Isis Investments Ltd v Oscatello Investments Ltd & Ors [2013] EWHC 7 (Ch)

“7. In these proceedings, as originally commenced, and as adopted by the liquidator, Isis sought certain declarations as to the interpretation of clause 6 and consequential directions as to the proper persons to whom the VER should be paid out of the money in court. Kaupthing and Oscatello counterclaimed for payment out of the VER to them on the basis of their construction of the agreement. On the pleaded cases no party was alleging in these proceedings (although see the 600 claim below) that the agreement was unenforceable. Oscatello then made an application for summary judgment on its counterclaim. They argued that if they were right as to the construction of the Framework Agreement there was no other defence and the money should be paid out. ” 8. It is clear that at some stage, the liquidator of Isis formed the view on the information then available to him, that the Framework Agreement was in principle enforceable at the suit of Oscatello, subject to the issue of construction. Indeed Mr Shimmin went as far as to apply to the IOM court for sanction of payments to Oscatello. However the sub-participants made strong representations to the IOM court that he should not do so. This led to a second witness statement on behalf of Isis, in which Mr Shimmin expresses grave doubts about the circumstances in which the Framework Agreement came to be made. 9. In his second witness statement Mr Shimmin described his findings in relation to clause 6 as follows: “(i) On any view this was an improvident transaction by which Isis sold an interest of which it had already disposed. There was also no justification for prioritising Oscatello over other creditors. (ii) Oscatello does not appear to have actually ever paid £44.05 million under Clause 6. This seems to have a purely circular payment by and to Kaupthing which could never have benefited Isis. (iii) The Framework Agreement appears to have been concluded by the directors under pressure from Kaupthing without any real thought being given to the discharge of their fiduciary responsibilities. Kaupthing itself acted as if it was a director of Isis. (iv) There is a serious indication that by agreeing to pay the VER under Clause 6, Isis was making an unlawful distribution of capital to or for the benefit of its shareholder, Kaupthing and/or one of its ultimate shareholders, Mr Tchenguiz.” 10. It was on the basis of these provisional conclusions that Isis resisted Oscatello’s summary judgment application when it came before Lewison J (as he then was) on 30th March 2011. By that stage Isis had also made a cross application for a stay under the Cross Border Insolvency Regulations to enable Mr Shimmin to conduct further investigations as to whether to mount a challenge to the validity of the Framework Agreement. 11. The hearing before Lewison J on 30th March was accordingly not a protracted one. It emerged that there was no longer a dispute as to how the Framework Agreement was to be construed. Lewison J was, however, disinclined to grant a declaration adequate to require Isis to hand over the VER when doubts remained over the validity of the Framework Agreement. He granted a limited declaration as to the true interpretation of clause 6 on the hypothesis that it was valid and enforceable. He also stayed the proceedings for 3 months, until 30th June 2011, to enable the liquidator of Isis to conduct further investigations as to the validity of clause 6. 12. The matter came before Peter Smith J on Isis’ application to continue the stay. Oscatello renewed its summary judgment application. Both applications now come back before me, some 12 months after the hearing before Lewison J. Oscatello had indicated in advance that they would not ask at this hearing for a final order on its summary judgment application. However it emerged during the course of the hearing that it did contend that the proposed amended pleadings were unarguably barred by a compromise agreement, to which I shall come in due course. 13. The liquidator of Isis has now decided to challenge the framework agreement and has served draft amended particulars of claim (DAPOC). The DAPOC were provided to Oscatello and Kaupthing on 2nd March 2012. Whilst formulated in that way, the case of invalidity which Isis’ liquidator wishes to raise could equally have been pleaded as a defence to Oscatello’s counterclaim for payment out of the VER to them. 14. Of necessity, the DAPOC have to traverse a great deal of factual background in what was a complex set of inter-related transactions. Paragraph 7D sets out a summary of at least some of the allegations. In section VIII there is a fuller list of reasons why Oscatello cannot enforce Clause 6 of the Framework Agreement. In summary these are: i) There was no genuine consideration moving to Isis. The expressed payment of £44.05 million was never made, and Kaupthing simply made circular book entries. The promise of payment was a sham. ii) Clause 6 was an agreement procured by Kaupthing for Isis to make an unlawful return of capital to Kaupthing/TDT. iii) The sale of the VER was made in breach of fiduciary duty and with no true authority. iv) The effect of clause 6 when coupled with the obligation of Oscatello to pre-pay the Kaupthing overdraft was such that the purported sale of the VER was a sale by Isis to Kaupthing. Such a sale is unenforceable unless Oscatello or Kaupthing gave full and frank disclosure of all material facts. v) Clause 6 was tainted by illegality as it formed part of an unlawful conspiracy on the part of Kaupthing, Mr Tchenguiz and others to defraud the markets by giving a false picture of the true indebtedness of Kaupthing’s largest borrower. vi) Clause 6 is unenforceable as it amounts to an equitable charge which is unregistered and therefore unenforceable under IOM company law.” “(i) On any view this was an improvident transaction by which Isis sold an interest of which it had already disposed. There was also no justification for prioritising Oscatello over other creditors. (ii) Oscatello does not appear to have actually ever paid £44.05 million under Clause 6. This seems to have a purely circular payment by and to Kaupthing which could never have benefited Isis. (iii) The Framework Agreement appears to have been concluded by the directors under pressure from Kaupthing without any real thought being given to the discharge of their fiduciary responsibilities. Kaupthing itself acted as if it was a director of Isis. (iv) There is a serious indication that by agreeing to pay the VER under Clause 6, Isis was making an unlawful distribution of capital to or for the benefit of its shareholder, Kaupthing and/or one of its ultimate shareholders, Mr Tchenguiz.” i) There was no genuine consideration moving to Isis. The expressed payment of £44.05 million was never made, and Kaupthing simply made circular book entries. The promise of payment was a sham. ii) Clause 6 was an agreement procured by Kaupthing for Isis to make an unlawful return of capital to Kaupthing/TDT. iii) The sale of the VER was made in breach of fiduciary duty and with no true authority. iv) The effect of clause 6 when coupled with the obligation of Oscatello to pre-pay the Kaupthing overdraft was such that the purported sale of the VER was a sale by Isis to Kaupthing. Such a sale is unenforceable unless Oscatello or Kaupthing gave full and frank disclosure of all material facts. v) Clause 6 was tainted by illegality as it formed part of an unlawful conspiracy on the part of Kaupthing, Mr Tchenguiz and others to defraud the markets by giving a false picture of the true indebtedness of Kaupthing’s largest borrower. vi) Clause 6 is unenforceable as it amounts to an equitable charge which is unregistered and therefore unenforceable under IOM company law.”

