Koza Ltd & Anor v Akcil & Ors

Exclusive jurisdiction under art 24(2) of the Recast Judgments Regulation extends to proceedings substantially concerned with the validity of an English company’s constitutional arrangements or organ decisions. That includes determining whether a foreign shareholder, and persons purporting to act for it, had authority to serve statutory meeting notices. Foreign law and public policy may arise at the merits stage, but they do not remove jurisdiction.

A counterclaim is an unequivocal submission to jurisdiction where, viewed objectively, it seeks relief going beyond the claim, even if accompanied by a reservation of jurisdictional rights. A challenge to the authority of a defendant to participate should not be tried separately where it is inseparable from the pleaded dispute. An undertaking permitting dealings in funds in the ordinary and proper course of business allowed investment in liquid, low-risk assets.

The claimants sought declarations and injunctions concerning notices served under sections 303 and 305 of the Companies Act 2006. The notices purportedly requisitioned and called a general meeting of Koza Ltd to replace its directors. The claimants challenged both the notices’ validity and the authority of Turkish trustees and their successors to act for Koza Altin, Koza Ltd’s shareholder.

The defendants challenged jurisdiction. Koza Altin also filed a counterclaim concerning the validity of amendments to Koza Ltd’s articles and the allotment of special shares. The claimants sought to strike out documents filed for Koza Altin for want of authority. A further application concerned the proposed transfer of approximately £60 million to an investment manager under existing undertakings. The court determined jurisdiction, the strike-out issue and the investment application.

1. Jurisdiction. Article 24(2) of the Recast Judgments Regulation was to be construed strictly, but the principal subject matter of the proceedings fell within it. The Company Law Claim directly concerned the constitution of Koza Ltd and the validity of decisions of its organs. The Authority Claim was inseparable from that issue because the validity of the statutory notices could not be determined without deciding whether the shareholder had capacity, and whether those purporting to act for it had authority, to serve them. The claim was therefore inward-looking and concerned the validity of an English company’s organs and constitution (paras 33–48).
2. Foreign law might be relevant as evidence of the shareholder’s authority, and public policy might arise when deciding whether that authority should be recognised. Those matters concerned the merits and choice of law, not the existence of exclusive jurisdiction under article 24(2) (paras 45–47).
3. Submission. A counterclaim is a free-standing claim. Objectively viewed, Koza Altin’s counterclaim sought declarations concerning earlier changes to the articles and the allotment of shares. It went beyond the Company Law Claim and constituted an unequivocal submission to jurisdiction, notwithstanding the repeated reservation of jurisdictional rights. The Hanson Application, by contrast, merely sought enforcement of undertakings given while jurisdiction was expressly reserved and did not waive the jurisdiction challenge (paras 49–56).
4. Strike-out application. The authority issue was inherent in the claim. The alleged positive lack of authority of the trustees and the alleged negative incapacity of Koza Altin to participate were two sides of the same issue. Separate determination would duplicate the trial, require extensive evidence and undermine the jurisdiction decision. The strike-out issue should therefore be managed with the substantive proceedings rather than tried as a preliminary issue (paras 57–72).
5. Hanson application. The relevant undertaking prohibited dealings with company funds other than in the ordinary and proper course of business. It was not a freezing order, and no question of varying the undertaking arose. Investment of the company’s capital in cash, cash equivalents and highly rated, liquid securities, with access to the funds at short notice, fell within the ordinary course of business. The application was dismissed (paras 73–90).

This was a first-instance decision of the High Court (Chancery Division). The judgment records earlier interlocutory orders by Snowden J, but no appeal from an earlier judgment is identified.