Posts Tagged the Tatry
Office Depot v Holdham et al. Lis alibi pendens in follow-on cartel damages suit. Delay in the Swedish proceedings crucial factor in High Court’s rejection of a stay
in  EWHC 2115 (Ch) Office Depot BV et al v Holdham SA et al, the High Court in August (I had promised posting soon after the Tweet. That did not quite happen) held on issues of lis alibi pendens (and, alternatively, a stay on case management grounds) in a follow-on cartel damages suit arising from the European Commission’s cartel finding in the envelopes market. That’s right: envelopes. Cartel cases do not always involve sexy markets. But I digress (and I also confess to finding stationary quite exciting).
Sir Geoffrey Vos’ judgment deals with the fate of the Office Depot claimants’ follow-on proceedings in England against certain Bong (of Sweden) corporate defendants, after the Bong parties had commenced Swedish proceedings for negative declarations as to their liability. In March 2019 the relevant Swedish court said in effect that Article 8 Brussel I a was not engaged so that the Swedish Bong proceedings for negative declarations could only proceed against the locally domiciled Office Depot company, which was Office Depot Svenska AB, but not the non-Swedish Office Depot entities. Parties at the time of Sir Geoffrey’s decision (Swedish followers may be able to enlighten us on whether there has been a decision in the meantime; at 23 the expected date is mentioned as ‘the autumn’) were awaiting a certiorari decision by the Swedish Supreme Court.
CJEU C–406/92 The Tatry of course is discussed, as is CDC. Sir Geoffrey also discussed C-129/92 Owens Bank, in particular Lenz AG’s Opinion (the CJEU did not get to the part of the Opinion relevant to current case). Discussion between the parties, at Sir Geoffrey’s request, focused on the issue of the judge’s discretion under lis alibi pendens for related actions, rather than on whether or not the actions are related (it was more or less accepted they are; see ia at 43 ff).
At 46 ff the Court then exercises its discretion and finds against a stay, on the basis in particular of the expected length of the Swedish proceedings: at 54: ‘the grant of a stay would be contrary to justice in that it would delay unreasonably the resolution of proceedings that can only be tried in England and already relate to events many years ago‘, and at 48: ‘The stage in the Swedish proceedings is a long way behind these. It will be between one and two and a half years before jurisdiction is resolved there, two courts already having refused jurisdiction. It will be perhaps between three and five years before the substantive litigation in Sweden is resolved, if it ever gets off the ground.‘
Swedish courts do not tend to get used for torpedo actions. Yet the swiftness of English court proceedings yet again comes in to save the day (or indeed, scupper the stay).
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199
anchor, Anchor defendant, Anti-trust, Article 101 TFEU, Article 30, Brussels Ia, Cartel, Competition, envelopes, Follow-on damages, follow-up damages, https://www.bailii.org/ew/cases/EWHC/Ch/2019/2115.html, Jurisdiction, Lis alibi pendens, Office Depot BV et al v Holdham SA et al, Office Depot v Holdham, Regulation 1215/2012, related actions, the Tatry,  EWHC 2115 (Ch)
National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.
Thank you Ali Malek QC who acts for claimants (and who as I have noted, is a busy and efficient bee in international litigation land) for alerting me to a further episode of Kazakhstan v BNYM. This current jurisdictional challenge is part of a long-running saga relating to the enforcement of a Swedish arbitration award dated 19 December 2013 in favour of the “Stati parties”, the Second to Fifth Defendants, and against the Second Claimant, the Republic of Kazakhstan (“RoK”).
Many of the issues are ex-Brussels I Recast and /or Lugano Convention yet I report on them anyway for they reveal interesting issues on the relationship between foreign courts relevant to attachment (and enforcement generally), and courts with jurisdiction on the merits.
In  EWHC 3512 (Comm) National Bank of Kazakhstan v Bank of New York Mellon (BNYM) which I reviewed here, Popplewell J had dismissed claims essentially designed to establish that BNYM is not obliged or entitled to freeze assets of the National Fund by reason of Belgian and Dutch court attachment orders.
Teare J has now held a few weeks back – helpfully in  EWHC 3282 (Comm) also summarising the many proceedings which the blog has not always reported on. Trigger for this latest instalment of proceedings is claimants having sought to challenge a Belgian conservatory attachment before an “Attachment Judge” of the Belgian court. The Attachment Judge upheld the attachment order in a judgment dated 25 May 2018.
