During my thorough search to find a way for challenging the Judgment versus CBS I found two interesting things: i) an article concerning the recent cases and consultation on withdrawal of pre-action admissions (copy attached below) ii) HISPANO AMERICANA MERCANTIL S.A.v CENTRAL BANK OF NIGERIA
On a procedural point, Habib Bank deliberately did not obtain judgment in default (as this can be difficult to enforce in foreign jurisdictions). Rather, there was a trial and decision on the merits, albeit without Central Bank of Sudan being present. This means that Central Bank of Sudan would have to appeal against the finding rather than apply to have it set aside.
As a general point, and based solely on the High Court's judgment, an appeal looks difficult. It would be necessary to apply (late) for permission to appeal and, if granted permission, to win the appeal hearing. There do not appear to be strong grounds for an appeal (Central Bank of Sudan does not seem to dispute that there is a debt and seems to have admitted that, by 2002, this amounted to some $81 million). Having said that, we might, with further research, be able to advance some arguments about, for example, whether the claim was ever properly served and, if permission to appeal was granted, Central Bank of Sudan might then at least be in a better position to discuss a possible settlement with Habib Bank. There may also be an argument about the rate of interest applied, or whether interest should have been compounded, but these do not yet appear strong arguments. The best of these arguments looks to be on the question of service, but this would probably involve providing advice on what methods of service are permitted in Sudan - for example, does valid service necessarily require some involvement by the Sudanese courts?
On this basis, there are perhaps three possible areas of work:
i) considering the basis on which an appeal might be made against the decision;
ii) applying for permission; and
iii) the appeal itself.
It is difficult to estimate costs for these without sight of the underlying papers. However, we suggest that stage i) might cost around STG
0 for our part of the work. Central Bank of Sudan could then consider whether to undertake stages ii) and or iii). These would involve employing a barrister as well as a solicitor, and the question of the volume of underlying documents might become significant at this point. It is difficult to estimate costs for these two stages, but stage ii) might cost another STG
and stage iii) perhaps STG
. However, these estimates are extremely rough and could vary significantly either way.
It may be that the risk of an appeal by Central Bank of Sudan would make Habib Bank more amenable to a settlement, or that we could assist in creating enforcement difficulties for Habib Bank which would also make them more willing to settle.
It is not clear that the ruling on the amount/rate of interest is open to challenge (though we have, of course, seen only the High Court's judgment, rather than any of the underlying papers). The English courts will only very rarely set aside a contractually agreed (or implicit) rate of interest between commercial parties. It is possible, perhaps, where the rate is self-evidently extortionate, or amounts to a penalty. However, such findings are very much the exception. A more common ground would be that there was something wrong with the agreement in the sense that the parties thought they were agreeing to different things or that an agreed rate has been mis-applied /the contract has been mis-interpreted.
I suspect, therefore, that the only way of challenging the finding on interest would be if the papers exchanged between the parties could support an argument that a different rate of interest had been agreed or intended, or that compounding should not take place, but there is nothing in the judgment that suggests such an argument could be easily made. One difficulty with attacking the interest element is the fact that CBS seem implicitly to have accepted a significant interest rate when acknowledging amounts due at various stages since the Letters of Credit were issued.
As discussed, if there is a basis for challenge it seems at present to lie with an attack on whether CBS were ever properly served. If we were successful in this, CBS would at least be in a better bargaining position in the sense that Habib might be willing to accept a lower sum rather than have the cost, delay and risk of having, in effect, to start its action again. It is uncertain how likely even leave to appeal would be granted on these grounds. It is also unclear how strong a bargaining position CBS might achieve, but we cannot yet see any more robust approaches that might be taken. Having said that, I should repeat that this is solely on the basis of the judgment and it might be that the underlying papers would show more promising lines of attack.
In further to our phone conversation of today evening pertaining to the above mentioned subject, I'd like to draw your attention to a publication in your web site concerning the recent cases and consultation on withdrawal of pre-action admissions as follows:
The recent Court of Appeal decision in Stoke on Trent City Council v Walley  EWCA Civ 1137 has clarified when a claimant may contest the withdrawal of a pre-action admission, notwithstanding the decision in Sowerby v Charlton  1 WLR 568 that pre-action admissions can be withdrawn without needing the court's or the claimant's permission. Sowerby had confirmed that CPR Part 14, concerning admissions, applies only to admissions made in the course of proceedings and not to pre-action admissions.
