Linuzs & Ors v Latmar Holdings Corporation

Jurisdiction under article 6.1 of the Council Regulation (EC) No 44/2001 is assessed when proceedings are instituted. A later default judgment against one defendant does not remove jurisdiction over connected claims. The close-connection inquiry is a single, fact-sensitive test. Claims may be heard together where separate proceedings would require overlapping findings and create a risk of essentially incompatible judgments. The claims may satisfy the test even if a wider conspiracy involving all defendants is not established. A conspirator may join an existing conspiracy after its formation.

Latmar brought claims for deceit, fraudulent misrepresentation, conspiracy and breach of fiduciary duty against former senior officers of its parent company. The claims concerned two allegedly sham advisory agreements involving Arindal and Media Focus. The appellants were domiciled in Latvia and challenged the English court’s jurisdiction over the claims relating to Arindal, while accepting jurisdiction concerning Media Focus.

Eder J set aside default judgments against two appellants under CPR 13.3(1)(b), but rejected the jurisdiction challenge. He held that the English court had jurisdiction under article 6.1 of the Council Regulation (EC) No 44/2001 and that there was at least a good arguable case under article 23. The appeal concerned the effect of the default judgment, whether Media Focus was involved in a wider conspiracy, whether the claims were sufficiently connected, and whether article 23 could apply through corporate personification.

Disposition. Toulson LJ gave the leading judgment. Pill LJ and Munby LJ agreed. The appeal was dismissed, subject to an agreed correction of the costs order relating to Mr Berzins.

1. Relevant date. The court applied the principle that jurisdiction under article 6 of the Council Regulation (EC) No 44/2001 is determined when jurisdiction is invoked, namely when the claim form is issued. This preserves predictability and prevents subsequent events from defeating jurisdiction. Latmar’s later default judgment against Media Focus was therefore immaterial.
2. Wider conspiracy. The evidence provided a clear prima facie and strongly arguable case that the appellants orchestrated linked frauds through shell companies with nominee directors. The close resemblance between the agreements and the draft tripartite agreement supported the inference that Media Focus could have become involved in the wider conspiracy. A conspirator need not join at the outset; later entry into an existing conspiracy is legally possible. The court therefore upheld the finding that Media Focus and Arindal were arguably parties to one wider conspiracy.
3. Article 6 test. Even if Media Focus were party only to the Media Focus scheme, the claims were sufficiently connected. Article 6 involves a single composite and fact-sensitive inquiry. The court must examine the claims’ essence, factual context, nature and interrelationship, and whether separate trials would risk essentially incompatible judgments. Here, both agreements concerned the same shipbuilding contracts, were allegedly prepared and backdated together, and required overlapping findings about the appellants’ honesty. It would be unrealistic and potentially unjust to try the claims separately. The article 6 condition was satisfied.
4. Article 23. The article 23 issue was unnecessary to decide after the conclusion under article 6. The court expressed difficulty with treating Arindal as the appellants’ corporate personification, but made no final ruling on that alternative ground.
5. Costs. The judge had acted properly within his discretion in ordering payment of substantial costs despite evidence of limited means. The order was corrected by agreement so that Mr Berzins was liable only for the costs of the jurisdictional challenge.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court upheld jurisdiction under article 6 and ordered an agreed correction to the costs order concerning Mr Berzins.
2. Commercial Court: Eder J, in Latmar Holdings Corporation v Media Focus Ltd [2012] EWHC 262 (Comm), set aside default judgments against two appellants but rejected the challenge to jurisdiction over the claims concerning Arindal.