Koza Ltd & Anor v Akcil & Ors [2017] EWCA Civ 1609

Case No A3/2017/0290[2017] EWCA Civ 1609
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2016] EWHC 3358 (Ch)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Hon Mrs Justice Asplin DBE
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 18/10/2017
Before
LORD JUSTICE FLOYDLORD JUSTICE FLAUX
Between
KOZA LIMITEDClaimants/HAMDI AKIN IPEKRespondentsMUSTAFA AKCILDefendants/HAYRULLAH DAĠISTANAppellantsMAHMUT HIKMET KELEŞAppellantHAMZA YANIKAppellantARIF YALCINAppellantKOZA ALTIN IŞLETMELERI ASAppellant
Jonathan Crow QC and David Caplan (instructed by Mishcon de Reya LLP) for AppellantsRichard Morgan QC, Siward Atkins and Thomas Munby (instructed by Gibson Dunn & Crutcher LLP) for RespondentsHearing Hearing dates: 13-14 September 2017
Judgment
[1]This is an application for permission to appeal and, if permission is granted, an appeal, from a decision of Asplin J (as she then was) dated 21 December 2016, and her consequent order. It arises in a dispute between rival parties over the management and control of the first claimant, Koza Limited. The principal issue concerns the application of article 24(2) of Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the recast Judgements Regulation”) to the present proceedings.[2]The second claimant, Mr Ipek, is a director of Koza Limited and a member of the family which owns the corporate group to which Koza Limited belongs (“the Koza Group”). The Koza Group is a large Turkish-based mining and media conglomerate. Koza Altin Işletmeleri AS (“Koza Altin”), the sixth defendant, is a member of the Koza Group and Koza Limited is its wholly-owned subsidiary.[3]Following a police raid of the Koza Group’s headquarters in Ankara in September 2015, allegations were made by the Turkish authorities that the Koza Group was involved in the financing of terrorism. On 26 October 2015, an Ankara Criminal Peace Judge made an order under article 133(1) of the Turkish Criminal Procedure Code replacing the then existing boards of various companies within the Koza Group (including Koza Altin) with trustees who were required to manage those companies pending further investigations. An appeal from that decision was rejected on 12 November 2015 and a further appeal dated 18 November 2015 was lodged with the Constitutional Court but has not been dealt with. Pursuant to two further decisions of the Turkish Criminal Peace Court dated 13 January and 3 March 2016, the first to fifth defendants were appointed trustees of Koza Altin.[4]On 19 July 2016 a notice under section 303 of the Companies Act 2006 (“the section 303 notice”) was purportedly served on behalf of Koza Altin requisitioning a general meeting of Koza Limited to pass resolutions replacing its directors (including Mr Ipek) with the first, second and third defendants. Koza Limited did not call such a meeting. Thus, following the statutory procedure, on 10 August 2016 a further notice under section 305 of the 2006 Act was purportedly served on behalf of Koza Altin, calling for a general meeting of Koza Limited for the purpose of passing those resolutions (“the section 305 notice”).[5]Article 26 of Koza Limited’s articles of association provides: “26.1 Each shareholder shall exercise all voting rights and powers of control available to him in relation to the Company to procure that, save with A shareholder consent, the Company shall not effect any of the following matters:(a) Permit or cause to be proposed any amendment to the Articles;(b) Permit the appointment or removal of any person as a director of the Company; or(c) … 26.2 As a separate obligation, severable from the obligations in clause 26.1, the Company agrees that, save with A Shareholder Consent, the Company shall not effect any of the matters referred to in subparagraphs (a) to (c) of Article 26.1 above.” (a) Permit or cause to be proposed any amendment to the Articles; (b) Permit the appointment or removal of any person as a director of the Company; or (c) …[6]Article 2.1 defines “A Shareholder Consent” as meaning “the prior, signed written consent of each A Shareholder”. The two A shareholders were Mr Ipek and his brother, each of whom held one A share. It is the claimants’ case that at least Mr Ipek did not and would not consent to the resolutions.[7]On 16 August 2016 the claimants commenced these proceedings seeking(i) declarations that the section 303 and section 305 notices were ineffective,(ii) an injunction preventing the defendants or any of them from holding any meeting of Koza Limited pursuant to those notices,(iii) an injunction to restrain the first five defendants or any of them from holding themselves out as having the authority to act for or to bind Koza Altin as a shareholder of Koza Limited and from causing Koza Altin to do anything or permit the doing of anything as a shareholder of Koza Limited. This relief was stated to be sought on two grounds. The first ground was that by article 26 of Koza Limited’s articles of association, the resolutions to which the notices related could not be passed without the consent of Mr Ipek as an A shareholder and he did not consent. The second ground was that the court should not recognise any authority of the first five defendants to cause Koza Altin to serve the notices or any further notices or to take any other step as a shareholder of Koza Limited because such authority was granted (i) illegally under Turkish law, (ii) on an interim basis only, and (iii) granted in breach of natural justice and/or article 6 ECHR. Further, it would be contrary to public policy to do recognise the grant of such authority. These two grounds for seeking the relief claimed have been referred to in these proceedings as “the English company law claim” and “the authority claim”.