Neutral Citation Number: [2008] EWHC 421 (Ch)
Case No: HC06C02455
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 06/03/2008

Before:

THE HONORABLE MR JUSTICE EVANS-LOMBE
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Between :

	Greenland Bank Limited	Claimant	
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	American Express Bank Limited	Defendant	

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Gordon Bennett (instructed by Edwin Coe) for the Claimant
David Wolfson (instructed by Mishcon de Reya) for the Defendant

Hearing dates: 11/2/08-20/2/08
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Judgment
Mr Justice Evans-Lombe: 
1.	The Claimant, Greenland Bank Limited (“Greenland”) was, until it was placed in liquidation, carrying on a banking business from Kampala in Uganda.  Westmont Power (Bangladesh) PVT Limited (“Westmont”) was a customer of Greenland.  On 10th June 1998 Westmont entered into a Power Purchase Contract (“the Contract”) for the supply of electricity to Bangladesh Power Development Board (“Bangladesh Power”) for a period of 15 years concluding on 10th June 2013.  It was a term of the Contract that Westmont would provide a performance bond (“the Bond”) limited to the sum of US$1.5 million capable of being replenished if a claim is made, by a bank of appropriate standing, to secure due performance by Westmont of the terms of the Contract for the benefit of Bangladesh Power.  Greenland did not have that standing and accordingly approached the Defendants, American Express Bank Limited (“Amex”), with which it had a relationship going back to June 1993, to provide such a performance bond in its place upon terms, including a cash deposit of $1.5 million with Amex by way of cash collateral, and the payment of an annual commission of 1% of the sum secured by the performance bond.  On 23rd June 1998, with money provided through Westmont from a financier (“the Financier”), Greenland deposited US $1.5 million at a London branch of Amex.  It is Greenland’s case that the deposit of $1.5 million has become repayable to it because, at least by June 2001, the performance bond, by reason of the failure to renew it on due date in accordance with its provisions, had ceased to have effect.  It is Amex’s case that by reason, in particular, of the judgment of the District Court of the Joint District Judge Number 2 Dhaka (“the Judge”) delivered on 5th May 2004 (“the 2004 Judgment”), a judgment which is being appealed in Bangladesh by Amex, Amex remains liable under the performance bond and, accordingly, is entitled to retain the deposit.  
The underlying facts
2.	Clause 16.6 of the Contract provided that:-
“16.6.1 Within 15 days after the execution of this Agreement, the Company [Westmont] shall provide BPDB [Bangladesh Power] a performance bond (“the Performance Bond”) in the form provided in Schedule 11, which shall be continuing security, in an amount of US Dollars one million five hundred thousand (US$1,500,000) to ensure Company’s obligations hereunder including its obligations to pay liquidated damages.
16.6.2 Company shall maintain the Performance Bonds at all times during the Term from the full Commercial Operation Date; provided that Company may have 15 days to replenish the Performance Bonds so as to return it to the designated level, in the event that BPDB retains or collects funds from the Performance Bonds.”
3.	In most of the contemporaneous documents in which the Bond is referred to it is called a “guarantee”.  I regard this as confusing because the document in question is not a guarantee.  I have therefore referred to the Bond throughout this judgment as the Bond notwithstanding that it is referred to as “the Guarantee” in many contemporaneous documents.
4.	On 14th June 1993 Greenland had entered into a Counter Indemnity with Amex the provisions of which were effective to indemnify Amex against all claims arising out of or in connection with the Bond.  In June 1993 Greenland opened dollar and sterling accounts with Amex.  On 23rd June 1998 Greenland deposited $1.5 million in its dollar account.   
5.	On 24th June 1998 Amex faxed Greenland seeking their “comments and assistance on the following points” arising from the form of the Bond:-
“1. Please provide a brief background to the mechanics of this transaction.  Although one hundred per cent cash covered we must be sure that the transaction is within policy guidelines.  
2. Please provide the full address of the beneficiary (together with a fax number if available).
3. Pricing for this transaction would be 2% p.a. [later reduced to 1%]. 
4. We propose to issue the bond with an initial validity of two years with yearly rollover thereafter.
5. Covering funds would be placed on a fixed deposit on a yearly basis and at a favourable rate of interest. ”
6.	Greenland’s response faxed on the same day commented on points 3 and 4 as follows:-
“3. Guarantee fees of 2% p.a. is too high considering the facilities fully secured by a cash deposit – propose 1% p.a.
4. The Performance Bond format prescribes that the guarantee is to be valid for 15 years and [it] is preferable that the format not be changed.  However, if the insurer is insistent on an initial period of 2 years and subsequent renewals thereafter, it appears that as long as the renewal is not conditional the format may be acceptable to the beneficiary.
I propose that the expiry date of 10th June 2013 be retained to avoid any problems considering that we will be placing the deposit of US $1.5 million for the full tenure of the Performance Bond.”
