England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice. Rolls Building Fetter Lane, London, EC4A 1NL
		17 November 2016

MR SALTER QC:

Introduction

1. This is an application by the 4^th, 6^th and 11^th Defendants ("the Applicants") for a declaration that the court has no jurisdiction over the claims made against them in this action, and for an order setting aside the proceedings as against them. The ground of the application is that (according to the Applicants) the claims in this action all arise out of or in connection with a Shares Pledge Agreement dated 17 December 2010 ("the Pledge Agreement") to which the Claimant and the Applicants are parties, and which contains a provision conferring exclusive jurisdiction on the courts of Cyprus.
2. The Claimant's answer to the application is that, by judgments issued on 3 April and 18 September 2015, in proceedings involving the same parties and raising these and other claims, the Nicosia District Court ("the NDC") has already held that the courts of Cyprus do not have jurisdiction to try these claims and that the courts of England and Wales do. The Claimant accordingly submits that the issue of jurisdiction has already been decided in favour of the courts of England and Wales by a judgment which not only binds the parties but also binds this court.
3. The Applicants make two responses to the Claimant's reliance upon the judgments of the NDC. First, they say that the only reasoned judgment of the NDC was given in an application to which the Applicants in the present case were not parties. That judgment therefore does not bind them. The subsequent NDC order which dismissed the claim against the Applicants themselves was made, in effect, by consent. Secondly, they say that the NDC was considering a more extensive set of claims, covered mainly by agreements conferring jurisdiction on the courts of England and Wales. The NDC was thus choosing between competing jurisdiction clauses. This court (in the Applicants' submission) faces no such conflict and therefore has no such choice. The more limited claims before this court all arise squarely out of or in connection with the Pledge Agreement. It follows (say the Applicants) that the issue of jurisdiction before this court is very different to the issue which was before the NDC, and that this court is therefore not bound by the NDC's decision. Instead, this court is required to give effect to the plain words of the Pledge Agreement conferring exclusive jurisdiction on the courts of Cyprus.
4. The application is supported by a witness statement dated 26 February 2016 made by Mr Nicholson, who is the son and personal representative of the 11^th defendant. It is opposed by a witness statement dated 17 May 2016 made by the Claimant's solicitor, Mr Tinkler, which is answered in turn by a witness statement dated 19 May 2016 made by the Applicant's solicitor, Mr Carpenter.
5. The Claimant also sought permission at the hearing before me to rely upon a witness statement from Grigoris Phillippou, the Cypriot lawyer who acted for the Claimant in the proceedings before the NDC. That witness statement, like Mr Tinkler's, was served in May 2016, approximately six weeks after the date when it should have been served. No satisfactory explanation has been given for the late service, although the adjournment of the originally scheduled hearing has meant that the Applicants have in the event had ample time to respond to it. Perhaps more importantly, Mr Phillippou's witness statement consists almost entirely of argument and of expressions of opinion by Mr Phillippou as to the meaning of the judgments of the NDC.
6. The fact that a person in the position of Mr Phillippou who purports to give expert evidence of opinion is not independent of the party relying upon his evidence may not, of itself, render that evidence inadmissible^[1]. However, in the present case, Mr Phillippou's opinions are unsupported by any reference to any specific principles of Cypriot law, or to any special principles relating to the construction of judgments under Cypriot law. They simply seek to do the court's job for it, by interpreting the English translations of the judgments of the NDC. In my judgment, Mr Phillippou's opinions on those issues are neither properly admissible as expert evidence, nor helpful to the court^[2]. I therefore concluded that Mr Phillippou's evidence was not "reasonably required to resolve the proceedings" for the purposes of CPR 35.1, and I accordingly declined to give the Claimant permission to rely upon it.
7. Ms Elizabeth Weaver appeared for the Applicants. Mr Charles Samek QC and Mr Rupert D'Cruz appeared for the Claimant. I am grateful to all counsel for their helpful submissions.

Background

8. The background to this dispute is described in Mr Nicholson's witness statement. For the purposes of this Application, the following summary is sufficient:

8.1 In about 2000 or 2001, the 11^th Defendant ("Mr Nicholson senior") invested funds in a property development project in relation to a site in Poland called the Crosspoint Industrial Estate ("Crosspoint"). Crosspoint was owned by a Polish company called Haussmann Developments Polska SP zoo ("HDP"). At Mr Nicholson senior's suggestion, investments in the Crosspoint project were also made by Jenifer and Stephen Copeland^[3] (the 7^th and 8^th Defendants), James Hoseason (the 9^th Defendant) and David Toms (the 10^th Defendant).

8.2 Subsequently, Mr Nicholson senior and his co-investors acquired the freehold of the Crosspoint site through a company called Polad Ltd (the 4^th Defendant – "Polad"), and Mr Nicholson senior invested further funds through another company called Thistle Aviation Ltd (the 6^th Defendant – "Thistle").

8.3 Thereafter, Mr Robinson (the 1^st Defendant), his company, Winterbourne Pte Ltd (the 2^nd Defendant - "Winterbourne"), and Molyneux Investments Limited (the 5^th Defendant – "Molyneux") became involved. They introduced as an investor in the project the St Vincent (Crosspoint) Limited Partnership. The Claimant, St Vincent European General Partner Limited (which was then known as St Vincent European Limited) was and is the general partner of the St Vincent (Crosspoint) Limited Partnership. I shall refer to the Claimant as "St Vincent"

8.4 By a series of agreements dated 8 August 2006, the rights in relation to the Crosspoint project were re-arranged. The shares in HDP were transferred to a Cypriot company called Haussmann Holdings Limited ("HHL"). HHL was owned by Winterbourne, Polad and a Mr de Borde. However, by a Share Subscription and Shareholders Agreement dated 8 August 2006 ("the 2006 SPA"), St Vincent bought 60% of the shares in HHL. HHL also assumed responsibility for the majority of the loans due to the investors, and issued loan notes in their favour in relation to those debts. The parties to the 2006 SPA were Winterbourne, St Vincent, Polad, Mr de Borde and HHL. By clause 27 of the 2006 SPA, those parties irrevocably agreed "to submit to the exclusive jurisdiction of the courts of England and Wales over any claim or matter arising under or in connection with this agreement or the legal relationships established by this agreement". Of the 3 Applicants, neither Thistle nor Mr Nicholson senior were parties to the 2006 SPA

