The Commercial Court has stayed proceedings against an English domiciled defendant on the basis that the object of the proceedings was the validity of resolutions made by a Ukrainian company. In so doing, the court decided that the exclusive jurisdiction rules contained in Article 22 of the Brussels Regulation (EC No 44/2001) should be given “reflexive effect” in favour of non-EU state courts where the subject matter of the dispute falls within one of the grounds for exclusive jurisdiction provided for in Article 22: Ferrexpo AG v Gilson Investments Limited and ors [2012] EWHC 721 (Comm).
This is the first case in which an English court has ruled that it has the power to stay English proceedings brought against an English domiciled defendant where the dispute relates to the validity of decisions of the organs of a company situated in a non-EU state, in this case Ukraine. Although obiter, the Commercial Court also indicated that it would have a similar power to stay proceedings where the other party has commenced earlier proceedings in the non-EU state which are sufficiently related to give rise to a risk of conflicting judgments. The court expressly disapproved the earlier decision in Catalyst Investment v Lewinsohn [2009] EWHC 1964 (Ch), in which the court decided that it did not have the power to stay its proceedings in favour of earlier competing proceedings commenced in the US (see e-bulletin).
If this decision is followed by other courts (and subject to any appeal) this will mean a greater risk that parties may not be able to avoid “unfavourable” jurisdictions by suing an English “anchor” defendant if the foreign proceedings are commenced first or the subject matter of the dispute falls within one of the categories which justifies the foreign court exercising an exclusive jurisdiction. Continue reading →