Posts Tagged conspiracy
In  EWHC 1041 (Ch) MX1 and SES v Fardad Farahzad (defendant’s appeal for summary judgment) claimants are domiciled in Israel and Luxembourg respectively. Their action results from some 57 tweets published by a Twitter account going under the title “@MX1 Leaker”. The Tweets make various allegations of bribery and corruption against the First Claimant. Claimants suggest a conspiracy between the defendant and former employees (for the Tweet seemed furnished with internal information which the defendant would not have had access to).
Defendant’s domicile is not specified but for the purposes of the litigation is not relevant: for jurisdiction is seemingly undisputed and even if this were not based on the Brussels I Recast, the English courts have to apply Rome II to determine applicable law.
Defendant’s request for summary dismissal is based inter alia on the argument that if and to the extent the Claimants or either of them have suffered loss or damage as a result of the Conspiracy, the place of that loss or damage was not England. The applicable law identified by the Rome II Regulation – according to the Defendant: Israeli law – did not recognize the ‘lawful means conspiracy’ pleaded by the Claimants as a cause of action.
Arguments centred around Article 4(1) Rome II: neither 4(2) or (3) were engaged by counsel. Damage pleaded by the Claimants is as follows: (paras refer to the Particulars of Claim)
“23. Unless restrained by the court, the Defendant will cause damage to the business of the Claimants in England and Wales and elsewhere by publishing or facilitating the publication of harmful tweets pursuant to the Conspiracy.
24. Further, unless the Defendant is ordered by the court to delete the Tweets, the Claimants will suffer damage to its business in the future by reason of the continued public existence of the Tweets.
25. By reason of the matters aforesaid, the Claimants have suffered loss and damage. The best particulars which the Claimants can currently give are that: (a) The Claimants have incurred the costs of investigating the Conspiracy in approximately the sum of US$350,000 including costs of at least £100,000 incurred in England in respect of the services of Kroll and of the Claimants’ lawyers which are not recoverable as part of the costs of this claim; (b) The Claimants have also incurred additional costs investigating the allegations made in the Tweets.”
It is the £100K which Smith J at 39 ff applies Article 4(1) to, and he does so with harmonious interpretation (‘resonance’) between Brussels I Recast’s Article 7(2) and Rome II in mind.
Smith J held that the costs of investigating the conspiracy were incurred when the claimants entered into the agreements with investigators and lawyers to have the conspiracy investigated, and therefore in England. It is irrelevant that those costs were not the claimants’ predominant loss (paras 40, 46). The case will undoubtedly lead to Mozaik (‘fragmentation’), but that too is resonant with Brussels I Recast (Shevill).
A good starter introduction to Rome II.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.4.
JSC BTA Bank v Khrapunov. UK Supreme Court confirms the conspiracy itself, not its implementation, as locus delicti commissi under Lugano. Does not entertain locus damni.
The UK Supreme Court held in  UKSC 19 JSC BTA Bank v Khrapunov late March. Defendant is based in Switzerland, hence triggering the Lugano Convention. Addleshaw Goddard have the history of the case and I am happy to refer for those facts. Suffice to say that at the core is a claim in tort of conspiracy, alleging that Mr Khrapunov and his father in-law Mr Ablyazov conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov’s assets.
First let’s have a look at was not discussed at the SC: domicile and locus damni. As for the former, domicile once held but now fleed from was correctly rejected by Teare J as establishing domicile under Lugano (or indeed Brussels). The argument that jurisdiction should, nevertheless, be taken still to be domiciled in England because defendant was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction, was likewise rejected. An interesting proposition though.
Now, for the location of the locus damni. At 29 the SC refers to the Bank’s argument at the High Court and Court of Appeal stage. The Bank’s argument was that the damage occurred in England. This was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The High Court and Court of Appeal considered that the element of damage proximate to the harmful event was the Bank’s inability or reduced ability to execute against those assets in the places where they were located. Another fine example of the difficult implications of Bier and not one which the CJEU has hitherto had the occasion to review. (But current case will not reach it).
As for locus delicti commissi, the Bank submit that the event giving rise to the damage was the conspiracy itself, which was hatched in England. At the High Court Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation: a suggestion I like in the context of competition law, as readers of the blog will be aware. Teare J was not followed by the Court of Appeal though, which identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage.
The SC refers to CJEU authority to conclude with CDC and at 41 it reiterates the CA’s core reasoning: ‘As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunov’s alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov.’
The Supreme Court concludes that the making of the agreement in England should be regarded as the harmful event which set the tort in motion.
The judgment keeps open many issues, however. For starters, to have a sole birthplace of conspiratorial agreement is handy in the case at issue however it is likely not often to be so clearly the case (as Dan and Tom point out, particularly not in a digital context). Moreover, for those instances where Mr Khrapunov were not to be acting on instructions from Mr Ablyazov, questions of ultra vires so to speak and hence of a separate tort would arise.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11