Standard Bank Plc v Via Mat International Ltd & Anor

There are two applications before me. The first is an application by the First Defendant (“Via Mat UK”) for summary judgment pursuant to CPR Part 24. The second is an application by the Second Defendant (“Via Mat Hong Kong”) seeking to set aside the order of Burton J dated 25 July 2011 by which permission was granted to serve Via Mat Hong Kong out of the jurisdiction. By the beginning of the hearing it had become common ground that the outcome of the second application depended upon resolution of the first. It was accepted by the Claimant (“The Bank”) that if Via Mat UK’s summary judgment application were successful, Via Mat Hong Kong’s jurisdiction challenge must succeed. Conversely it was accepted on behalf of Via Mat Hong Kong that its jurisdiction challenge would fail if the summary judgment application by Via Mat UK failed.

The Bank is an international investment bank based in London, with a subsidiary, Standard Bank Asia Limited (“Standard Bank HK”) operating from Hong Kong. Via Mat UK is an English company. Via Mat Hong Kong is a company incorporated in Hong Kong. Each is part of the Via Mat Group, each being a subsidiary of a Swiss parent company, Via Mat Management AG, which itself is a subsidiary of a Swiss holding company.

The dispute arises in relation to eight consignments of silver totalling approximately 20 tonnes (“the Silver”) which were, or were represented to have been, delivered to a vault (“the Vault”) operated by Via Mat Hong Kong in Chenzhou, in the Hunan Province of China. Via Mat Hong Kong issued confirmations of receipt to the Bank in relation to each consignment on various dates between about 10 June and 2 November 2010 (“the Confirmations”).

The Confirmations make clear both in their heading and above the signature that they are confirmations which are being given by and on behalf of Via Mat Hong Kong. They are in identical terms save as to details of date of receipt, identification of the refinery and the description of the silver. That relating to the consignment said to have been received on 10 June 2010 is in the following terms:

“We are pleased to confirm that the following shipment has been received by our Hunan warehouse:

Date of Receipt	10 JUN 2010
Commodity (said to contain)	Silver Ingots
PCS	170 Boxes
Net weight (per shipper bar list)	5100KG
Net weight (VMI Weight)	-
Shipper	Xihe
Lot No.	SBA-(H)-201

We are holding the above mentioned shipment to the irrevocable order of Standard Bank plc without any set off or counterclaim. We would not release the shipment or any part of the shipment prior to receiving written release instructions from Standard Bank plc, duly signed by your authorised signatory, by authentic fax to (852) 3151 7101 or email to vmi.hongkong @viamat.com ”

The Silver had been sold to the Bank by two refineries in China who can be called, for brevity, Xihe and Jin Rong. The employee in charge of the Vault on behalf of Via Mat Hong Kong was Mr Qi Yong-Quan (“Mr Qi”). On 25 November 2010 it emerged, following conversations between the Bank and Via Mat Hong Kong’s head office, that the Silver was missing from the Vault. Investigations were made which suggested that Mr Qi had issued or procured the issue of false delivery receipts and false stock inventory reports; and that he had done so in return for bribes in circumstances where silver had either not been delivered to the Vault, or had been delivered and returned to the refinery. Mr Qi has been convicted in China of receiving bribes and sentenced to three years imprisonment, suspended for four years. The Chinese Authorities sealed the storage facility, which has hampered and continues to hamper access to documents held there. The Defendants have not had access to Mr Qi for the purposes of adducing evidence on these applications.

The claim against Via Mat UK is put as one for breach of contract and in bailment. It is not, however, contended on behalf of the Bank that Via Mat UK ever took possession of the Silver, or that the bailment claim could succeed independently of the claim in contract. Mr Auld QC on behalf of the Bank submits that the contract pursuant to which Via Mat UK agreed to handle the silver, and under which its contractual liability arises, is contained in an International Transport Agreement dated 9 July 2001 (“the ITA”) and the General Trading Conditions of Via Mat UK (“the GTC”) which were incorporated therein.

Mr Kendrick QC on behalf of the Defendants accepts that Via Mat Hong Kong has a serious case to answer in relation to the missing Silver. He accepts that if the Silver was received at the Vault, there is an arguable case that Via Mat Hong Kong are liable in bailment or conversion; and that if the Silver was never received in the first place at the Vault, Via Mat Hong Kong face a seriously arguable case of liability by reason of the issue of the Confirmations.