8.5 Under a Sale and Purchase Agreement dated 12 October 2007 ("the 2007 SPA"), St Vincent bought the remaining 40% of the shares in HHL, thus acquiring full ownership and control of HHL and, through HHL, of HDP, and so of the Crosspoint project. The parties to the 2007 SPA were St Vincent, Winterbourne, Polad, Mr de Borde, Mr and Mrs Copeland, Mr Hoseason, Mr Toms and Mr Nicholson senior. By clause 28 of the 2007 SPA those parties irrevocably agreed "to submit to the exclusive jurisdiction of the courts of England and Wales over any claim or matter arising under or in connection with this Agreement". Of the 3 Applicants, only Thistle was not a party to the 2007 SPA.

8.6 By a Take Over Agreement dated 1 February 2008 ("the Take Over Agreement"), St Vincent agreed (as had been contemplated in the 2007 SPA) to take on primary liability for the loans made to HHL, HDP and Crosspoint Management Sp zoo ("CP"). The parties to the Take Over Agreement were HDP, CP, HHL, St Vincent, Polad, Thistle, Mr Robinson, Molyneux, Mr Nicholson senior, Mr and Mrs Copeland, Mr Toms and Mr Hoseason. Each of the 3 Applicants was therefore a party to the Take Over Agreement. By clause 33, each of the parties to the Take Over Agreement irrevocably agreed "that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this agreement".

8.7 St Vincent failed to comply with its obligations to repay the loans. Sums of GBP 939,267 in respect of loan repayments and EUR 801,983 in respect of loan notes repayments were due, but only EUR 200,000 was paid. As a result, proceedings were issued against St Vincent in the English High Court on 2 October 2009, and on 4 February 2010 judgments were entered by consent in the sums of GBP 880,563.21 and EUR 751,863.40.

8.8 Preliminary steps to enforce those judgments in the Isle of Man and in Poland resulted in a further agreement. That agreement ("the Framework Agreement") was dated 13 April 2010. It was made between St Vincent, HHL, HDP, CP, and Winterbourne, on the one side, and Polad, Mr Robinson, Molyneux, Thistle, Mr & Mrs Copeland, Mr Hoseason, Mr Toms and Mr Nicholson senior (collectively, "the Lenders") on the other. The Lenders who were parties to the Framework Agreement included all three of the Applicants.

8.9 Under the Framework Agreement, St Vincent acknowledged its liability for the various amounts due to the Lenders as (inter-alia) Loan Repayments and Loan Notes Repayments. By clause 1, St Vincent, HHL, HDP and CP covenanted with the Lenders that, within 30 days, they would:

.. procure that the following securities are granted to the Lenders (or to such person as they shall nominate in writing) for the repayment of the Loan Repayments and the Loan Notes Repayments:

1.1.1 a Charge over the entire issue share capital of St Vincent;

1.1.2 a Charge over the entire issued share capital of HHL;

1.1.3 a Charge over the entire issued share capital of HDP; and

1.1.4 a Charge over the entire issued share capital of [CP]

8.10 Clause 13 of the Framework Agreement provided that:

This agreement shall be governed by and construed in accordance with English law and the parties irrevocably agree that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this agreement

8.11 On 17 December 2010, St Vincent and the Lenders entered into the Pledge Agreement, under which St Vincent pledged its shares in HHL to the lenders. Recital (3) to the Pledge Agreement stated in terms that it was:

.. A condition of [the Framework Agreement] that [St Vincent] shall execute this Shares Pledge in favour of the [Lenders] which is entered into by [St Vincent] in consideration of the [Lenders] agreeing to enter into the [Framework Agreement], and for other good and valuable consideration provided by the [Lenders] (the sufficiency of which [St Vincent] hereby acknowledges).

8.12 Clause 15 of the Pledge Agreement provided:

15.1 This Shares Pledge shall be governed by, and construed in accordance with, Cyprus law.

15.2 The courts of Cyprus shall have exclusive jurisdiction in relation to all matters which may arise out of or in connection with this Shares Pledge

8.13 On 8 March 2011 the Lenders purported to enforce the Pledge Agreement and to transfer the shares in HHL to Winterbourne. Since HHL owned HDP, and HDP owned Crosspoint, this effectively transferred ownership and control of the Crosspoint project to Winterbourne.

8.14 On 20 April 2011, Mr Robinson caused HDP to go into an insolvency process in Poland, which resulted in the Polish court making a formal order declaring HDP bankrupt on 10 June 2011.

8.15 On 24 October 2011 HHL's shares in HDP were transferred to PPL Winterbourne Limited ("PPL Winterbourne"), the 3^rd Defendant. PPL Winterbourne is an English registered company, owned and controlled by Mr Robinson.

8.16 According to Mr Nicholson, the Crosspoint development was sold in about July 2014.

The proceedings in Cyprus

9. In 2013, St Vincent and two other connected companies ("the Cyprus Plaintiffs") began proceedings in the NDC ("the NDC Action"). Nineteen parties were named as defendants to the NDC Action, including all 11 of the defendants in the present case. The wide-ranging nature of the claims made in the NDC Action is apparent from paragraph 1 of the Indorsement on the Writ, which (in the translation with which I have been provided) asserts claims for:

.. losses and/or expenses borne by the Plaintiffs and/or for general and/or special damages sustained by the Plaintiffs by virtue of fraud and/or conspiracy and/or swindling and/or embezzlement and/or for false and/or for fraudulent statements by the Defendants and/or for breach of duties arising from law by the Defendants and/or for violation of agreements and/or by virtue of agreements and/or for loss of opportunities and/or for lost profits and/or based on the principles of just enrichment and/or for sums paid and/or for a non-consequential cause and/or by virtue of loans and/or otherwise and/or as by virtue of the trust and/or infringement thereof and/or misappropriation of the property of the Plaintiffs ..

