Pacific International Sports Clubs Ltd v Surkis & Ors [2010] EWCA Civ 753

Case No A3/2009/1941[2010] EWCA Civ 753IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
THE HON MR JUSTICE BLACKBURNE
HC08C01562
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 02/07/2010
Before
LORD JUSTICE MUMMERYLORD JUSTICE MOORE-BICKLORD JUSTICE STANLEY BURNTON
Between
PACIFIC INTERNATIONAL SPORTS CLUBS LIMITEDAppellantIGOR SURKIS & ORSRespondent
MR JOHN BRISBY QC & MR TOM GENTLEMAN (instructed by Osborne Clarke) for AppellantMR ALI MALEK QC & MR CYRIL KINSKY QC (instructed by Edwin Coe LLP) for RespondentsHearing Hearing dates : 23 rd& 24 th March 2010
JudgmentLord Justice Mummery :Introductory
[1]This contested application for a stay of proceedings lasted for 6 days in front of Blackburne J in May 2009. The key question for him was whether tortious and restitutionary claims under Ukrainian law arising out of a bitter struggle for control of a valuable stake in the celebrated Ukrainian Dynamo Kiev Football Club (the Club) should be permitted to go to trial in the English Courts. That turned on whether the interests of justice constitute special circumstances requiring a trial in the English courts of claims for which the Courts of Ukraine are accepted to be the natural forum.[2]On 24 July 2009 the judge ordered a stay. He held that England is not the proper place for the trial of the claims made against the defendants by Pacific International Sports Club Limited (Pacific). Pacific appeals. On the appeal Pacific issued an application for permission to adduce further evidence in the form of a second witness statement of Mr Grigorishin dated 5 February 2010 with exhibits. Although the defendants did not object, they denied that the further evidence would have had an important influence on the outcome of the hearing below, or that it would affect this appeal, or that it satisfied other requirements for the grant of permission to adduce fresh evidence on appeal.[3]Pacific’s claim was originally for “damages in relation to a tortious conspiracy to injure the Claimant perpetrated by the Defendants.” In the Particulars of Claim, as amended pursuant to permission granted by Blackburne J at the hearing of the stay application, Pacific sought damages under the Civil Code of Ukraine for alleged tortious conspiracy to injure (Articles 13, 16 and 1190) and restitutionary remedies for unjust enrichment at Pacific’s expense (Articles 1212 to 1215). Those claims are based on the defendants’ alleged actions in taking a series of steps that intentionally diluted Pacific’s 18% stake in the Club. Pacific’s stake in the Club was ultimately extinguished. It has received no compensation for the removal and loss at a meeting in June 2002, of which it had no notice, of its pre-emption share purchase rights under the Club’s charter. They were exercisable in the event of a proposed transfer of shares by an existing shareholder. The result was that Pacific was subsequently unable to prevent transfers of shares and rights issues in the Club in August 2004, or changes to its charter, structure and organisation in order to squeeze Pacific out of the Club. Pacific claims that it has suffered other wrongs at the hands of Mr Surkis and his co-defendants. Blackburne J expressed no view on the legal or factual merits Pacific’s claims which are disputed by the defendants. He made no order granting summary judgment to the defendants or striking out the claims against them. He simply said that, if it had been necessary for him to express a view, he would not have dismissed the claims as disclosing no reasonable cause of action under Ukrainian law.[4]The principal parties, their claims, their defences and the events that have generated this litigation have no connection with England, its laws or its judicial system. Pacific itself is registered in Mauritius. Mr Konstantin Grigorishin, a substantial Russian businessman with many interests in Ukraine, controls and beneficially owns Pacific. His case for involving the English courts in the resolution of Pacific’s claims is that it is necessary in the interests of justice, as a fair trial of the claims in the courts of Ukraine is impossible.[5]The second and main defendant is Mr Igor Surkis, who owns a large number of shares in the Club. He is a prominent Ukrainian citizen with considerable political influence. He is also a substantial business man in control of the co-defendant BVI companies, which are past or current shareholders in the Club. His case is that the court should not allow Pacific’s claims to proceed in England and that an order of 20 October 2008, giving Pacific permission to serve the proceedings on the BVI companies out of the jurisdiction, should be set aside, as should the service effected on them at their shared registered office. There are other defendants who have not been served and have played no part in the appeal.[6]The only possible connection between the claims and this jurisdiction is that an English registered company controlled by Mr Surkis, Soccer Marketing International Limited (SMI), has been joined as a defendant, was served with the proceedings on 9 October 2008 and has unsuccessfully applied to strike them out or to have them stayed. SMI is not a party to the appeal, because it is now accepted by SMI that the claims against it for conspiracy can proceed in the English courts and cannot be stayed. Pacific’s position is that the total extent of the SMI/English connection is tiny and that, in so far as SMI has carried on business, it has done so in Ukraine or at any rate outside the jurisdiction of the English courts.[7]The salient facts about SMI are that for about three years between December 2001 and September 2004 Mr Surkis had an interest, via SMI, in 400 shares held by it in the Club. Pacific denies that it knew about the transfer of shares made by Mr Surkis’s company, Newport Management Company, to SMI. Although SMI was dissolved on 18 December 2007, it was, on Pacific’s application, subsequently restored to the register on 1 August 2008, shortly after the claim form was issued and so that it could be sued in this action. SMI has no realisable assets. The judge described Pacific’s joinder of SMI as a device to found jurisdiction for the service of foreign defendants (i.e. the BVI companies) as necessary or proper parties to this action.[8]As for Mr Surkis, he was personally served with proceedings on 25 November 2008 while on a short visit to England to watch the Club’s team play in a football match. On forum non conveniens grounds the judge stayed Pacific’s claims against him. Blackburne J also ordered the setting aside of both the order of Master Price dated 20 October 2008 granting permission to serve the defendantBVI companies (4th to 8th defendants) out of the jurisdiction and the service of the claim form on them at their registered office. On this appeal it is common ground that, if the proceedings against Mr Surkis were properly stayed, the judge’s orders relating to the BVI companies must also stand.