He submits, however, that the proper analysis of the contractual arrangements, which does not depend on disputed issues of fact, shows clearly that there is no claim with a real prospect of success against Via Mat UK. He submits that the ITA was no more than a framework agreement which was to apply if and when the Bank agreed for particular carriage or storage services to be provided by Via Mat UK. He submits that it is not by its terms apposite to cover the services which Via Mat was providing in this case which were storage services. But in any event, he submits, it does not create any contractual relationship in relation to any particular goods unless and until the Bank actually makes an agreement with Via Mat UK in respect of such goods. He contends that no such agreement was made in respect of the Silver; that the Bank did not give any instructions to anyone in relation to these shipments; that the Bank did not pay anyone in relation to any services in respect of these shipments; that the Particulars of Claim and the Bank’s evidence do not identify any mechanism by which these shipments could properly be said to have become the subject matter of any specific agreement under the framework of the ITA. He contends that the relationship between the entities concerned with the Silver was that the Bank purchased the Silver from the refineries on terms which required the refineries to deliver it in Hong Kong; that the refineries contracted with Via Mat Hong Kong for performance of the services of storage at the Vault and onward carriage to Hong Kong; that the only contractual obligations owed by either of the Defendants were owed by Via Mat Hong Kong, not Via Mat UK; and that those contractual obligations were owed to the refineries, not the Bank.

Before coming to the arguments on behalf of the Bank it is convenient to set out the evidence of the contractual arrangements between the various entities involved with the Silver.

The ITA is a single page document dated 9 July 2001 expressed to be between Via Mat UK, defined as “The Company”, and the Bank defined as “The Client”. It provides that it is governed by the current version of the GTC which is to form an integral part of the agreement. In a box headed “The Schedule” it provides amongst other things:

The GTC in force at the time and attached to the ITA were those set out in the January 2000 edition. It is accepted by both sides that for present purposes the relevant terms are those set out in 2005 edition. Neither party suggested that any differences between the two editions were material to the present applications.

The GTC provided as follows:

“In these General Trading Conditions, “The Company” is [Via Mat UK]. The Company (whether by itself or the agents referred to at the end of this document) is engaged in various services relating to valuables or special consignments such as precious and semi precious metals, precious stones, jewellery, currency, cheques, travellers cheques or other negotiable documents and cash or any other goods of a sensitive or valuable nature…. All items carried or otherwise dealt with… shall be collectively referred to as “goods” or “the goods” as the context admits”

The “agents referred to at the end of this document” were those identified on a separate page. The page bore Via Mat UK’s heading and said that it was “represented in” various territories by individually identified Via Mat companies incorporated in those local jurisdictions. The 2005 edition of the GTC did not have China identified as a territory, but it did identify Hong Kong as a territory and identified Via Mat Hong Kong as the representative in respect of that territory. The page continued “the above are acting as agents for [Via Mat UK]”.

The GTC went on to provide:

“the party with whom the Company trades and/or otherwise contracts is referred to as “the Principal”.

Subject to what follows, these General Trading Conditions apply to all activities and business undertaken by the Company for and on behalf of the Principal. These General Trading Conditions thus apply to valuable consignments but, for the avoidance of doubt, do not apply to any activities and business undertaken by the Company relating to works of art and similar property. Neither do they apply to activities performed entirely within Switzerland, since in such cases separate conditions are in force. …

These General Trading Conditions will be deemed incorporated into any other carriage documents or other agreements issued to the Principal by the Company.”

The GTC provided for English law to be the governing law and for resolution of disputes to be subject to the jurisdiction of the English Courts.

Clause 2 of the GTC provided:

“2.

Contract Services

The Company shall perform all services in accordance with the Principal’s instructions. The Company shall be entitled to perform any of its obligations by itself, agents, parent companies, subsidiary companies, associated companies or sub contractors and all such parties (through the agency of the Company), shall be entitled to the benefit of these General Trading Conditions. Unless otherwise agreed in writing and in advance or inapplicable to the particular services to be performed (e.g. long term storage, advice etc.), the Company will perform services as a carrier rather than a forwarder.”

Clause 13 of the GTC provided:

“A.

