Sarrio SA v Kuwait Investment Authority
| Jurisdiction | UK Non-devolved |
| Judge | LORD GOFF OF CHIEVELEY,LORD LLOYD OF BERWICK,LORD HOPE OF CRAIGHEAD,LORD CLYDE,LORD SAVILLE |
| Judgment Date | 13 November 1997 |
| Judgment citation (vLex) | [1997] UKHL J1113-1 |
| Date | 13 November 1997 |
| Court | House of Lords |
[1997] UKHL J1113-1
Lord Goff of Chieveley
Lord Lloyd of Berwick
Lord Hope of Craighead
Lord Clyde
Lord Saville
HOUSE OF LORDS
My Lords,
I have had the advantage of reading a draft of the speech prepared by my noble and learned friend Lord Saville. For the reasons he gives, I too would allow this appeal.
My Lords,
I have had the advantage of reading a draft of the speech prepared by my noble and learned friend Lord Saville. For the reasons he has given, I too would allow this appeal.
My Lords,
I have had the advantage of reading a draft of the speech prepared by my noble and learned friend Lord Saville. For the reasons he has given, I too would allow this appeal.
My Lords,
I have had the advantage of reading a draft of the speech of my noble and learned friend Lord Saville. For the reasons he has given, I too would allow this appeal.
My Lords,
The respondent is a Spanish company carrying on the business of manufacturing and marketing cardboard in Spain. In February 1991 it agreed to sell its special paper business (including certain factory premises) to a company called Torraspapel S.A. This company was a subsidiary of Grupo Torras S.A. as were two other companies called respectively Prima Immobiliara S.A. and Ebro Agricolas S.A. All these four companies were also Spanish.
Under the agreements for this sale (to which Grupo Torras was a party as well as Torraspapel) part of the consideration consisted of a payment of Ptas. 36,600m. into a bank account, out of which the respondent would immediately use Ptas. 29,600m. to acquire shares in Torraspapel, Ebro and Prima. However the respondent was given a put option (which it later exercised) to require Grupo Torras to buy from it the shares in Torraspapel and to pay for them in three instalments spread over the following three years.
In December 1992 Grupo Torras went into "suspension de pagos" (a form of insolvency procedure) leaving substantial amounts unpaid under the exercised put option. Two months later the respondent started proceedings in Spain against the appellant and others in which it claimed that the appellant (a Kuwaiti legal entity) was liable for these amounts. The claim is based upon allegations that the appellant (who was indirectly the majority shareholder in Grupo Torras) was the "decision centre" of this company, that there was a "confusion of assets" between them, and that the appellant undercapitalised this company and wrongfully abused its legal entity, causing damage to its creditors. It appears to be common ground that if the respondent can establish these matters, then as a matter of Spanish law it will be entitled to recover the amounts in question from the appellant. In an endeavour to do so, the respondent has made detailed allegations relating not only to the general corporate structure of Grupo Torras and its subsidiaries, but also to how and by whom on behalf of the appellant and others it is said that the negotiations for the sale of the special paper business were conducted.
While these Spanish proceedings were pending the respondent also started English proceedings against the appellant, claiming damages for negligent misrepresentations alleged to have been made on its behalf to the respondent during the course of these negotiations, which the respondent contends induced it to enter into the sale. In essence the respondent alleges that in those negotiations the appellant misstated the value and prospects of Prima and also falsely asserted that its clear policy was to stand behind its investments and provide funding where necessary. The respondent relies, among other things, upon the subsequent disastrous fall in the price of both the Prima and the Ebro shares, upon the insolvency of Grupo Torras and upon what it says is the self-evident failure of the appellant to stand behind its investment in these companies as demonstrating the falsity of the representations.
The appellant resisted these English proceedings on a number of procedural grounds. One of these, and the only one which is of relevance to this appeal, is the submission that the proceedings fall within the provisions of article 22 of the amended Brussels Convention, incorporated into our law by the Civil Jurisdiction and Judgments Act of 1982.
Article 22 is in the following terms:-
"Where related actions are brought in the courts of different contracting states, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings.
"A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions.
"For the purposes of this article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
It is common ground that if these two actions are related then the Spanish court is to be regarded as the court "first seised" for the purposes of this article. The essential dispute between the parties is whether the actions are related, and the debate has concentrated on whether there is a risk of irreconcilable judgments resulting from the two sets of proceedings. Mance J. in the Commercial Court considered that there was and stayed the English proceedings. The Court of Appeal (Evans, Peter Gibson and Brooke L.JJ.) took the opposite view and lifted the stay. The matter now comes before your Lordships.
In his judgment in the Court of Appeal (reported at [1997] 1 Lloyd's Rep. 113), Evans L.J. (with whom the other members of the court agreed) considered the approach of the European Court (including the opinion of the Advocate General) in The Maciej Rataj [1994] E.C.R. I-5439 and concluded that the issues which must be considered in order to decide whether or not there was a risk of irreconcilable judgments were:
"the issues of fact or law which have to be decided in order that the court can reach its judgment in the particular case. These can be described as 'primary' issues and they are limited to those facts which are necessary to establish a cause of action…. The court's decisions on these primary issues represent the process of 'reasoning' upon which its judgment...
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