Summary
The dispute was concerned with the ownership of the shares of a Ukrainian company (OJSC). The monetary value was potentially significant because OJSC owned and operated a mine in Ukraine which was estimate to be worth $1.2 billion.
The claimant, Ferrexpo, was a Swiss company. The defendants were English companies.
The claimants alleged that they owned over 98% of the shares in OJSC. The defendants disputed the claimants’ submission.
The background to the proceedings was another dispute Mr Zhevago and Mr Babakov which involved a dispute as to the validity of a 2002 Agreement for and purchase of security and lock-up agreement. In 2011, the Ukrainian court held that the 2002 SPA and lock-up were invalid. In October 2011, the defendants brought proceedings in Ukraine to seek to restore their shareholding interest in OJSC.
On 22nd November 2011, the English proceedings were issued by Ferrexpo. Ferrexpo was not originally a party to the Ukrainian proceedings.
The defendants challenged the English court’s jurisdiction.
The English court stayed the English proceedings. In this context, an interesting consideration was whether Articles 22 and 28 of the Brussels I regime should be reflexively applied. Mr Justice Andrew Smith held:
“154 As I have said, there are differing views about whether, if article 22 has a reflexive application at all, that application is mandatory or whether the court has discretion whether or not to apply it. I received only brief submissions about this. Having decided that the article has a reflexive approach to these proceedings, I conclude that it is a matter of discretion whether the court should or should not assume jurisdiction, for three main reasons:
(i) First, there appears to me no reason of principle or policy that the reflexive application of the article should be adopted slavishly and, as stated in Dicey, Morris and Collins (loc cit) at para. 12-022, it is inappropriate to do so.
(ii) Secondly, a mandatory rule would require the court to refuse to assume jurisdiction in favour of courts in which the parties would not receive justice (or where there was a real risk that they would not do so).
(iii) Thirdly, the machinery of the English court whereby it refuses to assume jurisdiction in a case such as this, is, as it seems to me, to grant a stay under para. 3.1(2) (f) of the CPR or its inherent jurisdiction, a power that is inherently discretionary.
155 I conclude that I should exercise my discretion to grant the stay. Whatever the precise considerations that should bear upon the exercise of the discretion (about which I did not receive submissions and I decline to express unnecessary views), having rejected Ferrexpo's argument that there is a real risk that they will not receive justice in the courts of Ukraine, there is, to my mind, no significant argument in favour of the court assuming jurisdiction. Against that there are powerful reasons that the dispute should be decided in Ukraine (if it cannot be resolved without litigation), in particular: (i) That there is now most likely multiplicity of proceedings and therefore a risk of inconsistent decisions will be avoided; and (ii) That other parties interested in the dispute, including OJSC, can be joined, and indeed have been joined, in the 2011 Ukrainian proceedings.
[…]
200 […] even if I had not accepted the defendants' submission that the Brussels Regulation should be applied reflexively and that these proceedings are an abuse of process, the court should, if sufficiently compelling circumstances justify it, exercise its powers to avoid conflicting decisions being reached in these proceedings and the 2011 Ukrainian proceedings. I have already explained why I consider that there are sufficiently compelling circumstances in this case.” [154-155 and 200]