10. The other relief claimed in the Writ in the NDC Action included declarations as to St Vincent's ownership of the shares in HHL and as to HHL's ownership of the shares in HDP and CP, together with consequential orders for transfer and registration, plus punitive damages.
11. The Particulars of Claim in the NDC Action extended to 165 paragraphs. The thrust of the claims pleaded there was primarily directed against Mr Robinson, who (in paragraph 10) was alleged to have acted on behalf of most of the other defendants. The allegations made covered the entire period of St Vincent's involvement in the Crosspoint project.
12. The following gives only the briefest outline summary of this lengthy pleading:

12.1 Paragraphs 24 to 32 plead the 2006 SPA, and complain (in paragraph 31) that St Vincent was not given "essential financial information".

12.2 Paragraphs 33 to 36 plead the 2007 SPA, and assert (inter-alia) that the defendants "tricked the Claimants to recognise and undertake debts that actually did not exist".

12.3 Paragraph 43 pleads the Take Over Agreement, and paragraph 62 pleads the Framework Agreement. It is alleged in paragraph 60 that St Vincent's agreement (in the Framework Agreement and subsequently in the Pledge Agreement) to pledge its shares was procured by "extortion and/or economic duress and/or unconscionable pressure".

12.4 Paragraph 63 pleads a share pledge agreement dated 20 May 2010, and paragraph 64 pleads the Pledge Agreement itself. Paragraphs 65 to 71 plead implied terms of the Pledge Agreement.

12.5 Paragraphs 82 and following allege, in summary, that Mr Robinson wrongfully (and in breach of the Pledge Agreement) took control of the pledged shares, cut off St Vincent from any information, blackmailed its representatives and took other actions "in order to privatise [St Vincent's] assets and to take advantage personally". Those paragraphs detail efforts which Mr Robinson is alleged to have made to prevent St Vincent from paying off its debts and redeeming the pledged shares, and complain of his refusal to accept an offer for redemption.

12.6 Paragraphs 101 and following deal with the insolvency proceedings in Poland in relation to HDP. They allege that Mr Robinson fraudulently misled the Polish court

12.7 After setting out various other allegations and claims, the Particulars of Claim end at paragraph 165 with the assertion that "Because of the above, the Claimants filed the current lawsuit and claim the return of the contested project "Cross Point" and/or damages against the Defendants, either jointly or severally, according to their lawsuit".

The NDC judgments

13. On 14 March 2014, Molyneux, Mr and Mrs Copeland, Mr Hoseason, Mr Toms, Mr de Borde, HDP, HHL and three Cypriot individual defendants issued an application challenging the jurisdiction of the Cypriot Court to try the NDC Action. Their application was supported by an Affidavit, sworn on 14 March 2014, by Mr Robinson. In that Affidavit, Mr Robinson gave a brief summary of the history of the matter, which identified the various agreements containing English jurisdiction clauses. Mr Robinson then continued (in paragraph 12.5):

All the aforementioned agreements include a term which explicitly determines that the English Courts shall have exclusive jurisdiction for the resolution of any dispute arising from the said agreements. The sole agreement which grants jurisdiction to the Courts of Cyprus is the Share Pledge Agreement dated 17/12/2010 which was executed in April 2011. The Plaintiffs have neither raised, nor do they raise, in their present Action any issue of infringement or of interpretation in relation to the said Agreement. Furthermore, .. the Share Pledge Agreement was a secondary agreement which was signed for the purposes of securing the obligations of the Plaintiffs to the Defendants by an Agreement which expressly provides that the English Courts shall have jurisdiction

14. On 3 April 2015 the NDC gave its Interim Decision ("the Interim Decision") allowing the application, setting aside the proceedings and all prior orders, "due to the absence of jurisdiction of the Cypriot Courts in relation to" the defendants who had made the jurisdiction challenge.
15. The Interim Decision is (in translation) some 20 pages long. After explaining the nature of the application, it deals first with an issue of misnomer, which is not relevant for present purposes. It turns to the issue of jurisdiction about halfway through. After a discussion of various procedural matters, it sets out the background facts taken from the Affidavit of Mr Robinson and the affidavit of Mr Lees (sworn in support of the ex parte application for leave to serve out of the jurisdiction), and summarises the contents of the Particulars of Claim (called "the claim report" in the translation).
16. The Interim Decision then cites a number of Cypriot and English cases, including the first instance decisions in Deutsche Bank AG v Sebastian Holdings Inc^[4], UBS AG v HSH Nordbank AG^[5], and Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd^[6]. The Deutsche Bank case, in particular, is cited for the decision (on the facts of that case) "that the pledge agreement was only related to the resolution of technical questions and that the jurisdictional terms of the other agreements applied, since those agreements were at the commercial centre of the transaction". The Credit Suisse case is cited for the proposition that:

.. Giving commercial efficiency to the intention of the parties on an agreement seems to be the basic criterion for the question of jurisdiction. As subsequently mentioned in the above decision, in case there are many agreements with conflicting jurisdiction clauses it should be considered that the parties act commercially and without the intentions similar claims [are] to be the object of conflicting jurisdiction clauses ..

17. Having dealt with the law, the Interim Decision goes on to make a number of findings, including that:

17.1 "[T]he alleged fraud of the Defendants is directly connected and led first to the signature of the [Framework Agreement] and then to the [Pledge Agreement]".

17.2 "[The Framework Agreement] contained substantial provisions for the settlement of all the liabilities and rights of the parties".

17.3 "Those elements [of the Pledge Agreement] show that the [Pledge Agreement] related to the technical, formal and procedural part of the precedent pledge agreement for the shares of [HHL] ".

17.4 "Following the transfer of shares of [HH], the overall behaviour of [Mr Robinson] and of the rest of the Defendants which constitutes, according to the Plaintiff's claim, fraud and creates a trust on the shares to the benefit of the Plaintiffs, relates to the totality of the facts and not exclusively to the shares .. Consequently, those allegations are not restricted to the [Pledge Agreement] but to the contrary they are extended to the previous agreements".

17.5 [By making a claim for repayment of the sums paid by them from 2 August 2006 to 12 June 2012] the Plaintiffs introduce a claim for their actions which resulted on the basis of all the previous agreements between the parties, starting with the [2006 SPA]. So, inevitably they are not connected only to the [Pledge Agreement]".

