Posts Tagged United Kingdom
Away to Scotland with thee! CA applies forum non conveniens to intra-UK conflicts in Cook & McNeil (v Virgin & Tesco)
A great example of internal forum shopping and the application of forum non conveniens in the Court of Appeal. (Just before Christmas. I am still hacking away at my end-of-year queue).
Claimants claim damages for personal injuries they alleged they sustained in accidents in Scotland as a result of the negligence and/or breach of statutory duty of the defendants. The claims were issued in the Northampton County Court. The registered offices of the defendants are situated in England and Wales. Both claimants are domiciled in Scotland. Liability has been admitted in the case of Cook, but denied in the case of McNeil. Since the claims related to accidents in Scotland, the claims were allocated to Carlisle County Court, which is the court geographically closest to Scotland. The claims were struck out on forum non conveniens grounds, with Scotland being the appropriate forum.
The most important issue that arises on these appeals (and the reason why Tomlinson LJ gave permission for a second appeal) is whether the doctrine of forum non conveniens can apply in a purely domestic context where the competing jurisdictions are England and Scotland. Put simply, the question is: does the English court have the power in such a case to stay or strike out a claim on the ground that the natural and more appropriate forum is Scotland?
As Floyd MR notes (at 7) it is surprising that there was no authority on this point.
He correctly holds that the ‘international element’ required for the Brussels I regime to apply, as it did in Owusu and Maletic (but also Lindner) is absent in the case at issue. There is nothing in the facts which renders the case international in the Brussels I (Recast) sense. Relevant precedent which did have some calling was Kleinwort Benson, Case C-346/93, in which the CJEU refused to interpret the (then) Brussels Convention in a purely domestic UK situation, even if the internal UK rules were modelled on the Brussels regime.
Forum non conveniens could be applied. Though not under appeal, Floyd MR does suggest that in his view the claim in which liability was admitted (Cook), should not have been struck out but rather stayed under the relevant rules.
Forum shopping alive and well outside the EU Insolvency Regulation. High Court (Bankruptcy) in Kekhman.
In Kekhman, the High Court (Kekhman) refused to reverse an earlier decision establishing jurisdiction for personal bankruptcy. COMI was not in the EU- the Insolvency Regulation therefore does not apply. Jurisdiction was upheld even though the applicant had only been personally been in the UK for one or two days.
Applicant argued pro jurisdiction mainly on the basis of
(a) the absence of a personal bankruptcy regime in the Russian Federation;
(b) the availability of assets in the jurisdiction (£200,000 which was to be made available to the official receiver);
(c) connection to the jurisdiction in the form of contractual English law/jurisdiction provisions;
(c) the opinion of a Russian lawyer, that the courts of the Russian Federation would recognise the bankruptcy;
(d) the fact that an English bankruptcy would allow for the investigation of Mr Kekhman’s affairs and an orderly realisation of Mr Kekhman’s assets for the benefit of his creditors as opposed to realisation on a first come first served basis;
(e) the promise that Mr Kekhman would cooperate with the official receiver and any trustee appointed;
(f) the prospect of Mr Kekhman’s financial rehabilitation.
Personal presence has long been withheld as sufficient ground for jurisdiction in England.
Section 265 Insolvency Act 1986 now provides
“Conditions to be satisfied in respect of debtor. (1) A bankruptcy petition shall not be presented to the court (…) unless the debtor(a) is domiciled in England and Wales, (b) is personally present in England and Wales on the day on which the petition is presented, or (c) at any time in the period of 3 years ending with that day (i) has been ordinarily resident, or has had a place of residence, in England and Wales; or (ii) has carried on business in England and Wales’.
Once jurisdiction has so been established, the Court has discretion to confirm or refuse jurisdiction in the case at issue, on the basis of relevant authority in case-law (and further instruction in the Act).
Baister CR reviewed precedent at length (including recent case-law on schemes of arrangement in the English courts) and held pro jurisdiction. Where his arguments are mostly likely to catch attention is his review of forum shopping, good and bad: The authorities, and in particular the corporate ones, demonstrate that the courts here are prepared to countenance what is in reality forum shopping, albeit of a positive, by which I mean a legitimate, kind’ (at 104). There is no suggestion in this case that the bankruptcy order was sought for an improper purpose (…) beyond, the Applicants would say, Mr Kekhman’s seeking to avoid the harsh consequences of Russian law (much as it might be said the companies in the two scheme cases [i.e. schemes of arrangement, GAVC] mentioned above sought to avoid the potential consequences for them of the lack of a scheme jurisdiction in their respective countries). (at 110) Rather, it seems to me that Mr Kekhman has come to this jurisdiction to fill a lacuna in the laws of the country where he is domiciled and resides. Many of the cases we have looked at, though primarily, I accept, in the corporate realm, indicate that the courts here have often been content to assist in such circumstances (at 111).
Russian assets can still be gone after by the Banks in Russia, using Russian law. English will be credited to them by the English courts using English law.
A refreshing defence of forum shopping which in my view unfairly has been utterly blacklisted in the Insolvency Regulation.
An end to libel tourism in the UK? The High Court in Subotic and Karpov. Abuse principles sink jurisdiction.
Two interesting cases in the High Court on libel tourism, Subotic and Karpov (both held 14 October 2013). The relevance to English libel law is set out by Robert Renfree and by Paul Dacam. Here I just wanted to flag the jurisdictional issues under the Brussels regime.
