 80 Eighth, Mr Sridhar's late application for a stay does not alter the landscape. The fact that Mr Sridhar intended to make such an application was not known by his Honour at the time when he granted the stay. In any event, Mr Sridhar has participated in the proceedings below only to the extent and for the purpose of seeking a stay. The making of that application does not constitute an appearance in the proceeding for all purposes and certainly does not mean that Mr Sridhar will become an active participant in the proceedings below should his application for a stay be refused. 81 Ninth, contrary to its submissions, the Suzlon group has an implied entitlement to apply to the Court to have the stay lifted should circumstances change. For example, should the Swiss courts refuse or decline to exercise jurisdiction in respect of the claims of the Suzlon group, the Suzlon group would be entitled to return to this Court and to argue that the stay should be lifted. As to the proposition that his Honour should have imposed other more onerous conditions upon the Swiss banks as the price for the stay, I do not agree. The terms of the conditions to be imposed were quintessentially within his Honour's undoubted discretion and have not been shown to be inadequate.

Conclusion 82 The Suzlon group has failed to make out its case for leave to appeal. Its application for such leave must be dismissed. Costs should follow the event. 83 As noted at [7] above, it is unnecessary for me to deal with Merrill Lynch's application for an extension of time within which to cross-appeal. That application too should be dismissed. There should be no order as to the costs of that application. I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

The Amended Application for Leave to Appeal from the judgment of Rares J delivered on 24 February 2012 (Suzlon Energy Ltd v Bangad (No 3) [2012] FCA 123) and from the orders made by Rares J on 2 March 2012 filed by the applicants on 2 April 2012 be dismissed.
The Application for an Extension of the Time within which to Cross-Appeal from the same judgment and orders filed by the second respondent (Merrill Lynch Bank (Suisse) SA) be dismissed.
The applicants pay the respondents' costs of and incidental to their Application for Leave to Appeal referred to in paragraph 1 above.
There be no orders as to the costs of the Application for an Extension of Time referred to in paragraph 2 above. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

The Reasons of the Primary Judge in the Stay Judgment 25 In the stay judgment, after describing the nature of the applications before him, the primary judge (at [3] of his Reasons) said: 3 Almost all of the principal findings of fact that I made in the service out reasons, Beluga (No 5) 278 ALR at 59 [10]-[50], [52]-[61], have been accepted by the three banks as being supported by the present evidence for the purposes of determining the questions that must be decided on these applications. Similarly, the parties accepted my findings and reasoning on the content and effect of Swiss Law in my reasons in relation to the notices to produce served by the Suzlon parties on each of the banks in September 2011: Suzlon Energy Ltd v Bangad (No 2) (2011) 198 FCR 1 at [30]-[54]. Rather than repeating those findings in these reasons I will proceed on the basis that they form part of the factual matrix for determining these applications. 26 These remarks made by his Honour were not challenged by the Suzlon group in the applications before me. 27 It must be remembered that the factual material to which his Honour had regard in Suzlon (No 5) was being considered by his Honour for the purpose of deciding whether that material was sufficient to establish a prima facie case within the meaning of that expression in r 10.43(4)(c) of the Federal Court Rules 2011. In Suzlon (No 5), his Honour noted that the observations which he made as to the facts were made in circumstances where none of the existing or putative cross-defendants had appeared and where only the Suzlon group's version of events was before the Court. For reasons explained in some detail at [10]-[60] (pp 59-69) of Suzlon (No 5), his Honour was satisfied that the Suzlon group had established to the requisite level of proof its contention that Mr Sridhar, and his associates, had improperly and in breach of duty procured significant payments and secret commissions in favour of corporate entities controlled by him and that each of the Swiss banks had deliberately refrained from making appropriate enquiries of Mr Sridhar in circumstances where they must have known that he was using a pseudonym (Rodney Marsh) in order to conceal the true nature of his transactions with the banks. 