Sibir Energy Ltd v Tchigirinski & Ors [2012] EWHC 1844 (Comm)

[2012] EWHC 1844 (QB)Case No Folio 2009/395
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 05/07/2012
Before
HIS HONOUR JUDGE MACKIE QC
Between
(1) SIBIR ENERGY LTDClaimants(2) CARALINE TRADING LIMITEDClaimant(3) OJSC MAGMA OIL COMPANYClaimant(1) CHALVA PAVLOVICH TCHIGIRINSKIDefendants(2) HENRY CAMERONDefendant(3) GRADISON CONSULTANTS INCDefendant(4) DERBENT MANAGEMENT LIMITEDDefendant
Mr Andrew Hunter QC (instructed by Jones Day) for ClaimantsMr Andrew Onslow QC and Mr Christopher Harris (instructed by Reynolds Porter Chamberlain) for RespondentHearing Hearing dates: 3 rd April and 9 th May 2012
Judgment
[1]This is the Claimants’ application to join Mr Josef Haener as a party under Article 6(1) of the Lugano Convention to an action which they brought on 25 March 2009 to seek redress for the apparent misappropriation of more than US$400 million by various participants. While many issues have been raised the main point remaining at the end of the hearing was whether the Claimants were in fact proceeding against the ‘anchor defendant’ and, if they were not, what the legal consequences of that would be under Article 6(1).[2]The court has, for what was to have been a one day hearing, but which should not have been listed as such, eight witness statements, nine bundles of documents and more than 30 authorities, most of them pertinent. This was followed in time by further witness statements and written submissions. After the hearings there was additional disclosure, correspondence and further submissions until 6 June.[3]The background facts are complex and they occupy much of the legitimately lengthy skeleton arguments of Counsel but I can state them briefly for two reasons. First the issues on the application narrowed in the course of argument on two separate days and in subsequent written submissions. Secondly the facts are helpfully set out in earlier judgments in this case and in a related action in the Chancery Division known as the Slocom Proceedings - see for example the judgments of Beatson J, Tomlinson J and Flaux J in this case and those of Vos J and Henderson J in the Chancery action.[4]The First Claimant is an energy company registered in London and formally listed on the AIM. The Second and Third Claimants are Cypriot and Russian subsidiaries of the First Claimant. The Claimants’ claim arises out of a fraud (“the Sibir Fraud”) in 2008, involving the misappropriation of more than US$400 million from all three Claimants. There were several alleged participants in that fraud including the First Defendant, a Russian national who was a director and major shareholder of Sibir, the Second Defendant Mr Cameron, an English resident who was Sibir’s CEO at the time of the fraud, the Third Defendant Gradison, a BVI company owned by the First Defendant and operated for him by Mr Haener, (Gradison received some US$154.5 million of misappropriated funds directly and further sums indirectly in the form of a payment by Sibir of some of its debts); and the Fourth Defendant (“Derbent”), a Cypriot company operated by Mr Haener (which received some US$174 million of misappropriated monies directly).[5]The Claimants issued proceedings against these four defendants on 25 March 2009. On the same day a worldwide freezing order was made by Burton J against the First Defendant and Gradison. There was no challenge to the English Court’s jurisdiction by the four original defendants. The case against the First Defendant was settled in 2010. The case against Mr Cameron has not been settled and remains alive and controversial on this application. The case against Gradison was resolved by two summary judgments entered against it in June and August 2009. The case against Derbent was resolved by a settlement and partial judgment by consent in June 2009 but because of issues in the Chancery action it may revive. These judgments and settlements yielded large sums for the Claimants but it seems that there remains a shortfall of at least US$170 million. The judgments against the companies were not opposed and Mr Haener points out that these orders do not bind him.