The judgment

[9]The judge’s orders followed from his finding that Pacific had not made out a case that it would be unjust if it had to litigate its claims in the naturally appropriate forum, the courts of Ukraine. In support of that conclusion an impressively meticulous judgment ([2009] EWHC 1839(Ch)) set out in detail the factual background, the nature of the claims, the applicable law, the location of the witnesses and documents, the conduct of the parties, the pros and cons of the logistics of a trial in Ukraine and in England, the evidence of both general and particular shortcomings of the Ukrainian judicial system, the rival legal submissions and other relevant circumstances of the case.[10]Many of the facts concerning the jurisdiction and discretion of the court were common ground: the individual defendants live in Ukraine; the relevant events took place in Ukraine; those events related to the corporate affairs of the Ukrainian company which owns the Club, and are governed by Ukrainian law; the witnesses and the relevant documents, which are in Ukrainian, are located in Ukraine; the claims raise points of Ukrainian law on which the expert witnesses are divided; and several disputes between the principal parties have already been litigated in the Ukrainian courts.[11]As for the perceived defects in the Ukrainian judicial system, there was no shortage of evidence. The disagreement is about the cogency of Pacific’s evidence of bias, improper influence, political interference and corruption as impediments to getting justice in the Ukrainian courts. There is a specific dispute about the extent to which Pacific’s attempts to litigate its claims in Ukraine may have been prejudiced by improper pressure on, or influence of, members of the judiciary.[12]The parties are in agreement about the legal principles as laid down in Spiliada Maritime Corporation v. Cansulex Ltd [1987] 1 AC 460 at 476 to 478 and 480 to 481. They disagree about how the principles should be applied to the particular facts. The judge’s summary of the law on stay and service out of the jurisdiction, which has not been criticised by either side, supplies succinct guidance - “31. … First, in a stay case the court already has jurisdiction and the issue is why the court should not exercise that jurisdiction. In addressing that issue, the court must first consider whether there is a forum outside England which is the appropriate forum. If there is, the court will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. The burden of proving that there is a forum outside England which is the appropriate forum rests on the defendant. In a stay case, if the court is satisfied that the prima facie appropriate forum is outside England, the burden shifts to the claimant to show that there are special circumstances by reason of which justice requires that a stay should nevertheless not be granted. Second, and by contrast, in a case involving service out of the jurisdiction the issue is why the court should take jurisdiction at all. In addressing that issue, the court must consider whether England is the appropriate forum (“the first stage”). If it is, the court will normally grant permission to serve out of the jurisdiction unless there are circumstances by reason of which justice requires that service out of the jurisdiction should nevertheless be refused (“the second stage”). In short the court takes jurisdiction over the case because England is the appropriate forum. The burden of proving that England is the appropriate forum rests on the claimant. In a service out case, if the court is satisfied that the prima facie appropriate forum is England, however, the burden shifts to the defendant to show that there are special circumstances by reason of which justice requires that service out should nevertheless be refused.”[13]The summary continues - “33. Third, allegations as to why the appropriate forum should be displaced must amount to an allegation that the forum is or will be unavailable for the trial of the claim. This must be clearly demonstrated against an objective standard and supported by positive and cogent evidence. In the Abidin Dover [1984] 1 AC 398 at 411 Lord Diplock said in reference to this point:
‘The possibility cannot be excluded that there are still some countries in whose courts there is a risk that justice will not be obtained by a foreign litigant in particular kinds of suits whether for ideological or political reasons, or because of inexperience or inefficiency of the judiciary or excessive delay in the conduct of the business of the courts, or the unavailability of appropriate remedies. But where there is already a lis alibi pendens in a foreign jurisdiction which constitutes a natural and appropriate forum for the resolution of the dispute, a plaintiff in an English action, if he wishes to resist a stay upon the ground that even-handed justice may not be done to him in that particular foreign jurisdiction, must assert this candidly and support his allegations with positive and cogent evidence.’
In the Spiliada at 478D-F, Lord Goff, in discussing what must be shown if a stay of proceedings in this country is to be refused, referred to “…the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction…” ‘The possibility cannot be excluded that there are still some countries in whose courts there is a risk that justice will not be obtained by a foreign litigant in particular kinds of suits whether for ideological or political reasons, or because of inexperience or inefficiency of the judiciary or excessive delay in the conduct of the business of the courts, or the unavailability of appropriate remedies. But where there is already a lis alibi pendens in a foreign jurisdiction which constitutes a natural and appropriate forum for the resolution of the dispute, a plaintiff in an English action, if he wishes to resist a stay upon the ground that even-handed justice may not be done to him in that particular foreign jurisdiction, must assert this candidly and support his allegations with positive and cogent evidence.’[14]Blackburne J then applied those principles and produced this précis of the position in this case- “34. …As the BVI defendants challenge the grant of permission to serve out of the jurisdiction on them it is for Pacific, having sought and obtained permission to do so, to satisfy the court that England is the proper place in which to bring the claim. See CPR 6.37(3). By contrast, having been duly served with the claim within the jurisdiction, the burden is on SMI and Mr Surkis who apply to stay the claim on forum non conveniens grounds, to satisfy the court that England is not an appropriate forum in which to bring the claim. All of this was common ground between the parties. The fact that the burden of proof on this issue is different according to whether it is a defendant duly served within the jurisdiction who is seeking a stay or it is the claimant who, having served out with the court’s permission is having to satisfy the court on a challenge to the grant of permission, that England is the proper place in which to bring the claim does not present any practical difficulties in the present case: the BVI defendants are, on any view, part players in this dispute; the essential contest, as I have explained, is between Pacific and Mr Surkis…The effective burden therefore is on Mr Surkis to persuade me that, although duly served within the jurisdiction, this country is not a proper place to try Pacific’s claims.”[15]The grounds of appeal are based on the judge’s application of the summarised principles after he had set out the facts and considered the competing submissions. Towards the end of his judgment Blackburne J acknowledged that the inability of Pacific to get its claims off the ground in Ukraine raised “92…grave doubts about the impartiality and honesty of the courts in Ukraine, not least when faced with a claim of the nature brought by Pacific concerned with shares in, and ultimately control of it, such a high profile football club where powerful interests are at stake.”[16]However, and “not without considerable hesitation”, he decided that the evidence was not sufficiently cogent to justify a finding that Pacific would be denied justice, if it was compelled to litigate in Ukraine. He expressly took account of three other considerations: the dispute had absolutely no connection with the United Kingdom, except for the registration of SMI here; Ukraine was the only other appropriate jurisdiction; and Pacific’s claim gives rise to acutely difficult issues of Ukrainian law which it would be inappropriate for the English courts to pronounce upon. He agreed that the doctrine of forumnon conveniens could not be applied to the claim against SMI, but said that that factor could not dictate where the dispute as a whole must be tried, especially in view of his finding that service on SMI was a device for bringing other defendants before the English courts.