RoK seeks a declaration that the debts or assets held by BNYM(London) and said to be subject to the attachment order are in fact held by BNYM(L) solely for the National Bank of Kazakhstan (“NBK”), the First Claimant. They therefore submit that the attachment order has no subject-matter, because there are no assets to attach. The Claimants contend that this question was referred to this court by the Belgian court.
A provision of Belgian law cited by the Attachment Judge, article 1456(2) of the Belgian Judicial Code, provides as follows: “If the third-party debtor disputes the debt claimed by the creditor, the case is brought before the competent trial judge or, as the case may be, the case is referred to the competent trial judge by the enforcement court.” Further proceedings are now pending in Belgium, in which the Stati parties seek to convert the ‘conservatory’ attachment order into an ‘executory’ attachment order. In those proceedings, the Stati parties have raised a number of arguments in support of their contention that the GCA assets are properly held for RoK (rather than merely NBK). These include Belgian-law arguments relating (inter alia) to piercing of legal personality, sham trusts, and “abuse of law”.
The crucial consideration discussed by Teare J in current proceeding is that the Stati parties submit that there is no “serious issue to be tried” (hence no jurisdiction) as between the Claimants and the Second to Fourth Defendants, (i.a.) because “the declarations sought […] will not affect the Belgian Court’s decision” since that Court “faces a number of Belgian law arguments unrelated to the GCA with regard to the ROK debt question”.
There was a dispute between Belgian law experts as to precisely what had been remitted by the Attachment Judge to the High Court and it is worth repeating each assertion in full: at 28-29
‘The evidence of Mr Brijs (the Stati parties’ Belgian law expert [GAVC fellow Leuven Class of 1993] ) is that “a pure question of English contractual law will not resolve the core dispute” because “a Belgian enforcement court would still have to evaluate – amongst other things – the arguments raised by the Stati parties under Belgian attachment law” such as piercing legal personality, sham trusts, and abuse of law. Further, “the Belgian Enforcement court did not decide the arguments – not because the judge “envisaged” that these arguments should be resolved by an English Court or because the Belgian Enforcement Court found that it could not decide them (when in fact it can) – but solely because the Belgian Enforcement Court considered that it did not need to decide them… It is difficult to conceive why an English court should decide on e.g. matters that concern Belgian public policy, or on the question whether there is a sham trust structure to the prejudice of the creditors and what the sanction/effect thereof is on the Belgian attachment.”
The evidence of Mr Nuyts (the Claimants’ Belgian law expert [GAVC colleague and learned friend extraordinaire ) is that “[t]here is nothing in the Belgian judgment to show that the Belgian Court envisaged the English court deciding only some of the issues, and not the arguments raised by the Stati parties such as piercing of legal personality, sham trust, and abuse of law. These arguments had been raised at length by the Stati parties in written submissions in the Belgian proceedings, and the Belgian Court has distinctly decided not to address any of these arguments, leaving them to be decided by the English Court… The Belgian Judgment holds in general that the “challenge” relating to “the debt of the third party” must be referred to the English court… [and] that it is for the English court to decide in general “whether or not a debt exists from BNYM towards Kazakhstan”.”
It is Mr Nuyts’ evidence that convinced Tear J. At 31 ‘In this case, however [GAVC despite Meester Brijs’ correct statement that there are circumstances in which the enforcement court is competent to decide on the merits], the enforcement court has clearly decided that the English court is the competent court to decide the merits.’ At 35 the relevant passages of the Belgian Court are copied:
“The seized-debtor is entitled to challenge the declaration from the garnishee before the attachment judge. However, this challenge relates to the debt of the third party and must be referred to that trial court in the proceedings on the merits, under article 1456, 2nd para. BJC. The competent trial court is, as stated by Kazakhstan itself, the English court who must apply its own national substantive law. […] Both requests relate to the subject-matter of the attachment, notably whether or not a debt exists from BNYM towards Kazakhstan. Kazakhstan disputes the existence of such debt. The attachment judge cannot and may not settle such dispute, but only the judge on the merits. The judge on the merits is, as already mentioned above, the English court who must apply its own national law.”
