Summary
The claimants, Blue Tropic and Coppella, were companies based in the British Virgin Islands. The defendant, Mr Chkhartishvili, was domiciled in the UK.
The claimants issued proceedings in England on 8th February 2013.
It was alleged that the defendant had arranged for transfer of assets belonging to Blue Tropic and Coppella to be transferred to entities associated with the defendant.
The defendant argued that he was the beneficial owner of the companies.
On 2nd August, Mr Chkhartishvili issued proceedings in the BVI.
In England, the defendant challenged the jurisdiction of the English court on the ground of Article 22, and requested stay of the English proceedings. Master Marsh dismissed both applications.
This was an appeal against the decision of Master Marsh rendered on 16th December 2013. His decision was affirmed by the High Court. Mr Justice Newey held:
“The issue as to the beneficial ownership of Blue Tropic and Coppella clearly goes to the heart of the proceedings. The point is crucial to whether, as is pleaded in the draft defence, Mr Kavtaradze was entitled to regard instructions from Mr Chkhartishvili as “representing the instructions of” Blue Tropic and Coppella and/or of “the beneficial owner of and/or individual responsible for the assets of” the companies. In practice, success by Mr Chkhartishvili on the question could anyway be expected to render the pursuit of the proceedings pointless from the point of view of Mr Patarkatsishvili’s estate and to put Mr Chkhartishvili in a position to bring them to an end. Establishing that he was the beneficial owner of Blue Tropic and Coppella might possibly also enable Mr Chkhartishvili to impugn the board decisions to bring and pursue the proceedings. Even, however, if that is so, it does not render the validity of the decisions the “principal subject matter” of the proceedings. It will be a rare case, I suspect, where the “principal subject matter” of proceedings does not relate to the substance of the claim but to whether it has been properly brought. At any rate, I do not consider the present case to be an example. While the validity of the board decisions might be affected by the “principal subject matter” of the proceedings, it is not itself the “principal subject matter”.
25 I should perhaps add that the issue as to beneficial ownership cannot properly be characterised as purely factual. Mr Crow was inclined to refer to the dispute as a factual one, and he stressed that art.22(2) requires the court to focus on the legal questions. However, “beneficial ownership” is a legal concept, albeit that the beneficial ownership of Blue Tropic and Coppella plainly depends on the facts as well as the relevant law (be it Georgian or BVI).
[…]
28 […] The beneficial ownership of the shares in Blue Tropic and Coppella is important in the context of the claims advanced by the claimants; the entries in the relevant share registers are not. Beneficial ownership may possibly be key to both the claimants’ allegations and whether the share registers should be rectified, but that does not make the validity of the entries in the registers part of the subject matter of the case, let alone its “principal subject matter”. As the Master pointed out, it is “no part of (Mr Chkhartishvili’s) case to say that the entries in the share registers were made incorrectly or that the wrong shareholder was recorded in the registers”.” [24-25 and 28]