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On appeal from: [2017] EWCA Civ 1609

This case considers two primary issues:

  1. Whether Article 24(2) of the Recast Regulation (Regulation (EU) No. 1215/2012) confers exclusive jurisdiction on the English courts to determine the authority in England of directors appointed in foreign proceedings to the board of a foreign corporate shareholder of a company registered in England to cause or permit the foreign corporate shareholder to do anything as a shareholder of the English company;
  1. Whether Article 24(2) confers exclusive jurisdiction against anyone other than the foreign corporate shareholder, such as its directors of a corporate shareholder as co-defendants.

Koza Ltd, of which Mr Akin Ipek is a director, is part of the Koza Group, a large Turkish-based mining and media conglomerate. Koza Altin Işletmeleri AS (“Koza Altin”) is also a member of the Koza Group and Koza Ltd is its wholly owned subsidiary. In 2015, following a police raid on Koza Group’s headquarters in Ankara, Turkish authorities alleged that Koza Group was engaged in terrorist financing. In October 2015 an Ankara Criminal Peace Judge made an order under Turkish legislation replacing the existing boards of various companies within the Koza Group with trustees who were required to manage those companies pending further investigations. These companies included Koza Altin but not Koza Ltd. In July 2016, the trustees of Koza Altin caused it to serve a notice under Companies Act 2006, s303 requiring the board of Koza Ltd to hold a general meeting of Koza Limited to pass resolutions replacing its directors with the first, second, and third appellants.

The board of Koza Ltd did not call that meeting and so the trustees of Koza Altin caused it to serve a notice under s305 of the 2006 Act calling a general meeting of Koza Ltd to pass those resolutions. In August 2016, the respondents commenced proceedings in the High Court seeking declarations that the notices were ineffective, an injunction preventing the appellants from holding a meeting of Koza Ltd pursuant to those notices and an injunction restraining the first five appellants or any of them from holding themselves out as having the authority to act for or to bind Koza Altin as a shareholder of Koza Ltd and from causing Koza Altin to do anything or permit the doing of anything as a shareholder of Koza Ltd. All the appellants acknowledged service and stated they intended to contest the jurisdiction of the English court.

At first instance the judge held that the court had jurisdiction to hear the claim. The appellants appealed to the Court of Appeal who dismissed their appeal. The appellants now appeal to the Supreme Court of the United Kingdom.

 

Held: The Supreme Court unanimously allows the appeal.

The basic scheme for allocation of jurisdiction under the Recast Regulation is that persons domiciled in a Member State of the European Union should generally be sued in that Member State (by article 4), but they may also be sued in another member state in certain situations, including in cases of exclusive jurisdiction specified under article 24. The cases of exclusive jurisdiction within article 24 reflect situations where there is an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular member state. The principle of exclusive jurisdiction supersedes the other principles underlying the Recast Regulation, including the domiciliary principle of jurisdiction (under article 4) and the principle of respect for party autonomy.

  1. In this case, the English company law claim and the authority claim are connected in a sense, but they are distinct claims which are not inextricably bound up together. The English company law claim can be brought and made good on its own terms without regard to the authority claim, as can the authority claim. Assessing the authority claim as a distinct set of proceedings, clearly the principal subject matter does not comprise the validity of the decisions of the organs of a company with its seat in England. That interpretation and application of article 24(2) is acte clair. The English courts thus lack article 24(2) jurisdiction over Koza Altin and the trustees as to that claim.
  1. Since article 24(2) does not cover the authority claim, the English courts lack article 24(2) jurisdiction in relation to the trustees with respect to that claim. The proceedings against the trustees are principally concerned with the authority claim. Article 24(2) jurisdiction over the English company law claim cannot extend to the trustees, who are not necessary parties to that claim.

 

For judgment, please download:  [2019] UKSC 40

For Court’s Press Summary, please download: Press

For a non-PDF version of the judgment, please visit: BAILII

 

To watch the hearing, please visit: Supreme Court Website  (Morning 19 March)    (Afternoon 19 March)