Conspiracy cases and jurisdiction

Conspiracy cases and jurisdiction


In JSC BTA Bank, the Court of Appeal has provided further guidance on the rules regarding jurisdiction, writes Richard Foss

The Court of Appeal recently considered the interaction between an alleged claim for conspiracy involving two defendants and the jurisdiction of the courts of England and Wales pursuant to the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007 (the Lugano Convention).

The appeals related to Mr Justice Teare’s decision in JSC BTA Bank v (1) Ablyazov (2) Khrapunov [2016] EWHC 230, in which questions arose regarding the definition of unlawful means and the rules regarding jurisdiction in conspiracy cases. Khrapunov was alleged to have conspired to help his father-in-law, Ablyazov, hide or dissipate his assets from JSC BTA Bank in breach of worldwide freezing and receivership orders.

The Court of Appeal upheld Teare J’s finding that breaching freezing and receivership orders can amount to using unlawful means for the purposes of the tort of conspiracy to injure. This will be helpful where claimants would otherwise have to claim for lawful (rather than unlawful) means conspiracy, as it avoids the need to evidence an intention to injure.

The court also confirmed that damages are not recoverable in relation to a breach of a court order, other than as part of a separately actionable cause of action.

Domicile rules

Despite Khrapunov being domiciled in Switzerland, the bank sought to bring the claim in the courts of England and Wales, under either article 5 or 6 of the Lugano Convention.

Article 6 allows a person domiciled in a state bound by the convention to be sued in the courts where another defendant is domiciled. The bank submitted that Ablyazov was domiciled in the UK when the claim was issued in 2015 (despite having left the UK in 2012), which provided a foundation for jurisdiction against Khrapunov under article 6.

However, Teare J found that Ablyazov was no longer UK domiciled after he left the country in 2012, therefore the English courts had no jurisdiction after that date. The aim of the Lugano Convention is to provide predictability and certainty. Therefore the court was unwilling to accept the bank’s argument and apply an exception to the normal domicile rules, namely that a person (Ablyazov) cannot take advantage of his own unlawful act in failing to attend a committal hearing and leaving England, as there had been no relevant wrongful conduct by Khrapunov.

Harmful event

The bank also argued that article 5 of the Lugano Convention, which allows a claim to be brought in the place where ‘the harmful event occurred or may occur’, was applicable. Article 5 can include either ‘the place where the damage occurred’ (limb (a)) or ‘the place of the event giving rise to’ the damage in question (limb (b)).

The allegation against Khrapunov related to assets outside the jurisdiction. As such, the damage might have occurred in numerous jurisdictions in relation to limb (a). The bank argued that the damage was the reduction in value of its chose in action, freezing order, and judgments, which were in England. This argument failed to convince the court, which agreed with Teare J that damage arose in the places where those assets were allegedly dissipated and concealed (i.e. not in the UK).

In relation to limb (b), it was Teare J’s view that ‘the place of the event giving rise to’ the damage was when and where the alleged conspiracy was acted upon. This meant the bank could be forced to bring claims in numerous jurisdictions in relation to the same conspiracy. Teare J sought to distinguish the tort of conspiracy from negligent misstatement on the basis that ‘a misstatement causes damage when it is made’, whereas ‘a conspiracy only causes damage when it is implemented’.

The Court of Appeal did not find this persuasive, holding that the English courts could accept jurisdiction on the basis that the ‘event giving rise to the damage’ was the hatching of the alleged conspiracy in England, not when it was acted upon. Lord Justice Sales gave the lead judgment, concluding that ‘if the bank wishes to rely on article 5(3) it would have to sue Mr Khrapunov in different jurisdictions… but in relation to the same original conspiracy agreement, thereby increasing costs, the risk of increased delay and giving rise to the risk of irreconcilable judgments being reached in different jurisdictions’.

Care must therefore be taken when advising on jurisdiction in conspiracy claims involving multiple defendants.

Richard Foss is a London Solicitors Litigation Association committee member and a partner and head of dispute resolution at Kingsley Napley