Home Information Cases Chaitan Choudhary & Ors v Damodar Prasad Bhatter & Ors (2009)

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Chaitan Choudhary & Ors v Damodar Prasad Bhatter & Ors (2009)

Summary

When considering the issue of jurisdiction of a court of a Member State under the Regulation 44/2001 art.22, it was unnecessary and wrong to construe the words "regardless of domicile" in that provision as having any application to a case where the person to be sued was not domiciled in a Member State.

Facts

The appellants appealed against an order ((2009) EWHC 314 (Ch), (2009) 2 BCLC 108) that the court was bound to accept jurisdiction in proceedings brought by the respondents concerning the affairs of a company, and that the respondents were entitled to injunctive relief in respect of resolutions made at general meetings of the company. The company had its registered office in England but was situated in India. The first and second respondents (C) were the company's directors who had assumed the management of the company's business. The only other director was the first appellant (B) who was not domiciled in a Member State. In a series of company meetings, five new directors were purportedly appointed and the company's rules were altered to require that all further resolutions and decisions be approved by at least five directors. In addition, certain company shareholdings were forfeited and the company's secretary was replaced. C then apparently resigned as directors by letters purportedly signed by them. C claimed that they were not present at any of the alleged meetings, that B on his own would not have constituted the minimum required quorum of two directors, and that their signatures on the purported resolutions and on the purported letters of resignation were forged. Pending the trial of the matter, the judge granted an interim injunction restraining B from, among other things, acting in relation to the management of the company's business and affairs otherwise than as directed or authorised by C or as directed by a court of competent jurisdiction in India. The issues were whether (i) the proceedings fell outside the scope of the Regulation 44/2001 by reason of art.1(2)(b) so that the judge did not have jurisdiction to consider the matter; (ii) art.22 of the Regulations could found jurisdiction in respect of a person who was not domiciled in a Member State; (iii) the claim against B in the instant proceedings fell within art.22(2); (iv) if jurisdiction in respect of B was conferred by art.22(2), the English court was precluded, by the decision in Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (C-281/02) (2005) QB 801 ECJ, from declining jurisdiction; (v) if the judge could properly entertain proceedings against B, he erred in granting an interim injunction.

Held

(1) The instant proceedings did not fall outside the scope of the Regulation by reason of art.1(2)(b) because the proceedings which C sought to bring against B were not proceedings relating to winding up or analogous proceedings. The only claim against B was for compensation under the Companies Act 1985 s.92. (2) It was clear that the direction in the opening words of art.22 of the Regulations as to the courts which were to have "exclusive jurisdiction" was a direction which was intended to apply only as between the courts of those Member States which were bound by the Regulations. It would be absurd to construe art.22 as an attempt to exclude the jurisdiction of the Indian courts in a case where the seat of a company was in England. The words "shall have exclusive jurisdiction" displaced the general rule set out in art.2(1) that a person domiciled in a Member State would be sued in the courts of that Member State. Those words also displaced the general rule set out in art.4(1) that in the case of a defendant not domiciled in a Member State the jurisdiction of the courts of each Member State would be determined by the law of that Member State. The words "regardless of domicile" in art.22 had to be construed in that context and it was unnecessary and wrong to construe those words as having any application to a case where the person to be sued was not domiciled in a Member State. (3) If the holding in respect of the second issue was correct the third issue did not arise. In any event, for the purposes of ar.22(2), the proceedings against B could not be said to have as its object the validity of the constitution of the company or the validity of the decision of one of its organs, the board of directors, Speed Investments Ltd v Formula One Holdings Ltd (No2) (2004) EWCA Civ 1512, (2005) 1 WLR 1936 and Grupo Torras SA v Al-Sabah (No1) (1996) 1 Lloyd's Rep 7 CA (Civ Div) considered. (4) The third issue also did not arise in view of the conclusions in respect of the second and third issues. The decision in Owusu provided no direct authority on the question whether a court of a Member State was precluded from declining the jurisdiction, if any, conferred on it by art.22 of the Regulations in respect of a person not domiciled in a Member State on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action, Owusu considered. (5) Assuming that the judge had jurisdiction to make the interim order, he had erred in principle in making the order in the terms that he did. The appropriate order, if any, for the English court to make was an order against the company restraining it from acting in England on any resolution that might be passed by a general meeting or the board of directors pending resolution of the underlying dispute or further order of the Indian court. There was no need for an order against B personally.

Appeal allowed

Court of Appeal
Ward LJ, Stanley Burnton LJ, Sir John Chadwick
Judgment date
11 November 2009
References

LTL 11/11/2009

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