[8]The basis of the authority claim, as it has been called, is expanded in the Particulars of Claim at paragraphs 5-30. Paragraph 5 of the pleading asserts that the English courts should not recognise any authority of the Trustees to cause Koza Altin to call any general meetings of the company or to do or permit the doing of anything else as a shareholder of the company. It is said by the claimants that the appointment of the Trustees was unlawful as a matter of Turkish law and that there is no way in practice of redressing this through an appeal; that the judicial process by which the Trustees were appointed was contrary to natural justice and to article 6 ECHR; and that the purpose for which the Trustees were appointed was to assist the Turkish government to expropriate the assets of Mr Ipek, his family and businesses for unjustified political reasons. It is not necessary for the purposes of this judgment to rehearse the detail of all the allegations which the claimants then make concerning the events in Turkey which led to the appointment of the Trustees.[9]The pleading then turns to the section 303 and 305 notices and the claimants’ case on why those notices were invalid. Paragraph 34 asserts:
“The s 303 Notice was invalid because: (1) The Trustees have no authority in this jurisdiction to cause Koza Altin to do anything as a shareholder of the Company; and in any event (2) The s 303 notice was invalid as a matter of English company law.”
[10]The pleading goes on to explain that the first of the grounds (the authority claim as it has been called) has already been explained, but that the second ground (the English company law claim) will be explained below. By section 303 of the 2006 Act, members of a company can only require the directors to call a general meeting to consider resolutions which “may properly be moved”. Section 303(5) provides that a resolution may be properly moved at a meeting unless it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the company’s constitution or otherwise). The claimants contend that the proposed resolutions were not such as could properly be moved at a general meeting of the company because they would, if passed, be ineffective for the purposes of section 303(5)(a) of the 2006 Act as being contrary to the Company’s constitution.[11]At paragraph 44, under the heading “Claimants’ case on need for final relief”, the pleading asserts that the defendants are likely unless restrained to purport to serve further notices under section 305 of the 2006 Act following the directors’ refusal to call a meeting in response to the section 303 notice; and/or take further steps to try to change the constitution of the board of the company, misappropriate funds representing its share capital and/or its other assets, or otherwise harm the business of the company.[12]The relief claimed in paragraph 45 reflects, in somewhat expanded form, that sought in the claim form which I have summarised above.[13]On the same day as the claim form was issued, the claimants sought an injunction, without notice to the defendants, to prevent any meeting of Koza Limited taking place for the purpose of passing the resolutions. Snowden J granted the injunction. He concluded, albeit in the absence of argument from the defendants, that there was jurisdiction over the defendants because both aspects of the claim fell within Article 24(2) of the Recast Judgments Regulation.[14]On 14 September 2016 all the defendants filed an acknowledgement of service in which they stated that they intended to contest the jurisdiction of the English court. On 7 October 2016 they issued an application to that effect. On the same day, Koza Altin (but not the Trustees) served a defence and counterclaim. The defence contains an express reservation that it is served subject to a jurisdictional challenge on the part of Koza Altin as to the authority claim (at that stage called the Trustee issue) and by the first five defendants as to both the authority and the English company law claims. The defence does not plead to any aspect of the Particulars of Claim which alleges want of authority on the part of the Trustees. In paragraph 9(3) of the defence Koza Altin pleads that the purported introduction of article 26 into the company’s articles of association was invalid and ineffective, having been carried out otherwise than in good faith for the benefit of the company as a whole; that the purported issue and allotment of the A ordinary shares was invalid and ineffective, again having been carried out otherwise than in good faith for the benefit of the company as a whole and/or for an improper purpose; and that article 26 is unenforceable, being an unlawful fetter on powers conferred upon the company by statute, including the power under section 168(1) of the 2006 Act to remove a director by ordinary resolution.[15]The counterclaim incorporates by reference the relevant contents of the defence and adds no further factual allegation. It also expressly states that the counterclaim is not intended to waive the jurisdictional challenges that the defendants have made. The relief claimed in the counterclaim is purely declaratory. It claims declarations that(1) the changes introducing article 26 purportedly effected to the company’s articles of association in September 2015 were invalid and ineffective and/or that article 26 is unenforceable or otherwise ineffective, and(2) the resolution purportedly passed by the directors at the board meeting on 11 September 2015 and/or the purported issue and allotment of A ordinary shares to Mr Ipek and his brother were invalid and ineffective.