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1980] Q.B. 629
[COURT F APPEAL]
TRENTEX TRADING CORPORATION AND ANOTHER v. CREDIT SUISSE
[198 T No. 626]
See also: House of Lords judgment at [1982] A.C. 679
1980 arch 25, 26, 27, 8, 31; April 1; May 2
Lord Denning M.R., Bridge and Oliver .JJ.
Mainteance of Suit - Champerty - Assignment of cause of action - Swiss
ank's finncing of commercial contract and litigation - Whether sufficient
iterest or assignment of suit to be valid - Criminal Law Act 1967 (c.
58), s.14 (2) 1
Practice- Stay of proceedings - Jurisdiction - Swiss contract wih
exclusive Swiss urisdiction clause - Assignment of English cause of action
- English cton claiming contract void - Whether action to be stayed -
Exerise of judg's discretion
The first plaintiff, Trendtex, a Swiss corporatio whose sharecapital was
owned by the second plaintiff, Temo, a Liechtestein corpration, contracted
to sell 240,000 tons of cement to an Engish company or shipment to
Nigeria. The purchase price and demurrage were o be paid undr a
1 Criminal Law Act 1967, s. 14 (2): see post, p. 653D.
1980]
630
Q.B.
Trendtex Trading v. Credit Suisse (C.A.)
letter of credt issued y a Nigerian bank, C.B.N, which subsequently
failed to honour the leter of credit. Trendtex climed damages amounting to
$14,000,000 in proceeding in England against C.BN. whose plea of sovereign
immunity succeeded at irst instance. In January 977 the Court of Appeal
allowed Trendtex's appea but C.B.N. was gien leave to appeal to the House
f Lords.
Credt Suisse, the defendant Swiss bank, was a substanial creditor of
Trendtex who had other creditors and could not have undertaken it
contracual duties without the finanial help of Credit Suisse, who had
garanteed the legal costs and fees icurred by Trendtex's English
solicitor n the action against C.B.N.
Following agreements by which Trendtex purportd o assign to Credit Suisse
its cause of action against C.B.N. by way of ecrity, an agreement between
Trendtex and Credit Suisse was signed in Geneva nJanuary 4, 1978. The
agreement recited that an offer had been received fm a third party to buy
Trendtex's right of action against C.B.N. for $800,00 andprovided that
Trendtex (1) released to Credit Suisse, who arranged fo the other creditors
of Tredtex to be satisfied, all its residual rghts against C.B.N. and
acknowldged that it had no further interest in the ction against C.B.N.,
(2) gae a power of attorney to a representative o Credit Suisse to enable
the ation to be settled and (3) deposited 90 per cnt. of its shares with
the repesentative The agreement was expressly tated to be "governed by
Swiss law" and also stated that any dispute arisin from i was to be
"judged by the Court of Geneva, exclusive of any other juridicton."
On January 9, 1978, Credit Suisse's representative assigned Trendtx's cuse
of action against C.B.N. to a third party for $1,000,000. In Februay 197
that action was settled by a payment by C.B.N. of $8,000,000. In Marc 197
an action in England was commenced in the name of Trendtex an Temo aginst
Credit Suisse claiming that the purported assignments of Trendte' cause of
action against C.B.N. to Credit Suisse and the agreement of Janur 4, 1978,
were void and of no effect or alternatively that the agreemnt hould be set
aside, an account of all moneys received in settlement ofthe ation against
C.B.N., damages for breach of duty and the return of all share held in
Trendtex.
On Credit Suisse's claim for a stay of the action nder te exclusive
jurisdiction clause and the inherent jurisdiction of the curt, nd the
plaintiffs' submission that the purported assignment of a bar cause o
action was illegal and unenforceable as savouring of maintennce and
champety, Robert Goff J. held that effect should be given to the excusive
jurisdction clause and, having regard to the "overwhelming strong Swis
connection" f the case, granted a stay.
On the plaintiffs' appeal:-
Hld, dismissing he appeal, (1) that since Credit Suisse had financed the
tranaction givig rise to Trendtex's right of action against C.B.N. ad was
justified in mintaining the suit it had a legitimate, genuine and
suffcient interest in thesuit and, accordingly, the assignment of the
cause ofaction to Credit Susse was valid (post, pp. 655A, 658A-B,
659A-B,669A-C, 74F-G).
Guy v. Curchill (1888) 40 Ch.D. 481; Glegg v. Bromley[1912] 3 K.B.474,
C.A.; Martell . Consett Iron Co. Ltd.
[1980]
631
Q.B.
Trendtex Trding v. Credit Susse (C.A.)
[1955] Ch. 363, C.A. and dicta of Lord Dennig M.R. in Hill v. Achbold
[1968] 1 Q.B. 686, 694, C.A. applied.
Dawson v. reat Northern andCity Railway Co. [1905] 1 K.B. 260, C.A. and
County Hoteland Wine Co. Ltd v. London and North Western Railway Co.
1918] 2 K.B. 251 considered.
