JSC COMMERCIAL BANK PRIVATBANK V KOLOMOISKY AND OTHERS

[2019] EWCA Civ 1708, Court of Appeal (Civil Division), Lord Justice David Richards, Lord Justice Flaux and Lord Justice Newey, 15 October 2019

Conflict of laws – Jurisdiction – Claim brought against defendant in its domicile with sole object of adding a defendant domiciled elsewhere – Lis alibi pendens – Stay – Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 2007 (Lugano Convention)

The claimant (and appellant) was a Ukrainian bank and the first two defendants (respondents) were essentially its former controlling shareholders. The first two were natural persons and domiciled for the purpose of the present proceedings in Switzerland. The remaining defendants were companies controlled by the first two defendants and incorporated in England or BVI. The substance of the case concerned, in brief, alleged misappropriation of the bank’s funds through sham loans “on an epic scale”. The first two defendants objected to these proceedings, asserting that article 6(1) of the Lugano Convention – which permitted them to be joined to proceedings against the English defendants although domiciled in Switzerland – was subject to a requirement that a claim brought against a defendant in the courts of that defendant’s domicile must not be brought for the sole object of joining a defendant domiciled in another Convention state. They said that the present proceedings had been brought against the third to fifth defendants with the sole object of joining the first and second defendants. The defendants had also brought defamation proceedings in Ukraine. The second question was whether the court had jurisdiction to stay proceedings brought against defendants in accordance with the Lugano Convention and the Recast Brussels Regulation on grounds of lis alibi pendens in favour of proceedings in a non-Convention state (a third state) and, if so, whether the judge was wrong to hold that, if it had arisen, he would have exercised his discretion to stay the proceedings. At first instance, the judge had decided the issues against the claimant bank. This was its appeal.