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Note: Wanxiang Resources (Singapore) PTE Limited (Buyer) contracted with Impala Warehousing and Logistics (Shanghai) Co. Limited (Seller) to purchase aluminum. Payment was assured by a standby letter of credit issued by Rabobank International (Issuer) under a Collateral Management Agreement. The CMA provided that it was governed by Singapore law and that the courts of Singapore had non-exclusive jurisdiction. The contract provided that Seller was to deliver the goods by providing warehouse certificates to Buyer.

The warehouse certificates were given by Seller to Issuer to whom the aluminum had been pledged. The warehouse certificates referred to a website for their terms and conditions, one of which provided “at clause 10 an agreement to English law as the governing law and an exclusive jurisdiction clause in favour of England.” [A1] The Judge concluded that there was sufficient notice and that these terms applied to the certificates. Buyer claimed that Issuer’s claims had been satisfied and that the certificates had been endorsed in favor of Buyer. However, Seller failed to deliver the aluminum.

Buyer sued Seller in China in August 2014 based on the warehouse certificates. In September 2014, Seller obtained an interim anti-suit injunction from the English High Court restraining Buyer from continuing proceedings in China. The High Court of Queen’s Bench Division, Teare, J., dismissed Seller’s application for a final mandatory injunction and for an interim mandatory injunction.

Buyer introduced evidence to show that despite the exclusive jurisdiction clause, which the court determined was integrated into the warehouse certificates agreement, the Collateral Management Agreement, which governed the underlying transaction, would allow jurisdiction in Shanghai. The Judge rejected this argument on the grounds that the Seller was not a party to the Collateral Management Agreement. However, the Judge also noted that Seller had acknowledged that Buyer was the owner of the aluminum, and thus the claim against the Seller was legitimate and would be straightforward in showing the liability of the Seller. The question remained as to whether the court would enforce the exclusive jurisdiction clause in the warehouse certificates so as to force Buyer to litigate the claim in England.

The Judge dismissed Buyer’s application for an injunction against the proceedings in China, not because the court acknowledged that the collateral agreement had effect over the warehousing agreement, but rather on grounds that it would significantly prejudice the Buyer’s claim because a judgment rendered in England in its favor would not have force in China, where the goods and parties were located.

[ALC]

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