Summary

The domestic court did not have jurisdiction to determine part of a claim made by liquidators against a French company where there was no direct link between the proceedings and the insolvency legislation or the winding-up of the company with which the liquidators were concerned, and therefore the exception under Regulation 44/2001 art.1.2(b) did not apply.

Facts

The applicant French company (F) applied for a declaration that the English courts had no jurisdiction over it, or an order declining jurisdiction and an order setting aside the purported service of an application made by the respondent joint liquidators (L) concerning ownership of a yacht. The yacht, which was moored in France, had been acquired using money emanating from an English company (M) which, due to links to a company found to have committed fraud, was later wound up. L were appointed pursuant to orders granted in England. F had invested in M's largest creditor and had also suffered losses and so it subsequently issued proceedings in France for compensation. F obtained an order for the arrest of the yacht and L subsequently applied to lift that order. L applied to the English courts for a declaration that M was the sole beneficial owner of the yacht and that F was precluded by the Insolvency Act 1986 s.130(2) and Regulation 1346/2000 from commencing or continuing proceedings against it and, alternatively, they claimed that under s.238 and s.423 of the Act, if the yacht was not beneficially owned by M, the payments by M to or for its purchase were transactions at an undervalue and the yacht should be transferred to M. F submitted that Regulation 44/2001 applied and that under art.2 of that Regulation the proceedings had to be brought in France. F argued that, alternatively, the French commercial court was first seised of the issue of ownership of the yacht when L applied to lift the arrest so, under art.27, the instant court had to decline jurisdiction. F further argued that the Insolvency Regulation did not apply, as M fell within the exclusion under art.1(2) of that Regulation of "investment undertakings which provided services involving the holding of funds or securities for third parties", as it was an investment firm and there were indications that it might have traded for its owner and controller. L contended that the Judgments Regulation did not apply, as the proceedings were excluded under art.1(2)(b) of the Insolvency Regulation as "relating to the winding-up of insolvent companies".

Held

(1) The cause of action under s.238 of the Act fell within the exception under art.1(2)(b). It was not available to M before winding-up, but could only be pursued by a liquidator or other comparable office-holder. The cause of action was purely statutory in that conditions for liability were laid down in the relevant provisions of the Act. That Act dealt generally with insolvency, whether personal or corporate. Further, the products of success enured for the benefit of M's creditors, not M itself. The s.238 and s.423 claims could not arise unless and until the ownership claim had been determined in F's favour. If they did arise, neither of them could confer any beneficial interest in the yacht before judgment on those claims and the grant of relief to L in the form they sought. The principal claim was the declaration as to beneficial ownership. Therefore it was necessary to consider whether that claim was within the exception, Hayward (Deceased), Re (1997) Ch 45 Ch D considered. The claim was made by L but arose under the general law and, if well made, had accrued to M before it was wound up. The link with the Act or the winding-up of M was neither direct nor close, Re Hayward, Ashurst v Pollard (2001) Ch 595 CA (Civ Div) and German Graphics Graphische Maschinen GmbH v Alice van der Schee c-298/08 considered. The exception in art.1(2)(b) did not apply so as to exclude the application of the Judgments Regulation as a whole. F was domiciled in France and was therefore entitled to be sued there in accordance with art.2. (2) The exception in art.1(2) of the Insolvency Regulation did not relate to investment undertakings generally or to those providing any services to third parties but only to those investment undertakings which provided services to third parties of the relevant description, namely "services involving the holding of funds or securities for third parties". That Regulation applied to the proceedings opened by the previous orders appointing L and winding-up M. Depending on the decision of the French court on the issue of beneficial ownership, the claims made by L against F in relation to s.130(2), s.238 and s.423 might have been properly brought in the jurisdiction under those provisions of the Act. (3) The court had no jurisdiction to hear or determine the beneficial ownership claim. The claims under s.130(2), s.238 and s.423 were to be stayed until that issue had been disposed of by compromise or abandonment.

Declaration granted