Alliance Bank JSC v Aquanta Corp & 14 Ors (2012)
A Kazakhstan bank had not established that the English court was the most appropriate forum for resolution of disputes arising out of an alleged conspiracy to defraud it of £1.1 billion. Although two of the instruments used to further the fraud were expressly governed by English law, the essence of the dispute had very little connection with the domestic jurisdiction. The court also examined the availability of subrogated rights, causes of action in implied contract, and the jurisdictional gateway in CPR PD 6B.
The appellant Kazakhstan bank (C) appealed against a decision ( EWHC 3281 (Comm)) that it had failed to establish that the English court was the most appropriate forum for the resolution of its disputes with the defendants. The defendants cross-appealed against various aspects of the decision.
C claimed to be the victim of a fraudulent conspiracy by the defendants. It believed the principal conspirator to be the sixth respondent (D6), who was the former chair of its board. The seventh and eight respondents (D7 and D8) were the brothers of D6 and they owned D9, a Kazakh holding company, which owned the majority of C. The other corporate defendants (D1 to D5) were beneficially owned by D6 and controlled by the three brothers. There were also personal defendants (D10 to D15). C's case was that it had been required to purchase American treasury notes, which were subsequently pledged to two Cypriot banks as security for loans made to D1-D4. It alleged that the money had been laundered to the other defendants. Loan agreements and guarantees between the Cypriot banks and the borrowers contained English jurisdiction clauses. C maintained that it had a subrogated claim to enforce the loan agreements against D1-4 and D6-8. Permission had been granted for C to serve the proceedings out of the jurisdiction. The issues were whether (i) C had a real prospect of success in its subrogated claims against D3 and D4; (ii) C had a cause of action in implied contract against D3 and D4; (iii) C's non-contractual claims could, for the purposes of the jurisdictional gateways in CPR PD 6B be regarded as claims made in respect of a contract; (4) a good arguable case existed for the resolution of the non-contractual claims under English law.
(1) There were grave reservations about the availability of subrogated rights; any rights that had arisen could not be exercised in C's name. Since D3 and D4 were insolvent, the concept of a subrogated claim was contrived, and constituted an artificial device to enable C to rely upon the exclusive jurisdiction clauses as pointing towards the English court being the appropriate forum, VTB Capital Plc v Nutritek International Corp  EWCA Civ 808,  2 Lloyd's Rep. 313 applied. Although C had offered an undertaking not to pursue any claim against the Cypriot banks in respect of the guarantees, an undertaking would not assist it because it had no cause of action in its own name against D3 and D4. There was no basis on which service out of the jurisdiction ought to have been permitted against D3 and D4. Such a conclusion, in the context of the decision below concerning appropriate forum, deprived C of reliance as a matter of contractual entitlement upon the exclusive jurisdiction clauses in the agreements with the Cypriot banks, Societe Generale de Paris v Dreyfus Bros (1885) 29 Ch. D. 239 approved. It would be very rare for a court to permit a claimant to perfect or complete his cause of action by reliance upon an undertaking, let alone a conditional undertaking, and especially where the undertaking depended on the court assuming jurisdiction over different causes of action asserted against different overseas parties rather than those parties immediately affected by the defective cause of action in respect of which the undertaking had been given (see paras 39-40, 42-46 of judgment). (2) C sought to rely upon an implied indemnity as justifying the grant of permission to serve D3 and D4 out of the jurisdiction. A collateral contract, such as, in the instant case, an implied indemnity, would be governed by the same law as the substantive contract which generated it, at least where that contract contained an express choice of law, Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd  EWCA Civ 265,  3 All E.R. 842 applied. There was nothing to displace the inference that the parties intended both contracts to be governed by the same system of law. Subject to proving that England was the correct forum, C would be permitted to serve D3 and D4 out of the jurisdiction with the claim in implied contract (paras 46, 54). (3) There was no basis upon which D1 and D2 could be served out of the jurisdiction in reliance on gateway 5. C had no subrogated claim against D3, so there was no issue which it was reasonable for the court to try. There was a potential reliance on gateway 6 in respect of the implied claims against D3 and D4, subject to appropriate forum and to the court's reservation that those defendants did not constitute anchor defendants for the purpose of the necessary or proper party gateway. Gateway 6 was unavailable for D6 to D9 (paras 60-73). Since there was no anchor defendant, the application of gateway 3 was academic, but the court expressed a view upon it in any event (paras 74-79). (4) The conclusion of the judge below concerning forum was unsurprising and ought not to be interfered with: the dispute had very little connection with the domestic jurisdiction in terms of the torts committed, the agreements made, the loss suffered and the domicile of the parties. The fact that some of the instruments used to further the fraud were expressly governed by English law was incidental to the real essence of the dispute, VTB applied (paras 83-120)
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