That finding on the scope of referral to the English courts, also plays a role in the assessment of abuse: at 46: ‘I do not consider that it is an abuse of process for the Claimants to raise in these proceedings issues not argued before Popplewell J or the Court of Appeal in the earlier English proceedings. First, those proceedings served a different purpose, namely, the determination of BNYM(L)’s contractual entitlement to freeze the GCA assets and in particular the scope of clause 16(i). Second, it appears that the Claimants did in fact seek to raise the wider issue, or something like it, before Popplewell J. but were not permitted to because the Stati parties were not before the court. Third, it would be odd, to say the least, for this court to hold that these proceedings were an abuse of process in circumstances where the issues raised by the proceedings had been referred to it by the Belgian court. It cannot, I think, be in the public interest to frustrate the order of the Belgian court. On the contrary, comity and the public interest point to these proceedings serving a legitimate and proper purpose.’
Finally, a cursory look a the forum conveniens issue is warranted: at 58-61:
- Mr Sprange, for the Stati parties, submitted that “England is not a proper forum for a claim against the Second to Fourth Defendants, where that claim seeks (on the Claimants’ case) to conclusively determine issues of the validity of a Belgian executory attachment, which are properly the subject of Belgian attachment law for a Belgian attachment judge to decide”.
- Mr Malek, for the Claimants, submitted that the real dispute is not about “the validity of a Belgian executory attachment”, but rather “whether there is an obligation owed by BNYM London to RoK capable of forming the subject-matter of a Belgian attachment.” Further, he submitted that the effect of the Belgian Attachment Judge’s decision was to determine that England was the appropriate forum. Mr Malek relied upon this decision as giving rise to “an estoppel of a particular, autonomous, EU kind”; in the alternative, he submitted that it was a strong factor to be weighed in the analysis of the appropriate forum. Finally, Mr Malek submitted that the only realistic alternative to the jurisdiction of the English court would be the Belgian court, and that “the Belgian court is materially worse placed than this Court because it would be investigating matters by reference to an English-law governed contract, the GCA (so far as issues of Kazakh law, or facts in relation to the relationship between NBK and RoK, are concerned, the Belgian court enjoys no advantage over this Court).”
- I am unable to accept Mr. Sprange’s submission. This court will not be asked to determine the validity of the conservatory attachment order made in Belgium. Rather, it will be asked to determine what, if any, assets constitute the subject-matter of that order. The Belgian Attachment Judge plainly considered that a dispute concerning the content of the attachment – which, on its terms, constitutes only such assets (if any) as are held by BNYM(L) for RoK under the GCA – is a question for this court.
- The fact that the Belgian court has referred the dispute to this court is a cogent reason, indeed a compelling reason, for concluding that this court is a proper forum for determining the dispute. It would not be in accordance with comity to send the dispute back to Belgium. There is no need to consider Mr. Malek’s further submissions.
I quite like Ali Malek QC’s idea of “an estoppel of a particular, autonomous, EU kind”; linked to considerations of mutual trust, one assumes.
Finally, one of the defendants is based in Gribraltar and against it, (now) Article 8(2) Brussels I Recast applies, re third party proceedings. There is little to none CJEU authority. At 68 ‘I consider that the wording of article (2) is wide enough to encompass a situation in which a person is a proper party to a dispute between other parties to which he has a “close connection”, so long as that dispute has not been “instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case” and at 69 ‘This is a case in which “the efficacious conduct of proceedings” demands the presence of Terra Raf in this jurisdiction. I therefore find the requirements of article (2) to be satisfied.’
Teare J’s findings on this point also mean he need not consider (now) Article 7(5)’s jurisdiction for activities arising our of branch activity on which as I noted, I also have my doubts.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.
1215/2012, 33/78, Article 30, Article 7(5), Article 8(2), Branch, Brussels I, Brussels I recast, Brussels I Regulation, Curia, FNC, http://www.bailii.org/ew/cases/EWHC/Comm/2017/3512.html, https://www.bailii.org/ew/cases/EWHC/Comm/2018/3282.html, Jurisdiction, lex fori, lis, Lis alibi pendens, National Bank of Kazakhstan v Bank of New York Mellon, Recognition, Recognition and enforcement, Regulation 1215/2012, related actions, Somafer, Sovereign immunity, sufficient nexus, the Tatry, third party proceedings,  EWHC 3512 (Comm),  EWHC 3282 (Comm)
National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.