Grounds of appeal

[17]The issue on the appeal is whether the judge was wrong to order a stay of the claims against Mr Surkis and to set aside the orders for service of the BVI defendants. As Mr Ali Malek QC, appearing for Mr Surkis and the BVI companies, pointed out, this would only be the case if Pacific could show that the judgment contains a self-misdirection of law; or that the exercise of the discretion was vitiated by the influence of irrelevant matters or by the omission of relevant matters; or if the outcome was plainly wrong.[18]Seeing how little (if any) dispute there is about the state of the law or the salient facts, what scope could there be for holding that the judge’s conclusions and his consequent orders were wrong? A lot of scope, says Mr John Brisby QC, who appears for Pacific. He persuaded the judge to grant permission to appeal.[19]In broad terms Mr Brisby contends that the judge misdirected himself in law by applying the wrong legal test to the facts. The result was that he set too high the burden of producing cogent evidence that justice will not be done in the natural forum, and that he did not exercise his discretion properly in accordance with the correct legal principles as summarised by him and the relevant factors. So, he says, the appeal should be allowed and Pacific’s proceedings should be allowed to continue in England against all defendants, not just against SMI.[20]Mr Brisby depicts Pacific as the victim of a deliberate and damaging campaign which the defendants have not denied. It began after a breakdown in about 2002 of a business “partnership deal” that had been reached between Mr Grigorishin and Mr Surkis in about 1998. A stake in the Club was transferred to Pacific as part of that deal. After the falling out the feud began. A “phoney rights issue” diluted, extinguished, expropriated, and stole Pacific’s shareholding in the Club. Mr Brisby complains that the judge ignored and failed to address the strength of Pacific’s underlying case, though that is contested by the defendants, who point out that the issues at this stage relate not to the substantive merits of the claims, but only to the forum for their determination.[21]Further, Mr Brisby says that there is cogent evidence of serious deficiencies in the legal system of Ukraine, which make it incapable of delivering justice to Pacific. That fact is evidenced by the circumstances in which Pacific has failed to get anywhere with its litigation in the courts there. It has experienced a repeated and inexplicable failure to obtain any relief. So it is contended that there is real risk that Pacific might never get justice in those courts. By declining jurisdiction and granting a stay, the English courts would be depriving Pacific of its only real prospect of securing a fair trial of its claims.[22]In his forthright submissions Mr Brisby attacks the judgment for, on the one hand, placing too much weight on the difficulties facing trial of Pacific’s claims in an English court and on the fact that Pacific had chosen to bring many other cases in the courts of Ukraine, and, on the other hand, for placing too little weight on the fact that the case against SMI can proceed, cannot be stayed and will be heard in the English courts in any event with the same witnesses of fact and the same expert witnesses on Ukrainian law as would be heard at the trial of the action against Mr Surkis and the BVI companies. The only sensible course, he says, is for the English courts to hear and determine all the claims at once. That would avoid the risk of inconsistent decisions and having to trouble witnesses twice over in London and Ukraine. If, in the course of the balancing exercise conducted by him, the judge had properly directed himself and placed proper weight on the relevant factors he would, Mr Brisby submits, have reached a different conclusion.

