Imanagement Services Ltd Appellant v [1] Cukurova Holdings A.S. [2] Cukurova (BVI) Ltd Respondents

• Jurisdiction: British Virgin Islands
• Judge: EDWARDS, J.A. [AG.]
• Judgment Date: 06 October 2008
• Neutral Citation: VG 2008 CA 3,[2008] ECSC J1006-3
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: HCVAP 2007/025
• Date: 06 October 2008

[2008] ECSC J1006-3

IN THE COURT OF APPEAL

The Hon. Mr. Justice Denys Barrow, SC Justice of Appeal

The Hon. Mde. Justice Ola Mae Edwards Justice of Appeal [Ag.]

The Hon. Mr. Justice Errol Thomas Justice of Appeal [Ag.]

HCVAP 2007/025

Between:

Imanagement Services Limited

Appellant

and

[1] Cukurova Holdings A.S.

[2] Cukurova (BVI) Limited

Respondents

Appearances:

Mr. Michael Fay and Ms. Claire-Louise Whiley for the Appellant

Mr. John Higham QC and Mr. Christopher Young for the First Respondent.

Stay of proceedings - forum non conveniens - allocation of jurisdiction - BVI claim for tortious acts committed in Russia and elsewhere - jurisdiction established in BVI forum where defendants incorporated - arbitration proceedings brought in Russia under alleged arbitration agreement - jurisdiction of Russia over BVI claim - effect of defendants' undertakings to submit to jurisdiction of Russian courts - proof of whether Russia is a more appropriate forum - burden and standard of proof - the governing law for the tortious acts and double - actionability rule - nature of proceedings pending elsewhere in Russia - the discretion of the judge.

• (1) Cukurova Holdings A.S. (Cukurova) a company incorporated in Turkey brought a claim in tort in the British Virgin Islands (BVI) against 2 BVI companies -Imanagement Services Limited (Imanagement) and Cukurova (BVI) Limited (CBVI) -for conspiracy, abuse of civil process, and malicious falsehood. This claim has its genesis in an alleged forged arbitration agreement between Imanagement and Cukurova pursuant to which Imanagement obtained an award in Russia that became the subject of proceedings before courts in Russia, both before and after Cukorova filed its claim in the BVI High Court. Cukurova is seeking damages, an injunction and 3 declarations: (a) that Imanagement and CBVI fraudulently represented that there was an agreement to arbitrate between Cukurova and Imanagement; (b) that the Arbitral Tribunal's award in Russia was procured by fraud and as such is not binding on Cukurova; (c) that Imanagement and CBVI are stopped, restrained or prohibited from seeking to enforce or obtain any benefit from this Arbitral award.

• (2) Cukurova filed its BVI claim against Imanagement and CBVI on the 14 ^th December 2006. The defendant companies on the 24 ^th January 2007 filed their applications for a stay of proceedings on the grounds that a suit is pending elsewhere in Russia ( lis alibi pendens), and/or that the British Virgin Islands was not the most appropriate forum to determine the action (forum non conveniens). In the High Court Hariprashad-Charles J dismissed the applications, and reserved costs pending the trial and determination of the claim or until further order.

• (3) The appellant in this appeal has challenged the learned judge's finding that Russia is not an available forum for the resolution of the dispute between the parties. Imanagement alleges that the learned judge erred in holding that the fact that the defendants are incorporated in the BVI imposes a "very heavy" burden upon the defendants to establish that the BVI is not the "jurisdiction in which it should be sued" and that the BVI "is certainly the more appropriate forum to try the issues which are before the Court". Imanagement's grounds of appeal also question the judge's findings that the offered undertakings of Imanagement and CBVI to submit to the jurisdiction of the Russian courts were insufficient to confer jurisdiction on those courts, and that the governing law for the BVI claim is BVI law.

• (4) Cukurova has contended in its cross-appeal that the learned judge failed to take into account that to the extent, if any, that the substantive law of Russia was relevant to the claims made by Cukurova against Imanagement and CBVI in this action, there was no evidence before the court that any complex or difficult issues of Russian law were likely to arise or that Russian law was any different from the law of the British Virgin Islands. Cukurova urged that since CBVI has not sought to appeal, then Cukurova's action against CBVI will continue in the BVI, thereby making it unjust and oppressive to stay the proceedings herein against Imanagement only upon its application, thereby effectively requiring Cukurova to proceed against each co-conspirator in two separate jurisdictions.

Held: dismissing the appeal with prescribed costs to Cukurova under CPR 65.13(b) which will await the determination of costs below under CPR 65.5 (2) unless the parties to the appeal agree otherwise.

