KARAFARIN BANK V GHOLAMREZA MANSOURY-DARA

[2009] EWHC 1217 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Teare, 4 June 2009

Jurisdiction – Claimant cheques – Application for a stay – Abuse of process – Civil Jurisdiction and Judgments Act 1982, section 34

The claimant had claimed against the defendant in respect of sums due under 13 cheques. The hearing was about to commence on 6 July 2009. On 11 May 2009 the defendant made an application for stay on the grounds that there were concurrent proceedings in Iran or, in the alternative, that the proceedings ought to be stayed pending the conclusion of the concurrent proceedings in Iran. The background was that the claimant, unknown to the defendant, had pursued criminal and civil proceedings in Iran in respect of four of the 13 cheques. The defendant was convicted in his absence of a criminal offence in relation to those cheques and sentenced to two years’ imprisonment. Civil judgments on those cheques were also obtained against the defendant. These proceedings were conducted in absentia and the defendant was unaware of them until some time in the second half of 2008. The defendant took action in Iran and succeeded in having the convictions set aside in November 2008 and on 6 May 2009. On 11 May 2009 this application to stay the English proceedings was made and on 12 May 2009 an appeal against the civil judgments was commenced in Iran. Teare J dismissed the application for a stay, which was based on three different strands of argument by the defendant. The defendant first argued that the proceedings in England in respect of those cheques that had already been the subject of proceedings in Iran were an abuse of process. Teare J held that it was not an abuse of process because the judgment in Iran could not have been enforced in England, since it was obtained in the absence of the defendant who furthermore had not submitted to the jurisdiction. The proceedings in England furthermore concerned 13 cheques only four of which were the subject of proceedings in Iran. The defendant’s second argument was that Owusu v Jackson prevented an application for a stay based upon lis alibi pendens. To this, Teare J considered that lis alibi pendens could only apply in respect of four of the 13 cheques and that it was a legitimate advantage for the claimant to obtain a judgment in England since the Iranian judgment could not be enforced in Iran (where the defendant had no assets) and was unenforceable in England. Since the legitimate advantage was at hand, there was no need to consider whether Owusu v Jackson prevented a stay. The defendant’s third argument was that section 34 of the Civil Jurisdiction and Judgments Act 1982 together with case management considerations prevented a stay. Teare J dismissed this argument, holding that it was not appropriate to await the outcome of the Iranian appeal proceedings. This argument assumed that the defendant, in order to appeal the Iranian judgments, would have to submit to the jurisdiction, with the effect that the Iranian judgments would become enforceable in England. However, the English proceedings were scheduled for a hearing on 6 July 2009 and the earliest an outcome of the Iranian appeal could be expected was in one to two years. Case management considerations therefore dictated that the English proceedings should go ahead.