The English Commercial Court of the Queen’s Bench Division rejected an appeal from a Kuwaiti public body that sought to claim English-jurisdiction over 37 defendants alleged to have been associated with a multibillion-dollar civil fraudster.
Background
The Public Institution for Social Security (PIFSS) is a public institution of the State of Kuwait that is responsible for Kuwait’s social security system and pension scheme. In 2018, PIFSS brought proceedings against 37 defendants associated with Mr. Fahad Al Rajaan (the First Defendant), the former Director-General of PIFSS from 1994 to 2014, over allegations of corruption and bribery charges summing up to a total of US$847.7 million.
In addition, to Mr. Al Rajaan, who is charged for breaching his fiduciary duties relating to the office of Director General of PIFSS, and violation of Kuwaiti public property and anti-bribery laws, his wife, Ms. Al Wazzan, was also charged with corruption allegations; both of whom are currently the UK domiciled. In the proceedings in question, PIFSS has also sought to bring claims against financial institutions, their current and former partners, representatives, intermediaries, and other associated corporate vehicles, who were associated with Mr. Al Rajaan; having made illicit payments to him and assisting him with the concealment and disposal of these payments.
Challenging the English-jurisdiction claim of PIFSS to try the defendants in English courts, the majority of the defendants contended that PIFSS does not have jurisdiction to try them in English courts pursuant to Art. 6(1) of the Lugano Convention, or its counterpart, Art.8 (1) of the Recast Brussels Regulations, on the basis that the claims against them are so closely connected to those against Mr. Al Rajaan that it was expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
Alternatively, PIFSS was given permission to serve proceedings outside the English jurisdiction in relation to the involvement of Pictet Bahamas and Pictet Asia (both of them were defendants in the case) pursuant to the UK Civil Procedures Rule 6.36 and Practice Direction 6B on the basis that it was necessary.
In the proceedings in question, ten defendants who are responsible for making unlawful corrupt payments worth US$500 million, contended that the facts in question do not give rise to English-jurisdiction to PIFSS to have them tried in English courts. Three of these defendants, namely, Banque Pictet (registered in Switzerland), Pictet Europe (registered in Luxembourg), and Mirabaud (registered in Switzerland) claim that they have to be tried in Geneva or Luxembourg pursuant to exclusive jurisdiction agreements between the cross-party relationships of the defendants, although Pictet Europe had consented to be tried in Geneva as opposed to Luxembourg.
Alternatively, these defendants have argued that even if some of the claims/allegations against them are pursued in Geneva or Luxembourg, the other claims against them cannot be brought before English courts, as otherwise, it would be inconsistent with Art. 6(1) of the Lugano Convention, or Art. 8(1) of the Recast Brussels Regulations.
Moreover, the Fourth Defendant (M. Bertherat, a former partner at Banque Pictet), the Twelfth Defendant (M. Mirabaud), and the Thirteenth Defendant (M. Fauchier-Magnan) who were partners at Mirabaud sought the same protection afforded under the exclusive jurisdiction agreements as their respective companies claiming they should be tried in Geneva, or Luxembourg, as otherwise, it would be contrary to Art. 6(1) of the Lugano Convention, or Art. 8(1) of the Recast Brussels Regulations.
Similarly, the Fourteenth Defendant (M. Argand, a senior Swiss lawyer who legally assisted Mr. Al Raajan with his embezzlements) argued that should the aforementioned defendants (M. Berthetat, M. Mirabaud, M. Fauchier-Magnan) succeed in their claim, he should be discharged for the same reasons. In the same fashion, Pictet Bahamas and Pictet Asia argued that should Banque Pictet succeed in their jurisdiction claim, based on a forum non conveniens, they too should be tried in Geneva. Finally, PIFSS also sought a claim against M. Amouzegar, who was a former employee at Banque Pictet.
The Commercial Court of England & Wales
After four days of oral hearings, on the 6th November 2020, the Commercial Court of the Queen’s Bench Division pronounced its final judgment. Mr. Justice Henshaw allowed the jurisdiction challenges made by the defendants. Firstly, in regards to the claims made against Banque Pictet, Pictet Europe and Mirabaud relating respectively to the “Pictet Scheme” and the “Mirabaud Scheme”, the Court held that they fell within the scope of valid and binding jurisdiction agreements in favor of the Geneva and Luxembourg courts.
Secondly, regarding the “accessory” claims against the other financial institutions and their associates/representatives who had assisted Mr. Al Rajaan in concealing and disposal of his illicit money, the Court held that these did not fall within the jurisdiction agreements per se.
However, in circumstances where the claims in relation to the Pictet Scheme and the Mirabaud Scheme must be brought in Geneva/Luxembourg, and in the light of the risks of irreconcilable judgments that thereby arise on the particular facts of the case, the Court held that neither the requirements of Art. 6 of the Lugano Convention, or Art. 8 of the Recast Brussels Regulations had been met for accessory liabilities. The aforementioned conclusions were also applicable to the claims made against M. Bertherat, M. Mirabaud, and M. Fauchier-Magnan.
Thirdly, provided the claims made against Mirabaud, M. Mirabaud, and M. Fauchier-Magnan had to be brought in Geneva, and in the light of the risks of the irreconcilable judgments that thereby arise on the particular facts of the case, the Court held that the requirements of Art. 6 of the Lugano Convention were not met in relation to the claims made against M. Argand. Fourthly, the Court found that M. Amouzegar was not entitled to the benefit over the exclusive jurisdiction agreements.
However, assuming that the claims against Banque Pictet and M. Bertherat were to be brought in Geneva, and in the light of the risks of irreconcilable judgments that thereby arise on the particular facts of the case, the Court held that the requirements of Art. 6 of the Geneva Convention were not met. Finally, regarding the claims PIFSS had made against Pictet Bahamas and Pictet Asia, PIFSS had failed to establish that England was the appropriate forum for addressing the claims against the parties. Hence, the Court declined jurisdiction over these claims.
To access the judgment of the Commercial Court, click here.
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