Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran, (1993) 159 N.R. 139 (HL)

• Case Date: October 14, 1993
• Jurisdiction: Canada (Federal)
• Citations: (1993), 159 N.R. 139 (HL)

Seaconsar Far East Ltd. v. Markazi Bk. (1993), 159 N.R. 139 (HL)

MLB headnote and full text

Seaconsar Far East Limited (appellants) v. Bank Markazi Jomhouri Islami Iran (Body Corporate)

(respondents)

Indexed As: Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran

House of Lords

London, England

Lord Templeman, Lord Griffiths,

Lord Goff of Chieveley, Lord Browne-Wilkinson

and Lord Mustill

October 14, 1993.

Summary:

Seaconsar Far East Ltd. (Seaconsar) was a Hong Kong company which dealt in arms. In 1986, Seaconsar agreed to sell a large quan­tity of artillery shells to Iran. Payment was by way of a letter of credit whereby Bank Markazi Jomhouri Islami Iran (Bank Markazi) issued an unconfirmed letter of credit available at sight in London at the Bank Melli Iran (Bank Melli). The credit was payable upon presentation of the proper documents. Seaconsar made two shipments of shells to Iran. Seaconsar made two pre­sentations at the Bank Melli. The Bank Markazi failed to make payment on both presentations on the ground the documents failed to conform with the requirements of the letter of credit. Seaconsar commenced an action in London, England, against Bank Markazi for breach of contract for failing to pay under the letter of credit. Seaconsar applied ex parte for leave to serve the pro­ceedings on Bank Markazi outside the juris­diction. Leave was granted in regard to both presentations. Bank Markazi applied to have the orders granting leave in regard to both presentations set aside. The trial court dis­missed the application in regard to the first presentation but set aside the order granting leave in regard to the second presentation. Seaconsar appealed the order concerning the second presentment. Bank Markazi cross-appealed in regard to the first presentment. The Court of Appeal dismissed both the appeal and the cross-appeal. Seaconsar appealed. Bank Markazi declined to pursue the cross-appeal.

The House of Lords allowed the appeal and granted Seaconsar leave to serve pro­ceedings outside the jurisdiction in respect of the second presentment, as well as the first.

Practice - Topic 2562

Service - Service of notice, writ or state­ment of claim out of jurisdiction - Re­quirement of good cause of action against named defendant - Seaconsar sold arms to Iran - Payment was by letter of credit issued by the Bank Markazi in Iran and presentable to the Bank Melli in London - Bank Markazi failed to pay when presentment was made on the letter of credit - Seaconsar commenced an action in London against Bank Markazi and applied for leave to serve the proceedings outside the jurisdiction - The Bank opposed the granting of leave on the ground that Seaconsar failed to show that it had a good arguable case on the merits (i.e., a prima facie case) - The House of Lords granted leave for service outside the jurisdiction.

Practice - Topic 2562

Service - Service of notice, writ or state­ment of claim out of jurisdiction - Re­quirement of good cause of action against named defendant - Seaconsar was to be paid by letter of credit issued by the Bank Markazi in Iran - Bank Markazi failed to pay - Seaconsar commenced an action against Bank Markazi and applied for leave to serve the proceedings outside the jurisdiction - The bank claimed that Sea­consar failed to show that it had a "good arguable case on the merits" - Seaconsar submitted that leave should be granted because leave had been granted in a paral­lel case - The House of Lords ruled that the fact that leave was granted in a similar action was not a consideration in deciding whether there was a "serious issue to be tried" - See paragraph 23.

Practice - Topic 2562

Service - Service of notice, writ or state­ment of claim out of jurisdiction - Re­quirement of good cause of action against named defendant - Seaconsar, a Hong Kong com­pany, sued an Iranian bank in London, England - Seaconsar applied for leave for service outside the jurisdiction - It was conceded that London was the forum conveniens - The issue then arose as to whether Seaconsar had to establish a "good arguable case" (i.e. a prima facie case) or merely show that there was a "serious issue to be tried" - The House of Lords held that the appro­priate test was "a serious issue to be tried" - See paragraph 25.

Cases Noticed:

Great Australian Gold Mining Co. v. Mar­tin (1877), 5 Ch.D. 1 (C.A.), refd to. [para. 15].

Société Générale de Paris v. Dreyfus Brothers (1885), 29 Ch.D. 239; 37 Ch.D. 215 (C.A.), refd to. [para. 15].

Badische Anilin und Soda Fabrik v. Chemische Fabrik vormals Sandoz (1902), 88 L.T. 490, 492n (C.A.); 90 L.T. 733 (H.L.), consd. [para. 16].

Vitkovice Horni a Hutni Tezirstvo v. Korner, [1951] A.C. 869 (H.L.), dist. [para. 17].

Malik v. Narodni Banka, Ceskoslovenska (1947), 176 L.T. 136 (C.A.), refd to. [para. 17].

Spiliada Maritime Corp. v. Cansulex Ltd., [1987] 1 A.C. 460; 71 N.R. 372 (H.L.), refd to. [para. 21].

Société Commercial de Réassurance v. Eras International Ltd., [1992] 1 Lloyd's Rep. 570, refd to. [para. 22].

Overseas Union Insurance Ltd. v. Incor­porated General Insurance Ltd., [1992] 1 Lloyd's Rep. 439, refd to. [para. 22].

Banque Paribas v. Cargill International S.A., [1991] 2 Lloyd's Rep. 19, refd to. [para. 22].

Bankers Trust Co. v. State Bank of India, [1991] 2 Lloyd's Rep. 443 (C.A.), refd to. [para. 27].

Authors and Works Noticed:

Paget, Law of Banking (10th Ed.), p. 643 [para. 27].

Counsel:

Sidney Kentridge, Q.C., and Simon Rainey, for the appellants;

Nicholas Chambers, Q.C., and Mark Hap­good, for the respondents.

Solicitors of Record:

Clyde & Co. for the appellants;

Stephenson Harwood, for the respondents.

This appeal was heard on June 14, 15 and 16, 1993, in London, England, by Lord Templeman, Lord Griffiths, Lord Goff of Chieveley, Lord Browne-Wilkinson and Lord Mustill.

The decision of the House of Lords was given on October 14, 1993, when the fol­lowing speeches were delivered:

Lord Templeman - see paragraph 1;

Lord Griffiths - see paragraph 2;

Lord Goff of Chieveley - see paragraphs 3 to 28;

Lord Browne-Wilkinson - see paragraph 29;

Lord Mustill - see paragraph 30.