BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Strand, London, WC2A 2LL
B e f o r e :
| KMG INTERNATIONAL NV
|- and -
|MELANIE ANNE CHEN
CHIPPER MANAGEMENT LIMITED
Elspeth Talbot Rice QC and Graeme Halkerston (instructed by Penningtons Manches LLP) for the Defendants
Hearing dates: 18 and 19 April 2018
Crown Copyright ©
Mrs Justice Moulder:
"In my opinion, having regard to the authorities (including in particular the Scottish authorities), the law can at present be summarised as follows."
(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
(b) As Lord Kinnear's formulation of the principle indicates, in general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay (see, e.g., the Société du Gaz case, 1926 S.C.(H.L.) 13 , 21, per Lord Sumner; and Anton, Private International Law (1967) p. 150). It is however of importance to remember that each party will seek to establish the existence of certain matters which will assist him in persuading the court to exercise its discretion in his favour, and that in respect of any such matter the evidential burden will rest on the party who asserts its existence. Furthermore, if the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country (see (f), below).
In my opinion, the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum….
d) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These are the factors which Lord Diplock described, in MacShannon's case  A.C. 795 , 812, as indicating that justice can be done in the other forum at "substantially less inconvenience or expense." Having regard to the anxiety expressed in your Lordships' House in the Société du Gaz case, 1926 SC (HL) 13 concerning the use of the word "convenience" in this context, I respectfully consider that it may be more desirable, now that the English and Scottish principles are regarded as being the same, to adopt the expression used by my noble and learned friend, Lord Keith of Kinkel, in The Abidin Daver  A.C. 398 , 415, when he referred to the "natural forum" as being "that with which the action had the most real and substantial connection." So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction (as to which see Crédit Chimique v. James Scott Engineering Group Ltd., 1982 S.L.T. 131 ), and the places where the parties respectively reside or carry on business." [Emphasis added]
6:162.1 a person who commits a wrongful act against another person that can be attributed to him, must repair the damage that this other person has suffered as a result thereof.
6:162.2 as a wrongful act is regarded as a violation of someone else's right (entitlement) and an act or omission in violation of a duty imposed by law or of what according to unwritten law has to be regarded as proper social conduct, always as far as there was no justification for this behaviour.
6:162.3 a wrongful act can be attributed to the person committing the wrongful act if it results from his fault or from a cause for which he is accountable by virtue of law or generally accepted principles.
i) most of the relevant facts and matters have little connection with the Netherlands and are truly international in nature and referred in particular to the various companies through which the shares in Novero were passed;
ii) KMG and NIBV are Dutch registered companies. However Novero, the relevant asset, is a German company. NIBV is not the defendant. Neither Ms Chen nor Chipper has any material connection with the Netherlands;
iii) neither the witnesses nor the documents are based in the Netherlands: Mr van der Ven (a witness identified by the defendants) who is based in the Netherlands, is a peripheral witness, if relevant at all;
iv) the claim is concerned with the dissipation of Novero from the DP group and not the historic acquisition of Novero by the DP group which involved a court supervised sale in the Netherlands - the history is no answer to the case against them and the pre-2014 history of the acquisition of NIBV by the DP group is irrelevant;
v) the value of Novero is based on the pleaded case that Laird was willing to pay €65 million for Novero in January 2016 and that negotiations with Laird had commenced at the time of the 2014 transaction. Ms Chen's reliance on Mr Scheepers' valuation of 19 June 2015 or the evidence from the Dutch proceedings is irrelevant;
vi) the governing law may be an important factor in assessing the question of the appropriate forum but liability in this case will be driven by the factual enquiry and analysis. The only significant disagreement between the Dutch law experts is the issue whether the higher threshold of "severe reproach" applies to claims against de facto directors; and
vii) an alternative claim of unlawful means conspiracy is advanced under English law.
i) service of these proceedings on Ms Chen was fortuitous;
ii) the place of the tort is the starting point under the authorities and as Dutch law is the governing law, the Dutch courts are the most appropriate forum;
iii) this is particularly so where there are complicated issues of Dutch law and the principles would be unfamiliar to an English corporate lawyer;
iv) determination of the issues by the Dutch courts would allow for the possibility of an appeal whereas findings on foreign law by an English court would be findings of fact which are more difficult to appeal;
v) the authorities support the view that where the internal management of the company is concerned, the appropriate forum is the place of incorporation of the company;
vi) the facts are in dispute but the only relevant transfers are the transfer out of the DP group of NIBV in 2014 or June 2015, the subsequent transfers are irrelevant; and
vii) the value of Novero is disputed, in particular it is to be noted that the value attributed by Laird in its accounts involves a significant figure attributable to goodwill and intangible assets. Therefore the court will be concerned with the background to the Novero group, including the court proceedings in the Netherlands and it will be more appropriate for the Dutch courts to deal with this claim given their prior knowledge.
