England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		30/01/2013

Mrs Justice Asplin :

1. This is the hearing of a Case Management Conference in these proceedings ("Action 599"). Action 599 concerns entitlements to claim a sum in excess of £130 million which is the proceeds of the sale of shares in the supermarket chain Somerfield and of the repayment of an associated loan ("the Fund"). The Fund was paid into Court by the Claimant, Isis Investment Limited ("Isis") pursuant to an order of Sales J dated 2 March 2009.

The Parties

2. Isis is an investment holding company registered in the Isle of Man and now acts by its liquidator, Mr Shimmin, appointed by the Isle of Man court in March 2010. It is an indirect subsidiary of the Second Defendant, Kaupthing HF ("Kaupthing"). The Fund came into the hands of Isis as a result of the realisation of its shareholding in Tazamia Limited and Violet Equityco Limited and the repayment of part of a £67.15m loan made by Isis to Tazamia Limited.
3. The First Defendant, Oscatello Investments Limited ("Oscatello"), is a company registered in the British Virgin Islands. It is in liquidation and acts by its liquidators, Mr Akers and Mr McDonald. It was part of an offshore trust structure, TDT, set up by or for the property entrepreneur Robert Tchenguiz. It is a wholly owned subsidiary of the Fourth Defendant, Eliza Limited ("Eliza"). Eliza is also a company registered in the British Virgin Islands. It too is in liquidation and acts by its liquidators, Mr Akers and Mr McDonald.
4. Kaupthing is the ultimate parent of Isis. It is an Icelandic Bank, which collapsed in October 2008. It formally entered winding up proceedings on 22 November 2010 following a ruling of the district Court of Reykjavik. Prior to its collapse, Kaupthing had advanced very large sums of money to Oscatello.
5. The Third Defendant, Mr Adalsteinsson is one of a number of persons who entered into sub-participation agreements with Isis in respect of part of a loan of £67.15 million made by Isis to Tazamia Limited. In effect, they are investors in Isis. As a result, they have claims in its liquidation. In total, the amount subject to sub-participation by Isis was £40 million. Mr Adalsteinsson was joined as a party to Action 599 in a representative capacity on behalf of himself and all other persons and entities which invested by way of the sub-participation agreements with Isis. As a term of those agreements, the sub-participants were due to be paid upon receipt of sums by Isis at completion of the Somerfield transaction.

Procedural Background

6. The parties' respective entitlements to the Fund turn upon clause 6 of a Framework Agreement dated 19 December 2007 which contains an exclusive jurisdiction clause in favour of the English Courts. It imposes a payment waterfall in respect of proceeds received by Isis and also contains an express provision that part of the Violet Economic Return (VER) be held on trust for Oscatello. Isis contends that clause 6 is unenforceable and it is entitled to the Fund. Mr Adalsteinsson agrees with Isis that clause 6 is unenforceable. However, he claims that just over £56m of the Fund is held on trust for the purpose of making distributions to the sub-participants.
7. Action 599 was commenced in February 2009 and at that time was focussed on a narrow issue of construction arising from clause 6 of the Framework Agreement. That issue was determined in Oscatello's favour at a hearing before Lewison J (as he then was) in March 2011.
8. However, by an application of 6 March 2012, Isis by its liquidator, Mr Shimmin, sought permission to file and serve an amended Particulars of Claim. The matter came before Floyd J on 21 and 22 March 2012 and he gave permission for the amendments. On that occasion, an application by Oscatello for summary judgment was not pursued.
9. In his judgment on 23 March 2012, Floyd J set out a short description of the relevant procedural history in this matter in the following form, which I adopt:

"7. In these proceedings, as originally commenced, and as adopted by the liquidator, Isis sought certain declarations as to the interpretation of clause 6 and consequential directions as to the proper persons to whom the VER should be paid out of the money in court. Kaupthing and Oscatello counterclaimed for payment out of the VER to them on the basis of their construction of the agreement. On the pleaded cases no party was alleging in these proceedings (although see the 600 claim below) that the agreement was unenforceable. Oscatello then made an application for summary judgment on its counterclaim. They argued that if they were right as to the construction of the Framework Agreement there was no other defence and the money should be paid out. "

8. It is clear that at some stage, the liquidator of Isis formed the view on the information then available to him, that the Framework Agreement was in principle enforceable at the suit of Oscatello, subject to the issue of construction. Indeed Mr Shimmin went as far as to apply to the IOM court for sanction of payments to Oscatello. However the sub-participants made strong representations to the IOM court that he should not do so. This led to a second witness statement on behalf of Isis, in which Mr Shimmin expresses grave doubts about the circumstances in which the Framework Agreement came to be made.

9. In his second witness statement Mr Shimmin described his findings in relation to clause 6 as follows:

"(i) On any view this was an improvident transaction by which Isis sold an interest of which it had already disposed. There was also no justification for prioritising Oscatello over other creditors.

(ii) Oscatello does not appear to have actually ever paid £44.05 million under Clause 6. This seems to have a purely circular payment by and to Kaupthing which could never have benefited Isis.

(iii) The Framework Agreement appears to have been concluded by the directors under pressure from Kaupthing without any real thought being given to the discharge of their fiduciary responsibilities. Kaupthing itself acted as if it was a director of Isis.

(iv) There is a serious indication that by agreeing to pay the VER under Clause 6, Isis was making an unlawful distribution of capital to or for the benefit of its shareholder, Kaupthing and/or one of its ultimate shareholders, Mr Tchenguiz."

10. It was on the basis of these provisional conclusions that Isis resisted Oscatello's summary judgment application when it came before Lewison J (as he then was) on 30^th March 2011. By that stage Isis had also made a cross application for a stay under the Cross Border Insolvency Regulations to enable Mr Shimmin to conduct further investigations as to whether to mount a challenge to the validity of the Framework Agreement.

11. The hearing before Lewison J on 30^th March was accordingly not a protracted one. It emerged that there was no longer a dispute as to how the Framework Agreement was to be construed. Lewison J was, however, disinclined to grant a declaration adequate to require Isis to hand over the VER when doubts remained over the validity of the Framework Agreement. He granted a limited declaration as to the true interpretation of clause 6 on the hypothesis that it was valid and enforceable. He also stayed the proceedings for 3 months, until 30^th June 2011, to enable the liquidator of Isis to conduct further investigations as to the validity of clause 6.

12. The matter came before Peter Smith J on Isis' application to continue the stay. Oscatello renewed its summary judgment application. Both applications now come back before me, some 12 months after the hearing before Lewison J. Oscatello had indicated in advance that they would not ask at this hearing for a final order on its summary judgment application. However it emerged during the course of the hearing that it did contend that the proposed amended pleadings were unarguably barred by a compromise agreement, to which I shall come in due course.

13. The liquidator of Isis has now decided to challenge the framework agreement and has served draft amended particulars of claim (DAPOC). The DAPOC were provided to Oscatello and Kaupthing on 2^nd March 2012. Whilst formulated in that way, the case of invalidity which Isis' liquidator wishes to raise could equally have been pleaded as a defence to Oscatello's counterclaim for payment out of the VER to them.

14. Of necessity, the DAPOC have to traverse a great deal of factual background in what was a complex set of inter-related transactions. Paragraph 7D sets out a summary of at least some of the allegations. In section VIII there is a fuller list of reasons why Oscatello cannot enforce Clause 6 of the Framework Agreement. In summary these are:

i) There was no genuine consideration moving to Isis. The expressed payment of £44.05 million was never made, and Kaupthing simply made circular book entries. The promise of payment was a sham.

ii) Clause 6 was an agreement procured by Kaupthing for Isis to make an unlawful return of capital to Kaupthing/TDT.

iii) The sale of the VER was made in breach of fiduciary duty and with no true authority.

iv) The effect of clause 6 when coupled with the obligation of Oscatello to pre-pay the Kaupthing overdraft was such that the purported sale of the VER was a sale by Isis to Kaupthing. Such a sale is unenforceable unless Oscatello or Kaupthing gave full and frank disclosure of all material facts.

v) Clause 6 was tainted by illegality as it formed part of an unlawful conspiracy on the part of Kaupthing, Mr Tchenguiz and others to defraud the markets by giving a false picture of the true indebtedness of Kaupthing's largest borrower.

vi) Clause 6 is unenforceable as it amounts to an equitable charge which is unregistered and therefore unenforceable under IOM company law."

10. As I have already mentioned, Floyd J granted permission to amend and Amended Particulars of Claim were filed and served on 13 July 2012. Isis now challenges the validity of the Framework Agreement and seeks a declaration that it is the sole beneficial owner of the Fund. The enforceability of clause 6 of the Framework Agreement is challenged essentially on the six bases set out in the extract from Floyd J's judgment together with breach of fiduciary duty both by Isis' de jure Isle of Man directors and Kaupthing as shadow director. The challenge to the enforceability of clause 6 and the alleged role of Kaupthing as a shadow director of Isis is supported by allegations in relation to a number of transactions entered into by Isis prior to or at the same time as and in addition to the Framework Agreement, together referred to as "the Impugned Transactions".
11. An Amended Defence and Counterclaim was filed and served by Kaupthing on 5 October 2012 in which it denies that clause 6 is unenforceable and seeks declarations as to the validity of the Impugned Transactions. It also contends for an alternative construction of clause 6 or alternatively that it should be rectified. Amended Defence and Counterclaims were filed by Oscatello and Eliza and one by Mr Adalsteinsson also on 5 October 2012 and Defences to Counterclaim of Isis on 16 November 2012. There have also been numerous Requests for Further Information.
12. In Mr Adalsteinsson's Amended Defence and Counterclaim he supports Isis' claim that clause 6 is unenforceable. He contends in summary that:

i) Isis is not bound by Clause 6.

ii) If, contrary to Isis' case, Clause 6 is otherwise binding upon Isis, the Court should make an order pursuant to section 423 of the Insolvency Act 1986 setting aside Clause 6 as a transaction defrauding creditors.

iii) There is a trust in favour of the sub-participants in respect of £56,073,372 of the Fund (this sum is not part of any monies which would otherwise be part of the VER held on trust for Oscatello). This trust is said to arise by reason of the statements made by the solicitors to Isis in correspondence and in telephone calls with the solicitors to Mr Adalsteinsson.

iv) Kaupthing, Oscatello and others conspired to injure the sub-participants by unlawful means.

v) Kaupthing and Oscatello caused the sub-participants loss by unlawful means.

vi) Kaupthing procured Isis to breach the sub-participation agreements.