The Principal agrees to pay the Company at the rates it charges as at the time an order is placed and will also pay all costs and expenses reasonably incurred by the Company in performance of the agreed services.”

Neither party advanced any evidence of any course of dealing between them other than in relation to silver from Chinese refineries. The eight consignments of silver which are the subject matter of the dispute were amongst over 150 consignments which the Bank had purchased from the two refineries in China. The relevant contract between the Bank and Xihe was said to be that dated 27 April 2005. It provided for the purchase by the Bank from Xihe of silver ingots of minimum purity of 99.9% in monthly quantities within a range, at seller’s option. The written contract only referred to the period from 1 May 2005 to 30 April 2006, but I was asked by both parties to assume that this agreement governed consignments thereafter (although without being updated to take account of the new arrangements in 2009 to which I refer below). The agreement provided that contractual delivery was to take place by delivery to a nominated Security Agent at an address in Hong Kong notified by the Bank. Title and risk was only to pass to the Bank when that Security agent, in Hong Kong, issued a Safety Receipt confirmation. The agreement provided for prepayments or credits to commodity accounts, but always subject to the ultimate price being adjusted by reference to the confirmation of receipt of the silver in Hong Kong, including in particular confirmation as to its quality (clauses 14(b), 15, and 16).

The governing contract in relation to silver from the Jin Rong refinery was dated 11 August 2009. The contract was in this case not specifically for ingots but for “silver products” of minimum 99.99% purity including electrical contact parts, silver wires or such other silver products as the buyer might approve from time to time. The quantity to be supplied was a monthly quantity within a range at seller’s option over a period from September 2009 to August 2011. Under this contract the delivery terms were that the refinery was first required to deliver the materials to the vault of Bank of China Chenzhou Branch, for subsequent export to Hong Kong and delivery to a vault of a security agent in Hong Kong designated by the Bank from time to time. Under the terms of this agreement, although contractual delivery would only take place in Hong Kong, payment was dependent upon inspection and the issue of certification by the Bank of China at its vault in China.

The shipments which are the subject matter of dispute in this case, and all other shipments from about August 2009, were not dealt with in accordance with the terms of either of the refinery agreements. The Bank says that the agreements were varied orally, but the paperwork was never amended to reflect the position. The new practice, in relation to both refineries, arose out of the establishment by Via Mat Hong Kong of its own vault in Hunan. It appears that this was an initiative driven, at least in part, by Mr Qi. According to a statement made to the Chinese police by Gilbert Chan (also known as Chen Guo-Xing), the former director and general manager of Via Mat Hong Kong and Mr Qi’s superior at the time when he was employed by Via Mat Hong Kong, Mr Qi’s target was to strive to get seven silver refineries in Hunan to become the customers of Via Mat Hong Kong so that Via Mat Hong Kong could provide warehouse and transportation services between mainland China and Hong Kong and deliver silver commodities to Standard Bank in Hong Kong on a regular basis as and when required. In order to explore the feasibility of the new business proposed, Mr Chen spoke to Mr Ellison Chu who was in charge of the precious metals department of Standard Bank HK. He said this was because without support from Standard Bank the new business plan proposed by Mr Qi would not be feasible from a commercial point of view. Mr Chu came back confirming that Standard Bank HK would endorse and support the new business plan proposed by Mr Qi.

On 14 August 2009 (three days after the Jin Rong refinery contract) Via Mat Hong Kong sent to Mr Chu at Standard Bank HK a document which said:

“we are pleased to inform you that we have now completed set up of our secured silver storage facility within the production plant of Chenzhou Jin Gui Silver Industrial Co Ltd in Hunan, China.

We would confirm that we are ready to receive store and process your first shipment of silver shipment (sic) at the above silver storage facility and all your silver shipments in the storage facility will be fully covered by our full liability cargo insurance policy for handling, transit and storage.”

In his first witness statement on behalf of the Defendants, Mr Grant described at paragraph 10 how the transport and storage of silver thereafter was intended to operate. His evidence is on information from Gilbert Chan, who verified this account by his own witness statement dated 28 February 2012. The operation was described as follows:

“10.1

The relevant Chinese refinery would make a contract of carriage by informing Qi Yong Quan, an employee of Via Mat HK, who managed Via Mat HK’s Hunan operations, that a parcel of silver was to be delivered to the secure storage facility in Hunan for onward transmission to the Claimant in Hong Kong.

