Forum Conveniens ' Context Is Key

• Published date: 11 May 2021
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Shareholders
• Law Firm: Reynolds Porter Chamberlain
• Author: Mr Daniel Wyatt and Karina Plain

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

The alleged conspiracy

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

Permission to serve out on Russian defendants granted

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

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

What was the forum conveniens for the claims?

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

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

The Court accepted the Claimants' argument that D5-D7 should be parties to the English proceedings to avoid the risk of inconsistent decisions if they were instead sued in separate proceedings elsewhere. In doing so, the Court acknowledged that there already was a risk of inconsistent judgments as a consequence of extant proceedings relating to the same claims in other...