The court decided that Mr Singal was out of time for challenging jurisdiction. However, even if he had been in time, such challenge could not have succeeded, because each of the guarantees contained a valid and binding exclusive English jurisdiction agreement and additionally, the Defendant had agreed not to argue to the contrary as follows:
“The English courts have exclusive jurisdiction to settle any dispute in connection with this Guarantee and Indemnity (a Dispute)”; and
“The English courts are the most appropriate and convenient courts to settle Disputes. [The Defendant] agrees not to argue to the contrary and waives objection to those courts on the grounds of inconvenient forum or otherwise in relation to proceedings in connection herewith”.
Furthermore, those clauses constituted a jurisdiction agreement within the scope of Article 25 of the Brussels Regulation Recast which precludes the possibility of a challenge to the jurisdiction on forum non conveniens or other common law grounds. As Popplewell J said, “Where article 25 applies, the court is left with no discretion to exercise on forum non conveniens or other grounds; it must give effect to the relevant agreement.”
Indian Insolvency Proceedings:
The court carried out a careful analysis of the guarantee and indemnity obligations and when they arose, considered whether they were dependent on a demand or not. The court recognised the range of obligations, including hybrids:
“Each case depends upon the actual words used. The Court approaches the task of characterisation without any preconceptions as to what the instrument creates;
“It is not necessary to shoe-horn a surety contract into the category of either pure guarantee or pure indemnity if it is in truth a mixture of primary and secondary elements - “Whether a particular contract of suretyship is of the one kind or the other or indeed a combination of the two turns on its true construction”
“The spectrum of contractual possibilities has pure guarantees at one end and performance bonds (a particularly strict form of indemnity contract) at the other. The space in between is occupied by modified guarantees, hybrid contracts (i.e. those which are a combination of guarantee and indemnity obligations) and pure contracts of indemnity (albeit short of performance bonds)”.
In this case, the Court decided that there was a breach for the purposes of Mr Singal’s guarantee when BPSL failed to pay sums due. The judge accepted the submission that no action taken against BPSL could affect KfW’s rights against Mr Singal, in view of the language of the guarantees.
Furthermore, English-law obligations under the Guarantees could only be altered or discharged by operation of English law. And it is well-established (aside from the EU Insolvency Regulation, which has no application to this case) that English law will not give effect to a foreign insolvency law that purports to alter or discharge English law obligations.