Factors which point in the direction of the Dutch courts
1. Place of tort
"18 The Albaforth line of authority is no doubt a useful rule of thumb or a prima facie starting point, which may in many cases also prove to give a final answer on the question whether jurisdiction should appropriately be exercised."
"where it is held that a court has jurisdiction on the basis that an alleged tort has been committed within the jurisdiction of the court, the test which has been satisfied in order to reach that conclusion is one founded on the basis that the court, so having jurisdiction, is the most appropriate court to try the claim, where it is manifestly just and reasonable that the defendant should answer for his wrongdoing. This being so, it must usually be difficult in any particular case to resist the conclusion that a court which has jurisdiction on that basis must also be the natural forum for the trial of the action. If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the courts of that jurisdiction are the natural forum. Certainly, in the present case, I can see no factors which could displace that conclusion." [Emphasis added]
"But the variety of circumstances is infinite, and the Albaforth principle cannot obviate the need to have regard to all of them in any particular case. The ultimate over-arching principle is that stated in The Spiliada, and, if a court is not satisfied at the end of the day that England is clearly the appropriate forum, then permission to serve out must be refused or set aside." [Emphasis added]
2. Dutch law
"46 The governing law, which is here English, is in general terms a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum…" [Emphasis added]
"I further regard, of substantial importance the circumstance that Greek law governs, and is, in respects which may well be material, different from English law. "
"I recognise that an English court can, and often does, decide questions of foreign law on the basis of expert evidence from foreign lawyers. Nor do I regard such legal concepts as contractual good faith and morality as being so strange as to be beyond the capacity of an English court to grasp and apply. It seems to be clear, however, that in general, and other things being equal, it is more satisfactory for the law of a foreign country to be decided by the courts of that country. That would be my view, as a matter of common sense, apart from authority. But if authority be needed, it is to be found in The Cap Blanco  P. 130 per Sir Samuel Evans P. at p. 136 and in Settlement Corporation v. Hochschild  Ch. 10, per Ungoed-Thomas J., at p. 18..." [Emphasis added]
"Apart from the general advantage which a foreign court has in determining and applying its own law, there is a significant difference in the position with regard to appeal. A question of foreign law decided by a court of the foreign country concerned is appealable as such to the appropriate appellate court of that country. But a question of foreign law decided by an English court on expert evidence is treated as a question of fact for the purposes of appeal, with the limitations in the scope of an appeal inherent in that categorisation. This consideration seems to me to afford an added reason for saying that, in general and other things being equal, it is more satisfactory for the law of a foreign country to be decided by the courts of that country. Moreover, by more satisfactory I mean more satisfactory from the point of view of ensuring that justice is done." [Emphasis added]
" It is clear that in the normal case the starting point must be the identification of the issues which are likely to arise. In section IV I expressed the view that it was for the claimants to establish that England was clearly the more appropriate forum for the determination of the issues not only in relation to the bribery allegations but also in relation to the question of their standing to sue, even if that question is resolved without any form of trial or oral evidence. In my judgment the courts of the place of incorporation will almost invariably be the most appropriate forum for the resolution of the issues which relate to the existence of the right of shareholders to sue on behalf of the company." [Emphasis added]
"the power [to call a meeting of the New York subsidiary in his capacity as President]… is a fiduciary power of a discretionary nature, vested in the defendant in the capacity of an officer of Incorporated. It follows that the defendant is bound to exercise that power in good faith in the interest of Incorporated as a whole. There is no suggestion that the law of New York is different in this respect from that of England. That being the position, it seems to me, in the first place, that the court of New York is the only proper tribunal in which the members of Incorporated could seek to control the exercise of this discretionary power. It cannot be open to an English court to control the exercise of a fiduciary power arising in the internal management of a foreign company." [Emphasis added]
" 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  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  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." [Emphasis added]
The issues of law in dispute
"72 I agree that this appeal should be dismissed for the reasons given by Auld LJ. I wish to add a comment on a very narrow aspect of the forum conveniens part of the case. It is to my mind important that, in general, where a defendant wishes to set aside an order for permission to serve out of the jurisdiction on the basis that the action involves or may involve issues which it would be appropriate should be tried in a court or courts outside the jurisdiction, it is incumbent upon him, so far as possible to identify the issues concerned and to state as clearly as possible how they arise or may arise in the proceedings. That is so even though, on such an application, the burden of proving that England is the more appropriate forum for the trial of the action is on the claimant. It is not appropriate for a defendant merely to speculate as to the issues which might arise."
