Alliance Bank JSC v Aquanta Corp & 14 Ors (2011)
Despite the existence of English jurisdiction clauses in loan agreements with two of the defendants, the appropriate forum for a claim by a Kazakhstan bank against its former controlling shareholders and others was Kazakhstan rather than England.
The defendants sought to set aside permission to serve proceedings out of the jurisdiction and challenged the jurisdiction of the English court. The claimant Kazakhstan bank (C) brought proceedings against a number of defendants alleging that US$1.1 billion had been extracted from it by a dishonest scheme. It was alleged that the participants in the scheme had caused C to acquire US Treasury Notes which had been charged to Cypriot banks as security for loans to offshore companies. The first loans were made to the third and fourth defendants (D3 and D4), companies incorporated in Samoa and the British Virgin Islands respectively. The loan agreements contained English law and jurisdiction clauses. Further loans were made to the first and second defendant BVI companies (D1 and D2). C's case was that the offshore companies failed to repay the loans and the Cypriot banks had enforced their security. It was said that the proceeds of the loans had been used to benefit the sixth defendant (D6), who was previously chairman of the board of C, and his brothers (D7 and D8), who together with D6 controlled the ninth defendant (D9), which had been C's majority shareholder. C had subsequently been effectively nationalised and then instigated a criminal investigation in Kazakhstan. D6 had been convicted in Kazakhstan of illegal use of moneys through the issue of ungrounded guarantees. He had been ordered to make repayment in associated civil proceedings but the appeal court had set aside that decision and directed C to establish its loss in the civil courts. C claimed to have a subrogated claim to enforce the loan agreements against D1 to D4 and against D6 to D8 by piercing the corporate veil. It also pleaded claims against the defendants under English law in conspiracy, dishonest assistance, knowing receipt and unjust enrichment, and sought to amend to plead breaches of the Kazakh Civil Code. C obtained permission without notice to serve the proceedings out of the jurisdiction.
(1) There was a serious issue of fact and law as to whether D6-D8 were to be treated as parties to the loan agreements by piercing the corporate veil, Antonio Gramsci Shipping Corp v Stepanovs (2011) EWHC 333 (Comm), (2011) 1 Lloyd's Rep 647 considered (see para.20 of judgment). (2) C had a good arguable case and there was a serious issue to be tried that it was entitled to pursue a subrogated claim under the loan agreements with D3 and D4, and hence there was a serious issue to be tried as against D6-D8 as well (paras 27-28). (3) The loan agreements that had been produced in respect of D1 and D2 provided for London arbitration but did not confer jurisdiction on the English courts. Accordingly C had not established a serious issue to be tried by way of a subrogated claim in respect of those loan agreements (paras 30-35). (4) There was a serious issue to be tried in respect of the English law claims of conspiracy, dishonest assistance, unjust enrichment and knowing receipt and also in respect of similar claims under the Kazakh civil code which C sought to plead by amendment (paras 36-45). (5) C had a good arguable case that it was entitled to bring a subrogated claim under the loan agreements against D3, D4 and D6-D8 which came within the jurisdictional gateway under CPR PD 6B para.3.1(6)(c) and para.3.1(6)(d) since the agreements contained English law and jurisdiction clauses. C's other claims were also "in respect of a contract" within para.3.1(6) (paras 49-50). (6) D3 had been served as an "anchor" defendant within the jurisdiction without permission pursuant to the contractual provision in the loan agreement and the other defendants could if necessary be served as necessary or proper parties within PD 6B para.3.1(3) (paras 51-61). (7) The English proceedings were not barred by the Civil Jurisdiction and Judgments Act 1982 s.34 because the civil judgment in Kazakhstan had been set aside, or by the doctrine of lis alibi pendens because C undertook if necessary not to pursue its claim in Kazakhstan while the instant proceedings were pending (paras 62-67). (8) C had not established that England was clearly and distinctly the most appropriate forum, and there were strong reasons or exceptional circumstances for departing from the jurisdiction provided for in the loan agreements. Almost all the events took place in Kazakhstan; Kazakh law might have an important role to play; almost all the documents were in Kazakhstan; there had been proceedings in Kazakhstan which had resulted in the conviction of D6 and important findings of fact; the evidence to establish conspiracy would be overwhelmingly in Kazakhstan; although the civil proceedings had, for the time being, come to an end, the appeal court had plainly encouraged the bringing of further civil proceedings. If C were to limit its claim to a subrogated claim against D3 and D4, the court would consider that position discretely. Otherwise service of the proceedings was set aside.
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