WWRT Ltd v Tyshchenko & Anor

Jurisdiction under Article 4 of the Brussels Regulation (Recast) is mandatory where the defendant is domiciled in the jurisdiction. It cannot be avoided by an indefinite common-law stay based on modified universalism in favour of foreign insolvency proceedings. A temporary case-management stay remains available only in rare and compelling circumstances and must not undermine the jurisdiction conferred by the Regulation.

At an interlocutory stage, a good arguable case requires a plausible evidential basis. Foreign law is ordinarily proved by expert evidence, and the court should not construe foreign legislation or case-law as if it were domestic material. Cross-examination on assets before judgment requires more than general suspicion, but is justified by serious deficiencies in disclosure.

WWRT Limited alleged that Serhiy and Olena Tyshchenko participated in a fraud involving loans made by Fortuna Bank in Ukraine. WWRT claimed under Article 1166 of the Ukrainian Civil Code after acquiring rights and assets through assignments from the bank’s liquidator and Star Investment One LLC.

The court considered Mr Tyshchenko’s challenge to jurisdiction, applications to continue worldwide freezing orders against both defendants, applications for fortification and variation of those orders, and WWRT’s application for cross-examination and further disclosure concerning assets and sources of funds. Related Ukrainian insolvency proceedings and the Kyiv Commercial Court’s Star judgment were relied on by the defendants.

1. Jurisdiction and domicile. Mr Tyshchenko was domiciled in England for Article 4 purposes. Residence is a question of fact and degree. A defendant may reside in more than one jurisdiction, and residence does not depend on a numerical comparison of days spent in each country. The relevant question is whether England was a settled or usual place of abode, assessed by the quality and nature of the defendant’s visits and settled pattern of life.
2. Modified universalism. The court rejected an indefinite common-law stay in favour of the Ukrainian insolvency proceedings. Article 4 of the Brussels Regulation (Recast) is mandatory, subject only to express exceptions. Bankruptcy and insolvency proceedings are expressly excluded from the Regulation by Article 1, but these civil tort proceedings were not. The exclusion therefore did not create a basis for applying modified universalism to avoid Article 4. A temporary case-management stay may exist in rare and compelling circumstances, but must not cut across substantive jurisdiction under the Regulation.
3. Article 34 and forum non conveniens. Article 34 could not properly be applied by analogy to proceedings deliberately excluded from the Regulation. In any event, the English civil claims were not shown to be related to the Ukrainian insolvency proceedings so as to create a risk of irreconcilable judgments. Forum non conveniens did not arise because Mr Tyshchenko was domiciled in England. If it had arisen, Ukraine was not clearly or distinctly the more appropriate forum. The English claimant, expert evidence on Ukrainian law, existing work in England and the presence of Mrs Tyshchenko as a co-defendant were significant factors.
4. Star judgment and foreign law. The Kyiv Commercial Court’s refusal to recognise Star as a creditor did not create an issue estoppel. That judgment concerned Article 58 of the Ukrainian Banks Law and recognition in insolvency proceedings, whereas the present claims were brought under Article 1166 of the Ukrainian Civil Code. The court was not entitled to determine Ukrainian statutory construction or case-law independently of expert evidence, except where expert evidence was clearly and obviously wrong or patently absurd.
5. Freezing orders. WWRT had a good arguable case, meaning a plausible evidential basis, on jurisdictional and merits issues including the freestanding nature of Article 1166, assignment of rights, civil liability for fraud and limitation. Conflicting expert evidence on Ukrainian law could not be resolved finally at this stage. No material breach of the duty of full and frank disclosure was established.
6. Asset examination and disclosure. Cross-examination on assets before judgment is exceptional. It may be ordered where disclosure is seriously deficient and further examination is likely to advance the purpose of the freezing order; a general suspicion is insufficient. The defendants’ unexplained wealth, lifestyle, funding and corporate connections justified cross-examination. Further disclosure was ordered only to the extent necessary and proportionate to police the injunction, rather than to conduct a general investigation into company assets.
7. The jurisdiction challenge was dismissed. The freezing orders were continued, subject to an agreed consent order. WWRT was required to fortify its cross-undertaking by payment into court and a stay of an earlier costs order. Cross-examination and further documentary disclosure were ordered in accordance with the judgment and appendix.