13. In addition to Action 599 and an action numbered 600 which was settled on 14 June 2010, on 23 December 2011 Isis also commenced proceedings in the Isle of Man seeking relief against its de jure directors, Kaupthing as a shadow director and Kaupthing Finance on the basis of breach of fiduciary duty, breach of trust and breach of duty of care as directors of Isis in approving, authorising and/or ratifying the Impugned Transactions which I should say include the Framework Agreement, ("the Isle of Man proceedings"). Declarations are sought that the Impugned Transactions are void and in the alternative, monetary claims are made against the directors. Oscatello, Eliza and Mr Adalsteinsson are not parties to the Isle of Man proceedings. It is accepted that many of the allegations made by Isis in the Isle of Man proceedings in relation to the Impugned Transactions are materially identical to those made in Action 599.
14. Oscatello, Kaupthing and Kaupthing Finance have also lodged proofs of debt in Isis' liquidation in the Isle of Man before a bar date in December 2010. The proofs were rejected by the liquidator of Isis on 20 February 2012 and appeals were lodged against the rejections on 5 October 2012, praying in aid the pleadings in Action 599. Oscatello's proof made clear that it was contingent upon a failure to establish that it was entitled to a part of the Fund and that it was a trust claim under the terms of the Framework Agreement.

Issues

15. Although four case management issues remained to be determined at the beginning of the hearing, by the end Mr Lowe QC on behalf of Isis confirmed that the only matters to be determined at this stage are the issue in relation to a stay to which I will refer in detail and the application made by Mr Adalsteinsson for permission to bring the counterclaims contained in his Amended Defence and Counterclaim filed on 5 October 2012 against Isis, to join Oscatello and Kaupthing as additional parties to the Counterclaim and to bring claims under sections 423 -425 Insolvency Act 1986 pursuant to section 424(1) of that Act.
16. Mr Lowe QC considers it likely that the time for service of a Reply by Isis will be the subject of an agreement and that other directions will flow from the decision in relation to the stay and Mr Adalsteinsson's application. I will turn therefore, to those issues in turn.

(1) Should a case management stay be granted in relation to Action 599 and if so, what form should it take?

17. It would seem that it is with some reluctance that Isis seeks a stay of these proceedings in order to enable the Isle of Man proceedings to continue and to avoid what it says is the danger of conflicting and inconsistent decisions both as to fact and law which might otherwise arise. In that regard Mr Lowe QC referred me to Lord Diplock's speech in The Abidin Daver [1984] 1 AC 398 and in particular to the passage at 411G – 412 B:

"Where a suit about a particular subject matter between a plaintiff and a defendant is already pending in a foreign court which is a natural and appropriate forum for the resolution of the dispute between them, and the defendant in the foreign suit seeks to institute as plaintiff an action in England about the same matter to which the person who is plaintiff in the foreign suit is made defendant, then the additional inconvenience and expense which must result from allowing two sets of legal proceedings to be pursued concurrently in two different countries where the same facts will be in issue and the testimony of the same witnesses required, can only be justified if the would-be plaintiff can establish objectively by cogent evidence that there is some personal or judicial advantage that would be available to him only in the English action that is of such importance that it would cause injustice to him to deprive him of it."

18. Before turning to the central principles applicable in relation to case management stays, I should mention that at the hearing before Floyd J in March of this year, Isis did not proceed with an application for a stay of the action based on the Cross Border Insolvency Regulations but sought to have the application adjourned generally. Floyd J dealt with the matter in a judgment of 16 May 2012 in the following way:

"The disposition of the stay application (Issues 1 and 9)

5. I referred to the stay application at [10] to [12] of the March judgment. Isis (and EA) suggest that the stay under the Cross Border Insolvency Regulations should be adjourned generally with liberty to restore at the next case management conference, and that the costs should be reserved to the judge hearing the restored stay application, with liberty to apply to vary in the event that the stay application is not restored. Oscatello and Kaupthing submit that the stay application should be dismissed, and that Isis should pay the costs of and incidental to the stay application, to be the subject of detailed assessment if not agreed.

6. The stay application was issued on 6^th March 2012, by which stage the Liquidator had rejected Oscatello's and Kaupthing's proofs of debt in the Isle of Man. On 12^th March 2012, Oscatello and Kaupthing obtained extensions of time from the Isle of Man Court until 18^th May 2012 to lodge any appeals. I do not know if any such appeals have yet been filed.

7. At the commencement of the hearing, Mr Lowe QC on behalf of Isis indicated that he was not then proceeding with the application for a stay. He indicated that until Isis knew what was to happen in the Isle of Man, it was premature to embark on case management of the kind envisaged by the application for a stay. He submitted that, if there was an appeal, there were a number of matters which ought to be determined in the place of incorporation, even if, ultimately, there would have to be a trial here. At the hearing, I did not hear any submissions on the stay application and, in consequence, did not decide it. No significant prior notice had been given to the other parties that the stay application was not being proceeded with.

8. Accordingly, Oscatello and Kaupthing approached the hearing of the applications on the basis that the stay application was going to be determined. The substance of the submissions in their skeleton arguments for the hearing was that (a) the Framework Agreement is governed by English law and contains an exclusive jurisdiction clause in favour of the English courts, and (b) the resolution of the proprietary entitlements of the parties to the VER was a logically prior question to any appeal against the rejection of Oscatello's claim to prove in Isis' liquidation. There was no attempt by Isis to meet either of these points. There was also no convincing explanation as to why there would be any tangible benefit in staying the English action until the outcome of the appeal in the Isle of Man was known. EA's position on the stay was that he did not object to it.

9. In these circumstances, I am not prepared to deal with the matter in the way in which Isis suggest. If I were to accede to that suggestion I would be adjourning the application on the basis that something might turn up to support it, when to date nothing of substance has. I propose therefore to make no order on the application, save that the costs of Oscatello and Kaupthing be paid by Isis, to be the subject of detailed assessment on the standard basis if not agreed. That order will leave Isis free to make an application for a stay if facts emerge which justify it."

Applicable principles

19. The applicable principles in relation to a case management stay are not in dispute. In Reichhold Norway ASA & Anr v Goldman Sachs International [1999] 1 All ER 40 (Comm), at first instance, Moore-Bick J held at 46j-47a:

"The Court's power to stay proceedings is part of its inherent jurisdiction which is expressly preserved by s49(3) of the Supreme Court Act 1981. It is exercised under a wide range of circumstances to achieve a wide variety of ends. Subject only to statutory restrictions, the jurisdiction to stay proceedings is unfettered and depends only on the exercise of the court's discretion in the interest of justice."

At 47c-d he went on:

" . . .choosing whom to sue is one thing; choosing in what order to pursue proceedings against different defendants may be another, especially when two related sets of proceedings are being, or could be pursued concurrently. In such a case the court itself has a greater interest; not only because the existence of concurrent proceedings may give rise to undesirable consequences in the form of inconsistent decisions, but also because the outcome of one set of proceedings may have an important effect on the conduct of the other."

20. Accordingly, the Court may manage the order in which proceedings are heard and it is clear from that case and Curtis & Anr v Lockheed Martin UK Holdings Ltd [2008] EWHC 260 (Comm) per Teare J at 12 that " . . .such case management is appropriate even where the proceedings are taking place between different parties in different jurisdictions."
21. In the Reichhold case, Moore-Bick J went on to consider the issue in that case which was an application to stay English proceedings pending the outcome of an arbitration in Norway by the claimant against other persons and at 47j- 48b he held:

"Since the court's jurisdiction to stay proceedings is discretionary and the circumstances in which an application for a stay may be made almost infinitely variable, I find it difficult to accept Mr McCaughran's submission that it would never be proper for the court to grant a stay of an action pending the outcome of proceedings by the plaintiff against some other person in arbitration or before a foreign court. I do accept, however, that such a step should only be taken if there are very strong reasons for doing so and the benefits which are likely to result from doing so clearly outweigh any disadvantage to the plaintiff. Ultimately, however, it must be a matter for the court to consider the circumstances of the case before it and come to its own conclusion. One fact of importance is likely to be the relationship between the parties to the proceedings both here and abroad."

Moore-Bick J's decision was affirmed in the Court of Appeal. The decision is reported at Reichhold Norway ASA & Anr v Goldman Sachs International [2000] 1 WLR 173. It was accepted that the court had jurisdiction to manage proceedings before it in order to ensure that justice was achieved between the parties while safeguarding the interests of other litigants. In his judgment, Lord Bingham of Cornhill CJ stated at 186C,

" . . . stays are only granted in cases of this kind in rare and compelling circumstances."

