Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd & others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Stanley Burnton,Lord Justice Moore-Bick |
| Judgment Date | 02 July 2010 |
| Neutral Citation | [2010] EWCA Civ 753 |
| Docket Number | Case No: A3/2009/1941 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 July 2010 |
[2010] EWCA Civ 753
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Hon Mr Justice Blackburne
Before: Lord Justice Mummery
Lord Justice Moore-Bick
and
Lord Justice Stanley Burnton
Case No: A3/2009/1941
HC08C01562
Mr John Brisby QC &Mr Tom Gentleman (instructed by Osborne Clarke) for the Appellant
Mr Ali Malek QC &Mr Cyril Kinsky QC (instructed by Edwin Coe LLP) for the Respondents
Hearing dates : 23 rd &24 th March 2010
Approved Judgment
Lord Justice Mummery:
Introductory
This contested application for a stay of proceedings lasted for 6 days in front of Blackburne J in May 2009. The key question for him was whether tortious and restitutionary claims under Ukrainian law arising out of a bitter struggle for control of a valuable stake in the celebrated Ukrainian Dynamo Kiev Football Club (the Club) should be permitted to go to trial in the English Courts. That turned on whether the interests of justice constitute special circumstances requiring a trial in the English courts of claims for which the Courts of Ukraine are accepted to be the natural forum.
On 24 July 2009 the judge ordered a stay. He held that England is not the proper place for the trial of the claims made against the defendants by Pacific International Sports Club Limited (Pacific). Pacific appeals. On the appeal Pacific issued an application for permission to adduce further evidence in the form of a second witness statement of Mr Grigorishin dated 5 February 2010 with exhibits. Although the defendants did not object, they denied that the further evidence would have had an important influence on the outcome of the hearing below, or that it would affect this appeal, or that it satisfied other requirements for the grant of permission to adduce fresh evidence on appeal.
Pacific's claim was originally for “damages in relation to a tortious conspiracy to injure the Claimant perpetrated by the Defendants.” In the Particulars of Claim, as amended pursuant to permission granted by Blackburne J at the hearing of the stay application, Pacific sought damages under the Civil Code of Ukraine for alleged tortious conspiracy to injure (Articles 13, 16 and 1190) and restitutionary remedies for unjust enrichment at Pacific's expense (Articles 1212 to 1215). Those claims are based on the defendants' alleged actions in taking a series of steps that intentionally diluted Pacific's 18% stake in the Club. Pacific's stake in the Club was ultimately extinguished. It has received no compensation for the removal and loss at a meeting in June 2002, of which it had no notice, of its pre-emption share purchase rights under the Club's charter. They were exercisable in the event of a proposed transfer of shares by an existing shareholder. The result was that Pacific was subsequently unable to prevent transfers of shares and rights issues in the Club in August 2004, or changes to its charter, structure and organisation in order to squeeze Pacific out of the Club. Pacific claims that it has suffered other wrongs at the hands of Mr Surkis and his co-defendants. Blackburne J expressed no view on the legal or factual merits Pacific's claims which are disputed by the defendants. He made no order granting summary judgment to the defendants or striking out the claims against them. He simply said that, if it had been necessary for him to express a view, he would not have dismissed the claims as disclosing no reasonable cause of action under Ukrainian law.
The principal parties, their claims, their defences and the events that have generated this litigation have no connection with England, its laws or its judicial system. Pacific itself is registered in Mauritius. Mr Konstantin Grigorishin, a substantial Russian businessman with many interests in Ukraine, controls and beneficially owns Pacific. His case for involving the English courts in the resolution of Pacific's claims is that it is necessary in the interests of justice, as a fair trial of the claims in the courts of Ukraine is impossible.
The second and main defendant is Mr Igor Surkis, who owns a large number of shares in the Club. He is a prominent Ukrainian citizen with considerable political influence. He is also a substantial business man in control of the co-defendant BVI companies, which are past or current shareholders in the Club. His case is that the court should not allow Pacific's claims to proceed in England and that an order of 20 October 2008, giving Pacific permission to serve the proceedings on the BVI companies out of the jurisdiction, should be set aside, as should the service effected on them at their shared registered office. There are other defendants who have not been served and have played no part in the appeal.
