Akçil and Others v Koza Ltd and another
| Jurisdiction | England & Wales |
| Judge | Lord Sales,Lord Reed,Lord Hodge,Lady Black,Lord Briggs |
| Judgment Date | 29 July 2019 |
| Neutral Citation | [2019] UKSC 40 |
| Court | Supreme Court |
| Date | 29 July 2019 |
[2019] UKSC 40
Lord Reed, Deputy President
Lord Hodge
Lady Black
Lord Briggs
Lord Sales
Appellants
Jonathan Crow QC
Adrian Briggs QC
David Caplan
(Instructed by Mishcon de Reya LLP)
Respondents
Lord Falconer of Thoroton
Siward Atkins
Andrew Scott
(Instructed by Gibson Dunn & Crutcher UK LLP)
Heard on 19 March 2019
( with whom Lord Reed, Lord Hodge, Lady Black and Lord Briggs agree)
This appeal is concerned with the interpretation of article 24(2) of the Brussels I Recast Regulation (Parliament and Council Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Recast Regulation”)), which sets out a special regime to determine jurisdiction in relation to certain matters regarding the governance of corporations. Although the issue in the present case relates to where a Turkish company and certain Turkish-domiciled individuals may be sued, and Turkey is of course not an EU member state, it is common ground that article 24(2) of the Recast Regulation applies to determine the question of jurisdiction which arises in this case.
Article 24 is in Section 6 of the Recast Regulation, entitled “Exclusive jurisdiction”. Article 24(2) provides as follows:
“The following courts of a member state shall have exclusive jurisdiction, regardless of the domicile of the parties:
…
(2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the member state in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; …”
The sixth appellant (“Koza Altin”) is a publicly listed company incorporated in Turkey. It carries on a business specialising in gold mining. It is part of a group of Turkish companies known as the Koza Ipek Group (“the Group”) which were formerly controlled by the second respondent (“Mr Ipek”) and members of his family. Amongst other things, the Group has media interests in Turkey. The first respondent (“Koza Ltd”) is a private company incorporated in England in March 2014. It is a wholly owned subsidiary of Koza Altin.
Mr Ipek says that he and the Group have been targeted unfairly by a hostile government in Turkey, including by making them the subject of an investigation into alleged criminal activity and taking steps against them in conjunction with that investigation. In order to defend himself as regards control of Koza Ltd, in September 2015 Mr Ipek caused a number of changes to be made to Koza Ltd's constitution and share structure. A new class of “A” shares was created and Koza Ltd's articles of association were amended to introduce a new article 26 (“article 26”), which purported to preclude any further changes to the articles of association or any change of directors save with the prior written consent of the holders of the “A” shares. Two “A” shares were issued, one to Mr Ipek and one to his brother.
The validity and effect of these changes is in issue in these proceedings. The respondents contend that they are valid and lawful. The appellants contend that they are invalid and unlawful attempts to entrench Mr Ipek and his associates in control of Koza Ltd.
In proceedings in Turkey relating to the criminal investigation in respect of Mr Ipek and the Group, on 26 October 2015 pursuant to article 133 of the Turkish Criminal Procedure Code the Fifth Ankara Criminal Peace Judge appointed certain individuals as trustees of Koza Altin and other companies in the Group, with power to control the affairs of those companies in place of the existing management. Pursuant to further decisions of the judge dated 13 January and 3 March 2016, the first to fifth appellants were appointed as the trustees in relation to Koza Altin. I refer to them together as “the trustees”, although in further proceedings in Turkey in September 2016 they were replaced by the Tasarruf Mevduati Sigorta Fonu (the Savings Deposit Insurance Fund of Turkey) as trustee of Koza Altin. The trustees, with Koza Altin itself, are the relevant parties in the present proceedings in England and for this appeal.
On 19 July 2016, the trustees caused Koza Altin to serve a notice on the directors of Koza Ltd under section 303 of the Companies Act 2006, requiring them to call a general meeting to consider resolutions for their removal and replacement with three of the trustees.