These principles were reiterated in the judgment of Longmore LJ in Amlin Corporate Member Ltd & Ors v Oriental Assurance Corporation [2012] EWCA Civ 1341 at paragraph 19 of his judgment. He went on to add at paragraph 22:

"Mr MacDonald Eggers submitted that the presence of the exclusive jurisdiction clause (there was no such clause in the Reichhold case) meant that the circumstance justifying a stay had to be even more rare and more compelling than in that case where jurisdiction was founded for other reasons and he was even able to cite the judgement of Beatson J in Equitas Ltd v Allstate Insurance Ltd [2009] Lloyd's Rep IR 227 in support of that proposition. For myself, however I doubt if it is useful to talk of degrees of rarity and compellability. It is better just to decide if the circumstances of any particular case are rare and compelling enough. The presence of an exclusive jurisdiction clause conferring jurisdiction on the English Courts to try a dispute is just one of the relevant circumstances to bear in mind when a judge exercises his discretion. . ."

22. The relevant factors are also helpfully summarised by Gloster J in Klockner Holdings GmbH & Anr v Klockner Beteilegungs GmbH [2005] EWHC 1453 (Comm), a case in which a complete stay of English proceedings was sought at a case management conference. The English proceedings had been commenced in 2002, some two and a half years before the application was made. The stay was sought on the basis that the Claimants had brought other proceedings in Germany and England against other defendants in which it was alleged that two of the agreements with which the proceedings were concerned were void. At paragraph 21 she held:

"In my judgment, relevant factors which guide the court in the exercise of its discretion to stay proceedings include (in the circumstances of the present case) the following:

i) The court has a wide discretion to stay proceedings but in circumstances where the claimant itself has voluntarily brought the two sets of proceedings a stay should only be granted in very rare circumstances: see Ledra Fishers v Turner [2003] EWHC 1049 Ch, paragraphs 14 and 38; Reichhold Norway ASA v Goldman Sachs [2000] 1 WLR 173 at pp 179-180.

ii) Even where there are such reasons for a stay, a stay should only be granted if the benefits of doing so clearly outweigh any disadvantage to the other party (Reichhold, page 180).

iii) A particularly compelling case would be required for a stay to be granted to the Claimant years after he has brought the claim (Ledra paragraph 39).

iv) A stay will not, at least in general, be appropriate if the other proceedings will not even bind the parties to the action stayed, let alone finally resolve all the issues in the case to be stayed.

v) A stay will not, at least in general, be appropriate if the parties to the other proceedings are not the same.

A defendant against whom a serious allegation (such as deceit) is made is entitled to an expeditious hearing, and should not be left for years waiting for the outcome of another case over which he (and the Court) has no control. An action alleging fraud should come to trial quickly; this unwarranted delay may lead to an action being dismissed for want of prosecution even before the limitation period has expired. . .. ."

23. To summarise, it is not in dispute therefore, that the imposition of a case management stay is a matter of discretion, the burden upon the applicant is high and the circumstances warranting the imposition of a stay in circumstances such as these are rare and compelling.

The Submissions

24. In summary, Mr Lowe QC on behalf of Isis makes his submissions under three heads. He says that Isis would be content to allow this Action 599 to proceed but for three stumbling blocks. They are: (i) what I shall call the Manx issues, (ii) the difficulties which would arise with regard to limitation and (iii) the prohibition upon amending Action 599 in order to incorporate the issues raised in the Isle of Man proceedings, which he says arises from the Credit Institutions (Reorganisation and Winding up) Regulations 2004 ("the Credit Regulations").
25. As I have already mentioned, he says that if these matters could be overcome and Isis were not prejudiced, it would have no objection to the entirety of the issues being determined in Action 599. However, he points out that the fact that Kaupthing and Oscatello are content not to take any limitation or amendment point against Isis, does not cure the position. He says that such concessions do not meet the fundamental difficulty which he identifies in relation to the Credit Regulations, nor do they overcome the limitation issues as against the directors.
26. Mr Lowe QC relied upon paragraph 22 of the judgment of Longmore LJ in Amlin Corporate Member Ltd & Ors v Oriental Assurance Corporation [2012] EWCA Civ 1341 to which I have referred, to the effect that the exclusive jurisdiction clause is a factor to be taken into consideration when exercising the discretion and may be important but nevertheless is merely a factor and is not decisive. He submits that there is a complete identity of factual issues between Action 599 and the Manx proceedings and that therefore the position is quite unlike that in the Reichhold case. I should mention that when referring to the Manx proceedings I understood him to mean not only the Isle of Man proceedings but also the appeals in relation to the proofs of debt which incorporate the pleadings in Action 599. As a result of that identity of factual issues he said that the danger of inconsistent findings was very high and that the matter cried out for one of the two jurisdictions to defer to the other and given the substantive claims and relief sought in the Isle of Man action, it was natural that Action 599 should be stayed. Furthermore, he points out that the alternative monetary claims in the Isle of Man proceedings are for sums in excess of the value of the Fund.
27. He also says that for the purposes of the application for a stay, Action 599 should be treated as if it had commenced in 2012 when the amendments were made as a result of the permission granted by Floyd J. He says that summary judgment having been granted by Lewison J in March 2011, Action 599 was merely used as a platform and the claims included by way of amendment were new. By that stage, of course, the Isle of Man proceedings were already on foot.
28. In response, in summary, Mr Trower QC on behalf of Oscatello and Eliza, Mr Snowden QC on behalf of Kaupthing and Mr Samek QC for Mr Adalsteinsson all submit that the heavy burden upon Isis to show that the circumstances are sufficiently rare and compelling to warrant a stay has not been discharged and that none of Mr Lowe's three difficulties are of sufficient weight to warrant such a step. They also reject Mr Lowe's analysis in relation to amendment. However, Mr Snowden on behalf of Kaupthing takes a different approach with regard to Isis than he does in relation to Mr Adalsteinsson, something to which I shall return.
29. I will take each of Mr Lowe's main three heads in turn.

(i) The Manx Issues

30. The specific Manx Issues fall into two categories although Mr Lowe says that they both have the same result. First, he says that there are Company law matters in relation to which the Courts of the Isle of Man have a legitimate interest and secondly, there is the insolvency process in relation to Isis which is inevitably based in the Isle of Man and in which steps have been taken.
31. The company law matters are (i) the appropriate treatment of an equitable charge and the effect of its non-registration, (ii) questions as to whether there has been an impermissible return of capital by Isis and lastly, (iii) the nature and extent of the breaches of fiduciary duty by the directors. In this regard, Mr Lowe referred me to Konamaneni & Ors v Rolls Royce Industrial Power (India) Ltd & Ors [2002] 1 WLR 1269. In that case, the claimants were minority shareholders in a company incorporated in India who sought to bring a derivative action on its behalf against two English companies. My attention was drawn in particular to paragraphs 55 and 66 of the judgment of Lawrence Collins J as he then was. They are as follows:

"55. Two points are being made by Pennycuick J. The first is that the extent of the duties of the director of a foreign company is governed by the law of that company's, the place of incorporation. The second is that the courts of that place are "the only proper tribunal" in which the members can seek to control the exercise of that power. The first point is unexceptional and indeed obvious, but it may be that the second proposition goes too far, in allocating exclusive responsibility to the courts of the place of incorporation for making orders controlling the exercise of discretionary powers. The decision predates the development of the modern forum non conveniens principles from later in the 1970s: see The Atlantic Star [1974] AC 436, and was given at a time when the prevailing view was that if the English court had jurisdiction, there was not normally a discretion to refuse to exercise it. If a similar point were to arise for decision today, I consider that the correct approach would be to say that the courts of the place of incorporation are very likely indeed to be the appropriate forum, but not so overwhelmingly that they will necessarily be the exclusive forum. So understood Pergamon Press Ltd v Maxwell [1970] 1 WLR 1167 confirms that questions of internal management are governed by the law of the place of incorporation, and that the courts of that place are best suited to give decisions on the control and extent of the powers of the management.

. . . . .

66. I also consider that the effect of Pergamon Press Ltd v Maxwell [1970] 1 WLR 1167 is, at the least, that if issues arise relating to the exercise of what Pennycuick J described as discretionary powers of management, then I should accord considerable weight to the potential role of the courts of the place of incorporation. I doubt whether they have exclusive jurisdiction to deal with such issues. For example it may be wholly unjust to require recourse to an offshore haven to pursue fraudulent directors in a case which has no connection with the jurisdiction other than that it is the place of incorporation."

32. Mr Lowe submitted therefore, that in this case, as Isis was incorporated in the Isle of Man that jurisdiction had a natural legitimate interest as a matter of policy, in determining issues in relation to the directors' fiduciary duties, the issue as to the effect of the unregistered equitable charge and whether there had been an impermissible return of capital.
33. Furthermore, with regard to the claims against the directors, he argued that it was questionable whether Action 599 could be amended to include the claims and even if it could, a fundamental difficulty would arise when Isis sought to serve the directors out of the jurisdiction. He also says that if such a strategy were adopted, Isis would be prejudiced as a result of the limitation issues to which I shall refer.
34. With regard to the insolvency process, Mr Lowe says that it is intrinsically entwined with the Isle of Man proceedings themselves, it is Isle of Man based and proofs of debt have been filed, rejected and are already subject to appeal. Mr Lowe referred me to the speech of Lord Collins in Rubin v Eurofinance [2012] 3 WLR 1019 where a party had submitted a proof of debt in the New Cap appeal. He observed at paragraph 167:

"I would therefore accept the liquidators' submission that, having chosen to submit to New Cap's Australian insolvency proceeding, the syndicate should be taken to have submitted to the jurisdiction of the Australian court responsible for the supervision of that proceeding. It should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding."

