Ferrexpo AG v Gilson Investments Ltd & Ors

Where proceedings concern the validity of company resolutions or entries in public registers situated in a non-member state, the English court may give a reflexive effect to the exclusive-jurisdiction principles in article 22 of the Brussels Regulation. The resulting stay is discretionary. Relevant considerations include the risk of injustice, the proximity of the foreign court to the subject matter, and the avoidance of inconsistent decisions.

The court may also stay proceedings that pointlessly duplicate related foreign litigation. Multiplicity alone does not establish abuse, but proceedings may be oppressive where they serve no purpose other than duplicating proceedings already brought abroad.

Ferrexpo, a Swiss company, sought declarations concerning its ownership of shares in a Ukrainian company and the consequences of the alleged invalidity of an earlier share purchase agreement. The defendants, English companies, had commenced related proceedings in Ukraine concerning the validity of company resolutions, share issues and entries in Ukrainian registers.

The defendants challenged the English court’s jurisdiction and sought a stay. The principal issues were whether the Brussels Regulation permitted a reflexive application of articles 22 and 28 in relation to Ukraine, whether the proceedings were abusive or premature, and whether Ferrexpo had shown a real risk that justice would not be obtained in Ukraine.

1. The defendants’ application to amend the notice of application to raise a separate subject-matter jurisdiction argument was refused. The issue was premature because no defence had been pleaded and the precise issues for trial had not been defined (paras [156]-[161]).

2. The court accepted that article 22 of the Brussels Regulation could have reflexive effect in relation to a non-member state. The English proceedings were principally concerned with the validity of resolutions of the Ukrainian company’s general meetings, an organ of a company seated in Ukraine. Alternatively, they concerned the validity of entries in the Ukrainian Unified State Register, a public register (paras [142]-[153]).

3. The reflexive application of article 22 was discretionary. The court was not required automatically to decline jurisdiction. The absence of cogent evidence of a real risk of injustice in Ukraine, the close connection of the dispute with Ukraine, the presence of related proceedings there, and the risk of inconsistent decisions justified a stay (paras [154]-[155]).

4. The court also accepted that article 28 could have reflexive effect. The English proceedings and the Ukrainian proceedings were related because they concerned substantially the same facts and Ukrainian legal issues, and there was a significant risk of irreconcilable judgments. Article 27, applied reflexively, governed because the proceedings involved the same cause of action and the Ukrainian court was first seised of proceedings between the relevant parties (paras [163]-[187]).

5. Ferrexpo had not established a real risk that justice would not be obtained in Ukraine. The evidence was fragmentary, vague and often unreliable, and did not provide the cogent evidence required where the independence or integrity of a foreign court was impugned (paras [35]-[36], [96]).

6. The proceedings were also oppressive and an abuse of process. The viable declarations substantially duplicated issues in the Ukrainian proceedings, while other relief was abandoned, hypothetical, undisputed or incapable of serving a practical purpose. They could have no purpose other than pointlessly to duplicate the Ukrainian litigation (paras [192]-[198]).

7. The order for expedition was revoked. The anticipated trial could not be accommodated before the Ukrainian hearing, and expedition would otherwise create an unjustified race for judgment (paras [201]-[204]). The proceedings were stayed.