Approach to appeal

[23]At this point further reference to Spiliada is a salutary reminder of both the nature of a stay application and of the restricted role of this court on an appeal from a decision to grant or refuse a stay. The Spiliada sent out strongly worded signals(a) to lower courts that it is inappropriate, in jurisdictional spats of this kind, to have long drawn out hearings at first instance, and(b) to appeal courts that they ought not to be too ready to interfere with the judge’s assessment of the situation and his exercise of his discretion. Lord Templeman said at p465F-G “The solution of disputes about the relative merits of trial in England and trial abroad is pre-eminently a matter for the trial judge before whom submissions should be measured in hours, not days. An appeal should be rare and the appellate court should be slow to interfere.”[24]Blackburne J’s description of the case was that it is “peculiarly fact sensitive.” He cited recent pertinent authorities (e.g Dornoch Ltd v. Mauritius Union Assurance Co Ltd [2006] EWHC 1887 (Comm);[2006] Lloyd’s Rep IR 127 at para 97; Cherney v. Deripaska [2008] EWHC 1530 (Comm); [2009] 1 All E.R. (Comm) 333 at paragraphs 237-239; and Yugraneft v. Abramovich & 0rs [2008] EWHC 2613 (Comm) at paragraphs 492-497) as illustrating “41. …the need to examine most clearly the matters relied upon a demonstrating that a fair trial in what is otherwise the appropriate forum for the resolution of the dispute will not be possible. Nor does it follow that because claimant A cannot obtain a fair trial in a particular country, claimant B will not be able to do so in the same country.”[25]He cited passages from the judgment of Christopher Clarke J in Cherney to the effect that an English Court will approach with considerable circumspection any contention that a potential claimant cannot obtain justice or a fair hearing in a foreign court and that, in the absence of cogent evidence to the contrary, the court will start with the assumption that courts of other legal systems will seek to do justice in accordance with applicable laws and will be free from improper interference or restriction. As the same judge said in Yugraneft, impropriety may be indicated in a number of ways, such as repeated determinations by the same judge without good reason, departure from normal practice and irrational conclusions.[26]I now turn to consider in more detail the passages in the judgment that are the target of Pacific’s criticisms.

