Tag: Article 8(1)

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Stichting Claim Gran Petro. Dutch court holds that use of the anchor mechanism merely to avoid tardy Brasilian proceedings in follow-on damages claim, constitutes abuse of process.

Regular readers will be aware that disciplining the use of the anchor defendant mechanism is not an easy task for a court to undertake (I have linked to one post yet the search tag ‘anchor’ will take you to plenty). The CJEU takes a restrictive view. Although in the case at issue Article 8(1) Brussels Ia does not formally apply (the mechanism does not apply to defendants domiciled outside the EU), instruction in Dutch residual rules is that they be applied as A8(1) would.

In Stichting Claim Gran Petro v Shell Netherlands, Shell Brasil and Raizen ECLI:NL:RBDHA:2023:7099, the Hague court of first instance did though refuse jurisdiction against the one Brazilian defendant (Raisen), anchored unto two Dutch Shell entities (Shell now having moved domicile exclusively to England was held [5.2] not to have relevance on account of the perpetuatio fori principle), citing abuse of the anchor defendant mechanism.

Shell have a majority share in Raisen. The claimants in essence called upon the corporate structure of Shell and, pro inspiratio, hoped to convince the court that the presumption of involvement of mother corporations in their daughter’s anti-competitive shenanigans might be enough to justify the relatedness of the claims. Such assumption exists in EU competition law (see eg CJEU ENI) however the court finds that claimants have not been able to prove a Brazilian equivalent.

The court refers ia to CJEU CDC v Azo Nobel et al to emphasize the condition that the anchor mechanism must not be intended merely to remove the defendant at issue from its natural domicile forum. [6.7] the court reports that the claimants acknowledge that Dutch jurisdiction is sought for reasons of  general tardiness of Brazilian proceedings. There is no suggestion that Raizen will not be willing to meet any future damages. Seeing as no presumption under Brazilian law of mother corporation involvement exists, and seeing as no proof of factual involvement of the Shell mother entities was furnished, [6.16] the court concludes that the anchor mechanism at issue is an abusive application and must not lead to jurisdiction.

Geert.

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Richard de La Tour AG on trademarks and anchor jurisdiction in Beverage City & Lifestyle.

I am on a break with the family until after Easter, hence only slowly treating myself to writing up blog posts. There are one or two in the queue, and I hope to be clearing them before long. ]

In C‑832/21 Beverage City & Lifestyle GmbH v Advance Magazine Publishers Inc. Richard de la Tour AG Opined a few weeks back. The claim is for trademark infringement between a US domiciled holder of an EU Trademark, and its EU suppliers in Poland and Germany. The AG suggest Article 8(1)’s joinder mechanism may apply in the case, provided the claimant in limine litis (at the start of proceedings) prove the anchor defendant’s role in the chain of infringements.

Background is the Union Trademark Regulation 2017/1001, which has separate rules on jurisdiction discussed in ia AMS Neve, however it leaves A8(1) Brussels Ia’s anchor defendant mechanism untouched.

(34) ff the AG uses the opportunity to clarify CJEU Nintendo,  with respect to Article 8)1)’s condition of ‘same situation in law’: the AG suggests the Court clarify that the application of different national laws as a result of intellectual property rights’ territorial scope, does not stand in the way of the situation being the same in law in the case of a Union trademark.

Next the AG discusses the issues also of relevance in ia CJEU C‑145/10 Painer, namely the question of sameness in fact, and argues for a flexible interpretation despite the defendants at issue not being contractually linked. He suggests inter alia that it would run against the intention of the Regulation to force the claimant into proving the anchor defendant be the main instigator of the infringement. Along similar lines, that the anchor defendant is not a corporation itself but rather one of its directors, with domicile in a different Member State, does not in the view of the AG prevent him being used as anchor defendant, provided (77) claimant prove at the start of proceedings that the director actively engaged in the infringement or should have known about it but did not stop it.

One can see merit in the AG’s approach in that it, as he also suggests, addresses the issue of abuse of the anchor defendant mechanism. On the other hand, this engagement with some of the merits of the case always raises the issue of how intensive that can /ought to be at the jurisdictional stage without leading to a ‘mini’ trial’. It may be preferable simply to hold that as a director of a corporation, one should not be surprised to be used as jurisdictional anchor for that corporation’s infringements, in one’s place of domicile.

Geert.

EU Private international law, 3rd ed. 2021, 2.482 ff.

