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  • COURT OF APPEAL - Cátedras de la Facultad de …portalacademico.derecho.uba.ar/catedras/archivos/catedras...COURT OF APPEAL In re HARRODS (BUENOS AIRES) LTD. Authoritative version
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21/8/2015 In re Harrods (Buenos Aires) Ltd. http://www.uniset.ca/lloydata/css/1992Ch72.html 1/28 COURT OF APPEAL In re HARRODS (BUENOS AIRES) LTD. Authoritative version at: [1992] Ch. 72 COUNSEL: Michael Briggs for Ladenimor. Alan Boyle for Intercomfinanz. George Bompas for the company. SOLICITORS: Bower Cotton & Bower; Frere Cholmeley; Clifford Chance. JUDGES: Harman J. Dillon, Stocker and Bingham L.JJ. DATES: 1990 April 2, 3, 4, 5, Nov. 29, 30; Dec. 19; 1991 Feb. 6, 7, 8; March 13 HARMAN J. On 7 July 1989 a petition was presented to this court in the matter of a company called Harrods (Buenos Aires) Ltd. The petition was presented by a company incorporated in Switzerland, called Ladenimor S.A. It specifies that the company was incorporated in September 1913 in England. Its registered office is at Royex House, an address very well known in this court. Its nominal capital is £5,457,000 sterling. Ladenimor holds a large percentage, 49 per cent., of the issued shares of the company. The object of the company is: “to carry on, in Buenos Aires, in the Argentine Republic and elsewhere in South America, the business of a universal supply company and general stores in all its branches.” The remainder of the company’s shares, other than those held by Ladenimor are held by the first respondent, Intercomfinanz S.A., which is a Swiss company that has a controller or beneficial owner named Gibertoni. The petition sets out allegations as to relationships between Mr. Gibertoni and the individuals behind Ladenimor. It alleges that in September 1979 they made an agreement in principle to acquire the shares in the company, and at that date its only activity was the running of a large department store in Florida Street, Buenos Aires. The share capital was acquired and the very substantial price was paid by instalments between November 1979 and December 1984. Mr. Gibertoni ran the company and had complete de facto control of it with the agreement of Ladenimor. In 1985, Mr. Gibertoni and the Italian family behind Ladenimor fell out, and various matters then took place in regard to the company’s business. Amongst other matters the company was advised by the formerly well known firm of Clifford Turner, the solicitors for the company, as to how distributions might be made by the company, which had a lack, according to English law then applicable, of distributable reserves, so that it was unable to pay a dividend. Upon advice, a structure of loans was created but, according to the allegation in the petition, Ladenimor did not receive the alleged part of the loans intended to be for its 49 per cent. of the interest in the company. Further, the petition alleges that the company had its activities diversified into cattle breeding, but that that cattle breeding was remarkably unsuccessful in that, throughout the period September 1984 to March 1986 there were according to the records no calves at all born of the company’s cattle. It is alleged that that leads to an inference that [*77] the affairs of the cattle were being manipulated in a way that disadvantaged the company. It is further alleged that other transactions took place in a sort of bond issued in Argentina called a Bonex, which were disadvantageous to the company compared with the loans also made by the company to another Argentine company controlled by Mr. Gibertoni. Another allegation concerns the acquisition of shares from a further company in Argentina controlled by Mr. Gibertoni, at a grossly excessive price and so on, leading to the conclusion, in paragraphs 41 and 42 of the petition: “41. In the premises the affairs of the company have been, are being and for as long as the same remain under the control of Mr. Gibertoni will be conducted in a manner which is unfairly prejudicial to the interests of the petitioner. “42. Further or alternatively it is just and equitable that the company should be wound up. Upon a winding up of the company, a substantial surplus would be distributable to its members.”

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  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 1/28

    COURTOFAPPEAL

    InreHARRODS(BUENOSAIRES)LTD.

    Authoritativeversionat:[1992]Ch.72

    COUNSEL:MichaelBriggsforLadenimor.AlanBoyleforIntercomfinanz.GeorgeBompasforthecompany.SOLICITORS:BowerCotton&BowerFrereCholmeleyCliffordChance.JUDGES:HarmanJ.Dillon,StockerandBinghamL.JJ.DATES:1990April2,3,4,5,Nov.29,30Dec.191991Feb.6,7,8March13HARMANJ.On7July1989apetitionwaspresentedtothiscourtinthematterofacompanycalledHarrods(BuenosAires)Ltd.ThepetitionwaspresentedbyacompanyincorporatedinSwitzerland,calledLadenimorS.A.ItspecifiesthatthecompanywasincorporatedinSeptember1913inEngland.ItsregisteredofficeisatRoyexHouse,anaddressverywellknowninthiscourt.Itsnominalcapitalis5,457,000sterling.Ladenimorholdsalargepercentage,49percent.,oftheissuedsharesofthecompany.Theobjectofthecompanyis:

    tocarryon,inBuenosAires,intheArgentineRepublicandelsewhereinSouthAmerica,thebusinessofauniversalsupplycompanyandgeneralstoresinallitsbranches.

    Theremainderofthecompanysshares,otherthanthoseheldbyLadenimorareheldbythefirstrespondent,IntercomfinanzS.A.,whichisaSwisscompanythathasacontrollerorbeneficialownernamedGibertoni.ThepetitionsetsoutallegationsastorelationshipsbetweenMr.GibertoniandtheindividualsbehindLadenimor.ItallegesthatinSeptember1979theymadeanagreementinprincipletoacquirethesharesinthecompany,andatthatdateitsonlyactivitywastherunningofalargedepartmentstoreinFloridaStreet,BuenosAires.ThesharecapitalwasacquiredandtheverysubstantialpricewaspaidbyinstalmentsbetweenNovember1979andDecember1984.Mr.GibertoniranthecompanyandhadcompletedefactocontrolofitwiththeagreementofLadenimor.In1985,Mr.GibertoniandtheItalianfamilybehindLadenimorfellout,andvariousmattersthentookplaceinregardtothecompanysbusiness.AmongstothermattersthecompanywasadvisedbytheformerlywellknownfirmofCliffordTurner,thesolicitorsforthecompany,astohowdistributionsmightbemadebythecompany,whichhadalack,accordingtoEnglishlawthenapplicable,ofdistributablereserves,sothatitwasunabletopayadividend.Uponadvice,astructureofloanswascreatedbut,accordingtotheallegationinthepetition,Ladenimordidnotreceivetheallegedpartoftheloansintendedtobeforits49percent.oftheinterestinthecompany.Further,thepetitionallegesthatthecompanyhaditsactivitiesdiversifiedintocattlebreeding,butthatthatcattlebreedingwasremarkablyunsuccessfulinthat,throughouttheperiodSeptember1984toMarch1986therewereaccordingtotherecordsnocalvesatallbornofthecompanyscattle.Itisallegedthatthatleadstoaninferencethat[*77]theaffairsofthecattlewerebeingmanipulatedinawaythatdisadvantagedthecompany.ItisfurtherallegedthatothertransactionstookplaceinasortofbondissuedinArgentinacalledaBonex,whichweredisadvantageoustothecompanycomparedwiththeloansalsomadebythecompanytoanotherArgentinecompanycontrolledbyMr.Gibertoni.AnotherallegationconcernstheacquisitionofsharesfromafurthercompanyinArgentinacontrolledbyMr.Gibertoni,atagrosslyexcessivepriceandsoon,leadingtotheconclusion,inparagraphs41and42ofthepetition:

    41.Inthepremisestheaffairsofthecompanyhavebeen,arebeingandforaslongasthesameremainunderthecontrolofMr.Gibertoniwillbeconductedinamannerwhichisunfairlyprejudicialtotheinterestsofthepetitioner.42.Furtheroralternativelyitisjustandequitablethatthecompanyshouldbewoundup.Uponawindingupofthecompany,asubstantialsurpluswouldbedistributabletoitsmembers.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 2/28

