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COURT OF APPEAL CLARIFIES PROPER FORUM IN MULTI-PARTY CONSPIRACY CLAIMS

On 26 November 2019, the Court of Appeal gave judgment in ED&F Man Capital Markets Ltd v Straits (Singapore) Pte Limited [2019] EWCA Civ 2073. It clarifies when England will be the proper forum in multi-party conspiracy claims against defendants based in different jurisdictions. It contains a useful analysis of the recent Supreme Court judgment in Vedanta Resources plc v Lungowe [2019] UKSC 20, [2019] 2 WLR 1051.

The claimant (‘EMCM’) entered into agreements (containing English exclusive jurisdiction clauses) with the first and second defendants for the sale of metals. EMCM claimed to be the victim of a US$264 million fraud committed by those defendants, in conspiracy with others, including the tenth defendant (‘Straits’) a Singaporean company.

EMCM brought a pre-action disclosure application against Straits in Singapore, which was later dismissed. EMCM later brought proceedings in England against the first two defendants and sought to join the other defendants, including Straits. All other defendants submitted to the jurisdiction, but Straits challenged it.

The only disputed issue on its challenge was whether England was the proper forum. The central argument was whether the claim against Straits should be tried in England, rather than Singapore, to avoid multiple proceedings and a risk of irreconcilable judgments. Straits argued that this factor was no longer critical, because, it said, the Supreme Court’s judgment in Vedanta had changed the law.

In Vedanta, Zambian citizens injured by emissions from a Zambian mine had sued the Zambian corporate owner of the mine and its English parent company. The Supreme Court held that Zambia was the natural forum and the claimants could not use the claim against the English company to force the whole claim out of Zambia. The claimants pointed to the risk of irreconcilable judgments, but they had brought this on themselves by choosing to sue in England. The aim of avoiding irreconcilable judgments was not a ‘trump card’ which displaced the natural forum. The English company had also undertaken to submit to the Zambian court if the claim were brought there.

Straits argued that, in light of Vedanta, EMCM could not rely on the risk of irreconcilable judgments to avoid suing it (Straits) in Singapore, rather than England – in particular where EMCM had chosen to bring pre-action proceedings against Straits in Singapore and then changed its mind and sued Straits in England.

The Judge and the Court of Appeal disagreed. Vedanta had not changed the law. The principle remained the same: the risk of irreconcilable judgments was an important, but not the sole, factor in the decision on proper forum. Unlike the claimants in Vedanta, EMCM had not brought the risk on itself by choosing to sue in England – it had to sue the first and second defendants in England under the exclusive jurisdiction clauses. While EMCM had decided to bring the pre-action application against Straits in Singapore, EMCM had never brought substantive proceedings against it there and had not unequivocally elected to sue there. England was the proper forum and the jurisdiction challenge was dismissed.

As the Court of Appeal makes clear, in multi-party conspiracy claims there should preferably be a single composite forum in which claims against all defendants can be tried. The risk of irreconcilable judgments looms large – but a claimant cannot use it to remove a case from its natural foreign forum for tactical reasons. An English exclusive jurisdiction clause binding some conspirators is an important way to show that England is the proper forum for a claim against all of them. Claimants should also decide on the proper forum at an early stage: EMCM’s pre-action application against Straits in Singapore did not compromise the English proceedings, but a substantive claim against it could well have done so.

Alexander Halban (2009 call) practises in international commercial and civil fraud disputes. He has considerable experience of jurisdiction and other conflict of laws issues, including cases based on foreign law.

Posted: 27.11.2019 at 16:53
Tags:  Comments  Commercial Law  Articles
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