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X v PayPal. Questionable Dutch compulsory settlement jurisdiction reignites discussion similar to English scheme of arrangement tourism. Also raises the question whether compulsory settlements are ‘contracts’ under Rome I.

The Dutch first instance judgment in Groningen  earlier this month, in X v PayPal (Europe) S.a.r.l. & Cie S.C.A., sees claimant debtor essentially seeking a compulsory settlement – CS. PayPal (established in Luxembourg) is the only debtor refusing the settlement proposed by claimant’s bank.

The CS is not listed in Annex I to the Insolvency Regulation 2015/848 (always check for the consolidated version, for the Annex is frequently updated by the Member States’ communication of proceedings to be included). This is where the discussion of scope of application could and should end.

Instead, the judge tests the CS against A1(1)’s abstract criteria. She decides there is neither divestment of assets, nor a temporary stay of individual enforcement proceedings.

This then raises the applicability of Brussels Ia. Seeing as the judge finds the action does not meet with the CJEU F-Tex criteria (Brussels Ia’s insolvency exception only applies to actions which derive directly from insolvency proceedings and are closely connected with them), she holds that Brussels Ia’s ‘insolvency’ exception is not triggered and that BIa applies.

The judge then cuts the corner which English courts in schemes of arrangement have often cut, namely to consider the willing debtors, domiciled in The Netherlands, as ‘defendants’ per Brussels Ia, hereby triggering Article 8(1) BIa’s anchor defendant mechanism. The judge justifies this by stating that the other creditors are interested parties and that it is in the interest of the sound administration of justice that the CS be discussed viz the interested parties as a whole. That may well be so, however in my view that is insufficient reason for A8(1) to be triggered. A8(1) requires ‘defendants’ in the forum state, not just ‘interested parties’. The suggestion that a co-ordinated approach with an eye for all interested parties, justifies jurisdiction, puts A8(1)‘s expediency cart before the A4 ‘defendant’-horse.

The judge then also cuts corners (at least in her stated reasons) on the applicable law issue, cataloguing this firmly in Rome I. She argues that even if the CS is a forced arrangement, replacing a proposed contract which party refused to enter into, it is still a contractual arrangement. That is far from convincing.

Equally not obvious is as the judge holds, that  per A4(2) Rome I, the party required to effect the ‘characteristic performance’ of a compulsory settlement, is the claimant-debtor of the underlying debt, leading to Dutch law being the lex causae.

The judgment at the very least highlights the continuing elephant in the restructuring tourism room, namely the exact nature of these proceedings under Brussels Ia, EIR and Rome I.

Geert.

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G I Globinvestment. A jurisdiction finding with core shortfalls on Brussels Ia.

In G I Globinvestment Ltd & Ors v VP Fund Solutions (Luxembourg) SA & Ors [2022] EWHC 1872 (Comm) wealthy Italian investors seek to recover losses which they suffered when investments they had made plummeted in value at the outset of the COVID pandemic. Defendants are in various jurisdictions. Most have accepted jurisdiction, two of them, one based in Luxembourg, the other in Liechtenstein, challenge jurisdiction.

The claim against the Liechtenstein defendant is subject to common law rules, the country not being a party to Lugano. I will leave that further undiscussed here, suffice to say the challenge was unsuccessful.

The claim against the Luxembourg based defendant was issued before Brexit implementation date and subject to Brussels Ia. It claims there is an A25 exclusive choice of court clause in the investment fund’s general subscription terms, and Vineall DJ discusses it with reference to the general A25 outline in PIFSS v Piqtet.

Parties are agreed [64] – wrongly, nota bene, that on formal validity, the question is whether there has been an actual consensus between the parties, clearly and precisely demonstrated, and on material validity, the question is whether the dispute between the parties arose or originated from the particular legal relationship in connection with which the clause was concluded. That is the kind of agreement which would see my students fail a Brussels Ia question.

[65] a further major error is made with the parties seemingly agreeing that ‘whether the claim falls within the scope of the [clause], that question is to be answered according to Luxembourg law’.

The conclusions are [88] that there is no [forum clause] in the in the Subscription Agreement, although there is choice of law clause; 88.2. There is no EJC in the Offering Document; The Offering Document wrongly asserts that there is a jurisdiction clause in the Subscription Agreement; That is insufficient to establish a clearly and precisely demonstrated consensus; no consensus as to jurisdiction is demonstrated: the result of the conflicting documents is a muddle; therefore there is no exclusive jurisdiction clause on which VP Lux can rely.