    Theprayerseeksinparagraph1thatIntercomfinanzS.A.beorderedtopurchaseLadenimorssharesonaparticularvaluationbasisthereisatemporaryordersoughtinparagraph3and,alternatively,inparagraph4anorderforthewindingupofthecompanyundertheCompaniesAct1985.ThepetitionwastobeserveduponthecompanyatitsownregisteredofficeatRoyexHouse,anduponIntercomfinanzatLugano.Thatwasfollowedbyanapplicationmadeexpartewhichsoughtleavetoservethepetitionoutofthejurisdiction,pursuanttoR.S.C.,Ord.11presumably,IdonotthinkIhaveseentheactualapplication,pursuanttoOrd.11,r.1(1)(a).Bythatprovisionserviceoutispermissiblebecauseintheaction,socalled,begunbywrit,socalled(thosewordsapplytoanapplicationtothecourtbypetition)reliefwassoughtagainstapersondomiciledwithinthejurisdiction.Plainly,thatwouldhavebeentheappropriatecasebecausethecompanyisapersonwithinthejurisdictionsubjecttothepetition,andtheserviceonIntercomfinanzisonapersonoutsidethejurisdiction.Theapplicationtoserveoutwassupportedbyasomewhatexiguoustwopageaffidavit,byanassistantsolicitor,whichwasseverely,andinmyviewjustifiablycriticisedbyMr.Boylefortheapplicantinthissummons.Hedidsoonthegroundthattheaffidavitwasinbreachofthegoldenrule,sometimesreferredtoastheruleinTheHagen[1908]P.189,sometimesreferredtoastheruleinRexv.KensingtonIncomeTaxCommissioners,ExpartePrincessEdmonddePolignac[1917]1K.B.486,butinanyeventtherulethatonallexparteapplicationsfullandfrankdisclosureofanymatterthatmayinfluencethejudgeinexercisinghisdiscretionexpartemustbemadebythepersonapplying.Inmyviewthegoldenruleplainlywasnotsatisfied.TheorderwasinfactmadebyMr.RegistrarBuckley,andserviceeventuallytookplaceafteralongtime.Thereupon,thissummonswasissuedon20November1989.ThesummonsbyIntercomfinanzsoughtanorderfromtheregistrar,nowadjournedtome,seekingtosetasidetheordergivingleavetoserveoutandanorderthatservicebesetasidethesummonsalsosoughtanorderthatthepetitionandall[*78]proceedingsthereunderbestayed.Thoseare,inasense,quiteseparateapplications.Paragraphs1and2arebaseduponthegoldenrule,andwouldnotbringtheproceedingstoanend.Theywouldsimplyresultintheorderandtheservicebeingsetasideandthepetitionerbeinglefttostartagainifitcouldproperlymanagetodoso.Paragraph3isanordereffectivelydrivingthepetitionerfromthisjudgmentseat.OnthematterbeingarguedbeforemeMr.Briggs,inamostcogentargument,submittedtomethatOrd.11,r.1wasnotinfactapplicabletothismatter,andleavetoservetherespondentwasnotnecessary.Hemadethatsubmissionbyreferencetotheruleswhichgovernthesesortsofproceedings.Firstly,theInsolvencyRules1986(S.I.1986No.1925),whichprovideinrelationtoapetition,byrule4.22(4):Thepetitionershall,atleast14daysbeforethereturnday,serveasealedcopyofthepetitiononthecompany.ThatistheonlyrequirementforserviceintheInsolvencyRules1986atthatpoint.Thatwascompliedwith.Thatresultsintheserviceonthecompanybeingeffective.Rule4.23(1)provides:Onthereturndaythecourtshallgivesuchdirectionsasitthinksappropriatewithrespecttothefollowingmattersastoserviceandothermatters,including,underrule4.23(2),whetheranyofthepersonsinrule4.10istobeservedwiththepetition.Byrule12.12(1),Order11doesnotapplyininsolvencyproceedings.TheresultisthatthecodeforinsolvencyproceedingsisintheInsolvencyRules1986andOrder11hasnothingtodowithpetitionsseekingthewindingupofthecompany,whetherbyacreditorfordebt,orbyacontributoryuponthejustandequitableground.Rule12.12(3)provides:

    Whereforthepurposesofinsolvencyproceedingsanyprocessororderofthecourt,orotherdocument,isrequiredtobeservedonapersonwhoisnotinEnglandandWales,thecourtmayorderservicetobeeffectedwithinsuchtime,onsuchperson,atsuchplaceandinsuchmannerasitthinksfit

    Thus,theinsolvencycourtisincontrolofthemethod,timeandsoforthofservice,andthereisnorequirementforleavetoserveout,nordoestheprovisionofOrd.11,r.4(2),thatnoleaveshallbegrantedunlessitismadetoappeartothecourtthatthecaseisaproperoneforserviceoutofthejurisdiction,whichthrowsaburdenuponthepersonseekingleavetoshowaprimafaciecase,applytoinsolvencyproceedings.Allthatseemstomeextremelyobviousandnatural.AnEnglishcompany,beinganartificialpersoncreatedpursuanttothisverystatute,subjecttothejurisdictioninevitablyofthiscourt,mustplainlybeproperlybroughtbeforethiscourt,andthefactthatotherpersonsoutsidethejurisdictionmayneedalsotobeheardissufficientlycoveredbythepowerandrequirementtogivedirectionsaboutserviceonthem.Thus,ifthispetitionweresimplyapetitionforajustandequitablewindinguptherecouldbe,inmyjudgment,nodoubtthatOrder11wouldhavenothingtodowiththematteratall.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 3/28

    TheInsolvencyRules1986,however,donotnecessarilyapplytopetitionsundersection459.Tothem,theCompanies(UnfairPrejudiceApplications)ProceedingsRules1986apply.Theseweremade,aswaspointedout,10dayslaterthantheInsolvencyRules,inNovember1986.[*79]ThesearerulesapplyingtopetitionspresentedunderPartXVIIoftheActof1985which,ofcourse,includessection459ofthatAct.Rule2(2)provides:ExceptsofarasinconsistentwiththeActandtheseRules,theRulesoftheSupremeCourtapplytoproceedingsunderPartXVIIoftheActwithanynecessarymodifications,butrule4(1)provides:Thepetitionershall,atleast14daysbeforethereturnday,serveasealedcopyofthepetitiononthecompanyand,underrule4(2):

    Inthecaseofapetitionbaseduponsection459oftheAct,thepetitionershallalso,atleast14daysbeforethereturnday,serveasealedcopyofthepetitiononeveryrespondentnamedinthepetition.

    Thus,therearemandatorydirectionsintheserulesrequiringservicesonthecompany,whichmustbeacompanyhavingaplaceforservicewithinthejurisdictionand,therefore,thereisnoquestionofserviceoutunderrule4(1)and,underrule4(2),amandatoryrequirementforeveryrespondentnamedtobeserved.Itwouldseemcuriousiftherulemandatorilyobligedthepetitionertoserverespondentsnamedinthepetition,butalsorequiredthepetitionertogetleavetomakesuchservice.Therewouldbe,tomymind,aninevitableconflictbetweenthosetworules.Mr.Boyleobservedcorrectlythattheserulesdonot,unliketheInsolvencyRules1986,specificallyexcludeOrder11but,inmyjudgment,serviceissufficientlydealtwithbyrule4,inthetwoparagraphstheresetout,plustheprovisionsunderrule5(a),enablingthecourtonthereturndaytogivedirectionsforserviceofthepetitiononanypersonthatitthinksfit.Thoseprovisionsseemtometoamounttoacodeforserviceofcompanypetitions,bearinginmindtheprovisionsofrule2(2),sothatitwouldbeinconsistentwiththeserulesforOrder11toapplyalsotosection459petitions.Inmyjudgment,despiteMr.Boylesextremelyelegantreasoninguponthepoint,Mr.Briggsargumentisundoubtedlycorrect.Inmyjudgment,thereisnorequirementinrespectofpetitions,eitherundertheInsolvencyRules1986orundertheCompanies(UnfairPrejudiceApplications)ProceedingsRules1986,requiringleaveforserviceoutofthejurisdictionunderOrder11.Further,itistobenoticedthatOrd.11,r.1(2)itselfprovides:

    Serviceofawritwhichinthiscontextincludesapetitionoutofthejurisdictionispermissiblewithouttheleaveofthecourtprovidedthateachclaimmadebythewrittheprayersinthepetition,Isuppose,istheproperwaytoreadthatis(b)aclaimwhichbyvirtueofanyotherenactmenttheHighCourthaspowertohearanddeterminenotwithstandingthatthepersonagainstwhomtheclaimismadeisnotwithinthejurisdictionofthecourtorthatthewrongfulact,neglectordefaultgivingrisetotheclaimdidnottakeplacewithinitsjurisdiction.

