Summary
The claimant, FKI, is a UK company. It sold its shares in a German company to an English company, DeWind Holdings. (There was another jurisdictional dispute before the English courts related to this transaction - See [2007] EWHC 72 (Comm) aff’d [2008] EWCA Civ 316.)
In 2005 DeWind GmbH entered into a Business Transfer Agreement (‘BTA’) agreeing to sell its business assets to Stribog. The agreement included an English jurisdiction clause. The sum of €33 million, which had been due under the BTA, was not paid.
In August 2009, insolvency proceedings in relation to DeWind GmbH started in Germany. On 31st August 2009, FKI became assignee of claims by DeWind GmbH against various parties (and Stribog in particular).
On 18th September 2009, Stribog sought from a German court a declaration of non-liability to FKI. However, Stribor’s original claim “made an exception of any purchase price claims under the BTA.” ([65] – [2011] EWCA Civ 622.)
On 15th January 2010, FKI commenced proceedings against Stribog, suing for the purchase price under the BTA, in England. FKI’s claim was initiated in its capacity of assignee of DeWind GmbH.
On 12th Feb 2010, the claim in the German proceedings was amended. Stibor submitted that the assignment was void under German law.
In England, Stibor asked for a stay of the English proceedings on the ground of Article 28 of Brussels I. The English High Court dismissed the defendant’s challenge. Mr Justice Burton held:
“39 In this case, if an art.28 application had been brought by DWL after the commencement of the English proceedings on January 21 but prior to the February statement on February 12, it is clear that there would have been no related actions, and the art.28 application would have failed. It is only the introduction of the February statement, subsequent to the English proceedings, which has rendered the two actions related. In my judgment, it is inconsistent with predictability , and does not create a clear and effective mechanism , if a party can unilaterally change the nature of the earlier action […]
40 There is thus no discretion for this court to exercise, because this court is first seised . Article 28 makes it plain that it is only the court second seised which has the discretion to stay. Absent any agreement of the parties, it must now be for the Lübeck court to consider the application for a stay. […]” [39-40]
The defendant appealed. On 25th May 2011, the English Court of Appeal allowed the appeal.