In  EWHC 3512 (Comm) National Bank of Kazakhstan v Bank of New York Mellon, Article 7(5) makes a rarish appearance, as does (less rarely) Article 30. Popplewell J summarises the main facts as follows.
‘The Second Claimant is the Republic of Kazakhstan (“ROK”). The First Claimant is the National Bank of Kazakhstan (“NBK”). The Defendant is a bank incorporated in Belgium with a branch in, amongst other places, London. Through its London branch it provides banking and custody services to NBK in respect of the National Fund of Kazakhstan (“the National Fund”), pursuant to a Global Custody Agreement dated 24th December 2001, (“the GCA”). The National Fund has been the target of proceedings brought by Mr. Anatolie Stati and others, (“the Stati Parties”), who are seeking to enforce a Swedish arbitration award against ROK for a sum, including interest and costs, in excess of US$ 500 million. The Stati Parties obtained attachment orders from the Dutch court and the Belgian court, which were served on the Defendant (“BNYM”). BNYM, after taking legal advice, decided to freeze all the assets comprising the National Fund, which it holds under the GCA, on the basis that it was bound to comply with the Belgian and Dutch orders, breach of which would expose it to the risk of civil liability for the amount of the Stati Parties’ claims and criminal liability in Belgium and the Netherlands.’
Effectively therefore the London Branch of a Belgian domiciled bank, has frozen claimant’s assets which it holds in London (although the exact situs is disputed), on the basis that it wishes to prevent exposure to BE and NL criminal proceedings.
Parties arguments on jurisdiction are included at 41 and 42 of the judgment. Core to the Brussels I Recast jurisdictional discussions is Article 7(5) which provides
“A person domiciled in a Member State may be sued in another Member State: […]
(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;’
Beyond Case 33/78 Somafer, to which the High Court refers, there is little CJEU precedent – C‑27/17 flyLAL is currently underway. Popplewell J at 53 refers to Lord Phillips’ paraphrasing of Somafer in  EWCA Civ 147 as a requirement of ‘sufficient nexus’ between the dispute and the branch as to render it natural to describe the dispute as one which has arisen out of the activities of the branch.
At 54 he holds there is such nexus in the case at issue, particularly given the management of the frozen assets by the London branch, and the very action by that branch to freeze them. This is quite a wide interpretation of Article 7(5) and not one which I believe is necessarily supported by the exceptional nature of Article 7.
As to whether the English and Belgian proceedings are ‘related’, providing an opportunity for the English proceedings to be halted under Article 30 of the Recast (lis alibi pendens), the High Court refers at 57 ff to C-406/95 The Tatry to hold that there is no risk of conflicting decisions in this case: the argument specifically being that even if the issues addressed are the same, they are addressed in the respective (English, Dutch, Belgian) proceedings under different applicable laws (in each case the lex fori on sovereign immunity). I do not find that very convincing. The risk of irreconcilable outcome is the issue; not irreconcilability or not of reasoning. In the same para 60 in fine in fact Popplewell J advances what I think is a stronger argument: that the issue whether the National Fund was used or intended to be used for commercial purposes, requires to be determined or addressed in the English proceedings, with the result that there is no risk of conflict.
Article 30 not being engaged for that reason, obiter then follows an interesting discussion on whether there can be lis alibi pendens if the court originally seized had no jurisdiction under the Regulation: here: because the Belgian and Dutch proceedings are arbitration proceedings.
Does Article 30 apply to Regulation claims where there was a related action in a Member State in which the related action did not itself come within the Regulation? Referring to the new Article 34 lis alibi pendens rule for proceedings pending ex-EU, ex absurdum, would there not be an odd lacuna if Article 34 required a stay where there were related non-Regulation foreign proceedings in a third party State and the position were not to be the same for equivalent foreign proceedings in a Member State? I do not believe there would be such lacuna: the Article 34 rule applies to concurrent proceedings which are in fact in-Regulation, except international comity requires the EU to cede to foreign proceedings with a strong (typically exclusive) jurisdictional call. For intra-EU proceedings, the comity argument holds no sway – mutual trust does.
Like Poplewell J however I reserve final judgment on that issue for another occasion.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.