[6]The Claimants say that Mr Haener, a financier resident in Switzerland, is a dishonest individual who has been shown to have participated in numerous fraudulent activities including the Sibir fraud, to have fabricated multiple documents, and to have misled the English Court. They cite criticisms of him by other judges and allege as follows. Mr Haener was a central figure in the Sibir Fraud, playing a key role in planning, organising, and executing it in conspiracy with the other defendants. He requested and procured Mr Cameron to make unlawful payments totalling US$154.5 million from Sibir and Magma directly to Gradison. Mr Haener then dissipated those sums from the Gradison Swiss bank account. He personally signed (on behalf of Derbent) a series of false invoices for fictitious oil purchases, these being the instruments used to extract US$174 million from the Claimants which was paid to Derbent. Mr Haener then spent the money from the Derbent Swiss bank account. The Claimants say that Mr Haener orchestrated another aspect of the Sibir fraud, under which Sibir in effect paid off US$62 million of debts owed by the First Defendant’s companies including Gradison. Consequently the Claimants say that Mr Haener is liable to them in the tort of unlawful means conspiracy, as a co-conspirator with the existing four Defendants. He is also liable as a dishonest assister of the breaches of fiduciary duty perpetrated by the First Defendant and Mr Cameron.[7]Despite his allegedly central role in the Sibir Fraud, Mr Haener was not originally joined as a defendant to the claim because he offered cooperation to the Claimants in their recovery efforts apparently assuring the Claimants that he had not personally benefited from the fraud and had minimal assets. The Claimants entered into a conditional settlement agreement with him in April 2009. The settlement was conditional upon express warranties by Mr Haener that he had limited assets and that the information he was providing was true and complete. The Claimants say that Mr Haener’s assurances about his assets were false, that he has provided misleading and false information, and that he is in breach of the warranties. In particular he failed to declare various substantial assets which far exceed the warranted level, and he made deliberately false statements as to the beneficial ownership of Derbent, and an associated company, Slocom and as to the validity of a purported loan which Mr Haener represented that those companies had secured over one of the First Defendant’s main assets, a villa in the South of France. (The villa is at the heart of the Slocom Proceedings in the Chancery Division at the trial of which Mr Haener gave evidence to Roth J by videolink.) The Claimants say that developments in the Slocom action led them to make this application on 16 December 2011.[8]Mr Haener now accepts that the threshold of ‘serious issue to be tried’ (an aspect of the requirement for joinder to which I will come later) is met so I do not need to examine the facts. The evidence against him, as it stands, seems at present powerful and his honesty and truthfulness have been questioned by two High Court judges. However it is fair to point out that Mr Haener vigorously disputes the claims against him and to summarise his position. Mr Haener is a 58 year-old Swiss citizen, domiciled in Switzerland. He was formerly a senior banker and CEO of the Moscow offices of major banks. From 2001 to early 2009 he acted as a business consultant to the First Defendant Mr Tchigirinsky, the controlling influence within Sibir. In autumn 2008, Mr Haener became involved in steps taken by Sibir to assist the First Defendant in meeting enormous liabilities, steps taken with the apparent agreement of Sibir’s board including Henry Cameron, Sibir’s Chief Executive Officer. The fact of the payments by which it is claimed that losses were suffered, and the means by which they were made, are not disputed by Mr Haener. Mr Haener provided the Claimants with information and documents, which enabled them to issue proceedings against the other Defendants. Mr Haener and Sibir entered into a Deed by which Sibir and its subsidiaries agreed not to bring proceedings and Mr Haener agreed to continue to provide information. Mr Haener warranted that the information provided was true in all material respects (clause 5.2), and that he did not have net assets worth more than CHF 20 million (clause 5.1(c)). He denies any breach of warranty.[9]When the Claimants issued Commercial Court proceedings and obtained worldwide freezing orders no such order was sought against Mr Cameron, and he later gave undertakings not to dispose of assets. All Defendants acknowledged service stating an intention to defend, but no Defences were served. No CMC has taken place, and no case management directions have been sought or given. None of the Defendants contested the applications for judgment referred to above.

