Commercial judge rejects two jurisdiction pleas in £85m unlawful conspiracy action

About this case:

• Citation:
  [2024] CSOH 86
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Sandison

Mex Group Worldwide Ltd maintained that 12 defenders had engaged in an unlawful means conspiracy directed at injuring its interests by causing the eleventh defender, Mex Securities SARL, to seek to renege on a binding agreement. The third, eighth, and ninth defenders, none of whom were domiciled in Scotland, stated various objections to the jurisdiction of the court.

The case was heard by Lord Sandison in the Outer House. Dean of Faculty, Roddy Dunlop KC, and J Brown, advocate, appeared for the pursuer. RG Anderson, advocate, appeared for the fourth and ninth defenders, and K Young, advocate, for the eighth defender. The third defender appeared as a party litigant, with the remaining defenders not appearing.

Not closely connected

The pursuer’s claimed losses amounted to £85 million, primarily consequential on the failure of a planned bond issue said to be the fault of the defenders. In relation to the third and eighth defenders, declarator was sought that they caused a commercial inducement to be paid to the third defender, Colm Smith, by the transfer of investment funds from the ninth and tenth defenders, comprising the Von der Heydt company group, in the sum of at least $7m, to the eighth defender, CSM Securities SARL. This was done to induce Mr Smith to cause Mex Securities SARL to seek to renege on a supposed agreement between it on the one hand and Mex Clearing Limited and the pursuer on the other.

It was submitted for the eighth defender that the claim against it was not so closely connected with the claims against those defenders domiciled in Scotland that it was expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. At its highest, the claim against it characterised it as a mere conduit rather than a wrongdoer. The third defender added that, in any event, Scotland was forum non conveniens in respect of the dispute.

Regarding the ninth defender, the pursuer narrated that on 17 May 2020 the parties entered into a Deed of Affirmation in which the ninth defender undertook various matters. On 2 December 2020 the fourth defender indicated that it had become necessary for the ninth defender to withdraw funds from certain notes issued by the eleventh defender, in anticipatory breach of the Deed.

The pursuer claimed that this gave rise to a substantial claim for damages for breach of the ninth defender’s obligations and one of the aims of the alleged conspiracy was to attempt to insulate the ninth defender from any such claim by fraudulently misrepresenting its reasons for requiring to withdraw the funds in question.

Counsel for the ninth defender submitted that the court had no jurisdiction to hear claims based on a breach of, or non-contractual claims in relation to, the Deed of Affirmation. If the Deed was relevant to the claim, it was subject to a jurisdiction clause which prorogated the jurisdiction of the courts of either Luxembourg or Germany.

Touchstone of liability

In his decision, Lord Sandison began with the eighth defender: “It is certainly not possible to say that the pursuer’s claim against the eighth (or any other) defender will succeed at proof, but more to the point for present purposes, nor is it possible to say that it is bound to fail. Put another way, it is not inconceivable that the evidence to be led in support of the pursuer’s averments will allow or even compel the inference to be drawn that the eighth defender was a participant in the alleged conspiracy and is jointly and severally liable with the other conspirators for the damage caused by the conspiracy to the pursuer.”

He continued: “The precise role played by each conspirator, whether active or passive, in itself wrongful or lawful, is not the true touchstone of liability. In these circumstances the eighth defender is in no different position from the other defenders for the purposes of assessing the application of the jurisdictional test.”

On the plea of forum non conveniens, Lord Sandison said: “The allegations which the pursuer wishes to have tried have very little substantial connection with Luxembourg, and although it might be convenient in the narrow sense of that word for the third (and eighth) defenders to be sued there as the place of their domicile, that does not render it a clearly more appropriate forum than Scotland.”

He went on to add: “Most tellingly of all, however, given that the anchor defenders are being, and will continue to be, sued in Scotland, any declinature of jurisdiction over the third defender here would result in the prospect of irreconcilable judgments, the potential for which in itself renders those alternatives clearly inappropriate.”

He concluded on the pleas of the ninth defender: “It is clear that this court has no jurisdiction to entertain any claim or dispute arising out of or in connection with the Deed of Affirmation. It does not matter that the present action is not founded on that Deed, or that reference to it is said merely to form part of the background to the pursuer’s actual claim. The applicable yardstick is precisely that set out in the clause in question itself; put at its widest, is the court being asked to decide a matter of dispute arising in connection with the Deed? The existence and terms of the Deed are not matters of controversy between the pursuer and the ninth defender and so do not fall within the scope of the prorogation clause.”

Lord Sandison therefore repelled the pleas-in-law of the third and eight defenders relating to jurisdiction but sustained the ninth defender’s plea-in-law. The case will continue to a diet of debate.