JSC BTA Bank v Granton Trade Ltd & Ors

When foreign defendants are said to be necessary or proper parties, the court must assess the anchor claim, the common issues and whether England is distinctly the more suitable forum. There is no inflexible rule excluding service merely because the dispute has stronger foreign connections or because joinder might let the tail wag the dog. The relative importance of the defendants is material, especially where the anchor defendants are the alleged principal actors and proceedings against them will continue in England. Avoiding inconsistent judgments and duplicated costs is a powerful factor. Jurisdictional challenges should be resolved promptly on limited material; a later failure or stay of the anchor claim does not retrospectively remove jurisdiction once the service-out test was properly met.

JSC BTA Bank brought claims concerning an alleged large-scale misappropriation scheme against two individuals domiciled in England and eight foreign companies said to be borrowing or intermediary companies. The companies applied to set aside service of the claim form out of the jurisdiction and sought declarations that the court lacked jurisdiction or should decline to exercise it.

On 9 June 2010, Mr Gavin Kealey QC, sitting as a Deputy High Court judge, granted permission to serve the companies out of the jurisdiction. The present application concerned whether the companies were necessary or proper parties, whether England was the appropriate forum, and whether the court should await a pending strike-out or stay application by the anchor defendants.

Application dismissed. The permission to serve the defendants out of the jurisdiction was upheld.

1. The claimant had to show a real issue to be tried against the anchor defendants, that the applicant companies were necessary or proper parties to that claim, and that England was distinctly the more suitable forum in the interests of the parties and justice. Once those matters were established, the applicants had to identify special circumstances requiring service out to be refused.
2. The companies were necessary or proper parties because the claims against them and the anchor defendants concerned the same essential question: whether a fraud had been orchestrated through the companies. Proceedings without either the alleged architects of the fraud or the borrowing and intermediary companies would be incomplete.
3. There was no rule that the presence of an anchor defendant domiciled in England automatically justified service on foreign defendants, nor a rule requiring the foreign defendants to be excluded where the dispute had stronger foreign connections. The court had to consider the relative importance of the defendants and the practical continuation of the English proceedings. The broad concern that the tail should not wag the dog did not govern where the anchor defendants were the chief protagonists. Owusu v Jackson [2005] QB 801 did not prevent the court from exercising discretion over non-domiciled defendants.
4. The risk of inconsistent judgments and waste or duplication of costs was a powerful factor favouring one forum: see 889457 Alberta Inc v Katanga Mining Ltd [2008] EWHC 2679 (Comm), para 25, and Citi-March Ltd v Neptune Orient Lines Ltd [1996] 1 WLR 1367. The substantial connections with Kazakhstan, Russian-language documents and the need for Kazakh law evidence did not outweigh the practical advantages of determining the whole dispute in England.
5. A jurisdictional challenge should be resolved at an early stage, expeditiously and on limited material. The court should not postpone it until a trial or factual hearing. That approach accorded with Canada Trust Co. v Stolzenberg [1998] 1 WLR 547; [2002] 1 AC 1, and The Spiliada [1987] AC 460.
6. The jurisdictional issue fell to be determined as at the commencement of proceedings on the good arguable case standard. A later failure of the anchor claims, or a successful abuse-of-process strike-out or stay application, would not retrospectively deprive the court of jurisdiction over companies properly joined at that stage. The Bank had a good arguable case for resisting the pending application, and the companies’ application was dismissed.

The judgment was a first-instance decision. It records that on 9 June 2010 Mr Gavin Kealey QC, sitting as a Deputy High Court judge, granted permission to serve the claim form and Particulars of Claim out of the jurisdiction. The present judgment determined and dismissed the defendants’ jurisdiction application.