18. Against that background, the Interim Decision then sets out the conclusions of the NDC:

In the light of the findings of the Court in relation to the nature and the basis of the Plaintiffs' claim .. the nature of the [Pledge Agreement] and mainly the fact that this is a secondary one and results clearly from the primary [Framework Agreement], is a primarily decisive [sic]. This secondary agreement aimed at the formal settlement of the pledge procedure for which the substantial provisions are contained in the basic [Framework Agreement]. Therefore, it is impossible .. to come to the conclusion that this action relates exclusively to the breach of the [Pledge Agreement].

The Court believes that the Plaintiffs tried to isolate and limit the basis of their claim to the [Pledge Agreement] in order to give jurisdiction to the Cypriot Courts. However, [they] failed to do so ..

Notwithstanding the foregoing, the Court has taken into consideration the background and the totality of the agreements between the parties. .. All the said agreements contained a clause for exclusive jurisdiction of the English Courts in relation to any dispute arising out of those agreements. The [Pledge Agreement] constitute the technical question of the substantial previous [Framework Agreement] and is the only agreement giving exclusive jurisdiction to the Cypriot Courts.

From the foregoing it results that the intention of the parties is the existence of the sole jurisdiction which would resolve any disputes arising out of their commercial transactions. The [Pledge Agreement] due to its nature and to the Plaintiffs' claims and claim report, is inevitably infringed against the parties' intention to integrate it to the jurisdiction of the English Courts.

According to the foregoing, I conclude that the applicants have shirked^[7] the burden of proof to present a convincing reason for the non-application of the clause of jurisdiction of the Cypriot Courts contained in the [Pledge Agreement]

19. As I have already indicated, the present Applicants were not parties to the 14 March 2014 application to the NDC. That application therefore did not result in any order in relation to them. However, on 23 May 2015, the Applicants issued their own application to challenge the jurisdiction of the Cyprus Courts. This was supported by an Affidavit sworn by their lawyer in Cyprus, Ms Stella Stylianou. In paragraphs 26 to 30, this exhibited and relied upon the previous decision of the NDC, stating that:

.. this Court has decided that the Cypriot Courts have no jurisdiction to adjudicate the present case. Therefore, regarding this matter, there is res judicata, which the Court .. should follow in the case of the present application as well ..

20. It appears that St Vincent did not contest this application: and, on 18 September 2015, the NDC made an order ("The September 2015 Order") setting aside the proceedings and all prior orders against the Applicants "on the grounds that the Court lacks jurisdiction to hear this claim and/or the present claim constitutes an abuse of the proceedings before the Court".
21. On 22 September 2016, the NDC issued a Certificate for the purposes of Article 53 of Regulation (EU) No 1215/2012 ("the Recast Judgments Regulation"). This records that:

The Court rejected jurisdiction and set aside the Writ of Summons and the Cypriot proceedings.

The Court found that (1) the [Pledge Agreement] was secondary to the other agreements, especially the [Framework Agreement], (2) the [Pledge Agreement] was the technical part of the substantive [Framework Agreement] and was the only agreement giving jurisdiction to the Cyprus Curt (3) the intention of the parties was the existence of a sole jurisdiction in which to settle any disputes arising out of their commercial transactions, this being the Courts of England.

The present action

22. The Claim Form in the present action was issued on 16 September 2015. It originally named 17 defendants, but was amended pursuant to CPR 17.1 to reduce the number of defendants to 11. Unlike the proceedings in Cyprus, St Vincent is the only claimant, and the claims raised are limited.

22.1 The General Endorsement pleads claims for breach of the express and/or implied terms of the Pledge Agreement and/or breach of the defendants' duties as trustees of St Vincent's interest in the shares of HHL and/or breach of St Vincent's right of redemption, plus claims for equitable compensation and/or damages for conspiracy and/or restitution of the benefit received by the defendants as a result of their wrongful dealings with those shares.

22.2 The Particulars of Claim, served on 15 January 2016, plead the 2006 SPA, the 2007 SPA, the Takeover Agreement and the Framework Agreement only as part of the background to the Pledge Agreement. St Vincent's claims are identified as:

22.2.1 Breach of the Pledge Agreement;

22.2.2 Breach of s 135 of the Contract Law of Cyprus by refusing a tender to redeem the shares pledged under the Pledge Agreement;

22.2.3 Breach of implied trust by dealing with the pledged shares;

22.2.4 Dishonest assistance by PPL Winterbourne in assisting in such dealings;

22.2.5 Conspiracy to use the unlawful means previously pleaded to injure St Vincent; and

22.2.6 Unjust enrichment in consequence of the sale of the Crosspoint development.

23. Out of the 11 remaining Defendants, only the 3 Applicants have disputed the jurisdiction of the English court. It follows that, even if the Applicants' challenge succeeds, the present action will continue against the remaining 8 defendants.

Common Ground

24. Certain matters were either common ground or were not seriously in dispute between the parties:

24.1 The issue of whether the English court has jurisdiction to entertain the present action against the Applicants falls to be determined by the application of the rules as to jurisdiction contained in the Recast Judgments Regulation. That Regulation came into force on 10 January 2015, and so was in force on 16 September 2015, the date when the Claim Form in the present action was issued^[8].

24.2 The rules in the Recast Judgments Regulation allow the court no discretion^[9].

24.3 The primary rule concerning jurisdiction is contained in Article 4 of the Recast Judgments Regulation, which provides that:

Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Since the Applicants are all domiciled in the United Kingdom, the English court will have jurisdiction over them under Article 4, unless that jurisdiction is taken away by one of the other Articles of the Recast Judgments Regulation.

24.4 The only Article that is relevant for that purpose on the facts of the present case is Article 25, which (so far as material) provides that:

If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction .. Such jurisdiction shall be exclusive unless the parties have agreed otherwise ..

24.5 Since Cyprus is a Member State of the European Union, Article 25 will confer exclusive jurisdiction on the courts of Cyprus in relation to any disputes which properly fall within the scope of clause 15.2 of the Pledge Agreement. The English court will not have jurisdiction over any dispute in relation to which the courts of Cyprus have exclusive jurisdiction under Article 25.

