Summary
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.
Factual background
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.
Held
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
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.
Appeal route
- This judgment [2011] EWHC 3281 (Comm) High Court (Commercial Court)
- Appealed to[2012] EWCA Civ 1588Outcomeappeal dismissed unanimously; cross-appeals allowed in part
Key cases cited
The 30 most senior of 31 authorities cited.
- AK Investment CJSC v Kyrgyz Mobil Tel Limited and others (Isle of Man) [2011] UKPC 7
- Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221
- Republic of India v India Steamship Co Ltd (The Indian Endurance and The Indian Grace) (No 2) [1998] AC 878
- de Dampierre v de Dampierre [1988] AC 92
- Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987] AC 460
- Pitman (Curator) v Crum Ewing [1911] AC 217
- UBS AG & UBS Securities Llc v HSH Nordbank AG [2009] EWCA Civ 585
- Dadourian Group Int Inc v Simms & Ors [2006] EWCA Civ 399
- Filby v Mortgage Express (No 2) Ltd. [2004] EWCA Civ 759
- VTB Capital Plc v Nutritek International Corp & Ors [2011] EWHC 3107 (Ch)
- Linsen International Ltd & Ors v Humpuss Sea Transport Pte Ltd & Ors [2011] EWHC 2339 (Comm)
- Ibrahim v Barclays Bank Plc & Anor [2011] EWHC 1897 (Ch)
- Antonio Gramsci Shipping Corp & Ors v Stepanovs [2011] EWHC 333 (Comm)
- Fiona Trust & Holding Corporation Ors v Privalov Ors [2010] EWHC 3199 (Comm)
- Cecil & Ors v Bayat & Ors [2010] EWHC 641 (Comm)
- Deutsche Bank Ag v Sebastian Holdings Inc [2009] EWHC 3069 (Comm)
- OJSC Oil Company Yugraneft v Abramovich & Ors (Rev 1) [2008] EWHC 2613 (Comm)
- Greene Wood & McLean v Templeton Insurance Ltd [2008] EWHC 1593 (Comm)
- Albon (t/a N A Carriage Co) v Naza Motor Trading SDN BHD & Anor [2007] EWHC 327 (Ch)
- BAS CAPITAL FUNDING CORPORATION DEUTSCHE BANK AG LONDON PAINE WEBBER CAPITAL INC. PW EXE LTD. PW PARTNERS 1999 LP v. MEDFINCO LTD. ABACUS HOLDINGS LTD. W GERDES HTC INC. iWORLD GROUP EUROPE HOLDINGS LTD. [2003] EWCH (Ch) [2004] 1 Lloyd's Rep 652
- Deo Antoine Homawoo v GMF Assurances SA [Case C-412/10]
- Niru Battery Manufacturing Co v Milestone Trading Ltd (No 2) [2003] 2 All ER (Comm) 365
- Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438
- BRITISH AEROSPACE PLC v. DEE HOWARD CO. [1993] 1 Lloyd's Rep 368
- Black v Yates [1992] QB 526
- Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] AC 643
- Behbehani v Salem (Note) [1989] 1 WLR 723
- Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350
- E.I. DU PONT DE NEMOURS & CO. AND ENDO LABORATORIES INC. v. I. C. AGNEW, K. W. KERR AND OTHERS [1987] 2 Lloyd's Rep 585
- M. H. SMITH (PLANT HIRE) LTD. v. D. L. MAINWARING (T/A INSHORE) [1986] 2 Lloyd's Rep 244
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Cases citing this case
5 later cases · 3 positive · 2 negative
Most senior citing decisions:
- VTB Capital Plc v Nutritek International Corp & Ors [2012] EWCA Civ 808 overruled
- Lakatamia Shipping Co Limited v Nobu Su (aka Su Hsin Chi; aka Nobu Morimoto) & Ors. [2021] EWHC 1907 (Comm) applied
- The European Union & Anor v The Syrian Arab Republic [2018] EWHC 1712 (Comm) applied
- Allen & Ors v Depuy International Ltd [2014] EWHC 753 (QB)
- Fortress Value Recovery Fund I LLP v Blue Skye Special Opportunites Fund LP & Ors [2013] EWHC 14 (Comm)
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