Kazakhstan & Anor v The Bank of New York Mellon SA/NV, London Branch & Ors

For the purposes of a jurisdictional challenge, a foreign court may refer to the English court the determination of the assets or obligations forming the subject-matter of a foreign attachment. The English court should identify the substance of the dispute, rather than confine it to a narrow contractual issue, where the foreign court has referred the underlying question for determination.

Issues not decided in earlier proceedings are not barred by res judicata. Abuse of process requires a broad, merits-based assessment of all the circumstances. Parties directly affected by declaratory relief may properly be joined, particularly where their participation ensures that all sides of the dispute are heard. The jurisdictional gateway for third-party proceedings extends to claims involving a close connection and a risk of irreconcilable judgments.

The claimants, the National Bank of Kazakhstan and the Republic of Kazakhstan, sought declarations concerning cash and securities held by the Bank of New York Mellon under a Global Custody Agreement. The declarations were relevant to a Belgian conservatory attachment obtained by the Stati parties in enforcement proceedings concerning a Swedish arbitration award.

The Stati parties challenged permission to serve them out of the jurisdiction. They argued that the Belgian court had not referred the issue to England, that the claims were barred or abusive because of earlier English Part 8 proceedings, that declaratory relief was inappropriate, and that the jurisdictional gateways were not satisfied.

The central questions were whether there was a serious issue to be tried, whether the defendants were proper parties, whether England was the appropriate forum, and whether the Gibraltar defendant could be joined under article 6(2) of the Brussels Convention 1968.

1. Scope of the dispute. The Belgian Attachment Judge had not finally determined the subject-matter of the attachment. The judge considered that the correctness of the garnishee declaration and whether a debt or chose in action was held by BNYM(L) for the Republic of Kazakhstan were matters for the English trial court. The English proceedings therefore extended beyond the narrow question of the contractual counterparty and could address the relationship between the Republic and the National Bank, including analogous issues concerning legal personality, sham trusts and abuse of law. The material question was what assets, if any, BNYM(L) held for the Republic.
2. Serious issue and abuse. The claim disclosed a real prospect of success. The earlier Part 8 proceedings concerned the construction of clause 16(i) of the Global Custody Agreement and BNYM(L)’s entitlement to freeze the assets. They had not decided the wider ownership and holding issues. The present proceedings were not res judicata and were not an abuse of process. The issues served a different purpose, the Stati parties had not been parties to the earlier proceedings, and the Belgian court’s referral gave the proceedings a legitimate purpose consistent with comity.
3. Declaratory relief and service out. There was a real and present dispute. The Stati parties were directly affected because the declarations concerned their right to attach the assets. Declaratory relief in England was the most effective means of resolving the dispute with all affected parties present. The necessary or proper party gateway was satisfied because BNYM(L) was properly served, there was a serious issue between the claimants and BNYM(L), and the second to fourth defendants had a real and substantial interest in the subject matter.
4. Terra Raf. Article 6(2) of the Brussels Convention 1968 had an autonomous meaning and was not confined to domestic third-party claims. It extended to a dispute involving a person closely connected with the original proceedings where hearing the claims together was necessary to avoid irreconcilable judgments and promote the efficacious administration of justice. Those requirements were satisfied in relation to Terra Raf. The application to set aside service on the second to fifth defendants was dismissed.