The law

[10]The bundles of authorities contain thirty three items, many European or English cases of substance and complexity. As the procedural dispute has narrowed however only some of them need discussion.[11]Article 6(1) of the Lugano Convention 2007, provides:
“A person domiciled in a Member State may also be sued: 1. where he is one of a number of defendants, in the court for the place where any one of them is domiciled, provided that the claims 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”
[12]The application of this Article (and of the equivalent provisions in the Lugano Convention 1988, the Brussels Convention, and the Judgments Regulation) has been analysed in a number of cases both in the English Courts and in the European Court. The main general points which are of relevance to this action are set out in the following propositions which I adapt from the skeleton argument of Mr Hunter QC, Counsel for the Claimants, as follows.• The principle underpinning the Lugano Convention is that defendants are to be sued in the courts of their domicile (Article 2), and exceptions to this principle are to be restrictively construed.• Article 6(1) may be relied upon to establish jurisdiction in a case of a subsequent joinder of a foreign defendant. It is not confined to cases where proceedings were issued compendiously against all defendants at the outset. See Gascoine v Pyrah [1994] I L Pr 82.• The words “where he is one of a number of defendants, in the court for the place where any one of them is domiciled” have been held to require that one of the co-defendants (typically called the “anchor defendant”) must be domiciled in England. See Petrotrade v Smith [1999] 1 WLR 457, recently approved by the Court of Appeal in Gard Marine and Energy v Tunnicliffe and ors [2011] Bus LR 839 at para 56. Mr Cameron is so domiciled.• On an Article 6(1) assessment, the Court is not required to engage in an assessment of the prospects of success of the claims against the different defendants, nor on whether those claims are in fact likely to proceed to trial or judgment. At most it should assess whether there is a serious issue to be tried. See Dicey, Morris and Collins, Fourth Cumulative Supplement to the 14th ed, Note 11-330 at p. 91-92. In this case it is conceded that there is a serious issue to be tried against both Mr Cameron and Mr Haener.• The words “provided that the claims 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” require a “broad commonsense approach” taking all relevant factors into account. In Madoff v Raven[ 2011] AllER(D) 225, Flaux J held at paragraph 69 that the appropriate guidance as to the “broad commonsense approach” was to be found in the analysis of Gross J in Et Plus SA v Welter [2006] I L Pr 18 at para 59. As I mention below this case, consistently with the ECJ decisions, makes it clear that the risk of irreconcilable judgments may arise from potential conflicting findings of fact or decisions of law. Mr Onslow QC and Mr Harris, Counsel for Mr Haener, realistically accept that the Court would see it as unsatisfactory for claims of conspiracy and dishonest assistance involving both Mr Haener and Mr Cameron to have to proceed in different courts. It is clear that if the action proceeded against Mr Cameron in England and Mr Haener in Switzerland there would be a risk of irreconcilable judgments. There is however disagreement about what the commonsense approach is applied to. The Claimants say it is applied to the potential findings of law and fact alone but Mr Haener says that the Court should look at the litigation realities.[13]So there is or should be no dispute about whether there is a serious issue to be tried or whether if the claims proceeded in England and Switzerland there would be a risk of conflicting judgments. The area of law where the parties differ concerns the extent of the evaluation of the potentially conflicting claims. The Claimants say that the motive for proceeding against the anchor defendant and the extent to which the litigation against him will in practice be pursued is irrelevant. Mr Haener says that one must take a broader and more pragmatic view.[14]Each side cites different paragraphs in the same ECJ cases and sometimes even the same paragraphs and indeed sentences in support of their conflicting submissions partly because each case identifies both on the one hand the importance of a defendant’s right to be sued in his domicile and of Article 6(1) not being used to frustrate that right and on the other hand the need for only a limited evaluation of the risk of conflicting judgments. The cases do not always explain how these are balanced or reconciled. So rather than simply summarise the competing submissions I will start by referring to the relevant parts of these cases. As I see it the position becomes relatively clear when these cases are seen in sequence and in context.[15]Kalfelis 189/87 [1988] ECRMr Kalfelis sought to sue a bank under Article 6(1) for investment losses in circumstances that do not matter for this purpose. The bank challenged the jurisdiction of the German courts which asked the ECJ whether for Article 6(1) of the Convention to apply, a connection must exist between the claims made by the same plaintiff against several defendants and, if so, what the nature of that connection is. The Court in answering the question stated some considerations which appear with approval in the later cases; 7Pursuant to Article 2 of the Convention, persons domiciled in a Contracting State are, subject to the provisions of the Convention, "whatever their nationality, to be sued in the courts of that State ". Section 2 of Title II of the Convention, however, provides for "special jurisdictions", by virtue of which a defendant domiciled in a Contracting State may be sued in another Contracting State . One of the special jurisdictions is that provided for in Article 6 ( 1 ) according to which a defendant may be sued "where he is one of a number of defendants, in the courts for the place where any one of them is domiciled ". 8 The principle laid down in the Convention is that jurisdiction is vested in the courts of the State of the defendant' s domicile and that the jurisdiction provided for in Article 6 ( 1 ) is an exception to that principle . It follows that an exception of that kind must be treated in such a manner that there is no possibility of the very existence of that principle being called in question . 