Direct actions against liability insurers. Port of Assens v Navigators Management (UK) Ltd – the sequel.


Following the Court of Justice’s interpretation of art. 13(5) of the Brussels I Regulation, reported in this blog on July 13 2017, the matter came back before the Danish Supreme Court. The CJEU had found that an agreement on jurisdiction in an agreement between an insurer and a policyholder is not binding on an injured party who wishes to bring an action directly against the insurer before its home court or before the courts for the place where the harmful event occurred. On 9 October 2017 the Danish Supreme Court found that the CJEU judgment did not contain any reservations to the effect that, for this to apply, the injured party must be regarded as an economically or legally weaker party in this particular case.

Accordingly, under the Brussels I Regulation the Port of Assens would be entitled to bring an action before the Danish courts, if it was permitted to bring an action directly against the insurance company under the national rules applicable to the case. The claim was most closely linked to Denmark so this issue was to be settled under Danish law. Section 95(2) of the Danish Insurance Contracts Act thus applied and the Port of Assens was correct in bringing the action in Denmark. The Supreme Court remitted the case to be heard on its merits before the Maritime and Commercial Court.

Judgment creditors can celebrate in England — UK Supreme Court.

English courts are not very keen on judgment debtors who spirit assets away out of sight of our enforcement officers. The Supreme Court today showed they meant business when faced with this scenario. They confirmed in JSC BTA Bank v Khrapunov [2018] UKSC 19 that anyone who in England does anything to help a debtor do this can find himself at the receiving end of a civil claim from the judgment creditor.

Mukhtar Ablyazov, a colourful Kazakh politician, dissident and businessman who used to run the biggest bank in Kazakhstan, was successfully sued here by the bank for the moderate sum of US$4.6 billion. The court issued the usual congeries of worldwide freezing orders in aid of enforcement, which were disobeyed. In 2012 Mr Ablyazov, facing the prospect of time inside for contempt, fled England and continued with a large degree of success to move his assets around to make them inaccessible.

The Ablyazov cupboard being bare, the bank then turned to an associate, one Ilyas Khrapunov, who had allegedly agreed in England to help Mr Ablyazov to cause his assets to vanish and later done just that. It sued Mr Khrapunov in tort, alleging that the above acts amounted to an unlawful means conspiracy. Mr Khrapunov applied to strike, arguing that if (as is clear) contempt of court cannot give rise to damages, the bank shouldn’t be allowed to plead conspiracy to get a similar remedy by the back door. He also argued that in any case he was safely tucked up in Switzerland; that the assets were outside England; and that the mere fact that he had conspired in England to make those assets disappear did not take away his right under the Lugano Convention to be sued in his country of domicile.

Mr Khrapunov lost all the way in the Supreme Court. There was no reason why the fact that he had acted in contempt of court should not count as unlawful means for the purposes of conspiracy. Furthermore, the jurisprudence under the Brussels I / Lugano system made it clear that for the purpose of non-contractual liability, where jurisdiction laywas “either in the courts for the place where the damage occurred or in the courts for the place of the event which gives rise to and is at the origin of that damage”, an agreement amounted to an ” event which gives rise to and is at the origin of that damage.”

Good news, in other words, for judgment creditors: bad news for friends of fugitive tycoons.

Non-exclusive jurisdiction under Brussels I Recast: a logical but odd result.

