Akcil & Ors v Koza Ltd & Anor (2019)
The Supreme Court interpreted Regulation 1215/2012 art.24(2), which set out special jurisdictional rules on the governance of corporations. Where a party was able to bring one claim within art.24(2), that party was not permitted to add on another claim which was conceptually distinct if the claim was not inextricably bound up with the former claim and if it was not principally concerned with the validity of decisions of the organs of a company which had its seat in England. A mere link between a claim which engaged art.24(2) and one which did not was not sufficient to bring the latter within the scope of art.24(2).
A Turkish parent company (Koza Altin) and its court-appointed trustees appealed against a decision that the English courts had jurisdiction to hear a claim brought by the first respondent, an English company (Koza Ltd) which was a wholly owned subsidiary of Koza Altin.
Koza Altin was part of a group of Turkish companies which had formerly been controlled by the second respondent. The second respondent alleged that he and the group had been investigated unfairly by the Turkish government in relation to criminal allegations. To protect his control of Koza Ltd, he made some changes to its constitution and share structure. The appellants claimed that the changes were invalid and unlawful. In Turkish proceedings relating to the criminal investigation, the court appointed certain individuals as trustees of Koza Altin, with power to control its affairs. The respondents brought proceedings in England, involving two claims. The first (the English company law claim) concerned the validity of notices served by the trustees under the Companies Act 2006 s.303 and s.305. The second (the authority claim) concerned the trustees' authority to act. The High Court considered that it had jurisdiction to determine the claims because they fell within Regulation 1215/2012 art.24(2), which set out a special regime to determine jurisdiction in relation to certain matters regarding the governance of corporations. It was common ground that the English company law claim fell within art.24(2). The court considered that the authority claim was inextricably linked with that claim, which it considered to be the principal subject matter of the proceedings. It therefore held that it had jurisdiction in relation to both claims. The Court of Appeal upheld that decision. It also dismissed a submission that the English courts had no jurisdiction in relation to the trustees because they were not necessary parties. Although Turkey was not an EU Member State, it was common ground that art.24(2) applied to determine the question of jurisdiction in the case.
Application of art.24(2) in relation to authority claim - The cases of exclusive jurisdiction within art.24 comprised situations where there was an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular Member State. For cases falling within art.24, the principle of exclusive jurisdiction took priority over other principles underlying the Regulation. It was clear from the scheme of the Regulation that the interpretation and application of art.24(2) could not depend on the type of evaluative judgment in relation to which different courts could reasonably take different views. In principle, there should be only one correct application of art.24 in relation to a given claim. The objectives of the Regulation were to set out rules governing the allocation of jurisdiction which were highly predictable, and to avoid inconsistent judgments on the same issue being produced by the courts of different Member States. The case law of the Court of Justice of the European Union showed clearly that the interpretation of art.24(2) adopted by the courts below in the instant proceedings could not be sustained. The Court of Appeal had relied on Berliner Verkehrsbetriebe (BVG) v JP Morgan Chase Bank NA, Frankfurt Branch (C-144/10) EU:C:2011:300 to hold that art.24(2) required the court to form an overall evaluative judgment as to what the proceedings were principally concerned with. However, that approach had the effect of expanding the application of art.24(2), contrary to the guidance in BVG and Hassett v South Eastern Health Board (C-372/07) EU:C:2008:534, rather than narrowing its application as the CJEU had been at pains to do in those cases. According to the Court of Appeal in the instant proceedings, art.24(2) was to be read as having the effect of allowing a party which was able to bring one claim within that article (the English company law claim) to add on another claim (the authority claim) which was conceptually distinct and not inextricably bound up with the former claim. That was an illegitimate reversal of the approach indicated in the BVG case. A mere link between a claim which engaged art.24(2) and one which did not was not sufficient to bring the latter within the scope of art.24(2), BVG, Hassett, Schmidt v Schmidt (C-417/15) EU:C:2016:881 and E.ON Czech Holding AG v Dedouch (C-560/16) EU:C:2018:167 applied. The English company law claim and the authority claim were connected in a certain sense, but they were distinct claims which were not inextricably bound up together. The authority claim was not principally concerned with the validity of decisions of the organs of a company which had its seat in England. It was acte claire that art.24(2) did not cover the authority claim (see paras 24-25, 28-30, 33-35, 41-43 of judgment).
Application of art.24(2) in relation to the trustees - Since art.24(2) did not cover the authority claim, the English courts had no jurisdiction in relation to the trustees under that provision with respect to that claim. The proceedings against the trustees were principally concerned with the authority claim. The jurisdiction of the English courts in relation to the English company law claim under art.24(2) did not extend to cover the trustees, who were not necessary parties to that claim (para.45).