“Where a suit about a particular subject matter between a plaintiff and a defendant is already pending in a foreign court which is a natural and appropriate forum for the resolution of the dispute between them, and the defendant in the foreign suit seeks to institute as plaintiff an action in England about the same matter to which the person who is plaintiff in the foreign suit is made defendant, then the additional inconvenience and expense which must result from allowing two sets of legal proceedings to be pursued concurrently in two different countries where the same facts will be in issue and the testimony of the same witnesses required, can only be justified if the would-be plaintiff can establish objectively by cogent evidence that there is some personal or judicial advantage that would be available to him only in the English action that is of such importance that it would cause injustice to him to deprive him of it.”

“The disposition of the stay application (Issues 1 and 9) 5. I referred to the stay application at [10] to [12] of the March judgment. Isis (and EA) suggest that the stay under the Cross Border Insolvency Regulations should be adjourned generally with liberty to restore at the next case management conference, and that the costs should be reserved to the judge hearing the restored stay application, with liberty to apply to vary in the event that the stay application is not restored. Oscatello and Kaupthing submit that the stay application should be dismissed, and that Isis should pay the costs of and incidental to the stay application, to be the subject of detailed assessment if not agreed. 6. The stay application was issued on 6th March 2012, by which stage the Liquidator had rejected Oscatello’s and Kaupthing’s proofs of debt in the Isle of Man. On 12th March 2012, Oscatello and Kaupthing obtained extensions of time from the Isle of Man Court until 18th May 2012 to lodge any appeals. I do not know if any such appeals have yet been filed. 7. At the commencement of the hearing, Mr Lowe QC on behalf of Isis indicated that he was not then proceeding with the application for a stay. He indicated that until Isis knew what was to happen in the Isle of Man, it was premature to embark on case management of the kind envisaged by the application for a stay. He submitted that, if there was an appeal, there were a number of matters which ought to be determined in the place of incorporation, even if, ultimately, there would have to be a trial here. At the hearing, I did not hear any submissions on the stay application and, in consequence, did not decide it. No significant prior notice had been given to the other parties that the stay application was not being proceeded with. 8. Accordingly, Oscatello and Kaupthing approached the hearing of the applications on the basis that the stay application was going to be determined. The substance of the submissions in their skeleton arguments for the hearing was that (a) the Framework Agreement is governed by English law and contains an exclusive jurisdiction clause in favour of the English courts, and (b) the resolution of the proprietary entitlements of the parties to the VER was a logically prior question to any appeal against the rejection of Oscatello’s claim to prove in Isis’ liquidation. There was no attempt by Isis to meet either of these points. There was also no convincing explanation as to why there would be any tangible benefit in staying the English action until the outcome of the appeal in the Isle of Man was known. EA’s position on the stay was that he did not object to it. 9. In these circumstances, I am not prepared to deal with the matter in the way in which Isis suggest. If I were to accede to that suggestion I would be adjourning the application on the basis that something might turn up to support it, when to date nothing of substance has. I propose therefore to make no order on the application, save that the costs of Oscatello and Kaupthing be paid by Isis, to be the subject of detailed assessment on the standard basis if not agreed. That order will leave Isis free to make an application for a stay if facts emerge which justify it.”