7.	These comments were, in fact, the comments of Westmont’s bankers on the form of bond submitted by Amex.  With this fax was sent a two-page description of the electrical power project which Westmont was to undertake on behalf of Bangladesh Power which made plain to Amex that the project was to last for 15 years and that the Bond was to be issued in favour of Bangladesh Power pursuant to a term of the Contract.  
8.	Also on 24th June Greenland faxed to Amex a form of the Bond for their approval.  That was in letter form and was addressed to Bangladesh Power and the material part of it provided:-
“THEREFORE WE hereby affirm that we are guarantors and responsible to you, on behalf of the Seller [Westmont], up to a total of US$1,500,000 (US Dollars one million five hundred thousand) and we undertake to pay you, upon your first written demand declaring the Seller to be in default under the Contract and without cavil or argument, any sum or sums within the limits of US$1,500,000 (US Dollars one million five hundred thousand) as aforesaid without your needing to prove or to show grounds or reasons for your demand or the sum specified therein.
This guarantee is valid until the tenth day of June two thousand and thirteen and is irrevocable and unconditional.”
9.	On 25th June Amex faxed Greenland and Bangladesh Power for approval a draft of the Bond which expanded the last line of Greenland’s draft so that it read:- 
“On 10th June 2000 this Guarantee shall expire.  On such date this Guarantee shall become null and void, whether or not returned to us for cancellation, unless we shall have agreed, on receipt of your written request therefor, not later than 1 month prior to such date, to renew this Guarantee for a further period of one year.  Thereafter this Guarantee may be renewed for successive periods of one year on the terms hereof, or on such other terms as we may from time to time agree.”
10.	Later on 25th June Greenland faxed to Amex a copy of a communication from Westmont to them commenting on the drafts being proposed for the Bond as follows:-
“In respect of expiry, the guarantee should be reworded to include the initial expiry on 10th June 2000 and thereafter to be renewed for successive periods of one year each (up to June 10th 2013) on the terms thereof or on such other terms as we may from time to time agree.”
They added their own comment:-
“They [Westmont] request that the guarantee’s initial expiry be on 10th June 2000 ….”
11.	On the same day Greenland faxed to Amex a further draft of the Bond in which the final sentence of Amex’s draft was expanded so as to read:-
“Thereafter this Guarantee may be renewed for successive periods of one year on the terms hereof, or on such other terms as we may from time to time agree, until 10th June 2013.”
12.	This form appears to have been acceptable to all parties and Greenland instructed Amex to “go ahead and issue the above guarantee and transfer from our demand account No. 130850 USD 1,500,000 to be placed as a fixed deposit with yourselves as collateral against this guarantee.  You are further authorised to debit account No. 130850 for the bank charges involved under separate advice to us.  Regarding interest on the fixed deposit please let us know your offer as these funds will remain with you for quite a long time.”
13.	In the result the final form of the Bond entered into by Amex in favour of Bangladesh Power on 25th June 1998 was in the following terms:-
“Re: Guarantee No. 31/98
We refer to our above-numbered Guarantee.
WHEREAS Westmont Power (Bangladesh) Pvt. Ltd., (hereinafter called “the Seller”) has undertaken, in pursuance of the Power Purchase Agreement dated 10th June 1998 to supply Electrical Power (hereinafter called “the Contract”).
AND WHEREAS it has been stipulated by you in the Contract that the Seller shall furnish you with an irrevocable and unconditional Bank Guarantee by a scheduled Bank in Bangladesh or by a foreign Bank endorsed and authenticated by a scheduled Bank in Bangladesh for the sum specified herein as security for compliance with the Seller’s performance obligations in accordance with the Contract.
AND WHEREAS we have agreed to provide to the Seller a guarantee.
THEREFORE WE hereby affirm that we are Guarantors and responsible to you, on behalf of the Seller, up to a maximum aggregate amount of US$1,500,000 (United States Dollars One Million Five Hundred Thousand) and we irrevocably and unconditionally undertake to pay you, upon your first written demand (sent by registered mail to our above address, or such other address as we may notify to you) declaring the Seller to be in default under the Contract and without cavil or argument, any sum or sums up to maximum aggregate amount of US$1,500,000 (United States Dollars One Million Five Hundred Thousand) as aforesaid, without your needing to prove or show grounds or reasons for your demand or the sum specified therein.
On 10 June 2000, this Guarantee shall expire.  On such date this Guarantee shall become null and void, whether or not returned to us for cancellation, unless we shall have agreed, on receipt of your written request therefor, not later than 1 month prior to such date, to renew this Guarantee for a further period of one year.  Thereafter, this Guarantee may be renewed for successive periods of one year on the terms hereof, or on such other terms as we may from time to time agree, until 10th June 2013.”
14.	On 1st July 1998 Amex faxed Greenland as follows:-
“In accordance with your instructions and your discussions with Greg Adams I confirm the following details with regard to the above Guarantee and the fixed deposit.