    Inmyjudgment,wereitnecessarytogobacktoOrder11,whichIdonotbelieveitisasIreadthetwosetsofrulesapplicabletothispetition,[*80]thatsecondlimbofrule1(2)(b)wouldapplybecausetheclaimherewouldbeaclaimbyvirtueofanenactment,viz.theCompaniesAct1985,whichtheHighCourtundoubtedlyhaspowertohear.Thatmustbesobecausethisisapetitionwhichfallsprecisely,inmyjudgment,withintheopeningwordsofsection459,whichprovides:Amemberofacompanyandnotetherearenorestrictionswhateverastoresidence,nationalityorotherqualification,savethattheapplicantbeamember(i.e.ashareholderorapersonentitledtobeenteredontheregisterofmembersofthecompany)mayapplytothecourtbypetitionforanorderunderthisPart...Thatplainly,then,givesthecourtjurisdictiontohearanddeterminethatpetition,andthatissonotwithstanding,inmyview,thefactthatthewrongfulact,neglectordefaultgivingrisetothepetitiondidnottakeplacewithinthiscourtsjurisdiction.Thus,inmyview,therecanbenodoubtatallthatleavetoservethispetitionoutwasneverrequired.Onthatbasistheapplicationforleavetoserveoutwasmisconceived.Itwaswhollyunnecessaryandthedefectiveaffidavit,whichwould,inmyview,havebeeninbreachofthegoldenruleandwouldhaveledmeatleasttosetasidetheorderforserviceoutwithoutmoreadoonthegroundthatithadbeenobtainedwithoutproperdisclosure,wasallawhollywastedexerciseandgaverisetonoconsequencesatall.Ishall,therefore,paynofurtherattentiontoparagraphs1and2ofthesummonsnowbeforeme,onthegroundthattheorderofMr.RegistrarBuckleywasanunnecessaryorderandtheapplicationwasanunnecessaryapplication.Therewasarighttoserveand,therefore,noquestionoftheinadequacyoftheaffidavithasanymaterialbearinguponthiscase.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 4/28

    Iturntothematterwhichisreallythesubstanceofthisapplication,andthatisthequestionwhetherthecourtshouldmakeanorderforastay.ThefoundationforMr.Boylesextremelyinterestingandintelligentargumentis,ofcourse,SpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460,particularlyLordGoffofChieveleysspeech.IcannotresistobservingthatononepartoftheSpiliadacaseitisdemonstrablethattheviewsoftheHouseofLordsarewhollyoutoftouchwithreality.LordTempleman,atp.465F,observedthathehopedthatinfuturethejudgewillbeallowedtostudytheevidenceandrefreshhismemoryofthespeechofhisnobleandlearnedfriend,LordGoff,inthequietofhisroomwithoutexpenseoftheparties.Hewillnotbereferredtootherdecisionsonotherfacts,andsubmissionswillbemeasuredinhours,notdays.Anappealshouldberareandtheappellatecourtslowtointerfere.Thismattercameonbeforemeat2oclockonMonday.IamdeliveringjudgmentataquartertofouronaThursdayafternoon.Idonotregardanyminuteofthetimethathasbeentakenbeforemeashavingbeenwasted.Thematteris,inmyview,difficult.Ihavebeenassistedbyextremelyableargumentsfromallthreeofthecounselbeforeme,toeachofwhomIamgreatlyindebted.LordTemplemansobservationsbearnorelationtoanyconceivablewayinwhichthismattercouldhavebeenconducted.WhereIshouldhavefoundthetimetoreadtheevidence,whichrunsintheexhibitstosomehundredsof[*81]pagesandintheaffidavitsaloneto134pages,Icannotimagine.TheresultisthatLordTemplemanswishesarewhollyincapableofperformanceandhavenotbeenperformed.Thematterthatisofimportance,however,isLordGoffsspeech,whichisobviouslyextremelywellknown.Itisveryimportant,however,torememberthatevenaspeechbysoveryablealawyerasLordGoffundoubtedlyis,assentedtoexpresslybyothermembersoftheHouse,sothatitconstitutestheunanimousviewoftheHouse,mustnotbeconstruedasifitwereastatute.Everywordisnottobetakenasliterallyapplyingtoeveryothercase.ItistobetakenassettingouthisLordshipsreasoninginreachingtheprincipleswhichheexpressedandtowhichhisbrethrenassented.Theprincipleisonewhichisoffairlyrecentdevelopment.TheSpiliadacaseitselfisunderfouryearsold,andthedecisionsbeforeit,whichleduptoit,aremostly,Ithink,withinthelastdecade.Thedoctrineiscommonlycalledforumnonconveniens,althoughitisveryimportanttoremember,asLordGoffspecificallypointedout,thatconveniensisnotadequatelytranslatedasconvenient.Itisusedinthesenseinwhichlawyersusethewordconvenience,asinthephrasebalanceofconvenienceincaseswhenthecourtisdecidingwhetherornottograntaninjunction.Insuchcaseswhatthecourtistryingtodoisachieveabalanceofjustice,orabalanceoffairnessbetweentheparties,upholdingexistingrightsandnotupsettingmatterswhichlaterwillhavetobeundone,preservingthestatusquosofarasisreasonablypossible.Thatisnotconvenienceinthesenseofwhatisniceandeasyforthepartiesinanypropersense,andnorheredothewordsforumnonconveniensmeanthemosthandycourtintowhichtopop.Thephrasemeans,anditisclearlylaidoutasamatterofprinciplebyLordGoff,wherehecited,LordKeithofKinkelinTheAbidinDaver[1984]A.C.398,415,wherehehadreferredtothenaturalforumasbeingthatwithwhichtheactionhadthemostrealandsubstantialconnectionandLordGoffsaid[1987]A.C.460,478A:itisforconnectingfactorsinthissensethatthecourtmustfirstlook.LordGoff,itmustberemembered,wasdealingwithacasefromtheCommercialCourtconcerningtheshippingofacargo,IthinksulphuritdoesnotreallymatterinashipfromCanadatoEngland.TheconnectionofthecasewithEnglandwasnotparticularlyobvious.ItwasacaseintheCommercialCourttowhichmanyinternationalcasesarebrought,andwheretherightsofthepartiesarefrequentlydependentuponexpressprovisionsthatEnglishlawshallapplyinthecontract.Therightsarealmostalwaysrightstosumsofmoneybywayofdamagesforsomebreachofcontractorperhaps,althoughmorerarely,intort,andthemattersareallmattersoftruelitigationinterpartes.NoneofthephrasesinLordGoffsobservationsnaturallyandeasilyapplytocasessuchastheChanceryDivisionissocommonlyconcernedwith,whereapartyappliestoitforassistanceandguidanceanditmaybeforadischargeofliabilities.Forexample,ifEnglishtrusteesbesetbyconflictingclaimsfrombeneficiariescometothecourttohavedeterminedwhattheirdutymaybeiftrusteesofpensionfundscometoacourtandsurrenderany[*82]discretiontheymayhavetochooseastowhoshallbetherecipientofsurplusfunds,sothatthecourt,actingonproperprinciplesandconsideringthetermsofthepensionfundtrustdeed,candecidewherethemoneysshouldgo.Thosemattersareverymuchmatterswhicharenotmattersofalisinterpartes,withrightstodamagesonewayortheotherandwhere,aboveall,thepersonseekingrelieffromthecourt,caneffectivelyonlygetrelieffromthecourtbeingtheEnglishHighCourthereinLondon.Thatissobecauseatrusteecanbesuedbyabeneficiarytoaccountforthetrustpropertyatanytime,anditisonlyifthetrusteehas