Pe curiam. Officers of the court must not put themselves in a position
where heir owninterests may conflict with their duties to the court by
agreeing "cotigency fees"; and personal rights of action for tort should
not in generabe assigned (post, pp. 654-B, 657H, 663E-F).
Observations on "cases in whch a contract isto be treated as contrary to
public policy r otherwise illegal" for maintenance and champrty consequent
uon section 14 (2) of the Criminal Law Act 1967 (post, p. 653B-E, 657G,
663C-D,668G-H, 669F-G 674E-F).
(2) That the proper law o the agreement of January 4, 1978, was Siss law
(post, p. 658B); that (pr Bridge and Oliver L.JJ.) if and in so faras the
agreement of January 4, 978, contemplated the future assignment ofTrendtex's caus of action against C.B.N. to a third party who had no
legitimte interest uder English law it did not follow that the agreement
as a whoe was void by wiss law; that the question whether the agreement
gave rise o enforceable rigts and duties was within the exclusive
jurisdiction clause nd fell to be detrmined by Swiss law, that it was a
matter for the judg's discretion whether o not to give effect to the
exclusive jurisdictin clause by granting a stay; ad that, sine the judge
had not erred in principle in the exercis of his discrtion in regard to
the issues before him, the court ough not to interfere withthe exercise of
his discretion (post, pp. 659A-B,65D-F, 675G - 676C).
MacShanon v. Rockware Glas Ltd. [1978] A.C. 795, H.L.(E.) applied.
Per Lord DenningM.R. In accordance with MacShannon v. Rockware Glass Ltd.
everythingpoints to Switzerland as being the forum cnveniens and, although
there is no rocess for compelling discovery of documnts in Swiss civil
courts, the plaintffs' claims should be tried in Switzeland and not in
England (post, p 658D).
Per Bridge and Oliver L.J. When consdering the appropriate forum fr thehearing of a given dispute a judge is entitled to take account of the fct
that parties to that dspute have agreed upon a suitable forum in relationto a closely allie matter (post, pp. 659A-B, 676E-F).
Judgment of Robert GoffJ. affirmed.
Te following cases are referred to in the judgments:
BritishCash and Parce Conveyors Ltd. v. Lamson Store Service Co. Ltd.
[1908] 1 K.B. 006, C.A.
Chparral, The [1972] 2 Lloyd's Rep. 315.
Compania Colombiana deSeguros v.Pacific Steam Navigation Co. [1965] 1 Q.B.
101; [1964] 2 W.LR. 484; [1964] All E.R. 216.
County Hotel and Wine Co. Ltd. v. Londonand North Western Ralway Co.
[1918] 2 K.B 251.
Dawson v. Great Northern nd City Railway Co. [1905] 1 K.B. 260, C.A.
Defries v. Milne [1913] 1 Ch 98,C.A.
Di
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OSE OF LORDS
TRENDTEX TRADING CORPORATION AND ANOTHER, APPELLANTS
AND
CREDIT SUISE, RESPONDENTS
[1982] A.C. 679
COUNSEL: Stanley Brodie Q.C. and Stephen Nthan for the plaintiffs.
Richard Yorke Q.C. and David Hunt for the defendants
SOLICITORS: Herbert Oppenheimer Nathan & Vandyk; Theodore Goddard & Co.
JUDGES: Lord Wilberforce, Lord Edmund-Davies, Lord Fraser of Tllybelton,
Lord Keith of Kinkel and Lord RoTES: 1981 July 20, 21, 22, 23; Oct. 22
HEADNOTE: Maintenance of Suit - Champety - Assignment of cause of action -
Swiss bank's financing of commercial cotract and litigation - Whether
sufficient interest for assignment ofsuit to be valid - Assignment to third
party with no genuine commercial interest- Whether void for champerty
Practie - Stay of proceedings - Jurisdiction - Swiss contract with
exclusive Swss jurisdiction clause - Assignment of English cause of action
- English actin claiming contract void - Whether action to be stayed -
Exercise of judge's discretion
The first plaintiff, Trendtex, a Swiss corporation hose share capital was
owned by the second plaintiff, Temo, a Liechtenstein orporation, contracted
to sell 240,000 tons of cement to an English compan for shipment to
Nigeria. The purchase price and demurrage were to be paidunder a letter of
credit issued by a Nigerian bank, C.B.N., which subsequenly failed to
honour the letter of credit. Trendtex claimed damages amouting to U.S.