28 At [30]-[33] (pp 10-11) in Suzlon Energy Ltd v Bangad (No 2) (2011) 198 FCR 1, his Honour said: 30 The Banks relied on an expert report of Michèle Wassmer, a Swiss lawyer whose practice was essentially oriented on Swiss banking law. For the purposes of deciding the issues of Swiss law arising in respect of the notices to produce I have accepted her unchallenged evidence in respect of the aspects of Swiss law summarised below. Swiss banking secrecy is promoted by a number of Swiss laws. The two principal provisions, each creating an offence punishable by up to three years' imprisonment or a fine, are: • Art 47 of the Swiss Federal Banking Act; and • Art 273 of the Swiss Criminal Code. 31 The effect of Art 47 is to prohibit a bank, its present and former employees from disclosing any information in relation to any account that the bank's present or former client's have conducted with it. Swiss legislation does not define the precise extent of banking secrecy. However, generally, the obligation created by these two articles prevents disclosure of any information at all that the bank and its employees have obtained in the course of any relationship, even a one-off transaction, between it and a client. The secrecy obligation requires the bank and its employees to keep confidential any information obtained in the course of the professional relationship with the client concerning the economic and personal affairs of the client (including the client's identity and address), and information in relation to third parties and their transactions connected to the client's affairs. 32 Relevantly, Art 47: • prohibits a person divulging or inducing another to divulge a secret entrusted to him of which he became aware in his capacity as a management body, employee, agent or liquidator of a bank (Art 47(1)); • provides that the prohibition in Art 47(1) against violation of professional secrecy continues after the termination of any official relationship (between the bank and its client) or employment (Art 47(4)); • provides an exception that if the assistance of Swiss judicial authorities is sought and granted then the Swiss law governing a person's obligations to testify will apply (Art 47(5)); • has extraterritorial effect, so that a disclosure outside Switzerland by a person in breach of Art 47 is an offence (see Art 8 of the Swiss Criminal Code, made applicable by Art 47(6)). 33 Next, Art 273 relevantly prohibits a bank, its officers and employees from disclosing confidential information to foreign judicial authorities. It also operates extraterritorially. Article 273 is intended to prevent infringements of Swiss sovereignty by foreign authorities using coercive powers to obtain information contrary to Swiss law and to protect Swiss economic interests. There are three exceptions to the general prohibitions in Arts 47 and 273, namely, where: • the client has consented freely to the disclosure; • the disclosure is made in testimony to Swiss judicial authorities acting pursuant to a request for assistance that has been granted (Art 47(5)); • the disclosure is made by a person who is in a state of necessity, as defined in Arts 17 and 18 of the Swiss Criminal Code. Those provisions exculpate a person who commits what would be an offence because he or she is confronted by an imminent danger to himself or herself or another that is impossible to avoid otherwise than by so acting. 29 At [35] (p 11), his Honour noted that Art 271 of the Swiss Criminal Code prohibits anyone without authorisation from performing, or aiding or abetting the performance of, "acts for a foreign State" on Swiss territory that are "reserved to an authority or an official". 30 In Suzlon Energy Ltd v Bangad (No 2), his Honour relieved the Swiss banks from any requirement to produce documents in answer to certain Notices to Produce served upon them. The above passages which I have extracted demonstrate that there are exceptions to the application of the Swiss banking secrecy laws. For present purposes, the relevant exception is where the assistance of Swiss judicial authorities is sought and granted. This would generally only occur in Switzerland. 31 It is apparent from the observations made by the primary judge at [3] of the stay judgment that: (a) For the purposes of the applications which his Honour determined in the stay judgment, the Suzlon group and the three Swiss banks accepted his Honour's findings and reasoning at [30]-[54] (pp 10-16) of Suzlon Energy Ltd v Bangad (No 2); and (b) His Honour regarded those findings and that reasoning as pertinent to his determination of the matters with which he dealt in the stay judgment. 32 None of the parties before me submitted that his Honour had misunderstood or misstated the terms, effect or impact upon the Swiss banks in the present proceedings of the Swiss banking secrecy laws when he addressed those laws at [30]-[54] (pp 10-16) of Suzlon Energy Ltd v Bangad (No 2). 33 At [4]-[25] of the stay judgment, the primary judge traversed the evidence which he considered relevant to the applications made by LB Swiss and Merrill Lynch to set aside service of the Cross-Application upon them. 34 At [26]-[30], his Honour made several findings which are relevant to the present applications. His Honour said: OTHER EVIDENCE 26 Mr Vagadia gave further evidence that in June 2010 he had been informed by Dr Marc Russenberger, a Swiss lawyer acting for Suzlon Energy that a Swiss public prosecutor in Geneva was investigating potential breaches of Swiss money laundering laws by Messrs Sridhar, Bangad and Ahn. Those investigations have continued. 27 Mr Vagadia also said that Mr Maurice Hariri, a Swiss lawyer from another firm, also acting in Geneva for Suzlon Energy, had told him in August 2011 that Mr Hariri asked the Swiss public prosecutor for access to prosecution documents obtained in the investigation for review. Mr Hariri was granted that access and reviewed the documents. These revealed that approximately USD18 million is held, frozen, in Mr Sridhar's and his companies' accounts with the three Swiss banks. Mr Sridhar made 11 attempts to be granted access by the investigating magistrate to funds in those accounts between November 2009 and August 2011. The investigating magistrate granted nine of those requests. Those involved either some minor sums being paid to third parties or internal re-arrangements of the way the funds were held by the banks. Mr Vagadia learnt that, in late October, Mr Sridhar had been released on bail from prison in Pune, India. 