Akçil and others v Koza Ltd and another

The exclusive jurisdiction conferred by article 24(2) of the Brussels I Recast Regulation must be interpreted narrowly and applied separately to each distinct claim. A claim does not fall within the provision merely because it is linked to another claim which does.

The court must identify whether the principal subject matter of the particular claim is the validity of a company’s constitution or decisions of its organs. Jurisdiction then belongs to the courts of the member state where that company has its seat. An overall evaluation of proceedings cannot extend exclusive jurisdiction to a conceptually distinct claim or to parties who are unnecessary to the qualifying claim.

Koza Ltd was an English subsidiary of Koza Altin, a Turkish company. Turkish-appointed trustees sought, on Koza Altin’s behalf, to replace Koza Ltd’s directors. Koza Ltd and Mr Ipek challenged both the effectiveness of the proposed corporate action under English company law and the trustees’ authority to act for Koza Altin.

Asplin J held that the English courts had jurisdiction under article 24(2) of the Brussels I Recast Regulation because the authority claim was inextricably linked to the English company law claim. The Court of Appeal dismissed the appeal in [2017] EWCA Civ 1609, applying an overall evaluative assessment of the proceedings.

The Supreme Court considered whether article 24(2) conferred jurisdiction over the authority claim against Koza Altin and whether it conferred jurisdiction over either claim against the trustees.

1. Appeals allowed unanimously. Lord Sales delivered the judgment, with which Lord Reed, Lord Hodge, Lady Black and Lord Briggs agreed. The English courts had no jurisdiction under article 24(2) of the Brussels I Recast Regulation over the trustees in relation to either claim. They had jurisdiction under that provision over Koza Altin only for the English company law claim, not the authority claim.

2. Article 24 creates exclusive jurisdiction and takes priority over the Regulation’s ordinary rules, including jurisdiction based on domicile, party autonomy and priority according to the court first seised. Its application should therefore be highly predictable. There should ordinarily be one correct application of the provision to a given claim. This was incompatible with the broad evaluative approach adopted below.

3. The Court of Justice authorities required article 24(2) to be interpreted strictly. Under Hassett v South Eastern Health Board and the BVG case, the provision covers proceedings whose principal subject matter is the validity of a company’s constitution or decisions of its organs under the applicable company law or articles. A mere link with a corporate decision is insufficient. An issue concerning corporate validity may be ancillary to another claim, but the converse does not permit a qualifying claim to draw a distinct, non-qualifying claim into exclusive jurisdiction.

4. The English company law claim and the authority claim were connected but legally distinct. Either could be decided without determining the merits of the other. The authority claim principally concerned whether Koza Altin had acted through organs authorised under the law of its Turkish seat. Its particularly close connection was therefore with Turkey, not England. Schmidt v Schmidt and EON Czech Holding AG v Dědouch confirmed the need for a narrow, claim-specific analysis directed to the courts most closely connected with the relevant company.

5. The trustees were unnecessary parties to the English company law claim. Separate examination of that claim, together with the strict construction of article 24(2), meant that jurisdiction over Koza Altin concerning Koza Ltd’s internal affairs could not be extended to them.

6. Because Turkey was not an EU member state, the Regulation did not confer exclusive jurisdiction on the Turkish courts. The decision did not prevent an English court from assuming jurisdiction over the authority claim under another available rule governing service outside the jurisdiction. No such alternative basis had been relied upon in these proceedings.

1. United Kingdom Supreme Court: Allowed the appeals unanimously in [2019] UKSC 40. It held that article 24(2) did not confer jurisdiction over the authority claim or over the trustees in relation to either claim.
2. Court of Appeal: Dismissed the appeal in [2017] EWCA Civ 1609. It held that the court should assess the principal concern of the proceedings as a whole and that article 24(2) covered the authority claim and the claims against the trustees.
3. High Court: Asplin J dismissed the jurisdictional challenge. She regarded the authority claim as inextricably linked to the English company law claim, which was the principal subject matter of the proceedings viewed as a whole.