He submitted therefore, that Kaupthing, Kaupthing Finance and Oscatello had in effect elected to have their claims dealt with in the Isle of Man.

35. Mr Snowden QC's response on behalf of Kaupthing was adopted by Mr Trower QC on behalf of Oscatello and amplified by Mr Samek QC on behalf of Mr Adalsteinsson. In summary, Mr Snowden submitted that there is no suggestion whether in the evidence for the purposes of this application or in the pleadings in Action 599 that there is any material difference whatever between Manx and English law with regard to the Manx issues.
36. He points out that if Manx law were different it would have been necessary to plead the differences but for example, there is no such reference at paragraphs 163 and 164 of the Amended Particulars of Claim in relation to directors' duties. Lastly, at paragraph 167 the facts relating to the alleged unlawful return of capital are all pleaded in the familiar English form and there is no reference to Manx law. He submitted therefore, that no material difference had been pleaded and that even if it had, it would merely be necessary for the court to determine the foreign law on the basis of expert evidence.
37. With regard to the Konamaneni case, he says that the circumstances were entirely different. The question there was whether a derivative action should be commenced and therefore, it related to the internal management of the company and accordingly, was more suited to be dealt with in the place of incorporation. Mr Snowden says that this is a different world from breach of fiduciary duty. He also pointed out that Mr Lowe QC had accepted that it was an English authority which was likely to apply in relation to the issues arising with regard to the equitable charge and that the provisions in relation to registration were almost identical to those under English law. Lastly, he repeated that the issue in relation to the unlawful return of capital is pleaded in the English form and made reference to the fact that all of the authorities on a disguised return of capital have been considered very recently by the Supreme Court in the case of Progress Properties.
38. With regard to the claims in the Isle of Man against the directors, Mr Snowden characterised them as subsidiary claims which would fall away if clause 6 of the Framework Agreement were set aside. In any event, he submitted that the directors were necessary and proper parties to Action 599 and ought to be joined. He says that they are necessary and proper parties to the claim that clause 6 is invalid as a result of their breach of duty and accordingly, there would be no difficulty in service out of the jurisdiction. He also says that there is nothing in the assertion in the witness statement of Ms McHarrie that the directors would be prejudiced were they joined. He pointed out that they already have English counsel who had a watching brief at this very hearing. He did accept however, that the directors' claims for a contribution or indemnity against Kaupthing could not be pursued in Action 599 as a result of the Credit Regulations to which I shall refer.
39. In summary, therefore he contends that all the issues can be litigated within Action 599 to which Oscatello is also a party and that that is the course which should be adopted.

(ii) Limitation

40. In this regard, Mr Lowe submits that even if amendment of Action 599 in order to include allegations of breach of fiduciary duty were possible, Isis would be prejudiced by such a course because parts of the action against its directors in the Isle of Man proceedings would be statute barred were the amendment route available and adopted.
41. In response Mr Snowden says that any limitation difficulties were Isis to seek to amend Action 599 to include claims against the directors, if and to the extent that they exist, are of Isis' own making. He pointed out that at the time that the Isle of Man proceedings were commenced on 23 December 2011, Isis thought fit to commence protective proceedings against Kaupthing in England but did not do the same in relation to the directors. In any event, he says that it would relate to a very small part of the claim being £1.2m in relation to the Alumdawn transaction which took place in June 2006 and which Mr Lowe was happy to accept Isis would forgo if it were the only claim and the claim in relation to 90% of the profits on a loan in relation to the sub-participation agreements. Those agreements were also entered into more than six years ago. He says therefore, that these are small amounts and of insufficient weight to justify a stay.
42. It was accepted in fact, that Kaupthing would not take any limitation points against Isis and that in fact, the real extent of any prejudice turned upon the claims against the directors and in fact, if they could not be joined in England, whether had they been successfully sued in the Isle of Man any substantial judgment would be recovered against them. There was no evidence before the court in relation to the likelihood of recovery.

(iii) Credit Institutions (Reorganisation and Winding up) Regulations 2004

43. In any event, Mr Lowe says that it is not possible to amend Action 599 in order to bring in the Isle of Man claims by Isis and its directors as against Kaupthing in England and avoid a duplication of proceedings in that way. Nor he says would the stumbling block be overcome were Kaupthing to seek negative declarations in relation to the Impugned Transactions in Action 599.
44. The issue arises as a result of the effect of the relevant insolvency regime. As Gloster J set out in Lornamead Acquisitions Limited v Kaupthing Bank HF [2011] EWHC 2611 (Comm), at paragraphs 61 and 62, the primary European instrument dealing with cross border insolvency does not apply in relation to credit institutions which are subject to special regulatory regimes. Kaupthing is such a credit institution. Gloster J very helpfully goes on to explain the relevant provisions in relation to credit institutions and the way in which they are dealt with within the EEA (of which both England and Wales and Iceland are part) in the following way:

"The 2001 Directive

63. As regards credit institutions^[1], the gap in legislation relating to cross-border insolvency was filled by the 2001 Directive, which formed part of the EC legislative framework on the co-ordination of laws, regulations and administrative provisions with regard to the taking up and pursuit of the business of credit institutions, which is found in Directive 2000/12/EC (the "2000 Banking Directive")^[2]. As such, it was adopted, not only by the members of the EC bound by the Insolvency Regulation, but also by members of the EEA, who had adopted the EC framework on the co-ordination of credit institutions.

64. It has long been established under English law that the English Courts will generally recognise and respect insolvency proceedings ongoing in the place of a company's incorporation, and seek to co-ordinate any English proceedings with them. As Lord Hoffmann put it in McGrath v. Riddell (supra):

"6. Despite the absence of statutory provision, some degree of international co-operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the Court of the bankrupt's domicile which receives world-wide recognition and it should apply universally to all the bankrupt's assets.

7. This was very much a principle rather than a rule. It is heavily qualified by exceptions on pragmatic grounds; elsewhere I have described it as an aspiration: see Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26; [2007] 1 AC 508, 517 at paragraph 17. Professor Jay Westbrook, a distinguished American writer on international insolvency has called it a principle of 'modified universalism': see also Professor Ian Fletcher, Insolvency in Private International Law (2nd ed 2005) at pp. 15-17. Full universalism can be attained only by international treaty. Nevertheless, even in its modified and pragmatic form, the principle is a potent one."

65. In relation specifically to credit institutions, the 2001 Directive, which is based on international agreements, replaces the common law of modified universalism, with a purer form of unity and universalism, in which there can only be a single insolvency proceeding within the EEA, based in the credit institution's home Member State, which has automatic effect, and extends to all branches, throughout all states within it^[3]. This is made plain both by the recitals to, and articles of, the 2001 Directive. As Lord Glennie put it in Landsbanki Islands HF v. Mills [2010] Scot CS CSOH 100^[4]:

"61. Taking the 2001 Directive as a whole, there can be no doubt that its purpose is to ensure that administration or winding up proceedings are dealt with exclusively in the home state of the credit institution, and to ensure that such proceedings, and the decisions taken in those proceedings, are recognised and given full effect in other states within the Community."

66. The 2001 Directive sets out a coherent and detailed code governing the insolvency of banks. The starting point is that the 2001 Directive has the objective of extending the co-ordinated cross-border position established by the 2000 Banking Directive prior to insolvency, to the position after insolvency."

45. Gloster J went on to consider the exceptions to the basic rule at paragraphs 73-75 in the following way:

"73. The basic rule for both reorganisation measures and winding up proceedings is that the "laws, regulations and procedures" of the insolvency proceedings of the home Member State (i.e. the lex concursus) will be effective across all Member States, including in relation to proceedings against the credit institution, save where the Directive provides otherwise. The latter is a reference to Articles 20 to 32 of the Directive, which specify those limited areas where the lex concursus will not apply^[5].

74. Article 32 deals with "Lawsuits pending":

"The effects of insolvency proceedings on a lawsuit pending concerning an asset or right of which the debtor has been divested shall be governed solely by the law of the Member State in which that lawsuit is pending."

75. Thus, save in relation to certain lawsuits which were already pending when the insolvency proceedings began, the law of the home Member State will determine the effect of the insolvency regime on proceedings ongoing elsewhere in the EEA. The logic of this distinction was explained by Longmore LJ in Syska v. Vivendi Universal SA [2009] EWCA Civ 677; [2009] 2 All ER (Comm) 891 (Court of Appeal), especially paragraph 16^[6]:

"Of course if no claim has been initiated before insolvency proceedings are opened, it is entirely appropriate that the lex concursus should determine how any subsequent litigation or arbitration should proceed. But if litigation or arbitration has begun before insolvency occurs, the natural expectation of businesses would be that it should be that law that should determine whether the proceedings should continue or come to a shuddering halt.""

46. Article 34 of the 2001 Directive required each Member State to bring into force laws, regulations and administrative provisions necessary to comply with it by 5 May 2004. As a result, in England and Wales, the Credit Regulations came into force on that very day.
47. At paragraph 77- 79 Gloster J explains the manner in which the 2001 Directive was given effect in English law in the following way:

"The 2004 Regulations

77. Member States were required to bring into force the laws, regulations and administrative provisions necessary to comply with the 2001 Directive. On 5 May 2004, the 2004 Regulations were brought into force in the UK for that purpose.