Our charge for the Guarantee is 1% per annum.  The rate you are earning on your fixed deposit is 5.1875%.  The funds have been fixed for 12 months and will be rolled over annually until the Guarantee expires.”
15.	On 1st April 1999 the Bank of Uganda gave notice of the closure of Greenland and on 3rd April Messrs. Deloitte & Touche (“the Liquidators”) were appointed receivers of the bank and later liquidators.  
16.	There was in evidence a fax dated 9th May 2000 of a letter from Westmont to a London office of Amex referring to the Bond and reading:-
“We refer to the captioned matter and write to advise that the Beneficiary of the Guarantee, Bangladesh Power Development Board, requires that the Guarantee is to be renewed for a further period of one year up to June 10th 2001.  
Kindly ensure that the necessary action is taken to ensure that the validity period of the Guarantee is extended before the current expiry date of June 10th 2000.  The Bangladesh Power Development Board is to be advised of the renewal of the Guarantee.”
17.	Strictly the power to seek a renewal of the guarantee was confined by its terms to Bangladesh Power.  However, if this fax was despatched, it is shown to have been copied to them.  Amex do not accept that they ever received this fax.  If it was sent and received it would arguably have constituted notice to Amex by Westmont on behalf of Bangladesh Power, pursuant to the last paragraph of the Bond, to renew it for a further period of one year up to 10th June 2001.  There is no documentary or other evidence of any reaction from Amex to this fax.  
18.	On 11th June 2000, the day after the initial expiry date appearing in the final paragraph of the Bond, Amex faxed Bangladesh Power:- 
“Cancellation of Guarantee No. 31/98 dated 25th June 1998 amount USD 1,500,000 favouring yourselves issued by American Express Bank Limited, 60 Buckingham Palace Road, London SW1W 0RU valid Until [sic] 
Since the subject Guarantee has expired, we absolve ourselves from all liabilities against this Guarantee.  All your rights to claim against the subject Guarantee ceases [sic] to exist. Kindly return us the original of the said Guarantee at your earliest.  If the original Guarantee cannot be traced by you please sign and return the statement below.  Please treat this as most urgent.”
19.	On 27th June 2000 Amex sent the following message to the Financier:-
“I can now confirm that our Guarantee has expired without a claim and without a request for extension.  As such, funds held by AEB London in support of this Guarantee can now be released to the liquidators of Greenland Bank.  With this in mind please let me have your disposal instructions for the deposit (USD 1.5 million plus accrued interest).  I would like to point out that we have not yet taken our charges for the extension of this Guarantee last year.  Our fee of USD 15,000 (1%) will be deducted from the funds held before they are paid to you.”
20.	On 7th July 2000 the liquidators of Greenland wrote to Amex requesting repayment of the deposit.  On 10th July Amex wrote to Bangladesh Power reminding them of their request for the return of the original Bond but concluding “however as we do not have any liability under this we are closing our books.”  On 17th July Bangladesh Power wrote to Westmont:-
“Pursuant to Article 16.6.2 of the Power Purchase Agreement (PPA) the Company shall maintain the Performance Bond at all times during the Term from the Full Commercial Operation Date.  The Bank Guarantee No. 31/98 dated 25th June 1998 for US Dollars One Million Five Hundred Thousand issued by American Express Bank Limited, 60 Buckingham Palace Road, London in favour of you has expired on June 13th 2000 [sic]  
Please note that failure of the company to provide Performance Bond on [sic] a timely manner is clearly an Event of Default in respect of the Company as provided in Article 14.1.1 (iii) of the PPA.  You are therefore requested to take it as notice for remedial measure to be taken by you within the time stipulated in Article 14.4 of the PPA [the Contract].”
21.	On 19th July 2000 Amex wrote to the Liquidators indicating their willingness to return the deposit. By contrast on the same date Westmont wrote to Amex challenging their assertion that the Bond had lapsed and threatening a claim.  On 10th August 2000 Amex wrote to the Bank of Uganda informing them that because the Bond had become the subject of legal proceedings in Bangladesh, they were unable to release the deposit to the liquidators of Greenland.  The proceedings in question had been commenced in the District Court of Dhaka by Westmont as Claimant against Amex as Defendants.  
22.	On 21st August Amex wrote to the liquidators of Greenland drawing their attention to a request received by Amex’s London office from “the beneficiary of the Guarantee” to extend the Bond for a further period of one year.  The letter continues:-
“To enable us to adhere to their request we would appreciate if you could provide us with your instructions to do so.”
The liquidators’ response of 22nd August refused to give those instructions on the ground “that [Greenland] has ceased trading and no extension can be given.”  The letter continued:-
“We expect remittance of the matured deposit of US $1.6 million.  We have received a statement of our Amex account which indicates a debit of US $15,000 dated 21st July 2000 as Guarantee commission.  We insist that you reverse this debit because we are not renewing the Guarantee.”