[16]In September 2016, the Turkish Savings Deposit Insurance Fund (SDIF) was appointed as “trustee” in place of the first five defendants, and then purported to use its power as such to appoint a new board of directors of Koza Altin. For that reason the first five defendants are sometimes referred to as the former trustees.[17]There have been further procedural developments since Koza Altin served its defence and counterclaim. On 3 November 2016 the claimants issued an application to strike out “the Acknowledgement of Service, Defence and Counterclaim and other documents filed by Mishcon de Reya [the defendants’ solicitors] on behalf of” Koza Altin, with an associated application for directions for a trial of that application. I will refer to these applications as “the strike out application” and “the directions application”. The strike out application appears to have been brought(a) because of the procedural requirement to raise objections to authority at an early opportunity rather than rely on them as a defence at trial, see e.g. Russian Commercial and Industrial Bank v Comptoir D’Escompte de Mulhouse and others [1925] AC 112 at 130; and(b) to guard against the possibility that the authority claim was held to be outside the jurisdiction of the court. In those circumstances the claimants wished to preserve the ability to argue that the defendants’ solicitors had no authority to act in the context of the English company law claim.[18]Koza Altin takes the view that the strike out application was misconceived. On the second day of the hearing before Asplin J it put forward a draft application notice setting out the reasons why it considered that the strike out application should be summarily dismissed in the exercise of the court’s case management powers.[19]The judge held that the court had jurisdiction in respect of all the issues raised in the action. If she was wrong about that, she held that by counterclaiming in the action Koza Altin had submitted to the jurisdiction. She expressed puzzlement about the strike out application. In paragraph 67 she pointed out that, unlike in cases where a defendant wishes to take a point on the authority of those purporting to act for the claimant, the claimants had brought Koza Altin before the court as a defendant. She continued:
“It seems to me that it would be a nonsense if, having done so, the Claimant could contend that the Acknowledgment of Service and Defence could be struck out as an abuse of process arising from the very lack of authority which is relied upon in the claim itself.”
[20]The judge then went on to consider whether the position was different in relation to the counterclaim and concluded that it was not. She also held that:
“…it would also make a nonsense of the Jurisdiction Application if it were possible, having lost that application in relation to the Authority Claim, to seek to resurrect it outside the ambit of Article 24(2)…”
[21]In the result, however, the judge adjourned the strike out application to be dealt with at the trial of the “Authority Issue”. By that stage undertakings had been given by the defendants not to assert that the strike out could not be dealt with at trial, thus waiving any point based on the principle in Russian Commercial and Industrial Bank (supra), and the claimants had waived any potential case of breach of warranty of authority against Mishcon de Reya. The judge ordered that the costs of the strike out application should be costs in the Authority Issue. She ordered that the claimants should pay the defendants’ costs (if any) of the associated directions application.[22]The issues before the court on this appeal are the following: i) Whether the judge was correct to hold that the proceedings were within Article 24(2) of the Recast Judgments Regulation (“the jurisdiction issue”); ii) Whether Koza Altin had in any event submitted to the jurisdiction of the English court in relation to the authority claim (“the submission issue”); iii) Whether the judge’s refusal to dismiss the strike out application was wrong (“the strike out issue”).

The jurisdiction issue

[23]The general rule under the Recast Judgments Regulation is, as it was under the predecessor European legislation, that defendants are to be sued in the courts of the state where they are domiciled: in other words, “defendants play at home”. The general rule is subject to exceptions. Given their status as exceptions, they are to be construed narrowly, or at least no more broadly than is required by their objective. Article 24, which deals with exclusive jurisdiction irrespective of domicile, is one such exception. So far as material, it provides as follows:
“The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: … (2) in proceedings which have as their object the validity of the constitution, the nullity or dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat the court shall apply its rules of private international law.” (2) in proceedings which have as their object the validity of the constitution, the nullity or dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat the court shall apply its rules of private international law.”
