Euroafrica Shipping Lines Co Ltd v Zegluga Polska SA & Anor

A general solicitor’s retainer in litigation authorises the solicitor to take the steps necessary to bring the proceedings to an end. That authority continues despite later uncertainty about which company officers are entitled to give instructions. The distinction is between the solicitor’s authority to conduct the litigation and the practical ability to obtain current instructions. A dispute about the constitution of a company’s management or supervisory organs therefore does not, without more, justify staying proceedings where the solicitor’s retainer remains in force and the judgment will bind the company.

The defendants in one action, who were claimants in connected proceedings, applied for both English actions to be stayed pending determination by the Regional Court of Szczecin of issues concerning the validity of Euroafrica’s shareholder resolutions and the constitution of its management and supervisory boards under Polish law.

The parties accepted that substantial Polish-law issues arose, but the central English-law issue was whether Richards Butler retained authority to conduct the English litigation under a general retainer entered before the alleged constitutional defects. The court also considered whether delay, possible changes in litigation strategy, or the risk of re-litigation justified a stay.

1. Application dismissed. The court refused a stay of the conjoined English proceedings pending the Polish proceedings.
2. Richards Butler had been instructed under general retainers to conduct the relevant litigation without limitation. The retainer was a contract governed by English law, and WNLO had authority to conclude it for Euroafrica. The evidence established that instructions had been given for Richards Butler to conduct the proceedings.
3. Applying Donsland Ltd v Van Hoogstraten [2002] EWCA Civ 253, a solicitor employed under a general litigation retainer has the necessary authority to take all steps ordinarily incidental or necessary to carry the proceedings to their conclusion. That authority persists despite later difficulty in obtaining instructions from properly constituted company officers.
4. The challenge confused the solicitor’s authority to conduct proceedings with the ability to obtain current instructions. The subsequent disputes concerning Euroafrica’s shareholders, Management Board and Supervisory Board therefore did not remove Richards Butler’s authority or prevent the English judgment from binding Euroafrica.
5. The possible effect on litigation strategy, settlement decisions, disclosure or witness evidence did not justify a stay. The Polish-law issues were irrelevant to the central contractual default claims, and there was no realistic prospect that the English proceedings would require re-litigation. The court indicated that the costs question remained to be determined.