78. Part 2 of the 2004 Regulations, which is the part relevant for present purposes, deals with "EEA credit institutions": that is EEA undertakings, other than UK credit institutions^[7], as defined in the 2000 Banking Directive, namely credit institutions subject to the regulation of a Member State other than the UK. The 2001 Directive is implemented, in relation to such institutions, by two provisions:

i) Regulation 3 prevents an EEA credit institution from being the subject of a UK insolvency process, whether by Court order (see Regulation 3(1)), or out of Court (see Regulation 3(5) and (6)). Thus, such an institution can never obtain the protection of (for example) an administration order or a winding up order, both of which would give rise to an automatic statutory stay on proceedings^[8].

ii) Regulation 5 fills the gap that would otherwise arise in relation to such a company, by giving any ongoing reorganisation measure or winding up proceedings, as defined by the 2001 Directive, applicable to an EEA credit institution, direct effect in the UK^[9]. Regulation 5(1) provides:

"(1) An EEA insolvency measure has effect in the United Kingdom in relation to –

(a) any branch^[10] of an EEA credit institution,

(b) any property or other assets of that credit institution,

(c) any debt or liability of that credit institution, as if it were part of the general law of insolvency of the United Kingdom."

79. Thus, an EEA insolvency measure, which will necessarily be governed by the insolvency law of the EEA state in question, has effect in the UK as if it were part of the English statutory insolvency regime. As the Explanatory Note to the 2004 Regulations puts it: "EEA reorganisation measures and winding up proceedings are to be recognised in the UK.""

48. It is clear therefore, that the provisions of Icelandic law relating to "reorganisation measures and winding up proceedings" are to be treated as if they were part of the Insolvency law of England. There was no dispute therefore, that the task before me is to interpret the relevant provisions of Icelandic law as if they were part of the general law of insolvency of the United Kingdom, in order to determine whether any amendment of Action 599 would fall foul of them.
49. The key parts of Article 116 of the Icelandic Bankruptcy Act (No 21/1991) ("Article 116") in English translation are as follows:

"(1) Legal action shall not be brought against a bankruptcy estate in the district Court unless expressly permitted by law, except for criminal litigation in which a request is made for criminal sanctions applicable to bankruptcy estates. In such event, the action may be brought in the district where the bankruptcy proceedings take place.

(2) A legal action brought against a bankrupt before the Court order declaring the bankruptcy was issued may be continued until adjudication, provided the plaintiff notifies the trustee in bankruptcy of the action."

Article 99(2)(h) of the Icelandic Financial Undertakings Act ("Article 99(2)(h)"), provides a limited exception to the prohibition of actions against a bankruptcy estate in the following form:

"The legal effect of a ruling on financial reorganisation on lawsuits, concerning an asset or other right of which a credit institution has disposed of, initiated before the ruling on financial reorganisation was rendered, shall be governed by the law of the state where the lawsuit was initiated."

50. It is not disputed that as a result of Article 104(1) of the Financial Undertakings Act, Article 99(2)(h) applies to winding up procedures and not just to financial reorganisations. The experts in relation to Icelandic law on behalf of Isis, Kaupthing and Mr Adalsteinsson also all agree that Article 99(2)(h) is an implementation of Article 32 of the Directive.
51. It was the conclusion of Mr Adalsteinsson's legal expert, Mr Tamimi, in his first report, with which the other experts agreed, that Article 116 only prevents claims which cannot be brought as part of existing proceedings and that for the purposes of Articles 116 and 99 it is for English procedural law to determine whether amendments can now be made to Action 599. Mr Tamimi went on to conclude at 18(c) and (d) and 22 and 23 of his first report as follows:

"18(c) Under Icelandic law, the question of whether the claims can be brought as part of the existing proceedings would depend upon whether the civil procedure of the court in question (here, England) would allow the claims to be brought as part of the existing proceedings.

(d) If English procedural rules would allow the claims against Kaupthing to be brought as part of the existing proceedings then those claims could proceed and would not be prohibited by paragraph 1 of Article 116.

. . . . .

20. Article 99(2)(h) of the Iceland Act on Financial Undertakings has the stated objective of implementing Article 32 of European Parliament and Council Directive 2001/24/EC on the reorganisation and winding up of credit institution[s]. . . . . .

. . . . .

22. There is no question that pursuant to Article 99(2)(h) if proceedings are launched against a party who subsequently becomes subject to a winding up pursuant to a ruling in Iceland then those proceedings are subject to the laws of the state where the case was initiated. This applies both to the applicable procedure and the substantive law.

23. As a result, on the assumption that the claims by Mr Adalsteinsson against Kaupthing would be treated by English law as part of the existing proceedings, then Article 99(2)(h) of the Icelandic Act on Financial Undertakings No. 161/2002 stipulates that the process and substantive determination of these claims shall be exclusively a matter of English law. Accordingly, further provisions of Icelandic law, including Paragraph 1 of Article 116, would therefore, be irrelevant."

52. Mr Lowe says however, that the prohibition in Article 116 applies because there is no "pending lawsuit" for the purposes of Article 99(2)(h) and even if there were, it did not concern "an asset or other right of which a credit institution has disposed of . . .". He uses the terms from Article 32 because all of the experts on Icelandic law accept that Article 99(2)(h) is an implementation of that provision. He says that the exceptions to the general prohibition should be construed narrowly and with regard to the purpose of the legislation with which Mr Snowden agreed.

(a) "Law suit pending"

53. As there are no authorities which relate to Article 32 itself, with regard to the meaning of "pending" Mr Lowe took me to a series of authorities in relation to seisin. Although they deal with different regulations and in fact, a different circumstance, he submitted that although the meaning of "pending" is a matter for the national court, they are helpful by way of analogy and give a European flavour to the task of interpretation.
54. He referred me, for example, to Grupo Torras v Al Sabah [1995] 1 Lloyd's Rep 374, a case in which the Court considered the effect of Articles 16(2), 21 and 22 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters ("the Convention"). It was argued that English proceedings should be stayed either because the Spanish Court had exclusive jurisdiction under Article 16(2) of the Convention, or that there were proceedings pending in Spain of which the Spanish Court was first seised and that the English Court should decline jurisdiction or stay proceedings under Article 21 or 22. Articles 21 and 22 respectively provide:

"21. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Contracting States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.

22. Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings.

A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions.

For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

55. In that case at first instance, Mance J as he then was, considered the date by reference to the issue of which court is first seised should be resolved for the purposes of Articles 21 and 22 in the context of an amendment. He held at 419, column 1:

"It is difficult to think that the Convention contemplates retrospective satisfaction of the criteria of art 21 requiring "the same cause of action" and "the same parties". Indeed, if the submission were right, it would mean that it was open to the Quail co-plaintiffs to join in the Quail proceedings retrospectively by amendment at any time up until the day of any judgment given in any English action involving them, and by so doing to put themselves in a position to assert under art. 21 or 22 that the Spanish Court was first seised. On the other hand, certain amendments with retrospective effect are recognised by the English and it seems the Spanish legal systems. If by the time a Court comes to hear an application under Article 22, there have been amendments not affecting the cause of action or parties, it may well be that a Court would be able to assess the closeness of connexity under Article 22 by comparing the two sets of proceedings without reference to the date(s) when various allegations had been introduced. This is a difficult area, and the possibility that amendments not affecting the cause of action or parties might convert an action which would not otherwise have fallen to be regarded as related into a related action within art. 22 appears to me to be both remote and one which is better left until it arises in a concrete case."

56. Mr Lowe submits that the amendments in this case, were they to be made, would introduce new claims and that accordingly, they are not "pending" for the purposes of Article 32 and as a result, are barred under Article 116. In this regard, he also relied upon obiter dicta of Beatson J in Underwriting Members of Lloyds Syndicate 980 & Ors v Sinco SA [2008] 2 CLC 187. It received qualified approval in the Court of Appeal in FKI Engineering Ltd & Anr v Stribog Ltd [2011] 1 WLR 3264. That case was concerned with an application pursuant to Article 28 of Council Regulation (EC) No 44/2001 to stay an action. It was held that the court had to determine whether it and the court of another member state were both seised of an action and where they were, it had to ascertain in accordance with Article 30 whether it or the court of the other member state had been the first to achieve seisin in order to determine which court had jurisdiction to impose a stay. In that context, Mummery LJ pointed out at paragraph 40 of his judgment that:

" … one should be cautious about placing too much weight on passages in authorities which, while in the same area of law and couched in general terms, are not directly in point."

57. He found both Grupo Torras SA v Al-Sabah [1996] 1 Lloyds Rep 7 "a decision on Article 21 of the Convention which was the predecessor of Article 27" and the Sinco case on Article 27 itself, to be irrelevant. In the Grupo Torras case, in the context of the addition of new parties, the court rejected the application of the doctrine of relation back of an amendment. In the Sinco case, an amendment was made to add a new claim in an action seized first in point of time. The amendment was subsequent to the seisin of the second court and as a matter of domestic law, would normally relate back to the commencement of the first action. Beatson J said obiter, at paras 60-68 that the relation back would be disregarded in determining which court was first seised of the proceedings for the purposes of article 27.
58. In the FKI case, Rix LJ stated at paragraph 116 that an amendment in order to plead an entirely new cause of action "especially one which does not arise out of the same or substantially the same facts but would constitute a "new claim" for limitation purposes . . . . . have to be regarded as new proceedings."
59. In this regard, Mr Snowden (supported by Mr Samek on behalf of Mr Adalsteinsson and Mr Trower on behalf of Oscatello) submitted that the authorities relating to seisin were concerned with an entirely different circumstance where there were two concurrent proceedings in two different countries and the issue as to which was first seised was a timing point. He says that the insolvency regime with which Articles 116 and 99(2)(h) is concerned is a different context altogether and not one of timing at all. The question for the purposes of Article 99(2)(h) is whether the fact of Kaupthing's insolvency in Iceland should have any effect upon Action 599. It is not concerned with whether Action 599 or the Isle of Man proceedings were commenced first. He says that the expert evidence makes clear that that is a question for English law as to whether Action 599 can be amended.
60. With regard to Kaupthing he says it is clear that Action 599 can be amended and accordingly, that the claims fall within Article 99(2)(h). However, in relation to Mr Adalsteinsson's proposed counterclaim, he says that that is an entirely new claim and therefore falls foul of Articles 116 and cannot be saved by article 99.

