Sarrio SA v Kuwait Investment Authority [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mance J. |
| Judgment Date | 12 October 1995 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 12 October 1995 |
Queen's Bench Division (Commercial Court).
Mance J.
Charles Hollander (instructed by Linklaters & Paines) for the plaintiff.
Andrew Popplewell (instructed by Baker & Mckenzie) for the KIA.
The following cases were referred to in the judgment:
De Dampierre v de DampierreELR [1988] AC 92.
Gascoine v Pyrah (unreported, 13 November 1991, R Southwell QC).
Grupo Torras SA v Sheikh Fahad Mohammed Al Sabah [1995] CLC 1,025.
Gubisch Maschinenfabrik v PalumboECAS (Case 144/86) [1987] ECR 4861.
Harrods (Buenos Aires) Ltd, ReELR [1992] Ch 72.
Kuwait Airways Corp v Iraqi Airways Co [1995] CLC 1065; [1995] 1 WLR 1147.
Overseas Union Insurance Ltd v New Hampshire Co LtdUNK [1992] 1 Ll Rep 204.
Owens Bank Ltd v BraccoELR [1994] QB 509.
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami IranELR [1994] 1 AC 438.
Spiliada Maritime Corp v Cansulex Ltd (“The Spiliada”)ELR [1987] AC 460.
Tatry v Maciej RatajECAS (Case C-406/92) [1995] CLC 275.
Jurisdiction — Forum Conveniens — Sale of Paper Business to Subsidiary Company — Both Parties Spanish Companies — partial Payment When Purchaser Insolvent — Claim for Negligent Misstatement Against Kuwaiti Controlling Company in London — Spanish Proceedings begun before English Writs Issued — Whether English proceedings Ought to be Stayed or Dismissed — Civil Jurisdiction and Judgments Act 1982, Sch. 1 (Brussels Convention), art. 21, 22.
These were applications to strike out write on the ground, inter alia, of lack of jurisdiction under art. 21 or 22 of the Brussels Convention.
The plaintiff, a Spanish company, agreed on 7 February 1991 to sell its special paper business for Pts 43,600m to Torraspapel SA (“Torraspapel”), a subsidiary of Grupo Torras SA (“GT”), a company indirectly controlled by the Kuwait Investment Authority (“KIA”). By the agreement the plaintiff was to receive a transfer of business and assets of Pts 400m, cash of Pts 3,000m and a cash credit of Pts 36,600m, with Pts 29,600m of which the plaintiff was to purchase shares in Torraspapel and two other GT subsidiaries (“Ebro” and “Prima”). The plaintiff was given a put option to require GT to buy the shares in Torraspapel from the plaintiff for Pts 12,000m, which it exercised on 12 December 1991. Having become insolvent, GT went into suspension of payments on 4 December 1992, Prima went into receivership on 13 December 1992 and Ebro's market value fell sharply. The plaintiff had received for the sale of its paper business, which it valued at Pts 43,600m, only Pts 10,000m in cash and plant valued at Pts 4,000m under the original agreements and. Pts 4,406m under the put option.
On 9 February 1993 the plaintiff began civil proceedings against the KIA in Madrid to recover sums GT failed to pay under the put option. The proceedings were admitted on 15 February 1993 and served on the KIA in London on 12 March 1993. By writs dated 8 February 1994 and 14 August 1995 the plaintiff claimed damages in tort against the KIA for negligent misstatements which induced the plaintiff to enter into a contract with companies controlled by the KIA for the sale of the plaintiffs special paper business. The Spanish court was accordingly first seised of its proceedings within art. 21 and 22 of the Brussels Convention.
Three attempts to serve the writs were made. The first was delivery to a security guard at KIA offices in London on the basis that KIA was an oversea company within s. 695 of the Companies Act 1985 and therefore service was in conformity with RSC, O. 65, r. 3(1). The second was in Kuwait with leave granted under O.11, r. l(1)(f). The third was by post to the general manager of KIA's London office on the basis that KIA was a body corporate within O. 65, r. 3(2). The KIA applied for declarations that the write had not been duly served and that the proceedings should be struck out for want of jurisdiction. KIA conceded that it was not a state and therefore service in Kuwait was not required.
Held, ruling accordingly:
1. Where a defendant was not domiciled within a contracting state to the Brussels Convention, art. 4 provided that jurisdiction depended on national rules. When the alternative forum was in a contracting state, an English court would consider under art. 4 whether England was the proper forum unless it would be obligatory or appropriate under art. 21–23, as the court second seised, to decline or stay its jurisdiction.
2. It followed that it was open to the KIA to question the appropriateness of England as a forum for the trial of the actions, but if under art. 21 or 22 the English court would anyway decline or stay its jurisdiction, it was immaterial to consider whether England would otherwise be appropriate or inappropriate.