Forum non conveniens issue

[27]On this issue the judge concluded that “ 99. …I am of the view that, notwithstanding the undoubted problems highlighted by the evidence over the independence of the Ukrainian court system and the problems that Pacific has so far encountered in pursuing its claims over the Dynamo shares, the correct decision for this court to make is(1) to stay the proceedings against SMI and Mr Surkis and(2) to set aside the permission order and, with it, the service of the claim on the BVI defendants.”[28]Pacific’s particular dissatisfaction with the judgment stems from the judge’s treatment of forum non conveniens in the following paragraphs:
“91. What conclusions should I draw from the blizzard of proceedings that have been brought in Ukraine in connection with the Dynamo share dispute brought by Pacific? And what of the other evidence connected with the inadequacies of the Ukrainian judicial system and the suggestions of political and other interference with the system? Do they constitute the cogent evidence which is needed to justify a finding that Pacific will be denied justice in Ukraine if it is compelled to litigate its claims in the courts of that country so that, even if Ukraine is otherwise the appropriate forum for the resolution of its claims, I should permit the proceedings which Pacific has brought in this country to proceed to trial? 92. I have come to the conclusion, I confess not without considerable hesitation, that they do not. The evidence leaves me with the strong impression that Pacific (or Mr Grigorishin) is happy to resort to the Ukrainian courts where it suits it (or him) to do so. It is quite true that the repeated inability of Pacific to get its claim off the ground coupled with apparently perverse conclusions reached by some at least of the courts there until ultimately corrected in the Supreme Court (at any rate in the case of the Obolonsky Court proceedings) raise grave doubts about the impartiality and honesty of the courts in Ukraine, not least when faced with a claim of the nature brought by Pacific concerned with shares in, and ultimately control of it, such a high profile football club where powerful interests are at stake. 93. But I am not persuaded that the evidence relied upon to demonstrate that Pacific will be denied justice in Ukraine in its dispute with Mr Surkis quite crosses the threshold of cogency that the jurisprudence requires. I am the more willing to reach that conclusion by three further considerations.”
[29]The judge is criticised for commenting that he was “the more willing to reach that conclusion by three further considerations”: the fact that the dispute has no connection at all with this country; the fact that, subject to the denial of justice objection, Ukraine was the only appropriate forum for the trial; and the fact that the claim raised difficult issues of Ukrainian law on which the Ukrainian law experts hold sharply differing views.[30]While accepting that the Ukraine is the natural forum for the determination of the dispute Mr Brisby submits that the judge reached the wrong conclusion in declining the jurisdiction of the English courts to entertain Pacific’s overwhelmingly meritorious claim that there has been a deliberate campaign to dilute and extinguish its shareholding in the Club.

Standard of proof

[31]Mr Brisby says that the judge set too high a standard for what constitutes cogent evidence when seeking to establish the risk of a denial of justice in the Ukrainian legal system. This was apparent from his reference in paragraph 91 to the need for cogent evidence to justify a finding that Pacific “will [Mr Brisby’s emphasis] be denied justice in Ukraine...” There are similar references to that standard of proof in other passages in the judgment. In paragraph 36 the judge said “36. The standard of evidence needed to establish the unavailability of the appropriate forum if that forum is overseas-the cogent evidence to which Lord Diplock and Lord Goff referred- must be such as to demonstrate that the forum in question is or will be unavailable, not merely that it may be unavailable.”[32]Mr Brisby contends that the judge wrongly used of the concept of “unavailability” of the foreign forum. He asked himself whether the foreign forum “will be unavailable” rather than “may be unavailable.” This showed that the judge set too high the threshold for the evidence required of denial of justice in the foreign forum. This flawed approach was confirmed by the judge’s reference to his “grave doubts about the impartiality and honesty of the courts in Ukraine” when faced with a claim of the nature made by Pacific. Such language showed that the judge was satisfied that there was a substantial risk that Pacific would not be able to obtain a fair trial of its claims there, but he then incorrectly required Pacific to prove as a fact that it will not receive a fair trial in the natural foreign forum.[33]Mr Brisby cites Cherney v, Deripaska [2008] EWHC 1530 (Christopher Clarke J) and [2008] EWCA Civ 849 at paragraphs 29 and 59 as authority for the proposition that the issue for the judge hearing the application for a stay of proceedings on forum non conveniens grounds is an evaluative one: he has to assess, by taking relevant factors into account, the risk of what might happen in the future by having regard to the degree of likelihood that a future event might occur. That is different from an issue at trial on which the judge must be satisfied by evidence that, on the balance of probabilities, an event did in fact or will in fact happen. The crucial point is that the judge evaluating a risk does not have to be satisfied that, on the balance of probabilities, the future event will in fact happen. Having the “grave doubts” which he expressed about the Ukrainian legal system was in itself sufficient proof of the existence of the risk which he should have addressed.[34]On this issue I am quite satisfied that this very experienced judge was not under any misunderstanding as to what case Pacific had to make out and that there was no self-misdirection on his part. He was fully aware that he was assessing the risk of injustice to Pacific in the courts of Ukraine and that he was not required to make a finding of future fact on the balance of probabilities. The references to “unavailability”, to “will” rather than “may” and to “cogency of evidence” do not indicate that the judge misunderstood what he was doing or supposed to be doing. The judge was reflecting the language in which the opinions in the leading cases are expressed: see, for example, The Abidin Daver [1984] 1 AC 398 at 411 per Lord Diplock and the Spiliada at 478D-F per Lord Goff. In assessing a present risk of a future event it is meaningful to use expressions like “cogent evidence” or “insufficiently cogent evidence” to describe the evidence that relates to assessing the degree of risk. It does not mean that the judge took an unreasonably strict view of what evidence Pacific was required to produce to establish the risk.[35]It is valid to refer to whether an event “will” occur or whether something such as justice “will be unavailable” as long as one is clear that the exercise undertaken is one of assessing the likelihood of the risk that something, like an unfair trial of Pacific’s claims, will happen rather than proof of the fact that an event will probably happen in the future. For example in the Spiliada at p 478D-F Lord Goff discussed when a stay is to be refused and referred in the following terms to- “ …the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction…”

Pacific’s use of Ukraine courts

[36]Another criticism of the judge is that he unfairly and wrongly took into account and gave too much weight to his impression about Pacific’s resort to the Ukrainian courts when it suited it.[37]In my view, the judge’s treatment of this factor was fair, balanced and justified. I agree that there is evidence that Pacific has encountered difficulties in vindicating its claims in Ukraine, but not all the decisions of those courts have been against it nor is an adverse decision itself proof of incompetence, impropriety or bias, let alone corruption of the judiciary. Further, the particular claims in this action are not the same claims as have in the past been brought in the courts of Ukraine by Pacific. Indeed, some of the proceedings brought by Pacific in the courts there could not have been brought by it elsewhere.

