Interpretation of Article 24(2) Brussels Recast

In its recent decision in Koza Ltd v Akcil [2017] EWCA Civ 1609, the Court of Appeal interpreted the scope of Article 24 (2) Brussels I Recast, which governs exclusive jurisdiction “in proceedings which have as their object the validity of the constitution, the nullity or dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat”.

Factual Background

The dispute concerned the control and management of the First Claimant, Koza Ltd, a company with its seat in England and Wales. The Second Claimant was a director of Koza Ltd. Koza Ltd was a wholly owned subsidiary of Koza Altin Isletmeleri AS. Both were members of the Koza Group. The Koza Group was accused by the Turkish authorities of financing of terrorism, and became embroiled in Turkish criminal proceedings. Koza Altin served notice requisitioning a general meeting of Koza Ltd with a view to passing resolution replacing its directors, including the Second Claimant, with the First, Second and Third Defendants. Koza Ltd would not voluntarily call the general meeting. Statutory procedure was sought to call the general meeting.

Koza Ltd sought relief on two grounds:
(i) the “English law company claim”, which alleged that the resolutions to which the notices related could not be passed without the consent of Mr Ipek, and he did not consent, and
(ii) “the authority claim”, which alleged on a variety of grounds that the Defendants had no authority to serve the notices served. Continue reading

No anti-suit although HK claims breach jurisdiction clause

Team Y&R Holdings v Ghossoub [2017] EWHC 2401 (Comm) is an interesting treatment of parallel proceedings. The exclusive jurisdiction clause was read to fulfil its purpose: the substance not the form of allegedly wrongful Hong Kong proceedings was important and third parties were not bound.  However, despite Mr Ghossoub being in breach of the jurisdiction clause, no anti-suit injunction was granted against him.  The decision should give parties pause for thought when drafting jurisdiction clauses and starting or resisting parallel proceedings. Chaos or at least inconvenience might be unavoidable without a clearly drafted jurisdiction clause. It also offers guidance on how to write a jurisdiction clause which bites on non-contracting parties.

The origin of the dispute

The case arose from a sale and purchase agreement (“SPA”) for the shares of Team Y&R Holdings (“TYRH”) and a service agreement (“SA”) between Mr Ghossoub and TYRH.  The SPA contained an exclusive jurisdiction clause as follows (the SA clause was less detailed).

“The English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with this agreement and the parties submit to the exclusive jurisdiction of the English Courts.” Continue reading

The power of domicile

This post looks at two cases which show the  importance of the Brussels I Regulation’s primary rule of jurisdiction – that defendants should be sued in the jurisdiction of their domicile.  Those cases are Aspen Underwriting v Kairos Shipping [2017] EWHC 1904 (Comm), Bestolov v Povarenkin [2017] EWHC 1968 (Comm).  It is the fifth of our “new term catch up series”.

Aspen Underwriting achieves a potentially unsatisfactory result with some claims being tried in England and others capable of resolution only in the Netherlands (the place of domicile).  On the other hand, in Bestolov v Povarenkin, jurisdiction was established on the basis of domicile under the Brussels Regulation when it would not have been asserted at common law. Continue reading

Enforcing Arbitration Awards: update

The third post in our “new term catch up” series looks at the law concerning the enforcement of arbitration awards.  This is often neglected by parties and their legal representatives alike. This is ironic as it is arguably the most commercially critical stage of the entire arbitral process. Many a party has spent much blood, sweat, and money to achieve a positive result, only to find it an essentially pyrrhic victory.

It is with the crucial importance of this area of law in mind that in this post, the third in our new legal term series, two recent Commercial Court decisions concerning the circumstances in which recognition or enforcement of a New York Convention award may be refused are summarised.  The cases are Zavod Ekran v Magneco and Anatolie Stati v The Republic of Kazakhstan. Continue reading

Permission to serve out required before alternative service order can be made

Marashen Ltd v Kenvett Ltd [2017] EWHC 1706 (Ch) (06 July 2017)

Foxton QC in the Chancery Division overturned an earlier order permitting service of third party costs order on a person resident in Russia by means of alternative service on his lawyers’ offices in London, on the basis that there was no pre-existing order for permission to serve out. A court must have already given permission to serve out of the jurisdiction, before the power to permit alternative service (under CPR 6.15) arises. Pre-existing permission to serve out must exist even for alternative service within the jurisdiction. The power to make alternative service within England and Wales on a defendant resident outside the jurisdiction derives from CPR 6.37(5)(b)(i). In Hague Service Convention cases, there must be “exceptional circumstances” to grant an order for alternative service, outside the terms of the Convention.

