Alliance Bank JSC v Aquanta Corporation

JurisdictionEngland & Wales
JudgeLord Justice Tomlinson,Lord Justice Elias,Lord Justice Lloyd
Judgment Date12 December 2012
Neutral Citation[2012] EWCA Civ 1588
Docket NumberCase No: A3/2012/0139 + (A)
CourtCourt of Appeal (Civil Division)
Date12 December 2012

[2012] EWCA Civ 1588

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Mr Justice Burton

[2011] EWHC 3281 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Lloyd

Lord Justice Elias

and

Lord Justice Tomlinson

Case No: A3/2012/0139 + (A)

Between
Alliance Bank JSC
Appellant
and
(1) Aquanta Corporation
(2) Bazora Corporation
(3) Serbina Limited
(4) Xilliana Limited
(5) Terpia Limited (formerly Audina Management Services Limited)
(6) Mr Margulan Kaliyevich Seisembayev
(7) Mr Erlan Kaliyevich Seisembayev
(8) Mr Askar Kaliyevich Galin
(9) Seimar Alliance Financial Corporation Jfv
(10) Mr Aleksei Ageyev
(11) Mr Zhomart Zhadygeruly Ertayev
(12) Mr Dauren Kereibayev
(13) Ms Irina Viktorovna Ivanova
(14) Mr Erik Sultankulov
(15) Mr Anuar Beisebayev
Respondents

Daniel Toledano QC and Nicholas Sloboda (instructed by Slaughter & May) for the Appellant

Richard Slade QC (instructed by Klein Solicitors Limited) for the 1 st, 2 nd, 3 rd and 4 th Respondents

Richard Morgan QC and Thomas Munby (instructed by Morgan Lewis & Bockius) for the 6 th Respondent

Harry Matovu QC (instructed by Memery Crystal LLP) for the 7 th, 8 th and 9 th Respondents

The other Respondents were neither present nor represented

Hearing dates : 19 – 22 June 2012

Lord Justice Tomlinson

Introduction

1

The Appellant, and Claimant in the action, a Kazakh bank to which I shall refer as "Alliance", claims that it is the victim of a massive fraud, the product of a conspiracy between the Respondents, the Defendants in the Action. The principal conspirator is said to have been the Sixth Respondent, to whom I shall refer as "D6", who was at all material times Chairman of the Board of Directors of Alliance. The Seventh and Eighth Respondents, D7 and D8, are the brothers of D6. The brothers between them owned D9, a Kazakh holding company, which at times material to the alleged fraud owned more than 70% of Alliance. Ds 1–5 are companies all of which are admittedly beneficially owned by D6 and are alleged to have been controlled by the brothers, D5 being at the material time the corporate director of Ds 1–4. All of the other personal Defendants, Ds 10–15, at all material times held senior positions, at director level, with Alliance, D15 having additionally been Director General of D9. It is said that by their dishonest scheme the Defendants, between 2005 and 2009, defrauded Alliance of US$1.1 billion.

2

On 5 April 2011 Teare J, on an ex parte application in the Commercial Court, granted to Alliance permission to serve process out of the jurisdiction on Ds 1, 2 and 4– 15. D3 was in a limited respect amenable to service within the jurisdiction as I shall shortly explain. At the same time Teare J also granted a Worldwide Freezing Order against all the Defendants. Alliance asserted both express and implied contractual causes of action governed by English law against Ds 1–4 and 6–8, although only the former, the express contractual causes of action, were expressly relied upon in the affidavit in support of the application for permission to serve out of the jurisdiction. It follows that it is questionable whether the order of Teare J entitled Alliance to pursue its pleaded cause of action in implied contract. This is a point to which I shall return. Only Ds 1–4, all corporations, were named as party to the express contracts upon which Alliance sued. However Ds 1–4 were alleged to be the "puppets" of Ds 6–8, their "puppet masters". Ds 6–8 were alleged to be themselves party to the agreements into which they had caused their puppets to enter. As I shall later explain Ds 6–8 are equally alleged to be party to the implied contracts.

3

All of the Defendants save Ds 12 and 14 were served with the proceedings. D5 applied to set aside service but has not pursued the application. Ds 10, 11, 13 and 15 have neither acknowledged service nor applied to set aside service upon them. Alliance intends to proceed against Ds 5, 10, 11, 13 and 15, sometimes together called "the inactive defendants", in order to obtain against them a reasoned judgment of the English court.

