Sokol Iankov v Kosta Kantchev & Ors

Permission to serve out requires a good arguable case on an applicable jurisdictional gateway and a serious issue to be tried. A jurisdictional gateway cannot be established by an artificial claim against an English company which has no real and present dispute with the claimant. Rectification proceedings cannot create such a dispute where the register is not alleged to contain a mistake and beneficial ownership has not first been established.

Gateway 4A is directed to adding related claims against a defendant already properly within the jurisdiction. It does not ordinarily permit separate proceedings to be used as an anchor for unrelated service out. Consolidation cannot generally be used to bypass the jurisdictional code. England must also be clearly and distinctly the appropriate forum; overlapping issues and the risk of inconsistent judgments are important but not automatically decisive.

Mr Iankov brought proceedings concerning alleged contractual, trust and fiduciary rights to shares in, and founder tokens issued by, the Nexo Group. He sought permission to serve foreign defendants out of the jurisdiction, relying on NPEM Ltd as an English anchor defendant and on several gateways in Practice Direction 6B.

NPEM applied to strike out the claim against it. The defendants challenged jurisdiction. Mr Iankov and Mr Shulev applied to consolidate these proceedings with the existing Shulev Proceedings, which concerned overlapping allegations about ownership of the Nexo Group but also involved different parties, causes of action and substantial additional issues.

The court determined whether there was a viable claim against NPEM, whether any gateway applied, whether consolidation could assist jurisdiction, and whether England was clearly and distinctly the appropriate forum.

1. Strike out. The claim against NPEM disclosed no reasonable grounds. There was no real and present dispute between Mr Iankov and NPEM. NPEM had no apparent interest in the identity of its beneficial shareholder and was not alleged to have done or omitted anything giving rise to liability. The proposed declaration would therefore be an artificial use of declaratory relief.
2. Rectification. The proposed reliance on Companies Act 2006, s 125(3), did not alter the conclusion. The provision is directed to rectifying a mistake in the register. It does not create an otherwise absent dispute between a claimant and the company. Beneficial ownership had first to be established before rectification could arise.
3. Jurisdictional gateways. The pleaded injunction to transfer NPEM shares could not satisfy Gateway 2 because the relevant transfer documents could be executed outside England. The trust, property, breach of trust, constructive trust and fiduciary-duty gateways were not engaged. The pleaded case did not identify a trust created, or a breach committed, in England, nor a properly arguable claim against the relevant defendants concerning NPEM shares.
4. Gateway 4A and consolidation. Gateway 4A concerns adding related claims to an existing claim against the same defendant. It does not provide an independent route for bringing separate proceedings merely because they arise from facts connected with another action. Consolidation may precede service out in exceptional circumstances, as illustrated by Fremont and Harrington, but it cannot ordinarily be used to evade the jurisdictional requirements. No exceptional circumstances existed here.
5. Forum. Even if a gateway had been available, England was not clearly and distinctly the most appropriate forum. Bulgaria had the strongest connection with the alleged agreements, events, witnesses and documents. The overlap with the Shulev Proceedings was material, but the claims differed substantially and the risk of inconsistent judgments did not dictate consolidation.
6. The strike-out applications and jurisdiction applications succeeded. The consolidation applications were dismissed. The application to set aside alternative service was moot, but would have succeeded.

This was a first-instance decision of the Commercial Court. The judgment records earlier interlocutory decisions in the separate Shulev Proceedings, but those decisions formed part of the same litigation and were not decisions appealed to this court.