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 5/28

    anorderofthecourtconfirmingtheadministrationthatheissafefromfutureaction.Thus,thetrusteehastobeprotectedandisentitledtobeprotected.Thatismilesfromaclaimbyonecorporateownerofashipagainstanothercorporateownerofcargofordamagesformisshippingtherelevantsubstance.Hereinthispresentcase,again,onehasamatterwhichisveryfarfromtheformulationsadoptedbyLordGoff.HereonehasanapplicationbyamemberofanEnglishcompany,pursuanttoanexpressrightgivenbyanEnglishstatute,inrespectofamatterwheretheEnglishlawgivesaparticularremedybysection461oftheActof1985asamatterofdiscretion,enablingittoeffectwhatMr.Briggsratherneatlydescribedascorporatedivorce.Theordermaderequiresabuyoutbyonesideoftheother,anditmaybebythepetitioneroftherespondent,orbytherespondentofthepetitioner,oritmayinmanycasesbebythecompanyofthepetitioner.Thatwillalterthefutureconductoftheaffairsofthecompany,whichwillaffectmanypeopleotherthanthetwomajorprotagonistsintheirfuturerightsandentitlements.AllsuchmattersareplainlymatterswheretheEnglishlawappliestotheEnglishartificialentitywhichhasbeencreated.NoneofthathasmuchresemblancetoalisinterpartesintheCommercialCourt.Nonetheless,inmyjudgmenttheSpiliadapropositionsabouttryingtoassesswhatisthemostappropriateforumdoapplyinthesensethat,sofarastheylaydownprinciples,thoseareuniversalprinciplesofEnglishlaw.Thequestionwhetherastayshouldbegrantedisansweredbyapplyingthefollowingtest,accordingtoLordGoff,atp.476:

    astaywillonlybegrantedonthegroundofforumnonconvenienswherethecourtissatisfiedthatthereissomeotheravailableforum,havingcompetentjurisdiction,whichistheappropriateforumforthetrialoftheaction

    Ihave,therefore,tosay:whatistheappropriateforumforthetrialofthisaction?ToanswerthatquestionIhavetoposeanother:whatisthisaction?Thisactionisapetition,inmyjudgment,forreliefagainsttheconductofthecompanysbusinessinamannerunfairlyprejudicialtosomepartatleastofitsmembers,includingLadenimor.Thecourtwillhearawholeseriesofinstancesofthingsthathavebeendone,actsthathavebeencommitted,anditwillhavetodecidewhethertheallegationthatthisorthatwasdoneistrueorfalse.Butintheendwhatthecourt,inmyjudgment,hastodointhesemattersisreachanoverallconclusion:hasLadenimorsufferedbyreasonoftheconductofthe[*83]companysaffairsinsuchamannerastobeunfairlyprejudicialtoit?Thatisageneralconclusion,butitistheessentialconclusionandthefoundationforthejurisdiction.Section461saysthatthecourtmaynotmakeanyorder,unlessitissosatisified.Mr.Boylesubmittedtomethatthequestionwasnotproperlyformulatedastowhatwastheissueinthispetitionbymakingthatconclusion.Hesubmittedthatthatwasnottheissueinthepetition.Theissueinthepetitionwaswhetherthesubstantivecomplaintshisphrasetheparticularactscomplainedof,Iwouldsay,hadbeencommitted.HereitisquiteclearthatwhatthepetitionerallegesisawholeseriesofactscommittedinArgentina.ThereisnodoubtthatalltheprincipalwitnessesareArgentinian.ThereisnodoubtthatthebooksofthecompanyareintheArgentine.Thereisnodoubtthatthecompany,althoughanEnglishcompany,andalthoughithasitsannualgeneralmeetingshere,hasitsaccountsinsterling,hasitsminutebookofgeneralmeetingskepthere,yettheresidencefortaxpurposesofthecompanyisArgentinaandnotEngland.Nonetheless,asitseemstome,thequestionmustalwaysbe:Howisthiscompanyproperlytoberegulated?WhenoneislookingatacompanyincorporatedinEngland,whichhasitslifeandbeingonlybyvirtueoftheactoftheEnglishlawcreatingthisartificialperson,itistomymindextremelydifficulttoseethatitcanbeappropriatetoholdthattheforumappropriatetodecidethatsortofmatterisanyforumotherthantheforumoftheEnglishcourt.Itis,asMr.Briggssubmitted,inmyviewblindinglyobviouswhattheanswertothequestionisoncethequestionisposed.Mr.Boylesubmittedthatthatwasnotaproperapproachtothematter,andIhavetostartwithevenscalesandputintothebalanceoneachsidethevariouspossiblefactorswhichLordGofflisted.Inmyview,Idohavetostartwithevenscales,andIdohavetoconsiderwhatfactorseffectthematter,butwhenIfind,whenIamasked,tostayapetitionanddrivefromtheEnglishseatofjusticeapersonentitledbyEnglishstatutetoaremedywhichitisconcededisnotavailableanywhereelse,itisimpossible,thatbeingarelationshipgovernedbyEnglishlaw,foronetocometoaconclusionthatanotherforumwillbethebetterorthemoreappropriateforum.Itseemstomequitewrongtosaythattheissuesthathavetobedecidedaretheparticularfactualissuesastowhathasbeendone.Thosearesteps,factsthathavetobeprovedalongthewaytodecidingtheeventualissue,andthesame,inmyjudgment,appliestothequestionwhetherthecompanyshouldbewoundupupontheequitablegroundornot.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

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    TheevidenceastoArgentinelaw,whichwouldberelevantifonewereindoubtastothematterandwereconsideringwhetherornotsubstantialjusticecouldbeobtainedintheotherforum,isinterestingandcurious.ItisquiteplainthatArgentinelawprovidesfairlyextensiveprotectiontoshareholdersincompaniesagainstwrongdoingsbythosemanagingthecompanies.ItisclearthattheArgentinelawcanprovideforthewindingupofArgentinecompanies.TheoddityliesintheapparentprovisionsofArgentinelaw.Argentinelaw,byarticle118ofwhat,Ithink,istheCompaniesLawitisdefinedintheaffidavitsas[*84]C.L.,andIhopeIhavenotmisunderstooditprovidesthatabranchofaforeigncompanyisrequiredtoberegisteredinArgentinaaccordingtocertainparticularlaws.Thiscompany,Harrods(BuenosAires)Ltd.,registereditselfasabranchoftheEnglishcompany,statingthatthebranchhadnocapitalofitsown,statingthatthecompanyhadacapitalof5\4m.oddsterling,statingthatthecompany,notthebranch,hadobjectsofverywideextentandplainlycompliedinallrespectswitharticle118.Somuchonewouldexpect,andsomuchwouldbesimilartoourowncompanypracticerequiringforeigncompaniestogivenoticetotheregistrarundertherelevantsectionswhentheyseektosetupaplaceofbusinesshere.Ifacompanyisregisteredinaccordancewitharticle118thenArgentinelawprovidesthatthelawoftheplaceofincorporationshallgovernthefundamentalpointsastothecompanysexistenceandsoforth.IfthatarticlewereapplicableEnglishlawwouldapplytothismatteriftriedinArgentinecourts.ThatwouldmakeitplainlydesirablethattheEnglishcourttrythecase,becausetheEnglishcourtislikely,ingeneralterms,tobebetteratapplyingEnglishlawthanaforeigncourtactingonexpertevidence,howeverable.Despitetheprovisionsofarticle118,Argentinelawgoesoninarticle124toprovideIreadfromwhatiscalledafreetranslation:

    AcompanyincorporatedabroadwhichhasitsseatintheRepublic,orwhoseprinciplecorporatepurposeissoughttobeaccomplishedinthesame,shallbeconsideredasalocalcorporationinrelationtotheaccomplishmentofitsincorporationandmodificationandthecontrolofitsperformance.

