EUPillar Fortress Value Recovery Fund I LLC v Blue Skye Special Opportunities Fund LP Stepstone Acquisition Sarl (In Bankruptcy) v Cerchione [2013] EWHC 14 (Comm)

Summary

On 21st December 2011, the claim form was issued. The claimants were investors. The first defendant, Blue Skye fund, was an English company which held interests in Italian assets, estimated at €200 million. The fourth defendant, Stepstone, was a Luxembourg registered company which held 99.999% of the Fund. The second claimant, ZBS, funded Stepstone by a way of a loan. The Loan Agreement contained an English law and jurisdiction clause. The ZBS loan was secured by a deed of assignment – Stepstone assigned to the first claimant, Fortstress, all of its rights and interests in Blue Skye Fund. The claimants alleged that, through a series of dishonest steps, the defendants diminished the claimants’ rights in the Italian assets. It should be noted that “Stepstone had been declared bankrupt on 28 March 2012 by the Luxembourg court which appointed Mr Rukavina as Official Receiver. […] Mr Rukavina concluded, as had the claimants, that there had been a fraudulent Scheme of which Stepstone was also a victim. Accordingly, he instructed DAC Beachcroft LLP […] to issue Part 20 proceedings. This should have made Article 6(2) relevant. The defendants made applications to strike out the claims or, alternatively, a summary judgment against the claimants. The applications were dismissed. The applicable law was inter alia an important issue to be decided in this context. The English High Court held: “56 ... it matters not whether in the event that the claimants establish their case on the facts, the defendants are liable for a whole series of categories of tort in English law or for an all-encompassing tort in Luxembourg law. I suspect that at trial, the real battleground will be whether the Scheme was, as the claimants allege, a dishonest one designed to prejudice them or, as the defendants contend, entirely honest and above board and that, if the claimants make out their case on the facts and that they have suffered the losses alleged, the court is not likely to be unduly troubled with the question under which tort law regime those losses are recoverable. 57 The fact that, irrespective of the applicable law, if the facts are established, the defendants will be facing liability in tort, whichever system of law applies to the claim in tort, also seems to me to be the answer to the point Mr Wardell made by reference to [12] of the Explanatory Memorandum that determination of the applicable law will facilitate the settlement of disputes. That may well be the case if there is a liability in tort under one system of law but not the other, but it is difficult to see how in the present case determination that one system of law rather than another was applicable would promote settlement. 58 If it were simply a question of determining where any direct damage occurred for the purposes of Article 4(1) then it might be the case that it would be appropriate to decide the issue of the applicable law on a summary basis, but once Article 4(3) is arguably applicable, it does not seem to me to be appropriate to do so. Obviously if the defendants could demonstrate that the claimants had no real prospect of establishing a manifestly closer connection with England the position might be different but, for the reasons set out below, I consider that the claimants do have a real prospect of establishing at trial that the tortious acts and conduct are manifestly more closely connected with England. […] 99 […] the proposed indemnity claim arises from the same facts as the existing contractual claims advanced by the claimants against Stepstone for breaches of the various agreements. [...] 100 However, for the reasons I have given, Article 27 of the Judgments Regulation is not relevant and, for the purposes of Article 15 of the Insolvency Regulation, it is for the English court, applying its own procedural law, to determine whether or not permission to amend the English proceedings should be given. ” [56-58 and 99-100]