(b) "an asset or other right . . ."

61. With regard to the phrase "concerning an asset or right" which appears in Article 99(2)(h), Mr Lowe says that there is no asset in this case because clause 6 of the Framework Agreement does not confer rights upon Kaupthing. In this regard, he referred me to paragraphs 36 -39 of Christopher Clarke J in Syska & Anr v Vivendi Universal SA & Ors [2009] Bus LR 367 at which the phrase "concerning an asset or a right of which the debtor has been divested" in Article 15 of Council Regulation (EC) No 1346/2000 was under consideration. In that context, Christopher Clarke J held that the phrase included "(i) a claim by the debtor to a particular asset or a claim asserting any other right eg in contract; and /or (ii) a proprietary claim by a third party to the assets or rights of the debtor; (iii) a claim by a third party which, if successful, would fall to be satisfied out of the assets the subject of the insolvency proceedings."
62. Mr Snowden on behalf of Kaupthing accepted that Christopher Clarke J's analysis in the Syska case is relevant here despite the fact that it related to Article 15 of the Council Regulation. However, he submitted that the judge's categories were not expressed to be exclusive. Furthermore, it was not correct to contend that there was no asset or right in this case. He pointed out that Kaupthing was a party to the Framework Agreement and has rights and obligations under it and was joined to Action 599 because it is a proper party and is interested in the outcome of the claims to the Fund, which may ultimately result in it recovering assets through Oscatello. Accordingly, he says that there is clearly a pending action concerning assets or rights of Kaupthing which could be amended. In this regard, Mr Samek added that if Mr Lowe were right, Article 99(2)(h) would not apply and Article 116 would be no bar with the effect that the entire regime would be irrelevant which cannot be correct.
63. As an alternative, Mr Snowden submitted that the matter was covered by Article 116(2).

General submissions

64. On behalf of Oscatello, Mr Trower also made a number of general submissions which were adopted by Mr Snowden for Kaupthing. First, he reminded me that the Framework Agreement is not within the four corners of the Isle of Man proceedings because of the exclusive jurisdiction clause in favour of the English courts and what is more that Oscatello is not a party to those proceedings. By contrast he says, there is nothing which cannot be heard in England.
65. He also says that the claims for damages in the Isle of Man proceedings cannot be established until the validity of the Framework Agreement has been determined in England. Loss is claimed against the directors on the basis that they wrongfully entered into the Impugned Transactions including the Framework Agreement. Accordingly, he says, it is logical to determine its validity first. This too he says, applies to the proofs of debt which were lodged at the request of the liquidator of Isis as a protective measure. They make clear that they are contingent upon the failure of the trust claims in relation to the Fund which accordingly, must be determined first. He adds that it is curious to contend that one should deal with the validity of the Framework Agreement which is subject to an exclusive jurisdiction clause, in the context of an appeal against the rejection of the proofs of debt. Proofs of debt are means by which a creditor seeks to share in the distribution of the insolvent estate whereas the determination of the validity of the Framework Agreement is in effect, the recovery of an asset for the estate.
66. Furthermore, he submitted that the circumstances would have to be very rare indeed to warrant a stay in circumstances such as these where Isis itself had commenced two sets of proceedings and in this regard referred me to the first principle set out at paragraph 21 of the judgment of Gloster J in the Klockner case to which I have referred. He also submitted that as the liquidator of Isis called for the proofs of debt in the Isle of Man it can hardly suggest that Oscatello has elected to be bound by the Isle of Man jurisdiction as a result of submitting a protective proof nor that it would be fair should such a step lead to Oscatello being bound up with the Isle of Man proceedings to which it is not a party. The trust claims in Action 599 are logically anterior he says and it is surprising that the liquidator of Isis should now seek to stay those proceedings which it first brought.
67. He also drew attention to the third factor to which Gloster J referred in paragraph 21 of the Klockner case, that in this case much time and money has already been expended on the English proceedings which were originally commenced in February 2009. Furthermore, he says that Isis did not proceed with its application for a stay before Floyd J and nothing much has changed since then, save that the parties have been forced to appeal against the rejection of the proofs of debt. It is incumbent upon the applicant, he says, to apply for a stay expeditiously which Isis has failed to do.
68. Next, he turned to the fourth and fifth factors to which Gloster J drew attention. He pointed out that the parties in Action 599 and the Isle of Man proceedings are not the same and that in fact, only Isis and Kaupthing are in common. He submits that even if a stay of Action 599 were granted it would be of no assistance because in just the same way, any determination of the factual issues in the Isle of Man proceedings would not bind the relevant parties.
69. In this regard he referred me to Curtis & Anor v Lockheed Martin UK Holdings Ltd [2008] EWHC 260 (Comm), a case in which a case management stay was sought in relation to the determination of certain issues pending the outcome of proceedings in Italy. Teare J considered the risk in that case of inconsistent decisions and whether it would be avoided by the grant of a stay. He found that because the stay would not be final and the claimants would not be bound by the decision of the Italian court, no estoppel would be created and it would not be an abuse of process to seek a finding inconsistent with it. In the circumstances the stay would not prevent the risk of inconsistent decisions. He found that the benefits of a stay did not clearly outweigh the significant disadvantage to the claimant of the delay in resolution of the English claims.
70. Mr Trower says that the risk of inconsistent decisions has been brought by Isis on itself, that just as in Curtis, the stay will not necessarily avoid it and that there is no reason to assume that Oscatello will accept decision of the Manx court by which it is not bound, in relation to issues of fact.
71. He also stressed that whilst the exclusive jurisdiction clause in the Framework Agreement is only one factor to be taken into account it is a very important one and that furthermore there are other agreements relevant in Action 599 with such clauses.
72. Lastly, he concentrated on the sixth issue set out by Gloster J in the Klockner case, namely, the seriousness of the allegations. He pointed out that they were very serious, that all the estates are insolvent, that the centre of activity for the litigation had been London and that it would be an injustice to Oscatello were the determination of the claims to the Fund to be delayed whilst the issues in relation to breach of duty were dealt with in the Isle of Man. He also cautioned against seeking to hive off the issues between the jurisdictions.
73. Mr Snowden also made more general submissions on behalf of Kaupthing which were adopted and endorsed both by Mr Trower and Mr Samek. First, he pointed out that Mr Lowe raises the issue in relation to the Credit Regulations in order to demonstrate that it would not be possible to amend Action 599 in order to bring the Isle of Man claims against Kaupthing into this action. However, the amendments made to Action 599 as a result of the permission granted to Isis by Floyd J in March 2012, include claims against Kaupthing but it was not mentioned on that occasion that to give such permission would be contrary to the Credit Regulations. On the contrary, Mr Lowe says that the difficulty did not arise in relation to those amendments because no substantive relief was sought against Kaupthing as a result.
74. He also stated that if there were no difficulty under Icelandic law, Kaupthing would be willing to consent to the amendments to Action 599. Kaupthing wishes to adopt a pragmatic stance and accordingly, if there were difficulties, would be content were it considered appropriate that the factual matters be dealt with in Action 599 and that they be used in order to obtain the relevant relief in the Isle of Man. He said that such an approach would avoid the dangers of competing factual findings and the repetition of evidence in two jurisdictions which would be involved were there to be two factual enquiries. Lastly, he mentioned that Kaupthing is willing to counterclaim in order to seek negative declarations in Action 599 if it would assist.
75. Mr Lowe indicated that he would be content with this if it were permissible and not contrary to Article 116. However, he submitted that there is no clear expert evidence to suggest that Article 116 can be waived. He also points out that there are serious dangers in proceeding in the way Mr Snowden suggests. In particular he says that the issues as to validity of the transactions turns in part upon the duties and conduct of the Isis directors and therefore, cannot be dealt with as if it were freestanding.
76. Lastly, in anticipation of the argument that the English proceedings in relation to clause 6 logically come first he pointed out that there may be restitutionary claims to be pursued in the Isle of Man even if the Impugned Transactions cannot be set aside. Furthermore, he says that the issues arising in relation to clause 6 will in any event be decided in the Isle of Man proceedings, that the Isle of Man proceedings include the directors and all the Impugned Transactions.
77. Finally, he concluded by submitting that it would be appropriate to complete the pleadings in Action 599 in any event and subject to that it should be stayed. If I were against him on the construction to be placed upon the Credit Regulations, he submitted that all should be dealt with in Action 599 but for the claims against the directors.