    IhavehadshowntomeatextbookbyanArgentineacademic,aprofessorwhowasformerlyamemberoftheCourtofAppealinArgentina,onthisverysubject.Theevidenceisreallynotincontroversybeforemethataforeigncompanywhichhasitsseat,itsprincipaloffice,Isuppose,isthebestEnglishequivalenttoseat,intheRepublicistreatedintheArgentinecourtsasanArgentinecompany.Suchacompanyistakenoutofarticle118whichtreatsitasaforeigncompanywhichhasregisteredabranchinArgentina.Andalternatively,ifaforeigncompanysprincipalcorporatepurpose,limitingthewordprincipaltomeanonlycorporatepurposebeingitsbusiness,iscarriedonintheArgentine,thenagaintheArgentinelaw,asitwere,adoptsandtakesoverthecompany.Thatseemstometobeanunusualformofprovision.ThereisnosuchprovisioninEnglishlaw,andIknowofnosuchprovisioninsuchothersystemsofcontinentalcompanylawasthosewithwhichIhaveanyfamiliarity.Nonetheless,thatiswhatthelawis.Theresultinthecaseofthiscompany,whichhasitswholebusinesscarriedonwithinArgentina,hasitsmaindirectingofficeinArgentina,whosedirectorslive,meetandhavetheirdailylivesandbeinginArgentina,isthatitwouldprobablybeheldtohaveitsseatinArgentina.Alternatively,itwouldcertainly,evenwithintherestrictiveunderstandingoftheword[*85]principal,beheldtocarryonbusinessexclusivelywithinArgentina.TheresultwouldbethatArgentinelawwouldapplyandtheEnglishlawwouldbeousted.TheresultofthatwouldbethatLadenimorcouldnotobtain,accordingtotheundoubtedanduncontrovertedevidencebeforeme,theremedywhichitprimarilyseeks,thecorporatedivorceorbuyout.Itcould,perhaps,obtainawindingupongroundsthatseemnotatalldissimilartoajustandequitablewindingup,butthepetitionisquiteplainlyaimed,andMr.Briggsassertedjustifiablythatitwas,primarilyatobtainingabuyoutontheproperbasisofvaluation,givingLadenimorallthevaluewhichitwasentitledto.That,inArgentina,cannotbeobtained.That,byEnglishstandardsapplyingtothisEnglishcompany,isarightthatParliamenthasgranted.ThatrightIwouldbedefeatingifIweretograntastayinthiscase.Itseemstomethatthatrightbeingdefeated,thefactthatanotherright,whichisthefallbackpositioninthiscountryofajustandequitablewindingup,wouldbeavailableinArgentinabywayofawindingupandsaleoftheassetssothatthepartieswouldbeseparated,isnotenoughtoensurethatsubstantialjusticewouldbedone.ItisnotoriousinEnglandthat,uponawindingup,lessisobtainedfromassetsinasalebyaliquidatorthanisobtainedbysomeotherform,forexamplebyanadministratorappointedbythecourtundertheInsolvencyAct1986or,evenbetter,byareceiverappointedbya

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    debentureholder.Ihavenoreasontosupposethatthatgeneralproposition,thataforcedsalebyaliquidatortendstoproduceaworseprice,isnottrueinArgentinaasinEngland.Itis,infact,apropositionofelementarycommercialsense.Thatbeingso,thereisplainlyaseriousdisadvantagetoLadenimorifthepetitionweretobestayedontheground,whichIdonotaccept,thattheArgentinecourtwasthemoreappropriateforum.ItwouldstillresultinLadenimorbeingdeprivedofsubstantialjustice,asIseethecase,anduponthatgroundalsoIwouldnotconcludethatthereshouldbeanystay.Forthosereasons,Ihavereachedaclearconclusionthatparagraph3ofthissummonsisnotjustified,andnostayshouldbeordered.Applicationdismissed.INTERLOCUTORYAPPEALfromHarmanJ.PursuanttoleavegrantedbyNichollsL.J.on14June1990,Intercomfinanzappealedbyanoticedated25June1990,onthegrounds,interalia,thatthejudgehadfailedproperlytoapplytheprincipleslaiddowninSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460,thattheremediesavailableinproceedingsbroughtinArgentinaweresuchastoenablepracticaljusticetobedoneshouldthefactualbasisforthecomplaintsmadeinthepetitionbeestablished,thatby[*86]reasonoffactualcircumstancesspecifiedinthenoticeArgentinawasthemoreappropriateforum,andthatforthoseandotherreasonsthejudgehaderredinhisdecision.Cur.adv.vult.19December1990.Thefollowingjudgmentswerehandeddown.DILLONL.J.ThiscasecomesbeforethiscourtonappealfromadecisionofHarmanJ.intheChanceryDivisionof5April1990.TheproceedingsinwhichtheappealisbroughtareentitledInthematterofHarrods(BuenosAires)Ltd.Thatcompany(thecompany)wasincorporatedinEnglandin1913undertheCompaniesActs1908and1913,anditsregisteredofficeisandhasalwaysbeeninEngland.ButitsbusinessisandhasalwaysbeenexclusivelycarriedoninArgentinaanditscentralmanagementandcontrolisexercisedinArgentinaitsprincipalactivityistocarryonadepartmentstoreorgeneralstoreinBuenosAires.Since1979,thecompanyhashadtwoshareholdersonly,bothofwhicharecompaniesincorporatedinSwitzerlandandwhosecentralmanagementandcontrolisexercisedinSwitzerland,viz.,thepresentappellantIntercomfinanzS.A.,whichowns51percent.oftheissuedsharecapitalofthecompanyandthepresentrespondent,LadenimorS.A.,whichownstheremaining49percent.Thepresentproceedingswerecommencedon7July1989bythepresentationbyLadenimorintheCompaniesCourtofapetitionundertheCompaniesAct1985andtheInsolvencyAct1986.TheprimarycaseputforwardbyLadenimoristhattheaffairsofthecompanyhavebeenandarebeingconductedbythepresentmanagementinamannerwhichisunfairlyprejudicialtoLadenimorwithinthemeaningofsection459oftheCompaniesAct1985,andtheprimaryreliefsoughtisanorderthatIntercomfinanzpurchaseLadenimorssharesinthecompanyatapricerepresenting49percent.ofthevalueofthecompanyanduponthebasisthattherebeaddedbacktothevalueofthecompanysuchlossasmaybefoundtohavebeencausedtothecompanybythematterscomplainedofinthepetition.Inthealternative,however,itissubmittedinthepetitionthatitisjustandequitablethatthecompanyshouldbewoundup,andacompulsorywindinguporderissoughtundertheInsolvencyAct1986.Itisnotindoubtthatthecompanyissolvent.[*91]Undertherelevantstatutoryrules,thecompanywasanecessarypartytotheproceedings,whetherthereliefsoughtwasawindinguporder,ormerelyanorderagainstIntercomfinanzundersection459oftheActof1985,andtherewasofcoursenodifficultyinservingthecompanyatitsregisteredofficeinEngland.Inaddition,onexparteapplicationLadenimorobtainedfromMr.RegistrarBuckleyon12July1989anorderunderR.S.C.,Ord.11,givingleavetoLadenimortoservethepetitiononIntercomfinanzoutofthejurisdiction.TheupshotofthatwasthatIntercomfinanz,byitsEnglishsolicitors,issuedasummonsof20November1989claiming(1)anorderthattheorderofMr.RegistrarBuckleygivingleavetoservethepetitiononIntercomfinanzbesetaside(2)anorderthattheserviceofthepetitiononIntercomfinanzbesetasideand(3)anorderthatthepetitionandallproceedingsthereonbestayed,onthegroundsthattherewasanotherforum(namelyArgentina)havingcompetentjurisdictionwhichwastheappropriateforumforthetrialoftheissuesraisedbythepetition.

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    ThatsummonscamebeforeHarmanJ.andbyhisordernowunderappealhedismissedit.Heheld,ineffect,first,thatleaveunderOrder11toservethepetitionoutofthejurisdictionwasneverrequired,onatrueappreciationofthestatutorypositionwiththeconsequencethatanylackofproperdisclosureintheaffidavitwhichwasputbeforeMr.RegistrarBuckleywasimmaterialandsecondly,thattheEnglishcourt,andnottheArgentinecourt,wastheappropriateforumforthetrialoftheissuesraisedbythepetition.HarmanJ.refusedIntercomfinanzleavetoappealagainsthisorder,butleavetoappealwasgrantedbyNichollsL.J.on14June1990.Hecommented:

    AlthoughthecompanywasincorporatedinEngland,andalthoughadecisiononwhetherornottograntastayisamatterofdiscretionforthejudge,IntercomfinanzS.A.hasaseriouslyarguablecaseontheapplicationoftheSpiliadaprinciples[SpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460]intheunusualcircumstancespresenthere.