In Walley, the first instance decision had been decided before Sowerby and the judge had considered CPR 14.1(5), which gives the court a discretion to permit a party to withdraw an admission, and refused permission for the defendant Council to withdraw its pre-action admission. That admission had been made by an employee of the Council's loss adjuster who had later been dismissed for unsatisfactory work. Before proceedings were issued the Council had written to withdraw the admission of liability. Following the decision in Sowerby, the Council appealed to the Court of Appeal. The court (Brooke, Smith and Wall LJJ) held that it was bound by Sowerby and allowed the Council's appeal, remitting the case back to the county court for determination. In giving judgment, the court took the opportunity to give guidance on the procedure for cases where pre-action admissions are later withdrawn:
The correct approach for a claimant who sought to contest the withdrawal of a pre-action admission (where the facts were not such that summary judgment should be entered) was to apply under CPR 3.4(2) to strike out the defence on the ground that it was an abuse of the process of the court or was otherwise likely to obstruct the just disposal of the proceedings.
For a claimant to show that the withdrawal of an admission would amount to an abuse of process of the court, it would usually be necessary to show that the defendant has acted in bad faith.
In order to show that the withdrawal of a pre-action admission is likely to obstruct the just disposal of the case, it will usually be necessary for the claimant to show that it has suffered some prejudice which will affect the fairness of the trial. For example, the claimant might have agreed to the destruction of an item of real evidence; it might have agreed that an expert inspection (no longer possible) was not necessary, or witnesses might have died or lost contact.
Whilst clarifying the status of pre-action admissions as they now stand under the CPR, the Court of Appeal judgment also makes it clear that the judges are aware that concerns have been raised by personal injury practitioners (in particular) about the current state of the law and that the Civil Procedure Rules Committee have been asked to consider whether any amendment of the CPR might be appropriate. In his judgment, Lord Justice Brooke (with whom the other justices agreed) indicated his support for giving the status of pre-action admissions more weight than they currently enjoy under the rules. He said that: "anything that lends uncertainty to the value of a pre-action admission of liability (given in these circumstances) appears to me to run against the grain of the overriding objective, and be likely to lead to avoidable delay, expense and worry".
This issue is now being considered by the Civil Procedure Rules Committee and a limited consultation of relevant organisation and individuals is taking place before any amendments are decided upon.
In respect of your verbal advice, I'd like to clarify that, to my knowledge, since the American Embargo imposed on Sudan in the year 1997 Sudan was no longer dealt with USA and its closest allied countries in international transactions. In my view I doubt that CBS is still keeping assets in UK which will be subject to attachment for the enforcement of the Judgment.
According to Sudan Civil Procedure Act of 1983 certain conditions should be fulfilled in order to enforce a foreign judgment as follows:
i) the judgment must be issued by a competent Court and that Court has jurisdiction.
ii) the parties 're duly appeared before the said Court.
iii) the country in which the judgment is issued accepts the enforcement of Sudanese Courts' judgments.
The CBS requested me to set all the relevant costs associated in handling this lawsuit, inter alia, the professional fees. As you disclosed you will send me your advice and in turn I'll keep it and I'm expected to provide the CBS with my advice including your advice, but I'll make it clear to them that the required advice shall not be delivered to them unless they pay the consultation fee.
I'll be waiting to receive your advice in my below e-mail together with your bill.
Thank you for referring this matter to us. I have conducted a conflict check and we would be pleased to act, subject to dealing with some necessary client acceptance formalities. I have asked my colleague Rainer Evers to deal with these with you and to take an early look at the papers with me with a view to indicating in broad terms whether we think there are any plausible arguments that can be advanced in order to set aside this judgment. Thank you for your initial thoughts.
Rainer will be in touch very shortly to give you an idea of costs. Assuming there is something of substance to be researched, I suggest we agree with you an initial cap on our research work and review, and then, if you authorise that work we can give a clearer indication of the likely cost of making an application to the Commercial Court.