28 LB Swiss and Credit Suisse led evidence that each of its still current and former employees (including Ms Klee) who appear to have had dealings with, or responsibility for, Mr Sridhar's and his associated companies' accounts, considered himself or herself bound by Swiss banking secrecy laws and is unwilling to come to Australia to give evidence in breach of those laws. Merrill Lynch led evidence that any witness it was likely to call resided in Switzerland. 29 Credit Suisse's Swiss Private Banking services are conducted in Switzerland for its foreign based clients. That service is conducted through Swiss banking centres of Credit Suisse in Switzerland. The physical and electronic records of its Swiss Private Banking services are located in Switzerland and are not accessible from Credit Suisse's operations in Australia. Its Australian office and employees do not deal here with operations, customers or accounts of Swiss Private Banking service and have no access to its records of the latter service. 30 Each of LB Swiss and Merrill Lynch has no office branch in Australia and conducts private banking business in Switzerland for Swiss or foreign domiciled customers. While Merrill Lynch has related companies in Australia, none of those has any involvement with the Swiss bank that is the fourteenth second cross respondent. 35 His Honour then considered the question of whether or not the Suzlon parties had established a prima facie case for the purposes of r 10.43(4)(c) of the Federal Court Rules 2011. 36 The primary judge commenced his consideration of the Swiss banks' application for a stay on forum non conveniens grounds at [49] of his Reasons. 37 After recording the parties' submissions at [49] and [50], his Honour set out his Honour's understanding of the relevant principles at [51]-[54]. 38 None of the parties before me submitted that his Honour misstated or misunderstood those principles. 39 At [52]-[54] of his Reasons, his Honour said: 52 The following propositions emerge from the majority reasons in Voth 171 CLR 538, with which Brennan J agreed at 572: 1. An Australian court must exercise jurisdiction that is conferred on it, except where it is established to be a clearly inappropriate forum (171 CLR at 559). 2. In cases where the Court has a discretion to grant leave to serve outside the jurisdiction, it is relevant to consider the appropriateness of the forum in exercising that discretion (171 CLR at 560). 3. The applicant for either that leave, or confirmation of service effected (here, the Suzlon parties), must satisfy the Court positively that the proceedings would not, or ought not, be stayed as having been brought in a clearly inappropriate forum or as being an abuse of process (171 CLR at 564). 4. The power to stay (or refuse leave to serve outside the jurisdiction), based on the Court being a clearly inappropriate forum is discretionary, and involves a subjective balancing process, in which various factors and matters of impression, in all the circumstances, are weighed as had been explained by Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 247-248 (whose judgment was substantially approved in Voth 171 CLR at 564). 5. Ordinarily, the local court will not be a clearly inappropriate forum if there is no foreign tribunal that has jurisdiction over the respondent (here the banks) and would entertain the particular proceedings that the applicant wishes to bring (Oceanic 165 CLR at 248). However, where there is no real connection between the subject matter of, or parties to, the litigation, the local court may be clearly inappropriate if the law of the place where the alleged wrong occurred did not allow proceedings to be brought for its redress (e.g. in a jurisdiction where a traffic accident occurred and that had an exclusive statutory compensation scheme, a suit brought in this jurisdiction would be in a clearly inappropriate forum) (Voth 171 CLR 558-559). 6. The rationale for the exercise of the power to stay is the avoidance of injustice between parties in the particular case (Voth 171 CLR at 554). 53 Further, a court is not an inappropriate form merely because another is more appropriate: Zhang 210 CLR at 503 [24]. There, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ held that a court's power to stay proceedings is an aspect of its inherent or implied power to prevent its own processes being used to bring about injustice. They cited with approval the following reasoning of Dawson, Gaudron, McHugh and Gummow JJ in Henry v Henry (1996) 185 CLR 571 at 587 (Zhang 210 CLR at 504 [25]): "In Voth ((1990) 171 CLR 538 at 564-565), this Court adopted for Australia the test propounded by Deane J in Oceanic Sun, namely, that a stay should be granted if the local court is a clearly inappropriate forum, which will be the case if continuation of the proceedings in that court would be oppressive, in the sense of "seriously and unfairly burdensome, prejudicial or damaging", or, vexatious, in the sense of "productive of serious and unjustified trouble and harassment" (Oceanic Sun (1988) 165 CLR 197 at 247). It was also held in Voth that, in determining whether the local court is a clearly inappropriate forum, "the discussion by Lord Goff in Spiliada ([1987] AC 460 at 477-478, 482-484) of relevant "connecting factors" and "a legitimate personal or juridical advantage" provides valuable assistance" (Voth (1990) 171 CLR 538 at 564-565). In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being "where the case may be tried "suitably for the interests of all the parties and for the ends of justice"" (Spiliada [1987] AC 460 at 482, quoting Sim v Robinow (1892) 19 R 665 at 668, per Lord Kinnear)." 