    InthiscourtapreliminaryissueofimportancehasbeentakenonbehalfofLadenimor.ItissubmittedthatastheresultoftheBrusselsConventiononJurisdictionandtheEnforcementofJudgmentsinCivilandCommercialMatters1968betweentheoriginalmemberstatesoftheE.E.C.,towhichtheUnitedKingdom,DenmarkandIrelandaccededin1978afterjoiningtheE.E.C.,theEnglishcourthasnojurisdictiontorefuseonthegroundsofforumnonconvenienstodecidetheissuesraisedbythepetitionortostaythepetition,sincethecompanyisforthepurposesoftheConventiondomiciledinEngland(albeitalsodomiciledinArgentina).ThetermsoftheConventionaresetoutinSchedule1totheCivilJurisdictionandJudgmentsAct1982,andundersection2ofthatAct,theConventionhastheforceoflawintheUnitedKingdom.ThePreambletotheConventionsetsoutthegenesisoftheConventioninthefollowingterms:[*92]

    ThehighcontractingpartiestotheTreatyestablishingtheEuropeanEconomicCommunity,desiringtoimplementtheprovisionsofarticle220ofthatTreatybyvirtueofwhichtheyundertooktosecurethesimplificationofformalitiesgoverningthereciprocalrecognitionandenforcementofjudgmentsofcourtsortribunalsanxioustostrengthenintheCommunitythelegalprotectionofpersonsthereinestablishedconsideringthatitisnecessaryforthispurposetodeterminetheinternationaljurisdictionoftheircourts,tofacilitaterecognitionandtointroduceanexpeditiousprocedureforsecuringtheenforcementofjudgments,authenticinstrumentsandcourtsettlementshavedecidedtoconcludethisConvention

    ThescopeoftheConventionisprescribedinarticle1inTitleI.Withexceptionswhichareimmaterialtothepresentcaseitistoapplyincivilandcommercialmatterswhateverthenatureofthecourtortribunal.TitleII,comprisingarticles2to24,isheadedJurisdiction.Section1oftheTitle,comprisingarticles2to4,isheadedGeneralprovisions.Article2provides:

    SubjecttotheprovisionsofthisConvention,personsdomiciledinacontractingstateshall,whatevertheirnationality,besuedinthecourtsofthatstate.

    Thatisthearticlefundamentaltothepreliminaryissue.ItisnotindoubtthatthecompanyisdomiciledintheUnitedKingdom,althoughalsodomiciledinArgentina,andthatIntercomfinanzandLadenimoraredomiciledinSwitzerland:seesection42(3)and(6)oftheActof1982.Article3oftheConventionprovidesthatpersonsdomiciledinacontractingstatemaybesuedinthecourtsofanothercontractingstateonlybyvirtueoftherulessetoutinarticles2to6ofTitleII.Thesecondparagraphofarticle3thenlistsparticularprovisionsofthelawsofthevariouscontractingstatesincludingtheUnitedKingdomwhicharenottobeapplicableasagainstpersonsdomiciledinothercontractingstatesthedetailsarenotrelevant.Article4thenprovides:

    Ifthedefendantisnotdomiciledinacontractingstate,thejurisdictionofthecourtsofeachcontractingstateshall,subjecttotheprovisionsofarticle16,bedeterminedbythelawofthatstate.Asagainstsuchadefendant,anypersondomiciledinacontractingstatemay,whateverhisnationality,availhimselfinthatstateoftherulesofjurisdictionthereinforce,andinparticularthosespecifiedinthesecondparagraphofarticle3,inthesamewayasthenationalsofthatstate.

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    Therearethenfurtherarticlessettingoutdetailedprovisions,manyofwhichinvariousrespectsqualifyarticle2.Ishallhavetorefertosomeoftheselater.Therearealso,underTitleIII,detailedarticlesfrom25to49dealingwiththerecognitionandenforcementofjudgments.ItisinparticulartobenotedthatthedoctrineofforumconveniensunderEnglishandScottishlaw,aselaboratedbyLordGoffofChieveleyinSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460,is[*93]notarecognisedbasisforjurisdictionunderanyofthearticlesoftheConventionwherethecontestisbetweenthejurisdictionofcontractingstates.AsbetweenthecontractingstatesthegeneralprincipleoftheConventionisthatthecourtfirstproperlyseisedofacauseofactionundertheConventionshallexercisejurisdiction.Thusarticles21and23provide:

    21.Whereproceedingsinvolvingthesamecauseofactionandbetweenthesamepartiesarebroughtinthecourtsofdifferentcontractingstates,anycourtotherthanthecourtfirstseisedshallofitsownmotiondeclinejurisdictioninfavourofthatcourt.23.Whereactionscomewithintheexclusivejurisdictionofseveralcourts,anycourtotherthanthecourtfirstseisedshalldeclinejurisdictioninfavourofthatcourt.

    Againstthatbackgroundsection49oftheActof1982providesthatnothingintheActshallpreventanycourtintheUnitedKingdomfromstaying,sisting,strikingout,ordismissinganyproceedingsbeforeitonthegroundofforumnonconveniensorotherwisewheretodosoisnotinconsistentwiththeConvention.Itisimplicitinthatsection,inmyjudgment,thatthecourtcannotstayorstrikeoutordismissanyproceedingsonthegroundofforumnonconvenienswheretodosowouldbeinconsistentwiththeConvention,andthatcoversallcaseswherethedefendantinproceedingsinEnglandisdomiciledinEnglandandtheconflictofjurisdictionisbetweenthejurisdictionoftheEnglishcourtandjurisdictionofthecourtsofsomeothercontractingstate.ThecrucialquestioninthepresentcaseiswhethertheEnglishcourtcanstay,strikeoutordismissproceedingsonthegroundofforumnonconveniens,wherethedefendantintheEnglishproceedingsisdomiciledinEngland,buttheconflictofjurisdictionisbetweenthejurisdictionoftheEnglishcourtandthejurisdictionofthecourtsofastatewhichisnotacontractingstate,noothercontractingstatebeinginvolved.ThatquestioncamebeforetheCommercialCourtinS.&W.BerisfordPlc.v.NewHampshireInsuranceCo.[1990]2Q.B.631.Inthatcasethesecondplaintiff,whichwastherelevantplaintiff,wasanAmericancompanybasedinNewYork.ThedefendantwasanAmericaninsurancecompanydomiciledinNewHampshire,butthedisputesaroseoutoftheoperationsofthedefendantsLondonbranch,andconsequentlythedefendantwasdeemed,forthepurposeoftheConvention,tobedomiciledintheUnitedKingdom.ItwasheldbyHobhouseJ.inthosecircumstances(a)thatsincethepartieshadnotagreedthatthecourtsofanyothercontractingstateshouldhavejurisdiction,article2oftheConventionrequiredthatthedefendantshouldbesuedintheUnitedKingdom,(b)thattostaytheproceedingsonthegroundofforumnonconveniensviz.,thatthecourtsofNewYorkwerethemoreappropriateforumwouldbeinconsistentwiththeConvention,and(c)that,accordingly,theEnglishcourthadnojurisdictionundersection49oftheActof1982tostaytheaction.TheratioofthejudgmentofHobhouseJ.istobefoundinthepassageatpp.643G645D.Thecruxis,inmyjudgment,tobefound,wherethejudgesaid,atp.645:[*94]

    ItisclearthattheConventionisdesigned(subjecttoarticle4)toachieveuniformityandto'harmonise'therelevantproceduralandjurisdictionalrulesofthecourtsofthecontractingstates.TheConventionleavesnoroomfortheapplicationofanydiscretionaryjurisdictionbythecourtsofthiscountrytheavailabilityofsuchadiscretionwoulddestroytheframeworkoftheConventionandcreatelackofuniformityintheinterpretationandimplementationoftheConvention.