23.	Amex’s response of 23rd August, having indicated that the proceedings in Bangladesh precluded a repayment of the deposit but that they were resisting the proceedings, continued:-
“With respect to your request for a reversal of the debt of US$15,000 in respect of the Guarantee commission, we would clarify that this was for the period 1999 to 2000 and was therefore due in respect of the Guarantee whilst it was in force.”
24.	In the proceedings in the District Court Westmont’s claim, as in the translated Points of Claim before me, reads as follows:-
“(a) A declaration that [Bangladesh Power] is not legally bound to return the original Guarantee No. 31/98 to the Defendants [Amex] as directed by the Defendant 2 by the letter dated 10.07.2000.  
(b) A direction upon the Defendants to extend/renew the Guarantee No. 31/98 dated 25.06.98 for further period of one year in order to comply with the [Contract] entered into with [Bangladesh Power] 
(c) Permanent injunction upon the Defendants from demanding the return of the Guarantee No. 31/98 dated 25.06.98 
(d) Costs of the suit 
(e) Any other relief to which the plaintiff is entitled to in law and in equity.”
25.	Meanwhile on 10th August 2000 Westmont had obtained a “temporary” interlocutory injunction directing Amex “to maintain status quo in respect of the disputed performance guarantee til further order.”  There is no evidence that this injunction was discharged at any time before the District Court’s judgment in 2004. 
26.	An application was made by Amex to strike out the claim which failed on 19th March 2001.  Following this failure Westmont, on 29th March, wrote to Amex repeating their request “to extend the validity of the Guarantee as per Contract.”  Amex’s response of 3rd April was that “American Express Bank is not prepared to “extend” the above Guarantee, as it has (as previously advised to you) expired.”  An appeal from the refusal of Amex’s application to strike out Westmont’s claim was dismissed on 20th August 2001.  Following that dismissal Westmont repeated their request for an extension to Amex in a letter of 10th September 2001.  By this time the period of the extension of one year from June 2000, sought in Westmont’s proceedings, had passed.  Amex’s response of 20th September was that “as previously advised we have no instructions to extend the validity of the Guarantee.”
27.	Judgment was delivered in the proceedings in the District Court on 5th May 2004 in favour of Westmont, the judge ordering that:-
a)	Bangladesh Power was not legally bound to return the original copy of the Bond.
b)	Directing Amex to increase the duration of the Bond for a further year and to issue a new Bond in favour of Bangladesh Power; and
c)	Granting a permanent injunction, directed at Amex, to restrain Amex from demanding return of the Bond.
28.	A copy of the judge’s judgment in translation was before the court.  It is, I think, common ground that the translation is unsatisfactory.  Doing the best I can with it, it seems to me that the judge’s route to his final conclusion was by means of a finding, contrary to the submissions of Amex, that the fax of 9th May 2000 was sent by Westmont to Amex, and received by the latter, and that it constituted a written request for an extension of the Bond for a further year made more than one month before 10th June 2000 for the purpose of the final paragraph of the Bond.  He then was able to find that Amex agreed to such extension because agreement was to be implied from Amex deducting their fee of $15,000 after 10th June 2000, the date when the Bond would otherwise have expired. 
29.	These findings led logically to the orders which the judge made, though, for my part, I do not see that it was necessary for him to “direct” an extension of the Bond for one year.  It seems to me that the judge was finding that the parties, applying the provisions of the Bond, had effected such an extension. Also I do not see why it was necessary to make a direction that a new Bond, on undefined terms, be issued by Amex to Bangladesh Power.  Amex have appealed against the judge’s judgment in the course of which they are challenging his finding that Amex had agreed to the extension, not only on the grounds that they never received the fax of 9th May 2000, but also because the exchange of letters between the liquidators of Greenland and Amex on 22nd  and 23rd August 2000, the important parts of which I have set out above, indicate that Amex’s deduction of $15,000 after the 10th June 2000 related to the year ending 10th June 2000 and so could not have been relied on by the judge in support of his conclusion that Amex had agreed to the extension.  It is common ground, however, that the letter of 23rd August 2000 from Amex to the liquidators of Greenland was not before the judge.  
30.	If the judge’s judgment had only consisted of the findings which I have described leading to the orders which he made, this would have been a strange result of a judgment delivered in May 2004 against a background of a 15-year contract of which the Bond was an integral part and which had a further 9 years to run.  It is true that the judge’s orders flowed from the relief which Westmont was claiming in proceedings commenced in the circumstances pertaining in August 2000.  However a judgment finding that the Bond had been extended to June 2001 hardly dealt with the position of the parties to the Contract in May 2004.  
