Grupo Torras SA v Sheik Fahad Mohammed Al Sabah
| Jurisdiction | England & Wales |
| Judge | Stuart-Smith,Hobhouse,Millett L JJ. |
| Judgment Date | 26 May 1995 |
| Date | 26 May 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal.
Stuart-Smith, Hobhouse and Millett L JJ.
Gordon Pollock QC, Paul Wright and Andrew Popplewell (instructed by Baker & McKenzie) for the plaintiffs.
Michael Briggs QC (instructed by Peters & Peters) for the fifth to eighth defendants and the twelfth defendant.
Jeffery Onions (instructed by Lawrence Graham) for the thirteenth to twenty-second defendants.
John McCaughran (instructed by Ashurst Morris Crisp) for the first defendant.
Terence Mowshcenson (instructed by Simmons & Simmons) for the third defendant.
The following cases were referred to in the judgment:
Anglo-French Co-operative Society, Re, ex parte PettyELR (1882) 21 ChD 492.
Bumper Development Corp v Metropolitan Police CommrWLR [1991] 1 WLR 1362.
Dalmia Dairy Industries Ltd v National Bank of PakistanUNK [1978] 2 Ll Rep 223.
Dresser UK Ltd & Ors v Falcongate Freight Management Ltd & OrsUNK [1991] 2 Ll Rep 557.
Gubisch Maschinenfabrik KG v Giulio PalumboECAS (Case 144/86) [1987] ECR 4861; [1989] 1 CEC 504.
Neste Chemicals SA & Ors v DK Line SA & Anor (“The Sargasso”)UNK [1994] 2 Ll Rep 6.
Newtherapeutics Ltd v Katz & AnorELR [1991] Ch 226; [1990] BCC 362.
Parkasho v SinghELR [1968] P 233.
Rosier v RottwinkelECAS (Case 241/83) [1986] QB 33.
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami IranELR [1994] 1 AC 438.
Sharif v AzadELR [1967] 1 QB 605.
Tatry v Maciej RatajECAS (Case C-406/92) [1995] CLC 275; [1995] 1 CEC 273.
Webb v WebbECAS (Case 294/92) [1994] ECR 1-1717.
Zelger v SalinitriECAS (Case 129/83) [1984] ECR 2397.
Forum conveniens — Fraudulent conspiracy and breach of duty by directors — Frauds alleged on Spanish company and English subsidiary — Actions started in Spain and England — Multiple parties — Court “first seised”— Whether disputes to be heard in Spain or England — Civil Jurisdiction and Judgments Act 1982, Sch.1 (Brussels Convention), art. 16(2), 21.
This was an appeal from a decision of Mance J in the Commercial Court that proceedings by the plaintiff companies for damages for fraudulent conspiracy and breach of duty by the companies' directors should be tried in England rather than Spain.
The first plaintiff (“Grupo Torras”), a Spanish company, and the second plaintiff (“Torras London”), its English subsidiary, issued a writ on 14 April 1993 in the Commercial Court against certain officers of and professional advisers to the plaintiffs and offshore companies alleged to have been provided by the professional advisers to carry out frauds on the D plaintiffs. The plaintiffs claimed damages for. fraudulent conspiracy and breach of duty by directors of the plaintiff companies and moneys alleged to be due under a constructive trust. The defendants who were domiciled within the jurisdiction were served on 15 April 1993 under art. 2 of the Brussels Convention scheduled to the Civil Jurisdiction and Judgments Act 1982 as amended. Those who were domiciled in other contracting states under the Brussels Convention were served between 21. June and 1 October 1993. The plaintiffs were granted leave on 29 April 1993 under RSC, O. 11, r.1(1)(f) and r. 1(1)(c) to serve E proceedings on the third group of defendants who were domiciled outside any of the contracting states. Proceedings, both criminal and civil, were also commenced in Spain. The civil (“Quail”) proceedings were admitted under Spanish law on 12 May 1993, whereas the criminal proceedings were not admitted until 11 February 1994.
The defendants challenged the jurisdiction of the English court under the Brussels Convention and O.11, arguing that since Grupo Torras had its seat in Spain the Spanish p courts had exclusive jurisdiction under art. 16(2) of the Brussels Convention, that the proceedings involved the same cause of action and the same parties, that the Spanish court was “first seised” and accordingly under art. 21 the English court should decline jurisdiction, and further that under RSC, O.11 Spain was the appropriate forum. Mance J held that art. 16(2)) did not apply, that neither of the Spanish proceedings came within art. 21, that the English court was first seised and that England was the appropriate forum for the trial of the issues. The defendants appealed.