• (1) The role of the appellate court in forum non conveniens matters is restricted to ensuring a correct approach in principle in the judge's exercise of discretion. The circumstances in which this court will interfere with the judge's exercise of discretion were stated by Lord Brandon in Abidin Daver 1 to be : (i) where the judge has misdirected himself/herself with regard to principles in accordance with which his/her discretion had to be exercised; (ii) where the judge in exercising his/her discretion had taken into account matters which he/she ought not to have taken into account or failed to take into account matters which he/she ought to have taken into account; (iii) where the judge's decision is plainly wrong.

  Case applied: Abidin Daver [1984] 1A.C. 398 at page 420 paras A to C.

• (2) Even if the learned judge was inconsistent in her findings concerning the jurisdiction of the Russian courts over the BVI claim and undecided as to where the action for fraud was committed, in relation to the alleged conspiracy and the guarantee agreement, it seems arguable on the pleadings that the injury took place in Turkey where Cukurova is incorporated; and pecuniary damage was suffered in Russia, Switzerland and the Dutch Antilles in defending the arbtration claim and enforcement proceedings. Although the most significant elements of the other tortious acts may have occurred in Russia it was not of much significance that the judge left undecided the matter as to whether the Russian courts would have jurisdiction if the injury occurred on the territory of the Russian Federation as she did go on to consider all the other circumstances of the case and apply the other forum non conveniens principles.

• (3) The learned judge did not err in concluding that the defendants' undertakings were not sufficient to confer jurisdiction upon the Russian courts, as the Russian law required the agreement of Cukurova also.

• (4) In determining whether or not there is some other available forum having competent jurisdiction which is the appropriate forum for the trial of the action the authorities establish with clarity a burden of proof on the defendant and the nature and quality of what is to be proved; and it is doubtful that they have established any formulated standard of proof or any legal principle as to the degree of the standard of proof or the extent of the burden of proof. The learned judge's use of the words "very heavy" to describe the burden of proof when considering that Cukurova had established jurisdiction in the forum of Imanagement's incorporation may be perceived as giving impermissible weight to Cukurova's right to sue in the BVI.

  Cases applied: Spiliada Maritime Corporation v Cansulex Limited [ 1987] 1 A.C. 460; IPOC International Growth Fund Limited v L V Finance Group Limited others: BVI Civil Appeal Nos. 20 of 2003 and 1 of 2004 (unreported) delivered 19/9/05, para 27 Per Gordon J.A.

  Cases considered: Banco Atlantico S.A. v The British Bank of the Middle East [1990] 2 Lloyd's Rep (C.A. 504, 510; Bitech Downstream Ltd v Rinex Capital Inc. and another BVHC 2002/0233: paras 26–27 Per Rawlins J (as he then was).

• (5) The burden of proof rests on the party asserting that foreign law differs from BVI law, or that the foreign law is complex or presents difficult issues, and in the absence of such proof there is a presumption that foreign law and BVI law are the same. The learned judge inaccurately stated that the governing law for these tortious acts is BVI law although she was entitled to conclude that any governing Russian law was no different from BVI law.

• (6) In weighing the factors which fell in favour of a trial in Russia against the factors which fell in favour of a trial in the BVI the learned judge did not explicitly mention the factors concerning the familiarity of the Russian courts with the arbitration dispute but she implicitly took these factors into account at paragraphs 107 and 108 of her judgment. The main issues before the Arbitral Tribunal in Russia were whether there was an arbitration agreement and whether there was a breach of the agreement which is clearly different from the issues in the BVI claim. The learned judge cannot be faulted for concluding that the Moscow court had not ruled on the question of forgery after considering whether concurrent proceedings existed at the material time, and whether refusal of a stay would produce the undesirable consequences of two conflicting judgments of the Russian and BVI courts or create a situation of res judicata or issue estoppel in the latter case. Although the alleged tortious acts were committed in the course of alleged contractual relations the acts have a separate legal existence from the contractual obligations and breaches thereof. Accordingly there is no error of principle that would serve to vitiate the learned judge's ultimate conclusion that the BVI is the most natural and appropriate forum to try this claim in tort.

EDWARDS, J.A. [AG.]

1 The defendants filed applications for a stay of the action for conspiracy and fraud brought by the claimant against them. The grounds of their applications were that a suit is pending elsewhere in Russia ( lis alibi pendens), and / or that the British Virgin Islands ( BVI) was not the most appropriate forum to determine the action ( forum non conveniens). The learned trial judge...