Sabbagh v Khoury & Ors

For jurisdictional purposes, a claimant must show a real issue to be tried against an anchor defendant and, for additional defendants, a good arguable case that the claims are sufficiently connected to avoid irreconcilable judgments. The court must avoid conducting a mini-trial, while testing whether the claim has a realistic prospect of success.

An heir is not bound by a company’s arbitration clause merely because the claim derives from the deceased’s assets. The clause binds the heir only so far as the claim is based on rights arising under the company’s articles. Claims substantively founded on tortious conspiracy remain outside that clause.

The Brussels Regulation exclusions for succession and company-organ jurisdiction are construed by identifying the principal subject matter of the claims.

The claimant brought claims against family members and companies concerning alleged misappropriation of her late father’s assets and alleged deprivation of shares in a Lebanese company. The defendants challenged jurisdiction, sought stays in favour of arbitration and Lebanon, and challenged service on one defendant outside the jurisdiction.

The court considered whether there was a serious issue to be tried against the English-domiciled anchor defendant, whether the claims against the other defendants were sufficiently connected under Article 6(1) of the Brussels Regulation, whether the claims fell within the arbitration clause in the company’s articles, and whether the claims were excluded from the Regulation as succession matters or proceedings concerning the validity of company organs.

1. Share deprivation claim. The claim did not raise a serious issue to be tried. The documented share transfers, the share register and the evidence of corporate approval made the alleged failure to complete transfer formalities speculative. Any want of formality was in any event arguably waived by the relevant shareholders. The claim also failed on the separate question of knowledge: there was no properly arguable basis for alleging that the anchor defendant knew that the deceased still owned the shares at death or participated in intentional wrongdoing.
2. Asset misappropriation claim. This claim did raise a serious issue to be tried. The evidence disclosed triable issues concerning the deceased’s capacity after his stroke, the scope of internal accounting practices, the effect of powers of attorney, the propriety of investments and the knowledge and involvement of the defendants. The court declined to conduct a mini-trial.
3. Article 6(1). There was a good arguable case for jurisdiction over the co-defendants. The claims raised overlapping questions of fact and law, including capacity, accounting practices, powers of attorney, loss, knowledge and intention. The risk of irreconcilable judgments included inconsistent findings along the route to liability, not merely inconsistent final outcomes.
4. Arbitration. The claimant was not bound by the arbitration clause in the company’s articles in respect of the asset misappropriation claim. Although an heir may be bound by contractual obligations inherited from the deceased, this claim was substantively a delictual claim for conspiratorial misappropriation, not a claim founded on the articles. No mandatory stay under section 9 of the Arbitration Act 1996 arose.
5. Brussels Regulation. The principal subject matter of both claims was alleged conspiracy to deprive the claimant and her father of assets. Succession and the validity of company-organ decisions were relevant issues, but neither was the principal subject matter. The claims therefore fell within the Regulation and were not subject to Article 22(2) exclusive jurisdiction.
6. The applications to stay the share deprivation claim were granted. Service on HH was set aside. The applications to stay the asset misappropriation claim were dismissed. Consequential matters, including costs, were left for agreement or further order.