Source: http://conflictoflaws.net/2009/non-domiciled-parties-and-the-brussels-i-regulation-a-phantom-menace/
Timestamp: 2015-05-24 15:07:32
Document Index: 562950681

Matched Legal Cases: ['EWCA ', 'Art. 22', 'Art. 22', 'Art. 22', 'Art. 22', 'Art. 22', 'Art. 22', 'Art. 22', 'Art. 4']

The Judges and Advocates General adjourned for lunch to discuss matters of common concern. Just before service of coffee, a pallid apparition entered the room, silently but menacingly. It wore a full bottomed wig, respecting its former custom, but appeared to have changed for the occasion into more modern, red and black Betty Jackson robes. All eyes in the room gazed upon the spectre. It rose, rattling its gavel angrily, before expelling a single word into the air. It was one unfamiliar to some of the assembled crowd, but which others knew only too well. ‘Owuuuusuuuu …’
The Court of Appeal’s decision, delivered on 11 November 2009, in Choudhary v Bhatter [2009] EWCA Civ. 1176 will come as a surprise not only to some residents of Luxembourg but also to others familiar with the text of the Brussels I Regulation and recent jurisprudence of the Court of Justice. The Court decided that Art. 22 of the Regulation (specifically, Art. 22(2) concerning company disputes) does not apply to proceedings against persons not domiciled in a Member State, even if the relevant connection to a Member State is established. The Court also left open the question whether, even if Art. 22 were to apply, a Member State would retain the power to stay proceedings in favour of the courts of a non-Member State which it considered to be a more appropriate forum for the resolution of the parties’ dispute.
The case concerned a dispute between rival factions within a company, of a kind that is fairly commonplace in England. One group was alleged to have attempted a coup, and the other brought proceedings against the company and selected members of the rival group in England, having first secured an interim injunction against one of the company’s Indian directors, Mr Bhatter. What made the case unusual was that the company, although incorporated in 1872 in England, carried on its business exclusively in India and had been subject to (suspended) winding-up proceedings there. As Lord Justice Burnton noted:
The assets of the Company are in India; its affairs are subject to the jurisdiction of the courts in India; the events that gave rise to this litigation took place in India; and the individual parties, the witnesses and evidence are in India. It is obvious that the issues in these proceedings should be tried in India.
Obvious it may have been to the Court, but not obvious according to the scheme of the Brussels I Regulation. Under Art. 22(2), exclusive jurisdiction is given to the courts of the Member State in which a company has its seat “in proceedings which have as their object … the validity of the decisions” of the company’s organs. In Choudhary, it could not be doubted that (applying English private international law rules, in the form of Sch. 1, para. 10 of the Civil Jurisdiction and Judgments Order 1991) the company had its seat in the United Kingdom (specifically, England). Moreover, the claims set out in the Claim Form and Particulars of Claim appeared to fall (at least in substantial part) squarely within Art. 22(2). The relief sought included (a) declaratory relief concerning (i) the purported forfeiture of certain shares in the company by a shareholders resolution, (ii) a purported allotment of shares in the company by a board resolution, and (iii) the purported resignation of two of the claimants and the appointment of new directors and a company secretary by board resolutions, (b) statutory compensation from Mr Bhatter for allotment in breach of pre-emption rights, and (c) rectification of the company’s register of members.
The appeal in Choudhary, however, concerned only the interim injunction granted against Mr Bhatter preventing him from taking certain steps with respect to the company’s affairs. No similar relief had been sought or granted against the company or the other defendant, one of its shareholders, and neither was a party to the appeal. Indeed, the claimants’ approach to the litigation may have been influential in their ultimate defeat. As another Court of Appeal judge noted at an earlier stage in the proceedings, in requiring that the claimants provide security for costs:
[T]here is a certain element of luxuriousness in the invocation of this jurisdiction by the claimants in this case. They may well be entitled to invoke it, but one asks oneself why it would not be sufficient for the injunctive relief that has so far been obtained to have been obtained in India, and indeed why the case as a whole could not more conveniently proceed in India. That is not of course an answer to the jurisdiction point because convenience, it is said by [Counsel], and no doubt rightly, is irrelevant to any question of invocation of jurisdiction under the Regulation, but as I say it does seem to me that, if the claimants wish to have the luxury of litigating these matters in England, that there is a certain injustice in requiring Mr Bhatter, who has a legitimate appeal, to put money up front to secure the costs of the appeal.
This led the Court to question whether Art. 22(2) applied to a claim against a person not domiciled in a Member State. Again, the Regulation appears unambiguous on this point, as (1) Art. 22 is expressed to apply “regardless of domicile”, and (2) Art. 4 (the general rule regulating jurisdiction over persons not domiciled in a Member State) is expressed to be “subject to Articles 22 and 23″.
The Court begged to differ. It concluded, referring to references in the Recitals and in other Articles to domicile in a Member Stat