The three considerations and the two stage process

[38]The judge’s reference to three particular considerations to bolster his conclusion on forum non conveniens (claims nothing to do with the UK, Ukraine the natural forum and difficult questions of Ukraine law for the English courts) was used to found an argument that those considerations are only relevant to the first stage of deciding whether there was an appropriate forum outside England. Mr Brisby contends that they are all irrelevant at the second stage of deciding whether Pacific had proved that there were special circumstances that, in the interests of justice, a stay should be refused.[39]Mr Brisby’s emphasis is on the two stage approach on stay applications laid down in the Spiliada at and Connelly v. RTZ Corporation plc [1998] AC 854 at 871-872. At the first stage it is for the defendant to show that there is a more appropriate forum which would be the natural forum for the trial of the action; at the second stage it is for the claimant to show that, by reason of special circumstances, justice requires that a stay should not be granted and for that reason the natural forum is not the appropriate forum. Mr Brisby’s point is that, in that part of his judgment, Blackburne J had reached the second stage. It was not therefore permissible for him to take into account, when deciding whether or not Pacific could get a fair trial of its claim in Ukraine, considerations of what was the natural forum for the trial.[40]This is not a valid criticism of the judgment. It was common ground at the hearing below that the natural forum for the case was Ukraine. The judge then went on to hold that the evidence of special circumstances requiring that a stay should not be granted was insufficiently cogent. He had already made that decision before he mentioned the three considerations. They were not stated as reasons for his conclusion on the second stage: I think that they were in the nature of added comments in the context of his overall conclusion on stay. They do not invalidate what he had already decided on other stage two grounds relating to special circumstances for not granting a stay.[41]Further, the two stage approach is not so self-contained and rigid as to preclude a judge from taking the sensible precaution of standing back at the end of the two stages and looking at all the circumstances in the round rather than in isolation from one another. That is all that Blackburne J was doing when he added the criticised comments to his conclusion.

The proceedings against SMI

[42]It is said that, on the one hand, the judge gave undue weight to the difficulty of the disputed questions of Ukranian law, and that, on the other hand, he overlooked or gave too little weight to the fact that the English courts would have to grapple with them in any event when the proceedings against SMI are tried here. As explained earlier, those proceedings have not been and cannot be permanently stayed. The trial of Pacific’s conspiracy claim against SMI must be heard in this jurisdiction, as the forum non conveniens doctrine cannot be applied to stay the claim against SMI: Owusu v. Jackson, Case C-282/02 [2005] QB 801.[43]Mr Brisby says that Pacific intends to pursue the claim against SMI in any event. That means that, if the judge’s order stands, there would be two trials of the claims: one in England, the other in Ukraine. The trial of the claims against SMI could lead to a judgment which, if not satisfied, could be used by Pacific to put SMI into liquidation. Mr Brisby suggests that the liquidator of SMI could then bring proceedings against Mr Surkis in the English courts for damages for breach of duty. Separate proceedings against him in Ukraine entail unnecessary additional costs, as well as the risk of inconsistent decisions.[44]In my judgment, the judge was entitled and indeed required, when considering the interests of justice, to look at all the circumstances in the round. He described the claim against SMI as a device to bring foreign defendants before the English courts and said that that ploy should not be allowed to determine the issue of forum non conveniens. The judge was aware that risks of inconsistent decisions and duplication of costs, if proceedings are instituted in Ukraine parallel to Pacific’s claim against SMI in the English courts, are relevant and that that is far from satisfactory. He observed that they can be mitigated by the exercise of case management powers in the action against SMI, which he described as a minor player in the dispute. It is by no means inevitable that there will be two trials of the same dispute, one in England and the other in Ukraine. I agree with Mr Malek that the arguments based on Pacific’s claims against SMI are no more than fragile and featherweight reasons for allowing Pacific’s action against Mr Surkis and the other defendants to proceed in the English courts.