10.2

The silver bars from the refinery were then transported by the relevant refinery (without any involvement of Via Mat HK) to the secure storage facility in Hunan.

10.3

On receipt of the silver, the storekeeper of the secure storage facility checked the parcel and completed a manual collection/delivery receipt on Via Mat HK headed paper which would be countersigned by a representative of the delivery refinery… A copy of such collection/delivery receipt was then sent to Via Mat HK’s Hong Kong office. Via Mat HK would thereupon issue a confirmation (or warehouse receipt) to the Claimant’s Hong Kong office…….. Via Mat HK staff would update the stock inventory report and email it to staff in the Claimant’s Hong Kong office.

10.4

Consignments of silver were grouped together at the secure storage facility in Hunan in order to reduce transport costs. This meant that consignments of silver bars could remain in the secure storage facility in Hunan for a significant period before being transported by truck to Hong Kong (with an armed escort).

10.5

When requested to do so by the refinery in question, Via Mat HK would transport silver in the secure storage facility in Hunan to Hong Kong. All the relevant export documentation was provided by the refinery. For the avoidance of doubt, all instructions as to the transport of the silver from the secure storage facility in Hunan to Hong Kong came from the refineries, and not the Claimant. In particular it was the refinery which instructed Via Mat HK which parcels of silver were to be transported to the Claimant in Hong Kong and when.

10.6

Via Mat HK would invoice the refinery after the silver had been transferred to the Claimant in Hong Kong (i.e. had arrived at Via Mat HK secure storage facility in Hong Kong where it was then stored at the Claimant’s cost)…….. There was no separate charge for the storage of the silver at the secure storage facility in Hunan.

10.7

The relevant refinery, and not the Claimant, paid, and was solely responsible for paying, Via Mat HK’s charges under the contract of carriage referred to in paragraph 10.1 above.”

This account, contained in Mr Grant’s first witness statement of 13 October 2011, was not substantially disputed by any evidence adduced on behalf of the Claimant. In Mr McDonald’s second witness statement dated 27 January 2012 he said at paragraph 60:

“Mr Grant seeks to make a point out of the refinery’s involvement in instructing the Vault to move individual shipments of silver on to Hong Kong. I am told by the Bank’s employees that the Bank, the refineries, and Via Mat did liaise with regard to the size and frequency of shipments out of Hunan to Hong Kong.”

Mr McDonald did not specifically take issue with Mr Grant’s clear evidence that it was the refineries who gave the instructions for storage, consolidation and onward transport to Hong Kong, not the Claimant, although he did make a point that the refineries did not have authority to instruct Via Mat to move the silver “anywhere other than the agreed destination, in this case Via Mat’s Hong Kong vault”. It appears therefore that such liaison as there was between the Bank and Via Mat (and paragraph 11 of Mr Grant’s witness statement suggests that there was some such liaison) was limited to exchange of information, and did not involve the Bank purporting to give instructions to Via Mat Hong Kong. That the instructions always came from the refineries, not the Bank, is confirmed by the fact that in Mr Grant’s second witness statement dated 28 February 2012 he again said, on information from Gilbert Chan, that the instructions always came from the refineries and that Via Mat Hong Kong did not receive any instructions from the Bank to move the silver from mainland China to Hong Kong whatsoever. Despite further evidence put in on behalf of the Claimant, no issue was taken with that evidence. It is consistent with, and supported by:

Such documentation as is available is also consistent with, and only consistent with, the consignments of silver which the Bank bought from the refineries being dealt with in this way. There are receipts issued by Via Mat HK to the refineries evidencing receipt of silver at the Vault. There are communications between Mr Qi and transport subcontractors for carriage of the silver from Hunan to Hong Kong. There are invoices from Via Mat Hong Kong to the refineries for the shipping and packing charges for transport from Hunan to Hong Kong. It was common ground before me that the Bank did not make any payment to any Via Mat company for storage of the silver or transport to Hong Kong in respect of any of 158 consignments of silver which were subject to these arrangements; and that no one expected the Bank to do so in respect of the eight of those consignments which are the subject matter of the present dispute.

