Conflict of laws - clause providing for agreement to be subject to English law and 'principles of the Glorious Sharia'a' - clause void for uncertainty

Shamil Bank of Bahrain EC v Beximco Pharmaceuticals Ltd and others: CA (Lord Justice Potter, Lord Justice Laws and Lady Justice Arden): 28 January 2004

The claimant bank brought proceedings against the first and second defendants in respect of monies advanced to them by the claimant under various financing agreements, and against the third, fourth and fifth defendants as guarantors.

The judge made an order for summary judgment in favour of the bank.

Permission to appeal was granted on the single issue of the construction of the governing clause of the relevant contract, which stated 'subject to the principles of the Glorious Sharia'a, this agreement shall be governed by and construed in accordance with the laws of England'.

Richard Hacker QC and Mark Arnold (instructed by Jaswal Johnston) for the first and second defendants; Brian Doctor QC and Sara Partington (instructed by Norton Rose) for the bank.

Held, dismissing the appeal, that the task of construction was to ascertain the presumed intention of the parties; that the general reference to principles of Sharia'a law afforded no reference to, or identification of, those aspects of Sharia'a law that were intended to be incorporated into the contract and that as such, they were inevitably repugnant to the choice of English law as the law of the contract; that there was an appropriate alternative construction, namely that the words were intended to reflect the Islamic religious principles according to which the bank held itself out as doing business rather than a system of law intended to 'trump' the application of English law; and that it would be unusual and improbable for the parties to have intended otherwise.