Vincent Aziz Tchenguiz and Others (Respondents/Claimants) v Grant Thornton UK LLP and Others (4) Kaupthing Bank HF and Another (Applicants/Defendants) William Procter (Third Party)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mrs Justice Carr DBE,Mrs Justice Carr DBE |
| Judgment Date | 01 July 2015 |
| Neutral Citation | [2015] EWHC 1864 (Comm) |
| Docket Number | Case No: 2014 Folio 1434 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 July 2015 |
[2015] EWHC 1864 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mrs Justice Carr DBE
Case No: 2014 Folio 1434
and
Mr Romie Tager Q.C., Mr Jonathan Crystal and Miss Samantha Knights (instructed by McGuireWoods London LLP) for the Respondents/Claimants
Mr Robert Miles Q.C., Mr Jeremy Goldring Q.C. and Mr Tom Gentleman (instructed by Travers Smith LLP) for the Applicants/Fourth and Fifth Defendants
Hearing dates: 9th, 10th, 11th June 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A. Introduction
This is an application brought pursuant to CPR 11 by the Fourth Defendant, Kaupthing Bank hf ("Kaupthing"), and the Fifth Defendant, Jóhannes Rúnar Jóhannsson ("JJ"), (together "the Applicants"), seeking dismissal or a stay of proceedings brought against them by the First Claimant, Vincent Aziz Tchenguiz ("VT"), and others. VT is a well-known businessman and investor in the property industry. The Second Claimant, Rawlinson & Hunter Trustees S.A., is a company incorporated in Switzerland and trustee of a British Virgin Island trust, the Tchenguiz Family Trust ("the TFT"), of which VT is a beneficiary. The remaining claimants are entities associated with VT and the TFT. VT is a former customer of Kaupthing.
The First Defendant, Grant Thornton UK LLP ("GT"), is an accountancy firm. The Second Defendant, Stephen Akers ("SA"), and the Third Defendant, Hossein Hamedani ("HH"), are and were at all material times both partners in GT.
Kaupthing is now an insolvent Icelandic bank. It was established in 1982 and became licensed as a commercial bank in 2002 by the Financial Supervisory Authority of Iceland ("the FME"). It also provided integrated financial services to companies, institutional investors and individuals. Prior to October 2008 it was the largest bank in Iceland.
Kaupthing and its main foreign subsidiaries experienced financial difficulties during the international liquidity crisis in around 2008, with those difficulties becoming severe in October 2008 when one of its most significant (English) subsidiaries went into administration. The FME appointed a Resolution Committee to take over the responsibility for the bank, replacing the board of directors. Kaupthing was then made the subject of insolvency winding-up proceedings in Iceland, the Icelandic Court, specifically the District Court of Reykjavik, making a Moratorium Order on 24 th November 2008 and a winding-up Order on 22 nd November 2010 pursuant to the Icelandic Financial Undertakings Act 2003 ("the FUA"). The Icelandic Court declared that the winding-up proceedings are deemed to have been in effect as of 22 nd April 2009. Kaupthing was under the control of the Resolution Committee until 1 st January 2012 and since then of a Winding-up Committee. GT was instructed in late 2008 to assist Kaupthing in certain investigations into lending and the recovery of assets.
JJ is an Icelandic lawyer who was a member of Kaupthing's Resolution Committee and then of its Winding-up Committee.
The present proceedings were commenced on 27 th November 2014, without any letter before action, but nevertheless accompanied by a full press release on behalf of the Claimants. Service on the Applicants was effected the next day (out of the jurisdiction in Iceland). CPR 6.33(1)(b)(i) was relied on to the effect that permission to serve out of the jurisdiction was not required. CPR 6.33(1)(b) provides materially:
" 6.33(1) The claimant may serve the claim form on the defendant out of the United Kingdom where each claim against the defendant to be served and included in the claim form is a claim which the court has power to determine under the [Civil Jurisdiction and Judgments Act 1982] or the Lugano Convention and –
b)(i) the defendant is domiciled in the United Kingdom or in any Convention territory…"
The Applicants acknowledged service on 19 th December 2014 indicating an intention to contest jurisdiction. The present application was duly issued on 15 th January 2015. Repleaded Particulars of Claim were served on 3 rd March 2015.
