Supreme Court Narrowly Interprets Exclusive Jurisdiction Provisions Of Brussels Regime Relating To Validity Of Corporate Decisions

The Supreme Court has held that the English courts did not have exclusive jurisdiction to hear certain claims brought by an English subsidiary company against Turkish domiciled defendants, including its parent company: Akcil v Koza Ltd [2019] UKSC 40.

The judgment overturns the decision of the Court of Appeal and narrowly interprets article 24(2) of the recast Brussels Regulation. This provides that, where proceedings have as their object the validity of a company's constitution or the decisions of its organs, the EU member state of that company's seat will have exclusive jurisdiction over the proceedings, regardless of domicile.

The Supreme Court held that a mere link between a claim which engages article 24(2) and one which does not is not sufficient to bring both claims within the scope of the provision.

It has been established for a number of years that article 24(2) only applies where the principal subject matter of the proceedings is a company law matter, so it is not sufficient that some aspect of the case might concern the validity of a decision taken by a company if that is not the principal subject matter overall.

This decision makes clear that it is not legitimate to reverse that approach and find that, by virtue of an overall evaluative judgment in relation to two separate claims - one falling with the article when taken alone and the other not - both come within article 24(2) because the principal subject matter taken together is a company law matter. That would be an illegitimate expansion of the application of article 24(2).

Background

The case concerns a dispute over the ownership and control of a group of companies, the Koza Ipek group, set up by Mr Ipek and his family.

As part of a criminal investigation in Turkey into alleged financing of terrorism, a Turkish court appointed certain individuals as trustees of a number of companies in the group, including Koza Altin, a Turkish plc. The trustees were given power to control the affairs of those companies in place of the existing management.

The trustees then caused Koza Altin to serve a notice on its English subsidiary, Koza Ltd, under section 303 of the Companies Act 2006, requiring the directors to call a general meeting to consider resolutions for their removal and replacement with three of the trustees. No meeting was called, so Koza Altin served a notice pursuant to section 305 of the 2006 Act to convene a meeting to consider those resolutions.

In response, Mr Ipek and...