Australia, June 3 -- New South Wales Land and Environment Court issued text of the following judgement on May 5:

1. The background to this matter is set out in my judgment of 15 October 2024. [1] I shall use the same abbreviations here.

2. I then declined to lift my 14 December 2023 stay of my 20 November 2023 $37 million judgment in favour of Gosford against the Bank. [2]

3. I did so pending consideration by the Chinese Court of the Bank's application to that Court to dissolve its Civil Ruling that currently restrains the Bank from making payment under the Letter of Credit that is the subject of my 20 November 2023 judgment.

4. I took this course for reasons of comity between this Court and the Chinese Court as, on 15 October 2024, the position was that the Chinese Court was scheduled to hear the Bank's application on 26 December 2024.

5. I said:

"Notwithstanding the undoubted importance of letters of credit in international trade, comity requires, in the particular circumstances of this case, that I await the Chinese Court's decision, provided that it is made within a reasonable time of the hearing scheduled for 26 December 2024." [3]

6. The purpose of my continuation of the stay was to enable the Chinese Court to consider whether, in the light of my conclusions as to the enforceability of the Letter of Credit, which conclusions have now been upheld on appeal, it should dissolve the Civil Ruling, thus enabling the Bank to comply with the judgment that this Court has entered against it.

7. Gosford now makes a further application to lift the stay on my 20 November 2023 judgment.

8. There have been a number of developments since my last consideration of the matter.

9. In December 2024, the Bank made comprehensive written submissions to the Chinese Court, including:

"The Australian court has already rendered a judgment on the dispute under the standby letter of credit involved in this case, and [Shanxi] seeking relief based on the same facts domestically falls under the principle of 'res judicata'. Therefore, your honourable court should not continue to hear this case but should directly dismiss the plaintiff's case.

...

Since the Australian court has issued a binding judgment affirming that Gosford is entitled to claim under the standby letter of credit, and [Shanxi], as a party in that proceeding, has voluntarily accepted and is bound by the jurisdiction of the Australian court, the judgment of the Australian court must be executed and honoured. Therefore, your honourable court lacks jurisdiction over the facts established by the effective judgment of the Australian court (i.e., the fact that Gosford is entitled to claim under the standby letter of credit."

10. In effect, the Bank argued that by reason of this Court's determination of the question of the Bank's obligation under the Letter of Credit, the Chinese Court should summarily dismiss Shanxi's challenge to it.

The 26 December 2024 and 21 January 2025 hearings

11. The "public hearing" foreshadowed in the Chinese Court's Announcement of 20 September 2024, set out at [24] of my 15 October 2024 judgment, took place on 26 December 2024.

12. It appears that there was also a further "hearing" on 21 January 2025.

13. A notice published by the Chinese Court of 7 February 2025 appears to describe what happened on 26 December 2024 and perhaps also on 21 January 2025.

14. That notice stated:

"The Court has held a public trial on 26 December 2024 and organised a hearing on 21 January 2025, during which the [Shanxi] and the third party BOC Shanxi conducted factual statements, Evidence-in-chief, cross-examination and court debates around the following issues: 1) the nature of the Plaintiff's claim and the application of law; 2) jurisdiction; 3) issues relating to the standing of the Plaintiff and the Defendant; 4) the relationship between the litigations in New South Wales and in Taiyuan; 5) whether the demand made by the Defendant, Gosford, constitutes fraud."

15. The notice thus described five "issues" evidently debated on 26 December 2024 and perhaps also on 21 January 2025. Those issues included "jurisdiction" [4] and "the relationship between the litigations in NSW and in Taiyuan". [5] The latter appears to be the subject of the Bank's submissions in support of summary dismissal of Shanxi's claim on the basis of this Court's decisions.

16. The 7 February 2025 notice continued:

"The Court has found that, as a foreign-related civil and commercial case, the nature of this case is an independent guarantee fraud dispute, the applicable law shall be Chinese law, and specifically the Provisions of the Supreme People's Court on Several Issues concerning the Trial of Independent Guarantee Dispute Cases ("PRC Independent Guarantee Provisions"); as the court at the domicile of BOC Shanxi, the independent guarantee issuer, this Court has jurisdiction over the case; and [Shanxi] and the Defendant Gosford both have the capacity to sue and to be sued in this case."

17. That paragraph records what the Chinese Court found arising from the 26 December 2024 and 21 January 2025 hearings. The finding appears to be that the Chinese Court determined it had jurisdiction over the matter before it; the "jurisdiction" issue referred to in the passage I have set out above.

The 25 February hearing

18. An earlier notice from the Chinese Court, dated 26 January 2025, stated that:

"The Court is scheduled to hear from the parties again on 25 February 2025, to continue to investigate some of the facts, and is scheduled to make a decision over this case by 31 March 2025."

19. The 7 February 2025 notice also stated that the Chinese Court proposed to "hold another trial to hear from the parties on 25 February 2025."

20. The notice set out eight "questions" on which the 25 February 2025 hearing "will be focussing". Those questions all appear to be related to the fifth "issue" ventilated at the 26 December 2024 and 21 January 2025 hearings: "whether the demand made by the Defendant, Gosford, constitutes fraud".

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1969f35bf4c86311d4668147)

Disclaimer: Curated by HT Syndication.