Exceptional circumstances is a test going beyond mere good reason. Mere delay or additional expense did not constitute exceptional circumstances. Article 15 of the Hague Service Convention itself offers comfort to a claimant in the case of excessive delay in that, in the event of a delay exceeding 6 months, this article would allow the claimant to continue on with proceedings despite a lack of formal confirmation of service.

Italian law is no way out of swap liability for Prato

The Court of Appeal’s recent decision is another blow for litigants who hope that foreign law will allow them to escape from liability under English law contracts.  This case, Dexia Crediop SpA v Comune di Prato [2017] EWCA Civ 428 (15 June 2017) arose from a claim by Dexia (the Bank) for some EUR 6.5 million due under an interest rate swap.[1]  The contract was subject to English law and jurisdiction.

The defendant, an Italian local authority (Prato), sought to rely on various Italian law arguments.  Not one arrow in Prato’s “capacious quiver” [2] of defences struck home, however.  The result of Walker J’s judgments[3] was basically reversed.

The case demonstrates how hard it is to show that “mandatory” rules of foreign law should apply (due to Article 3(3) of the Rome Convention) where parties have expressly chosen English law.  The 2016 Banco Santander case[4] (discussed in my post on Blair J’s March judgment and the Court of Appeal’s December decision) covered similar ground but this case is more extreme.  Continue reading

Court agrees with Deutsche Bank – Singapore is not more convenient

An alleged fraud (relating to a sale of Indian cotton) between an Indian, a Malaysian and a Hong Kong company has generated multiple claims in Singapore and one in London, Detusche Bank AG v CIMB Bank Berhad.  These arise from the typical web of letters of credit, finance facilities and guarantees found in international commodities finance.   In London, Deutsche Bank (DB) claim reimbursement from CIMB (a Malaysian bank) of sums paid out under letters of credit issued by CIMB.

Of interest for this blog is the Commercial Court’s decision last week ([2017] EWHC 81 (Comm)) refusing to grant CIMB a stay of the London proceedings on the basis of forum non conveniens.  Teare J’s judgment is a pithy demonstration of the English court’s approach to such arguments applying the Spiliada[1] principles (discussed below).

A key point to note is that the mere risk of inconsistent decisions on a factual point and the duplication of costs was not enough to justify a stay of English proceedings.  The case also should give parties pause to consider before beginning parallel proceedings in another jurisdiction (see my final thoughts on tactics)

20 Essex Street’s Andrew Fulton appeared for Deutsche Bank. Continue reading

Court of Appeal confirms that Portuguese “mandatory” law is no defence to swaps liability

Earlier this year (see my March post), Blair J held that Lisbon based transport companies could not use “mandatory” provisions of Portuguese law to defeat a multi-million Euro claim by Santander under interest rate swaps contracts.  The Court of Appeal has now upheld this decision in Banco Santander Totta SA v Cia Carris de Ferro de Lisboa SA [2016] EWCA Civ 1267 (main judgment, Sir Terrance Etherton MR).

In short, under article 3(3) of the Rome Convention, a “mandatory” provision of national law could only displace the parties’ express choice of law in a contract if the situation is truly domestic – an “international situation” (even if not pointing to a specific other country) is sufficient to prevent article 3(3) applying. Continue reading

Submission: Golden Endurance v RMA Watanya

Golden Endurance Shipping SA v RMA Watanya SA [2016] EWHC 2110 (Comm)

An interesting recent judgment of Phillips J in the Commercial Court has clarified the law concerning submission to the jurisdiction of a foreign court.  20 Essex Street’s Michael Collett QC was instructed for the claimant.

The court held that a Moroccan judgment would not be recognised in England because the claimant had not submitted to the jurisdiction of the Moroccan court. Although the claimant had appeared in the Moroccan proceedings, it had done so in order to ask the court to stay the Moroccan proceedings in favour of arbitration and had only engaged with the merits as it was obliged to do so under Moroccan law.

As a result, the claimant ship-owner was not estopped by a Moroccan judgment from asking an English court for a declaration of non-liability for alleged damage to a cargo. Continue reading

Failure to follow service rules is the end of a claim

In Asefa Yesuf Import and Export v A.P. Moller-Maersk A/S (16 June 2016) Simon Bryan QC (as a Deputy Judge of the High Court) made an important decision on service under EU rules.  I was instructed for the successful defendants.

The Judge set aside service of a claim form on defendant shipowners in Denmark on the basis that the proceedings had not been validly served under EU Regulation 1393/2007 on service of judicial documents on the territories of the Member States.

Although service did not establish substantive jurisdiction in this case, which was based on the Judgments Regulation, the failure to serve the claim form led the court to declare that it had no jurisdiction (in the narrow sense) to hear the case under CPR Part 11. The consequence for the claimants was that they had to issue a new claim form.  Unfortunately for the claimants, by this time, their claims had been extinguished under the one-year time bar in the contracts of carriage on which they wished to sue. Continue reading