Abu Dhabi Commercial Bank PJSC v Bavaguthu Raghuram Shetty & Ors

On a jurisdiction challenge, the court should separate three questions: whether there is a serious issue to be tried, whether the claim passes an available jurisdictional gateway, and whether England is clearly or distinctly the appropriate forum. Success on the forum issue may justify a stay supported by undertakings, while preserving a limited liberty to apply if those undertakings are breached. A court may defer discharge of a worldwide freezing order for a limited period after deciding that it should otherwise be discharged, but continuation is a constrained jurisdiction. Costs should reflect success on properly identified issues. Indemnity costs require conduct outside the norm or unreasonable conduct to a high degree.

Abu Dhabi Commercial Bank PJSC brought claims against six defendants and challenged jurisdiction in proceedings concerning alleged wrongdoing connected with the United Arab Emirates. The court concluded that there was a real issue to be tried and that the relevant claims passed the applicable gateways, including service under Companies Act 2006, section 1140, and the tort gateway.

The court nevertheless found Abu Dhabi clearly and distinctly the more appropriate forum and accepted undertakings offered by the defendants. It then addressed the form of the stay, the continuing worldwide freezing order, permission to appeal, costs, and the basis of costs assessment.

1. Jurisdiction and forum. The court identified three true issues in a jurisdiction challenge: whether there was a serious issue to be tried on the merits; whether each foreign defendant had a good arguable case that the claim passed through a gateway in paragraph 3.1 of Practice Direction 6B; and whether England was clearly and distinctly the forum conveniens. The defendants succeeded only on the third issue, but that issue determined the result (paras. [32]-[35]).
2. The governing law was Abu Dhabi law. Under Article 4(2) of Rome II, the habitual residence of the persons concerned in the UAE meant that law applied unless Article 4(3), reserved for exceptional circumstances and subject to a very high threshold, produced a different result. There was no realistic prospect of English law applying under Article 4(3). The centre of gravity of the dispute was in the UAE, including because the governing law and relevant evidence were there (paras. [21]-[24]).
3. The appropriate order was a general stay against the first to fourth defendants, with liberty for those defendants to seek further relief. The defendants’ acceptance of jurisdiction should be expressly recorded, but strictly limited to an application by the claimant to lift the stay following breach of the undertakings (paras. [2]-[11]).
4. The jurisdiction to defer discharge of the worldwide freezing order was recognised but described as constrained because the order ought otherwise to be discharged. The claimant’s proposed relief under section 25 of the Civil Jurisdiction and Judgments Act 1982 should be sought from the Court of Appeal in the permission application. Discharge was deferred until 29 April at 4.30 pm (paras. [13]-[19]).
5. Permission to appeal was refused. The applicable test was whether there was a realistic prospect of success or some other reason for permission. The forum grounds did not meet that test. Matters relevant to governing law and fair presentation should also have been disclosed on the without-notice application (paras. [20]-[25]).
6. Costs were divided by reference to the three true issues. Since the defendants lost on two issues but succeeded on forum and in the result, each defendant recovered one-third of its jurisdiction-challenge costs, together with the costs of the claim generally and the freezing-order set-aside application. Costs were assessed on the standard basis, and the first defendant was awarded £300,000 on account (paras. [26]-[44]).

This was a first-instance decision. Permission to appeal was refused by the High Court because the proposed grounds had no realistic prospect of success and no other sufficient reason for permission (paras. [20]-[25]).