“The Court’s power to stay proceedings is part of its inherent jurisdiction which is expressly preserved by s49(3) of the Supreme Court Act 1981. It is exercised under a wide range of circumstances to achieve a wide variety of ends. Subject only to statutory restrictions, the jurisdiction to stay proceedings is unfettered and depends only on the exercise of the court’s discretion in the interest of justice.”

“ . . .choosing whom to sue is one thing; choosing in what order to pursue proceedings against different defendants may be another, especially when two related sets of proceedings are being, or could be pursued concurrently. In such a case the court itself has a greater interest; not only because the existence of concurrent proceedings may give rise to undesirable consequences in the form of inconsistent decisions, but also because the outcome of one set of proceedings may have an important effect on the conduct of the other.”

“Since the court’s jurisdiction to stay proceedings is discretionary and the circumstances in which an application for a stay may be made almost infinitely variable, I find it difficult to accept Mr McCaughran’s submission that it would never be proper for the court to grant a stay of an action pending the outcome of proceedings by the plaintiff against some other person in arbitration or before a foreign court. I do accept, however, that such a step should only be taken if there are very strong reasons for doing so and the benefits which are likely to result from doing so clearly outweigh any disadvantage to the plaintiff. Ultimately, however, it must be a matter for the court to consider the circumstances of the case before it and come to its own conclusion. One fact of importance is likely to be the relationship between the parties to the proceedings both here and abroad.”

“Mr MacDonald Eggers submitted that the presence of the exclusive jurisdiction clause (there was no such clause in the Reichhold case) meant that the circumstance justifying a stay had to be even more rare and more compelling than in that case where jurisdiction was founded for other reasons and he was even able to cite the judgement of Beatson J in Equitas Ltd v Allstate Insurance Ltd [2009] Lloyd’s Rep IR 227 in support of that proposition. For myself, however I doubt if it is useful to talk of degrees of rarity and compellability. It is better just to decide if the circumstances of any particular case are rare and compelling enough. The presence of an exclusive jurisdiction clause conferring jurisdiction on the English Courts to try a dispute is just one of the relevant circumstances to bear in mind when a judge exercises his discretion. . .”

“In my judgment, relevant factors which guide the court in the exercise of its discretion to stay proceedings include (in the circumstances of the present case) the following: i) The court has a wide discretion to stay proceedings but in circumstances where the claimant itself has voluntarily brought the two sets of proceedings a stay should only be granted in very rare circumstances: see Ledra Fishers v Turner [2003] EWHC 1049 Ch, paragraphs 14 and 38; Reichhold Norway ASA v Goldman Sachs [2000] 1 WLR 173 at pp 179-180. ii) Even where there are such reasons for a stay, a stay should only be granted if the benefits of doing so clearly outweigh any disadvantage to the other party (Reichhold, page 180). iii) A particularly compelling case would be required for a stay to be granted to the Claimant years after he has brought the claim (Ledra paragraph 39). iv) A stay will not, at least in general, be appropriate if the other proceedings will not even bind the parties to the action stayed, let alone finally resolve all the issues in the case to be stayed. v) A stay will not, at least in general, be appropriate if the parties to the other proceedings are not the same. A defendant against whom a serious allegation (such as deceit) is made is entitled to an expeditious hearing, and should not be left for years waiting for the outcome of another case over which he (and the Court) has no control. An action alleging fraud should come to trial quickly; this unwarranted delay may lead to an action being dismissed for want of prosecution even before the limitation period has expired. . .. .”

