Summary

The English courts had jurisdiction to hear a claim brought by an English company against its Turkish parent company. The proceedings were principally concerned with the validity of decisions of an organ of the English company, and therefore fell within Regulation 1215/2012 art.24(2).

Facts

A Turkish parent company and its Turkish court-appointed trustees appealed against a decision that the English courts had jurisdiction to hear a claim brought by the first respondent English subsidiary company.

The second respondent was a director of the English company. The Turkish authorities had alleged that the corporate group was involved in the financing of terrorism. An order was made by the Turkish court replacing the existing boards of companies within the group with trustees. Disputes arose regarding the management and control of the English company. The respondents commenced proceedings in the English High Court, seeking declarations that notices served on it, purportedly on behalf of the parent company, requisitioning general meetings to pass resolutions replacing its directors were ineffective, and seeking related injunctions. The relief was sought on two grounds: first, that, under the English company's articles of association, the resolutions to which the notices related could not be passed without the second respondent's consent (the "English law claim"); and, second, that the court should not recognise any authority of the trustees to cause the parent company to serve notices or to take any steps as a shareholder of the English company (the "authority claim"). The respondents obtained a without notice injunction preventing any meetings taking place to pass such resolutions. The judge considered that the claim fell within Regulation 1215/2012 art.24(2) and that the court therefore had jurisdiction. The appellants filed an acknowledgement of service before challenging the English court's jurisdiction. The High Court held that it had jurisdiction as the claim fell within art.24(2) and that, by serving a counterclaim that went beyond the claim, the parent company had submitted to the court's jurisdiction.

Held

Jurisdiction - Article 24 provided an exception to the general rule that defendants were to be sued in the courts of the state where they were domiciled. Article 24(2) provided that the courts of a Member State had exclusive jurisdiction, regardless of the parties' domicile, in proceedings which had as their object "... the validity of decisions of [the company's] organs". It was common ground that art.24(2) was applicable even though Turkey was not an EU Member State, and that the seat of the first respondent was in England and Wales. The court had to determine whether the proceedings related principally to the validity of the decisions of an organ of the English company. A mere link to a decision of the company, or to an issue raised which was ancillary to the heart of a contractual dispute or some other dispute, was insufficient to bring the proceedings within the exclusive jurisdiction, Berliner Verkehrsbetriebe (BVG) v JP Morgan Chase Bank NA, Frankfurt Branch (C-144/10) EU:C:2011:300 applied. The High Court concluded that the principle subject matter of the proceedings did fall within art.24(2). A generalised attack on the authority of those purporting to act for the parent company would not be within art.24(2), but that was not the nature of the proceedings. The appellants argued that the English company law claim and the authority claim were distinct claims brought against different parties; the authority claim being against the trustees, to which the parent company was a necessary and proper party, and the English company law claim being only between the two companies. They considered the question was whether the authority claim fell within the exclusive jurisdiction of the English courts by virtue of art.24(2). The judge rightly considered the two issues to be "inextricably linked". Both were concerned with the validity of decisions of the shareholders in general meetings to replace the board of directors of the English company, and were preconditions for a valid decision of an organ of the company. Faced with such proceedings, rather than disentangling interlinked issues, the court was required to form an overall evaluative judgment regarding what the proceedings were principally concerned with, JP Morgan Chase Bank NA v Berliner Verkehrsbetriebe (BVG) Anstalt des Offentlichen Rechts [2010] EWCA Civ 390 applied. The conclusion on jurisdiction should not be affected by whether the decision had already been taken or was imminent. The policy rationale behind the art.24 exception, namely that it was desirable to centralise jurisdiction in relation to the identified subject matter in order to avoid conflicting decisions, was equally satisfied. That there was a decision of an organ of the company under attack in the proceedings had, in any event, to be implicit in the parent company's concession that the English company law issue was within the exclusive jurisdiction. Although the authority issue raised issues of law which were not English company law issues, that did not prevent the proceedings from being principally concerned with the validity of decisions of an organ of the English company. The relevance of those non-company law issues went directly to the validity of the notices, and therefore the validity of the decision of the company taken in pursuance of them. The requirement for a valid notice was, in any event, a requirement of English company law. It was correct to characterise the proceedings as a whole, insofar as they related to the parent company, as being principally concerned with the validity of decisions of an organ of the company (see paras 23-51 of judgment).

Trustees - The trustees argued that it was not necessary to join them to the proceedings, and that a strict interpretation of the Regulation would exclude cases against unnecessary parties. It was not necessary for them to be joined, but that did not mean that the action against them was not principally concerned with subject matter within art.24(2). The case remained one in which the underlying rationale of art.24 applied (paras 52-54).

Appeal dismissed