3. Since the English and Spanish proceedings did not have the same cause of action, nor the same object, art. 21 did not apply.
4. For the purposes of art. 22, there was a risk of irreconcilable judgments if the two sets of proceedings continued, because of the overlap of issues concerning the exercise of control by KIA over the Spanish companies and the details of the sale agreement. The two sets of proceedings were so closely connected that it was expedient to hear and determine them together to avoid that risk. (Tatry v Maciej RatajECAS(Case C-406/92)[1995] CLC 275applied.)
5. The fact that the Spanish proceedings would continue in any event and the desirability that the common issues should be finally determined in one set of proceedings outweighed any considerations based on connection which might otherwise point towards England as an appropriate forum. In all the circumstances it was appropriate for the court to stay the English proceedings.
Mance J:
The plaintiff (“Sarrio”) has brought two identical actions against the defendant, the Kuwait Investment Authority (“the KIA”), in this country. The writs are dated 8 February 1994 and 14 August 1995 and they claim damages in tort for negligent misstatement made orally in about December 1990. Sarrio's case is that misstatements by or on behalf of the KIA induced it to enter into a contract with companies controlled by the KIA for the sale of Sarrio's special paper business. The damages claimed consist of loss allegedly resulting.
The KIA, by applications dated 18 March 1994 and 31 October 1994 in the first action and 8 September 1995 in the third action, all under RSC, O. 12, r. 8, now seeks declarations that the writs have not been duly served and that the court has no jurisdiction in respect of the actions and orders that the proceedings be struck out, dismissed or stayed or that jurisdiction be declined. That there are two separate actions and three applications under O. 12, r. 8 is a response to attempts to serve the KIA by three different routes. In the first action, the first attempt was by delivery to a security guard at offices used by the KIA at St Vedast House, Cheapside, London EC2 on 18 February 1994 on the basis that the KIA was an overseas company within Companies Act 1985 s. 695 and that RSC, O.65, r. 3(1)allowed such service. The second took place in Kuwait on 24 July 1994 pursuant to leave granted under O. 11, r. l(1)(f) and r. 7 by Cresswell J on 26 March 1994; this leave was sought by Sarrio as a fall-back to meet a claim by the KIA to sovereign status (which Sarrio submitted and submits to be ill-founded). The third attempt was in the second action (issued for the purpose) by sending the writ by post to the general manager of the KIA's London office at St Vedast House in August 1995 on the basis that the KIA is a body corporate within O. 65, r. 3(2).
The background to the actions and applications is as follows. The KIA was established by decree (Law No. 47 of 1982) issued by the Emir of Kuwait. Three translations were put before me. In that prepared by the Ministry of Justice of Kuwait, the first two articles of this decree read:
“1. An independent public authority with an autonomous status, called the Public; Investment Authority is to be set up and placed under the overall charge of the Minister of Finance. The authority shall be located in the state of Kuwait and may set up offices outside the state of Kuwait.
2. The objective of the authority is to manage the investment of the State's Reserve Fund and the amounts allocated for the Future Generations Reserve Fund in the name and account of the government of Kuwait, and also of other funds entrusted for management to the authority by the Minister of Kuwait.”
St Vedast House is an office, such as contemplated by art. 1. It is occupied in the name of the Kuwait Investment Office (“the KIO”), which is simply an office and part of the KIA. The KIA through the KIO has numerous subsidiary companies, through some of which it at the material time indirectly controlled a Spanish company called Grupo Torras SA (“GT”) and its subsidiaries, including a company involved in the paper/ packaging business, Torraspapel SA (“Torraspapel”) and two other companies, Ebro Agricolas SA (“Ebro”) and Prima Immobiliara SA (“Prima”). Sarrio is a Spanish company represented at the material time by a Dr Bonomij who shortly, afterwards became its chairman. In late 1990 the idea developed that Sarrio would dispose of its special paper business. Agreements were eventually executed on 7 February 1991 whereby, in summary, Sarrio agreed to sell and Torraspapel to buy that business, including various factory premises, at a price stated to be Pts 43,600m, to be satisfied:
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(1) as to Pts 36,600m by cash credit to an account at Banco Hispano Americano out of which Sarrio would immediately expend Pts 29,600m to acquire shares in Torraspapel for Pts 15,000m, in Ebro for Pts 7,300m and in Prima for a further Pts 7,300m;
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(2) as to Pts 4,000m by transfer by Torraspapel to Sarrio of the former cardboard making business and assets (save finished products) at Almazan; and
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(3) as to Pts 3,000m in cash.
Sarrio was...
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