Koza Ltd & Anor v Akcil & Ors

Exclusive jurisdiction under article 24(2) of Regulation (EU) No 1215/2012 is determined by an overall classification of the proceedings. The question is whether they are principally concerned with the validity of decisions of a company organ, not whether every issue is one of local company law. Interlinked challenges to the authority to initiate a corporate process and to the effectiveness of resulting notices may be assessed together. The provision concerns subject matter, not the identity or domicile of each defendant, and may apply where the corporate decision is threatened rather than completed. A jurisdiction challenge is waived only by wholly unequivocal conduct. An appellate court should not determine the substantive merits of a strike-out application for the first time where it was not argued below.

Koza Limited and Mr Ipek sought declarations and injunctions after Koza Altin purportedly requisitioned and called a general meeting to replace Koza Limited’s directors. They advanced an English company law claim and an authority claim based on the alleged invalidity of Turkish trustee appointments, natural justice, article 6 of the ECHR and public policy.

Asplin J held that the English court had jurisdiction over all issues and, alternatively, that Koza Altin had submitted to the jurisdiction by counterclaiming. She stood over a strike-out application concerning the authority of Koza Altin’s solicitors. The appeal concerned exclusive jurisdiction, submission to jurisdiction and the strike-out order.

Outcome. Floyd LJ granted permission to appeal on all the issues argued, but dismissed the appeal. Flaux LJ agreed.

1. Article 24(2) of Regulation (EU) No 1215/2012 is an exception to the general domicile rule and must be construed narrowly. Following JP Morgan Chase Bank NA and another v Berliner Verkehrsbetriebe Anstalt des Öffentlichen Rechts [2010] EWCA Civ 390, the court must make an overall classification and overall judgment of whether the proceedings are principally concerned with the validity of decisions of a company organ. The proceedings need not relate exclusively to local company law.
2. The English company law claim and the authority claim against Koza Altin were inextricably linked. Both concerned preconditions for a valid decision by Koza Limited’s shareholders to replace its board. Issues of Turkish law, natural justice, public policy and the ECHR did not alter that characterisation because they went directly to the validity of the notices and the proposed corporate decision. The same conclusion applied whether the decision was threatened or had already been made.
3. The former trustees’ position was no different. Article 24(2) is concerned with the subject matter of the proceedings, not the identity of the parties. The fact that the former trustees were not necessary parties did not remove the proceedings from the exclusive jurisdiction of the English courts, since the subject matter and the policy of avoiding conflicting decisions remained the same. The reasoning was consistent with Nicole Hassett v South Eastern Health Board [2008] ECR I-7403 and Berliner Verkehrsbetriebe, Anstalt des öffentlichen Rechts v JP Morgan Chase Bank NA [2011] 1 WLR 2087.
4. The submission issue did not strictly arise. Nevertheless, under CPR Part 11, and applying the approach in SMAY Investments Limited v Sachdev [2003] EWHC 474 (Ch), expressly approved in Zumax Nigeria v First City Monument Bank [2016] EWCA Civ 567, waiver requires a wholly unequivocal submission. Koza Altin’s counterclaim was expressly without prejudice to its jurisdiction challenge and was confined to the issue accepted to be within jurisdiction.
5. The strike-out application had lost practical utility once both issues remained within the court’s jurisdiction. Although it could have been dismissed or made subject to no order, standing it over for trial and dealing with costs was a case-management decision. The Court of Appeal declined to determine its substantive merits for the first time on appeal because they had not been argued below and the material relied on had been placed before the judge for a different purpose.

• Court of Appeal (Civil Division): Permission to appeal was granted on the issues argued, but the appeal was dismissed: [2017] EWCA Civ 1609.
• High Court of Justice, Chancery Division: Asplin J held that the English court had jurisdiction over the issues, alternatively that Koza Altin had submitted to the jurisdiction, and stood over the strike-out application: [2016] EWHC 3358 (Ch).