The only document evidencing a contract of carriage, or contract of storage and carriage, between the refineries and Via Mat Hong Kong which Via Mat HK have been able to put before the Court is an International Transport Agreement dated 1 June 2009. It is in identical terms to the ITA of July 2001 upon which the Bank relies, save that it is between Via Mat Hong Kong and Xihe; and its incorporation of the GTC was of “the terms and conditions of the GTC applicable to this agreement.” The GTC attached were, it appears, Via Mat UK’s GTC which therefore defined the Company as Via Mat UK, in contradistinction to the definition on the face of the ITA of Via Mat HK as the Company. Mr Auld QC contended that this ITA, and agreements made pursuant to it, were by its terms necessarily agreements by Via Mat HK on behalf of Via Mat UK. I disagree. The agreement in the ITA itself is clearly expressed to be with Via Mat Hong Kong and signed on behalf of Via Mat Hong Kong. The incorporation of the “applicable” GTC simply means that references in the GTC to Company are to Via Mat Hong Kong, which is defined as “The Company” on the face of the ITA.

Mr Auld QC submitted that the ITA incorporating the GTC was intended to be a comprehensive document governing all shipments of silver in which the Bank had an interest; and was intended to apply to the handling of those shipments by Via Mat UK or any of the other named Via Mat companies including Via Mat Hong Kong. The commercial purpose was to have a single set of standard terms, with the certainty of English law and jurisdiction, to govern such operations wherever they might happen in the world and whichever of the Via Mat companies might be involved locally.

He relies upon a witness statement of Neal Johnson, who since 1 November 2010 has held the position of Global Head of the Physical Commodities Management Unit for the Corporate and Investment Banking Division of the Standard Bank Group. He joined Standard Bank in April 2003. His capacity between April 2003 and 1November 2010, which covers the period during which all or almost all of the Silver was handled, is not identified. He says that his belief had always been that the ITA covered all the dealings between the Via Mat Group and the Bank including those relating to the missing silver shipments the subject matter of these proceedings. He says his “understanding” has always been that when Via Mat received and stored precious metals including silver for Standard Bank at its vault in Hong Kong it did so under the terms of the ITA. I did not find this evidence of any assistance on this application. It did not identify any facts upon which his belief or understanding was founded.

I take first Mr Kendrick QC’s argument that the ITA was not apposite to cover the services which fell to be performed in relation to the Silver shipments because they do not come within any of the categories set out in the Schedule on the face of the ITA. This point is, in my judgment, mistaken. The services in the schedule on the face of the ITA include “Door to door”. The arrangements which Via Mat undertook in this case were for storage of the cargo upon receipt at the Vault, processing and grouping together with other consignments, and onward transport to and delivery to the Bank in Hong Kong. That is door to door from receipt in the Vault to delivery in Hong Kong. Moreover it is apparent from clause 2, clause 3 and clause 4C that storage, even if it be long term and independent storage, is within the scope of the general terms and conditions. There can be no doubt that incidental storage is within the scope of the conditions and clause 2 provides that the services which are to be performed are presumed to be those of a carrier. The services which Via Mat were performing in relation to the consignments of silver from the refineries, including the eight which are the subject of this dispute, were in my view clearly for incidental storage as part of an obligation to transport the goods from Hunan to Hong Kong. This is consistent with and supported by the International Transport Agreement between Via Mat HK and Xihe which defines the scope of services which it is to cover by a schedule on its face in identical terms to the ITA.

Mr. Kendrick QC’s main argument, however, is more formidable and one which I accept. The ITA is a framework agreement which by its terms can only have been intended to apply if services were contracted for in relation to specific shipments or goods by further dealings directly between Via Mat UK (or someone on its behalf) and the Bank. There is no evidence in this case that there was ever any agreement between Via Mat UK, or anyone on its behalf, and the Bank for the provision of the storage services in relation to the eight consignments of silver. On the contrary the evidence is inconsistent with any such agreement because it is clear that Via Mat HK contracted with the refineries, not the Bank, for the provision of such services as they agreed to provide in relation to the Silver.