"170 [The applicable law] is not a factor of great significance in this case because there is no evidence of any difference between English law and Indian law on the relevant matters. But the case does involve some developing and controversial areas of law such as the scope of the right to bring derivative actions and the law of bribery. I have expressed the view that the question of the right to bring a derivative action is governed by Indian law, and it is likely that the bribery issues are governed by Indian law: Arab Monetary Fund v Hashim  1 Lloyd's Rep 543 , affirmed on this aspect in  1 Lloyd's Rep 589 . To the extent that there are controversial issues it would be better for them to be decided by the court which can authoritatively rule on them, and whose judgments are subject to appeal. But since there is no evidence of any differences, and since the application of foreign law is an everyday occurrence in English courts, this is not a significant pointer to India as the proper forum." [Emphasis added]
i) Mr Tjeenk of de Brauw Blackstone Westbroek dated 23 November 2017;
ii) Mr van Maanen of BarentsKrans N.V. dated 27 February 2018 ("Van Maanen 1") and 29 March 2018 ("Van Maanen 2"); and
iii) Professor Veder of Resor N.V. dated 20 March 2018.
"I do not consider there is a credible basis to assert such claim, unless exceptional circumstances apply."
However he then says that (paragraph 5.56 of Van Maanen 1):
"such exceptional circumstances could exist, in my view, if KMG can demonstrate that the transfer of Novero GmbH by NIBV in June 2015 was detrimental to the interests of KMG and actually intended by directors of NIBV at the time of the transaction to cause prejudice to KMG as creditor of the ultimate parent DPH SA."
"this is a person whose conduct, demeanour and decisions resemble that of a formal director although the person lacks that formal capacity…"
3. Location of the parties
"I may add that if, in any case, the connection of the defendant with the English forum is a fragile one (for example, if he is served with proceedings during a short visit to this country), it should be all the easier for him to prove that there is another clearly more appropriate forum for the trial overseas."
4. Location of the witnesses
5. Location of documents
6. English law claim
7. Confidentiality issues in the Netherlands
8 . History of the Novero Group before the Dutch courts; Involvement of Mr Olosu-Ittu
"But the crucial point, in the judge's view, was the Cambridgeshire factor. This was regarded, certainly by Neill L.J., as relevant; and in this I find myself to be in agreement. The criticism of the judge's view of this factor goes, therefore, to its weight, as Neill L.J. indicated  2 Lloyd's Rep. 116 , 124 when he said that it seemed to him that the judge attached far too much importance to this factor. With all respect, however, when I read the judgments of both the Lords Justices, I consider that they underrated it. I believe that anyone who has been involved, as counsel, in very heavy litigation of this kind, with a number of experts on both sides and difficult scientific questions involved, knows only too well what the learning curve is like; how much information and knowledge has to be, and is, absorbed, not only by the lawyers but really by the whole team, including both lawyers and experts, as they learn about the interrelation of law, fact and scientific knowledge, having regard to the contentions advanced by both sides in the case, and identify in their minds the crucial matters on which attention has to be focused, why these are the crucial matters, and how they are to be assessed. The judge in the present case has considerable experience of litigation of this kind, and is well aware of what is involved. He was, in my judgment, entitled to take the view (as he did) that this matter was not merely of advantage to the shipowners, but also constituted an advantage which was not balanced by a countervailing equal disadvantage to Cansulex; and (more pertinently) further to take the view that having experienced teams of lawyers and experts available on both sides of the litigation, who had prepared for and fought a substantial part of the Cambridgeshire action for Cansulex (among others) on one side and the relevant owners on the other, would contribute to efficiency, expedition and economy - and he could have added, in my opinion, both to assisting the court to reach a just resolution, and to promoting a possibility of settlement, in the present case. This is not simply a matter, as Oliver L.J. suggested, of financial advantage to the shipowners; it is a matter which can, and should, properly be taken into account, in a case of this kind, in the objective interests of justice." [Emphasis added]
Enforcement proceedings in the Netherlands
Procedure in the Netherlands
Application to set aside permission to serve out