Defects of Ukrainian legal system

[45]Finally, throughout his written and oral submissions, Mr Brisby re-iterated that Pacific’s main ground of appeal was that the judge erred in his conclusion at the second stage of the Spiliada process by holding that Pacific has not established a sufficiently cogent evidential basis for its contention that “justice will not be obtained in Ukraine even if Ukraine is otherwise the appropriate forum for the resolution of its claims.” The judge described that as “the principal issue which I am called upon to deal with on this application and which I have found to be the least straightforward to decide.”(paragraph 35).[46]As before the judge, Mr Brisby has taken the court to the bulk of the materials and to the further material which he describes as providing overwhelming evidence that Pacific’s claims will not get a fair hearing in Ukraine and cannot be justly litigated in an ineffective judicial system riddled with bias and corruption. He likens the legal system in Ukraine to the “Wild West.” While evidence of corruption is normally likely to be circumstantial rather than direct, Mr Brisby says that in this case he is able to rely on direct evidence in the form of documented deficiencies in the Ukrainian legal system contained in reports of respected international bodies, such as the Atlantic Council of the United States (2007), about the existence of corruption in the legal profession and bias in the judiciary, and by Sigma (Support for Improvement in Governance and Management) (March 2006). There was ample evidence, he claims, of perverse decisions and impropriety among members of the Ukrainian judiciary. The Ukraine government itself had now recognised shortcomings in the legal system.[47]Mr Brisby focuses on the difficulties faced by Mr Grigorishin personally. He has been out of favour with the government there and has been treated with hostility. That is in contrast to the ability of Mr Surkis and his associates, as members of an elite cartel (“the Kiev Seven”), to bring pressure to bear in Ukraine. He had been banned from entering the country in December 2008. The court was referred to the detailed evidence about the fact that since 2004 Pacific has not been able to enforce its rights in proceedings in the Ukrainian courts in relation to the Club shares, or get its claims off the ground. The evidence gives instances of serious shortcomings in the Ukrainian system experienced by Pacific which were not addressed in the evidence of Mr Surkis: attempts in 2005 to have a judge (Judge Otrosh) taken off a case in which she had made findings in favour of Pacific and was accused of bias and lack of objectivity leading to a request to have her removed from office; complaints about the conduct of the President of the Appeal Court in the case which Pacific had to fight to the Supreme Court to secure the correct decision in a “meritless case” brought in the Obolonsky District Court of Kiev in May 2005 for a ruling that Pacific was not a shareholder in the Club; forgery of a court order; and the intervention of an ex-President in favour of Mr Surkis.[48]The evidence of improper pressure on the judiciary and Pacific’s experience of repeated failure to obtain relief in proceedings to date in Ukraine are, Mr Brisby contends, sufficiently cogent for the court to decline to grant a stay of the proceedings against Mr Surkis. The “grave doubts” expressed by the judge were sufficiently cogent to evidence a real risk that Pacific could not obtain justice in that forum. It was wrong for the judge to reach a decision that would require the claims to be tried in a jurisdiction about which he entertained “grave doubts.” Those doubts expressed by him could not be allayed by reference to the three factors singled out by the judge as making him “the more willing” to grant the stay.[49]In brief, Pacific contends that its only prospect of justice is in the English courts. If Pacific’s appeal fails it will, Mr Brisby claims, be the first time that proceedings begun as of right in this jurisdiction (i.e. against Mr Surkis who has been served in the jurisdiction) are stayed where there are grave doubts about the honesty and integrity of the courts in the foreign natural forum.[50]In my judgment, the judge did not misdirect himself on this central issue by asking the wrong question in relation to “cogent evidence.” It is plainly not enough for Pacific to assert a claimed superior ability on the part of the English courts to deliver justice in a case such as this. In reaching his conclusion “with considerable hesitation” the judge rightly focussed on the serious criticisms of the judicial system in Ukraine. He took account of the evidence of the general deficiencies in the justice system of the Ukraine. He dealt in detail with the particular difficulties which encountered by Pacific in litigation there. He was fully alive to the points pressed by Mr Brisby as appears from his summary of his submissions:- “79. …the English court [Mr Brisby submitted] should not turn a blind eye to the deficiencies in the Ukrainian judicial system which were acknowledged to exist, even by the President of Ukraine. The fact that efforts were being made to improve the system was not assisted by pretending in the present dispute that all was well. He submitted that the evidence overwhelmingly indicated that all was not well. He emphasised that Pacific’s complaints were not about defects in Ukrainian substantive law or procedure but about the way that the courts in Ukraine went about their judicial function: the essential complaint was that the judges there are subject to improper influence. There was, he submitted, a very strong likelihood that the Ukrainian courts would be subject to improper influence in their disposal of the claims that Pacific sought to advance in the current proceedings. Its attempts in Ukraine to pursue those claims, or aspects of them, had all this far been thwarted as a result, he submitted, of improper influences on the courts there.”[51]The judge noted the acceptance by Mr Malek QC, counsel for Mr Surkis and the BVI Companies, that there were indeed problems in the Ukrainian judicial system. Mr Malek’s pertinent point was that the generalised statements of complaint of interference in judicial proceedings and unspecific evidence of corruption in the reports on the legal system were insufficient to show that Pacific would not obtain substantial justice, if it pursued its claims in Ukraine. To be cogent and relevant such evidence should be directed to improper influence involving Mr Surkis. There was no cogent evidence that he or his associates were successful in manipulating the Ukrainian legal system by improperly influencing the Ukrainian courts in any of the particular cases in which Pacific has sought to ventilate its claims for the loss of its stake in the Club.[52]As for the difficulties encountered by Mr Grigorishin personally in Ukraine, the entry ban episode had in fact ultimately demonstrated the independence of the system by the lifting of the ban. There was also evidence that companies under his control had brought numerous claims in the courts of Ukraine with a considerable measure of success and that, when it suited him to do so, Mr Grigorishin had not been slow to resort to the Ukrainian courts. Even in these proceedings Pacific had been careful not to exclude the possibility of proceedings in Ukraine, if it thinks it appropriate to bring them.[53]In my view, the judge was entitled to treat Mr Brisby’s multiple criticisms of the legal system of Ukraine as falling short of the degree of cogency required to persuade the court to decline a stay of proceedings which had no connection with England and for which Ukraine is the natural and proper forum. The various points made by Pacific do not address with sufficient force and directness the thwarting of the prospect of a fair trial of the claims in this action in Ukraine. There is no cogent evidence that Mr Surkis is personally corrupt in his relations with the judiciary in Ukraine, or that he has sought to take advantage of the deficiencies of the legal system in Ukraine by engaging in attempts to put pressure or exercise improper influence over the judges in litigation involving Pacific. It was relevant to take into account the fact that Pacific has successfully invoked the jurisdiction of the courts of Ukraine in other cases, even though no relief has ever been obtained by Pacific in those courts of matters relating to the issues in this action.[54]It was for the judge at first instance to decide how much weight to give to the evidence on the various points. It cannot possibly be said that he reached a conclusion that was unsupported by evidence or was otherwise perverse or irrational. I would not disturb his decision to grant a stay.