4

At an eleven-day hearing inter partes before Burton J in the Commercial Court in November 2011 Ds 1, 2 and 4 and Ds 6 to 9 sought to set aside the permission granted to serve them out of the jurisdiction and Ds 1–4 and 6–9 sought a declaration that the court has no jurisdiction to try the claim, or alternatively that it should not exercise any jurisdiction which it may have. In the alternative Ds 1–4 sought a stay of the proceedings in reliance upon a contractual arbitration clause. All eight of the active defendants therefore sought the consequential setting aside of the WFO. In addition, all eight of the active defendants contended that the WFO fell to be set aside on account of material non-disclosure by Alliance in making its ex parte application to Teare J.

5

Before Burton J Alliance sought additional relief over and above the maintenance of the orders made by Teare J. First, it sought permission to serve amended Particulars of Claim asserting that its claims against the Defendants made in English law by way of conspiracy, dishonest assistance, knowing receipt and unjust enrichment are sustainable, in the alternative, as a matter of and by reference to the law of Kazakhstan. Secondly, recognising that the service upon D3 in London pursuant to a contractual service of process clause could be effective only in respect of the express contractual cause of action to which the agreement to accept service relates, Alliance sought permission to serve D3 out of the jurisdiction in respect of the additional causes of action in tort. No application was made for permission to serve out in respect of the implied contractual claim, whether against D3 or against any other Defendant.

6

Burton J delivered his reserved judgment, [2011] EWHC 3281 (Comm), on 14 December 2011. By his Order made two days later on 16 December 2011 he set aside the permission to serve out of the jurisdiction and, consequentially, the WFO. He also set aside service of the Claim Form and Particulars of Claim on Ds 1–4 and 6–9, the active defendants. His conclusions were broadly as follows:-

i) There is a serious issue to be tried in respect of what I have so far called Alliance's express contractual claims, which are in fact claims pursued by Alliance in right of subrogation against Ds 3, 4, 6, 7, and 8. In reaching the conclusion that these contractual claims have a serious prospect of success against Ds 6, 7 and 8, who were not nominally parties to the contracts, the judge unsurprisingly followed his own decision in Antonio Gramsci Shipping Corporation v Stepanovs [2011] 1 Lloyd's LR 647 to the effect that in analogous circumstances the corporate veil could be pierced and the personal defendants, Ds 6, 7 and 8 shown to have been always themselves party to the contracts which they procured their puppets to conclude.

ii) The judge expressed no view about Alliance's claims pleaded in implied contract, from which I infer that he heard no argument as those causes of action were not relied upon as satisfying the criteria for service out of the jurisdiction.

iii) He held that there is a serious issue to be tried in respect of all of Alliance's non-contractual claims, whether pursued in the English law of tort, equity or unjust enrichment or under the Kazakh Civil Code.

iv) The judge concluded that Alliance is able to bring itself within one or more of the "gateways" set out in Practice Direction 6B paragraph 3.1. Unsurprisingly, he regarded the express contractual claims as falling within paragraph 3.1(6)(c) and (d) since the contracts contained in addition to the English exclusive jurisdiction clause an express choice of English law as the governing law. Although the judge's reasoning on this topic is not entirely clear, he appears also to have concluded that all the remaining non-contractual claims are to be regarded as claims made in respect of those same contracts. He also concluded that in any event all of the Defendants other than D3 were proper parties to the claim against D3, alternatively that all of the Defendants other than Ds 3, 4, 6, 7 and 8 were proper parties to the claims against Ds 3, 4, 6, 7, and 8.

v) Alliance had not established that the English court is clearly and distinctly the most appropriate forum for the resolution of the disputes. Further, insofar as Alliance sought to found jurisdiction for its subrogated express contractual claims in reliance upon terms in those contracts conferring upon the English court exclusive jurisdiction, there existed strong reasons or exceptional circumstances which justified the court in not holding the relevant Defendants to their agreement and in declining to exercise jurisdiction over the claims.

vi) These conclusions rendered it unnecessary for the judge to consider the allegations of material non-disclosure on the ex parte application. He nonetheless addressed the issue to some extent. He concluded that in four respects there had been either non-disclosure or an irregularity which was material to the exercise by Teare J of his discretion but that these went neither to the root of the question whether there was a good arguable case of substantial fraud nor to the risk of dissipation of assets. In the circumstances the judge found it unnecessary to decide whether he would, had the issue been live, either have set aside the orders made by Teare J or, had he done so, re-granted them.

7

In line with his conclusions set out above, the judge also refused the applications of Alliance:-

i) to amend its Particulars...

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