9 That possibility might arise if a plaintiff were at liberty to make a claim against a number of defendants with the sole object of ousting the jurisdiction of the courts of the State where one of the defendants is domiciled . As is stated in the report prepared by the committee of experts which drafted the Convention ( Official Journal C 59, 5.3.1979, p . 1 ), such a possibility must be excluded . For that purpose, there must be a connection between the claims made against each of the defendants . 10 In order to ensure, as far as possible, the equality and uniformity of the rights and obligations under the Convention of the Contracting States and of the persons concerned, the nature of that connection must be determined independently . 11 In that regard, it must be noted that the abovementioned report prepared by the committee of experts referred expressly, in its explanation of Article 6 ( 1 ), to the concern to avoid the risk in the Contracting States of judgments which are incompatible with each other . Furthermore, account was taken of that preoccupation in the Convention itself, Article 22 of which governs cases of related actions brought before courts in different Contracting States . 12 The rule laid down in Article 6 ( 1 ) therefore applies where the actions brought against the various defendants are related when the proceedings are instituted, that is to say where it is expedient to hear and determine them together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings . It is for the national court to verify in each individual case whether that condition is satisfied . 13 It must therefore be stated in reply to the first question that for Article 6 ( 1 ) of the Convention to apply there must exist between various actions brought by the same plaintiff against different defendants a connection of such a kind that it is expedient to determine those actions together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings. [This requirement later became part of the Article][16]So far the Court is clear about the importance of a defendant being sued in its domicile, and that principle not being called in question. The Court sees that risk arising if the plaintiff is free to claim against a number of defendants solely in order to oust the jurisdiction of one defendant’s court. To avoid that risk there must be a connection of the kind which the Court identifies. There is thus an indication that the serious risk which the Court wishes to avoid is avoided not by some detailed evaluation of the litigation realities but by the very requirement for the requisite connection between the claims to be independently established. The case was decided before the Article took its present form which incorporates expressly the need to avoid the risk of irreconcilable judgments.[17]Réunion Européenne and Others [1998] ECR I-6511, a case controversial for an aspect irrelevant to this issue, at paragraph 47 endorsed Kalfelis without further examination.[18]Reisch Montage C-103/05 [2006] ECR I-6827. Reisch Montage brought an action for payment before the Austrian District Court, against Mr Gisinger, who was domiciled in Austria, and against Kiesel, a German company. Kiesel had stood security for Mr Gisinger. The court dismissed, under Article 6(1), the action against Mr Gisinger on the ground that bankruptcy proceedings concerning his assets had been instituted and were not completed at the time that action was brought. The ECJ took a different view and held that Article 6(1) may be relied on in an action brought in a Member State against a defendant domiciled in that State and a co-defendant domiciled in another Member State even when that action is regarded under a national provision as inadmissible from the time it is brought in relation to the first defendant, such as a rule precluding creditors from bringing individual actions against a debtor who has been declared bankrupt. The Court added in familiar language that 6(1) cannot be interpreted in such a way as to allow a plaintiff to make a claim against a number of defendants for the sole purpose of removing one of them from the jurisdiction of the courts of the Member State in which that defendant is domiciled. Mr Onlsow submits that the Court did not apply its mind to the question of irreconcilable judgments at all and, like many academic commentators, criticises other aspects of the decision. At paragraph 32 the Court says, referring to the sole purpose point ‘However this does not seem to be the case in the main proceedings’. This observation may perhaps be an indication that the exercise involves looking beyond the claims of fact and law. Nevertheless the consequence of the position adopted by the Court is that Article 6(1) can be used to bring in a defendant even when in practice, as opposed to analysis of the nature of the claims, there can be no risk of irreconcilable judgments.[19]In Freeport C-98/06 [2007] ECR I-8319the ECJ was concerned, amongst other things, with what was claimed to be an attempt by the claimant to use Article 6(1) for the sole purpose of avoiding the domicile requirement so as to sue an English company in Sweden. Advocate General Mengozzi considered the question of abuse of Article 6(1) broadly, leaving a conclusion for a more relevant case, identified the need for objective criteria so as to produce certainty in an area where this is important and opined that prospects of success could be considered by a Court when considering Article 6(1) but only to satisfy itself that a potentially conflicting claim was manifestly hopeless. The relevant issue is discussed as follows;48. By its second question, the national court asks essentially whether application of Article 6(1) of Regulation No 44/2001 presupposes that the action was not brought against a number of defendants with the sole object of ousting the jurisdiction of the courts of the Member State where one of the defendants is domiciled. Observations submitted to the Court49. Mr Arnoldsson and the Commission are of the opinion that the special jurisdiction laid down in Article 6(1) of Regulation No 44/2001, unlike that laid down in Article 6(2), is not subject to the condition that the action must not have been brought for the sole purpose of ousting the jurisdiction of the courts for the place where one of the defendants is domiciled. They consider, essentially, that the condition referred to in Article 6(1) of Regulation No 44/2001 concerning the existence of a connection between the claims is sufficiently strict to avoid the risk of misuse of the rules on jurisdiction.50. However, Freeport takes the