24.6 Under the Recast Judgments Regulation, it is for the party asserting that a contractual prorogation of jurisdiction deprives the English court of jurisdiction (ie, in the present case, the Applicants) to persuade the court that it has the better of the argument on that issue^[10].

24.7 The NDC Action was begun on 24 July 2013. It follows that the rules relating to the recognition and enforcement of the judgments of the NDC (given on 3 April 2015 and 18 September 2015) are those contained in Council Regulation (EC) number 44/2001 ("the Judgments Regulation"), rather than those to be found in the Recast Judgments Regulation.

24.8 Under Article 33 of the Judgments Regulation:

A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required

Article 36 of the Judgments Regulation further provides that:

Under no circumstances may a foreign judgment be reviewed as to its substance

24.9 The fact that the judgments of the NDC were judgments on jurisdiction and not on the merits of the substantive dispute does not affect the entitlement of those judgments both to recognition and to the benefit of the prohibition on review^[11]. Both of the judgments of the NDC in the present case qualify under these provisions of the Judgments Regulation.

24.10 Issue estoppel can be created by the judgment of a foreign court if that court is recognised in English private international law as being a court of competent jurisdiction. Issue estoppel operates regardless of whether or not an English court would regard the reasoning of the foreign judgment is open to criticism^[12].

The submissions of the parties

25. Against that background, I now turn to the rival submissions made by the parties.
26. The argument made by Ms Weaver on behalf of the Applicants is a straightforward one. In Ms Weaver's submission, the claims made in the present action all relate to "matters which may arise out of or in connection with this Shares Pledge", within the ordinary and natural meaning of clause 15.2 of the Pledge Agreement, because they all relate to the Applicants' actions and dealings as pledgees in respect of the shares of HHL.
27. Ms Weaver submits that the plain reason why the Pledge Agreement contained a Cyprus law and jurisdiction clause (and did not follow the other agreements between the parties, which were subject to English law and jurisdiction) was because the Pledge Agreement created a specific and distinct relationship involving the creation of security rights over shares in a Cyprus company. The enforcement of the pledge by the sale of the shares would be effected by transfers of the shares in the register of the company. The natural intention of the parties was therefore that this particular relationship should be dealt with by the courts of Cyprus.
28. Since all of the claims in the present action arise in connection with the relationship between St Vincent and the Applicants as pledgor and pledgee under the Pledge Agreement, the courts of Cyprus have exclusive jurisdiction over those claims, and the English courts do not have any jurisdiction (unless by subsequent agreement or submission to the jurisdiction), both as a matter of contract and of Article 25 of the Recast Judgments Regulation. Because Article 25 gives the court no discretion, the fact that the present action will continue in England against other defendants is irrelevant, as is the fact that the courts of Cyprus have already declined jurisdiction.
29. As for the judgments of the NDC, Ms Weaver submits that they are irrelevant for 2 independent reasons.

29.1 First, the NDC Action and the present action are materially different in scope. In arriving at the Interim Decision, the NDC was considering a broad range of claims arising in connection with a number of agreements. As the English cases on which the NDC relied demonstrate, the NDC was deciding which of the competing jurisdiction clauses in those agreements was intended by the parties to cover that range of disputes. The allegations in the Particulars of Claim in Cyprus extended far beyond the pledge relationship, and so were more naturally governed (as the NDC held) by the jurisdiction clauses in the agreements covering the overall commercial relationship. The Interim Decision does not bind the English court to hold that the more limited range of claims in the present proceedings, all of which arise solely out of the pledge relationship, are similarly governed.

29.2 Secondly, the Interim Decision (which is the only reasoned judgment of the NDC) does not bind the Applicants or give rise to any estoppel as against them, because they were not parties to the application in which that Interim Decision was made. The Applicants' own subsequent jurisdictional challenge did not result in any reasoned judgment, since the Cyprus claimants (including St Vincent) simply agreed, in response to that application, to the dismissal of the Cyprus proceedings against the Applicants.

30. For St Vincent, Mr Samek QC submits that, since the Applicants are all domiciled in England, St Vincent is entitled to sue them here under Article 4.1 of the Recast Judgments Regulation. In Mr Samek's submission, the Applicants' objection to jurisdiction based on clause 15.2 of the Pledge Agreement is unsustainable. The claims made in the present action are all claims which formed part of the proceedings brought in Cyprus. In those proceedings, the NDC has ruled that those claims do not fall within the scope of clause 15.2, but must be brought before the English court. The NDC judgments must be read together. They are (at least for jurisdictional purposes) final and conclusive on their merits, and may not be reviewed as to their substance by the English Court.
31. Mr Samek also submits that the English court is not merely prohibited from reviewing the final decisions of the NDC, but is also prohibited by Article 36 from undertaking any review of the findings of law or fact which led to those final decisions.
32. In Mr Samek's submission, I am therefore bound (to the extent, if any, that they bind the Applicants) not merely by the final decisions of the NDC, but also by any clear findings of law or fact made by the NDC on its way to those decisions. The judgments of the NDC therefore effectively estop the Applicants from relying upon the jurisdiction clause in the Pledge Agreement.

Analysis

33. In my judgment, it follows from the matters set out in sub-paragraph 24.7 to 24.10 above that, if either or both of the judgments of the NDC determine(s) the issue of jurisdiction in relation to the present proceedings, and if that judgment (or those judgments) bind(s) the Applicants, I am bound to follow and apply that judgment (or those judgments) in determining the present application.
34. I also accept Mr Samek's submission that I am (to the extent, if any, that they bind the Applicants) not merely bound by the final decisions of the NDC, but also by any clear findings of law or fact made by the NDC on its way to those decisions. As the ECJ noted in its judgment in the case of Dieter Krombach v André Bamberski^[13] (speaking of the equivalent provisions of the Brussels Convention 1968):

By disallowing any review of a foreign judgment as to its substance, Article 29^[14] and the third paragraph of Article 3411 of the Convention prohibit the court of the State in which enforcement is sought from refusing to recognise or enforce that judgment solely on the ground that there is a discrepancy between the legal rule applied by the court of the State of origin and that which would have been applied by the court of the State in which enforcement is sought had it been seised of the dispute. Similarly, the court of the State in which enforcement is sought cannot review the accuracy of the findings of law or fact made by the court of the State of origin.