1215/2012, 33/78, Article 30, Article 34, Article 7(5), Branch, Brussels I, Brussels I recast, Brussels I Regulation, Curia, FNC, Forum non conveniens, http://www.bailii.org/ew/cases/EWHC/Comm/2017/3512.html, Jurisdiction, lex fori, lis, Lis alibi pendens, National Bank of Kazakhstan v Bank of New York Mellon, Recognition, Recognition and enforcement, Regulation 1215/2012, related actions, Somafer, Sovereign immunity, sufficient nexus, the Tatry,  EWHC 3512 (Comm)
C-523/14 Aertssen is not a corner piece of the Brussels I jigsaw. Rather, a necessary if unexciting piece of the puzzle’s main body. Aertssen NV, of Belgium, had a gripe with VSB Machineverhuur BV and others, of the Netherlands. Aertssen alleged fraud in VSB’s dealings with the company. It employed a well-known feature of Belgian (and French, among others) civil procedure, which is to file complaint with the investigating magistrate. This launches a criminal investigation, to which civil proceedings are attached.
Aertssen’s subsequent action of attachment of VSB’s accounts in The Netherlands, risked being stalled by the Dutch courts’ insistence that the group launch new legal action in The Netherlands. Aertssen obliged pro forma with this initiation of new proceedings, subsequently to aim to torpedo them. Aertssen would rather the Belgian courts continue with their own, criminal investigation and that action in The Netherlands, other than action in attachment, be put on hold, at least until the Belgian proceedings be finalised.
In essence therefore, the case before the CJEU needs to determine whether the Aertssen action in Belgium is of a ‘civil and commercial’ nature, and if it is, whether the actions in Belgium and The Netherlands meet the requirements of the lis alibi pendens rule of Article 27 (old) of the Brussels I-Regulation. The CJEU replied in the affirmative to both.
Precedent for the ‘civil and commercial’ issue, other than the usual suspects, was available per Sonntag, Case C-172/91, where the Court held that civil matters within the meaning of the first sentence of the first paragraph of Article 1 of the Brussels Convention, cover an action for compensation for damage brought before a criminal court. In Aertssen, The CJEU used the term ‘private law relationship’ to describe the legal relationship between the parties concerned. Even though, other than in Sonntag where the criminal proceedings were launched by the State prosecutor, Aertssen itself had triggered the criminal investigation, its ultimate aim is to obtain monetary compensation.
The subsequent question was whether per Article 27, lis pendens exists. Reference is best made to the judgment itself for the application of the The Tatry criteria (Case C-406/92): the two cases pending need to involve the same parties, pursuing the same cause of action (the facts and the rule of law relied on) and with the same object (meaning the end the action has in view). The CJEU held among others that the question whether the parties are the same cannot depend on the position of one or other of the parties in the two proceedings.
The remainder of the judgment deals with the meaning of the term ‘court first seized’ in Article 30 of the Regulation, and the relevance of national rules of civil procedure in same.
It is not often that a party aims to torpedo its own proceedings and the procedural intricacies of the case are rather complex. However the CJEU keeps a level head, with in the end transparent results.
Aannemingsbedrijf Aertssen and Aertssen Terrassements, Aertssen, Aertssen v VSB Machineverhuur BV, Article 27, Article 30, Brussels I, Brussels I recast, Burgerlijke en Handelszaken, C-172/91, C-406-92, Civil and commercial, CJEU, Court seized, Curia, ECJ, ECLI:EU:C:2015:722, EEX, EEX Verordening, http://curia.europa.eu/juris/liste.jsf?language=en&num=C-523/14, Judgmens Regulation, Jurisdiction, LAP, Lis alibi pendens, rationae materiae, Regulaiton 44/2001, Regulation 1215/2012, Scope of application, Sonntag, the Tatry
- Wallis v Air Tanzania. A good reminder of the (soon to be resurrected) UK reservation viz the Rome Convention. 03/04/2020
- Aspen Underwriting: The Supreme Court overrules on the issue of economically weaker parties in the insurance section. 02/04/2020
- Lamesa Investments v Cynergy. Rome I-like ‘mandatory law’ provisions applied to US secondary sanctions. 31/03/2020
- CJEU confirms Saugmandsgaard ØE in Libuše Králová v Primera Air Scandinavia: ‘contractual relation’ broadly interpreted, restraint on the consumer section, even for package travel. 29/03/2020
- Brexit in transit. Bournemouth, Christchurch and Poole Council v KC et al. Exequatur insisted on. 26/03/2020
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