54 The nature and degree of connection between the proceedings and the forum are fundamental factors in assessing whether the forum is clearly inappropriate: cf McGregor v Potts (2005) 68 NSWLR 109 at 120 [47] per Brereton J; PCH Offshore Pty Ltd v Dunn (No 2) (2010) 273 ALR 167 at 184 [120], 188 [150] per Siopis J. 40 In the balance of his Honour's Reasons (at [55]-[77]), his Honour weighed the various relevant considerations in the present case against the requirements of the relevant principles as explained by his Honour at [52]-[54]. 41 At [55] of his Reasons, his Honour noted that: (a) In the proceedings below, Indian companies (the Suzlon group) were suing Indian nationals resident in India and corporations incorporated in countries other than Australia. (b) Until the three Swiss banks were joined, the Suzlon group were the only active parties in the proceedings below. (c) None of the parties to the proceedings below appeared to have any connection with Australia. 42 At [56], his Honour said that the subject matter of the claims made by Suzlon group "… had very little connection to Australia". One Suzlon corporation and Credit Suisse are present here but none of the issues which arise in the proceedings involve transactions or activities by either of those corporations in Australia. 43 At [57]-[61], his Honour said: 57 The Suzlon parties have collected some material and evidence from third parties in or as a result of these proceedings, such as Yahoo! That has enabled them to track some of the alleged wrongful transactions, frauds and breaches of fiduciary duty by Mr Sridhar and their other former employees. The Australian lawyers acting for the Suzlon parties have also undertaken obviously detailed work in identifying the claims that are currently pleaded. 58 However, the likely jurisdictional sources of the Suzlon parties' legal right to redress, if they can establish the alleged wrongdoing at a trial, are principally the law of India and, so far as the banks are concerned, the law of Switzerland. It is adventitious that the initial circumstances on which the Suzlon parties rely came to light in this Court as a result of a shipowner commencing interpleader proceedings to enable it to discharge wind turbine equipment on board its ship. The interpleader was between some of the Suzlon parties interested in the cargo and the charterer of that ship which was allegedly involved in the frauds. 59 Australia and Australian law have no apparent direct application to the facts of the controversy that the Suzlon parties' cross application raises other than as currently being the forum. In contrast, Swiss banking secrecy laws will have a significant impact on the ability of each of the banks to conduct this litigation in Australia as I explained in Suzlon Energy 198 FCR 1 at [30]-[54]. The consequence is that if the matter were to proceed here, the banks could not give discovery or call or tender any evidence in these proceedings in relation to any of their dealings with Mr Sridhar, his companies or third parties with whom either he or the companies dealt. 60 I am of opinion that it is significant, in resolving the application for a stay, that the banks have not placed themselves in this difficulty by dealings that they conducted in, or that related to, Australia. If any one of the banks had dealt with Mr Sridhar or his companies here or in respect of his conducting some transactions here, then depending on the degree of involvement of the bank, this fact could be an important consideration to be weighed against it. In such a context, the bank's commercial decision, cognisant of the effect of Swiss banking secrecy laws were it sued here, to engage in dealings in or involving Australia could be relevant to a conclusion that Australia was not a clearly inappropriate forum: cf Australian Securities Commission v Bank Leumi Le-Israel (Switzerland) (1996) 69 FCR 531 at 546C-D, 550G-551C, 552G-553B per Lehane J, Lockhart and ML Foster JJ agreeing. But, that is not this case. 61 Here, the relationship between the banks and Mr Sridhar, as well as his companies, appears to have been entered into in Switzerland and to be governed by Swiss law. Although the Rodney Marsh email account had an Australian domain name, nothing in the evidence suggests that this created a real or commercial dealing or connection here. To the contrary, the expert evidence of Dr Bizzozero and Mr Martin was to the effect that this choice of unusual email address by Mr Sridhar ought to have caused each bank to make enquiries. That was because of one or more of the combination of the pseudonym, the apparently unbusinesslike disconformity between Sunshine's corporate name and that in its email address, the easily available free "yahoo.com.au" email account and Mr Sridhar's connections to India. 