Hawke Bay Shipping Co. Ltd. & Ors. v. The First National Bank of Chicago - Court of Appeal (O’Connor, Purchas and Mustill L.JJ.) - 4 December 1985

Forum non conveniens - Factors considered in refusal to grant stay of English action running parallel to Greek action

In March 1974 the Bank entered into a loan agreement for up to U.S.$10 million with the first plaintiff and three other foreign, one ship companies (also plaintiffs). The agreement was governed by English law. The Bank took a mortgage over each vessel. Following financial difficulties on the part of all four companies, the Bank, in February 1978 demanded repayment of all sums due under the agreement, said to be U.S.$4.5 million. The Bank’s demands were not met. The Bank therefore brought foreclosure proceedings against two of the companies in Greece and arrested three vessels, all of which were subsequently sold. There was a shortfall and the Bank brought another action in Greece against the guarantors of the agreement (the sixth and seventh plaintiffs). It was alleged in these proceedings that the Bank had no right to foreclose or to arrest the ships because, by an agreement reached in August 1977, the time for payment of certain instalments under the loan agreement had been deferred, the two of the vessels were sold at an undervalue and that the Bank had failed to realise the security of another vessel and hence the guarantors were discharged from liability under the guarantee.