An English court had jurisdiction, under the European Convention on Civil Jurisdiction and Judgments, to hear an action brought by a Spanish company against, among others, its own directors and officers, notwithstanding the existence of legal proceedings involving the same parties in Spain, because the English court was the "first seised" and the case was concerned with alleged fraud upon, rather than "decisions of the organs of", the companies concerned.
The Court of Appeal dismissed appeals by all but one of 22 defendants to an action begun on 14 April 1993 by the plaintiffs, Grupo Torras SA, a Spanish company, and Torras Hostench London Ltd, its London subsidiary, against the refusal of Mr Justice Mance to set aside or stay the action on the ground that it should instead be tried in Spain.
Michael Briggs QC, Terence Mowschenson, Jeffrey Onions and John McCaughran (Peters & Peters; Simmons & Simmons; Lawrence Graham; and Ashurst Morris Crisp), variously, for the defendants; Gordon Pollock QC, Andrew Popplewell and Paul Wright (Baker & McKenzie) for the plaintiffs.
Lord Justice Stuart-Smith, giving the judgment of the court, said the plaintiffs claimed damages for fraudulent conspiracy and breach of duty and monies alleged to be due under constructive trust. The defendants included directors, officers and professional advisers of the plaintiff companies and companies allegedly used to carry out the frauds.
The defendants argued that the "object" of the proceedings was "decisions of [the] organs" of Grupo Torras, so the courts of Spain, being the contracting state in which Grupo Torras had its seat, had exclusive jurisdiction pursuant to article 16(2) of the Convention scheduled to the Civil Jurisdiction and Judgments Act 1982 as amended by Order in 1990 (SI 2591).
By article 16(2) "proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the decisions of their organs, the courts of the contracting state in which the company, legal person or association has its seat" should have "exclusive jurisdiction, regardless of domicile".
The defendants argued that the proceedings were principally concerned with the decisions of Grupo Torras, its officers and shareholders, and consequently the Spanish courts should have exclusive jurisdiction.
In their Lordships' judgment, The subject matter of this action was not decisions of the organs of Grupo Torras but the frauds which the defendants were alleged to have practised on the plaintiff companies. Accordingly, article 16(2) did not debar the English court from assuming jurisdiction.
The defendants also argued for the action to be stayed under article 21 of the Convention, because the proceedings involved "the same cause of action" and were "between the same parties" as proceedings already pending before the Spanish courts, and the English court was not the "first seised".
The defendants relied on two sets of Spanish proceedings. One was begun by a "querella" filed by Grupo Torras on 8 January 1993. Such proceedings were primarily criminal but the court could also give a civil judgment awarding compensation to the victim. The other was a civil action filed in June 1992 against Grupo Torras in which some of the present defendants were plaintiffs.
However, under Spanish law, a civil action was not "definitively pending" for the purposes of the Convention until it had been filed, admitted and served; until then it merely had a provisional character. Since the Spanish proceedings were not served on the relevant parties until October 1993, the English proceedings, which had all been served by June 1993, came first.
Finally, the civil aspect of the querella proceedings could not be regarded as definitively pending until February 1994, when the criminal proceedings were admitted. It followed that this ground of appeal also must fail.
Paul Magrath, Barrister