view that that risk justifies application of Article 6(1) of Regulation No 44/2001 being subject to the same condition as that set out in Article 6(2). Firstly, the latter condition, prohibiting misuse of the rules on jurisdiction laid down by that regulation, is a general principle which must also be observed in the application of Article 6(1) of the Regulation. Secondly, application of such a condition is justified, inter alia, by the principle of legal certainty and by the requirement that the principle that a defendant may be sued only before the courts for the place where he is domiciled should not be undermined. Answer of the Court51. As the national court rightly pointed out, Article 6(1) of Regulation No 44/2001, unlike Article 6(2), does not expressly make provision for a case in which an action is brought solely in order to remove the party sued from the jurisdiction of the court which would be competent in his case. The Commission stated on that point that, when amending the Brussels Convention, the Member States had refused to include the proviso contained in Article 6(2) in Article 6(1), taking the view that the general condition that the claims be connected was more objective.52. It should be recalled that, after mentioning the possibility that a plaintiff could bring a claim against a number of defendants with the sole object of ousting the jurisdiction of the courts of the Member State where one of the defendants was domiciled, the Court ruled, in Kalfelis , that it was necessary, in order to exclude such a possibility, for there to be a connection between the claims brought against each of the defendants. It held that the rule laid down in Article 6(1) of the Brussels Convention applies where claims brought against different defendants are connected when the proceedings are instituted, that is to say, where it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.53. Thus, that requirement of a connection did not derive from the wording of Article 6(1) of the Brussels Convention but was inferred from that provision by the Court in order to prevent the exception to the principle that jurisdiction is vested in the courts of the State of the defendant’s domicile laid down in Article 6(1) from calling into question the very existence of that principle ( Kalfelis , paragraph 8). That requirement, subsequently confirmed by the judgment in Réunion Européenne and Others , paragraph 48, was expressly enshrined in the drafting of Article 6(1) of Regulation No 44/2001, the successor to the Brussels Convention (Roche Nederland and Others , paragraph 21).54. In those circumstances, the answer to the question referred must be that Article 6(1) of Regulation No 44/2001 applies where claims brought against different defendants are connected when the proceedings are instituted, that is to say, where it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings, without there being any further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the courts of the Member State where one of the defendants is domiciled.[20]Freeport thus makes explicit what is implicit in Kalfelis.[21]Painer v Standard Verlags GmbHC-145/10[2011] ECDR 13 was a copyright case concerning the use of photographs of Natascha K, the victim of a notorious crime. The referring court asked, in essence, whether Article 6(1) could apply if claims for substantially identical copyright infringements were brought on national legal grounds which varied according to the Member States concerned. After stating the question the Court set out eleven paragraphs of considerations referring to and not departing from Kalfelis, Reunion and Freeport. At paragraph 84 the Court answers the question stating that the Article is not precluded adding “ It is for the referring court to assess, in the light of all the elements of the case, whether there is a risk of irreconcilable judgments if those actions were determined separately.”[22]Mr Onslow relies on this sentence to suggest that a broad examination of all aspects is required. That submission seems to me to be wrong as the elements being considered are the limited ones identified in the earlier cases.[23]There are other indications. Thus the Advocate General in Painer under a subheading “no separate examination or forecast whether there is a risk of an inconsistency in the specific case” states at paragraph 100 “it is not necessary in addition to the existence of a single factual situation and a sufficiently close legal connection, to examine or make a forecast as to whether there is a risk of contradiction between the two judgments”. The Advocate General adds at 101:
“Article 6(1) of the Regulation proceeds for the assumption of the abstract risk that the transfer of two judgments to two courts may result in inconsistencies between those judgments … however because this is an abstract risk, the requirement is merely the existence of a sufficiently close connection with the anchor claim.”
The opinion adds at 102 ‘the words to avoid the risk of irreconcilable judgments resulting from separate proceedings’ can be understood as a simple description of the objective of the provision, but do not have the character of an autonomous requirement”.[24]In Et Plus the court stayed actions in favour of arbitration in a dispute between a group of companies which marketed and sold tickets to freight clients for use of the Eurotunnel truck shuttle service, and the operators of the tunnel as well as former employees of the claimants who had gone to work for the defendants. It is clear from paragraph 59 that the commonsense approach described by Gross J, as he then was and endorsed by Flaux J in Madoff is the same as that in Kalfelis (“In applying the Kalfelis test, a “broad commonsense approach” is to be adopted and an “over sophisticated analysis” is to be avoided: Casio v Sayo [2001] I.L. Pr. 43, at paras. [32] - [37], together with the authorities there cited. In my judgment, this decision of the Court of Appeal furnishes the approach to Art. 6(1) to be followed, certainly in this country…”) and cannot be invoked as Mr Onslow would wish for a wider examination of the realities of the litigation. Further the broad commonsense approach identified by Gross J is applied to the facts and law involved in the claim and not to an assessment of what will happen to the case in the real world. The decision is that a claim cannot be brought in the English court as a matter of law given the arbitration provision-not a practical assessment of what will happen to the case.