Conclusion

78. Although I am concerned to avoid the unfortunate consequences which are elaborated in the extract from the Abidin Daver to which I have referred, for the reasons which I shall set out, in my judgment, this is not a case in which the circumstances are sufficiently rare and compelling to warrant a stay of Action 599 in order to enable the Isle of Man proceedings to take place first. My conclusion in this regard relates both to the Isle of Man proceedings themselves and to the wider insolvency proceedings which have now reached the stage of appeals against rejection of proofs.
79. First, I take into account that in my judgment, the issues which arise in relation to clause 6 of the Framework Agreement in Action 599 are logically prior to the claims in the Isle of Man proceedings or any appeal against the rejections of the proofs filed in Isis' liquidation.
80. Second, it is also relevant that the appeals against rejection of proofs are contingent upon and expressly refer to the facts and matters in Action 599 itself. In my judgment, it would both more convenient and appropriate that those matters were decided first in the action itself rather than as part of the insolvency process designed for the purposes of distribution and I accept Mr Trower's submission in this regard.
81. Furthermore, given the circumstances in which the proofs were lodged and the fact that they were couched as being contingent to any entitlements to the Fund to be determined in Action 599, in my judgment, they cannot be characterised as an election to have the underlying claims determined in the Isle of Man and accordingly, the circumstances can be distinguished from those under consideration by Lord Collins in the Rubin v Eurofinance case.
82. Third, Action 599 has been ongoing since 2009 (albeit substantially amended in 2012), much time and money has been expended upon it and it is at a more advanced stage than either the Isle of Man proceedings or the appeals in the insolvency proceedings there. Although the scope of Action 599 was altered quite considerably as a result of the amendments made in 2012, given that it is still more advanced than the proceedings of both kinds in the Isle of Man, I do not accept Mr Lowe's submission that it should be treated as if it were commenced in 2012.
83. Fourth, in my judgment it is also relevant that Isis chose to bring both actions and therefore, has brought the present circumstances upon itself. Furthermore, although I am informed that it brought additional protective proceedings against Kaupthing in England, it could have but did not do so against the individual directors, something to which I shall return in the context of limitation.
84. Fifth, the Framework Agreement is governed by English law and contains an exclusive jurisdiction clause in favour of the English courts. This is obviously only one of the factors to be taken into consideration but given that I have found that the determination of the validity and construction of clause 6 of the Framework Agreement is anterior to the matters to be determined in the Isle of Man, it seems to me that it is a relatively important factor. So too, is the fact that as a result of the clause, even if the stay were granted, all the relevant issues could not be determined in the Isle of Man proceedings.
85. Sixth, I take into account that Oscatello and Eliza both of which are in liquidation are not parties to the Isle of Man proceedings. Accordingly, in my judgment, not only would they be prejudiced by the delay in dealing with their claims to entitlement to the Fund were Action 599 stayed but they would also be prejudiced by the potential for findings of fact in the Isle of Man by which they would not be bound but which might indirectly affect their position but in relation to which they had no input. A stay therefore, would not necessarily prevent the risk of inconsistent decisions. Accordingly, the alleged benefits of granting a stay would not clearly outweigh the disadvantages to Oscatello and Eliza.
86. Seventh, although it is accepted that the Impugned Transactions are raised in Action 599 more by way of background, given that in my judgment, a determination in relation to the Framework Agreement is logically prior to any relief against the Isis directors, it is an inevitable consequence that factual findings will be made with regard to the Impugned Transactions and that there is potential for inconsistent findings. This risk could at least be minimised by determining the issues in Action 599 and if necessary, seeking remedies against the directors thereafter. Given that it seems likely to me that the directors are proper parties to Action 599 (something to which I shall return) in practice, it is possible that the difficulty or inconvenience may be avoided. However, even if that were not the case, on balance, in my judgment, the risk does not outweigh the advantages of continuing Action 599 at this stage.
87. Eighth, with regard to the Manx Issues, limitation and the Credit Regulations, I accept the submissions of Mr Snowden, Mr Trower and Mr Samek. In particular, with regard to the Manx Issues, I accept Mr Snowden's submission that the question of breach of fiduciary duty is different from the issues under consideration in the Konamaneni case which were more suited to be dealt with in the place of incorporation. I also accept his submissions to the effect that there is nothing to suggest that there is a material difference between English and Manx law in relation to the return of capital and the status of the equitable charge. Accordingly, given the complexity of this matter, I do not consider that these matters are of sufficient weight to warrant the grant of the stay.
88. This also applies in relation to the claims against the directors which are subsidiary claims which would fall away if clause 6 of the Framework Agreement were set aside. As I have already mentioned, it seems to me to be likely that they are necessary and proper parties to Action 599 and accordingly, could be joined. In this regard, I take account of the fact that as a result of Article 116, since Kaupthing's insolvency it is not open to the individual directors to commence a new claim in England seeking an indemnity and contribution against Kaupthing were the claims against the directors to become relevant and to be made out. However, it is possible that those circumstances may never arise and in the event that they do, the issues are relatively self-contained.
89. This brings me on to Mr Lowe's concerns about the effect of limitation were Isis to seek to amend Action 599 in order to incorporate the claims against the individual directors. Once again in this regard I accept Mr Snowden's submissions to the effect Isis brought the situation upon itself by failing to bring precautionary proceedings in England in addition to the Isle of Man proceedings, that the amounts involved are relatively small and that as against the individual directors there is no evidence of likely recovery were such claims to become relevant and the loss proved.
90. As I have already mentioned, I also do not accept Mr Lowe's submissions with regard to the Credit Regulations. First, I accept Mr Snowden's submissions, adopted and supported by Mr Trower and Mr Samek, to the effect that the authorities on seisin are not of relevance when determining whether there is a pending lawsuit for the purposes of Article 32 or that a lawsuit has been initiated in the terms of Article 99(2)(h). They are concerned with a circumstance which is different from that with which the insolvency regime within the EEA is concerned. Further, in this regard, I take particular note of Mummery LJ's words of warning in the Stribog case, to which I referred at paragraph 46.
91. Further, as I have already mentioned, there appears to be no dispute as to the expert evidence as to Icelandic law that Article 116 only prevents claims which cannot be brought as part of existing proceedings and whether such claims are part of the existing proceedings is a matter for English procedural law.
92. In my judgment, given the present scope of Action 599, there can be little doubt that such amendments if permitted, would be within Action 599 and would not be regarded as new proceedings. It seems to me that if Mr Lowe were right, it could be argued that some of the amendments made in 2012 fell foul of Article 116. Equally, given the fact that Kaupthing was a party to the Framework Agreement, has an active interest in the outcome of Action 599 and the likelihood that it will recover assets as a result, albeit through Oscatello, in my judgment, Mr Snowden's submissions with regard to "asset or other right" should be preferred. The categories set out by Christopher Clarke J in the Syska case are not exclusive and it seems to me that Article 99(2)(h) is wide enough to encompass such a situation. There is no expert evidence to the contrary.
93. In the circumstances, I do not think that it is necessary to deal with Mr Snowden's subsidiary submission to the effect that Article 116(2) applies which in fact, he did not elaborate.
94. Lastly, as Mr Trower pointed out, it is difficult to see that much has changed since the question of a stay was raised in the hearing before Floyd J at which Isis' attempt to have that issue adjourned was specifically rejected. No new facts have emerged which would justify a different conclusion.
95. It is likely that England is an available forum for decision of the majority of the relevant issues. In any event, Isis would not be prevented from seeking whatever relief may remain relevant in the Isle of Man once the issues have been resolved in Action 599.
96. In my judgment, therefore, on balance and given that a stay would not avoid the potential for inconsistent findings of fact between Isis and Oscatello and Eliza and the other matters to which I have referred, although the circumstances are far from straightforward, the indicators point to justice being best served by the continuation of Action 599 and the determination of any additional issues in the Isle of Man, thereafter.

(2) Mr Adalsteinsson's application

97. Mr Adalsteinsson is himself a party to Action 599 and in order properly to constitute the action, was joined as a representative defendant from the start. He now wishes to bring the counterclaims in this action in the form to which I referred at paragraph 12. Mr Samek submits on his behalf that the analysis is very simple. For the purposes of Article 99(2)(h), as at 22 November 2010 when there was a ruling in relation to the financial reorganisation of Kaupthing, was there a lawsuit which had already been initiated? Action 599 was already on foot and therefore, he says that the answer is yes, and Mr Adalsteinsson's counterclaim falls within the exception in Article 99(2)(h).
98. He says that the experts agree that the question is whether as a matter of English procedure, Mr Adalsteinsson could now bring the claims against its co-defendant Kaupthing and refers in particular to paragraphs 30 and 31 of Mr Tamimi's first report where he concluded in relation to article 116:

"30. . . . a case is not brought unless initiated in the very way normal civil cases are brought and which is prescribed by the relevant procedural rule. Any procedure before the courts other than a case brought in that fashion is consequently not caught by the provision of Paragraph 1 of Article 116IAB.

31 . . . when a claim can be advanced within on-going or already existing civil proceedings, nothing in Article 116 prevents such a claim from being made and going forward. Conversely, Article 116 prevents claims which cannot be brought as a part of existing proceedings."