Permission to serve out of jurisdiction

[55]Mr Brisby accepts that, if he fails in his appeal against the stay of the Pacific’s claim against Mr Surkis on forum non conveniens grounds, Pacific is not entitled to bring the BVI companies in as co-defendants. The judge said that, if he had not granted the stay against Mr Surkis, he would have agreed with Pacific that the BVI defendants could be joined as “necessary and proper parties to the claim”: see Part 6 CPR.[56]The judge went on to find that, even if he was wrong on the stay issue, the order granting permission to serve the BVI Companies out of the jurisdiction should be set aside. He applied the well established rule that, in the course of a jurisdiction challenge, no subsequent amendment of the cause of action can be relied upon to support the prior order for permission to serve out of the jurisdiction. In this case Pacific had obtained permission at the hearing of the stay application to amend its Particulars of Claim by introducing new causes of action under the Ukranian Civil Code, thereby relying on a different form of liability.[57]Mr Brisby contends that the overriding objective of the CPR has introduced greater flexibility into the court’s powers and practice on the effect of amendment in a case of permission to serve out of the jurisdiction. The judge was wrong on this point. It should not be necessary for Pacific to have to make a fresh application for permission to re-serve the BVI companies out of the jurisdiction. No new causes of action had been introduced by the amendments, which had only been made to clarify what was pleaded and to attach a new Ukrainian law label to the facts already pleaded. Those facts supported a claim for common law conspiracy, which was equivalent to the wrongs now pleaded under the law of Ukraine.[58]I agree with Blackburne J that the amendments introduced different causes of action to the cause of action originally pleaded before the order permitting service out was made. They are new causes of action governed by the law of Ukraine, not just a fleshing out of an existing pleaded case by better particulars, further information or clarification. As was said in Metal & Rohstoff v. Donaldson Inc [1990] 1QB 391 at 436, a person who has obtained permission to serve out of the jurisdiction is limited to what he has specifically pleaded for the purpose of the ex parte application for permission and cannot later justify the nature of his legal claim on another legal basis. See also ED & F Man Sugar Ltd v. Lendoudis [2007] EWHC 2268 (Comm) at paragraphs 26 and 27.

Result

[59]I would dismiss the appeal.[60]In summary, there are no grounds for re-opening the judge’s decision to grant a stay of this action. He did not misdirect himself on the law. He took account of what mattered. He ignored what did not matter. How much the various matters, either individually and collectively, weighed with him was for him to decide so long as that process did not produce a conclusion that was plainly wrong. He discharged that function by reaching a decision that was sensible as well as being correct in law. Ukraine is obviously the natural forum for the trial of the claims. The risk of Pacific suffering an injustice in a trial of its claims in Ukraine has not been shown by cogent evidence to be such that they ought to be tried in a legal system with which they have no real connection.

Lord Justice Stanley Burnton:

[61]I agree. Lord Justice Moore-Bick[62]I also agree.

Cited in 13 later judgments

and 4 more of the most senior