The directors of Koza Ltd did not call such a meeting, so on 10 August 2016 Koza Altin served a notice pursuant to section 305 of the 2006 Act to convene a meeting on 17 August 2016 to consider those resolutions. The service of this notice prompted Mr Ipek and Koza Ltd to make an urgent without notice application on 16 August seeking an injunction to prevent the meeting taking place and, so far as required, orders for service out of the jurisdiction and for alternative service.
Injunctive relief as set out in the application was sought on two bases. It was contended that (i) the notices of 19 July and 10 August 2016 (“the notices”) were void under section 303(5)(a) of the 2006 Act because at least one of the holders of the “A” shares (Mr Ipek) did not consent to the proposed resolutions and so, if passed, they would be ineffective as being passed in breach of article 26 (I refer to this claim as “the English company law claim”); and (ii) the notices were void on the basis that the English courts should not recognise the authority of the trustees to cause Koza Altin to do anything as a shareholder of Koza Ltd, because they were appointed on an interim basis only and in breach of Turkish law, the European Convention on Human Rights and natural justice, so that it would be contrary to public policy for the English courts to recognise the appointment (I refer to this claim as “the authority claim”).
As regards jurisdiction, the primary submission for Mr Ipek and Koza Ltd was that permission to serve out of the jurisdiction was not required because the English courts had exclusive jurisdiction to deal with the whole claim pursuant to article 24(2) of the Recast Regulation. At the without notice hearing before Snowden J on 16 August 2016, the judge accepted this submission. He granted interim injunctive relief as sought by Mr Ipek and Koza Ltd and gave permission for alternative service at the offices of Mishcon de Reya LLP, the solicitors acting for Koza Altin and the trustees.
Mr Ipek and Koza Ltd issued their claim form on 18 August 2016 seeking a declaration that the notices were ineffective, an injunction to restrain Koza Altin and the trustees from holding any meeting pursuant to the notices and from taking any steps to remove the current board of Koza Ltd, a declaration that the English courts do not recognise any authority of the trustees to cause Koza Altin to call any general meetings of Koza Ltd or to do or permit the doing of anything else as a shareholder of Koza Ltd and an injunction to restrain the trustees from holding themselves out as having any authority to act for or bind Koza Altin as a shareholder of Koza Ltd and from causing Koza Altin to do anything or permit the doing of anything as a shareholder of Koza Ltd.
Koza Altin and the trustees filed an acknowledgement of service indicating their intention to contest jurisdiction and then issued an application to do that. At the same time, Koza Altin filed a Defence and Counterclaim to the English company law claim, impugning the validity and enforceability of article 26 and also impugning the validity and effectiveness of the board resolution of Koza Ltd pursuant to which the two “A” shares were issued.
In turn, Mr Ipek and Koza Ltd issued an application to strike out the acknowledgment of service, Koza Altin's Defence and Counterclaim and all other steps taken by Mishcon de Reya LLP purportedly on behalf of Koza Altin in the proceedings, on the basis that the authority of those who had caused Koza Altin to take these steps should not be recognised in this jurisdiction.
The application of Koza Altin and the trustees to challenge jurisdiction was heard by Asplin J in December 2016. Their position was that (i) the English courts have no jurisdiction under article 24(2) of the Recast Regulation over the trustees in relation to any part of the claims; (ii) the English courts do have jurisdiction under that provision over Koza Altin in respect of the English company law claim, which relates to the affairs of Koza Ltd; and (iii) the English courts have no jurisdiction under that provision over Koza Altin in respect of the authority claim, which relates to the conduct of the business of Koza Altin.
Asplin J dismissed the application by order made on 17 January 2017. It was common ground that the English company law claim fell within article 24(2) of the Recast Regulation so that the English courts had jurisdiction in relation to it and in the judge's assessment the authority claim was inextricably linked with that claim, which she considered was the principal subject matter of the proceedings viewed as a whole.
Koza Altin and the trustees appealed on the grounds that Asplin J had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine the authority claim and had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine any of the claims against the trustees. The Court of Appeal dismissed the appeal. Like Asplin J, it held that the authority claim is inextricably linked with...
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