The only possible connection between the claims and this jurisdiction is that an English registered company controlled by Mr Surkis, Soccer Marketing International Limited (SMI), has been joined as a defendant, was served with the proceedings on 9 October 2008 and has unsuccessfully applied to strike them out or to have them stayed. SMI is not a party to the appeal, because it is now accepted by SMI that the claims against it for conspiracy can proceed in the English courts and cannot be stayed. Pacific's position is that the total extent of the SMI/English connection is tiny and that, in so far as SMI has carried on business, it has done so in Ukraine or at any rate outside the jurisdiction of the English courts.
The salient facts about SMI are that for about three years between December 2001 and September 2004 Mr Surkis had an interest, via SMI, in 400 shares held by it in the Club. Pacific denies that it knew about the transfer of shares made by Mr Surkis's company, Newport Management Company, to SMI. Although SMI was dissolved on 18 December 2007, it was, on Pacific's application, subsequently restored to the register on 1 August 2008, shortly after the claim form was issued and so that it could be sued in this action. SMI has no realisable assets. The judge described Pacific's joinder of SMI as a device to found jurisdiction for the service of foreign defendants (i.e. the BVI companies) as necessary or proper parties to this action.
As for Mr Surkis, he was personally served with proceedings on 25 November 2008 while on a short visit to England to watch the Club's team play in a football match. On forum non conveniens grounds the judge stayed Pacific's claims against him. Blackburne J also ordered the setting aside of both the order of Master Price dated 20 October 2008 granting permission to serve the defendant BVI companies (4 th to 8 th defendants) out of the jurisdiction and the service of the claim form on them at their registered office. On this appeal it is common ground that, if the proceedings against Mr Surkis were properly stayed, the judge's orders relating to the BVI companies must also stand.
The judgment
The judge's orders followed from his finding that Pacific had not made out a case that it would be unjust if it had to litigate its claims in the naturally appropriate forum, the courts of Ukraine. In support of that conclusion an impressively meticulous judgment ( [2009] EWHC 1839(Ch)) set out in detail the factual background, the nature of the claims, the applicable law, the location of the witnesses and documents, the conduct of the parties, the pros and cons of the logistics of a trial in Ukraine and in England, the evidence of both general and particular shortcomings of the Ukrainian judicial system, the rival legal submissions and other relevant circumstances of the case.
Many of the facts concerning the jurisdiction and discretion of the court were common ground: the individual defendants live in Ukraine; the relevant events took place in Ukraine; those events related to the corporate affairs of the Ukrainian company which owns the Club, and are governed by Ukrainian law; the witnesses and the relevant documents, which are in Ukrainian, are located in Ukraine; the claims raise points of Ukrainian law on which the expert witnesses are divided; and several disputes between the principal parties have already been litigated in the Ukrainian courts.
As for the perceived defects in the Ukrainian judicial system, there was no shortage of evidence. The disagreement is about the cogency of Pacific's evidence of bias, improper influence, political interference and corruption as impediments to getting justice in the Ukrainian courts. There is a specific dispute about the extent to which Pacific's attempts to litigate its claims in Ukraine may have been prejudiced by improper pressure on, or influence of, members of the judiciary.
The parties are in agreement about the legal principles as laid down in Spiliada Maritime Corporation v. Cansulex Ltd [1987] 1 AC 460 at 476 to 478 and 480 to 481. They disagree about how the principles should be applied to the particular facts. The judge's summary of the law on stay and service out of the jurisdiction, which has not been criticised by either side, supplies succinct guidance —
“31. … First, in a stay case the court already has jurisdiction and the issue is why the court should not exercise that jurisdiction. In addressing that issue, the court must first consider whether there is a forum outside England which is the appropriate forum. If there is, the court will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. The burden of proving that there is a forum outside England which is the appropriate forum rests on the defendant. In a stay case, if the court is satisfied that the prima facie appropriate forum...
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