Held, dismissing the appeal:
1. The objective of art. 16(2) of the Brussels Convention was to confer exclusive jurisdiction to decide questions concerning the constitution and management of a company on the courts of the contracting state in which the company had its seat. Whether or not an action fell within art. 16(2) depended upon its subject matter, not on the relationship between the parties. The subject matter of the disputes did not concern any decisions of the plaintiffs' organs within art. 16(2), but frauds practised on the plaintiffs. Accordingly the proceedings fell outside art. 16(2).
2. For the purposes of art. 21 of the convention the court “first seised” was the one before which the requirements for proceedings to become definitively pending were first fulfilled. To determine which court was first seised where multiple parties were involved, a party by party approach was to be adopted: to the extent that any of the parties in the relevant actions were the same, men art 21 applied to those actions insofar as those actions were between those parties and not otherwise. (Zelger v SalinitriECAS (Case 129/83) [1984] ECR 2397 and Tarry v Maciej RatajECAS (Case C-406/92) [1995] CLC 275applied.)
3. The English courts were seised of the action on the dates when the defendants were served, between 15 April and the end of June 1993. The Spanish courts were seised of the Quail action, which concerned the same cause of action and was between the same parties, on 1 October 1993 when the action had been filed, accepted and served. It followed that for the purposes of art. 21 the English courts were first seised. Accordingly the English courts had jurisdiction.
(Delivered by Stuart-Smith LJ)
This action was begun by writ issued on 14 April 1993 in the Commercial Court. The first plaintiff, Grupo Torras SA (“Grupo Torras”) is a Spanish company; the second plaintiff, Torras Hostench London Ltd (“Torras London”), is its English subsidiary. The plaintiffs claim damages for fraudulent conspiracy, moneys alleged to be due under constructive trust, and damages for breach of duty by directors of the plaintiff companies. The personal defendants are officers of or professional advisers to the plaintiff companies; they are said to have engineered or facilitated the frauds. The fifteenth to twentieth defendants are offshore companies provided by the professional advisers for the purpose, it is said, of carrying out the frauds. All but one of the defendants (the second defendant, Robinson), challenged the jurisdiction of the court, seeking to set aside or stay the proceedings under RSC, O.12, r. 8 or pursuant to the inherent jurisdiction. The central question is where should the plaintiffs” claims be tried, in England, as the plaintiffs contend, or in Spain, as the defendants contend. Mance J rejected the challenge of all the defendants, save in the case of the claim of Grupo Torras against Coll & Co Ltd where the proceedings have been stayed pursuant to an arbitration clause. Save for the fourth defendant, Walid Edmond Moukarzel (“Moukarzel”) they have all appealed against the decision of the judge.
The Kuwait Investment Office (“KIO”) is a branch of the Kuwait Investment Authority established in Kuwait and has as its function the management of investment of funds belonging to the Government of Kuwait. KIO is based in London. It has a number of subsidiary companies in various parts of the world, including, through the medium of holding companies, Koolmees Holdings BY (“Koolmees”) and Kokmeeuw Holdings BV (“Kokmeeuw”) both Dutch companies which owned shares in Grupo Torras.
Grupo Torras is incorporated in Spain and is indirectly controlled by KIO. Through subsidiary companies it operated in various sectors of the Spanish economy. Since 10 December 1992 it has been in a state of suspension of payments under Spanish law. Torras London is a wholly owned subsidiary of Grupo Torras; at the material time it was substantially managed from Spain.
The first defendant, Sheikh Fahad Mohammed Al Sabah was until 8 April 1992, the chairman of KIO. Until 26 May 1992 he was the chairman of Koolmees and Kokmeeuw and a director and president of Grupo Torras. He was served with the proceedings under RSC, O. 11 in the Bahamas; but the judge held that he was domiciled in England and could have been served in England. He was represented both before Mance J and in this court by Mr McCaughran.
Messrs de la Rosa, Soler, Nunez, de Mir and Pique were together referred to as the “Spanish defendants”, being domiciled in Spain. At the material time, Mr de la Rosa was a director and vice-president of Grupo Torras. Mr Soler was director of finance and alleged to have been the most senior and active individual controlling Grupo Torras and Torras London's business. He was a director of Torras London. Mr Nunez was the managing director of Grupo Torras. Mr de Mir was a director of Grupo Torras and is said to have worked closely with Mr de la Rosa. Mr Pique is a lawyer who was the company secretary of Grupo Torras until 26 May 1992. Before Mance J the “Spanish defendants” were represented by Lord Irvine QC and Mr Briggs QC and on appeal to this court by Mr Briggs.
Mr Robinson, Mr Jaffar and Mr Moukarzel were domiciled in England. Mr Jaffar was deputy chairman and general manager of KIO until 20 April 1990, a director of Koolmees and Kokmeetiw until 15 March 1990, and at all material times vice-president and a director of Grupo Torras. He was not separately represented on the appeal but adopted the submissions of the other appellants.
Mr Folchi is a Spanish lawyer domiciled in Spain. He is said to...
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