+44 (0)20 7797 8600

MENU

 

MARC DELEHANTY ON STAYING ENGLISH PROCEEDINGS IN FAVOUR OF PENDING PROCEEDINGS IN NON-EU COUNTRIES

STAYING ENGLISH PROCEEDINGS IN FAVOUR OF PENDING PROCEEDINGS IN NON-EU COUNTRIES

In a recent judgment involving an issue of lis pendens, Fancourt J stayed proceedings brought in the Chancery Division against three English companies on the basis that there were already related proceedings pending in Ukraine: Privatbank v Kolomoisky, Bogolyubov and others [2018] EWHC 3308 (Ch).

This judgment addressed some interesting points relevant to stay applications for stays in favour of related proceedings outside the EU (pursuant to Article 34, Brussels I Regulation (recast)):

  • Can there be a stay in favour of foreign proceedings which have been dismissed at first instance on procedural grounds but which may be reinstated upon a successful appeal?

  • Does Article 34 require that it be practically possible to consolidate the claim brought in the English proceedings into the foreign proceedings?

Marc Delehanty acted for the Third to Eighth Defendants (led by Sonia Tolaney QC and Thomas Plewman QC; instructed by Pinsent Masons LLP).

Background

The claimant, a major Ukrainian bank, claimed that the Third to Fifth Defendants (English companies) were part of an alleged misappropriation of US$1.9 billion of its money by two Ukrainian oligarchs prior to the bank’s nationalisation in 2016.

Before the English proceedings had been commenced, the First Defendant had brought defamation proceedings in Ukraine against the Bank (and other defendants) concerning statements made about the alleged misappropriation.  The Third to Fifth Defendants were joined to those proceedings as affected third parties.

The Third to Fifth Defendants – who had been sued in England under the Recast Brussels Regulation on the basis of their English domicile – applied for a stay of the English proceedings under Article 34(1), recast Brussels I Regulation (also known as the Judgments Regulation), which provides:

Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and an action is pending before a court of a third State at the time when a court in a Member State is seised of an action which is related to the action in the court of the third State, the court of the Member State may stay the proceedings if:
(a)    it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings;
(b)    it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and
(c)    the court of the Member State is satisfied that a stay is necessary for the proper administration of justice.

Before the stay application was determined, the Ukrainian proceedings were dismissed on procedural grounds at first instance but this dismissal was subject to appeal.

Summary

Fancourt J analysed the nature of the proceedings in England and Ukraine and exercised his discretion to grant the stay.  In so doing, he held that:

  • The Ukrainian proceedings were still “pending” for the purposes of Article 34(1) notwithstanding they had been dismissed at first instance. It was sufficient that there was a right to appeal and a possibility of those proceedings being reinstated.  See: para 137.

  • Article 34(1)(a) can be satisfied even if it is not practically possible to consolidate the claim brought in England into the extant Ukrainian proceedings. If practical consolidation were possible that would be an additional reason in favour of a stay but it is not a condition of granting one. The objective of avoiding irreconcilable judgments can be met by one of the sets of proceedings following the other (e., not only by having a single consolidated set of proceedings).  See: para 145.

Fancourt J also held that, where English proceedings are brought against a defendant in reliance on the jurisdictional provisions of the Lugano Convention 2007 (i.e., against those domiciled in Denmark, Switzerland, Iceland or Norway), a stay of those proceedings can be ordered in favour of foreign proceedings outside the EU / EEA.  That is so notwithstanding that, unlike the recast Regulation, the Lugano Convention 2007 does not expressly provide for a power to do so.  See: para 125.

Also, as part of the same judgment, Fancourt J discharged and refused to re-grant a worldwide freezing order made against the Defendants and found that there was no jurisdiction to try the claim against the First, Second and Sixth to Eighth Defendants.

Fancourt J granted the Bank permission to appeal against his decisions on jurisdiction, including in relation to the decision to stay proceedings against the Third to Fifth Defendants on grounds of lis alibi pendens.

The full judgment may be accessed here 

Posted: 17.01.2019 at 15:23
Tags:  Comments  Commercial Law  EU Law
Share this page
Print page

Cookies help us deliver our services. By continuing to browse this website, you agree to our use of cookies. OK