KMG International NV v Chen & Anor

On an application for a stay on forum non conveniens grounds, the defendant must establish that another available forum is clearly or distinctly more appropriate than England. The court must assess all connecting factors and the interests of the parties and the ends of justice. The place where damage occurs, and the governing law, are relevant but do not determine the forum. An English court can appropriately determine foreign-law issues through expert evidence, particularly where the disputed legal questions are not genuinely difficult or controversial on the pleaded facts. Internal-management authorities do not create an exclusive forum in the place of incorporation. The existence of related foreign proceedings or historical litigation is insufficient without a demonstrated forensic or procedural advantage.

KMG International NV claimed damages from Melanie Anne Chen and Chipper Management Limited for the alleged dissipation of shares in a German company, said to have been intended to defeat enforcement of a substantial arbitral award against a Dutch company. KMG advanced a Dutch-law tort claim and, alternatively, an English-law unlawful-means conspiracy claim.

Ms Chen applied to stay the proceedings on forum non conveniens grounds, contending that the Netherlands was clearly the more appropriate forum. Chipper applied to set aside permission to serve it out of the jurisdiction. The applications concerned the appropriate forum for claims involving multiple jurisdictions, foreign law, disputed corporate control and related Dutch proceedings.

1. Ms Chen failed to establish that the Netherlands was an available forum which was clearly or distinctly more appropriate than England. The stay application therefore failed.

2. The court applied the principles in Spiliada Maritime Corporation v Cansulex Ltd [1987] A.C. 460. The defendant bears the burden of identifying another competent forum and showing that the case could be tried there more suitably for the parties and the ends of justice. The court must examine all relevant connecting factors.

3. The fact that the damage was alleged to have occurred in the Netherlands did not make the Netherlands the substantive place of the alleged tort. The alleged wrongdoing involved transfers concerning a German company, defendants and entities situated in several jurisdictions, and an eventual acquisition by an English company. The Albaforth approach, discussed in VTB Capital plc v Nutritek International Corpn [2013] UKSC 5, was therefore not decisive.

4. Dutch law was a factor favouring the Dutch courts, but it was not determinative. The English Commercial Court was accustomed to resolving foreign-law disputes through expert evidence. On the pleaded case, the competing Dutch-law analyses concerning quasi-director or ordinary-person liability, serious reproach and proximity were capable of resolution without determining a genuinely controversial or developing area of Dutch law.

5. The authorities concerning internal management did not require the proceedings to be brought in the place of incorporation. Konamaneni And Others v Rolls Royce Industrial Power (India) Ltd [2002] 1 W.L.R. 1269, properly understood, recognised that the place of incorporation was very likely to be appropriate for certain internal-management or derivative issues, but not necessarily exclusive. This claim was for damages, was not a derivative action, and did not require control of a foreign fiduciary power.

6. The locations of the parties, witnesses and documents, the historical Dutch litigation, the enforcement proceedings and confidentiality issues did not establish a clear Dutch advantage. Splitting the claims would create duplication, cost and the risk of inconsistent outcomes. Chipper’s application was therefore also dismissed.