Banco Mercantil del Norte SA v Cabal Peniche

• Jurisdiction: Cayman Islands
• Judge: (Levers, J.)
• Judgment Date: 06 August 2003
• Court: Grand Court (Cayman Islands)
• Date: 06 August 2003

Grand Court

(Levers, J.)

BANCO MERCANTIL DEL NORTE S.A. (GRUPO FINANCIERO BANORTE)

and

CABAL PENICHE

D.A. Magner for the plaintiff;

J.R. McDonough for the defendant.

Cases cited:

(1) Adams v. Cape Indus. PLC, [1990] Ch. 433; [1991] 1 All E.R. 929, dicta of Slade, L.J. considered.

(2) Desert Sun Loan Corp. v. Hill, [1996] 5 Bank. L.R. 98; [1996] 2 All E.R. 847, dicta of Roch, L.J. applied.

(3) Jacobson v. FranchonUNK(1927), 138 L.T. 386; 44 T.L.R. 103; 72 Sol. Jo. 121, dicta of Atkin, L.J. considered.

(4) State Bank of India v. Murjani Mktg. Group Ltd., English C.A., March 27th, 1991, unreported, dicta of Sir Christopher Slade considered.

Legislation construed:

Grand Court Rules, 1995 (Revised), O.12, r.8(5):

‘A defendant who makes an application … [to dispute the jurisdiction of the court] shall not be treated as having submitted to the jurisdiction of the Court by reason of his having given notice of intention to defend the action …’

O.14, r.1: The relevant terms of this rule are set out at para. 6.

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-court to recognize judgment in personam creating debt if debtor (a) was present in foreign jurisdiction when proceedings instituted; (b) participated as plaintiff or counter-claimant; (c) appeared voluntarily as defendant; or (d) agreed in advance to submit to foreign court”s jurisdiction as defendant-judgment not to be procured by fraud, in breach of natural justice or contrary to Cayman public policy

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-presence in foreign jurisdiction-whether debtor has presence in country of principal residence, having left apparently with no intention of returning is question of fact raising triable issue

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-court to recognize and enforce judgment provided foreign court had jurisdiction according to Cayman law-foreign court”s positive ruling on jurisdiction irrelevant

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-submission to jurisdiction of foreign court-proceedings brought in foreign court solely to challenge jurisdiction and not

addressing merits not voluntary submission to foreign court”s jurisdiction under Grand Court Rules, O.12, r.8 and foreign judgment not thereby enforceable in Cayman Islands-whether foreign proceedings based on voluntary submission is question of fact raising triable issue

The plaintiff applied to the Grand Court to enforce a judgment obtained in Mexico against the defendant.

A Mexican bank loaned the defendant 60m. pesos, secured by a promissory note. The defendant, who was resident in Mexico at that time, later fled the country to avoid impending criminal proceedings and consequently did not honour the promissory note. He was eventually caught in Australia and incarcerated awaiting extradition proceedings. Meanwhile, the bank brought an action against the defendant in Mexico claiming the 60m. pesos plus interest. It obtained final judgment against the defendant providing that, in default of repayment, it was entitled to seize his assets to satisfy the debt.

The defendant instituted Amparo proceedings in Mexico through his lawyers, seeking to set aside that judgment. He challenged the Mexican court”s jurisdiction over him, alleging that the bank”s service of notice had not been at his proper address as he had left Mexico, and therefore the judgment should be set aside. The defendant was successful at first instance, but that decision was overturned on appeal and the original judgment against him reinstated.

A bank account allegedly held by the defendant in the Cayman Islands contained over US$2m. There was a dispute over ownership of those funds, which was to be resolved in separate proceedings in the Grand Court.

The plaintiff bank (which was the successor in title of the original lending bank) sought to enforce the Mexican court”s judgment in its favour and applied for summary judgment. It submitted that (a) the defendant had a ‘presence’ in Mexico at the time of the institution of the proceedings against him because it was the country of his principal residence, despite his having fled the jurisdiction, and that ‘presence’ was sufficient to ground the Mexican court”s jurisdiction over him; (b) in addition, by bringing the Amparo proceedings in Mexico to challenge the judgment, the defendant had voluntarily submitted to the jurisdiction of its courts; and (c) moreover, as the Amparo proceedings were fully examined by the Mexican court, which determined that under Mexican law it had jurisdiction over the defendant, the Cayman court should not investigate the issue de novo.

The defendant submitted in reply that (a) the plaintiff”s application did not satisfy the test for summary judgment in the Grand Court Rules, O.14, because the institution of the proceedings in Mexico raised substantial questions which had still to be tried; (b) the proceedings in Mexico were instituted after he had left the jurisdiction, and the Mexican court did not therefore have jurisdiction over him; and (c) furthermore, he only submitted to the jurisdiction of the Mexican court to the extent

necessary to bring the Amparo proceedings to contest jurisdiction, during which proceedings the substantive case against him was not contested, nor was there argument on the merits.

Held, dismissing the application and ordering that the matter be tried:

(1) At common law, the Grand Court would recognize the final and conclusive judgment of a foreign court in an action in personam creating a debt, provided that one or more of four circumstances existed, namely, that the judgment debtor had (a) been present in the foreign jurisdiction at the time when the proceedings were instituted; (b) participated as a plaintiff or counter-claimant in the foreign proceedings; (c) voluntarily appeared in the foreign proceedings as a defendant; or (d) submitted to the foreign court”s jurisdiction as a defendant by prior agreement. The foreign judgment must not have been procured by fraud, given in breach of natural justice, or be contrary to the public policy of the Cayman Islands (para. 8).

(2) In the present case it was uncertain whether the...