Vincent Aziz Tchenguiz and Others v Kaupthing Bank HF and Another

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Briggs,Lord Justice Sales,Lord Justice Henderson
Judgment Date03 March 2017
Neutral Citation[2017] EWCA Civ 83
Docket NumberCase No: A3/2015/2509

[2017] EWCA Civ 83




Mrs Justice Carr, DBE


Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Briggs

Lord Justice Sales


Lord Justice Henderson

Case No: A3/2015/2509

Vincent Aziz Tchenguiz & Ors
(1) Kaupthing Bank HF
(2) Johannes Runar Johannsson

Christopher Hancock QC, Jonathan Crystal, David Caplan and Charlotte Tan (instructed by McGuire Woods London LLP) for the Appellants

Robert Miles QC, Jeremy Goldring QC and Tom Gentleman (instructed by Travers Smith LLP and Clifford Chance LLP) for the Respondents

Hearing dates: 1 and 2 February 2017

Approved Judgment

Lord Justice Briggs

This appeal concerns the relationship between two groups of mutual arrangements ("Instruments") between European states relating to aspects of jurisdiction, recognition, enforcement of judgments and applicable law in connection with civil, commercial and insolvency proceedings. The first group (which I will call "Jurisdiction Instruments") seek to establish a common basis for the allocation of jurisdiction in civil and commercial matters between the courts of the participating Member States, as the basis for the mutual recognition and enforcement throughout the Member States of the judgments in those matters given by the court or courts to which jurisdiction is allocated. They have a common ancestry in the 1968 Brussels Convention, and in their current form consist now of the Judgments Regulation (EU) No.1215/2012 between the Member States of the EU, and the Lugano Convention signed on 30 th October 2007, which applies across the slightly wider membership of the European Economic Area ("EEA").


The second group of Instruments (which I will call the "Insolvency Instruments") operate within the field of what is commonly called cross-border insolvency, by establishing a common scheme for the allocation of jurisdiction, recognition and applicable law in relation to bankruptcy, winding-up and analogous insolvency proceedings. The Insolvency Regulation (EC) Regulation No. 1346/2000 applies within the EU, in relation to cross-border insolvency generally, but excluding the insolvency of certain financial institutions, including credit institutions. The Directive No. 2001/24/EC on the reorganisation and winding up of credit institutions ("the Winding-up Directive") establishes a similar, but more rigorous, common scheme in relation to the reorganisation and winding up of credit institutions throughout the EEA.


The particular relationship which calls for examination on this appeal is that between the Lugano Convention and the Winding-up Directive, although substantially the same issues may arise as between the Judgments Regulation and the Insolvency Regulation. The issues for determination on this appeal have arisen in the following way. On 27 November 2014 Mr Vincent Tchenguiz and three associated entities issued High Court proceedings in England claiming damages for the tort of unlawful means conspiracy against five defendants, the fourth of which was Kaupthing Bank HF, an Icelandic Bank by then the subject of winding up proceedings in Iceland, which is a member of the EEA, although not a member of the EU. It was decided by the judge, Carr J, and is now common ground, that the English court has jurisdiction under the Lugano Convention in relation to that claim, against all the defendants. The first defendant, Grant Thornton UK LLP is domiciled in England, as are the second and third defendants, Messrs Akers and Hamedani, partners in Grant Thornton. The fourth defendant is Kaupthing and the fifth defendant, Mr Johannsson, was an Icelandic domiciled member of Kaupthing's Winding-up Committee. The harmful events are alleged to have taken place in England. Thus, Articles 2, 5.3 and 6.1 of the Lugano Convention together confer jurisdiction on the English courts. Since there is no lis alibi pendens in the courts of any other Member State, the English courts are the only courts with jurisdiction in relation to the claim under the Lugano Convention.


