Back to the future: Forum non conveniens and Spiliada after Brexit

In Al Assam & Ors v Tsouvelekakis [2022] EWHC 451 (Ch), the High Court considers an application to decline jurisdiction on the basis that it is not an appropriate forum to hear the dispute. The claim was commenced on 1 October 2021. The application, however, was brought after 31 December 2021, the end of the Brexit transition period. For that reason the application was decided by common law principles set out in Spiliada Maritime Corporation v Cansulex Limited [1987] 1 AC 460 rather than by reference to the Brussels Regulation (Recast) on jurisdiction. This decision is a reminder that different considerations will drive these applications in the future.

Background

The claimants in this matter comprise the settlors of two trusts, the beneficiaries of those trusts, the special purpose vehicles incorporated in the British Virgin Islands and Panama through which the assets of the trusts were held. The trusts are established pursuant to Cypriot law. The natural person claimants were domiciled in either Dubai or Cyprus. The defendant provided investment advice to the corporate trustee. The defendant is resident in England.

The substance of the claim is in relation to failed investments in Cypriot companies conducting businesses in Greece. The parties agreed that four of the six claims framed against the Defendant fell to be decided by reference to Cypriot law; two of the claims fell to be decided under Swiss law. While the proceeding is at an early stage, the claimants anticipated that expert evidence will be required from experts who will likely speak English but not Greek. Many, but not all, of the witnesses will speak English. The conduct of the trial will involve interpreters. In light of the complexion of the proceeding, the Defendant sought an order that the claim be permanently stayed as Cyprus, not England, was the more appropriate forum, and that the English courts decline jurisdiction.

Deciding forum applications post-Brexit

The current law in relation to forum applications pre-dates the application of the Brussels regulations on jurisdiction which applied up until the United Kingdom left the European Union. The law is today as it was in 1987: the two-limb test set out by Lord Goff in Spiliada:

Limb 1

The applicant must establish:

1. that another forum has jurisdiction to hear the claim – known as ‘availability’; and
2. an available Court is a more appropriate forum in which to hear the claim.
   

    

   Limb 2

3. that the applicant will obtain justice in that more appropriate forum.

Once the applicant has established that limb 1 is satisfied, the burden of proofs falls on the respondent to show why “justice nevertheless requires that a stay of the English proceedings should not be granted”.

HHJ Jonathan Richards decided that Cyprus was not the more appropriate jurisdiction to hear the claim. Accordingly, the claim remains on foot in the High Court of Justice.

Residence of defendant tips the balance

The Spiliada approach is subject to the proposition that once jurisdiction has been established as of right, it should not be taken away unless there is a clearly more appropriate forum. As the defendant resides in England, the claimants served him as of right. Jurisdiction was properly founded for that reason. While numerous factors did point towards Cypriot courts hearing the matter, they did not outweigh the significance of a properly founded claim. There must be good reasons for an English court to decline to hear a claim commenced as of right.

Unpersuasive factors

The judge was presented with a variety of considerations pointing in favour of a Cypriot court hearing the claim. However, none of these considerations were sufficient to displace the presumption that English jurisdiction, properly invoked, should be exercised. Despite the allegations of deceit and breach of fiduciary duty, the evidence disclosed that the case would be won or lost on the documentary communications exchanged between the parties. The place from which those communications were sent or received was likely to have little bearing on the matter; any Court was as good as another to interpret them. The fact that the claims would be decided by Cypriot law gave slender support to the application as that law was considered to be “broadly similar” similar to English law. Questions of convenience and expense, such as expenses generated by interpreters and experts on foreign law or flights to the jurisdiction were considered marginal and would have to be incurred in any event. In the face of jurisdiction properly grounded in England it was necessary to show some substantial advantage to proceeding in Cyprus.

Key takeaways

The re-emergence of Spiliada is one consequence of the United Kingdom’s departure from the European Union. It starts from the proposition that English jurisdiction should not be declined unless there is a clearly more appropriate forum. By contrast with the Brussels Regulation (Recast), it is substantially less internationalist in its outlook. Spiliada’s re-emergence is likely to make forum challenges more difficult for a reluctant defendant, even in disputes that are truly international.