31.	It seems to me, however, that the judge did deal with this aspect of the matter and that his direction that Amex issue a new Guarantee is to be explained as a direction to issue a Bond covering the remainder of the term of the Contract up to June 2013.  The translation of the passage in the judgment which spans pages 332 and 333 of the transcript, paraphrased by me, reads as follows:-
“As admitted in this case the Defendant issued the disputed Guarantee No. 31/98 dated 25/6/98 in favour of Bangladesh Power at the request of Greenland and the Bank of Uganda on the application of Westmont, a Guarantee limited to US$1.5 million in favour of Bangladesh Power, in order to comply with the provisions of the Contract.  Based on a construction of that Guarantee it was submitted on behalf of Westmont that the Guarantee which would otherwise expire on 10th June 2000 will have to be extended on the application of Bangladesh Power for one year and thereafter extended up to 10th June 2013.  On an examination of the text of the Guarantee exhibited by the Defendant it appears that the disputed Guarantee will expire on 10th June 2000 but at the written request of Bangladesh Power its duration will be extended for one year.  Thereafter it will be further extended year by year.  It is to be noted that the last line of the Guarantee is to the effect that it will remain effective up to 10th June 2013 and that it was to be irrevocable and unconditional until that date.  On a construction of the Guarantee it is established that it was to last for 15 years and that it was to be irrevocable and unconditional up to that date, notwithstanding that it would expire on 10th June 2000 unless extended to June 2001. ”
32.	Following the District Court’s judgment Westmont wrote to Amex summarising the effect of the judgment and pointing out that 2 months had already elapsed since its passing and continued:-
“You are therefore requested to comply with the judgment dated 5th May 2004 and decree dated 12th May 2004 passed by [the District Court] and accordingly either extend the validity of the Guarantee …for a further period of one year and communicate the extension to [Bangladesh Power] with a copy to us or issue a fresh Guarantee in favour of [Bangladesh Power] immediately.”
Westmont repeated this request in substantially similar terms by a letter to Amex on 23rd November 2004.  On 7th December 2004 Amex responded by pointing out that they had already filed an appeal against the District Court judgment and thus “we are not in a position either to extend the validity of the Bank Guarantee …for a further period of one year or issue a fresh Guarantee in favour of Bangladesh Power Development Board as requested by you.”  
The issue
33.	The present position is that a District Court in Bangladesh has found, broadly, that the Bond has not lapsed and that Amex remains potentially liable under it (or a new Bond issued by Amex, in compliance with the Court’s order, in similar terms).  From that court there are two levels of appeal, to the High Court and from the High Court, with permission, to the Appellate Division of the Supreme Court, the ultimate Court of Appeal of Bangladesh.  Each side called an expert witness of Bangladesh law and practice.  It did not seem to me to be in issue between the experts that the relationship between the lower courts and the appellate courts and appellate practice, in Bangladesh, differs materially from the same relationship and practice in the courts of this country.  
34.	Greenland claims the return of the deposit of $1.5 million on the basis that the Bond in favour of Bangladesh Power has lapsed irretrievably as a result of not having been renewed in accordance with its terms.  Amex are appealing the District Court’s judgment to the High Court.  In that appeal, Amex contend that the Bond was not validly extended after 10th June 2000 because no request was made for an extension by Bangladesh Power within the time prescribed and, even if such request was made, they never agreed to the extension as the terms of the Bond required.  Further on the appeal, Amex contend that even if the Bond was extended until 10th June 2001 it was never thereafter validly extended.  Because in these proceedings, in order to retain the protection of the deposit, Amex are resisting a claim by Greenland for the return of the deposit, Amex are in the strange position to be having to contend before me, while at the same time maintaining their appeal in Bangladesh, that that appeal may fail or that otherwise they may remain liable under the Bond because it has not lapsed, or there is a reasonable prospect that an argument that it has not lapsed may succeed in the future.  
35.	I accept Mr Wolfson’s summary of the issues in the present trial in his written opening submissions, on behalf of Amex, as:-
“1. Whether there is a real prospect that Amex might be held liable under the Bond.
2.	Whether Amex has a contingent liability under the Bond such that there remains indebtedness owed to Amex by Greenland, thus entitling Amex to retain the deposit pursuant to any of:
i)	  the Counter Indemnity dated 14th July 1993
ii)	 Clause 3b of Amex’s general conditions 
iii) Clause 3b of Amex’s conditions for Multi-Account Clients.”
(ii) and (iii) confer on Amex a right of set-off of sums held by them on account of a client against any claim that client may have against Amex.
36.	So long as Amex retains the deposit, its position is secure whether it is right or wrong in its defence of Westmont’s proceedings.  It is to preserve this position that it is defending these proceedings brought by Greenland.  The present position, and Greenland’s claim which I have to determine, has only arisen because of Greenland’s intervention between Westmont and Amex as the provider of the deposit and its subsequent liquidation in which, it appears, it is being contended that the amount of the deposit is recoverable by Greenland from Amex as an asset of Greenland distributable amongst Greenland’s creditors.  
