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

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

Merits of claim against anchor defendant matter (probably)

This second post in our “new term catch up series” looks at Sabbagh v Khoury [2017] EWCA Civ 1120, an important case about using an anchor defendant under the Brussels Regulation regime.

The use of anchor defendants in English proceedings is very common. Establishing a claim against an anchor defendant allows co-defendants to be sued in England when jurisdiction could not otherwise be established over them.  In Sabbagh v Khoury, the Court of Appeal considered whether, when the Brussels Regulation (or the Lugano Convention) applied, the claim against the anchor defendant had to be meritorious or whether even a hopeless claim against the anchor defendant would be enough to found jurisdiction.

Interestingly, but unhelpfully for litigants, the Court of Appeal judges disagreed with one another.  Patten and Beatson LJJ held that the claim against the anchor defendant must have a real prospect of success.  Gloster LJ considered that this was unnecessary although did agree that the anchor defendant regime cannot be invoked if the sole object of the claim is to oust the jurisdiction of the courts which would otherwise have jurisdiction over the non-anchor defendants.

There is also considerable scope for the issue to be re-argued because, in fact, the court’s decision on whether the claim against the anchor defendant needed to have a real prospect of success was obiter dictum. Continue reading

Position papers on judicial cooperation in civil matters: steps towards clarity?

As the new legal year starts in London, we’re running a short series of posts covering developments and cases you might have missed over the summer.  This first post in the series looks at the UK and EU position papers on Judicial Cooperation in Civil and Commercial Matters.

Since the Brexit Referendum of June 2016, there has been uncertainty as to how the current conflict of laws regimes concerning civil and commercial matters will change. (Other civil matters are outside the scope of this brief note.)

Until recently, there had been no indication from governmental levels as to the proposals both for the wind-down of the current regime and for the future basis of judicial cooperation (if any) between the UK and EU Member States.   This summer saw the publication of position papers by both the EU and the UK.  On 12 July 2017, the EU published its Position Paper on Judicial Cooperation in Civil and Commercial Matters.  On 22 August 2017, the UK published its paper entitled “Providing a cross-border civil judicial cooperation framework: a future partnership.”

Both papers set out proposals for the “wind-down” period.  The EU paper makes no proposals for any new relationship between itself and its former member, the UK. The UK makes some high level proposals in this regard. Continue reading

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

Article 50 and the Brussels Regulation

With Article 50 now triggered, amongst many other negotiations, attention will turn to the Brussels I Regulation. Rather than setting alarm bells ringing, this article by Sara Masters QC and Belinda McRae sets out three steps, based on previous examples of EU negotiations, of how the UK Government should assuage fears of upheaval in the system of commercial dispute resolution following Brexit.

The full article is here.

Asymmetric result?

The Commercial Court finds that asymmetric jurisdiction clauses are valid exclusive jurisdiction clauses for the purposes of the Brussels Recast. Given their prevalence in financial contracts,  a contrary decision could have produced significant instability.

Commerzbank Aktiengesellschaft v Pauline Shipping and Liquimar Tankers  [2017] EWHC 161 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

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

Lungowe v Vedanta – a boost for claims against multi-nationals

The opportunity for claimants from developing countries to bring claims in England and Wales against multi-national corporate groups that have caused loss in their home country has been given a significant boost by Coulson J’s recent decision in Lungowe v Vedanta Resources Plc [2016] EWHC 975 (TCC).

1,826 Zambian claimants commenced proceedings in the TCC alleging that Konkola Copper Mines (“KCM”) and its parent company Vedanta Resources PLC (“Vedanta”) were liable for personal injury, damage to property, loss of income, and loss of amenity and enjoyment of land due to pollution/environmental damage caused by the Nchanga copper mine which KCM operated. The Defendants, as invariably happens in claims of this sort, denied that the English Court had or should exercise jurisdiction, arguing the natural forum for the dispute was clearly Zambia.

Coulson J rejected both Vendata’s and KCM’s challenges to the jurisdiction. Continue reading