The fourth defendant Kaupthing Bank HF ("Kaupthing") was until 2008 the largest bank in Iceland. It is a credit institution within the meaning of Article 1 of the Winding-up Directive. Winding-up proceedings (within the meaning of Article 2) were instituted in Iceland, by means of a moratorium order made by the District Court of Reykjavik on 24 November 2008 and a winding-up Order on 22 November 2010. It is common ground that Iceland is the "home Member State" for all purposes connected with the application of the Winding-up Directive to Kaupthing. It is therefore also common ground that Icelandic insolvency law is the law applicable to the winding-up of Kaupthing within the meaning of Article 10 of the Winding-up Directive, so as to determine in particular the "effects of winding-up proceedings on proceedings brought by individual creditors" under Article 10.2(e), and that Mr Tchenguiz's English conspiracy proceedings are proceedings brought by him as an individual creditor of Kaupthing.


The judge decided, but it remains in issue on this appeal, that the effect of Icelandic insolvency law was to prohibit the bringing of the Appellants' claims by proceedings against Kaupthing in any court within the EEA at any time after the commencement of its winding-up, to require creditors' claims to be submitted to Kaupthing's Winding-up Committee, and for disputes about them to be determined by the District Court in Reykjavik. It followed that, although the Lugano Convention conferred jurisdiction on the English courts in relation to the Appellants' conspiracy claims against all the defendants, including Kaupthing, their pursuit of that claim in the English courts against Kaupthing contravened Icelandic insolvency law, applicable throughout the EEA, including England, and she therefore dismissed the claim against Kaupthing. It continued against the other defendants, including Mr Johannsson, for whose alleged participation in the conspiracy Kaupthing is said to be vicariously liable. I should add that all the allegations of wrongdoing by the defendants are vigorously denied, and that the merits of the dispute remain to be determined.


The Appellants' case on this appeal falls into two main parts. First, it is said that the judge's conclusion involved a mis-reading of the Winding-up Directive. On its true interpretation, its provisions for identifying applicable law were not designed to go so far as to negate the allocation of jurisdiction in relation to a civil or commercial matter achieved by the Lugano Convention. The Winding-up Directive should be read as subject to an implied limitation to that effect.


The second part of the Appellants' case asserts that, even if the Winding-up Directive may have that effect, the provisions of Icelandic bankruptcy law did not in fact do so, being limited in scope purely to domestic effect within the territory of Iceland.


Of these two parts of the Appellants' case, the first is much the more important, and took up most of the argument. It was submitted for the Appellants that its resolution would require a reference to the Court of Justice. There is also a free standing appeal on costs, with which I deal at the end of this judgment.

The Relevant Texts

The Lugano Convention


The Preamble contains the following recitals:

"Determined to strengthen in their territories the legal protection of persons therein established.

Considering that it is necessary for this purpose to determine the international jurisdiction of the courts, to facilitate recognition, and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements."


Under the heading "Scope", Article 1 provides, so far as is relevant, as follows:

"1. This Convention shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

2. The Convention shall not apply to:

a) …

b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

c) …"

Under "Jurisdiction", Article 2 provides:

"1. Subject to the provisions of this Convention, persons domiciled in a State bound by this Convention shall, whatever their nationality, be sued in the courts of that state.

2. …"

Under "Special Jurisdiction", Article 5 provides:

"A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued:

3. In matters relating to tort, delict or quasi-delict, in the courts for the place where a harmful event occurred or may occur;"

Article 6 provides:

"A person domiciled in a State bound by this Convention may also be sued:

1. Where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims 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;"

The Insolvency Regulation


Although not directly applicable, the following provisions of the Insolvency Regulation are material, both because they contain text substantially the same as that in the Winding-Up Directive which has been interpreted in relevant authorities, and because, as a whole, the Insolvency Regulation is part of the framework within which the Winding-Up Directive needs to be read and understood.


The Insolvency Regulation contains the following relevant recitals:

"(6) In accordance with the principle of proportionality this Regulation should be confined to provisions governing jurisdiction for opening insolvency...

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