44 At [63], the primary judge emphasised that, as matters stood at the time when he was dealing with the banks' applications, if no stay were granted, Australian law, as the law of the forum, would be the law to be applied in order to ascertain the rights of several foreigners whose relationships and transactions had nothing to do with Australia. His Honour observed that the only connection with Australia was the adventitious commencement of the admiralty proceedings brought about by the incidental circumstance that the ship MV Beluga Fantastic had put in at an Australian port. Towards the end of [63], his Honour said: 63 … Despite the Suzlon parties relying on Dr Bizzozero's evidence about Swiss banking laws, they called no evidence to suggest that Swiss law offered inadequate or inappropriate remedies against the banks if the material facts pleaded in the cross claim could be proved in a Swiss Court. I infer that the law of Switzerland provides the Suzlon parties with adequate and appropriate remedies for the claims they have made against the banks in the cross claim. 45 At [64], his Honour noted that the complexity, expense, uncertainty and risk of error associated with the application by an Australian court of foreign law were matters which should be considered on applications for a stay. 46 At [66], his Honour said: 66 The banks seek a stay of the proceedings only against them as opposed to a stay of the proceedings generally. This creates a complicating factor in resolving the question of whether Australia is a clearly inappropriate forum in relation to the Suzlon parties' claims against the banks. Despite the considerable experience of counsel for the parties in applications of this kind, none was able to refer to any case in which a court had granted a stay in respect of only part of the proceedings or only in respect of some, but not all, respondents or defendants on the principles of forum non conveniens or its analogues, such as a clearly inappropriate forum. Of course, the Suzlon parties do not have to proceed here against any particular cross defendant. And they could sue each bank in Switzerland, or indeed here, without joining all of the other cross defendants in these proceedings. 47 At [67]-[72], his Honour considered whether s 22 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) should be taken into account as a significant consideration against granting a stay of part of the Cross-Application. His Honour held that s 22 did not require that a stay should not be granted. 48 At [73]-[75], his Honour said: 73 I am satisfied that if the Suzlon parties' claims against the banks were not stayed, the banks would not be able to defend themselves in these proceedings by pleading substantive defences, giving discovery or leading evidence. That is the consequence of Swiss banking secrecy laws. It is a consequence that has arisen because these proceedings were commenced here, properly, but adventitiously. Nonetheless, the very significant injustice that would be done to the banks if no stay were granted cannot be gainsaid. And, Swiss law provides the Suzlon parties with adequate and appropriate remedies if they can establish there the claims against the banks they seek to bring in these proceedings. It is not necessary that Mr Sridhar or his associates be parties in these or any Swiss proceedings for the Suzlon parties to obtain the relief they seek against the banks. 74 Moreover, the residue of the Suzlon parties' claims are, and have been to date, undefended proceedings. None of the other cross respondents has appeared. Thus, any findings that might be made in these proceedings against Mr Sridhar, Mr Bangad and their associates will not arise from a contested trial, but will be ex parte. The issues involving those cross respondents cover a wider area than those involving the banks, although the claims against the banks all arise within the claims against the other cross respondents. 75 I am also satisfied that, if sued in Switzerland, while the banks would be able to avail themselves of such defences as Swiss law affords them, they would be subject to the effective control of the Courts of that nation in relation to the furnishing and giving of evidence, unlike here. Since the Suzlon parties could obtain adequate and appropriate relief if they sue the banks in Switzerland in respect of the essential subject matter of their claims in these proceedings, the interests of justice as between the Suzlon parties and the banks dictate that this is a clearly inappropriate forum. Provided that appropriate conditions on the grant of a stay will protect the legitimate rights of the Suzlon parties it would be manifestly unfair to require the banks to remain active parties in these proceedings in those circumstances. 49 At [76], his Honour concluded that, on the evidence and balancing the competing interests and arguments of the parties, there was a substantial, if not overwhelming, preponderance of factors in favour of granting a stay provided that the Suzlon's group's rights against the three Swiss banks could be protected by appropriate conditions. His Honour then gave an indication of the conditions which he had in mind. 50 These Reasons were ultimately reflected in the orders which his Honour made on 2 March 2012.

Suzlon Energy Limited v Frankfurter Bankgesellschaft

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Judgment (7 paragraphs)

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Legislation Cited (1)

Cases Cited (24)