The Royal Bank Of Scotland Plc v Hicks & Ors

The court considered multiple interlocutory applications arising from litigation about the sale of Liverpool Football Club, including whether to discharge or vary an anti-suit injunction, applications to amend pleadings, joinder and service out of the jurisdiction. Key legal principles applied were (i) the court's discretion to grant negative declaratory relief (following the approach in Messier-Dowty and subsequent authorities) with utility as the principal factor, (ii) the power under section 37(1) of the Senior Courts Act 1981 to grant anti-suit injunctions where an exclusive jurisdiction clause or unconscionable/vexatious foreign proceedings warrant restraint, and (iii) the court's duty to construe jurisdiction clauses generously where appropriate but to have regard to comity and the risk of inconsistent decisions.

On the facts the court allowed amendments to the RBS and Broughton proceedings to reflect post-sale events and to pursue negative declarations and relief; refused to strike out or stay the Broughton action; refused to discharge the anti-suit injunction because there remained a real threat of foreign proceedings that would fall within the scope of exclusive jurisdiction clauses or would be vexatious or oppressive; permitted a limited variation of the injunction to allow applications under 28 U.S.C. §1782 with seven days' notice and to make clear that assistance to Mill Financial was not caught by the injunction; ordered joinder of NESV to the Broughton action; and dismissed as unnecessary the separate application for permission to serve Investment out of the jurisdiction.

Background and parties: The proceedings arose from the sale of Liverpool Football Club. The former owners (Messrs Hicks and Gillett and related companies) had controlled the club companies through a chain of entities and were subject to finance documents with RBS. Corporate governance arrangements, an RBS Side Letter and a Corporate Governance Side Letter (CGSL) imposed restrictions and incorporated exclusive jurisdiction clauses in favour of the English courts. Sir Martin Broughton had been appointed independent chairman to oversee a sale process. The sale to UKSV/NESV proceeded in October 2010 after contested board events, interim English interlocutory proceedings and a short-lived Texas temporary restraining order.

Procedural posture and relief sought: The hearing concerned six interlocutory applications at a case management conference: (i) the former owners and a Cayman company sought discharge or variation of an anti-suit injunction previously granted; (ii) the former owners sought to strike out or dismiss the Broughton action; (iii) RBS sought permission to amend its claim in the RBS action; (iv) Sir Martin Broughton sought permission to amend the Broughton action (and to seek negative declarations or relief including under section 1157 Companies Act 2006); (v) NESV sought joinder to the Broughton action; and (vi) a precautionary application for permission to serve Investment out of the jurisdiction.

The issues framed by the court included:

• whether permission to amend should be given so as to permit negative declaratory relief and other amendments in both the RBS and Broughton actions;
• whether the anti-suit injunction previously granted should be discharged or varied in light of changed circumstances;
• whether the Broughton action should be struck out or stayed;
• whether NESV should be joined and whether permission to serve Investment out of the jurisdiction was required;
• whether applications under 28 U.S.C. §1782 and assistance to Mill Financial should be permitted despite the injunction.

Court's reasoning and findings:

1. The court reviewed the law on negative declaratory relief emphasizing utility as the decisive discretionary factor (following Messier-Dowty and related authorities). It concluded that negative declarations sought by Sir Martin Broughton would be useful: the former owners had been "temporising", had already advanced serious allegations (including by the Texas petition) and the claimant (Sir Martin) was entitled to have those allegations determined in England. Accordingly the court allowed amendments to the Broughton action and to the RBS action to enable those declarations and related relief to be pursued.
2. On anti-suit injunction principles (section 37(1) Senior Courts Act 1981 and authority such as Donohue, Turner and Hoffmann J in Barclays Bank v Homan) the court identified two bases for restraint: enforceable exclusive jurisdiction clauses and unconscionable/vexatious foreign litigation. The judge found a real and continuing threat that the former owners would issue or pursue United States proceedings that would impugn the sale process and Sir Martin's conduct and that such proceedings risked breaching exclusive English jurisdiction clauses or producing inconsistent determinations. The court therefore refused to discharge the anti-suit injunction.
3. The court nevertheless recognised limited exceptions: it clarified that the injunction already contained a provision permitting specific applications for permission and that it would permit applications under 28 U.S.C. §1782 in aid of English proceedings provided seven days' notice was given; and it made clear that assistance to Mill Financial (pursuant to the Tri-Party Intercreditor agreement) was not caught by the injunction.
4. NESV was joined to the Broughton action as a necessary or proper party. The separate application for permission to serve Investment out of the jurisdiction was dismissed as unnecessary because permission already existed.
5. The court treated the former owners' conduct in obtaining the Texas TRO without disclosing the prior English interlocutory application as a material factor supporting continuation of the injunction, though not as a punitive ground per se.

Subsidiary findings: the judge rejected the former owners' explanations for misleading the Texas court as unsatisfactory; found that the CGSL and related documents and letters of appointment contained jurisdictional provisions that entitled English courts to determine at least key claims (notably those against Sir Martin); and refused to accept that all potential claims against RBS necessarily fell within the exclusive jurisdiction clauses but held there was sufficient risk that future foreign proceedings would overlap with matters properly determined in England.

This was a first-instance disposal of multiple interlocutory applications. The court allowed the proposed amendments to the RBS and Broughton actions so as to permit negative declaratory relief and related claims; dismissed the application to strike out or stay the Broughton action; refused to discharge the anti-suit injunction and instead varied it to permit (a) applications under 28 U.S.C. §1782 subject to seven days' prior notice and (b) assistance to Mill Financial; ordered joinder of NESV to the Broughton action; and dismissed as unnecessary the separate application for permission to serve Investment out of the jurisdiction. The court reached these outcomes by applying the principles governing negative declarations (utility and discretion), the law on anti-suit injunctions (exclusive jurisdiction clauses and the unconscionable/vexatious category), and by finding a real threat of foreign proceedings that could cause inconsistent decisions or offend the parties' jurisdictional agreements.