Blue Tropic Ltd & Anor v Chkhartishvili

Under article 22 of the Brussels I Regulation, exclusive jurisdiction depends on the principal subject matter of the proceedings. A dispute about beneficial ownership does not become a claim concerning the validity of company-organ decisions merely because those decisions may later be impugned. Nor does it become a claim concerning the validity of entries in a share register merely because the ownership issue may lead to rectification.

Where an English court has jurisdiction under article 2, a stay cannot be granted under the guise of case management if its real basis is forum non conveniens. A short stay may nevertheless be appropriate in exceptional case-management circumstances, such as where related foreign proceedings pre-date the English claim and are imminent for trial.

Blue Tropic Limited and Coppella Ventures Limited brought proceedings against Ivane Chkhartishvili concerning alleged transfers of company assets in Georgia. Mr Chkhartishvili argued that he beneficially owned the companies and that the English court lacked jurisdiction under article 22 of the Brussels I Regulation because the proceedings concerned the validity of company-organ decisions or entries in the companies’ BVI share registers.

He alternatively sought a stay pending related proceedings in the BVI or Georgia. Master Marsh dismissed his application on 16 December 2013. Mr Chkhartishvili appealed. The issues were whether article 22 applied and, if not, whether the proceedings should be stayed.

1. Appeal dismissed. Article 22 of the Brussels I Regulation did not confer exclusive jurisdiction on the BVI courts.
2. The relevant inquiry is the proceedings’ principal subject matter, requiring an overall classification and overall judgment. The central dispute concerned beneficial ownership and its consequences for the substantive claims. It was not principally the validity of the companies’ board decisions. The possibility that success on ownership might enable the defendant to impugn those decisions did not alter the character of the proceedings.
3. Article 22(3) was also inapplicable. The claimants’ proceedings could be determined without deciding whether the share registers should be rectified. Beneficial ownership was relevant to the claims, but the validity of the register entries was not part of their subject matter.
4. Although beneficial ownership depended on facts, it was not a purely factual issue. Beneficial ownership is a legal concept, governed by the applicable law as well as the facts.
5. Because the defendant was domiciled in the United Kingdom when proceedings were issued, the English court could not decline jurisdiction on forum non conveniens grounds. A stay sought because the BVI was better placed to determine ownership, or because BVI company-board issues should be decided there, would achieve that result indirectly and was impermissible.
6. A stay might exceptionally be justified for short-term case management, for example where related foreign proceedings pre-dated the English claim and were about to be tried. Those circumstances were absent, and the stay application was dismissed.

• High Court (Chancery Division): Appeal from Master Marsh’s judgment of 16 December 2013. The appeal was dismissed.