“55. Two points are being made by Pennycuick J. The first is that the extent of the duties of the director of a foreign company is governed by the law of that company's, the place of incorporation. The second is that the courts of that place are "the only proper tribunal" in which the members can seek to control the exercise of that power. The first point is unexceptional and indeed obvious, but it may be that the second proposition goes too far, in allocating exclusive responsibility to the courts of the place of incorporation for making orders controlling the exercise of discretionary powers. The decision predates the development of the modern forum non conveniens principles from later in the 1970s: see The Atlantic Star [1974] AC 436, and was given at a time when the prevailing view was that if the English court had jurisdiction, there was not normally a discretion to refuse to exercise it. If a similar point were to arise for decision today, I consider that the correct approach would be to say that the courts of the place of incorporation are very likely indeed to be the appropriate forum, but not so overwhelmingly that they will necessarily be the exclusive forum. So understood Pergamon Press Ltd v Maxwell [1970] 1 WLR 1167 confirms that questions of internal management are governed by the law of the place of incorporation, and that the courts of that place are best suited to give decisions on the control and extent of the powers of the management. . . . . . 66. I also consider that the effect of Pergamon Press Ltd v Maxwell [1970] 1 WLR 1167 is, at the least, that if issues arise relating to the exercise of what Pennycuick J described as discretionary powers of management, then I should accord considerable weight to the potential role of the courts of the place of incorporation. I doubt whether they have exclusive jurisdiction to deal with such issues. For example it may be wholly unjust to require recourse to an offshore haven to pursue fraudulent directors in a case which has no connection with the jurisdiction other than that it is the place of incorporation.”

“I would therefore accept the liquidators' submission that, having chosen to submit to New Cap's Australian insolvency proceeding, the syndicate should be taken to have submitted to the jurisdiction of the Australian court responsible for the supervision of that proceeding. It should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding.”

“The 2001 Directive 63. As regards credit institutions Defined under the 2000 Banking Directive as an “undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own accounts”

“6. Despite the absence of statutory provision, some degree of international co-operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the Court of the bankrupt's domicile which receives world-wide recognition and it should apply universally to all the bankrupt's assets. 7. This was very much a principle rather than a rule. It is heavily qualified by exceptions on pragmatic grounds; elsewhere I have described it as an aspiration: see Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26; [2007] 1 AC 508, 517 at paragraph 17. Professor Jay Westbrook, a distinguished American writer on international insolvency has called it a principle of ‘modified universalism’: see also Professor Ian Fletcher, Insolvency in Private International Law (2nd ed 2005) at pp. 15-17. Full universalism can be attained only by international treaty. Nevertheless, even in its modified and pragmatic form, the principle is a potent one.” 65. In relation specifically to credit institutions, the 2001 Directive, which is based on international agreements, replaces the common law of modified universalism, with a purer form of unity and universalism, in which there can only be a single insolvency proceeding within the EEA, based in the credit institution’s home Member State, which has automatic effect, and extends to all branches, throughout all states within it The principle is not applicable to ordinary companies. The Insolvency Regulation contemplates that there may be both primary proceedings in a company’s centre of main interest, and secondary proceedings in states where that company has an establishment: see Article 3(1). . This is made plain both by the recitals to, and articles of, the 2001 Directive. As Lord Glennie put it in Landsbanki Islands HF v. Mills [2010] Scot CS CSOH 100 Lord Glennie was sitting in the Outer House of the Court of Session. His decision is the subject of an appeal to the Inner House, where judgment is awaited. : “61. Taking the 2001 Directive as a whole, there can be no doubt that its purpose is to ensure that administration or winding up proceedings are dealt with exclusively in the home state of the credit institution, and to ensure that such proceedings, and the decisions taken in those proceedings, are recognised and given full effect in other states within the Community.” 66. The 2001 Directive sets out a coherent and detailed code governing the insolvency of banks. The starting point is that the 2001 Directive has the objective of extending the co-ordinated cross-border position established by the 2000 Banking Directive prior to insolvency, to the position after insolvency.” “6. Despite the absence of statutory provision, some degree of international co-operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the Court of the bankrupt's domicile which receives world-wide recognition and it should apply universally to all the bankrupt's assets. 7. This was very much a principle rather than a rule. It is heavily qualified by exceptions on pragmatic grounds; elsewhere I have described it as an aspiration: see Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26; [2007] 1 AC 508, 517 at paragraph 17. Professor Jay Westbrook, a distinguished American writer on international insolvency has called it a principle of ‘modified universalism’: see also Professor Ian Fletcher, Insolvency in Private International Law (2nd ed 2005) at pp. 15-17. Full universalism can be attained only by international treaty. Nevertheless, even in its modified and pragmatic form, the principle is a potent one.” “61. Taking the 2001 Directive as a whole, there can be no doubt that its purpose is to ensure that administration or winding up proceedings are dealt with exclusively in the home state of the credit institution, and to ensure that such proceedings, and the decisions taken in those proceedings, are recognised and given full effect in other states within the Community.”