I have not got the kind of access to the file to say the outcome is factually wrong – the route to it certainly is and simply wrong in law.

The judge also [89] concludes that whether one of the claimants is a consumer who can sue in England and Wales need not be decided:  ‘That issue does not seem to me to be entirely straightforward and since it is not necessary to resolve it in the light of my conclusions about [choice of court] I prefer not to decide it’: why not?: VP Lux contest jurisdiction and it is the judge’s task under Brussels Ia to assess the existence of jurisdiction on any of the Brussels Ia grounds.

Had the judgment been issued in exam season it would have been obvious material for ‘spot the Brussels Ia errors’.

Geert.

 

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Galapagos v Kebekus. Freeport’s unfinished anchor mechanism analysis continues to spook the intensity of merits review at the jurisdictional stage.

Galapagos Bidco SARL v Kebekus & ors [2021] EWHC 68 (Ch) is yet again a fairly extensive first instance judgment merely on the issue of jurisdiction, entertaining Article 8(1) Brussel Ia’s anchor defendant mechanism as well as Article 25 choice of court.

On A8(1), focus of the discussion was the extent of a merits review under A8(1), which I also discuss  in Sabbagh v Khoury and Senior Taxi v Agusta Westland (both referred to here by Zacaroli J at 44 ff.; as was nb PIS v Al Rajaan). The issue was raised in CJEU C-98/06 Freeport but not answered. The judge here uses the notion of ‘sustainable claim’ to ensure absence of abuse of the anchor mechanism, concluding at 132 after fairly serious if arguably not excessive engagement with the merits, that the conditions of A8(1) are fulfilled.

Article 25 choice of court is discussed obiter at 138 ff., leading to some discussion on the timing of the binding character of the clause upon various parties (and a minor side-issue re Brexit).

A case-management stay was also applied for, with the judge justifiably adopting the strict approach at 160 that such a stay must not be used to circumvent the inapplicability of an Article 34 BIa challenge (the A34 route was dropped; in the light of A25 jurisdiction being established, it would be unavailable at any rate): case-management stay in such circumstances is in essence an application for forum non conveniens which is not permitted under BIa.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.13.1 (in particular 2.496); Heading 2.2.15.3.2.

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Weco projects: on Yachts lost at sea, anchor jurisdicton (that’s right), lis alibi pendens, carriage, ‘transport’ and choice of court.

In Weco Projects APS v Piana & Ors [2020] EWHC 2150 (Comm),  Hancock J held on a case involving Brussel Ia’s consumer title, including the notion of contract of ‘transport’, Article 25’s choice of court regime, and anchor jurisdiction under Article 8(1) BIa.

The facts of the case are complex if not necessarily complicated. However the presence of a variety of parties in the chain of events led to litigation across the EU. Most suited therefore to be, as WordPress tell me, the 1000th post on the blog.

For the chain of events, reference is best made to the judgment itself. In short, a Yacht booking note, with choice of court and choice of law was made for the Yacht to be carried from Antigua to Genoa. Reference was also made to more or less identical standard terms of a relevant trade association. A clause was later agreed with the identity of the preferred Vessel to carry out the transfer, followed by subcontracting by way of a Waybill.

The Yacht was lost at sea. Various proceedings were started in Milan (seized first), Genoa and England.

At 21, Hancock J first holds obiter that express clauses in the contract have preference over incorporated ones (these referred to the trade association’s model contract), including for choice of court. Readers will probably be aware that  for choice of law, Rome I has a contested provision on ‘incorporation by reference’, although there is no such provision in BIa.

Next comes the issue of lis alibi pendens. Of particular note viz A31(2) [‘Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement’] is the presence of two prima facie valid but competing exclusive choice of court agreements. Hancock J proceeds to discuss the validity of the English choice of court agreement in particular whether the businessman whose interest in sailing initiated the whole event, can be considered a consumer.

The judge begins by discussing whether the contract concerned is one of mere ‘transport’ which by virtue of A17(3) BIa rules out the consumer title all together. At 37 it is concluded that the contract is indeed one of transport and at 37(8) obiter that freight forwarding, too, is ‘transport’. Hancock J notes the limited use of CJEU authority, including Pammer /Alpenhof. In nearly all of the authority, the issue is whether the contracts at issue concerned more than just transport, ‘transport’ itself left largely undiscussed.

