Speed Investments Ltd & Anor v Formula One Holdings Ltd & Ors

Proceedings concerning the composition of a company’s board fall within the exclusive jurisdiction of the courts of the state in which the company has its seat. This is so even where the disputed entitlement to appoint directors depends upon a shareholders’ agreement rather than the company’s constitution in its narrow sense. The decisive question is the real subject matter of the proceedings, not the issues presently contested between the parties.

Where the court second seised has exclusive jurisdiction under article 16 of the Lugano Convention, article 21 does not require it to stay proceedings in favour of a court first seised which lacks that exclusive jurisdiction.

Speed and SLEC challenged Bambino’s purported appointment of the Argands as directors of Formula One Holdings Ltd, an English company. They contended that Bambino had already exhausted its right to appoint B-directors. The claim sought declarations as to the board’s composition and rectification of the register of directors.

The shareholders’ agreement contained an exclusive Swiss jurisdiction clause. Lewison J held that the English court nevertheless had exclusive jurisdiction under the Judgments Regulation and the Lugano Convention: [2004] EWHC 1827 (Ch). Bambino and the Argands appealed. The Argands also relied on proceedings commenced in Geneva and contended that the English court had to stay its proceedings as the court second seised.

Appeal dismissed. Carnwath LJ gave the judgment of the court, with whom Neuberger LJ and Sir William Aldous agreed.

1. The real subject matter of the proceedings was the composition of FOH’s board. That was a question of the company’s internal management and of the composition of one of its organs. It therefore fell within article 22(2) of the Judgments Regulation and the materially identical article 16(2) of the Lugano Convention. The associated claim concerning the register of directors did not alter that conclusion.

2. The conclusion was supported by the purposive approach in Grupo Torras v Al-Sabah [1996] 1 LlLR 7. The fact that the answer depended substantially on construing the shareholders’ agreement did not make the action merely contractual. Determining whether directors had been validly appointed was central to the validity of future board decisions. It would be unreal and uncertain if exclusive jurisdiction depended upon which aspect of the dispute happened to be contentious at a particular stage.

3. Ashurst v Pollard [2001] Ch 595 did not assist the appellants. It concerned the distinct rules governing immovable property and turned on the absence of any issue as to title. The need to construe article 16 restrictively meant no more than that its scope must not exceed its purpose. Here its purpose, legal certainty and the reasonable expectations of those concerned all favoured the courts of the company’s seat.

4. Article 16 impliedly derogated from the otherwise mandatory stay provision in article 21 of the Lugano Convention. A stay in favour of a court whose judgment would conflict with exclusive jurisdiction and would not be recognised served no useful purpose. It would instead cause delay and expense. The Court therefore upheld the refusal of a stay, assuming in the appellants’ favour that the Geneva court was first seised. It was unnecessary to decide whether Dresser UK Ltd v Falcongate Freight Management Ltd [1992] QB 502 had been superseded for Lugano Convention purposes.

• Court of Appeal (Civil Division) Dismissed the defendants’ appeal and refused permission to appeal to the House of Lords: [2004] EWCA Civ 1512.
• Chancery Division Lewison J held that the English court had exclusive jurisdiction over the dispute concerning the company’s directors: [2004] EWHC 1827 (Ch).