Alliance Bank JSC v Aquanta Corporation & Ors

For service out of the jurisdiction, a claimant must show a serious issue to be tried, a good arguable case within a jurisdictional gateway, and that England is the proper place for the claim. A serious issue requires a substantial question with a real prospect of success; a good arguable case requires the claimant to have the much better argument on the gateway issue.

Extinguished-rights subrogation may arise where the claimant is legally compellable to discharge another’s debt, or where payment was authorised or ratified. The claimant may then enforce the extinguished rights in its own name. An exclusive English jurisdiction clause will ordinarily be respected, but strong reasons or exceptional circumstances may justify declining jurisdiction. Extensive related proceedings, evidence and connections in another country may constitute such reasons.

The claimant, a Kazakhstan bank, challenged alleged international fraud involving guarantees, offshore companies and approximately US$1.1 billion in Treasury securities. It sought to continue proceedings against companies and individuals in several foreign jurisdictions, relying on subrogation, conspiracy, dishonest assistance, knowing receipt, unjust enrichment, tracing and proposed claims under Kazakh law.

The proceedings followed an ex parte order granting permission to serve out and a worldwide freezing order. Several defendants applied to set aside service and challenge jurisdiction. The claimant also sought amendments and further permission to serve. A related Kazakh criminal case had resulted in conviction, but the civil claim had been set aside on appeal, leaving the claimant to pursue civil proceedings.

The issues included whether there was a serious issue to be tried, whether the claims fell within the relevant gateways, whether the defendants were proper parties, the effect of the Kazakh judgment, and whether England was the proper forum.

1. Serious issue to be tried. The test was whether the claimant showed a substantial question of fact or law with a real, rather than fanciful, prospect of success. That threshold was met for the Reachcom subrogated claim, the English-law conspiracy and related claims, and the proposed alternative claims under Kazakh law. It was not met for a subrogated claim based on alleged Metropol loan agreements in the same form as the Reachcom agreements.
2. Subrogation. The claimant had a good arguable case that payment of the Reachcom debt extinguished the lenders’ rights and entitled it to stand in their shoes. The claim could be based on legal compulsion or authorisation and ratification. The claimant had not elected against relying on the loan agreements merely because it reserved rights against the lenders. It could sue in its own name and rely on the contractual English jurisdiction clause.
3. Corporate veil and related claims. There was a serious issue as to whether the alleged puppeteers were parties to the Reachcom agreements under the proper law of those contracts. There was also a serious issue to be tried concerning conspiracy, dishonest assistance, knowing receipt, unjust enrichment and tracing, including the proposed claims under Articles 917, 932, 953, 955 and 956 of the Kazakh Civil Code and Article 62 concerning obligations analogous to fiduciary obligations.
4. Jurisdictional gateways. The claimant had a good arguable case that the contractual and non-contractual claims fell within the relevant gateways in CPR Practice Direction 6B. The words “in respect of a contract” were wide enough to include the conspiracy and related claims. The Third Defendant was an anchor defendant, and the other defendants were proper parties to the same proceedings.
5. Foreign judgment and parallel proceedings. Section 34 of the Civil Jurisdiction and Judgments Act 1982 was construed purposively. It did not bar the English proceedings where the foreign judgment had been set aside and was no longer enforceable or entitled to recognition. The remaining appeal in Kazakhstan did not itself create impermissible parallel proceedings.
6. Forum. The claimant failed to establish that England was clearly and distinctly the most appropriate forum. The dispute had an overriding Kazakh connection: most events, documents and witnesses were there; Kazakh law might govern important issues; and detailed Kazakh criminal proceedings had already produced findings of fact. Those circumstances amounted to strong reasons or exceptional circumstances justifying departure from the contractual English jurisdiction provisions.
7. Disposition. Service of the proceedings against the active defendants was set aside. Permission to amend and for inter partes service out was refused. The freezing order was not finally discharged, pending any application for equivalent relief under section 25 of the Civil Jurisdiction and Judgments Act 1982. The defendants’ applications succeeded and the claimant’s applications were dismissed, subject to the possible discrete consideration of a claim limited to the Third and Fourth Defendants.

First-instance decision on applications to set aside service out of the jurisdiction, challenge jurisdiction, amend the claim and obtain further permission for service. The judgment also considered the effect of related proceedings and a judgment in Kazakhstan.