Walanpatrias Stiftung v Lehman Brothers International (Europe) & Ors

For service out of the jurisdiction, a dispute is “real” where the defendant holds disputed assets, does not recognise the claimant’s asserted entitlement, and is entitled to judicial protection before acting on competing instructions. A stakeholder’s absence of a positive case does not make the dispute contrived.

Where parties have agreed English law and exclusive English jurisdiction for disputes concerning assets held in England, that agreement is a powerful factor in favour of England as the proper forum. Parallel foreign proceedings do not justify a stay where they cannot effectively determine the ownership dispute or bind the relevant parties and assets.

Walanpatrias sought declarations concerning ownership of assets held by Lehman Brothers International (Europe) in the Doraw Account, together with relief concerning a United States tax claim. It also sought to serve AMP Services Limited outside the jurisdiction.

AMP applied to set aside service, alternatively for a stay on forum non conveniens or case management grounds, relying principally on proceedings in Florida and New York. LBIE sought a stay of the claims against it.

The central issues were whether there was a real issue between Walanpatrias and LBIE, whether the claims concerned property within the jurisdiction, whether England was the proper forum, and whether the competing proceedings justified stays.

1. Service out. The dispute between Walanpatrias and LBIE over ownership and control of the Doraw Account was a real issue which it was reasonable for the English court to try. LBIE held the assets, had not acknowledged Walanpatrias’s entitlement, and was entitled to judicial protection before acting on competing instructions. The issue was not rendered contrived or academic by the existing restraint on dealings with the assets.
2. The Doraw Account claim fell within CPR Part 6.20(3). The account was also property located in England for the purposes of CPR Part 6.20(10), since it was held in London under agreements governed by English law and subject to English jurisdiction. Service out was therefore valid for that claim. The overall ownership claim, concerning assets not wholly located in England, did not fall within the jurisdictional gateway.
3. Forum. Applying the approach in Spiliada Maritime Corp. v Cansulex [1987] AC 460, England was the appropriate forum for the Doraw Account ownership claim. The English jurisdiction clauses agreed by Walanpatrias and AMP, the location of the assets, and the ability of an English judgment to bind the relevant parties and assets carried substantial weight. The Florida proceedings remained uncertain as to jurisdiction and sustainable causes of action, while the New York proceedings concerned only a fraudulent conveyance claim and could not determine the ownership issue.
4. The IRS tax issues were discrete and could only be resolved in New York. They did not affect the need to determine ownership of the Doraw Account. The IRS claim in these proceedings was stayed pending resolution of the New York proceedings or further order.
5. The Doraw Account ownership claim against LBIE was stayed because LBIE advanced no positive case and should not incur further expense once the principal dispute was before the court. The stay was without prejudice to applications for disclosure and did not undermine the binding effect of any judgment concerning the assets. AMP’s forum and case-management stay applications were dismissed.

AMP’s application was granted only in relation to the overall ownership claim and dismissed in relation to the Doraw Account ownership claim.