Akçil and others v Koza Ltd and another

The Supreme Court interpreted article 24(2) of the Brussels I Recast Regulation (Regulation (EU) No 1215/2012) strictly and held that it must be confined to claims whose principal subject matter is the validity of the constitution, the nullity or dissolution of a company or the validity of the decisions of its organs. The court distinguished between an English company law claim (relating to the internal governance of an English company and the effect of its articles and Companies Act 2006 provisions, including sections 303 and 305) and an authority claim (challenging the authority and appointment of trustees of a Turkish company). Article 24(2) did not give the English courts exclusive jurisdiction over the authority claim because that claim principally concerned the validity of decisions of the organs of a company whose seat was outside the United Kingdom (Turkey), and the provision must be given a narrow, predictable scope to avoid overlap with the jurisdiction of the courts of the state of the company’s seat.

Accordingly, the court allowed the appeals by Koza Altin and the trustees insofar as article 24(2) had been held to confer exclusive jurisdiction over the authority claim and over claims against the trustees; but it confirmed that the English courts have jurisdiction under article 24(2) in relation to the English company law claim concerning Koza Ltd.

Background and parties. Koza Altin (a Turkish publicly listed company) was a shareholder in Koza Ltd, an English private company. After changes were made to Koza Ltd’s articles introducing an "A" share class and an article (article 26) entrenching control, trustees appointed in Turkey (the first to fifth appellants) served notices under sections 303 and 305 of the Companies Act 2006 to call meetings to remove and replace Koza Ltd’s directors. Koza Ltd and Mr Ipek sought injunctive relief in England, bringing two main claims: (i) an English company law claim that the notices were ineffective under Companies Act 2006 and Koza Ltd’s articles; and (ii) an authority claim that the Turkish trustees’ appointment was invalid and ought not to be recognised by English courts.

Procedural posture. Snowden J granted interim injunctive relief and accepted that article 24(2) of the Recast Regulation conferred exclusive jurisdiction on the English courts. Asplin J dismissed a subsequent jurisdictional challenge by Koza Altin and the trustees (order of 17 January 2017). The Court of Appeal ([2017] EWCA Civ 1609) dismissed the appeal, taking an overall evaluative approach and holding the authority claim to be inextricably linked to the English company law claim so as to fall within article 24(2). The trustees and Koza Altin appealed to the Supreme Court.

Issues. The court framed two issues: (i) whether article 24(2) of the Recast Regulation gives the English courts exclusive jurisdiction over the authority claim concerning the validity of decisions of the organs of Koza Altin (a Turkish company); and (ii) whether article 24(2) gives the English courts exclusive jurisdiction over either claim as regards the trustees.

Reasoning and decision. The Supreme Court held that article 24(2) must be interpreted narrowly and objectively, focusing on the specific claim against the particular defendant rather than by making a broad evaluative judgment about proceedings taken as a whole. The court relied on the Court of Justice jurisprudence (including Hassett, BVG, Schmidt and EON Czech) to emphasise predictability, the avoidance of conflicting judgments and the central role of the company’s seat. Applying that approach, the authority claim was principally concerned with the validity of decisions of the organs of a company whose seat lay outside the United Kingdom; thus article 24(2) did not confer exclusive jurisdiction on the English courts for that claim. Because the proceedings against the trustees were principally concerned with the authority claim, article 24(2) did not confer exclusive jurisdiction over them either. The appeal was therefore allowed in part: the English courts retained jurisdiction under article 24(2) over the English company law claim against Koza Ltd but not over the authority claim or over the trustees by virtue of article 24(2).

Wider context. The court stressed the narrow scope and predictable operation of article 24(2) and the objective of centralising internal company disputes in the courts of the company’s seat to avoid inconsistent decisions.

The appeals by Koza Altin and the trustees were allowed. The Supreme Court held that article 24(2) of the Brussels I Recast Regulation must be interpreted narrowly: it confers exclusive jurisdiction only where the claim itself is principally about the validity of the constitution, nullity or dissolution of a company or the validity of decisions of its organs. Applying that test, article 24(2) does not cover the authority claim (which principally concerns acts of a Turkish company) and accordingly does not confer exclusive jurisdiction over the trustees; but it does confer jurisdiction on the English courts in relation to the English company law claim concerning Koza Ltd.

On appeal from the Court of Appeal ([2017] EWCA Civ 1609). At first instance Asplin J dismissed the defendants' jurisdictional challenge by order dated 17 January 2017. The Court of Appeal ([2017] EWCA Civ 1609) dismissed the appeal. The appellants appealed to the Supreme Court which allowed the appeals in part ([2019] UKSC 40).