    ThatdecisionofHobhouseJ.wasfollowedbyPotterJ.inArkwrightMutualInsuranceCo.v.BryanstonInsuranceCo.Ltd.[1990]2Q.B.649.Inthatcasetheplaintiff,anAmericaninsurancecompany,hadaclaimonLondonreinsurerswhodisputedtheclaimonthegroundthatthelosswasnotcoveredbythepolicy.ThereinsurerscommencedproceedingsagainsttheplaintiffinNewYorkforadeclarationthattheywerenotliable.TheplaintiffthencommencedanactioninLondonagainstthereinsurersclaimingpayment,andthereinsurersappliedtostaytheEnglishproceedingsonthegroundofforumnonconveniensandlisalibipendens.TheycontendedthattheNewYorkcourtwasthemoreappropriatecourttodecidetheissue.TheargumentsinfavourofastayweresummarisedbyPotterJ.undereightheads,atpp.660661.Heads(1)to(6)read:

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    (1)TheConvention,beingconcerned,orprincipallyconcerned,togovernrelationsbetweencontractingstates,whichtherebyadoptedmutualobligationsandacceptedregulationoftheirownpotentiallycompetingjurisdictions,shouldnotreadilybeconstruedasoperatingsoastodepriveorinhibitnoncontractingstatesinrelationtocaseswherethejurisdictionofsuchstateswouldotherwiseplainlybemostappropriatefordeterminationofthedisputeinquestion.TheConventionbeingconcernedtodecidewhichofthecontractingstatesshouldassumejurisdictionincasesofcompetitioninterse,noviolenceisdoneorinconsistencyeffectedbyonecontractingstatestayingproceedingsinitscourtsinfavourofanoncontractingstate.

    (2)Thegeneralruleastodomicileimposedbyarticle2isnottoberegardedassooverwhelmingorallpervadingastoprecludestayinallcaseswhereitisnotexpresslyrequiredorpermittedbytheConvention.Theruleofdomicileistheprimafacieruleonly,withinasophisticatedframeworkofprovisionswhichrecogniseanumberofexceptionsinindividualsituations,themostlogicalandcompellingofwhicharethosedealtwithinarticles5to6A(specialjurisdiction),article16(exclusivejurisdiction)andarticle17(foreignjurisdictionclauses).(3)AnyEnglishcourtshouldbeslowsotoconstruetheConventionastoinhibitthevaluableandimportantjurisdictionofstayongroundsofforumnonconveniens,whichisdesignedtopromotecomity,toencourageefficiencyintheresolutionofdisputes,topreventduplicationoftimeandcostoflitigation,andtoavoidinconsistentjudgmentsintwojurisdictions.[*95](4)Albeitarticles21to23constituteamorelimitedandrigidschemeforallotmentofjurisdictionthanthatachievedbyapplicationofageneralprincipleofforumnonconvenienstheyareconcernedtogiveeffecttothenetworkofprovisionsinarticles2to20andtoavoidtheriskofinconsistentjudgmentsintwoormorecontractingstates,byrequiringdismissalorstayofactionsinfavourofthecourtofthecontractingstatefirstseised.Ifthereisnojurisdictionforacontractingstateinwhichadefendantisdomiciledorotherwiseproperlysuedtodeclinejurisdiction,ortostay,infavourofthecourtsofanoncontractingstate,thatcreatestheremarkablesituationwherebytheConventiondeterminestheappropriateforum(accordingtoitsownprovisions)forthecompetingjurisdictionsofcontractingstates,butrequiresentertainmentofsuitinthedomicileofthedefendant(withouttheapplicationofanytestofappropriateness)whereanoncontractingstateisconcerned.(5)EveniftheBerisfordcaseisrightinrespectofthebroadprincipleofforumnonconveniens,itneedandshouldnotbeappliedinrespectofthemorelimitedcaseoflisalibipendens,theverygroundofstaycontemplatedbyarticle21inrespectofcontractingstates.(6)GiventhatthepurposesoftheConventionareavoidancewithinthecourtsoftheCommunityofinconsistentjudgmentsandsimplificationofenforcementofjudgmentswithinthosecourtsneitherpurposewillbedisturbedbytheexerciseofajurisdictiontostayongroundsofforumnonconveniensand/orlisalibipendensinfavourofthecourtsofanonmemberstate.

    Thesearguments,however,thoughrecognised,atp.661,aspowerful,wererejectedbyPotterJ.onthegroundthatheagreedwiththedecisionofHobhouseJ.intheBerisfordcase[1990]2Q.B.631andpreferredthelogicoftheBerisfordcase.TheanswertothequestiondependsonthetrueconstructionoftheConventionandthatisamatterofEuropeanlaw.TheCourtofJusticeoftheEuropeanCommunitieshasjurisdictiontogiverulingsontheinterpretationoftheConventionundertheProtocolontheinterpretationoftheConventionof1968bytheEuropeanCourt,signedatLuxembourginJune1971.ThetextoftheProtocolof1971issetoutasSchedule2totheActof1982,andthatspecifiesthecourtswhichmayrequesttheCourtofJusticetogivepreliminaryrulingsonquestionsofinterpretationtheyincludethecourtsofthecontractingstateswhentheyaresittinginanappellatecapacity.InadditiontheActof1982providesbysection3(1)that

    Anyquestionastothemeaningoreffectofanyprovisionofthe[Convention]shall,ifnotreferredtotheEuropeanCourtinaccordancewiththeProtocolof1971,bedeterminedinaccordancewiththeprincipleslaiddownbyandanyrelevantdecisionoftheEuropeanCourt.

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    ItisfurtherprovidedthatinascertainingthemeaningoreffectofanyprovisionoftheConventionthecourtsmayconsiderthereportsofMr.P.JenardandProfessorPeterSchlosser,OfficialJournal1979No.[*96]C.59/1and59/71,andshallgivethemsuchweightasisappropriateinthecircumstances.ThesereportsarebothreferredtointhejudgmentsofHobhouseJ.intheBerisfordcaseandofPotterJ.intheArkwrightcaseandinthiscourtwehavehadcopiouscitationfrombothreports.Formypart,IfinditdifficulttogivemuchweighttothereportsinrelationtothequestionwithwhichweareconcernedbecauseIdonotthinkthatMr.JenardorProfessorSchlosserhadthatquestionincontemplation.Therearegeneralstatementsinthereportswhichcanbeusedaspointerseitherway,withoutthemselvessolvingthequestioninissue.MoreoveratthetimeevenoftheSchlosserreport,theEnglishdoctrineofforumconvenienswasconsiderablylessfullydevelopedthanitisnowthedecisioninTheAbidinDaver[1984]A.C.398andevenmore,SpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460,camelater.AsIseeitthestartingpointinapproachingtheconstructionoftheConventionmustbearticle220oftheE.E.C.Treaty,sincethePreambletotheConventionshowsasthestartingpointthedesireofthepartiestoimplementthatarticle.Theobjectofarticle220wastosecurethesimplificationofformalitiesgoverningthereciprocalrecognitionandenforcementofjudgmentsofcourtsortribunalsbetweenthememberstatesoftheCommunity.ToachievesuchrecognitionandenforcementitwasevidentlydecidedthatthecontractingstatesshouldhaveacommonbasisofinternationaljurisdictionorjurisdictionintheinternationalorderinthematterswhichfallwithinthescopeoftheConvention.Butthecommonbasisofjurisdictionenvisageddoesnotapplyworldwidesinceunderarticle4,ifadefendantisnotdomiciledinacontractingstatethejurisdictionofthecourtsofeachcontractingstateistobedeterminedbythenationallaw.ThedesideratumexpressedinProfessorSchlossersreport,OfficialJournal1979No.C.59/71,p.97,para.78,that

    Aplaintiffmustbesurewhichcourthasjurisdiction.Heshouldnothavetowastehistimeandmoneyriskingthatthecourtconcernedmayconsideritselflesscompetentthananother.

    isthusveryobviouslynotmetwherethedefendantisnotdomiciledinacontractingstate.Indeedthefollowingpassagesinparagraph78appeartoshowthattheProfessorwasonlyconcernedintheparagraphwiththeprotectionofpersonsdomiciledinthecontractingstatesandwithchoices,whichshouldnotbeonthegroundofforumconveniens,betweenthecourtsofseveralcontractingstateshavingjurisdiction.ThatisinlinewithreferencesintheJenardreport,e.g.thereferenceinOfficialJournal1979No.C.59/1,p.7,toanautonomoussystemofinternationaljurisdictioninrelationsbetweenthememberstatesandthestatementonp.15that

    thepurposeoftheConventionisalso,byestablishingcommonrulesofjurisdiction,toachieve,inrelationsbetweenthesixandinthefieldwhichitwasrequiredtocover,agenuinelegalsystematisationwhichwillensurethegreatestpossibledegreeoflegalcertainty.[*97]