37.	Amex’s appeal, if pursued to the highest level, is capable of producing a number of different results; (i) the dismissal of the appeal, in which case the order of the District Judge would stand; (ii) that the appeal be allowed and the order of the District Judge discharged but the matter be returned to the District Court for a re-hearing; (iii) that the appeal be allowed to the extent of a variation of the District Judge’s order; or (iv) that the appeal be allowed so that the court declares that the Bond has lapsed in accordance with the submissions of Amex.  It seems that there are similar powers to those of the courts of this country for the Appellate Courts in Bangladesh to admit further evidence and, in the light of that further evidence or without it, to review findings of fact in the courts below.  As matters stand to-day, therefore, it is open to the courts of Bangladesh to re-open all the issues of fact and law which were before the judge.  
38.	It seems to me, therefore, that my task is not to come to a view whether or not there is a reasonable prospect that the judge’s judgment of 5th May 2004 will be reversed on appeal.  If it is pursued by Amex, and I note that Amex’s appeal has been outstanding for three and a half years, it may well be reversed, but such a result would not necessarily be determinative of the issue before me.  I have to decide whether there is currently a realistic prospect that a claim could be made good against Amex under the Bond.  It is clear that if the Bond has not lapsed, a claim could be made by Bangladesh Power against Amex pursuant to it, which claim Amex would be bound to meet.  This is a demand performance bond.  It is accepted that the proper law of the Bond is the law of Bangladesh and that the Bangladesh courts have jurisdiction to decide, inter alia, whether or not the Bond has lapsed.  It follows that the issue before me is whether there is a reasonable prospect that a Bangladesh court might come to an unchallengeable conclusion that the Bond has not lapsed. 
Discussion
39.	As I have remarked in giving judgment in another case, the process of attempting to second guess the likely conclusion of a foreign court in a given set of circumstances is an unusually difficult one for an English judge to attempt to perform.  It seems to me that the only possible approach for me is to consider the question as if the matter had been raised in an English court applying English principles of, for instance, the construction of contracts and the rules as to burden of proof, save where expert evidence of the law and practice of the relevant foreign country establishes the necessity for a different approach.  It would be invidious and possibly patronising, to alter one’s approach in response to submissions of what the approach of a judge of a particular foreign country would be, except where those submissions are based on differences arising from that country’s statutes, rules of practice and established authorities.  No such difference has been drawn to my attention.  
40.	It was submitted to me that a Bangladesh court would be more likely to arrive at a construction of the Contract and the Bond favouring a result that the Bond has not lapsed because a court in Bangladesh would be influenced by the importance of not coming to a decision which would disrupt the operation of a scheme for the supply of electricity to a significant segment of the public and industry in Bangladesh.  It seems to me that it is legitimate for me to take account of the fact that Appellate Courts would be more likely to be prepared to accept appeals from decisions of lower courts which might have a significant social or economic impact in the country concerned.  It would also be legitimate to take such considerations into account when establishing the matrix of fact against which, in this case, the form of the Contract and the Bond were agreed.  However this approach would not be a departure from English law and practice.  
41.	My task is to decide the issue in this case, which I have described above, in the light of all the possible constructions of the provisions of the Contract and the Bond, against the background of the matrix of fact established by the evidence in the case, which the parties to the Contract and the Bond would have taken into account in agreeing their final form.  
The matrix of fact 
42.	The provisions of the Contract governed the terms upon which Westmont was to supply Bangladesh Power with electricity for a period of 15 years.  It is not in issue that this was a commercial contract governing an important economic activity in Bangladesh the disruption of which would have adverse economic and social effects.  Clauses 16.6.1 and 16.6.2 of the Contract required Westmont, within 15 days after entering into the Contract, to provide Bangladesh Power with a performance bond limited to $1.5 million as security to ensure that Westmont would duly perform the obligations placed upon it by the Contract and maintain the performance bond so supplied during its 15-year term.  Westmont through Greenland approached Amex to provide such a bond.  Amex’s policy in the granting of facilities to customers, in particular, in Bangladesh, is described in the witness of Mr Jonathan Halle filed in these proceedings between paragraphs 5 and 9 as follows:-
“The Guarantee 
5. On 24 June 1998, Eric Pinn, the manager of Greg Adams, who was AEBL's [Amex’s] Relationship Manager for GBL [Greenland], approached me seeking approval for a request made by GBL to AEBL to issue a guarantee in the sum of US$1,500,000 in favour of Bangladesh Power Development Board ("BPDB") [Bangladesh Power]. I was informed of the underlying transaction, which involved the supply of electricity by Westmont Power (Bangladesh) Limited ("Westmont") to BPDB under a power purchase agreement entered into between BPDB and Westmont. 
6.	AEBL had given GBL a class one credit limit, which meant that any business AEBL did with GBL had to be fully cash covered. 