Submissions of Counsel

[25]Against that background Mr Hunter says that it is now established that there is no separate requirement of showing that the claim against the “anchor defendant” is not brought to oust the jurisdiction of the Courts of the domicile of the foreign co-defendants. Freeport makes it clear that once the risk of irreconcilability test is satisfied, there is no further hurdle. See Dicey, Morris and Collins, Fourth Cumulative Supplement to the 14th ed, Note 11-327 at p. 90-91. Reisch establishes that the Court should go no further than, at most, enquiring as to whether or not there is a serious issue to be tried.[26]Mr Onslow takes a different view. He says that there must be a genuine claim against the anchor defendant. See Civil Jurisdiction and Judgments Fifth Edition,Briggs & Rees at 2.202:
“To begin with, there must be a genuine claim, or a claim which is properly brought, against the defendant who is being sued in the courts of his domicile. It is obvious that the claim against this "anchor" defendant cannot be allowed to be an entirely spurious one, and if there is no proper claim against the one defendant, it will be impossible to satisfy the requirement that it be necessary to hear and determine the claims against the two defendants together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”
He cites the passage I have set out from paragraph 84 of Painer and submits that the Court should indeed adopt a “broad commonsense approach” to Article 6(1), taking account of all relevant factors. This means that it is for the Claimants to establish with clarity the special jurisdiction under Article 6(1), existing as an exception to the general Article 2 rule requiring a defendant to be sued in the Courts of his domicile. Article 6(1) cannot be used for the sole purpose of removing a defendant from the courts of the Member State in which he is domiciled. In ET PlusGross J. explained in his judgment the need for careful scrutiny of the position of proposed anchor defendants where an application to join new defendants on the basis of article 6(1) is made, and, crucially, held that a defendant against whom the claim had been stayed (and thus was not going to be tried) could not serve as an anchor defendant. This can only have been on the basis that there is no risk of inconsistent judgments. At [57] Gross J. held:
“It follows that the position of the English defendants will require particular scrutiny; the English defendants serve as “anchor” defendants, as, self-evidently, without claims against them, there would be no basis for invoking article 6(1) against the foreign defendants. In the light of the stay for the Paris arbitration, the eighth defendant can no longer fulfil any such role...”

The law - conclusion of the Court

[27]From Kalfelis onwards the Court repeats regularly that 6(1) cannot be applied to allow an applicant to claim against a number of defendants with the sole object of ousting one defendant’s domicile. That risk is however seen to be avoided by ensuring that the irreconcilability test is met – this is implicit in Kalfelisand Reisch and explicit in Freeport and also in the Advocate General’s Opinion in Painer.The starkness of the position is illustrated by Reisch, a decision which I find difficult to follow unless looked at in a very narrow sense, where the Court permitted Article 6.1 to be invoked against the foreign defendant even though the case could not proceed against the anchor defendant-a situation in which there could be no possibility whatsoever of irreconcilable judgments. This undermines Mr Onslow’s otherwise powerful point that if, as the Claimants have indicated, the case against Mr Cameron will not proceed unless Mr Haener is joined there can be no risk of irreconcilable judgments if he is not. The broader observations relied on by Mr Onslow do not, as I see it, assist his position once they are considered in their context.

Alfa Laval

[28]In mid-May Mr Onslow commendably drew the court’s attention to a new and relevant case, the decision of Briggs J in Alfa Laval Tumba AB v Separator Spares International Ltd [2012] EWHC 1155 (Ch). In that case Alfa Laval claimed that parties had unlawfully acquired by bribery and then exploited its confidential drawings for spare parts and used these designs to set up competing businesses in England and Poland. Proceedings were started against SSI in April 2008 in England and a search order obtained. Mr Pacy was added as a defendant in November 2008, put forward no defence other than that he had acted only as a director of SSI and was later committed to prison for breach of a search order. Alfa Laval settled with SSI in July 2010. In July 2011 Alfa Laval applied to join SSIP and a Mr Jasikowski who had continued to operate a competing business. Mr Pacy had also started a new business. The “relative torpor” ended because Alfa Laval perceived the litigation had not ended the allegedly unlawful activity. The judge held that there was jurisdiction under Article 6.1 to bring in SSIP and Mr Jasikowski. The most pertinent parts of his judgment are as follows:33. Mr St Ville drew my attention to the following dictum of Mummery LJ in Research in Motion Ltd v Visto Corporation[2008] EWCA Civ 153, paragraph 37, concerning the almost identical language of Article 28, following a description of the mechanical effect of first seisin: “However, that is not the result of the application of Article 28 in the present matter because its effect is not entirely mechanical. It requires an assessment of the degree of connection, and then a value judgment as to the expediency of hearing the two actions together (assuming they could be so heard) in order to avoid the risk of inconsistent judgments. It does not say that any possibility of inconsistent judgments means that they are inevitably related. It seems that the Article leaves it open to a court to acknowledge a connection, or a risk of inconsistent judgments, but to say that a connection is not sufficiently close, or the risk is not sufficiently great, to make the actions related for the purpose of the article. Mechanics do not, for once, provide a complete answer.”34. I acknowledge that a similar value judgment falls to be carried out in relation to an invocation of Article 6.1. In that context, Mr St Ville submitted that the risk of irreconcilable judgments was low in the present case first, because there was no active pursuit of the claim against Mr Pacy (and a settlement as against SSI) and secondly because there needed to be no adjudication of liability as against Mr Pacy since he had served a defence which would not obstruct the Claimants from obtaining summary judgment against him. While he could not go so far as suggesting that Mr Pacy had been sued merely as a vehicle for ousting Polish jurisdiction against the Polish respondents, he submitted that Mr Pacy was little more than a nominal defendant.35. I am not persuaded that these considerations significantly detract from what seems otherwise to me to be an obvious case for the application of Article 6.1. The connection between the claims against Mr Pacy and the Polish respondents arises from their being sued as parties to a common design, in respect of all the causes of action alleged. The language of Article 6.1 suggests that it is primarily to the closeness of the connection that the court looks when carrying out its value judgment. Questions such as whether a particular defendant will mount an active defence or whether the claim may be or has been allowed for a time to become dormant against a particular defendant do not seem to me to go to the heart of the analysis. For as long there remain separate claims being pursued against Mr Pacy in England and against the Polish respondents in Poland, the risk of irreconcilable judgments seems to me to be palpable.[29]The Claimants say that the arguments raised by the foreign defendants were strikingly similar to those raised by Mr Haener in this case and that the response of the judge speaks for itself. Further the case supports the Claimants’ argument that in a multiple defendant case such as this, the court should not merely consider in isolation the connections between the claim against the anchor defendant and each claim against each individual foreign defendant but should look at the position as a whole and have regard also to the connections which exist between claims against foreign co-defendants which are proceeding or will proceed in England. Mr Onslow accepts that there are “superficial similarities” between the cases but that there are also clear differences. First in Alfa Laval the judge found that the Claimants intended to pursue the anchor defendant to judgment and there was no suggestion that the application was made for the sole purpose of ousting the jurisdiction of the Polish courts. Secondly there was nothing to suggest that Alfa Laval wouldnot pursue the anchor defendant to judgment whether or not the Polish Respondents were joined. As I see it the similarities are more than superficial and the judge’s conclusions follow the cases to which I have referred and support the view which I had formed. I respectfully agree with them.