“73. The basic rule for both reorganisation measures and winding up proceedings is that the “laws, regulations and procedures” of the insolvency proceedings of the home Member State (i.e. the lex concursus) will be effective across all Member States, including in relation to proceedings against the credit institution, save where the Directive provides otherwise. The latter is a reference to Articles 20 to 32 of the Directive, which specify those limited areas where the lex concursus will not apply No argument was addressed on behalf of Lornamead to the effect that it could rely on any of the other articles (such as Articles 21, 25 or 27) to disapply the effect of the Icelandic Moratorium Order. . 74. Article 32 deals with “Lawsuits pending”: “The effects of insolvency proceedings on a lawsuit pending concerning an asset or right of which the debtor has been divested shall be governed solely by the law of the Member State in which that lawsuit is pending.” 75. Thus, save in relation to certain lawsuits which were already pending when the insolvency proceedings began, the law of the home Member State will determine the effect of the insolvency regime on proceedings ongoing elsewhere in the EEA. The logic of this distinction was explained by Longmore LJ in Syska v. Vivendi Universal SA [2009] EWCA Civ 677; [2009] 2 All ER (Comm) 891 (Court of Appeal), especially paragraph 16 The case concerned the equivalent provisions in the Insolvency Regulation, namely Art 4.2(f) (the equivalent to Art 10(2)(e) in the 2001 Directive) and Art 15 (the equivalent to Art 32). : “Of course if no claim has been initiated before insolvency proceedings are opened, it is entirely appropriate that the lex concursus should determine how any subsequent litigation or arbitration should proceed. But if litigation or arbitration has begun before insolvency occurs, the natural expectation of businesses would be that it should be that law that should determine whether the proceedings should continue or come to a shuddering halt.”” “The effects of insolvency proceedings on a lawsuit pending concerning an asset or right of which the debtor has been divested shall be governed solely by the law of the Member State in which that lawsuit is pending.” “Of course if no claim has been initiated before insolvency proceedings are opened, it is entirely appropriate that the lex concursus should determine how any subsequent litigation or arbitration should proceed. But if litigation or arbitration has begun before insolvency occurs, the natural expectation of businesses would be that it should be that law that should determine whether the proceedings should continue or come to a shuddering halt.””

“The 2004 Regulations 77. Member States were required to bring into force the laws, regulations and administrative provisions necessary to comply with the 2001 Directive. On 5 May 2004, the 2004 Regulations were brought into force in the UK for that purpose. 78. Part 2 of the 2004 Regulations, which is the part relevant for present purposes, deals with “EEA credit institutions”: that is EEA undertakings, other than UK credit institutions Parts 3 and 4 deal with UK credit institutions; that is institutions whose head office is in the UK with permission to accept deposits or issue electronic money under Part 4 of the Financial Services and Markets Act 2000. , as defined in the 2000 Banking Directive, namely credit institutions subject to the regulation of a Member State other than the UK. The 2001 Directive is implemented, in relation to such institutions, by two provisions: i) Regulation 3 prevents an EEA credit institution from being the subject of a UK insolvency process, whether by Court order (see Regulation 3(1)), or out of Court (see Regulation 3(5) and (6)). Thus, such an institution can never obtain the protection of (for example) an administration order or a winding up order, both of which would give rise to an automatic statutory stay on proceedings The relevant provision in relation to administration is paragraph 43 of Schedule B1. That in relation to winding up is section 130(2). . ii) Regulation 5 fills the gap that would otherwise arise in relation to such a company, by giving any ongoing reorganisation measure or winding up proceedings, as defined by the 2001 Directive, applicable to an EEA credit institution, direct effect in the UK See the definitions of ‘EEA insolvency measure’ and ‘relevant EEA state’ in Regulation 5(6). . Regulation 5(1) provides: “(1) An EEA insolvency measure has effect in the United Kingdom in relation to – (a) any branch As defined in Article 1(3) of Directive 2000/12/EC as amended. of an EEA credit institution, (b) any property or other assets of that credit institution, (c) any debt or liability of that credit institution, as if it were part of the general law of insolvency of the United Kingdom.” 79. Thus, an EEA insolvency measure, which will necessarily be governed by the insolvency law of the EEA state in question, has effect in the UK as if it were part of the English statutory insolvency regime. As the Explanatory Note to the 2004 Regulations puts it: “EEA reorganisation measures and winding up proceedings are to be recognised in the UK.”” “(1) An EEA insolvency measure has effect in the United Kingdom in relation to – (a) any branch As defined in Article 1(3) of Directive 2000/12/EC as amended. of an EEA credit institution, (b) any property or other assets of that credit institution, (c) any debt or liability of that credit institution, as if it were part of the general law of insolvency of the United Kingdom.”