Understandably, none of the other Defendants, all resident in England, challenge jurisdiction. They have served a substantive Defence and Counterclaim (on 12 th May 2015), denying all allegations of wrongdoing.
Kaupthing, however, seeks dismissal or stay of the proceedings against it on two independent grounds, and JJ on one of those grounds:
a) the insolvency ground: it is said that that the Claimants are barred from bringing the proceedings against Kaupthing under Icelandic law, which has effect in England under the Credit Institutions (reorganisation and winding-up) Regulations 2004 ("the 2004 Regulations"). For the avoidance of doubt, this ground relates to and can avail only Kaupthing. Further, Kaupthing's case proceeds for this purpose on the assumption that, contrary to its case set out below, the English Court has territorial jurisdiction over the proceedings against it by virtue of the Lugano Convention;
b) the jurisdiction ground: it is said that, in any event, the English Court has no jurisdiction under the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters ("the Lugano Convention") because the proceedings fall within the scope of the exception in Article 1(2)(b) of the Lugano Convention. This ground relates to both Kaupthing and JJ. Thus the basis for service out of the jurisdiction relied upon by the Claimants, namely CPR 6.33-++(1)(b), falls away.
The parties have adduced factual evidence as follows:
a) for the Applicants: a statement from JJ dated 15 th January 2015 and from the Applicants' solicitor, Mr Stephen Paget-Brown, dated 26 th March 2015; for the Claimants: a statement from their solicitor, Mr Hardeep Nahal, dated 27 th February 2015;
and written expert evidence of Icelandic law as follows:
a) for the Applicants: Eiríkur Thorláksson. Mr Thorláksson practises in the fields of commercial, corporate and insolvency law, and is an assistant professor teacher in insolvency law, private international law and commercial law at Reykjavik University;
b) for the Claimants: Gísli Hall. Mr Hall is a partner at Jonsson & Hall Law Firm. The bulk of his practice since 2008 has been advising and litigating on issues involving financial undertakings and their relationship with customers, individuals and companies.
B. The claims
The claims arise out of the individual defendants' alleged involvement in the investigation by the Serious Fraud Office ("the SFO") into VT and associated entities, which resulted in a raid and VT's arrest in March 2011, and the continuing investigation thereafter. The investigation continued until June 2012.
The Claimants allege that the individual defendants committed the following torts: malicious prosecution of VT; conspiracy to injure the Claimants by unlawful means; and malicious procurement of the arrest and search warrants and execution of the same against VT. Kaupthing is alleged to be vicariously responsible for the acts of GT and JJ. The individual defendants (including JJ) are alleged to have conspired to put the Claimants under acute commercial pressure and financial pressure, amongst other things, to settle a £1.6 billion Commercial Court claim against Kaupthing and to obtain documents and information unlawfully. They are alleged effectively to have instigated and controlled the SFO investigation against VT by making false and malicious allegations of serious criminal misconduct in circumstances where they knew that there was no evidence of such misconduct or other wrongdoing of VT. The allegations are said to have been responsible for the issue of search warrants and the arrest of VT.
The claims are all governed by English law. It is not in dispute that they concern alleged harmful events which took place in England (see Article 5(3) of the Lugano Convention, assuming that it applies) and involve claims against all the Defendants which 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 (see Article 6(1) of the Lugano Convention, again assuming that it applies).
The Applicants dispute vigorously the claims against them. They say that the allegations are wholly without foundation and go so far as to say that they should never have been made by the Claimants or their lawyers. There is no evidence to support either the making or condoning of lies to the SFO or any dishonest activity on the part of JJ. Moreover, the SFO, itself an independent specialist prosecutor, has confirmed that it was guilty of serious internal shortcomings. JJ regards the claims as a mere device by the Claimants to expert pressure on Kaupthing to secure an advantage for themselves in the winding-up proceedings, given that associated parties are indebted to Kaupthing for some £143 million, a debt guaranteed personally by VT up to a limit of £10 million.
However, no jurisdictional attack is made by reference to the merits, an assessment of which at this stage would therefore be inappropriate.
C. The insolvency process in more detail
As already indicated, Kaupthing has been in an Icelandic insolvency process under the FUA since the collapse of the financial system...
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