In Subotic, a Serbian national living in Switzerland, Dingemans J accepted English jurisdiction in principle although it is not entirely clear on what basis. Domicile of the defendant at the time of the initiation of the claim was alleged by claimant to have been England. However defendant disputed such domicile, referring to inferred addresses having been a left-over of earlier study in the UK (but adding complaints about his wife and children’s address in London having been found, whence the dispute on domicile was not entirely clear). Counsel for the defendant also referred to his client having shied away, for costs reasons, from English proceedings after earlier acceptance to entertain the claim – however this potential voluntary appearance under Article 24 of the Regulation was not further reviewed. It is most likely that acceptance of jurisdiction was made on the basis of Article 5(3) of the Regulation however as readers will be aware, that does limit jurisdiction to damage in the UK only (the alleged acts leading to libel not having taken place in the UK, only some of the reputational damage). To add to the fog, parallel proceedings are alleged by plaintiff to be underway in Switzerland although their course is unclear. Finally, defendant now is domiciled in Croatia, EU Member State since 1 July 2013. As Dingemans suggested, this would certainly not stand in the way of new proceedings there (although it could of course lead to lis alibi pendens considerations, depending on what would be asked of the Croatian court).
Eventually, Dingemans held that continuation of the proceedings would amount to abuse of process, ‘The evidence shows that there was no substantial publication in England and Wales, and that there was no effect on the reputation of Mr Subotic in England and Wales.‘ There was, in other words, insufficient connection to England and Wales.
This is arguably not a refusal to exercise jurisdiction otherwise held under the Brussels I Regulation (per Owusu, that would be impossible), rather, an application of procedural rules under lex fori, or indeed a forward application of the lex causae (definitely libel under common law, as defamation is exempt from the Rome II Regulation). However upon first reflection, the abuse of process route may in circumstances such as these be seen as an application of the forum non conveniens doctrine. Any thoughts of common lawyers are certainly invited!
In Karpov, the claimant was a former Russian police officer who had brought proceedings against a British based hedge fund owner and associated companies. Simon J, too, held abuse of process in this case, holding inter alia that ‘claimant had no connection with, and had no reputation to protect within, the jurisdiction; and therefore cannot establish a real and substantial tort within the jurisdiction.’ In this case, though, none of the defendants was domiciled in the UK (Hermitage Capital Management (UK) Limited would seem to be domiciled in Guernsey, which is not part of the UK and not subject to the jurisdiction Regulation). Jurisdiction in Karpov therefore was entirely determined by English law.
What law applies to the piercing of the corporate veil? The Supreme Court (not) in VTB Capital v Nutritek.
Postscript 1 March 2016 I already refered in my initial posting to similar issues being sub judice in Shell. In the appeals judgment on the jurisdiction issue, the Gerechtshof Den Haag, without being definitive on the issue, suggested that applicable law for considering whether merger operations inserting a new mother company were abusive (merely carried out to make Royal Dutch Shell escape its liability), had to be addressed using ‘among others’ the lex incorporationis (at 3.2).
In VTB Capital v Nutritek [ UKSC 5] , the Supreme Court of the United Kingdom revisits in signature erudite fashion a number of extremely relevant conflicts issues. Quite a few of them are tantalizingly held out to the reader, without an answer to them being given.
VTB’s case is that it was induced in London to enter into a Facility Agreement, and an accompanying interest rate swap agreement, by misrepresentations made by one of the defendants, for which it claims the other respondents are jointly and severally liable. Parties are of suitably diverse domicile (appellant incorporated in England however controlled by a State-owned bank in Moscow; defendants two British Virgin Island-based companies owned and controlled by a Moscow-based Russian businessman. Defendants not being EU-based , the Brussels-I Regulation does not apply.
The issues involved were essentially
1. Jurisdiction. Lord Neuberger made the point that settling the presence (or not) of jurisdiction, is an early procedural incident in a trial and ought not to lead to protracted legal argument, costs and time, lest the discussions centre around whether the potential other jurisdiction can guarantee a fair trial or not. In contrast with other in recent high-profile cases before the UK courts, the alternative, Russian forum, would by common agreement have also offered a fair trial. Lord Neuberger also emphasises, with reference to Lord Bingham in Lubbe v Cape, that in forum non conveniens considerations, appeal judges should defer in principle to the trial judge, and that this should be no different in proceedings concerning service out of jurisdiction. The majority therefore opted to defer to Arnold J (at the High Court) and the Court of Appeal in their finding of jurisdiction, in the absence of any error which ought to have made the former change their conclusion.
2. Applicable law for tortious misrepresentation. This the law of the jurisdiction in which they are ultimately received and relied upon (the forum connogati if you like). In the case at issue, this was held to be England.
3. Applicable law for piercing the corporate veil. The Court emphasises the foundation of individual personality of a company established in Salomon and A Salomon and Co Ltd (1897). The presumption must be against piercing. The Supreme Court did not however set out a definitive test for it was not necessary for its resolving of the case, neither did it decide what law should apply to the issue. In theory, Lord Neuberger suggested, the proper law governing the piercing of the corporate veil (may be) the lex incorporationis, the lex fori, or some other law (for example, the lex contractus, where the issue concerns who is considered to be party to a contract entered into by the company in question). However common ground among parties in the case thus far had been to apply English law.
Piercing the corporate veil was also reviewed by the (Dutch) court in Shell. Lord Neuberger’s succinct analysis of the issue in VTB makes one hungry for more.