Cockerill J’s decision last month in UCP Plc v Nectrus Ltd [2018] EWHC 380 (Comm) may well encourage some lawyers to groan further about the effects of EU law on questions of jurisdiction. The background was a corporate dispute of spectacular dreariness: suffice it to say Nectrus alleged UCP owed it several million, while UCP had a claim for damages against Nectrus arising out of the same events. The relevant contract contained a non-exclusive English jurisdiction clause. Nectrus sued in the Isle of Man: a month or so later UCP sued in England. Nectrus sought to argue forum non conveniens to remove the hearing to Douglas. UCP argued that the English court not only should not but could not decline jurisdiction. It observed that the court had jurisdiction under Art.25 of Brussels I Recast, and that the limited lis alibi pendens provisions in Arts.33 and 34 were not applicable (since they only affected jurisdiction under Arts.4, 7, 8 and 9 and not jurisdiction by virtue of agreement). Cockerill J agreed, following dicta from Popplewell J in IMS SA v Capital Oil & Gas Industries [2016] 4 WLR 163  and the IISTL’s own Peter Macdonald-Eggers QC in Citicorp Trustee Company Ltd v Al-Sanea [2017] EWHC 2845 (Comm). Logical, certainly, in the light of the acepted interpretation of Brussels I. But it does have the effect that a non-exclusive jurisdiction clause now means not so much “You can, but don’t have to, sue in England” as “You can sue me outside England, but if you do I can still insist on proceedings taking place here.” Not quite the same thing, most lawyers will (one suspects) conclude.

“Everywhere you go, you can be sure with Shell.” No arguable duty of care in respect of Nigerian oil pollution leaks.


The issue of a parent company’s potential direct liability in tort in respect of acts of one of its subsidiary companies has recently come before the Court of Appeal in Okpabi v Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd , [2018] EWCA Civ 191. The Nigerian claimants suffered from harm from pollution arising from oil leaks from Nigerian land pipelines due to the illegal process of “bunkering” by which oil is stolen by tapping into the pipelines.

The claimants wanted to sue  Shell’s Nigerian subsidiary SPDC, who operated the pipelines, in the English courts rather than in Nigeria. To this end they sued the English holding company, Royal Dutch Shell (‘RDS’), in the English courts. RDS would now serve as an ‘anchor defendant’ and the claimants obtained leave to serve SPDC out of the jurisdiction under para 3.1 of Practice Direction 6B, on the ground that there was between the claimant and RDS a real issue which it was reasonable for the court to try and the claimant wished to serve SPDC as a necessary or proper party to that claim.

RDS applied under CPR Part 11(1) for orders declaring that the court had no jurisdiction to try the claims against it, or should not exercise such jurisdiction as it had. At first instance Fraser J found that there was no arguable duty of care owed by the parent company Royal Dutch Shell Plc to those affected by the operations of its subsidiary in Nigeria.( [2017] EWHC 89 (TCC), noted in this blog on 2 February 2017. The governing law would be that of Nigeria, but the issue was decided under English law, because the legal experts for the parties were agreed that the law of Nigeria would follow, or at least include as an essential component, the law of England in this respect.

The Court of Appeal has now upheld the decision by a 2-1 majority, Sales LJ dissenting. The Court of Appeal applied the three stage Caparo Industries v Dickman test for assessing novel duties of care[1990] 2 AC 605 (HL) which set out three requirements, all of which had to be satisfied. (1) Was it foreseeable that if the defendant failed to take reasonable care, the plaintiff would be injured by the acts or omissions of the defendant (the foreseeability factor)? (2) Was there a relationship between the plaintiff the defendant characterized by the law as one of “proximity” or of being “neighbours” one to another (the proximity factor)? (3) as a matter of legal policy it would be fair and just to impose a duty of care on the defendant (the policy factor)? The duty of care argued for by the claimants foundered on the proximity requirement.

The claimants’ based their case on the duty of care owed by RDS to them on the fact that

“… [RDS] exerts significant control and oversights over [SPDC’s] compliance with its environmental and regulatory obligations and has assumed responsibility for ensuring observance of proper environmental standards by [SPDC] in Nigeria. [RDS] carefully monitors and directs the activities of [SPDC] and has the power and authority to intervene if [SPDC] fails to comply with the Shell Group’s global standards and/or Nigerian law.”

The claimants relied on five main factors to demonstrate RDS’s arguable control of SPDC’s operations: (1) the issue of mandatory policies, standards and manuals which applied to SPDC, (2) the imposition of mandatory design and engineering practices, (3) the imposition of a system of supervision and oversight of the implementation of RDS’s standards which bore directly on the pleaded allegations of negligence, (4) the imposition of financial control over SPDC in respect of spending which, again, directly relevant to the allegations of negligence and (5) a high level in the direction and oversight of SPDC’s operations.