Obiter at 75, with reference to CJEU Gruber and Schrems, and also to Baker J in Ramona v Reliantco, Hancock J holds that Mr Piana had failed to show that the business use of the Yacht was merely negligible.

Following this conclusion the discussion turns to the impact of the UK’s implementation of the EU’s unfair terms in consumer contracts regulations, with counsel suggesting that the impact of these is debatable, in light of A25 BIa’s attempt at harmonising validity of choice of court. Readers will be aware that A25’s attempt at harmonisation is incomplete, given its deference to lex fori prorogati). Hancock J does not settle that issue, holding at 111 that in any event the clause is not unfair viz the UK rules.

Next follows the Article 8(1) discussion with reference to CJEU CDC and to the High Court in Media Saturn. Hancock J takes an unintensive approach to the various conditions: they need to be fulfilled without the court at the jurisdictional stage getting too intensively caught up in discussing the merits. At 139 he justifiably dismisses the suggestion that there is a separate criterion of foreseeability in A8(1). On whether the various claims for negative declaratory relief are ‘so closely connected’, he holds they are on the basis of the factuality of each being much the same and therefore best held by one court. Abuse of process, too, is ruled out per Kolomoisky and Vedanta: at 143: there is no abuse of process in bringing proceedings which are arguable for the purposes of founding jurisdiction over other parties.

(The judgment continues with extensive contractual review of parties hoping to rely on various choice of court provisions in the chain).

Quite an interesting set of Brussels Ia issues.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, big chunks of Chapter 2.

 

 

 

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Senior Taxi v Agusta Westland. Again on merits review and anchor defendants.

In Senior Taxi Aereo Executivo LTDA & Ors v Agusta Westland S.p.A & Ors [2020] EWHC 1348 (Comm) Waksman J discusses the same issues which I analysed in my review of Sabbagh v Koury (and he refers to that case at 51 ff). Proceedings arise out of the fatal crash of an Agusta Westland AW 139 twin turbine helicopter on 19 August 2011, during a flight from the Petrobras P-65 offshore oil platform in the Atlantic, west of Rio de Janeiro, to Macae Aerodrome in Brazil.

First and third defendant are an Italian company. Second defendant, AgustaWestland Ltd is an English company and the anchor defendant per A8(1) Brussels IA. At 32:

‘Defendants’ contention is that in order for Article 8 (1) to apply at all, the claim against the anchor defendant must at least be a sustainable one. I described this as “the Merits Test”. For present purposes, the requirement of sustainability can be equated with “viability”, “a real prospect of success”, a “serious issue to be tried” or a “good arguable case”. Neither party sought to argue that any fine point of distinction between these various expressions was relevant here.’

Reisch Montage and Freeport of course are CJEU authority referred to. As is Kolassa for the CJEU consideration of ‘merits review’ (particularly there: taking account of both defendant and claimant’s arguments) under A25 and A26 BIA) and CDC for the CJEU’s most recent proper discussion of the issue (at 86 Waksman J suggest CDC is not a ruling on the merits issue).

At 65 ff Waksman J follows the majority in Kabbagh, and not the dissent of Lady Justice Gloster – I as noted was more enclined to agree with her. Having confessed to his preference for there being a merits test, he then seeks to distinguish the CJEU in Reisch by focusing on the CJEU there finding on the basis of a ‘procedural bar’ in the Member State of the anchor defendant. At 83:

‘I do not find the reasoning of the CJEU here persuasive and I consider that the decision should be distinguished if possible. It can be distinguished because it is very clear from the judgments that the focus was on a national rule as to admissibility of the claim. Even allowing for differences of language, the expression “procedural bar” is not apt to include a lack of any substantive merit. Reisch is not therefore an obstacle to deciding that there is a Merits Test.’

And at 85:

‘that the reasoning of the court in Reisch was concerned more with what it simply saw as an illegitimate incursion of a domestic procedural rule (a bankrupt cannot without more be sued in ordinary litigation) into the operation of Article 6 (1). That, in and of itself decided the point. It was a question of form and not substance. But the Merits Test is a matter of substance.

Held: there is a Merits Test which must be satisfied before A8(1) can be invoked. That merits test is not met in casu.

A8(1)’s ‘so closely connected’ test clearly requires some appreciation of the facts and the legal arguments, as well as a certain amount of taking into account the defendant’s arguments. Yet this in my view does not amount to a merits test, and ‘sustainability’, “viability”, “a real prospect of success”, a “serious issue to be tried” or a “good arguable case” may well be synonyms – but there are not the same as an A8(1) merits test.