7.	It was the policy of AEBL not to provide open-ended facilities to customers and therefore all facilities had to have a finite termination date. The purpose of this policy was to allow AEBL to reconsider its facilities should there be a change of circumstance with the customer. In addition, AEBL had a policy of not agreeing to any facility beyond five to seven years, except in limited circumstances and only then for highly credit rated large customers. As such, I approved the request on the basis that (i) GBL deposited, as cash collateral, US$1,500,000 with AEBL and this was collateralised through AEBL's standard charge document, Conditions for Multi Account Client, and (ii) the guarantee was for an initial period of two years and would be renewable annually thereafter at AEBL's sole option.
8.	Following my approval of the request made by GBL, the relevant papers were forwarded to AEBL's General Counsel based in London, who drafted the guarantee. I am aware that there was correspondence entered into between GBL and AEBL on 24 and 25 June 1998 (TAB 15/135-153), during which the wording of the proposed guarantee was agreed (although I was not aware of this at the time). It was agreed between AEBL and GBL that the sum of US$1,500,000 received from GBL ("the Deposit") was to be security in the hands of AEBL for its potential liability under the guarantee and therefore GBL would not be entitled to the return of the Deposit and interest earned thereon until AEBL's potential liability under the guarantee had expired. 
9. 	On 25 June 1998, following receipt of the Deposit, AEBL in London issued guarantee number 31/98 to BPDB ("the Guarantee") (TAB 15/154-155).  The wording of the Guarantee made clear that it would expire on 10 June 2000, unless AEBL received from BPDB not later than one month prior to expiry of the Guarantee, a written request for renewal of the Guarantee for a further period of one year. The document would have been worded in this way to give AEBL an opportunity to consider whether it wished to renew the Guarantee.”
Mr Halle was the relevant regional credit officer for Amex and his evidence is confirmed in the witness statement of Mr Adams filed for Amex and is unchallenged.
The construction of the Bond
43.	As I have already found, the issue in this case is whether there is a reasonable prospect that a Bangladesh court might come to an unchallengeable decision that the Bond has not lapsed.  It follows that that issue turns on the provisions of the Bond defining the circumstances in which it ceases to have effect.  It seems to me that these are that part of the Second Recital which defines the purposes for which the Bond is required and the whole of its final paragraph.  
44.	The Second Recital defines that purpose as “security for compliance with [Westmont’s] performance obligations in accordance with the Contract by furnishing you [Bangladesh Power] with an irrevocable … Bank Guarantee [Bond] by a scheduled bank in Bangladesh ….”  The final paragraph provides that the Bond will expire on 10th June 2000 “unless we [Amex] shall have agreed, on receipt of your written request therefor, not later than 1 month prior to such date [10th June 2000], to renew this Guarantee for a further period of one year.  Thereafter this Guarantee may be renewed for successive periods of one year on the terms hereof, or on such other terms as we may from time to time agree, until 10th June 2013.”
45.	It seems to me that the first two sentences of the final paragraph are only to be construed as conferring upon Amex, as obligors under the Bond, a break clause after two years providing that they then be given notice by Bangladesh Power, one month before the Bond would otherwise expire, of the wish of Bangladesh Power to extend it for a year and, having received that request, have the option to accede to it or not in their absolute discretion.  
46.	There is, of course, a conflict between the first two sentences of the last paragraph and the Second Recital because, notwithstanding what the Recital says, the resulting Bond is revocable at the end of its second year of operation.  However, the words used in those sentences are not capable of any other meaning and that meaning is consistent with what appears to have been Amex policy in June 1998 in entering into financial obligations of this kind.  
47.	It was submitted by Mr Bennett for Greenland that, whereas a Bangladesh court might conclude that whereas the fax of 9th May 2000 was, on its face, a request by Westmont and not, as required, by Bangladesh Power, nonetheless it is to be treated as a request by Bangladesh Power, acting through the agency of Westmont, and, whereas that court might also conclude, contrary to Amex’s assertion, that the fax of 9th May was sent and was received by Amex, it is impossible that the Bangladesh court would conclude that Amex had agreed to the request.  It follows, so the submission goes, that the Bond must have expired on 10th June 2000.  Although it appears from Amex’s letter to the Liquidators of 21st August 2000 that they were not averse to an extension and would have accepted an extension if the Liquidators had so instructed them, there is no evidence that Amex ever actually agreed to an extension, indeed plenty of evidence that they did not.  
48.	It is Mr Wolfson’s submission that there are two bases upon which Amex could still be held to have agreed to an extension of the Bond.  He first points out that the Judge found that the Bond had been extended, on a finding that there had been a qualifying request for an extension made in time, to which Amex had indicated their agreement by taking a commission referable to a period June 2000 to June 2001.  He arrived at that conclusion without having before him the evidence of the letter of 23rd August 2000 from Amex to the Liquidators in which they explain that this was a misapprehension.  In order to challenge the District Judge’s finding of fact in the High Court it would be necessary to persuade that court to accept new evidence.  Both experts agreed that principles similar to those applied to the admission of new evidence in the English Court of Appeal, under Rules defined in the case of Ladd v Marshall, would apply in Bangladesh and that it was possible that such evidence would not be permitted to be adduced so that an Appellate Court might be left with the finding of the Judge unaltered.  