99. He says therefore, that the question is whether English procedure permits Mr Adalsteinsson to bring his counterclaims against his co-defendants within the existing proceedings, the answer to which is clearly, "yes". CPR Part 20 he says acknowledges that additional claims form part of that lawsuit. They have the same claim number and are within the existing proceedings. This is consistent for example, with the wording of CPR 20.10(1) which make direct reference to "the proceedings." English law is then applied to determine the question of whether those claims should be permitted to go forwards, to which he says the answer is also "yes".
100. It is said against him by Mr Snowden on behalf of Kaupthing that in fact, he seeks to bring an entirely new claim against Kaupthing contrary to the prohibition in Article 116 and even if that were not the case, permission should not be granted in respect of his counterclaim. As I have already mentioned, the Part 20 claim includes a claim pursuant to section 423 Insolvency Act 1986 and allegations of conspiracy and breach of contract.
101. Mr Snowden submits that Mr Adalsteinsson's position with regard to his counterclaim is entirely different from that of the amendments to Isis' claim against Kaupthing. He says that Mr Adalsteinsson does not have a pending lawsuit as a creditor against Kaupthing at all. He only had a counterclaim against Isis upon which he has already obtained judgment. The fact that he and Kaupthing were co-defendants to the claims of Isis is insufficient he says for the purposes of Article 99(2)(h). He is seeking to bring an additional claim for which permission is necessary under CPR Part 20 and which is treated pursuant to CPR part 20.7(2) as having been made when the court issues the appropriate claim form and is treated separately for the purposes of the Limitation Act 1980. In fact, Mr Snowden says that it is a new and separate claim for all purposes.
102. Mr Samek on behalf of Mr Adalsteinsson accepts that the claim is to be characterised as an additional claim for the purposes of CPR Part 20 but points out that Articles 116 and 99 are concerned with lawsuits and not claims within them. He also says that CPR Part 20 itself recognises that the additional claim is brought as part of the same lawsuit.
103. It is also said that Mr Adalsteinsson could not bring the claims he now seeks to introduce into Action 599 in Iceland and therefore, if permission were given one way or another the integrity of the insolvency regime throughout the EEA and its purpose of dealing fairly and equitably with creditors would be compromised. Mr Samek on Mr Adalsteinsson's behalf points out in this regard, that if it is accepted that the matter is one of English law, it is of no relevance to look back to see what would be the position in Iceland. In any event, if Mr Adalsteinsson could not proceed in Iceland it is a good reason why he should be permitted to do so here. In response, Mr Snowden says that if this is the case, it would be wrong to subvert the Icelandic regime and the application of Icelandic law by allowing Mr Adalsteinsson to bring those claims here.
104. In any event, Mr Snowden says that the effect of both the evidence of Mr Oddsson and the second report of the expert Mr Tamimi (both dated 17 December 2012 and served on the first morning of the hearing) is that it may be possible that Mr Adalsteinsson's claims in Iceland could be expanded in order to include the claims he wishes to bring in his CPR Part 20 claim. Accordingly, Mr Snowden submits that in order to avoid the possibility of subverting the Icelandic regime, Mr Adalsteinsson should seek to expand his claim in Iceland first and if he is successful, renew his application before this court at a later stage.
105. Mr Oddsson, Mr Adalsteinsson's solicitor, who is qualified in both Iceland and England and Wales, states in his witness statement at paragraphs 10 and 16 as follows:

"10. . . . . . By virtue of the claims which Mr Adalsteinsson has made in Kaupthing's insolvency, even aside from this litigation, he would be entitled to bring in Kaupthing's insolvency the Part 20 Claims set out in O (unlawful means conspiracy), P (causing loss by unlawful means) and Q (procuring a breach of contract)." (paragraph 10) (File F, p. 53)

"16. . . . . . . . It would be possible for Mr Adalsteinsson based upon the claims he has already submitted in Kaupthing's insolvency to advance against Kaupthing before the District Court the claims which are set out at sections O, P and Q of his Amended Defence and Counterclaim." (paragraph 16) (File F, p.54)"

106. Mr Tamimi, the expert on Mr Adalsteinsson's behalf comments on Mr Oddsson's evidence in his second expert report. At paragraphs 7 and 8 he states as follows:

"7. My opinion is that the point raised by Kaupthing is irrelevant for the following reasons:

(1) Article 117 of the IAB provides that parties who are not able to enforce their claims through litigation as a result of Article 116 need to declare their claims pursuant to the claims filing procedure set out in Article 117.

(2) The "bar date" is the date by which claims have to be filed pursuant to Article 117 of the IAB. The "bar date" is relevant only in the context of Article 117.

(3) Parties who are able to bring their claims within existing litigation which is not prohibited by Article 116 do not need to file any claims in accordance with the procedure set out in Article 117.

(4) For the reasons set out in my first report, if English procedural rules permit Mr Adalsteinsson's claims against Kaupthing to be raised within the existing English proceedings, then Article 116 does not prevent Mr Adalsteinsson from bringing his claims in England and Article 117 and the "bar date" are of no relevance.

8. However, and in any event, even if Article 116 did bar Mr Adalsteinsson's claims so that Article 117 was relevant, Mr Adalsteinsson would still be able to bring the claims which he seeks now to bring against Kaupthing in these English proceedings in Kaupthing's insolvency in Iceland. This is because the claims which Mr Adalsteinsson has already notified in Kaupthing's insolvency are wide enough so as to encompass the claims which he now seeks to bring against Kaupthing."

107. Equally, at paragraph 11 of the second expert opinion of Landslog slf on behalf of Kaupthing whom Mr Snowden represents, the writer concludes:

"11. As previously stated, my firm opined on 23 November 2012 that the procedural rules of the state where the law suit was initiated determine whether amendments can be made to a pending lawsuit. If new or amended claims cannot be introduced to an existing legal action, such claims must be brought before the courts as a new legal action. However, new legal action cannot be brought against a bankruptcy estate due to Art 116(1) of the BA."

108. Mr Samek says therefore, that the expert evidence in relation to the effect of Article 99(2)(h) is quite clear and was not challenged by Kaupthing by the service of a further report from Landslog slf. He says a simple step by step approach is necessary to establish whether there is a lawsuit and whether as a matter of English law, the additional claim can be brought as part of that lawsuit. If that is the case, he says that there is no reason why the Court's discretion should not be exercised in order to give permission for the counterclaim.
109. Mr Snowden says that if I am against him on Article 99(2)(h), I should nevertheless, not exercise discretion to allow the counterclaim. He says it would be to circumvent or breach the integrity of the EEA insolvency regime. He suggested that the position is similar to a situation in which a creditor trawls the courts of Europe looking for an action on foot against the credit institution to which he can be joined as a party and thereafter uses that status to make claims against the insolvent institution which are inconsistent with the equal treatment of all the creditors. Mr Snowden also points out that Mr Adalsteinsson's claim extends to personal claims based on an allegation of conspiracy in relation to the sub-participation agreements which have nothing to do with the original claims against Kaupthing in Action 599.
110. Mr Samek in this regard points out that this is hardly the case here. Mr Adalsteinsson has been a party to Action 599 since its inception and Kaupthing's counterclaim includes claims against him. Furthermore, he says that Mr Snowden's example of the roving would be litigant does not assist because in such circumstances, the effects of the English procedural rules would make it very unlikely that such a person would be joined to English proceedings.
111. Lastly, Mr Samek reiterated that the expert evidence shows that Action 599 is a qualifying action and if English procedure permits Mr Adalsteinsson to bring his claim, Article 116 is no bar to it.

Conclusion

112. I prefer the submissions of Mr Samek in this regard. Given the unequivocal nature of Kaupthing's own expert opinion evidence, set out at paragraph 11 of the second opinion of Landslog slf to which I have referred, I find it difficult to see how Mr Snowden's submission in relation to Mr Adalsteinsson's additional claims can be sustained. As Mr Samek points out, Article 99(2)(h) and Article 32 for that matter, is concerned with a lawsuit and not with claims within it. The expert evidence is to the effect that Action 599 is a qualifying action for the purposes of Article 99(2)(h) and it is a question of English procedure whether the additional claim can be made within it. In this regard, although CPR Part 20.7(2) makes reference to an additional claim being made when the court issues the appropriate claim form, the references throughout Part 20 are to a single set of proceedings with the same number. In my judgment, therefore, as a matter of procedure the new additional claims are capable of being introduced into the existing action, Action 599 and accordingly, Article 99(2)(h) applies.
113. I am also not persuaded by Mr Snowden's submissions in relation to the exercise of discretion. As I have already mentioned, there is expert legal evidence to the effect that Mr Adalsteinsson could bring his claims in Iceland in any event, and therefore, the arguments in relation to breaching the integrity of the insolvency regime come to nothing.
114. Accordingly, I grant Mr Adalsteinsson the permission sought.

General

115. Unless they can be agreed, I anticipate that a further hearing will be necessary in relation to the precise nature of the appropriate directions which are now sought.

Note 1    Defined under the 2000 Banking Directive as an “undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own accounts”. Specific provision was also made in relation to, for example, insurance undertakings.     [Back]

Note 2    The 2000 Banking Directive was subsequently amended to become Directive (EC) 2006/48, which, in the 2004 Regulations, is called the ‘banking consolidation directive’.     [Back]

Note 3    The principle is not applicable to ordinary companies. The Insolvency Regulation contemplates that there may be both primary proceedings in a company’s centre of main interest, and secondary proceedings in states where that company has an establishment: see Article 3(1).     [Back]

Note 4    Lord Glennie was sitting in the Outer House of the Court of Session. His decision is the subject of an appeal to the Inner House, where judgment is awaited.    [Back]

Note 5    No argument was addressed on behalf of Lornamead to the effect that it could rely on any of the other articles (such as Articles 21, 25 or 27) to disapply the effect of the Icelandic Moratorium Order.     [Back]

Note 6    The case concerned the equivalent provisions in the Insolvency Regulation, namely Art 4.2(f) (the equivalent to Art 10(2)(e) in the 2001 Directive) and Art 15 (the equivalent to Art 32).     [Back]

Note 7   I> Parts 3 and 4 deal with UK credit institutions; that is institutions whose head office is in the UK with permission to accept deposits or issue electronic money under Part 4 of the Financial Services and Markets Act 2000.    [Back]

Note 8    The relevant provision in relation to administration is paragraph 43 of Schedule B1. That in relation to winding up is section 130(2).     [Back]

Note 9    See the definitions of ‘EEA insolvency measure’ and ‘relevant EEA state’ in Regulation 5(6).     [Back]

Note 10    As defined in Article 1(3) of Directive 2000/12/EC as amended.    [Back]