One to watch upon appeal.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1

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PrivatBank v Kolomoisky and Boholiubov. The Court of Appeal reverses the High Court ia on abuse of the anchor mechanism. Further consideration, too, of the reflexive effect of Article 28’s lis alibi pendens, and of Article 34.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

Update 18 May 2020 early April the Supreme Court ruled that it would not hear the case – which therefore stands as (complicated) authority.

The Court of Appeal in [2019] EWCA Civ 1708 has reversed [2018] EWHC 3308 (Ch) PrivatBank v Kolomoisky and Boholiubov et al which I reviewed here. When I tweeted the outcome on the day of release I said it would take a little while for a post to appear, which indeed it has. Do please refer to my earlier post for otherwise the comments below will be gobbledygook.

As a reminder: the High Court had set aside a worldwide freezing order (‘WFO’) granted earlier at the request of Ukraine’s PrivatBank, against Ihor Kolomoisky and Hennadiy Boholiubov – its two former main shareholders.

Fancourt J’s judgment implied in essence first of all, the Lugano Convention’s anchor defendant mechanism, concluding that ‘any artificial fulfilment (or apparent fulfilment) of the express requirements of Article 6.1 is impermissible, and this includes a case where the sole object of the claim against the anchor defendant is to remove the foreign defendant from the jurisdiction of domicile. Bringing a hopeless claim is one example of such abuse, but the abuse may be otherwise established by clear evidence. In principle, the fact that there is a good arguable case against the anchor defendant should not prevent a co-defendant from establishing abuse on some other ground, including that the “sole object” of the claim is to provide jurisdiction against a foreign domiciled co-defendant.‘

The English Defendants serving as anchor, were not considered legitimate targets in their own right and hence the ‘sole object’ objection was met. 

The Court of Appeal in majority (Lord Newey at 270 ff dissenting) disagreed and puts particular emphasis on the non-acceptance by Parliament and Council at the time of adoption of Brussels I, of an EC proposal verbatim to include a sole object test like was done in Article (then) 6(2) (it also refers to drafters and rapporteur Jenard making a bit of a muddle of the stand-alone nature, or not, of the sole object test). Following extensive consideration of authority it decides there is no stand-alone sole object test in (now) Article 8(1) Brussels I (or rather, its Lugano equivalent) but rather that this test is implied in the Article’s condition of connectivity: at 110: ‘we accept Lord Pannick’s analysis that, as shown by the references to Kalfelis and Réunion,..that the vice in using article 6(1) to remove a foreign defendant from the courts of the state of his domicile was met by a close connection condition.’

Obiter it held at 112 ff that even if the sole object test does exist, it was not met in casu, holding at 147 that the ability to obtain disclosure from the English Defendants provided a real reason for bringing these proceedings against them.

Fancourt J had also added obiter that had he accepted jurisdiction against the Switzerland-based defendants on the basis of the anchor mechanism, he would have granted a stay in those proceedings, applying the lis alibi pendens rule of Lugano reflexively, despite the absence of an Article 34 mechanism in Lugano. The Court of Appeal clearly had to discuss this given that it did accept jurisdiction against the Switserland-based defendants, and held that the High Court was right in deciding in principle for reflexive application, at 178: ‘This approach does not subvert the Convention but, on the contrary, is in line with its purposes, to achieve certainty in relation to jurisdiction and to avoid the risk of inconsistent judgments.’

That is a finding which stretches the mutual trust principle far beyond Brussels /Lugano parties and in my view is far from clear.

However, having accepted lis alibi pendens reflexively in principle, the Court of Appeal nevertheless held it should not do so in casu, at 200 as I also discuss below: ‘the fact that consolidation was not possible was an important factor militating against the grant of a stay, when it came to the exercise of discretion as to whether to do so’.

Finally, stay against the English defendants was granted by the High Court on the basis of A34 BIa, for reasons discussed in my earlier post. On this too, the Court of Appeal disagreed.