Having reviewed the evidence submitted by the claimants Simon LJ concluded that none of the claimants’ five factors, either individually or cumulatively demonstrated a sufficient degree of control of SPDC’s operations in Nigeria by RDS to establish the necessary degree of proximity. There was no arguable case that RDS controlled SPDC’s operations, or that it had direct responsibility for practices or failures which were the subject of the claim. Simon LJ noted an important distinction between a parent company which controls, or shares control of, the material operations on the one hand, and a parent company which issues mandatory policies and standards which are intended to apply throughout a group of companies in order to ensure conformity with particular standards. “The issuing of mandatory policies plainly cannot mean that a parent has taken control of the operations of a subsidiary (and, necessarily, every subsidiary) such as to give rise to a duty of care in favour of any person or class of persons affected by the policies. [88]”.

A similar point was made by Sir Geoffrey Vos. The issue of mandatory policies, standards and manuals were of a highlevel nature and did not indicate control; control rested with SPDC which was responsible for its own operations.

“The promulgation of group standards and practices is not, in my view, enough to prove the “imposition” of mandatory design and engineering practices. There was no real evidence to show that these practices were imposed even if they were described as mandatory. There would have needed to be evidence that RDS took upon itself the enforcement of the standards, which it plainly did not. It expected SPDC to apply the standards it set. The same point applies to the suggested “imposition” of a system of supervision and oversight of the implementation of RDS’s standards which were said to bear directly on the pleaded allegations of negligence. RDS said that there should be a system of supervision and oversight, but left it to SPDC to operate that system. It did not have the wherewithal to do anything else.[205]”


Opkabi is one of three transnational tort claims involving attempts to sue a foreign subsidiary company using the English parent company as an ‘anchor’ defendant. In Lungowe v Vedanta and AAA v Unilever the court accepted that there was an arguable case that the anchor defendant owed a duty of care, although in AAA the claim foundered on the lack of foreseeability of the harm suffered by the claimants at the hands of third parties in the post-election violence in Kenya after the 2007 elections. An appeal is due to be heard later this year.

As a sidenote, in similar proceedings brought against SPDC in the Netherlands, using RDS as an ‘anchor defendant’, the Dutch Court of Appeal in December 2015 concluded that the claims against RDS were not bound to fail. They reasoned.

“Considering the foreseeable serious consequences of oil spills to the local environment from a potential spill source, it cannot be ruled out from the outset that the parent company may be expected in such a case to take an interest in preventing spills (or in other words, that there is a duty of care in accordance with the criteria set out in Caparo v Dickman [1990] UKHL 2, [1990] 1 All ER 56), the more so if it has made the prevention of environmental damage by the activities of group companies a spearhead and is, to a certain degree, actively involved in and managing the business operations of such companies, which is not to say that without this attention and involvement a violation of the duty of care is unthinkable and that culpable negligence with regard to the said interests can never result in liability.”


The claimants’ solicitors in Opkabi, Leigh Day, have indicated their intention to apply for leave to appeal to the Supreme Court.



Carry on suing in England – at least if you’re suing a non-European

In matters of tort foreign defendants domiciled in the EEA are reasonably well-protected from the exorbitant jurisdiction of the English courts. Both Brussels I Recast and Lugano II limit jurisdction to cases where where the act leading to liability, or the harm done by it, happened in England: furthermore, Euro-law makes it clear that the reference to harm here is fairly restrictive, referring only to direct harm and not to the financial effects of it, such as the straitening of an English widow’s circumstances following a wrongful death abroad.

By contrast, there is no such luck for defendants domiciled outside the EEA. For some time conflicts lawyers have remarked that English claimants, especially personal injury claimants, find it remarkably easy to establish jurisdiction against them. This is because CPR, PD6B 3.1(9), allows service out not only where damage results from an act “committed … within the jurisdiction” but also in all cases of damage “sustained …within the jurisdiction.”, and in a series of cases such as Booth v Phillips [2004] 1 WLR 3292 and Cooley v Ramsey [2008] ILPr 27 this has been held to cover almost any loss, even consequential, suffered in the jurisdiction. And in Four Seasons Holdings Inc v Brownlie [2017] UKSC 80 the Supreme Court by a majority (Lords Wilson and Clarke and Lady Hale vs Lords Sumption and Hughes) has now weakly upheld this distinction.

