Antonio Gramsci Shipping Corp & Ors v Recoletos Ltd & Ors

At the interlocutory jurisdiction stage, the court must avoid conducting a mini-trial. Where the evidence is sharply conflicting on an issue also to be decided at trial, it need not determine which side has the better argument. It is sufficient to identify evidence of sufficient strength to justify assuming jurisdiction.

A person who controls a company cannot, by piercing the corporate veil, thereby become a party to a contract or its jurisdiction clause. Consent under Article 23 of the Brussels Regulation requires clear evidence of the defendant’s willingness to submit to the chosen court. Article 24 requires conduct which objectively can bear only the meaning that the defendant accepts the court’s jurisdiction.

The claimants alleged that offshore companies had diverted profits through under-market vessel charterparties and sought to hold Mr Lembergs jointly liable by piercing the corporate veil. They relied on the English jurisdiction clauses in the charterparties and on his participation in contempt-related applications as establishing jurisdiction under Articles 23 and 24 of the Brussels Regulation.

Mr Lembergs denied being a beneficial owner or controller of the companies. The jurisdiction challenge therefore raised both a disputed factual issue and the legal question whether veil piercing could make him a party to the charterparties and their jurisdiction clauses.

1. Good arguable case. The court applied the approach in Canada Trust v Stolzenberg (No.2) and the subsequent authorities. The interlocutory process must not become a trial or appear to determine the merits in advance. Where rival evidence cannot fairly be resolved without cross-examination and fuller disclosure, the court should concentrate on whether factors exist which are sufficiently strong to permit it to take jurisdiction.
2. The claimants’ evidence gave their case sufficient strength to establish a good arguable case on the factual gateway, even though the court could not conclude that they had the better argument. The conflicting evidence required resolution at trial.
3. Corporate veil and Article 23. The Court of Appeal’s decision in VTB Capital PLC v Nutritek International Corp. and others had overruled Antonio Gramsci and others v Stepanovs as wrong in law. Piercing the corporate veil could not make Mr Lembergs an original party to contracts entered into by the companies. The same reasoning prevented the court from treating him as having consented to their jurisdiction clauses.
4. Even assuming that consensus under Article 23 could exist without a formal contract, there was no evidence that Mr Lembergs had expressed or indicated any willingness to submit claims against him to the English court. His alleged conduct showed, at most, willingness that claims against the companies be litigated there. Article 23 therefore did not confer jurisdiction.
5. Article 24. Applying the objective test in SMAY Investments v Sachdev and Global Multimedia International Limited v Ara Media Services, submission occurs only where the conduct relied upon cannot be explained except as acceptance of English jurisdiction. Mr Lembergs’ contempt applications were preceded by, and expressly referred to, his jurisdiction challenge. They were equally explicable as attempts to protect his position or challenge the evidence and did not constitute submission.
6. The court accordingly held that it had no jurisdiction over Mr Lembergs under either Article 23 or Article 24 of the Brussels Regulation.