Galapagos Bidco SARL v Kebekus & ors

For the purposes of Article 8(1) of the Recast Brussels Regulation, a sustainable claim against an anchor defendant ordinarily requires a serious issue to be tried or a real prospect of success. In a claim for the same declarations against several parties to a multilateral agreement, the existence of a genuine dispute with parties represented by a trustee may establish a sustainable claim against the trustee, even if the trustee itself does not oppose the relief.

The court must distinguish the existence of a lis from the discretionary question whether declarations should ultimately be granted. A defendant’s non-participation does not automatically defeat jurisdiction. Article 25(1) is assessed when proceedings are instituted, but a party later becoming bound by a jurisdiction agreement may be joined in proceedings already brought. A case-management stay is available only in rare and compelling circumstances and cannot circumvent the jurisdictional scheme of the Regulation.

Galapagos Bidco sought declarations concerning the validity of a financial restructuring carried out under an English-law intercreditor agreement. The claims were brought against parties domiciled in England, a German insolvency administrator and a Luxembourg creditor.

Bidco relied on Article 8(1) of the Recast Brussels Regulation, contending that the claims were closely connected and that there was a sustainable claim against English-domiciled anchor defendants. It also relied on Article 25(1) against Signal, which acquired a definitive note after the proceedings began and thereby became bound by the intercreditor agreement’s jurisdiction clause.

Signal and the insolvency administrator challenged jurisdiction. Signal also sought a stay because related proceedings existed in New York. The central issues were whether the anchor claims were sustainable, whether Article 25(1) applied, and whether a case-management stay should be granted.

1. Article 8(1). The court adopted the summary-judgment or strike-out standard identified in Sabbagh v Khoury [2017] EWCA Civ 1120: the claim against an anchor defendant must present a serious issue to be tried or have a real prospect of success. The phrases “hopeless” and “wholly unarguable” did not establish a lower threshold.
2. The relevant time for determining the Article 8(1) requirements was when proceedings were commenced. The claims against the foreign defendants and the English defendants concerned the same declarations under the intercreditor agreement and were therefore sufficiently closely connected.
3. There was a sustainable claim against the high-yield note trustee. A genuine dispute existed between Bidco and beneficial holders of the notes, some of whose interests the trustee represented. The trustee was an appropriate and necessary defendant because a judgment could bind unknown and changing beneficial holders. Its neutrality and non-participation did not remove the lis or make declaratory relief impossible. The court distinguished The Bank of New York Mellon v Essar Steel India Limited [2018] EWHC 3177, which concerned a final discretionary decision in materially different circumstances.
4. The principles governing declaratory relief, stated in Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387, did not prevent jurisdiction. There was a real and present dispute, the parties were affected by the declarations, and the court could ensure that opposing arguments were properly addressed. The decision in Ace European [2012] EWCA Civ 1624 and the approach in The Public Institution for Social Security v Al Rajaan [2020] EWHC 2979 (Comm) were distinguishable on their facts and procedural context.
5. Article 25(1) did not apply to Signal when the proceedings began because Signal was not then a party to the jurisdiction agreement. Its beneficial interest held through the trustee and common depositary did not make it a party. Once Signal acquired a definitive note, however, it became bound by the agreement and could be joined. The asymmetric jurisdiction clause did not prevent Bidco from pursuing the English proceedings merely because Signal had commenced related proceedings in New York.
6. The application for a case-management stay was dismissed. Such a stay was available only in rare and compelling circumstances, with exceptionally strong grounds required where the parties had chosen exclusive English jurisdiction. The application was essentially forum conveniens-based and could not be used to circumvent the unavailability of a stay under Article 34.
7. The jurisdiction challenges of Signal and the insolvency administrator were dismissed. Signal’s application for a stay was also dismissed.