Firstly, on the issue of ‘related’ actions: At 183: ‘The Bank argues that the actions are not “related” in the sense that it is expedient to hear and determine them together, because consolidation of the Bank’s claim with Mr Kolomoisky’s claim in the defamation proceedings would not be possible. It is submitted that unless the two actions can be consolidated and actually heard together, it is not “expedient” to hear and determine them together. In other words, the Bank submits that expediency in this context means practicability.’ The Court of Appeal disagreed: At 191: ‘The word “expedient” is more akin to “desirable”, as Rix J put it, that the actions “should” be heard together, than to “practicable” or “possible”, that the actions “can” be heard together. We also consider that there is force in Ms Tolaney’s point that, if what had been intended was that actions would only be “related” if they could be consolidated in one jurisdiction, then the Convention would have made express reference to the requirement of consolidation, as was the case in article 30(2) of the Recast Brussels Regulation.’

Further, on the finding of ‘sound administration of justice’: at 211: ‘the unavailability in the Ukrainian court of consolidation of the Bank’s current claim with Mr Kolomoisky’s defamation claim remains a compelling reason for refusing to grant a stay. In particular, the fact that the Bank’s claim would have to be brought before the Ukrainian commercial court rather than before the Pechersky District Court in which the defamation proceedings are being heard means that if a stay were granted, the risk of inconsistent findings in these different courts would remain. Furthermore, we accept Lord Pannick’s overall submission that, standing back in this case, it would be entirely inappropriate to stay an English fraud claim in favour of Ukrainian defamation claims, in circumstances where the fraud claim involves what the judge found was fraud and money laundering on an “epic scale” ‘

Finally, at 213, ‘that the English claim against Mr Kolomoisky and Mr Bogolyubov and the English Defendants should be allowed to proceed, it inevitably follows that the BVI Defendants are necessary or proper parties to that claim and that the judge was wrong to conclude that the proceedings against the BVI Defendants should be set aside or stayed.’

One or two issues in this appeal deserve to go up to the CJEU. I have further analysis in a forthcoming paper on A34.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

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Elena Tsareva et al v Dimitri Ananyev et al. Cypriot passports, forum shopping and anchor defendants in England.

Parties’ names alone in Elena Tsareva et al v Dimitri Ananyev et al [2019] EWHC 2414 (Comm) clearly indicate the attraction of England in international forum shopping. As Baker J notes at 5:

‘I infer that the choice of this jurisdiction as a venue for the claimants’ claims has been led by the lawyers (Russian and English) who have engaged themselves in assisting the claimants as disappointed investors. Indeed, I think it unlikely it would have occurred to the claimants, unless so led, to try to sue here. The most natural targets for any claim are PSB and (possibly) the first defendant, so the most natural venues for any litigation (all things being equal) are Russia and (perhaps) Cyprus. But none of that means that this court does not have jurisdiction.’

One, as always, wonders where these cases might go should following Brexit (if any) the English courts will regain full authority to apply forum non conveniens.

The Ananyevs are Russian nationals who were domiciled and resident in Russia in 2017. One of them, when the Claims were commenced in 2018, was domiciled and resident in Cyprus, where he has had a dual citizenship since June 2017. They are, or at all events they were in 2017, well-known in Russia as successful and very wealthy businessmen. They were the ultimate beneficial owners together of a number of businesses and assets, including Promsvyaz Bank – PSB, of whom claimants were clients. The core allegation underlying the claimants’ claims is that they were induced to invest in Notes by mis-selling on the part of PSB employees to the effect that the Notes were personally guaranteed by the Ananyevs and/or that they were safe investments. It is alleged that PSB was in a parlous financial condition rendering it highly likely the Notes would default, as in due course they did; and that the misselling was directed by the Ananyevs in a conspiracy to enrich themselves and/or their businesses at the expense of the claimants.

Some of the corporate defendants are English companies, although ‘tax-resident’ in Ireland in 2017, in Cyprus from some time later (and still now). The English companies cannot and do not challenge jurisdiction (but the claims against them are struck out nevertheless given the absence of foundation to the claims). Promsvyaz is a Dutch company, the Issuer is a Cayman Islands company, and Peters International is a Dutch Antilles company. Other defendants are Cypriot companies.

There are a great many claimants with varying suggested gateways for jurisdiction, and one best read the judgment to get the full picture. In short, however, the gateways relevant to the Brussels regime (this blogpost does not focus on the English rules) are Article 4, 7(2), and 8(1). At 29, Baker J emphasises that for the anchor claim under Article 8(1), unlike in the English CPR rules, there cannot be a merits claim. But there can be abuse, per CJEU Reisch Montage, and CDC, as recently also applied in Privatbank v Kolomoisky. Unlike in the latter case, Article 34 is not engaged here. Baker J concludes after considerate yet concise analysis that there is no good arguable case against the English defendants, the claim against them is hopeless, and therefore the anchor mechanism is abused. As always in these cases, walking the rope between merits analysis and ‘good arguable case’ is not straightforward yet the judgment shows again how the English courts deploy creativity to ensure the anchor mechanism of Article 8(1) is not abused.

