Isis Investments Ltd v Oscatello Investments Ltd & Ors

A case management stay of English proceedings should be granted only where the circumstances are sufficiently rare and compelling and the likely benefits clearly outweigh the resulting disadvantages. Relevant considerations include the relative progress of the proceedings, the identity of the parties, the risk of inconsistent findings, the availability of effective relief, and any exclusive jurisdiction clause. Proceedings should generally continue where the English issues are logically anterior to foreign insolvency or related proceedings. For the purposes of the applicable cross-border insolvency regime, whether additional claims form part of an existing lawsuit is determined by English procedural law. Claims capable of introduction within the existing proceedings are not necessarily prohibited by the insolvency moratorium.

The claimant, an Isle of Man investment company in liquidation, paid more than £130 million into court. The parties disputed their entitlements under clause 6 of a Framework Agreement governed by English law and containing an exclusive English jurisdiction clause.

The claimant sought to amend its case to challenge the validity and enforceability of clause 6. It also had related proceedings in the Isle of Man concerning directors, insolvency issues and connected transactions. The issues before the court were whether Action 599 should be stayed and whether a representative defendant should be permitted to bring additional counterclaims against Kaupthing under Insolvency Act 1986 and common law causes of action.

1. The stay was refused. The power to stay proceedings is part of the court’s inherent jurisdiction and is discretionary. In a case of this kind the burden is high: the circumstances must be rare and compelling, and the benefits of a stay must clearly outweigh its disadvantages.
2. The validity and construction of clause 6 were logically prior to the Isle of Man claims and to appeals concerning proofs of debt. The English action had begun in 2009, was more advanced, and had involved substantial expenditure. The claimant had itself commenced both sets of proceedings.
3. The English jurisdiction clause was an important, although not decisive, factor. Oscatello and Eliza were not parties to the Isle of Man proceedings. A stay would delay their claims and could produce findings by which they were not bound. It therefore would not necessarily eliminate inconsistent decisions.
4. The issues concerning fiduciary duties, return of capital and registration of an equitable charge did not justify a stay. No material difference between English and Manx law had been identified. Claims against the directors were subsidiary and might fall away if clause 6 were invalidated.
5. The authorities concerning seisin in cross-border jurisdiction cases did not determine whether Action 599 was a pending lawsuit for the purposes of Article 32 of Directive 2001/24/EC or article 99(2)(h) of the Icelandic Financial Undertakings Act. Under the expert evidence, the question whether amendments formed part of the existing action was governed by English procedural law. The proposed amendments were capable of being introduced within Action 599 and concerned rights or assets of Kaupthing.
6. Mr Adalsteinsson’s additional claims were likewise capable of being introduced in the existing proceedings under Civil Procedure Rules 1998 Part 20. Article 99(2)(h) therefore applied, and permission was granted. The remaining issues were left for subsequent directions.

First-instance case management decision. No appellate history was stated in the judgment.