Akers and Others v Samba Financial Group

Hearing dates: 29th and 30th January 2014

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Chancellor (Sir Terence Etherton):

This is an application by the defendant, Samba Financial Group ("Samba"), for a stay of these insolvency proceedings pursuant to CPR Part 11 on the ground that the courts of the Kingdom of Saudi Arabia are clearly and distinctly more appropriate for the determination of the claim than the courts of England and Wales.

Samba was served with these proceedings in England at its London branch as of right.

The claim

The proceedings are brought by the first, second and third claimants as the joint liquidators ("the Joint Liquidators") of the fourth claimant, Saad Investments Company Limited ("SICL").

The proceedings are for a declaration under section 127 of the Insolvency Act 1986 ("section 127") that the transfer on 16 September 2009 ("the September Transfer") by Mr Maan Al-Sanea ("Mr Al-Sanea") to Samba of shares in five Saudi Arabian companies ("the Disputed Shares") was a void disposition of the property of SICL. There is also a claim for payment of the value of the Disputed Shares and various other heads of relief which it is not necessary to describe. The Disputed Shares are alleged to have been held by Mr Al-Sanea on trusts for SICL governed by Cayman Islands law. They are alleged to have been worth some US$318 million at the date of the September Transfer.

SICL is incorporated under the Companies Law (as amended) of the Cayman Islands. It was wound up by order of the Grand Court of the Cayman Islands on 18 September 2009 pursuant to a winding up petition presented on 30 July 2009. The Joint Liquidators, having previously been appointed provisional liquidators by the Grand Court, were appointed official liquidators by the same order. Recognition orders of the English court made on 20 August 2009 and 25 September 2009 pursuant to the Cross Border Insolvency Regulations 2006 ("the CBIR") recognised the insolvency proceedings in the Cayman Islands as foreign main proceedings in accordance with the UNCITRAL Model Law on Cross-Border Insolvency set out in schedule 1 to the CBIR. Those orders recognised the Joint Liquidators as foreign representatives in those foreign main proceedings.

The Model Law and section 127

The UNCITRAL Model Law on Cross-Border Insolvency was given the force of law in Great Britain by the CBIR in the form set out in schedule 1 to those Regulations ("the Model Law"). The purpose of the Model Law is to enable a foreign office holder to use British insolvency law to obtain the same relief against persons located in Great Britain as if the insolvency were one that was commenced and continued in this jurisdiction.

CBIR reg. 3(1) provides that British insolvency law shall apply with such modifications as the context requires for the purpose of giving effect to the provisions of the CBIR.

Article 20(1)(c) of the Model Law provides that

"Upon recognition of a foreign proceeding that is a foreign main proceeding, subject to paragraph 2 of this article … the right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended".

Article 20(2) of the Model Law provides that:

"The … suspension referred to in paragraph 1 of this article shall be

(a) the same in scope and effect as if the debtor …, in the case of a debtor other than an individual, had been made the subject of a winding-up order under the Insolvency Act 1986; and

(b) subject to the same powers of the court and the same prohibitions, limitations, exceptions and conditions as would apply under the law of Great Britain in such a case."

The effect of those provisions is to enable the foreign representative to take advantage of section 127(1), which provides as follows:

"In a winding up by the court, any disposition of the company's property, and any transfer of shares, or alteration in the status of the company's members, made after the commencement of the winding up is, unless the court otherwise orders, void."

Accordingly, any disposition of SICL's property made after, at the latest, the date of recognition of the foreign proceedings on 20 August 2009 was void under section 127. The September Transfer was made after that date. The critical issue between the parties in relation to section 127, for the purpose of the present application, is whether or not, applying the relevant law, SICL had any property interest in the Disputed Shares at the date of the September Transfer.

The Joint Liquidators have decided to bring proceedings in this jurisdiction, taking advantage of the CBIR and the Model Law, rather than the Cayman Islands because, among other things, Samba has no presence there. The Joint Liquidators believed that Samba would refuse to submit to the jurisdiction of the Cayman Islands and that any judgment obtained there would be difficult to enforce.

The UNCITRAL Model Law has not been enacted in Saudi Arabia.

The principles for the grant of a stay

The relevant principles are well known and not in dispute. They are set out in the speech of Lord Goff in Spiliada Maritime Corp v Cansulex Ltd[1987] AC 460. The court has a discretion to stay proceedings if there is another more appropriate forum, even where, as in the present case, the court's jurisdiction has been invoked by the claimant as of right. It will only do so in such a case, however, if the following conditions are satisfied.

The defendant must satisfy the court that there is another forum which is clearly or distinctly more appropriate than the English court. In determining that issue, the court will consider with which forum the issues in the proceedings have the most real or substantial connection, including the governing law of the relevant transactions, the places where the parties respectively reside or operate, and the convenience of witnesses and the location of evidence. If the court considers that there is no other forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay.

If, however, the court is satisfied that there is another forum which is clearly more appropriate, then the court will ordinarily order a stay unless the claimant can satisfy the court that justice requires that the proceedings continue in England because, for example, it is established objectively and by cogent evidence that justice will not be done in that other forum. Ultimately, the question for the court is whether it is more suitable that the case should be tried in England having regard to the interests of all the parties and ends of justice.

The background

The parties

SICL is, as I have said, a Cayman Islands company. At all relevant times it had its registered office there. It is a member of the Saad Group of companies, which was formed in 1980 by Mr Al-Sanea, who has been at all relevant times a citizen of Saudi Arabia and domiciled and ordinarily resident there. The Saad Group has its headquarters in Al Khobar in Saudi Arabia. Mr Al-Sanea was the ultimate beneficial owner of SICL, acted as one of its directors and was chairman of its board of directors. SICL has had a number of directors over time. Some of them were based in Saudi Arabia, but three professional directors were not. SICL is essentially Mr Al-Sanea's family investment vehicle, the active management of which was conducted by an associated company in Geneva.

Samba is a public company which was incorporated in Saudi Arabia in 1980. It is listed on Tadawul, the Saudi Arabian stock exchange. It carries on business as an international bank. In addition to its operations in Saudi Arabia, it has operations in the United Kingdom, the United Arab Emirates, Qatar and Pakistan. According to its website "Samba has maintained a strong presence in the United Kingdom for over 20 years with a branch in London". Mr Al-Sanea acted as a director of Samba from 2004 until 2006.

SICL had a relationship with Samba's London branch. Samba, as lender, and SICL, as borrower, entered into a US$60 million facility agreement originally dated 6 December 2004 (and subsequently amended) governed by English law ("the SICL/Samba Facility Agreement"). SICL's liability under the SICL/Samba Facility Agreement was guaranteed by Mr Al-Sanea under a guarantee governed by English law. Under the jurisdiction clause in the SICL/Samba Facility Agreement, Samba required SICL to sue it only in the English courts.

SICL and Samba had other financial relationships, including Samba's US$50 million participation in the facility agreement which I mention below and certain credit balances in accounts which, since at least 2000, were held by SICL with Samba in London.

On about 24 August 2007 SICL entered into a facility agreement as the borrower with a syndicate of bank lenders for a revolving loan facility in an aggregate amount equal to US$2.815 billion ("the Facility Agreement"). Samba was one of the syndicate. The Facility Agreement was governed by English law and contained a...