Collusion or other abuse

[30]The reasoning in some of these cases may be shaped by the fact that the court is considering not the addition of a defendant when an action is several years underway against other parties and a pattern has emerged but the claims at the outset of proceedings when consideration of whether those against one defendant are serious will, even if it does arise, probably not be capable of evaluation. The court is also guided by the desirability of certainty when 6(1) is invoked by a party. Close examination of motive for bringing litigation is difficult and may be expensive, time consuming and inconclusive. A claimant may for example succeed in an application under 6(1) one day and in good faith and for an unrelated reason settle with the anchor defendant the next day. The risk of abuse is seen to be controlled by the fact that an application under 6(1) will only succeed if there is a risk of conflicting judgments given the similarity between the legal and factual issues in the two disputes.[31]The position may be different if the evidence clearly establishes that the Claimants are making a claim against Mr Cameron with the sole object of bringing a case against Mr Haener-the very conduct which the European Court has repeatedly said that Article 6(1) cannot be applied to allow. The European Court of Justice has repeatedly emphasised that Article 6(1) cannot be interpreted to allow a claimant to make a claim against a number of defendants for the sole purpose of removing one of them from the jurisdiction of the courts of the Member State in which that defendant is domiciled. This indicates that there must come a point at which the law requires an application under the Article to be refused where its provisions are being abused. If Mr Haener establishes that the Claimants are pretending to continue a claim against Mr Cameron but will not in truth take it forward and are doing this with the sole object of bringing Mr Haener into the action, that may well be a reason to refuse relief either under Article 6(1) or under the inherent procedural discretion (although there is limited scope for the latter it seems on applications under the Regulation - see Briggs and Rees at 2.205). The court must be able to refuse an application which otherwise meets the requirements of 6(1) if there is clear evidence of collusion or abuse. If to take an extreme example a claimant and an anchor defendant entered into a disclosed written agreement recording the terms upon which that defendant would be sued, agreeing to hold him harmless from all liability to be established and to pay his costs and a large fee with the express stated intention of bringing before the English court a party who could otherwise only be sued in France, one would refuse the application for being an intentional abuse of 6(1). What is unclear is where, in terms of degree of collusiveness the line should be drawn. That, as I see it, can only be answered by reference to the facts of a particular case.

What is Happening to the Claim Against Mr Cameron?

