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.
The defendant appealed. On 25th May 2011, the English Court of Appeal allowed the appeal. Lord Justice Mummery held that:
“54 The German court was first seised within the meaning of articles 28 and 30: the German action was commenced before the English action. They were related actions within the meaning of article 28 at the date of the application for stay and at the date of the hearing of the application when the decision had to be made. The fact that they were not related actions when the English action was commenced does not affect the chronology of deemed seisin within the meaning of article 30, or the question of which court was first seised within the meaning of article 28, or the existence or exercise of the discretion.
55 The English action may be stayed by the English court, as it was not the court first seised. It is proper to exercise the discretion to stay it until the issue of the validity of the assignment agreement and the assignments thereunder is decided by the German courts.
56 I would add that the result does not seem to me to be unjust, inconvenient or surprising. The validity of the assignment agreement will be decided by the German courts in accordance with German law by which, as the parties agree, it is governed.” [2011] EWCA Civ 622 [54-56].
Lord Justice Wilson went on to hold:
“In effect Burton J decided that the question was “which court was first seised of the issue which has rendered the actions related?”. With respect, it was impermissible for him thus to rewrite paragraphs (1) and (3) of Article 28 . He was clearly concerned that any other construction of them would reward manoeuvres cynically designed to thwart resolution of an issue properly first raised in the courts of a particular state.” [2011] EWCA Civ 622 [135]