[24]The policy rationale for article 24(2), which guides its interpretation, is that it is desirable to centralise jurisdiction in relation to the identified subject matter in order to avoid conflicting decisions, for example as to the existence of a company or the validity of one of its decisions. The courts of the member state where the company has its seat are also recognised to be best placed to deal with such disputes: see Case C-372/07 Nicole Hassett v South Eastern Health Board [2008] ECR I-7403 at [20] and [21].[25]It is common ground that article 24(2) applies in the circumstances of this case even though Turkey is not a member state of the European Union.[26]There is no dispute that the seat of Koza Limited, which is a company registered under the Companies Acts, is in England and Wales. No reliance is placed by the claimants on the first limb of article 24(2) i.e. that concerned with “the validity of the constitution, the nullity or dissolution of companies or other legal persons or associations of natural and legal persons”. The question which arises therefore is whether the proceedings can be classified as ones which have as their object “the validity of the decisions of [Koza Limited’s] organs”. It is common ground that Koza Limited’s shareholders in general meeting and its board of directors constitute organs of that company.[27]Koza Altin accepts that the English company law claim falls within article 24(2), although there is a separate question as to whether the former trustees are properly joined to it. The former trustees dispute that the court has any jurisdiction in relation to any aspect of the claim against them.[28]It is common ground that when article 24(2) speaks of proceedings having an “object” it is not referring to the purpose of the proceedings. Rather that phrase is to be interpreted as “proceedings which are principally concerned with” one of the types of subject matter within the article. That was the view of Aikens LJ (with whom Etherton and Pill LJJ agreed) in JP Morgan Chase Bank NA and another v Berliner Verkehrsbetriebe Anstalt des Öffentlichen Rechts [2010] EWCA Civ 390 in relation to the equivalent provision in the predecessor regulation, Council Regulation (EC) No 44/2001 at [83]. There is no reason why the same should not be the case in relation to article 24(2) of the Recast Judgments Regulation.[29]In order to answer the question whether proceedings which raise multiple issues are “principally concerned” with one of the matters within article 24(2) the court has to undertake “an exercise in “overall classification” and make an “overall judgment” to see whether the proceedings are “principally concerned” with one of the matters set out in” the article: JP Morgan Chase at [87].[30]In JP Morgan Chase at [88] Aikens LJ, said that this interpretation of the corresponding article, article 22(2), of the predecessor regulation:
“… fits with the wording of article 25. It also fits with the objective of article 22, which is to give exclusive jurisdiction to the courts of the state which will be best suited to dealing with the relevant issue, depending on which paragraph of article 22 is in play. It is only necessary to displace the general rule as to jurisdiction or the parties' own agreed jurisdictional choice if, making an overall judgment, it is clear that granting jurisdiction to the courts of the relevant state (where the land is, where the company has its seat, where the patent is registered, etc) will result in the sound administration of justice. In the context of article 22.2, this will not be the case unless, overall, the proceedings are so closely connected with matters of local company law and internal corporate decision making in respect of the company that the proceedings should not be tried anywhere but in the courts of the state where the company has its seat.”
[31]It is to be noted that the final sentence of the passage I have cited from Aikens LJ’s judgment expresses the test in terms of the proceedings overall, and their connection with matters of local company law and internal corporate decision making. It is very far from a statement that the proceedings must exclusively relate to matters of local company law. Indeed it is difficult to see how such a test could be applied in any real dispute, where other legal issues will almost inevitably arise.[32]In Hassett (supra), two doctors who were sought to be made liable in proceedings for damages for personal injuries, sought indemnification against the Medical Defence Union (MDU) of which they were members. The MDU was a company incorporated in England. The MDU responded that its articles of association provided that any request for an indemnity came within its absolute discretion, and refused the requests. On the basis that the refusals infringed their rights under the articles of association, the doctors successfully joined the MDU as additional party to a claim which had been brought against them in Ireland by individual claimants (in fact via the health authority as an intervening party). The MDU then contended that its joinder should be set aside on the ground that, because the claims against it “concerned in essence the validity of decisions adopted by its board of management” they fell within the scope of article 22(2) of Regulation 44/2001, with the result that jurisdiction lay exclusively with the courts of England and Wales and not the courts of Ireland.[33]The Court of Justice characterised the question which it was asked by the Irish Supreme Court as being whether article 22(2) meant that proceedings in which one of the parties alleges that a decision adopted by an organ of the company infringes its rights under that company’s articles of association were proceedings concerned with the validity of the decisions of the organs of the company within the meaning of that provision. The Court of Justice had little difficulty in answering that question in the negative. At paragraph 23 of the judgment the court pointed out that if all disputes involving a decision by an organ of a company had to be treated as coming within the scope of the article, that would mean that all legal actions brought against a company, whether in matters relating to contract, or to tort or any other subject matter, would almost always come within the jurisdiction of the courts of the member state in which the company had its seat. Thus the provision had to be interpreted as covering only disputes in which a party is challenging the validity of a decision of an organ of a company. There was no indication that the doctors had raised any such challenge. In fact the challenge was to the way in which the power undoubtedly contained in the articles of association was to be exercised. As the court put it at paragraph 22, it was not “sufficient that a legal action involve some link with a decision adopted by an organ of a company”.