International law enthusiasts will know that this case arose out of a car accident in Egypt in which the late Prof Ian Brownlie was tragically killed and his widow was injured. The actual decision was in the event a foregone conclusion: by the time the case reached the Supreme Court it was clear that the defendants, the franchising company behind the Brownlies’ Egyptian tourist hotel which had organised the fatal car ride, had never contracted with the Brownlies and was not liable in tort for the acts of the hotel itself. Nevertheless, the majority in the Supreme Court, doubting the decision of the Court of Appeal on this point, made it clear that, while not finally deciding the issue, they were not prepared to condemn the older authorities. It seems likely that future cases will follow their lead.

One further point. Lord Sumption and Lady Hale made the point that the decision whether a contract was made in England, another of the “gateways” in non-EEA cases (see CPR, PD6B 3.1(6)), was in the light of cases like Entores v Miles Far East Corpn [1955] 2 QB 327, pretty arbitrary and could do with a look from the Rules Committee. They were right. Let’s hope something gets done.

Moral: don’t arbitrate in Russia if you can help it

Decided eight weeks ago but just up on Bailii, the arbitration decision in Maximov v Open Joint Stock Company “Novolipetsky Metallurgichesky Kombinat” [2017] EWHC 1911 (Comm) is worth a brief note. Having sold a company to a buyer and faced a dispute as to the price, Nikolai Maximov got an arbitral award from a Russian tribunal for some 8 billion roubles (then about $250 million). A Russian court then proceeded at the buyer’s request to annul the award on very doubtful grounds, including those not raised by the parties. Two appeals failed. The seller sued in England under the New York Convention and at common law to enforce the award: to the buyer’s plea that the award had been set aside, the seller asked the court not to enforce that judgment on the basis that it must have been biased. Despite very grave suspicions about the propriety, let alone the correctness, of the Russian judgment, and despite evidence that the Russian judicial system left a great deal to be desired, especially when (as here) the Russian government had a strong interest in reducing or eliminating the award, the judge, Sir Michael Burton, was clear that this was not enough. Perverse and very suspicious it might be, but even here his Lordship was unable to draw the inference that the only explanation was bias.

Two further points for future reference. At [16] the judge expressed the view that a judgment given on one point out of evident bias would probably not be upheld even if there was another ground for the judgment that was not successfully challenged on that ground. And at [64] he strongly doubted a subsidiary argument by the defendant that once a court with jurisdiction had annulled an award that was an end of the matter however biased the court, since there would simply be nothing to enforce. And rightly so, we suggest: apart from anything else, the moral hazard that such a rule would engender is fairly obvious.

As we said at the beginning, arbitrate in Russia very much at your own risk.


EU Member States urged to ratify/accede to 2010 HNS Convention by 6 May 2021.


COUNCIL DECISION (EU) 2017/769 of 25.4.2017 authorises Member States to ratify or accede to the 2010 Protocol of the HNS Convention with the exception of the aspects related to judicial cooperation in civil matters. The decision also provides that they “shall endeavour to take the necessary steps to deposit the instruments of ratification of, or accession to, the Protocol of 2010 within a reasonable time and, if possible, by 6 May 2021”.


A parallel COUNCIL DECISION (EU) 2017/770 contains a similar authorization in relation to those aspects related to judicial cooperation in civil matters, subject to depositing the standard declaration preserving the effect of the Brussels I (Recast) Regulation, the Lugano Convention, and the 2005 agreement between the EU and Denmark in respect of judgments covered by the 2010 HNS Protocol.

Want to stymie a judgment creditor? It’s not as easy as you think.

