Racy v Hawila

Where English and foreign proceedings share substantial factual disputes but pursue different legal claims and remedies, the case is not one of forum non conveniens if neither jurisdiction is an appropriate forum for the other’s claims. The principles governing a stay to litigate in an alternative forum therefore do not apply. The court may instead use its case-management powers to decide whether the proceedings should run concurrently and, if not, which should proceed first. It may require the claimant to elect where simultaneous proceedings would oppress the defendant or impair efficient and just management. The discretion must be exercised on relevant considerations and is subject to appellate review for misdirection, material omissions or manifest error.

Mr Racy brought an English action against Mr Hawila alleging partnership, contractual and fiduciary rights arising from their business relationship. He had also commenced proceedings in Lebanon seeking the winding-up of SARL and the appointment of a liquidator.

Mr Hawila applied for a stay or dismissal. At the hearing he sought the more limited relief that Mr Racy elect which action should proceed first. Blackburne J ordered Mr Racy to make that election within 21 days. Mr Racy elected to pursue the English action first and undertook to use his best endeavours to halt the Lebanese proceedings pending the English action.

The central issue was whether the proceedings should run simultaneously and, if not, whether the court could require an election as a matter of case management.

1. Appeal dismissed. Lord Justice Jonathan Parker delivered the judgment, with Lord Justice May and Lord Justice Thorpe agreeing. The order requiring Mr Racy to elect which action should proceed first was upheld.
2. The two actions were closely interconnected in their factual disputes, although they involved different legal claims and remedies. This was not a forum non conveniens case. There was no appropriate alternative forum for the claims made in England, just as the English court could not grant the Lebanese remedy of winding up SARL. The principles in The Spiliada [1986] AC 460 were therefore inapplicable, and no anti-suit injunction was sought.
3. The real question was one of case management: whether both actions should proceed simultaneously and, if not, which should proceed first and what mechanism would produce a sensible and just result. Following the approach illustrated by Reichhold Norway ASA v Goldman Sachs International [2000] 1 WLR 173 CA, the court had a wide discretion to prioritise related proceedings.
4. The judge was entitled to conclude that requiring Mr Hawila to face both actions at the same time would be oppressive. Both actions involved substantial factual overlap, and concurrent proceedings created risks including duplicated investigation and double recovery. The order was merely one of priority; neither action was discontinued. Mr Racy’s offer to stay the Lebanese action on conditions was not a factor of significant weight.
5. The judge had not misdirected himself, relied on irrelevant matters, omitted relevant matters or reached a manifestly wrong conclusion. The Article 6 argument under the European Convention on Human Rights was rightly rejected. The appeal was dismissed with costs. An interim payment of £25,000 was ordered, with the balance to be assessed.

• Court of Appeal (Civil Division): Dismissed the appeal and upheld the case-management order requiring an election between the English and Lebanese proceedings. Costs were awarded, with an interim payment of £25,000 and the balance to be assessed.
• High Court, Chancery Division: Blackburne J ordered Mr Racy to elect within 21 days which action he would pursue first. Mr Racy elected to pursue the English action and undertook to use his best endeavours to halt the Lebanese proceedings pending final determination of the English action.