[34]Of more direct assistance is Case C-144/10 Berliner Verkehrsbetriebe, Anstalt des öffentlichen Rechts v JP Morgan Chase BankNA [2011] 1 WLR 2087. There, the German public transport authority (BVG) brought proceedings in Germany seeking a declaration that a swap contract, which it had entered into with an American bank, and in respect of which the bank had brought enforcement proceedings in the English High Court pursuant to an English jurisdiction clause, was void because its subject matter was ultra vires the authority’s own statutes. It contended that, by virtue of article 22(2), the subject matter was one over which the courts of Germany, as the state in which it had its seat, had exclusive jurisdiction. The relief BVG sought in Germany also included an order, in the alternative, that the bank should release BVG from any obligation stemming from the swap contract (as compensation for negligent advice given by the bank), and for damages against the bank.[35]The Court of Justice recognised at [37] that Regulation 44/2001 conferred exclusive jurisdiction to adjudicate on disputes which relate to the validity of the decision of a company’s organs upon the courts where the company had its seat, and that those courts were best placed to adjudicate upon disputes which relate exclusively, or even principally to such a question. It went on, however, to state at [38]:
“However, in a dispute of a contractual nature, questions relating to the contract’s validity, interpretation or enforceability are at the heart of the dispute and form its subject-matter. Any question concerning the validity of the decision to conclude the contract, taken previously by the organs of one of the companies party to it, must be considered ancillary. While it may form part of the analysis required to be carried out in that regard, it nevertheless does not constitute the sole, or even the principal, subject of the analysis.”
[36]In that passage, the court is giving general guidance as to disputes which can be properly characterised as “of a contractual nature”. Whilst issues about the validity of the decision to conclude the contract might well, in isolation or in other contexts, fall within Regulation 44/2001, in the particular context of contractual disputes they were not, in general, the principal concern of the proceedings.[37]The task for the court in each case is therefore to determine whether the proceedings relate principally to the validity of the decisions of an organ of the company. A mere link to a decision of the company, or an issue raised which is ancillary to the heart of a contractual or some other dispute, is insufficient to bring the proceedings within the exclusive jurisdiction.[38]In our case, Asplin J concluded that the principal subject matter of the proceedings did fall within article 24(2). Although a generalised attack on the authority of those purporting to act for Koza Altin would not be within article 24(2), that was not the nature of the proceedings here. She considered that the English company law claim and the authority claim were “inextricably linked”. Just like the English company law claim, the authority claim went directly to the validity of the section 303 and section 305 notices and thus related directly to the validity of the decisions of an organ of the English company. It was artificial to seek to separate out the two issues.[39]Mr Crow QC, who appeared on behalf of the appellants, contended that the authority claim and the English company law claim were two distinct claims brought against different parties: the authority claim being a claim against the former trustees to which Koza Altin was a necessary and proper party, and the English company law claim being a claim only between the two companies. It was therefore necessary to look at the case on a claim by claim basis. He stressed that the question before the court was whether the authority claim falls within the exclusive jurisdiction of the English courts by virtue of article 24(2). The claimants were not pursuing any alternative application for permission to serve the proceedings out of the jurisdiction, for example on the basis that the former trustees were necessary and proper parties to the English company law claim. Their contention was that they did not need such permission because the whole claim fell within article 24(2).[40]Considering the authority claim, Mr Crow submitted, firstly, that the claim did not attack the validity of the appointment of the former trustees. He drew attention to what he said were concessions by the claimants that the appointments were valid “in Turkey”. The burden of the claim was that the appointments, though valid in Turkey, should not be recognised by the English courts as a matter of public policy. Secondly, he submitted that the challenge to the effectiveness of the section 303 notice served by Koza Altin was not a challenge to a decision of an organ of Koza Limited. It was a challenge to the ability of Turkish appointees of a Turkish company to serve a notice. There was a significant difference between the ability of individual shareholders to serve a notice calling a general meeting, and the validity of a decision taken at a meeting once called. Thirdly he submitted that the issues raised by the authority claim were not issues of English company law. They were issues of Turkish law, violation of article 6 ECHR, and English public policy. The policy rationale of article 24(2), namely to centralise jurisdiction in the courts of the seat of the company, accordingly did not apply.