1. Richard Tsui-March 26 th Bank of India v. Gobindrams Bank of India v. Gobindram Naraindas Sadhwani & Others -Hong Kong, High Court, 1982 Richard Tsui Y2012462151

2. Richard Tsui-March 26 th Bank of India v. Gobindrams Facts Head Office: Bombay, India Regional Office: Tokyo, Japan Branch Office: Osaka, Japan Branch Office: Osaka, Japan Mr. Gobindram Mr. Kishinchand Sadhwanis (Japan), Ltd (SJL) Sadhwanis (Japan), Ltd (SJL) 4040 4040 6060 6060 Guarantors ¥230,000,000 Gobindrams vs

3. Richard Tsui-March 26 th Bank of India v. Gobindrams Arguments Gobindrams: The law governing the guarantee contract was Japanese law and under this system, the bank released them as guarantors. Therefore, they are no longer liable. Bank of India: Indian or Hong Kong law should apply.

4. Richard Tsui-March 26 th Bank of India v. Gobindrams Issue “Whether or not Japanese law is the proper law of the contract.” (August 173)

5. Richard Tsui-March 26 th Bank of India v. Gobindrams Rule Review the three-stage or subrule test defined in Dicey and Morris’ The Conflict of Laws.

6. Richard Tsui-March 26 th Bank of India v. Gobindrams The Conflict of Laws: Subrule Test Subrule 1: “When the intention of the parties to a contract, as to the law governing the contract, is expressed in words, this expressed intention, in general, determines the proper law of the contract.” Subrule 2: “When the intention of the parties to a contract with regard to the law governing the contract is not expressed in words, their intention is to be inferred from the terms and nature of the contract, and from the general circumstances of the case, and such inferred intention determines the proper law of the contract.” Subrule 3: “When the intention of the parties to a contract with regard to the law governing it is not expressed and cannot be inferred from the circumstances, the contract is governed by the system of law with which the transaction has its closest and most real connection.”

7. Richard Tsui-March 26 th Bank of India v. Gobindrams Apply: Subrule 1 In reviewing the guarantee contract, there was no expressed intention in regards to the law governing the contract.

8. Richard Tsui-March 26 th Bank of India v. Gobindrams Apply: Subrule 2 Inferred or Implied Choice of Law Plaintiff claims contract contains elements of common law and only intelligible by reference to English law. Convenience Referred to Indian Currency but referenced to Yen SJL is a joint Indian company in Japan using an Indian bank in Japan, and doing business in an Indian way. Mr. Gobindram and Mr. Kishinchand both never gave the proper law a thought. “No intention as to the proper law can be inferred from the guarantee and the surrounding circumstances.” (August 174)

9. Richard Tsui-March 26 th Bank of India v. Gobindrams Apply: Subrule 3 Guarantee has the Closest and Most Real Connection Great weight on the place of performance: Japan 2 of 4 guarantors resided in Japan (Kishinchand was active and made decisions) Negotiations in Japan The guarantee formed part of SJL in Japan Principal sum guaranteed: Yen Bears a 100 Yen stamp All guarantors had assets in Japan

10. Richard Tsui-March 26 th Bank of India v. Gobindrams Conclusion Yes, Japanese law is the proper law of the contract of guarantee.

11. Richard Tsui-March 26 th Bank of India v. Gobindrams Decision The plaintiff’s case was dismissed.

12. Richard Tsui-March 26 th Bank of India v. Gobindrams Opinion Although the case provides great insight on how a court determines the choice of law based on the contract, it is not clear (in my opinion) why the Gobindrams’ release from liability as guarantors should be disputed. The guarantee contract was made between SJL (Gobindrams and Kischinchands) and their bank of choice (BoI, Osaka branch), and it was this bank that had given their approval to release the Gobindrams as guarantors. Do written and spoken contracts made by BoI, Osaka branch, without BoI’s head office approval, hold no weight? Would this be different under different governing law systems?

13. Richard Tsui-March 26 th Bank of India v. Gobindrams Discussion Questions Would the outcome of the issue be different if half of SJL’s place of operations was in India (outsourcing), but was not part of the original plan when applying for the credit line from Bank of India, Osaka and signing the guarantee contract? Could Hong Kong’s High Court dismiss the case without addressing the proper law issue?

14. Richard Tsui-March 26 th Bank of India v. Gobindrams Thank You!