(Corrects location of ICICI Bank in third paragraph.)
ICICI Bank Ltd. can’t be sued in Australia over its role in a A$5.8 billion ($6 billion) dispute regarding the termination of a coal-supply agreement and the scuttling of a proposed urea plant, a judge ruled.
Perdaman Chemicals & Fertilisers Pty sued the bank, accusing it of illegally interfering with a coal-supply agreement that the fertilizer maker had with Griffin Coal Mining, to allow for the miner’s acquisition by Lanco Infratech Ltd. (LANCI), an Indian power producer.
Federal Court Justice Neil McKerracher on March 6 refused Perdaman’s request to formally serve the bank with the lawsuit in Singapore, where the Mumbai-based bank’s branch issued a loan to Lanco. Perdaman had to show that there was enough evidence that the bank broke the law and required the judge’s permission because ICICI Bank has no business presence in Australia. The fertilizer maker failed to make its case, the judge said.
“At worst, the bank drove a hard bargain as it was entitled to do,” McKerracher wrote in his ruling, issued in Perth.
Lanco bought Griffin Coal, which had filed for bankruptcy, in February 2011, using an A$800 million loan from ICICI Bank to partly finance the acquisition, according to court papers. Lanco decided it would be to its advantage to cancel Griffin’s coal- supply agreement with Perdaman, citing that it failed to meet all the conditions of the deal, and sell the reserves for a better price, Perdaman argued.
The bank, as part of the financing, obtained security over Griffin Coal and those obligations deprived the mining company of the ability to execute the coal-supply agreement without the bank’s consent, Perdaman said.
The bank “was entitled to protect its own interests and to impose and to adhere to whatever security requirements it could achieve,” McKerracher wrote. “The bank had no obligation to Perdaman.”
Perdaman has sued Lanco and Griffin, claiming the termination of the coal supply prevented it from getting financing to begin construction on the urea plant. That trial is likely to start later this year, the judge said.
The case is Perdaman Chemicals & Fertilisers Pty v ICICI Bank Ltd. (ICICIBC) WAD1/2013. Federal Court of Australia (Perth).
To contact the reporter on this story: Joe Schneider in Sydney at firstname.lastname@example.org
To contact the editor responsible for this story: Douglas Wong at email@example.com