-----Original Message----- From: ismat hagelamin [mailto:[email protected]] Sent:04 October 2006 To: House, Tim:LT (LN) Subject: Habib Bank v Central Bank of Sudan - L L Rs. 2006
Dear Mr. Tim,
Pls take note that M/S Lovells Int'l have recommended you to us.
Enclosed herewith the Judgment passed in favour of Habib Bank versus CBS that HBL is entitled to the sum of US$ 101,881,346.14.
The O/S liability under the two L/Cs: 218 & 233 was US$ 14 Mln. 2 Mln US$ paid during the period from 1983 up to 1991. In our view the amount claimed by HBL was apparently excessive and the difference between the exact liability and the amount decreed is unreasonable. The difference is US$ 89 Mln.
In view of the above mentioned could it be possible to contest against the Judgment in lieu of the difference between the exact O/S liability and the amount decreed? i.e. could it be possible to reduce the interest amount? Could you specify the percentage of success and the relevant costs?
On Sun. Ist Oct, 2006 Mr. Malako of the Legal Dept. has phoned me conveying your directive to set an initial cost regarding the potentiality for contesting the Judgment. After receiving the verbal instruction from Mr. Malako, which is not the normal practice for handling this issue, I've initiated my contacts on behalf of the CBS with Lovells Int'l and other Law Firms in this regard.
The outcome of my contacts is that it's not easy to challenge the Judgment and this due to the acknowledgment of debt made by the CBS. In my view acknowledgment of debt at earlier stage by CBS and consecutive stages extended the limitation period. The only way, in my view, to challenge the Judgment is whether or not there is a possibility in law or equity to reduce the accumulated interest to a reasonable sum and this what I'm running after.
Enclosed herewith my contacts with the Law Firms in UK and their responses for your information with a view to assist in taking your prompt decision. Meantime I hope that your excellency shall consider my endeavours.
In further to my emails of 25 & 29 Sept. regarding the above subject, pls take note that I've been contacted by Mr. Malako of the Legal Dept. Mr. Malako in a phone conversation requested me to prepare an initial costs for handling this lawsuit with a view to contest against the Judgment. I told him to forward to my e-mail address these instructions which, as he said, pursuant to the Governor's directives.
Up to this moment I did not receive any written instructions from CBS part, but meantime I've initiated my contact with Lovells and others.
In view of the above, I'm expected to receive a reply to my previous emails in order to be prepared to undertake such work.
I've some remarks on the Judgment which 'll be summarized as follows:
1- It's a default decree in that CBS did not appear before the said Court.
2- The relationship between issuing and intermediary bank depends upon what the latter is called upon by the issuing bank to do. The rights and liabilities of intermediary banks, confirming or not, are governed by the terms of the instructions which they receive from the issuing bank on the one hand, and of their advice or notification to the seller in pursuance of such instructions on the other. As between the issuing bank and the intermediary bank the relationship is, unless otherwise agreed, that of principal and agent, so that, subject to any agreement to the contrary, when the intermediary bank has fully complied with its mandate it is entitled to reimbursement of any moneys it has properly paid.
( Gutteridge & Megrah's Law of Bankers' Commercial Credits - 8th edition, p 87).
3- It's obvious that both L/Cs : 218 & 233 were deferred payment L/Cs i.e. payment had to be made after 180 days from B/L date, but the claimant violated the defendant's instructions when placing funds at Chase Manhattan pursuant to a request made by BdeP that payment be made in this way. His act made payment at sight in violation to the issuing bank instructions. In my view the claimant is not entitled to be reimbursed by the defendant.
I’m so surprised that Central Bank’s official acknowledged the debt including the principal plus interest without paying attention to the fact that Habib Bank has affected payment at sight in violation to the issuing bank’s instructions that payment would have been effected 180 days from B/L date.
I’ll be waiting to hearing your comment as to whether or not you welcome my intervention in this matter.
I'd like to disclose that I'm a lawyer and gained significant know-how in the practice of banking as well as the law of banking.
I've viewed the judgement passed in favour of Habib Bank Ltd. (attched). I'm so surprised that why your esteemed Bank didn't appear despite being summoned.
I'm ready to put my significant experience in this aspect at your disposal to contest against this default decree. It's to be noted that I had previous contact with a reputable English Law Firm in London: Lovells International.