35. It therefore seems to me that the correct resolution of the present application turns upon 2 issues: whether either or both of the judgments of the NDC has determined the issue of jurisdiction in relation to the present proceedings, either by the decision itself or by any clear findings of law or fact made by the NDC in reaching that decision; and, if so, whether that judgment (or those judgments) is or are binding upon the Applicants.

The September 2015 Order

36. It is convenient to begin the consideration of those issues with the September 2015 Order. Since the September 2015 Order was made on an application specifically made by the Applicants themselves, there can be no doubt that the Applicants were parties to that application, and are bound by the order made by the NDC on that application.
37. No reasoned judgment was given by the NDC at the time it made the September 2015 Order. However, as noted in paragraph 20 above, the September 2015 Order expressly recited that it was made "on the grounds that the Court lacks jurisdiction to hear this claim and/or the present claim constitutes an abuse of the proceedings before the Court".
38. Ms Weaver is, of course, correct in her submission that the NDC was considering jurisdiction in relation to an action which comprised claims of a wider nature and over a longer period that those made in the present action. However, all of the material facts relied upon in the present action were also relied upon in the NDC Action: and all of the claims made in the present action were also made (at least in substance) in NDC Action. It therefore seems to me that the September 2015 Order amounts to a judgment by the NDC that the NDC had no jurisdiction to hear the claims made in the present action. It is a necessary corollary of that finding that the claims in the present action do not fall within the scope of clause 15.2 of the Pledge Agreement.
39. The fallacy in Ms Weaver's argument on behalf of the Applicants is that it assumes that the NDC was considering the issue as a matter of forum non conveniens, and seeking to choose the forum in which the totality of the claims before it could most conveniently be tried in the interests of all the parties and the ends of justice^[15]. Some of the wording used in the Interim Decision (assuming for these purposes, in the Applicants' favour, that it is permissible to take the Interim Decision into account when considering the September 2015 Order) lends a degree of support to that suggestion.
40. It is, however, common ground that such considerations can play no part in determining jurisdiction under the Judgments Regulation. What the NDC was deciding was therefore, of necessity, a more simple question: did any of the claims made in the NDC Action fall within the scope of clause 15.2 of the Pledge Agreement, so that jurisdiction in relation to those claims was by Article 23 of the Judgments Regulation (which is in materially identical terms to Article 25 of the Recast Judgments Regulation) allocated exclusively to the courts of Cyprus. It must necessarily have answered that question in the negative in order to have come to the conclusion (as it did) that it lacked jurisdiction to hear those claims. The fact that the NDC was also considering whether it had jurisdiction to hear and determine other claims is irrelevant.
41. That conclusion is sufficient, on its own, to dispose of this application. I am bound by the September 2015 Order to hold that the claims made against the Applicants in the present action do not fall within the scope of clause 15.2 of the Pledge Agreement. That means that the prima facie jurisdiction of the English court over the Applicants under Article 4 of the Recast Judgments Regulation is not displaced under Article 25, and that the Applicants' challenge to the jurisdiction of the English court must fail.

The Interim Decision

42. However, in case this application should go further, I will briefly state my conclusions about the effect of the Interim Decision.
43. In my judgment, the Interim Decision - like the September 2015 Order - is a judgment by the NDC that the NDC has no jurisdiction to hear the claims made in the present action. The substance of those claims formed part of the NDC Action. Had the NDC considered that it had jurisdiction over them under clause 15.2 of the Pledge Agreement, it would have been obliged by Article 23 of the Judgments Regulation to exercise that jurisdiction, and would have had no discretion to decline jurisdiction simply because it had formed the view that those claims were more conveniently tried in another forum together with other claims over which it did not have jurisdiction.
44. In any event, when fairly read, the Interim Decision is primarily a decision about the construction - and therefore the true scope - of the various jurisdiction clauses in the agreements between the parties which the NDC had to consider. That is made clear, inter alia, by the quotations in the Interim Decision from English cases concerned with the correct approach to the construction of jurisdictional terms. The Interim Decision also contains a clear finding by the NDC about the proper construction of clause 15.2, which is that it was intended to deal with technical questions (such as questions about the extent and nature of the pledge^[16]) and not to deal with disputes (such as those in the present action) arising out of the parties' commercial transactions. Such disputes were to fall within the exclusive jurisdiction of the English court^[17].
45. The question of whether the English court, were it considering the same issue, would come to the same conclusion is irrelevant. The English court is prohibited by Article 36 of the Judgments Regulation from reviewing the findings of law or fact made by the NDC, and under Article 33 must simply give effect to the NDC's judgment.
46. Is the Interim Decision binding on the Applicants? An issue estoppel per rem judicatam can only arise between the same parties or their privies^[18]: and Ms Weaver submits that, as the Interim Decision was made as a result of an application to which the Applicants were not themselves parties, it cannot bind the Applicants or give rise to any issue estoppel against them.
47. The case primarily relied on by Ms Weaver in support of her argument is the decision of the Privy Council in Calyon v Michailidis^[19]. That was a case involving a dispute about the ownership of a collection of Eileen Gray furniture. That collection had, prior to his death, been owned by Christo Michailidis ("Christo"). When Christo's family discovered that the collection had been sold without their knowledge, they issued proceedings in the Chancery Division against the persons responsible for the sale. Shortly thereafter, those persons issued proceedings in Greece against the family, claiming negative declaratory relief. The family counterclaimed in the Greek proceedings, and obtained judgment on their counterclaim to the effect (broadly) that they had been the true owners of the collection at the time of the sale. Meanwhile, the family had also brought proceedings against Calyon (the corporate and investment banking arm of Crédit Agricole SA) in Gibraltar, alleging (inter alia) that Calyon had wrongfully assisted in the sale. In those Gibraltar proceedings, the family sought to rely upon the Greek judgment in order to obtain summary judgment against Calyon. That was refused at first instance, but was granted by the Court of Appeal.
48. The Privy Council allowed Calyon's appeal, and set aside the judgment, on the basis (inter alia) that the Greek judgment did not bind Calyon. Lord Roger of Earlsferry, who delivered the judgment of the Board, noted:

.. The appellant, Calyon, was not a party to the counter-claim in the Greek proceedings. Indeed the counter-claimants did not find out about Calyon's involvement in the matter until some 3 years after they began their counter-claim. And not only was Calyon not then added as a defendant in the counterclaim, but it was not even told about the Greek proceedings until after the judgment had been given and had been appealed. Nor does Calyon in any sense stand in the shoes of [those responsible for the sale]. In these circumstances, since Calyon was not itself a party to the proceedings, the judgment of the Greek court could not give rise to any estoppel per rem judicatam against Calyon in the present proceedings - even if it would have given rise to such an estoppel against [the persons responsible for the sale] ..

49. Ms Weaver also relied upon the decision of the Court of Appeal in Resolution Chemicals Ltd v H Lundbeck A/S^[20], in which the Court of Appeal cited with approval the following observations by Sales J in Seven Arts Entertainment Ltd v Content Media Corp Plc^[21]:

.. the basic rule is that, before a person is to be bound by a judgment of a court, fairness requires that he should be joined as a party in the proceedings, and so have the procedural protections that carries with it. This includes the opportunity to call any evidence he can to defend himself, to challenge any evidence called by the claimant and to make any submissions of law he thinks may assist his case. Although there are examples of cases in which a person may be found to be bound by the judgment of a court in litigation in relation to which he stood by without intervening, in my judgment those cases are illustrations of a very narrow exception to the general rule. The importance of the general rule and fundamental importance of the principle of fair treatment to which it gives expression indicate the narrowness of the exception to that rule.

50. It is clearly right that, in general, a person should only be bound by a judgment given in an action or an application to which he himself is a party. Cases which fall outside that general rule are exceptional. However, in my judgment, this is plainly such an exceptional case.
51. As the Court of Appeal noted in the Resolution Chemicals case, "The law recognises that there are some classes of case where fairness demands that party C should be precluded from re-litigating a matter, even though he was not a party to the previous proceedings between A and B"^[22]: and, as Lord Bingham of Cornhill made clear in his speech in Johnson v Gore Wood^[23]¸ the approach of the court to issues of this kind involves a "broad, merits-based judgment", and should not be formulaic.
52. The fact that the Applicants were not themselves parties to the application which led to the Interim Decision is unquestionably "a powerful factor in the application of the broad merits-based judgment" ^[24]. But it "does not operate as a bar to the application of the principle"^[25]. In the present case, there are two powerful countervailing factors, which, when taken together, greatly outweigh that factor.
53. First, there is the fact that the Applicants were parties to the NDC Action, even if they were not parties to the specific application. It was open to them to join in that application. They did not do so, presumably in the hope (ultimately fulfilled) that they would be able to take advantage of a favourable result.
54. In that respect, this case is analogous to the situation considered by the Court of Appeal in House of Spring Gardens Ltd v Waite^[26]. In that case, judgment was given in an action in Ireland against 3 defendants. The first and second defendants sought to challenge that judgment in Ireland, on the grounds that it had been obtained by fraud, but their challenge failed. In subsequent proceedings brought in England to enforce the Irish judgment, the third defendant (McLeod) also sought to set up the defence that the original Irish judgment have been obtained by fraud. The Court of Appeal held that he was precluded from doing so, on the grounds that he was "privy to the estoppel" against the first and second defendants arising from their earlier unsuccessful challenge, on grounds of privity of interest. Stuart-Smith LJ put the matter in these terms^[27]:

.. Mr McLeod was well aware of those proceedings. He could have applied to be joined in them, and no one could have opposed his application. He chose not to do so .. Instead, he was content to sit back and leave others to fight his battle, at no expense to himself. In my judgment that is sufficient to make him privy to the estoppel; it is just to hold that he is bound by the decision ..

55. The second, and even more powerful, factor is that the Applicants actively relied upon the Interim Decision in order to obtain the September 2015 Order. Their lawyer's Affidavit in support of the Applicants' own application stated that "this Court has decided that the Cypriot Courts have no jurisdiction to adjudicate the present case. Therefore, regarding this matter, there is res judicata, which the Court .. should follow in the case of the present application as well ..". I have no doubt that the Cyprus Plaintiffs (who included St Vincent) relied at least to some extent upon that assertion in coming to their decision not to contest the Applicants' application leading to the September 2015 Order. The facts of this case are therefore significantly stronger against the Applicants than those considered by the Court of Appeal in the House of Spring Gardens case.
56. Taking these two factors into account, it would in my judgment be wholly unjust to permit the Applicants to deny the commonality and privity of their interest with those who applied for and obtained the Interim Decision. The Applicants took the benefit of the Interim Decision by arguing before the NDC that the Interim Decision determined the issue of jurisdiction in their favour. In my judgment, it is not now open to them to adopt a contradictory stance before this court and thereby to disclaim the burden of the Interim Decision. As Sir Nicholas Browne-Wilkinson V-C said in Express Newspapers Plc v News (UK) Ltd^[28]:

.. A man cannot adopt two inconsistent attitudes towards another: you must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance ..

57. For these reasons, it seems to me that I am bound as much by the Interim Decision as by the September 2015 Order to hold that the claims made against the Applicants in the present action do not fall within the scope of clause 15.2 of the Pledge Agreement, and that the Applicants' challenge to the jurisdiction of the English court must therefore fail.

