Blomqvist v Zavarco Plc

Exclusive jurisdiction under Article 24 of the Recast Regulation is determined primarily by the nature and basis of the claim, rather than by contractual or other defences which may arise later. A claim concerning the validity of a company’s organs or the validity of entries in a company register remains within Article 24 even where payment, contractual obligations or other matters arise as preliminary issues.

Where Article 34 applies, its cumulative conditions must first be satisfied. The decision whether to stay then remains discretionary, having regard to the proper administration of justice and all relevant circumstances. Case-management powers cannot be used to surrender to a non-Member State court an essential issue which the Regulation requires the English court to determine.

Mr Blomqvist brought two proceedings concerning Zavarco Plc. The first sought declaratory relief concerning his notice convening a general meeting to remove and replace directors. The second sought rectification of the company’s register by deleting an entry recording 7 billion shares in the name of Open Fibre Sdn Bhd.

The company applied to stay both proceedings because related proceedings were pending in the Malaysian High Court. It relied on lis alibi pendens, forum non conveniens and, alternatively, Article 34 of Council Regulation No. 1215/2012 or the court’s case-management powers. The central issues were whether Article 24 conferred exclusive English jurisdiction and, if not, whether a stay was permissible and necessary.

1. The applications for stays in both proceedings were rejected. The court had exclusive jurisdiction under Article 24, making Article 34 inapplicable.

2. Article 24 must be interpreted restrictively because it overrides the ordinary jurisdictional rule. Nevertheless, classification is ordinarily determined from the claim as brought. A defence which raises a contractual or other preliminary issue does not alter the essential nature of an Article 24 claim.

3. The claim concerning the convening of a general meeting fell within Article 24(2). Its true issue concerned corporate governance, including whether the company could treat shares as unpaid despite their registration as paid-up, their inclusion in annual returns and the issue of corresponding certificates.

4. The rectification claim fell within Article 24(3), because the company’s register of members was a public register. The question of whether the issue of the 7 billion shares was authorised was also a matter of corporate governance within Article 24(2). The contractual issues arose only subsequently.

5. Alternatively, Article 34(1)(a) was satisfied only for the meeting-convocation claim. The Malaysian proceedings did not concern the 7 billion shares, so no risk of irreconcilable judgments arose in relation to the rectification claim. Although Article 34(1)(a) requires it to be expedient to hear and determine related actions together, that requirement was construed purposively as asking whether that course would have been expedient.

6. The court was not satisfied that a stay of the meeting-convocation claim was necessary for the proper administration of justice under Article 34(1)(c). Relevant considerations included the company’s English seat, the effect on other shareholders, the likely delay and the fact that the English court would still need to determine issues concerning the company’s records and corporate governance.

7. The general case-management power to stay proceedings pending a foreign determination exists only in rare and compelling circumstances. It could not be used to achieve indirectly what the Regulation prohibited directly by abandoning an essential issue to the Malaysian court.

First-instance jurisdictional decision. The judgment records parallel proceedings in the Malaysian High Court but does not state an appellate history for this decision.