$14,000,000 in proceedings in England against C.B.N. whose pla of sovereign
immunity succeeded at first instance. In January 1977 the ourt of Appeal
allowed Trendtex's appeal but C.B.N. was given leave to appea to the House
of Lords. Credit Suisse, the defendant Swiss bank, was a substntial
creditor of Trendtex who had other creditors and could not have undertaen
its contractual duties without the financial help of Credit Suisse whohad
guaranteed the legal costs and fees incurred by Trendtex's English
solicitors n the action against C.B.N. Following agreements by which
Trendtex purported to assign [*680] to Credit Suisse is cause of action
against C.B.N. by way of security, an agreement between rendtex and Credit
Suisse was signed in Geneva on January 4, 1978. The agreemnt recited that
an offer had been received from a third party to buy Trendte's right of
action against C.B.N. for U.S. $800,000 and provided that Trendex (1)
released to Credit Suisse, who arranged for the other creditors of rendtex
to be satisfied, all its residual rights against C.B.N. and acknowleded
that it had no further interest in the action against C.B.N., (2) gave a
ower of attorney to a representative of Credit Suisse to enable the action
t be settled and (3) deposited 90 per cent. of its shares with the
repreentative. The agreement (by article 6) was expressly stated to be
"governedby Swiss law" and that any dispute arising from it was to be
"judged by the Curt of Geneva, exclusive of any other jurisdiction." On
January 9, 1978, Crdit Suisse's representative assigned Trendtex's cause of
action against C.B.. to a third party for U.S. $1,100,000. In February 1978
that action was setled by a payment by C.B.N. of U.S. $8,000,000. In March
1978 an action in England was commenced in the name of Trendtex and Temo
against Credit Suisse claiming that the purported assignmentsof Trendtex's
cause of action against C.B.N. to Credit Suisse and the agreemet of January
4, 1978, were void and of no effect or alternatively tht the agreement
should be set aside, an account of all moneys received in setlement of the
action against C.B.N., damages for breach of duty and the eturn of all
shares held in Trendtex. On Credit Suisse's claim for a stay f the action
under the exclusive jurisdiction clause and the inherent jurisdction of the
court, and the plaintiffs' submission that the purported assignent of a
bare cause of action was illegal and unenforceable as savouring of
maintenance and champerty, Robert Goff J. held that effect should begiven
to the exclusive jurisdiction clause and, having regard to he "overwhelming
strong Swiss connection" of the case, granted a stay. Te Court of Appeal
dismissed an appeal by the plaintiffs.
On appeal by the paintiffs:--
Held, dismissing the appeal, (1) that, while Credit Suisse had ha a genuine
and substantial interest in the success of the C.B.N. litigatin, the
agreement of January 4, 1978, as entered into had manifestly involvedthe
possibility, and indeed the likelihood, of a profit being made, eitherby
the third party or possibly also by Credit Suisse, out of the causeof
action, that that manifestly "savoured of champerty" as involving
traficking in litigation; and that, accordingly, any such assignment of the
English cause of action as was purorted to be made by the agreement for the
purpose stated was, under English lw, void (post, pp. 694, 695, 696-697,
703-704, 705).
Martell v. Consett Irn Co. Ltd. [1955] Ch. 363, Danckwerts J. and C.A.; In
re Trepca Mins Ltd. (No. 2) [1963] Ch. 199, C.A. and Laurent v. Sale & Co.
[1963] 1W.L.R. 829 applied.
Per Lord Edmund-Davies, Lord Fraser of Tullybeltn, Lord Keith of Kinkel and
Lord Roskill. It remains a fundamental principleof English law that one
cannot assign a bare right to litigate. If, hoever, the assignment is of a
property right or interest, or if the assigee has a genuine commercial
interest in taking the assignment and in enforcng it for his [*681] own
benefit, there is no reason why the assignment should be struck down as an
assignment of a bare cause ofaction or as savouring of maintenance (post,
pp. 696-697, 703).
(2) That, hwever, the proper law of the agreement of January 4, 1978, being
Swiss, it as for the Swiss court to determine what effect the invalidity of
the asignment under English law had on the agreement as a whole; that there
wer other questions in issue between the parties besides the validity of
theassignment and, accordingly, there was room for the operation of article6 in spite of the champertous element in the agreement; and that, on the
fact, since matters arose on which the Swiss courts would be better
qualified todecide than the English courts, the decision to stay the
proceedings had been rightand the proceedings ought to be tried in
Switzerland (post, pp. 695-697 704-705).
Decision of the Court of Appeal [1980] Q.B. 629; [1980] 3 W.L.R.367; [1980]
INTERLOCUTORY APPEAL from the Court of Appeal.
This was an apeal by the plaintiffs, Trendtex Trading Corporation (a
company incorporate in accordance with the laws of Switzerland) and Temo
Anstalt (a corporation stablished in accordance with the laws of the
Principality of Liechtenstein), by leave of the Court of Appeal (Lord
Denning M.R., Bridge and Olier L.JJ.) from their decision on May 2, 1980,
affirming the judgment of Robet Goff J. [1980] 3 All E.R. 721 on March 30,
1979. By his judgment, Robert off J. ordered that proceedings by the
plaintiffs against the defendants Credit Suisse (a company incorporated in
accordance with the laws of Switzrland), be stayed pursuant to a clause in
an agreement between Trendtex ad Credit Suisse which stated that the
agreement was "governed by Swiss law and that any dispute arising from it
was to be "judged by the Court of Geeva, exclusive of any other
jurisdiction." The Court of Appeal gave the, plantiffs leave to appeal on
condition that securit
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