In a decision which will be of interest to offshore practitioners, the Commercial Division of the High Court has continued the recent judicial trend in the UK of rejecting or striking out foreign claims brought in the UK on jurisdictional grounds through the strategy of joining English anchor defendants.
This strategy has been frequently employed by foreign litigants who are eager to avail themselves of the wide ranging ancillary reliefs available in English proceedings, in particular freezing orders and disclosure orders.
In Tsareva and Ors v Ananyev and Ors, the dispute centred around a claim by the Russian plaintiffs that they were induced to invest in Notes by mis-selling on the part of a Russian bank’s employees to the effect that the Notes were personally guaranteed by the Bank’s super-wealthy owners and / or that they were safe investments. It was alleged that the bank was in a perilous financial state rendering it highly likely the Notes would default (which in due course they did) and that the mis-selling was directed by the owners of the bank in a conspiracy to enrich themselves at the expense of the claimants.
While Mr Justice Baker was sympathetic to the desire of the claimants to obtain compensation for their sizeable losses, he identified the key question as being whether the jurisdiction of the court was available to the claimants for the pursuance of that desire and, if so, whether there should be interim relief by way of freezing orders in support.
As part of his strong judgment, the Judge carefully analysed the role and purpose of the English company defendants in the dispute. The Notes had been issued by one defendant and guaranteed by other defendants, but none of these entities had any connection with England. The Court said it was “quite plain” that the English companies had no involvement at all in the issuance, sale or marketing of the Notes or the receipt or use of their proceeds; they were holding companies in the owners’ majority ownership of the bank and nothing more.
Mr Justice Baker expressed the view that these companies had been joined to give the claimants access to the English jurisdictional gateways on an exaggerated and artificial case as to their alleged involvement. This is an important case in the continuing approach of the English courts to claims which have no real connection with the jurisdiction, which we expect the courts in offshore jurisdictions would follow in similar circumstances.