At 51, the tort gateway of Article 7(2) against the non-English EU defendants is dismissed with reference to Lober. Claimants suffered loss by parting with their funds deposited with PSB in Russia (or, perhaps, by contracting with PSB in Russia to do so); there is no indication of links to England, as required by Lober (applying Universal Music).

The above only narrates the essence of the Brussels Ia analysis. There is quite a bit more in the judgment of relevance to the CPR rules.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2.

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The wealth in Paul Holgate v Addleshaw Goddard (Scotland). Intra-UK conflicts, the Gourdain insolvency exception; anchoring; forum contractus; and a stay on forum non conveniens grounds.

In [2019] EWHC 1793 (Ch) Paul Holgate v Addleshaw Goddard (Scotland) the claim is for damages for breach of contract, negligence and/or breach of fiduciary duty in connection with and arising out of the defendant’s acceptance and performance (and/or non-performance) of instructions to act as solicitor for and to advise Arthur Holgate & Son Limited (then in administration, now in liquidation) in relation to a dispute between the Company and Barclays Bank.

The application concerns the allocation of jurisdiction within the UK. The rival forums are England and Scotland. The claim is not time-barred in England, but may, at least in part, be time-barred in Scotland, where the relevant period of ‘prescription’ (the Scottish equivalent of ‘limitation’) is 5 years.

The Civil Jurisdiction and Judgments Act 1982 allocates jurisdiction within the devolved regions of the UK and, for civil and commercial matters, has opted to apply the (now) Brussels I Recast Regulation mutatis mutandis. At issue is first of all the insolvency exception of Brussels Ia (extended here as noted to the UK Act) interpreted per CJEU C-133/78 Gourdain: at 4:””[I]t is necessary, if decisions relating to bankruptcy and winding-up are to be excluded from the scope of the [Brussels] Convention, that they must derive directly from the bankruptcy or winding-up, and be closely connected with the proceedings for the liquidation des biens or the règlement judiciaire .” (Reference to the French procedure given the French origins of the case). This provision of course in the meantime has a mirror image in the Insolvency Regulation known as the vis attractiva concursus: the forum concursus can hear not just the very insolvency action but also those closely connected to it. CJEU C-111/08 SCT Industri v Alpenblume also features heavily in the discussion.

(Note Clark M makes the oft-repeated mistake of suggesting Brussels Ia and Insolvency Regulation dovetail. I have emphasised on various occasions that they do not).

Following discussion, at 50 Clark M holds that the claim does not relate to the internal management, of the administration or the conduct of the Joint Administrators (JAs) of the insolvency: the defendant’s purely advisory role meant it was not responsible for either of these. This is insufficient for the claim to be “closely linked” to the administration.

Next is the application of the anchor proceedings: these, too, follow EU language and precedent entirely and at 79ff Clark M discusses the interesting question whether a claim providing the anchor, issued after the claim which anchors unto it, is capable of conferring jurisdiction. He held that it does, provided the other requirements of the anchor provisions are satisfied: in particular the desirability of avoiding irreconcilable judgments. The sequence of claims did lead to some procedural oddity which could however be rectified and there was no suggestion of abuse. 

At 89 ff follows discussion of the forum contractus: ‘place of performance of the obligation in question’. At 129 Master Clark concedes that the relevant statutory instrument deliberately did not instruct this part of the UK’s residual rules to be interpreted in line with EU rules, however given the exact same wording, there is no reason for not doing so. At 132 follows then the oddity of the consequences of CJEU De Bloos (and now the language of the Regulation) with respect to ‘the obligation in question’: the determination of the principal obligation is carried out by analysing the particulars of claim. He finds at 136 that the Company’s complaints flow essentially from the primary complaint that the defendant was in breach of its fiduciary duty by continuing to advise and act for the Company (and not advising it that it could not properly do so), thereby putting the Bank’s interests (and its interests) before those of the Company. At 139: the place of performance of that obligation, is held to be in England.

Finally, forum non conveniens is briefly discussed and the right forum held to be England.

Quite a jurisdictional goodie bag.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, much of Chapter 2.

 

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