Awendale Resources Incorporated v Pyxis Capital Management Ltd

For the purposes of Regulation (EC) No. 1215/2012, claims seeking enforcement of a contract and declarations that the same contract is invalid may involve the same cause of action. The court examines the substance and end in view of the claims, rather than their form or the defences.

A properly constituted derivative claim may involve the same parties as proceedings between the company and the opposing party, where the company is a proper defendant and the remedy belongs to it. The 14-day limit in CPR Part 11 applies to applications under Article 29. It may be extended under the court’s general case-management power where the risk of irreconcilable judgments is significant and no material prejudice is shown.

Awendale claimed repayment of approximately US$52 million under five loan agreements made with Pyxis. The agreements were governed by English law and contained an exclusive jurisdiction clause in favour of the courts of England and Wales.

Before the English claim was issued, Infinitum, said to be a beneficial shareholder in Pyxis, had commenced a derivative claim in Cyprus against Mr Andreou, Awendale and Pyxis. That claim sought declarations that the loan agreements were invalid, that the debt was not due, and that default interest was penal.

Pyxis applied under Article 29 of Regulation (EC) No. 1215/2012 for a stay, but made the application outside the period in CPR Part 11(4). The issues were whether the proceedings involved the same cause of action and parties, whether the Cypriot court was first seised, and whether time should be extended.

1. The English claim and the Cypriot derivative claim involved the same cause of action. Applying the principles in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG, The Alexandros T [2013] UKSC 70, the court compared the claims, disregarding the defences. The claims concerned the same loan agreements and had legally incompatible ends in view: enforcement in England and prevention of enforcement in Cyprus. The form of the relief and the additional allegations against Mr Andreou did not alter that conclusion.

2. The proceedings involved the same parties for Article 29 purposes. Awendale and Pyxis were parties to both proceedings. A derivative claim is, in substance, a claim for the company’s benefit, and the company may properly be a defendant so that it is bound by the judgment and receives the remedy. The court relied on Kolden Holdings Ltd v Rodette Commerce Ltd [2008] 1 Lloyd’s Rep 434 and the passage from Gower’s Principles of Modern Company Law adopted in Christou v Melliou (2013) 1 AAD 1210. It was unnecessary finally to determine Infinitum’s standing, since there was a good arguable case that it had standing.

3. Pyxis had been served with the Cypriot writ on 7 November 2017. The Cypriot court was therefore first seised under Article 32(1)(a), and Article 29 was engaged.

4. The decision in The Alexandros T was binding. A party who failed to apply for a stay under Article 29 within the CPR Part 11(4) period was treated as having submitted to the jurisdiction under CPR Part 11(5), subject to the court’s power to extend time.

5. The application for an extension was governed by the general case-management power in CPR Part 3.1(2)(a), rather than solely by the relief-from-sanctions test. The international lis pendens context and the risk of irreconcilable judgments provided a strong reason to extend time. Pyxis had given no satisfactory explanation for its delay, but Awendale identified no particular prejudice or detriment. Time was extended retrospectively from 3 September to 25 November 2019.

6. The English claim was stayed under Article 29. The stay was subject to an undertaking that it would be lifted if the Cypriot derivative claim were struck out, including for want of prosecution. Awendale was given permission to apply to set aside the stay if Infinitum failed to take reasonable steps to prosecute the Cypriot proceedings.