[41]Mr Crow also submitted that, even if it was correct to look at the proceedings as a whole, it was still not possible to say that the proceedings were “principally concerned” with decisions of an organ of Koza Limited. By far the largest issue in the proceedings if they were allowed to go to trial would be the authority claim. He took us to the claimants’ expansive draft statement of case on the authority claim, which extends to some 34 pages. By contrast the matters for consideration in the English company law claim, even taking into account the allegations of lack of good faith on the part of Mr Ipek, would be relatively easily and shortly determined.[42]Mr Crow finally submitted that the position of the former trustees needed to be considered separately from the position of Koza Altin, even if the claim against Koza Altin were properly within Article 24. The former trustees, he submitted, were not parties to the company law claim. The former trustees are not and never have been shareholders in Koza Limited or directors of it. Although Article 24(2) is concerned with subject matter of the proceedings, there was no need for it to be interpreted so widely as to confer jurisdiction against Turkish nationals domiciled in Turkey. The only necessary parties are the company itself or its organs. The former trustees were third parties, whom it was not necessary to join.[43]Mr Morgan QC, who appeared on behalf of the claimants, supported the judgment of Asplin J. His analysis of the ECJ cases to which I have referred was that they were what he called “outward facing”, and the present case was distinguishable because it was concerned with the internal decision making of the company. It was not possible to divide the claim against Koza Altin into two discrete parts, based on the authority and English company law points. They were two grounds on which the validity of decisions of the organs of the company were being challenged. On the position of the former trustees, Mr Morgan objected that no distinction was drawn in the arguments of the defendants before Asplin J between the position of the personal and corporate defendants. Further, he drew attention to an argument rejected by the Court of Appeal in JP Morgan Chase (supra), namely that Article 24(2) only related to disputes between the legal entity and its officers or shareholders and did not extend to disputes between the legal entity and third parties. He submitted that Article 24(2) was concerned with the subject matter of the dispute. The identity of the proper parties to a dispute within Article 24(2) was a matter for the national court’s procedural rules.[44]I think the flaw in Mr Crow’s primary argument in relation to the claim against Koza Altin is that it treats the two issues in that claim as if they were entirely severable. He then analyses the authority issue as if it was a freestanding claim and concludes that, as such, it would not fall within article 24(2). If that were the correct approach to the application of Article 24(2) then I would have been inclined to accept his submissions. Such a freestanding claim would not fall within the language or the rationale and purpose of Article 24(2). However, in my judgment, that is not the correct way in which to analyse the case against Koza Altin, and is not the approach in law which is mandated by the authorities.[45]I agree with the judge that, far from being severable, the two issues raised in the claim against Koza Altin are inextricably linked. Both are concerned with the validity of decisions of the shareholders in general meeting to replace the board of directors of Koza Limited. Both issues are preconditions for a valid decision of an organ of the company. So much is clear from, in particular, the claim form and paragraph 34 of the particulars of claim.[46]I do not take from the English or European authorities which were cited to us any suggestion that one is required in all cases to disentangle issues which are interlinked in this way and apply Article 24(2) to each issue separately. On the contrary, faced with such proceedings, the court is required to form an overall evaluative judgment as to what the proceedings are principally concerned with. The position is obviously different from a case where two quite independent claims are made in the same proceedings. Exclusive jurisdiction in relation to each claim would, in those circumstances, have to be determined separately.[47]It is true that the decision of Koza Limited in general meeting which is sought by Koza Altin’s resolutions has not yet been made. That is only because the proceedings were brought quia timet in order to prevent the holding of such a meeting, and an interim injunction obtained to prevent it. Final relief is in any event sought to prevent any further decision of the company because it would be invalid on the same grounds. Even bearing in mind the narrow scope of the exception represented by Article 24(2), I cannot accept that the conclusion on jurisdiction should be different depending on whether the decision has been taken or is expressly threatened and imminent. The policy rationale behind the exception is equally satisfied in both scenarios. That there is a decision of an organ of the company under attack in the proceedings must in any event be implicit in Koza Altin’s concession that the English company law issue is within the exclusive jurisdiction.[48]That view of the proceedings is consistent with the way in which the action is pleaded in the particulars of claim. It is true, as the judge also observed, that some of the relief claimed might appear in isolation to go further than a challenge to the authority of those purporting to act for Koza Altin in relation to the internal management of Koza Limited. Read as a whole, however, in particular taking account of the way the case is pleaded in paragraph 34, it is a challenge to the ability of Koza Altin to act as a shareholder of Koza Limited in relation to Koza Limited’s internal affairs.