Bourlakova v Bourlakov. An ‘everything including the kitchen sink’ jurisdictional challenge, with the Article 34 forum non light issues held obiter.

‘Soonish’ was pretty accurate – I have been busy teaching LAW5478 at Monash. In Bourlakova v Bourlakov [2022] EWHC 1269 (Ch),  Trower J held ia against a stay of English proceedings on Article 34 Brussels Ia grounds. My paper on Article 33-34 is in the editorial stages at the Journal of Private International Law and the case will be included in its overview of the case-law so far. That case-law is predominantly English, perhaps a reflection of how (wrongly) English courts are convinced into thinking the Article 33-34 defence is another form of a forum non convenience objection to jurisdiction.

As in many of the cases (including Municipio de Mariana in which a Court of Appeal judgment ought to be delivered around June /July), the judge has to consider a mixed forum non conveniens (for the non-EU based defendants) and Article 33-34 (for the EU domicileds) defence. On top of that, there are applications for a  case-management  stay, and objections to valid service in Latvia. In other words, the classic ‘everything including the kitchen sink’ jurisdictional defence, leading to a judgment of over 400 paras long!

Jurisdiction in the case as far as Brussels Ia i concerned, is a combination of Article 4 and 8(1) – the Lugano Convention also has a calling.

Claimants are Mrs Loudmila Bourlakova and two companies of which she is the ultimate beneficiary, one of which (Hermitage One Limited (“H1”)) is incorporated in the Isle of Man and the second of which (Greenbay Invest Holdings Limited (“Greenbay”)) is incorporated in the Seychelles.  First defendant is Oleg Bourlakov, who died on 21 June 2021, which was after the commencement of these proceedings but before the applications to challenge jurisdiction had been made. The major part of his and his family’s wealth derived from the acquisition and subsequent sale of Novoroscement OJSC, a major Russian cement producer, which was sold for US$1.45 billion in 2007. Both Bourlakovi are or were Ukrainian, Russian and Canadian nationals. At the material time they were both domiciled in Monaco, although during the course of their marriage they had lived in a number of other jurisdictions including Canada.

Claimants allege that, since late 2017, there had been an irretrievable breakdown in marital relations. Divorce proceedings were initiated by Mrs Bourlakova in Monaco in 2018. It was common ground in the Monaco divorce proceedings that the law governing the matrimonial property regime is Ukrainian law and the Ukrainian concept of community property applied to the marriage. The Monegasque courts remained seised of the divorce proceedings at the time of Mr Bourlakov’s death.

Second to fourth defendants were all involved in the provision of fiduciary corporate services and advice to Mr Bourlakov, together with companies and foundations owned or controlled by him. Domicile for these is England, Cyprus or Switzerland. Fifth defendant, domiciled in Israel, somehow got caught up in the proceedings through a family trust, and is pursuing alternative litigation in England. Sixth defendant is a German qualified lawyer domiciled in Latvia, other defendants (family members ) are domiciled at Estonia or (companies) Panama.

The essence of the allegations is that Mr Bourlakov and his advisers conspired to reduce the share of the ex-wife in the matrimonial estate.  Mr Bourlakov and Mrs Bourlakova have never lived in England and the alleged partnership at the heart of the dispute is unrelated to England, did not operate here and is not governed by English law. None of the underlying assets which the claimants believe form part of Mr Bourlakov’s estate are located in England (or even held through English companies). Neither though, does Monaco (the alternative forum suggested in the jurisdictional objection) feature in the factual matrix.  One of the defendants is domiciled in England and one or two relevant meetings were held in England.

Divorce proceedings were commenced in Monaco and Mr Bourlakov and his advisers filed criminal proceedings there against Mrs Bourlakova on the basis of alleged breach of trust, concealment and money-laundering.  As is often the case in continental European proceedings, a civil claim there was lodged with an investigating judge, which will eventually lead to a court required to rule on the civil claim as well as the criminal one. Mr Bourlakov’s compaint has led to nought however Mrs Bourlakova’s counterclaim is still pending there in some, disputed form, as are Mr Bourlakov’s estate proceedings.

There is an extraordinarily complex web of issues to be held under English and EU jurisdictional rules but I shall limit this post to the Article 34 stay application – which was held obiter.

The judge [292] firstly notes, as noted obiter (for the A34 defence was raised too late), with reference ia to CJEU Aertssen,  that the defendants had not properly established that the Monaco criminal proceedings, viewed from the pont of Monegasque criminal procedure, were an “action pending before the court of a third state” for the purposes of A34 at the time the current proceedings were commenced.

[294] ff also discuss, equally obiter, whether any related third state action must fall within the scope of BIa for A34 to apply at all. [298] ff in that respect refer to two cases in which it was accepted that the court must be satisfied that the proceedings pending in the foreign jurisdiction, as well as the English proceedings, fall within the scope of BIa. However, in neither [BB Energy (Gulf) DMCC v Al Amoudi, WWRT Ltd v Tyshchenko, both engaged with the insolvency exclusion of BIa] was there a judicial decision on the point.

[312] Trower J also notes that A34 ‘accepts more risk of an irreconcilable judgment than article 30’, despite the reference in the recitals to flexibility. ‘Related’ actions are also discussed with reference to Viegas, and the judge [330] ff suggests he would not have ordered a stay on five further grounds, some of them related it seems to the ‘sound administration of justice’ requirement (and cited, too, for the refusal of a case management stay).

A complex web of findings and claims, with the A34 discussion showing that much is still outstanding on its application. I do not yet know whether permission to appeal has been sought and if so, on what grounds.

Geert.

European Private International, 3rd ed. 2021, Heading 2.2.15.3.2, para 2.539 ff

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