The ITA does not define what services Via Mat UK are to provide in relation to any particular shipment or goods. It may be for carriage, forwarding, or storage. The ITA does not define the place and time at which the services are to start and at which they are to finish. The Charges box in the Schedule envisages that there will be “individual quotes per destination” and “agreed delivery terms”. Clause 2 envisages that there will be instructions from the Bank to Via Mat UK as to how the services, which themselves will have to have been separately agreed, are to be performed. Clause 13 envisages that the Bank will be the party agreeing to pay charges, and costs and expenses at the time “an order is placed” which again posits specific instructions for specific services being given by the Bank to Via Mat UK.

There is no suggestion by the Bank that there were any such terms agreed in relation to the Silver between the Bank and anyone at Via Mat UK or indeed Via Mat HK. On the contrary, the Bank’s rights in relation to delivery of the Silver were those agreed with the refineries under their contracts which provided for delivery in Hong Kong. Thus one would expect the position to be, as the evidence suggests it was, that the contractual relationship which Via Mat had in respect of storage and handling prior to delivery in Hong Kong was a relationship with the refineries, not the Bank.

It is, in my judgment, telling that the Particulars of Claim do not articulate the mechanism by which these eight shipments came to be governed by the ITA so as to be the subject matter of a contract between Via Mat UK and the Bank. Nor was the mechanism identified any more clearly in the evidence served or the submissions made on behalf of the Bank. It was not clear whether it was said to arise upon and by reason of receipt of the Silver at the Vault, or upon issue of the Confirmation, or upon and by reason of Via Mat HK agreeing the services with the refineries.

Mr. Auld QC acknowledges that Via Mat UK, the English company, did not in fact have anything to do with these consignments. They were handled in China, for forwarding to Hong Kong, by Via Mat HK. His submission is that nevertheless Via Mat Hong Kong was acting as agents for Via Mat UK. The only source for such agency is said to be the ITA itself. It is submitted that the reference to “the Company” in the ITA must in all cases be treated as not merely a reference to Via Mat UK, but as a reference to any of the other Via Mat companies who may be agents or sub contractors of Via Mat UK. This argument is in my view misconceived. It starts with an a priori assumption that any Via Mat company is acting pursuant to the ITA, rather than providing an analysis of why that is so. It is of course possible that if one of the other Via Mat companies, other than Via Mat UK, is in any individual case performing services in relation to goods it is doing so as agent or subcontractor for Via Mat UK. But the mere existence of the ITA does not make that so. It is necessary first to identify whether, and if so how, the goods have become the subject matter of an agreement between the Bank and any Via Mat company; and then to analyse whether such contractual relationship involves the Via Mat company contracting as agent for Via Mat UK.

Quite apart from this difficulty, the insuperable obstacle in the way of Mr Auld QC’s argument is the existence of the contract for provision of the services between Via Mat HK and the refineries. The Bank’s case amounts in essence to saying that the ITA governs these shipments as a matter of implication from (i) the existence of the ITA and (ii) the fact that Via Mat HK were handling silver belonging to the Bank, or at least due to belong to the Bank if and when a Confirmation was issued. But such an implication would be entirely inconsistent with the contractual arrangements between the entities involved in the venture. It would involve Via Mat UK undertaking contractual obligations towards the Bank at the same time as, indeed on the Bank’s case because of, Via Mat HK’s agreement to undertake those contractual obligations towards the refineries. Who then, one might ask, would have the right to give the instructions to Via Mat which are envisaged by clause 2 of the ITA? On the Bank’s case, the Bank would be entitled to give instructions to Via Mat UK, whilst the refineries would be entitled to give inconsistent instructions to Via Mat Hong Kong. This would be a most surprising result and not one which could arise by implication.

One can further test the Bank’s case by asking what are the services in relation to the eight shipments which it is said Via Mat UK agreed to perform? Mr Auld QC’s answer was the storage of the cargo at the Vault and its onward carriage to Hong Kong. But these are only services which any Via Mat company can be said to have undertaken because they were the agreed scope of services negotiated between Via Mat Hong Kong and the refineries. The Bank cannot posit an agreement governed by the ITA for any Via Mat company to provide services without defining those services by reference to there being a separate contract with some Via Mat company to which the Bank was not party.