[49]It is true that the authority issue (as I prefer to call it) does raise issues of law which are not issues of English company law. But the presence of those issues in the action does not prevent the proceedings from being principally concerned with the validity of decisions of the organs of the company. The relevance of those non-company law issues goes directly to the validity of the notices and therefore the validity of the decision of the company taken in pursuance of them. The requirement for a valid notice is, in any event, a requirement of English company law.[50]I do not think that the analysis required by article 24(2) into the principal concern of the proceedings involves an assessment of how much evidence or argument is likely to freight the individual issues. I would accept that the English company law point is less weighty if viewed in those terms. To approach the assessment in that way would, however, be to shut one’s eyes to what the proceedings were principally about. On the view which I take, however, both issues are concerned with the validity of the decisions of the company’s organs.[51]In my judgment, therefore, it is correct to characterise the proceedings as a whole (so far as they relate to Koza Altin) as being principally concerned with the validity of decisions of an organ of the company.[52]I turn to the position of the former trustees. On this issue we do not have the benefit of any reasoning of the judge because it appears that the point was not argued below. Mr Crow points out that the judge raised the issue with counsel for the claimants, but it is plain that counsel then instructed by the defendants did not ask the judge to decide the case on this basis. Mr Crow submits that the points he raises are no more than points of law, and the claimants are not prejudiced by having to meet them at this stage.[53]I would permit the former trustees to raise the point, as it is a minor variant on the way in which the case was argued below. I would nevertheless reject it. The test to be applied remains an overall classification and overall judgment of the proceedings as a whole. That overall assessment does not in my judgment change dependent on which defendant one focuses on. Article 24(2) is concerned with the subject matter of the proceedings, not with who the parties are. It is not suggested that the former trustees cannot properly be joined to the action seeking declarations as to the validity of the decisions which they have initiated.[54]The former trustees’ case is that it is not necessary to join them, and that, although this is not mandated by the language of the Recast Judgments Regulation, a strict interpretation would exclude cases against unnecessary parties. I accept that it is not necessary for the claimants to join the former trustees, but that fact does not, in my judgment, lead to the conclusion that the action against them is not principally concerned with subject matter within Article 24(2). The subject matter of the proceedings remains the same. The case remains one to which the underlying rationale of the article applies, namely avoiding conflicting decisions in relation to the specified subject matter, and ensuring that the proceedings are tried in courts best placed to do so.

The submission issue

[55]As I have concluded that the court has jurisdiction over the proceedings against Koza Altin, this point does not strictly arise. I will deal with it shortly.[56]Asplin J concluded that Koza Altin had submitted to the jurisdiction, largely because she considered that, once a party has invoked the rules of the local court by counterclaiming, that party is to be taken as submitting to the jurisdiction, irrespective of any reservation that may be contained in the counterclaim or elsewhere.[57]In SMAY Investments Limited v Sachdev [2003] EWHC 474 (Ch), Patten J, as he then was, explained the impact of the new rules in CPR Part 11 concerning applications to challenge the jurisdiction of the court. At [41], in a passage expressly approved by this court in Zumax Nigeria v First City Monument Bank [2016] EWCA Civ 567 at [45], he said:
“It seems to me that when a defendant has complied with CPR Part 11 with a view to challenging the jurisdiction of the court, and the time for making his application under CPR Part 11(4) has not yet expired, then any conduct on his part said to amount to a submission to jurisdiction, and therefore a waiver of that right of challenge, must be wholly unequivocal.”
[58]Accordingly, what needs to be identified is a wholly unequivocal submission to the jurisdiction.[59]Mr Morgan relied on a passage from Dicey, Morris & Collins, The Conflict of Laws (15th Edition) at paragraph 14-068:
“It is obvious that a person who applies to a tribunal as claimant is bound to submit to its judgment, should that judgment go against him, if for no other reason than that fairness to the defendant demands this. It is no less obvious that a claimant exposes himself to acceptance of jurisdiction of a foreign court as regards any set-off, counterclaim or cross-action which may be brought against him by the defendant. By the same token, a defendant who resorts to a counterclaim or like cross-proceeding in a foreign court clearly submits to its jurisdiction.”
[60]Whilst it is the case that a party which itself invokes the jurisdiction of the court without qualification clearly submits to the jurisdiction, that is plainly not what has happened on the facts of this case. On the same day as the counterclaim was served, Koza Altin issued its jurisdiction challenge in relation to the authority claim. Far from being an unequivocal submission to the jurisdiction, the counterclaim made it clear that it was without prejudice to the jurisdiction challenge. In addition, its factual allegations go no wider than the defence and relate entirely to the issue on which it is accepted that the court has jurisdiction. The defence itself is scrupulous to avoid engagement with the authority issue. There is no “wholly unequivocal” submission to the jurisdiction in relation to the authority issue.[61]I would therefore not have reached the same conclusion on this issue as the judge, had it been necessary for me to do so. In the event this does not matter.