Conclusion

58. For the reasons set out above, I therefore dismiss this application.

Note 1    See eg Admiral Management Services Ltd v Para-Protect Europe Limited, The Times, March 26, 2002; and Multiplex v Cleveland Bridge [2008] EWHC 2220 (TCC) at [657] to [676], per Jackson J.    [Back]

Note 2    For the general principles governing the approach of the courts to expert evidence of foreign law, see Dicey, Morris & Collins, The Conflict of Laws (15th ed, 2012) paras 9-015 to 9-019. In particular, “if [the expert] says that the foreign statute [or judgment] bears a meaning which is patently inconsistent with the words of the English translation, the Court is entitled to reject his construction unless he goes further and proves some extraneous rule of law, written or unwritten, of the foreign country which compels that apparently forced interpretation”: A/S Tallina Laevauhisus v Estonian State Steamship.Line (1947) 80 Ll. L. Rep. 99 at [107], per Scott LJ.    [Back]

Note 3    Both Mr and Mrs Copeland are Doctors. I intend no discourtesy by referring to them hereafter simply as “Mr and Mrs Copeland”.    [Back]

Note 4    [2009] EWHC 2132 (Comm), [2009] 2 CLC 908; affmd [2010] EWCA Civ 998, [2011] 2 All ER (Comm) 245    [Back]

Note 5    [2008] EWHC 1529 (Comm), [2008] 2 Lloyd's Rep 500; affmd [2009] EWCA Civ 585; [2010] 1 All ER (Comm) 727    [Back]

Note 6    [1999] 1 All ER (Comm.) 237, [1999] 1 Lloyd's Rep. 767.    [Back]

Note 7    Which I interpret, in context, as meaning “discharged”.    [Back]

Note 8    Which is the relevant time for determining whether the court has jurisdiction: see eg Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at 566, affmd [2002] 1 AC 1; Petrotrade v Smith [1999] 1 WLR 457, QB, at 464; Freeport v Arnoldson Case C/98/06 [2008] QB 634, ECJ, at [54]; Per Linuzs v Latmar Holdings [2013] EWCA Civ 4 at [30].    [Back]

Note 9    See eg Equitas Ltd v Allstate Insurance Co [2008] EWHC 1671, [2009] 1 All ER (Comm) 1137, at [64]; and Nancy Jong v HSBC Private Bank (Monaco) SA [2015] EWCA Civ 1057 at [25].    [Back]

Note 10    See Konkola Copper Mines Plc v Coromin [2006] EWCA Civ 5, [2006] 1 All ER (Comm) 437 at [94] and [95], per Sir Anthony Clarke MR. It must be shown "clearly and precisely" that a party has agreed to be sued in courts other than those of his domicile: Case 24/76Estasis Salotti di Colzani Aimo et Gianmario Colzani v Rüwa Polstereimaschinen GmbH [1976] ECR 1831, ECJ. See also Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547; and Bols Distilleries v Superior Yacht Services [2006] UKPC 45, [2007] 1 WLR 12.    [Back]

Note 11    See National Navigation Co v Endesa Generacion SA (the “Wadi Sudr”) [2009] EWCA Civ 1397, [2010] 2 All ER (Comm) 1243 at [32]-[46]; and Case C-456/11 Gothaer Allgemeine Versicherung AG v Samskip GmbH [2013] QB 548.    [Back]

Note 12    DSV Silo-und Verwaltungsgesellcschaft mb H v Owners of The Sennar and 13 other ships (“The Sennar” No 2) [1985] 1 WLR 490.    [Back]

Note 13    Case 7/98, [2001] QB 709. The background facts of the Krombach case are a very long way from those of the present action. Kalinka Bamberski was a French teenager who died in suspicious circumstances in the house of her German stepfather, Dieter Krombach, a doctor. Following intense lobbying by the girl’s biological father, André Bamberski, the French courts accepted jurisdiction in the matter, and ordered Krombach to appear for trial before the Cour d'Assises de Paris. Krombach did not attend the hearing. The Cour d'Assises ruled that Krombach was in contempt: and, since, under Article 630 of the French Code of Criminal Procedure, no defence counsel may appear on behalf of the person in contempt, the Cour d'Assises refused to hear the defence counsel instructed by Krombach. It sentenced Krombach in absentia to 15 years for violence resulting in involuntary manslaughter, and (in a subsequent judgment) ordered Krombach, to pay FFR 350,000 compensation to Mr Bamberski. The Bundesgerichtshof stayed proceedings brought in Germany to enforce that judgment, and referred to the ECJ (inter alia) the question of whether the German courts could refuse enforcement on public policy grounds under Article 27.1 of the Brussels Convention, on the basis that the Cour d'Assises had refused to allow Krombach to be defended by a lawyer. The ECJ gave an affirmative answer to that question, following which enforcement in Germany was refused. In 2001, the criminal verdict and sentence were annulled by the European Court of Human Rights. That, however, was not the end of the matter. In 2009 Bamberski had Krombach abducted to France, where he stood trial, was convicted, and was again sentenced to 15 years in prison. Bamberski himself received a 1-year suspended sentence for the kidnapping.    [Back]

Note 14    Both Article 29 and the third paragraph of Article 34 of the Brussels Convention state that: “Under no circumstances may a foreign judgment be reviewed as to its substance”. See now Article 36 of the Judgments Regulation and Article 52 of the Recast Judgments Regulation.    [Back]

Note 15    Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460.    [Back]

Note 16    See the quotation in the Interim Decision from paragraph 73 of the 1st instance decision inDeutsche Bank.    [Back]

Note 17    See the passages quoted in paragraph 18 above.    [Back]

Note 18    See Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853; and DSV Silo-und Verwaltungsgesellcschaft mb H v Owners of The Sennar and 13 other ships (“The Sennar” No 2) [1985] 1 WLR 490 at 499A-C, per Lord Brandon of Oakbrook.    [Back]

Note 19    [2009] UKPC 34.    [Back]

Note 20    [2013] EWCA Civ 924.    [Back]

Note 21    [2013] EWHC (Ch) at [73].    [Back]

Note 22    [2013] EWCA Civ 924 at [24], per Floyd LJ.    [Back]

Note 23    [2002] 2 AC 1 at 31D and 32D.    [Back]

Note 24    Aldi Stores Ltd v WSP Group Plc [2007] EWCA 1260, [2008] 1 WLR 748, CA, at [10], per Thomas LJ.    [Back]

Note 25    Ibid.    [Back]

Note 26    [1991] 1 QB 241.    [Back]

Note 27    At p 253-4.    [Back]

Note 28    [1990] 1 WLR 1320 at 1329..    [Back]