OJSC VTB Bank v Parline Ltd & Ors

When deciding whether England is the clearly or distinctly most appropriate forum for a foreign defendant, the court must assess the claim in the context of related proceedings against defendants domiciled in England. The foreign defendant’s status as a necessary or proper party is a weighty, but non-conclusive, factor. The court should consider whether separate proceedings would duplicate evidence and create a risk of inconsistent judgments. A claimant’s genuine entitlement and intention to continue proceedings in England is the relevant starting point. The alleged factual predominance of one defendant is less important than the legal relationship between the claims and whether the English proceedings are practically bound to continue. Where the claims arise from the same facts and involve materially common legal and factual issues, it may be inappropriate to require the claim against the foreign defendant to proceed separately abroad.

OJSC VTB Bank brought claims against an English company, its English-domiciled director and a Russian individual. The claimant alleged that the Russian defendant directed and controlled the conduct giving rise to claims against all three defendants. The claims were governed by Russian law and concerned events, witnesses, documents and loss connected with Russia.

The Russian defendant applied to set aside service out of the jurisdiction. It was accepted that the claimant had a reasonable prospect of success against the English defendants and that the claim fell within the necessary-or-proper-party gateway in practice direction 6B. The issue was whether England was clearly and distinctly the most appropriate forum for the claim against the Russian defendant, given the competing Russian connections and the intended continuation of the English proceedings.

1. Application dismissed. The claimant established that England was clearly and distinctly the more appropriate forum for the claim against the Russian defendant.
2. The court adopted the three-stage approach summarised by Lord Collins in Altimo Holdings v Kyrgyz Mobil Tel [2012] 1 WLR 1804: a reasonable prospect of success on the merits; a good arguable case within a jurisdictional gateway; and England as clearly or distinctly the most appropriate forum. The first two requirements were accepted and satisfied.
3. The necessary-or-proper-party gateway was a relevant and weighty factor in the forum assessment, but it was not conclusive. Its weight arose from the desirability of resolving claims arising from the same facts in one proceeding, avoiding duplicated cost and evidence, and reducing the risk of inconsistent judgments.
4. The forum question was not whether Russia or England would be preferable for the foreign defendant’s claim considered in isolation. It was whether it was appropriate to require that claim to proceed in Russia in addition to English proceedings involving substantially the same facts, transactions, witnesses, documents and legal issues.
5. A claimant’s motive may reduce the weight of the English connection where English defendants are sued only as a device for bringing a foreign defendant within the jurisdiction. That was not this case: the claimant had a genuine claim against at least the first defendant and intended to pursue it in England in any event. The existence and exercise of that entitlement formed the proper starting point.
6. The alleged factual predominance of one defendant was not itself decisive. Greater significance attached to legally relevant distinctions between the claims and to whether proceedings against defendants within England were practically bound to continue. Where claims were based on joint liability in tort, the defendants could be equally significant for forum purposes. The first defendant was therefore not a minor player.
7. The judge declined at that stage to order a preliminary issue concerning whether Russian bankruptcy law provided a complete code excluding general tort principles and postponing any claim until a later stage of Yurganz’s bankruptcy process. A decision on a preliminary issue should await the case management conference, after pleadings had closed and the court had better information about the issues, witnesses and likely scope of trial.

The jurisdiction challenge was dismissed. No order was made on a preliminary issue at that stage, and the parties were directed to return for a case management conference after close of pleadings.