(Livingston Properties Equities Inc. and others (Respondents) v JSC MCC Eurochem and another (Appellants)  UKPC 31 – 30 November 2020)
By a judgment dated 30 November 2020 (the “Judgment”), the Judicial Committee of the Privy Council (the “Board” or the “Privy Council”) allowed an appeal brought by JSC MCC Eurochem and another (“Eurochem”) against a decision of the Eastern Caribbean Court of Appeal (the “Court of Appeal”) relating to applications to set aside service out of the jurisdiction and for a stay of proceedings in the British Virgin Islands (the “BVI”).
In August 2015 Eurochem commenced proceedings in the BVI seeking recovery of bribes that had allegedly been paid to, or for the benefit of, two Russian nationals that held senior positions in Eurochem. The other Defendants were limited liability companies; the majority of which were incorporated in the BVI. It was alleged by Eurochem that the corporate defendants were used to facilitate the payment and receipt of bribes.
In November 2015 the Eastern Caribbean Supreme Court in the BVI (the “High Court”) granted the ex parte application made by Eurochem for permission to serve their claim form outside of the jurisdiction (on those defendants that were domiciled outside of the BVI). Following service upon them, some of the defendants that were not resident or domiciled in the BVI applied to the High Court to set aside the order for service out of the jurisdiction. They also sought to stay the main proceedings on the basis that the High Court did not have jurisdiction to hear the claim. A number of the BVI companies also applied to stay the proceedings on this basis arguing that Russia, and not the BVI, was the most appropriate forum to hear the claim on account of the main protagonists being Russian nationals and because their contracts of employment with Eurochem (which underpinned many of the issues) were governed by Russian law.
On 1 November 2016 the Honourable Mr Justice Wallbank dismissed the applications and held that the BVI was the most appropriate forum for the trial. The defendants appealed against the judgment of Wallbank J. On 18 September 2018 the Court of Appeal allowed the appeal and reversed the decision of Wallbank J by setting aside the order for service out of the jurisdiction, granting a stay of the proceedings in the BVI and by holding that Russia was a more convenient forum for the hearing of the claim.
Eurochem appealed to the Privy Council.
The Privy Council's Judgment
The Privy Council reiterated the principles which a judge has to apply when considering applications to serve proceedings on defendants that are not resident or domiciled in the BVI. Those are:
- Firstly, that there is a serious issue to be tried on the merits, that is, a substantial question of fact or law.
- Secondly, that there was a good arguable case that the claim against the foreign defendants fell within the classes of case for which permission to serve out may be given.
- Thirdly, a claimant must show that the BVI was clearly or distinctly the appropriate forum for the trial of the dispute and that in all of the circumstances the court ought to exercise its discretion to permit service out of the jurisdiction.
Principles 1 and 2 above were not in dispute in this case and it was therefore for Eurochem to show that the BVI was clearly and distinctly the appropriate forum for trial in relation to the foreign defendants. Conversely, the BVI defendants were required to show that some other forum (Russia in this instance) was clearly and distinctly the appropriate forum.
The Privy Council focussed on the following issues: (1) whether Russia was clearly or distinctly the appropriate forum for the trial of the dispute; and (2) whether Russian or BVI law was properly applicable to the claim.
Whether Russia was clearly or distinctly the appropriate forum for the trial of the dispute
The Board held that Russia was not shown to be an appropriate forum, reasoning that:
- a court may consider a number of factors when assessing whether there is another more appropriate forum, including, the place where the alleged wrongs were committed, the location of any witnesses and the governing law of the pleaded claims;
- the governing law is an important factor because it is generally preferable that a case should be tried in the country whose law applies;
- in this instance, Wallbank J was clear in his finding about the availability of Russia as an alternative forum. He noted, and the Board agreed, that there was conflicting evidence regarding the availability of Russia as a forum for all the pleaded claims and that he could not make any findings as to the availability of Russia as a forum. This was largely due to unresolved conflicts in the two expert reports relied on by the parties; and
- the weight attached to the incorporation of some of the defendants in the BVI by the Court of Appeal was “unrealistic”1.
Whether Russian or BVI law was properly applicable?
The Board did not make a finding in respect of this disputed issue, reasoning that:
- It was not possible to make a finding as to the governing law of the claims. The Board found that such a finding was unassailable due to the number of claims alleged by Eurochem. The Board expressed sympathy for Wallbank J's approach that the governing law was not knowable at that point in time and was therefore a neutral factor when considering which forum was appropriate to try the claims;
- the presence of a Russian governing law clause in the employment contracts of the two main protagonists was not sufficient to establish that the claims against the other defendants were governed by Russian law as they were not parties to those contracts;
- a finding could not be made of the applicable governing law by applying the exception to the double actionability rule. This rule states that a tort committed outside of the jurisdiction (i.e. the BVI) is not actionable within it unless it is actionable both under the law of the BVI and under the law where the tort was committed. In making its finding the Board noted that “there was no factual material on which to ascertain the law with which each of the torts had their most real and closest connection”2; and
- the rule in Dicey 25(2)3 could not be relied upon in the current case, but the Board did agree with Wallbank J that foreign law did not need to be pleaded.
It is clear from the Board's finding that the BVI Court will continue to balance a number of factors when determining the most appropriate forum in which to try a claim. However, in complex claims involving individuals in multiple jurisdictions, particularly claims involving allegations of fraud on an international level, it is vital that defendants to those actions wishing the case to be determined elsewhere place convincing evidence before the Court to show that some jurisdiction other than the BVI is the most appropriate forum. Both factual and expert evidence on foreign law will need to be filed to support an argument that another jurisdiction is better placed to try the claims. If insufficient or conflicting evidence is provided then the BVI Court will be at liberty to hold that the BVI is the most appropriate forum.
1 Paragraph 39 of the Judgment
2 Paragraph 32 of the Judgment
3 Rule 25 states, “(1) In any case to which foreign law applies, that law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means.
(2) In the absence of satisfactory evidence of foreign law, the court will apply English law to such a case.”
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