Koza Ltd v Koza Altin

The Court of Appeal examined whether the English court should treat as a question of recognition of a foreign judgment (rather than a mere choice of law issue) the contention that certain Turkish judicial and subsequent executive acts produced trustees and directors whose authority ought not to be recognised in England on public policy grounds. The court restated the applicable test for permission to serve out (the PD6B/CPR gateways, the need for a good arguable case, a serious issue to be tried and that England be the appropriate forum) and the distinction between recognition of foreign judgments and the foreign act of state doctrine.

Although the judge below had erred in approaching the question as a choice of law issue (treating Turkish law as conclusively determining the defendants’ authority), the Court of Appeal held that on the facts there was no serious issue to be tried. The authority of the current directors derived from Turkish legislative and executive measures (statutory decree no. 674 and appointments by the SDIF) and the appointment(s) had been reviewed and sustained domestically by the Turkish Constitutional Court and, ultimately, by the European Court of Human Rights’ inadmissibility decision. The foreign act of state exceptions to non‑intervention are narrow and the available appellate material defeated any arguable claim that recognition should be refused. Accordingly permission to serve out was refused and the summary dismissal/strike out application was upheld.

The dispute concerned control of Koza Ltd (an English company). The claimants (Koza Ltd and Mr Ipek) sought declaratory and injunctive relief that notices under ss.303 and 305 Companies Act 2006 served on Koza were ineffective and sought to prevent persons appointed in Turkey from acting as directors of Koza Altin and purporting to exercise its shareholder rights in England. The litigation involved two sets of proceedings: the 2016 proceedings (English company law claim and an "old authority" challenge) and the 2021 proceedings (a "new authority" challenge). The claimants sought permission to serve the 2021 proceedings out of jurisdiction in Turkey.

Procedural history: initial interim relief and alternative service were granted by Snowden J; Asplin J held that article 24(2) of the Brussels Recast Regulation applied in the first instance ([2016] EWHC 3358 (Ch)); the Court of Appeal dismissed appeals but the Supreme Court allowed them ([2019] UKSC 40) leading to dismissal of some claims for want of jurisdiction; further applications and summary dismissal applications followed; the matters were before Trower J ([2021] EWHC 2131 (Ch)), whose orders were then appealed to this Court.

Issues framed:

• Whether the authority of the individual defendants to cause Koza Altin to act should be recognised in England or should be refused because their authority derived from a corrupt Turkish judgment (the Sűer judgment) and was contrary to English public policy.
• Whether the claimants had a good arguable case to obtain permission to serve proceedings out of jurisdiction under PD6B/CPR (the three‑limb test: good arguable gateway, serious issue to be tried, England the appropriate forum).
• Whether the claimants’ conduct constituted abuse of process (including warehousing the proceedings) and whether the strike out/summary dismissal application should be allowed.

Court’s reasoning: The Court of Appeal held that the correct analytical approach to a status or authority founded on foreign judicial acts is a recognition analysis (drawing on authorities such as Altimo and the Supreme Court’s Deutsche Bank/Central Bank of Venezuela decision) rather than treating the matter simply as one of choice of law. That approach permits investigation of whether a foreign judicial act met standards of impartial justice, but comity militates against adverse findings absent cogent evidence. The Court then examined the factual matrix and held that the present claimants could not show a serious issue to be tried. The current directors’ authority sprang from Turkish legislative and executive measures (statutory decree no. 674 and SDIF appointments) and had subsequently been reviewed by the Turkish Constitutional Court; the ECtHR had also dismissed Mr Ipek’s application. The foreign act of state exceptions are narrow and the appellate and Strasbourg material provided a definitive answer. The judge below had been wrong to rely on Williams & Humbert by analogy, but his orders were correct for the different factual reasons the Court identified.

Relief sought: injunctive relief restraining purported acts in England, declarations that Turkish judicial/administrative acts should not be recognised in England, permission to serve out of jurisdiction, and strike out/summary dismissal of defendants’ pleadings.

The appeal is dismissed. The Court of Appeal accepted that the judge below (Trower J) was wrong to treat the authority issue as a pure choice‑of‑law question rather than one of recognition of foreign judicial acts, but concluded on the evidence that there was no serious issue to be tried. The current directors’ authority derived from Turkish legislative and executive measures and had been upheld on domestic review; the ECtHR had dismissed the applicant's complaint. The foreign act of state/public policy exceptions were not engaged. For those reasons permission to serve out was refused and the summary dismissal/strike out was upheld.

Appeal from Trower J, Chancery Division, Business and Property Courts ([2021] EWHC 2131 (Ch)); earlier interlocutory decisions included Asplin J [2016] EWHC 3358 (Ch), Court of Appeal [2017] EWCA Civ 1609 and Supreme Court ([2019] UKSC 40) in the procedural history leading to the present appeals. This Court heard the appeals from Trower J and delivered judgment on 07 October 2022 ([2022] EWCA Civ 1284).