In this connection Mr Auld QC further submitted that the analysis by the Defendants hinges critically upon the agreement in relation to the handling of the Silver being made by Via Mat Hong Kong with the refineries, and says that the evidence of such contracting is exiguous and unreliable. It depends, he submits, ultimately upon evidence emanating from Mr Qi, whose word cannot be trusted, and on documentation which is incomplete and inadequate. He says that there is only evidence, which can safely be relied upon, of one contract to which any of the Via Mat companies are a party, and that is the contract contained in the ITA between Via Mat UK and the Bank. He points to various documents suggesting that Via Mat regarded the Bank and not the refineries as its customer.

The difficulty with these arguments is that the Bank did not agree to pay any Via Mat company in respect of the services, and did not do so. Nor did it agree the scope of services in relation to these eight shipments with Via Mat UK, or even Via Mat Hong Kong. That was all in the hands of the refineries. Mr Auld QC ultimately accepted that whatever might be the insufficiency of the details of how contracts were concluded between Via Mat Hong Kong and the refineries, there must have been a contract between Via Mat Hong Kong and the refineries in relation to the consignments in question; and that that must have been a contract under which Via Mat Hong Kong agreed what they were to be paid by the refineries for the services which they agreed to perform; and that that must have been a contract under which Via Mat Hong Kong agreed to store the consignments at the Vault, consolidate them with a view to reducing transport costs, and transport them to Hong Kong. He suggested that that may not have been a contract with Via Mat Hong Kong as principal and may therefore have been a contract with Via Mat Hong Kong acting as agent for Via Mat UK. Quite apart from the fact that there is no basis for such hypothesis other than the misconceived argument that it is the result of an a priori assumption from the ITA itself, that still leaves the problem that the contract for services which was being performed in this case by Via Mat Hong Kong, whether as principal or agent for Via Mat UK, was a contract with the refineries in which the scope of services was agreed with the refineries, the price was agreed by the refineries and paid by the refineries, and in respect of which the refineries had the right to give instructions. The existence of such a contract is quite inconsistent with a parallel contract under which Via Mat UK undertook all the same liabilities to the Bank.

Mr Auld QC also submitted that the terms of the Confirmations had the effect that the Bank was entitled to give instructions in relation to releasing the shipment from the Vault; and that this would be inconsistent with the refineries having any right to give such instructions. But the undertaking in the Confirmations not to “release the shipment” was not a reference to releasing the shipment from the Vault; it was a reference to releasing the shipment otherwise than in accordance with the existing contractual arrangements involving transport from the Vault to Hong Kong. This is the only construction consistent with the obligation owed to the refineries to consolidate the consignments so as to reduce transport costs and then to transport them to Hong Kong. That this was how the Bank’s employees themselves understood the Confirmations is supported by Mr McDonald’s evidence of their understanding in the final sentence of paragraph 60 of his second witness statement.

Mr Auld QC argued that the Confirmations were issued directly to the Bank, and that therefore they must have been being issued pursuant to a contractual obligation towards the Bank, which must have been a contractual obligation owed under the ITA as the only contract between the Bank and any Via Mat company. This involves false reasoning. It is a commonplace in international trade agreements for the parties to a contract to provide that a third party is to issue a document which will have some effect on their contractual obligations, without that third party undertaking a contractual relationship with the person to whom it is addressed. Buyers of cargo, for example, may be bound by a certificate of quality issued at the loadport by a surveyor who is engaged by the seller for that purpose. The purpose of the Confirmations was to trigger the obligation of the Bank to pay the price to the refineries, just as the Bank of China’s certificate had been under the written contract with Jin Rong. The Confirmations also acknowledged the property rights of the Bank thereafter, such that as bailees or custodians, Via Mat HK would only deal with the silver in accordance with such property rights and the terms of the contracts between the refineries and each of them. But it does not follow that the Confirmations were intended to create contractual rights or were provided in accordance with contractual obligations, still less that they were in fulfilment of obligations under the ITA which is silent about any such receipts or confirmations. The same is true of the inventory reports sent by Via Mat HK from time to time to the Bank which included the eight consignments as being stored at the Vault.

For these reasons, none of which depend upon the further investigation or resolution of disputed issues of fact, the claim against Via Mat UK has no real prospect of success. There is no other compelling reason why the case against Via Mat UK should be disposed of at a trial. Via Mat UK is entitled to summary judgment. It follows that Via Mat Hong Kong’s jurisdiction challenge application also succeeds.