49.	Mr Wolfson’s second ground was based on the letter of 27th June 2000 from Amex to the Financier behind Westmont, the important parts of which I have set out above.  He draws attention to the first sentence of the passage which I have quoted where Mr Adams of Amex says, “I can now confirm that our Guarantee has expired without a claim and without a request for extension.”  Mr Wolfson submits that if a Bangladesh court were to find, contrary to Amex’s case, that there had been a timely request for an extension of the Bond by or on behalf of Bangladesh Power, the court would necessarily find that a part of the Amex organisation, (the Johannesburg branch represented by Mr Adams), was proceeding as at 27th June 2000 under a misapprehension and that it might be possible to establish by further evidence that they did in fact receive a request and agreed to it.  I have already drawn attention to Amex’s letter of 21st August 2000 which indicates that Amex were not averse to extending the Bond at this time.  I confess that, in the light of the correspondence following on from the letter of 27th June 2000 which I have set out above, it seems to me to be exceedingly unlikely that a Bangladesh court would find that this had occurred.  
50.	On the assumption that it is possible a Bangladesh court might accept an argument that the Bond was renewed with effect from 10th June 2000, it is necessary to consider whether it is possible, on a construction of the Bond that its duration has been further extended until today.  In order to determine this issue, it is necessary to construe the last sentence of the final paragraph of the Bond which reads:-
“Thereafter [i.e. after 10th June 2001] this Guarantee may be renewed for successive periods of one year on the terms hereof, or on such other terms as we may from time to time agree until 10th June 2013.”
51.	It was Mr Bennett’s submission for Greenland that the words “on the terms hereof” necessarily import all the terms of the Bond including the requirements of the first sentence of the final paragraph with the result that any further extensions of the Bond, after 10th June 2001, would require a request for extension one month before expiry of any yearly period in operation and Amex’s consent to such request.
52.	It was Mr Wolfson’s counter-argument that a Bangladesh court might well construe the words “on the terms hereof” as applying to the obligation undertaken by Amex in the preceding paragraph of the Bond and not to the provisions for renewal in the first two sentences of the final paragraph, which expressly only apply to renewal at 10th June 2000; see the words “on such date” appearing twice in the second sentence which can only refer to 10th June 2000.  Mr Wolfson further submitted that it was possible to construe the final sentence as contemplating automatic renewal, without the necessity for a request from Bangladesh Power, but conferring on that company an option not to renew in any year on due notice given.  This would be consistent with the requirement of the Second Recital that the Bond to be provided by Amex was to be irrevocable by them.  
Rectification of the Bond
53.	It is Mr Wolfson’s submission for Amex that the conflict between the provisions of Clause 16.6 of the Contract and the Second Recital, on the one hand, and the provisions as to expiry and renewal in the last paragraph of the Bond, when read with the correspondence passing between the parties on 24th and 25th June 1998, which I have set out between paragraphs 5 and 12 above, provides Bangladesh Power and Westmont with a reasonably arguable case that the provisions of the Bond did not carry into effect what may have been the intentions of the parties to the Bond or, more certainly, the intention of Bangladesh Power.
Conclusion
54.	I have come to the conclusion that I should accede to the case made by Amex.  The Bond is an unsatisfactory document, badly drafted and internally inconsistent.  The high point of Greenland’s case seems to me their argument that there can be no defence to their claim that the Bond was not renewed after it expired on 10th June 2000 because it will not be possible to establish a reasonably arguable case that Amex ever agreed to such extension.  I have come to the conclusion that there is a sufficient likelihood that Amex may be unable to adduce further evidence on this issue and be confined to the Judge’s finding that there was such agreement in its appeal from his judgment, and that this possibility is sufficient to justify a conclusion that there is a real prospect that the Bangladesh courts might arrive at a final conclusion that the Bond did not lapse on 10th June 2000.  I would add, in support of this conclusion, the possibility that a Bangladesh court might rectify the Bond’s provisions so as to exclude the requirement for Amex’s agreement.  
55.	On the question of the further annual renewals after 10th June 2001, I have much less difficulty.  Here the words of the last sentence of the final paragraph of the Bond do not exclude the possible construction suggested by Amex.  Furthermore, their construction is supported by the matrix of fact existing at the time the Bond was entered into.  
56.	I confess that I am happy to be able to arrive at this conclusion since it precludes the possibility that a future divergence between my approach to the problems which this case presents and that of a Bangladesh court will expose Amex to losing the protection of the deposit from claims in the future made under the Bond.  If I am wrong in my conclusion, Greenland  have only suffered a delay in recovering the amount of the deposit which will have been earning interest for them, less Amex’s 1% per annum commission, during the period of that delay.  In addition, I entertain some doubt as to whether the amount of the deposit can properly be treated as an asset in the winding up of Greenland given that its source appears to have been Westmont’s financier.