The strike out issue

[62]I have set out the procedural background above. It will be recalled that the strike out application sought a ruling that Koza Altin’s solicitors were not properly authorised to act for it. Mr Crow advanced two broad points in support of his contention that the judge should have dismissed the application. The first was that, given that the judge expressed the view that the strike out application was “a nonsense”, she ought to have followed through on that conclusion and dismissed it. The second point was that the strike out application was bound to fail on the merits in any event. He made no secret of the fact that what lay behind the appeal was the desire to achieve a more favourable position in costs.[63]I take first the issue of whether the judgment is internally inconsistent. The judge reached three conclusions. First, she concluded that with the authority issue in play there would be no point in a strike out application directed at the acknowledgment of service and defence. It would raise the same issue. Secondly, she concluded that the same remained true even in the light of the counterclaim. Thirdly, the judge concluded that if the authority point was not in play (for lack of jurisdiction) it would be wrong to allow the strike out to undermine that result by bringing it back in.[64]I think, however, that in the circumstances where only the company law issue was in play, and the claimants were exposed to the counterclaim, they remained entitled to question the authority of those representing Koza Altin. It was not, on this view, a nonsense to seek to strike out at least the counterclaim and to seek directions for the trial of that question. In the event, with both issues in play, the strike out application lost any conceivable utility, and so the judge could simply have made no order on the strike out application, or dismissed it. However, it does not follow that she was wrong to take the course which she did, namely to stand it over to the trial with costs in the authority issue, and also to make the claimants pay the costs of the directions application. One might quibble, for example by saying that she could have made no order for costs, or that she could have reserved the issue of costs to the trial, rather than making the costs follow the event, but that is not the basis on which the judge’s decision is attacked before us. Koza Altin’s case is that it followed as a matter of logic that the strike out application should have been dismissed with costs. It does not. The judge’s decision was, in the circumstances which arose after judgment, a case management decision with which it would be wrong for this court to interfere.[65]Mr Morgan’s answer to the second way in which the strike out application is attacked is to say that there was no substantive argument before Asplin J on the merits of the strike out application at all. The case was argued before Asplin J on the basis that the real issue was the case management one, namely whether it was convenient for the strike out application to be dealt with as a separate matter or at trial. When counsel for Koza Altin introduced his attack on the strike out application he indicated that it raised essentially case management questions for the court in the light of its judgment on the main issues before it. He did not go on to argue, despite what was said in the application notice, that the strike out application was bound to fail.[66]Mr Crow responds that there was material before the court below which did provide a basis for saying that the strike out application was bound to fail: i) An argument propounded in paragraph 22 of the witness statement of Mr Plowman, the solicitor at Mishcon de Reya dealing with the matter for the defendants, in the context of responding to a possible application for service out of the jurisdiction, that the authority claim did not raise a serious issue to be tried. ii) Paragraphs 15.3.2 onwards of the skeleton argument placed before Asplin J at the hearing of the applications before her, again in the context of a possible application for permission to serve out. The heading is again “no serious issue to be tried”. The passage relies on some evidence of an expert in Turkish law as to the validity of the appointment of the directors of Koza Altin. This passage goes on to draw an analogy with cases such as Williams & HumbertLtd v W & H Trademarks (Jersey) Ltd [1986] 1 AC 368. The skeleton goes on to say at paragraph 20.6 that if the court upholds the jurisdiction challenge on the basis that the authority claim does not raise a serious issue to be tried, the strike out application must fail.[67]Despite the availability of this material, I do not think that it would be right for this court to embark for the first time on the substantive merits of the strike out application when there was no such argument in the court below. It is of course true to say that this court will sometimes entertain argument on and decide a discrete issue of law which has not been argued below. Indeed I have done so in relation to the defendants’ argument that the former trustees should be treated differently on the jurisdiction issue. That is because the court must apply the law, and the decision of the judge below may be “wrong” in terms of CPR 52.21(3)(a) even if the point in question was not argued before the judge. It is, however, an entirely different matter to allow an application which was not advanced at all on its substantive merits to be advanced on that basis for the first time in the Court of Appeal. It is impossible in such circumstances to say that the judge’s decision to stand the application to trial, taken in the absence of any such argument, is wrong. Further, by proceeding to hear the substance of the application for the first time in this court, the respondent to the application is being deprived of the opportunity to contest the application on that basis at first instance. It is no answer, in my judgment, to point to material which was before the judge for a different purpose. The consequence of the matter having been approached in the way it was before the judge, with the result that both parties’ substantive cases were reserved to trial, is that we should not allow the defendants to advance their case in a different way before us.

Conclusion

[68]In the result I would grant permission to appeal in relation to each of the issues which we have heard argued before us, but, for the reasons I have given, I would dismiss the appeal.[69]I agree.

Cited in 6 later judgments