“(1) Legal action shall not be brought against a bankruptcy estate in the district Court unless expressly permitted by law, except for criminal litigation in which a request is made for criminal sanctions applicable to bankruptcy estates. In such event, the action may be brought in the district where the bankruptcy proceedings take place. (2) A legal action brought against a bankrupt before the Court order declaring the bankruptcy was issued may be continued until adjudication, provided the plaintiff notifies the trustee in bankruptcy of the action.”

“The legal effect of a ruling on financial reorganisation on lawsuits, concerning an asset or other right of which a credit institution has disposed of, initiated before the ruling on financial reorganisation was rendered, shall be governed by the law of the state where the lawsuit was initiated.”

“18(c) Under Icelandic law, the question of whether the claims can be brought as part of the existing proceedings would depend upon whether the civil procedure of the court in question (here, England) would allow the claims to be brought as part of the existing proceedings. (d) If English procedural rules would allow the claims against Kaupthing to be brought as part of the existing proceedings then those claims could proceed and would not be prohibited by paragraph 1 of Article 116. . . . . . 20. Article 99(2)(h) of the Iceland Act on Financial Undertakings has the stated objective of implementing Article 32 of European Parliament and Council Directive 2001/24/EC on the reorganisation and winding up of credit institution[s]. . . . . . . . . . . 22. There is no question that pursuant to Article 99(2)(h) if proceedings are launched against a party who subsequently becomes subject to a winding up pursuant to a ruling in Iceland then those proceedings are subject to the laws of the state where the case was initiated. This applies both to the applicable procedure and the substantive law. 23. As a result, on the assumption that the claims by Mr Adalsteinsson against Kaupthing would be treated by English law as part of the existing proceedings, then Article 99(2)(h) of the Icelandic Act on Financial Undertakings No. 161/2002 stipulates that the process and substantive determination of these claims shall be exclusively a matter of English law. Accordingly, further provisions of Icelandic law, including Paragraph 1 of Article 116, would therefore, be irrelevant.”

"21. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Contracting States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. 22. Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings. A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

“It is difficult to think that the Convention contemplates retrospective satisfaction of the criteria of art 21 requiring “the same cause of action” and “the same parties”

“ … one should be cautious about placing too much weight on passages in authorities which, while in the same area of law and couched in general terms, are not directly in point.”

“30. . . . a case is not brought unless initiated in the very way normal civil cases are brought and which is prescribed by the relevant procedural rule. Any procedure before the courts other than a case brought in that fashion is consequently not caught by the provision of Paragraph 1 of Article 116IAB. 31 . . . when a claim can be advanced within on-going or already existing civil proceedings, nothing in Article 116 prevents such a claim from being made and going forward. Conversely, Article 116 prevents claims which cannot be brought as a part of existing proceedings.”

“10. . . . . . By virtue of the claims which Mr Adalsteinsson has made in Kaupthing’s insolvency, even aside from this litigation, he would be entitled to bring in Kaupthing’s insolvency the Part 20 Claims set out in O (unlawful means conspiracy), P (causing loss by unlawful means) and Q (procuring a breach of contract).” (paragraph 10) (File F, p. 53) “16. . . . . . . . It would be possible for Mr Adalsteinsson based upon the claims he has already submitted in Kaupthing’s insolvency to advance against Kaupthing before the District Court the claims which are set out at sections O, P and Q of his Amended Defence and Counterclaim.” (paragraph 16) (File F, p.54)”

“11. As previously stated, my firm opined on 23 November 2012 that the procedural rules of the state where the law suit was initiated determine whether amendments can be made to a pending lawsuit. If new or amended claims cannot be introduced to an existing legal action, such claims must be brought before the courts as a new legal action. However, new legal action cannot be brought against a bankruptcy estate due to Art 116(1) of the BA.”