Forum conveniens – context is key

The English High Court has allowed conspiracy proceedings brought by two Russian banks against several Russian nationals to proceed in England, despite there being "no doubt, and no dispute, that [it] is a Russian case".(1)

The alleged conspiracy

The Claimants allege that the seven defendants conspired to bring about transactions in which approximately US$800m of well performing, secured loans, which had been made by the Claimants to a company ultimately owned or controlled by the first four defendants (the Mints), were repaid with the Claimants' own money and replaced with illiquid, unsecured, non-income producing long-term bonds worth a fraction of the price the Claimants paid for them. At the time, the fifth to seventh defendants (D5-D7) were Chairmen, CEOs and/or shareholders of the Claimants. The Claimants allege that the Mints dishonestly procured the transactions in conspiracy with the banks' then controllers (D5-D7) to the benefit of the Mints' company and at the expense of the Claimants.

Permission to serve out on Russian defendants granted

Initially, the Claimants issued proceedings against only the Mints who were based in England. However, they later applied for permission to serve the proceedings against the further three defendants, D5-D7 who were based in the US, Israel and Russia).  This was on the basis that they were necessary or proper parties to the claim against the Mints, who were the "anchor defendants". The High Court Judge granted permission.

However, D5-D7 sought to have permission set aside on the basis that England was not the appropriate jurisdiction to hear the dispute.

What was the forum conveniens for the claims?

The Court accepted that the case before it was "essentially a Russian dispute".(2) The Claimants and Defendants were all Russian, the alleged wrongdoing occurred in Russia (save for at least one meeting in France), the alleged losses were sustained in Russia, the causes of action relied upon were "creatures of Russian law", and most of the documents were in Russian.(3)

However, the Court nonetheless allowed the English proceedings to proceed against D5-D7.

The Court accepted the Claimants' argument that D5-D7 should be parties to the English proceedings to avoid the risk of inconsistent decisions if they were instead sued in separate proceedings elsewhere. In doing so, the Court acknowledged that there already was a risk of inconsistent judgments as a consequence of extant proceedings relating to the same claims in other jurisdictions (such as Russia, Cyprus, and New York). However, the Court considered that the risk would be materially increased if it declined jurisdiction over D5-D7, and that increased risk was "something which is capable of causing great difficulty not only for the individuals affected but also for the judicial systems of England and Russia".  It therefore concluded it should be avoided.(4)

D5-D7 had argued that because the risk of inconsistent judgments had arisen only as a result of the Claimants’ own decision to sue the Mints in England, the Claimants could not rely on that to contend that England was the forum conveniens. The Claimants had chosen to sue the Mint Defendants in England because they expected to face challenges with enforcing a Russian judgment against the Mints in jurisdictions abroad. Conversely, an English judgment would be more easily enforceable in other jurisdictions (such as the Cayman Islands which is where the Claimants would seek to enforce it) and was, therefore, more attractive.

The Court accepted the Claimants' position that no rational claimant would have chosen to sue the Mints in Russia. Taking into account the full picture (being, the Claimants' reason for choosing to sue in England, and the material increase in the risk of multiple proceedings and of inconsistent judgments), the Court therefore held that England is the forum in which the claims against D5-D7 can be "suitably tried for the interests of all the parties and for the ends of justice".(5)

Comment

This decision illustrates that even though key legal, factual and practical aspects of a dispute favour another jurisdiction, the English Court may still find the forum conveniens to be England where the risk of multiplicity of proceedings and issues of enforceability of judgments are at play. 

That said, clearly the jurisdictional position in any given case will turn on the precise circumstances, and so claimants ought of course to consider carefully where to bring their claims taking account of the whole picture.