[32]This application was issued on 16 December 2011 and listed by the Claimants for a half day hearing in February 2012. It was relisted for a one day hearing before me on Tuesday 3 April 2012 in a context where Mr Haener’s lawyers had made it clear that they would be contending that the application should fail because the Claimants had no genuine intention of pursuing the anchor defendant, Mr Cameron. By 3 April 2012 the Claimants had disclosed limited information about the progress of their claims against Mr Cameron. The Claimants said in solicitors correspondence that there had been without prejudice settlement discussions with Mr Cameron but no settlement. The case against Mr Cameron was not being actively pursued for reasons of commercial proportionality, but there was a possibility of these claims being renewed should the claim against Derbent which had been settled revive. The Claimants had not disclosed steps in the proceedings against Mr Cameron taken after his acknowledgment of service in April 2009, but after being pressed they did provide details of consent orders in May 2009 and February 2010 dealing with the giving of an asset freezing undertaking by Mr Cameron and its release.[33]At the hearing on 3 April 2012 I was puzzled by the absence of relevant information and suggested that it might be obtained during the course of the day. At the very end of the day’s argument Mr Hunter produced a new chronology containing new and relevant information of which he had been unaware, including the fact that the Claimants had made but not pursued an application for summary judgment against Mr Cameron.[34]This made it necessary to fix a further hearing and I directed a half day which was arranged for 9 May 2012. Before this further hearing Mr Thomas served a sixth witness statement describing the Claimants’ dealings with Mr Cameron, reporting that the case had been actively pursued until they were “overtaken by without prejudice discussions” between August 2009 and January 2010. Those discussions ceased when the Slocom proceedings were brought in the Chancery Division and as a result there is currently no agreement which restricts the Claimants’ rights to pursue Mr Cameron. The Claimants’ solicitors, Jones Day, wrote on 31 January 2012 that the claims against Mr Cameron were unlikely to proceed to trial.[35]Mr Onslow complains that that statement has never been qualified and that it is difficult to see how parties would enter into an order releasing a defendant from a freezing injunction except in the context of a settlement. The Claimants say that the release arose because discussions about settlement would need to await developments arising from the Slocom litigation and that the release was agreed because there seemed at that time to be no imminent prospect of a resolution.[36]The Claimants relied upon the without prejudice nature of many of their discussions with Mr Cameron and his advisers. There was no opportunity nor need to examine the competing claims about without prejudice in detail, but I was left with the impression that Mr Haener and his advisers had a legitimate grievance that at least some aspects of the correspondence between the Claimants’ solicitors and those for Mr Cameron were being incorrectly claimed to be without prejudice. Mr Onslow submits that the Claimants do not intend to pursue Mr Cameron and that this must have been the subject of a tacit if not explicit agreement or a nod and a wink. Mr Onslow submits that the only reason why the action against Mr Cameron is pursued is to bring Mr Haener before the English court. Mr Hunter rejects this; he says that it is true that if Mr Cameron remained the sole defendant for financial reasons the Claimants would be unlikely to pursue him. The action against Mr Cameron remains live but has been in abeyance until judgment is given by Roth J in the Slocom proceedings. The Claimants apologise for not having regularised the position by seeking an appropriate stay from the court. The response of the Claimants to developments in the Slocom proceedings was to see Derbent and Mr Haener coming back into the case and this in turn affected their thinking as regards Mr Cameron.[37]The Claimants agreed to give further disclosure after the hearing on 9 May 2012 and they provided additional documents which they see as “mundane” but Mr Onslow regards differently. He suggests that it is improbable that the Claimants can genuinely have had doubts about Mr Cameron’s ability to meet at least part of a claim when he informed them in June 2009 that he had sold Sibir shares for more than £6,000,000. He wonders why Mr Cameron would have met Sibir’s chief executive officer for lunch in February 2010 and why it was that on 6 February 2012 Mr Cameron’s solicitors proposed a meeting to discuss the application by Sibir to join Mr Haener, having a wish to discuss matters before Mr Cameron’s solicitors replied to correspondence from Mr Haener’s solicitors. This led Mr Cameron’s solicitors to refuse to respond to Mr Haener’s solicitors request. Steps were taken in mid-April 2012 by solicitors to arrange meetings between Sibir’s CEO and Mr Cameron which did not take place but it appears that they had dinner on 27 April 2012. Nothing has been disclosed about what was said at the dinner but if the Claimants genuinely intend to proceed against Mr Cameron as and when they have Mr Haener on board and have neither settled nor entered into some arrangement or understanding such a social event would be unusual.[38]It is regrettable that the information now made available was not disclosed at the outset. Time and costs have been wasted. As is generally the case when disclosure is given reluctantly under pressure and bit by bit, the court is left wondering why this has happened and whether there is more to this than meets the eye. By letter dated 6 June 2012 the Claimants’ solicitors have written in some detail insisting that there has been no collusion or other arrangement with Mr Cameron. That letter is in unequivocal terms and, without prejudice to the Claimants’ position, discloses what the contacts between the Claimants and Mr Cameron were about. For my part I would be content to accept as true what is said in that letter but, against the background of this case, Mr Haener’s team is likely to ask that this be verified by witness statement. If that witness statement is forthcoming the allegations of collusion and /or that the Claimants have no intention of pursuing Mr Cameron fall away. Further the Claimants seek trial directions against Mr Cameron as much as against Mr Haener. There is thus no factual basis for Mr Haener to resist the application under 6(1) and it will succeed.

Conclusion

[39]In principle the application succeeds on detailed terms to be considered at the hand down of this judgment.[40]I shall be grateful if Counsel will let me have not less than 72 hours before the hand down, corrections of the usual kind and a draft order, preferably agreed, together with a note of the matters they wish to raise at the hearing.

Cited in 1 later judgment