English courts aren’t best pleased when they give judgment, only to find someone busily trying to frustrate the claimant’s efforts to collect on it. Last year, in JSC BTA Bank v Ablyazov [2016] EWHC 230 (Comm) (noted here on this blog), Teare J very rightly decided that an elusive judgment debtor’s pal was liable in tort to the judgment creditor when he helped the debtor shuffle his assets around in an elaborate “now you see them, now you don’t” exercise. Yesterday, in Marex Financial Ltd v Garcia [2017] EWHC 918 (Comm), Knowles J carried on the good work. Marex had got judgment in England for some $5 million, plus the usual freezing orders, against a couple of BVI companies controlled by SG, a globetrotting businessman. SG thereafter took care to avoid the UK, instead taking steps to spirit away the English assets of his companies to a web of entities in far-flung jurisdictions where it was difficult, if not impossible, for Marex to track them down. Marex thereupon sought permission to sue SG out of the jurisdiction, alleging a tort committed in England. What tort? In so far as SG might be deemed to have acted with the companies’ consent, inducement of breach of contract (i.e. the implicit contract by the companies to pay the judgment debt); and in so far as the companies hadn’t consented and hence he was in breach of duty to them, causing loss to Marex by unlawful means. Knowles J agreed with both limbs of the argument, swiftly disposed of a forum non conveniens point, and allowed service out, thus giving Marex at least a decent chance of getting paid.

Good news, therefore, to judgment creditors. Moreover, while this was a non-EU service out case, note that so long as any relevant monkey-business took place in England, its reasoning will apply equally to EU and EEA-based defendants under Brussels I and Lugano, because the tort “gateway” has been interpreted similarly in both cases since Brownlie v Four Seasons Holdings Inc [2015] EWCA Civ 665; [2016] 1 W.L.R. 1814.

So good luck and good hunting.

New York judgment against you? England expects you to pay up, in pretty short order.

A refreshing no-nonsense approach from Teare J today in Midtown Acquisitions LP v Essar Global Fund Ltd [2017] EWHC 519 (Comm) to a guarantor desperately trying to avoid enforcement in London of a judgment given against it in Manhattan. EGF had guaranteed a facility given to Essar Steel Minnesota LLC, a now-very-bankrupt former subsidiary of monster Indian conglomerate Essar Global. When Essar Minnesota defaulted, EGF  confessed liability ; a New York judge duly signed judgment against it in the modest sum of about $172 million. EGF applied to vacate the judgment: meanwhile the creditor, Midtown, wasted no time and applied to enforce it in England.

Teare J in quick succession demolished four arguments hopefully raised against enforcement.

(a) The New York order was based on a confession of liability, with no action technically brought. Irrelevant, he said: it was still a judgment.

(b) The outstanding application to vacate meant that the judgment wasn’t final. Nonsense: it was immediately binding as res judicata in New York unless and until set aside, and that sufficed to make it enforceable in England.

(c) The judgment was on admissions, with neither party arguing on the law or the facts. So what? It was still a judgment on the merits — i.e. whether EGF had to pay $172 million.

(d) To a half-hearted pleading of fraud, Teare J answered shortly that only a showing of conscious and deliberate dishonesty would do to establish this, and none had been pleaded or shown.

In addition he was prepared to enforce the judgment on the basis of a clause under which “The Guarantor agrees that a judgment in any such action, suit or proceeding may be enforced in any other jurisdiction by suit upon such judgment … The Guarantor hereby waives any objection it may now or hereafter have to the laying of the venue of any such action, suit or proceeding, and … further waives any claim that any such action, suit or proceeding brought in any of the aforesaid courts has been brought in any inconvenient forum.”

The only indulgence he allowed was a short stay of execution until one week after the result of the application to vacate: unless the application was successful, execution would then follow automatically.

In our view this judgment is to be welcomed and should be widely publicised. If a creditor has a clear claim, the fact that it got judgment on it quickly, with no argument, ought to be a factor in favour of, rather than against, its being immediately able to enforce that judgment here. Furthermore, delaying tactics such as applications to vacate should generally not be allowed to derail the process. The message is simple: even outside the EU context, bring your judgments to London, and we’ll enforce them unless the other side produces a pretty convincing reason why we shouldn’t.