    FortheEnglishcourttorefusejurisdiction,inacaseagainstapersondomiciledinEngland,onthegroundthatthecourtofsomenoncontractingstateisthemoreappropriatecourttodecidethemattersinissuedoesnotinanywayimpairtheobjectoftheConventionofestablishinganexpeditious,harmonious,and,Iwouldadd,certain,procedureforsecuringtheenforcementofjudgments,sinceexhypothesiiftheEnglishcourtrefusesjurisdictiontherewillbenojudgmentoftheEnglishcourttobeenforcedintheothercontractingstates.EquallyandforthesamereasonsucharefusalofjurisdictionwouldnotimpairtheobjectoftheConventionthatthereshould,subjecttotheverylargeexceptionofarticle4,beauniforminternationaljurisdictionforobtainingthejudgmentswhicharetobesoenforced.ButiftheEnglishcourtasaresultofarticle2oftheConventiondoesnothavethepowertodeclinejurisdictiontoentertainanactionagainstapersondomiciledinEnglandonthegroundthatthecourtsofanoncontractingstatearethemoreappropriateforum,theEnglishcourtmustequallyhavenopowertorefusetoentertainsuchanactiononthegroundoflisalibipendens,ifthelisispendinginthecourtsofanoncontractingstate.Articles21and22oftheConventionareonlyconcernedwiththepositionwhereproceedingsinvolvingthesamecauseofactionandbetweenthesameparties,orwhererelatedactions,arebroughtinthecourtsofdifferentcontractingstates.ThereisnothingatallintheConventiontodealwiththesituationwherethereisonelispendinginacourtofacontractingstateagainstapersondomiciledinthatstateandanother,andpossiblyearlier,lispending,inproceedingsinvolvingthesamecauseofactionorinarelatedaction,inthecourtsofanoncontractingstate.Againarticle17oftheConventionprovidesthatifthepartieshaveagreedthatthe

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    courtsofaparticularcontractingstateshallhaveexclusivejurisdictiontosettleanydisputeswhichmayariseinconnectionwithaparticularlegalrelationship,thenthecourtsofthatstateshallhaveexclusivejurisdictiontosettlesuchdisputes.ThereisnothingatallintheConventiontodealwiththesituationwherethepartieshaveagreedthatthecourtsofanoncontractingstateshallhaveexclusivejurisdictiontoresolvetheirdisputes.Butifarticle2hasthefullmandatoryeffectwhichHobhouseJ.intheBerisfordcase[1991]2Q.B.631thoughtithas,theEnglishcourtswouldbeboundtohearanddecideanactionagainstapersondomiciledinEnglandeventhoughbothpartiestotheactionhadagreedthatthecourtsofsomenoncontractingstatebeitNewYorkorArgentinashouldhaveexclusivejurisdiction.Suchresultswould,inmyjudgment,becontrarytotheintentionsoftheConvention.SincetheConventionismerelyanagreementbetweenthecontractingstatesamongthemselves,IdonotagreewithHobhouseJ.thattheframeworkoftheConventionwouldbedestroyediftherewereavailabletotheEnglishcourtadiscretiontorefusejurisdiction,onthegroundthatthecourtsofanoncontractingstateweretheappropriateforum,inacasewithwhichnoothercontractingstateisinanywayconcerned.Idonotacceptthatarticle2hastheverywidemandatory[*98]effectwhichHobhouseJ.wouldascribetoitwheretheonlyconflictisbetweenthecourtsofasinglecontractingstateandthecourtsofanoncontractingstate.Respectfullydiffering,therefore,fromtherulingsofHobhouseJ.andPotterJ.inS.&W.BerisfordPlc.v.NewHampshireInsuranceCo.[1990]2Q.B.631andArkwrightMutualInsuranceCo.v.BryanstonInsuranceCo.Ltd.[1990]2Q.B.649,IwouldrejectthepreliminaryissueraisedbyLadenimor,andIwouldholdthattheEnglishcourthasjurisdictiontostayordismissthepetitiononthegroundsofforumnonconveniensiftheEnglishcourtholdsthatthecourtsofArgentinaarethemoreappropriateforumtodecidetheissues.Iwouldaddthatitisnotappropriate,inmyjudgment,forthiscourttorequesttheCourtofJusticeoftheEuropeanCommunitiestogivearulingonthisissue.STOCKERL.J.IhavereadthejudgmentsofDillonandBinghamL.JJ.,whichIagreewith,andIhavenothingtoadd.BINGHAML.J.BeforethejudgeitwascommongroundthathehadadiscretiontostayLadenimorsproceedingsagainstthecompanyonthegroundofforumnonconveniensifhewasoftheopinionthat,applyingtheSpiliadatest(SpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460)inthisrathernovelsituation,goodreasonfordoingsoexisted.ThequestioninissuewaswhetherthejudgeshouldexercisethatdiscretioninfavouroftheArgentiniancourtonthegroundthatitwastheappropriateforumfortrialoftheproceedings.InthiscourtMr.BriggsforLadenimorcontendedthatthejudgehadnosuchdiscretion.HebasedthisargumentontheCivilJurisdictionandJudgmentsAct1982andtheConventionstowhichthatActgavetheforceoflawintheUnitedKingdom.Hissubmissionwas,inbrief,thatsincethecompanywas,byvirtueofsection42oftheActof1982,domiciledhere,theConventionsrequiredtheEnglishcourttoacceptjurisdictionandforbadeittodeclinejurisdictioninfavouroftheArgentiniancourtwhetherthatwasjudgedtobetheappropriateforumornot.Mr.Briggsacceptedthat,despitetheActandtheConventions,thejudgeretainedadiscretiontostayLadenimorsproceedingsagainstIntercomfinanz,whichisnotonanyshowingdomiciledhere,buthesubmittedthatIntercomfinanzsapplicationtostayhadtobejudgedonthebasisthattheproceedingsagainstthecompanywouldcontinueinanyevent.Theargumentthusraisedisofsomeobviousgeneralimportance.IninterpretingtheActof1982ourtaskis,asalways,toascertaintheintentionofParliamentandgiveeffecttoit.ButinsofarastheActisintendedtogivelegaleffecttotheConventionsandtoimplementtheUnitedKingdomsinternationalobligationtogivelegaleffecttotheConventions,wemustassumeintheabsenceofaclearindicationtothecontrary,whichisnottobefoundherethatParliamentintendedtheConventionstobeincorporatedintoEnglishlawsoasfaithfullytoreflecttheinternationalconsensusembodiedinthem.TheConventionsthemselvesareinpartsetoutinSchedulestotheAct,butitcannotbe[*99]doubtedthatininterpretingthemwearerequiredtoconsiderfirsttheobjectivesandschemeoftheConventions,andsecondlythegeneralprincipleswhichstemfromthecorpusofthenationallegalsystemsofthecontractingstates:L.T.U.LufttransportunternehmenG.m.b.H&Co.K.G.v.Eurocontrol(Case29/76)[1976]E.C.R.1541.Forthispurposewemustadoptaninternationalandcommunautaire,notanationalandchauvinistic,approach.AlthoughtheseConventionsdonotexpresslyprovide,likearticle18oftheRomeConventiononthelawapplicabletocontractualobligations(seetheContracts(ApplicableLaw)Act1990andSchedule(1)thereto),that

    Intheinterpretationandapplicationoftheprecedinguniformrules,regard

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    shallbehadtotheirinternationalcharacterandtothedesirabilityofachievinguniformityintheirinterpretationandapplication,

    itisplainthatthatisthebasisuponwhichweshouldact.AsthePreambletotheConventionof1968andtheJenardreport,OfficialJournal1979No.C.59/1,p.1etseq.,makeclear,thatConventionwasnegotiatedpursuanttotheobligationundertakenbytheoriginalmemberstatesinarticle220oftheE.E.C.Treatyto

    enterintonegotiationswitheachotherwithaviewtosecuringforthebenefitoftheirnationalsthesimplificationofformalitiesgoverningthereciprocalrecognitionandenforcementofjudgmentsofcourtsortribunalsandofarbitrationawards.

    WheninstigatingthenegotiationswhichledtotheConventionof1968,theCommissionoftheE.E.C.observed:

    Asjurisdictioninbothcivilandcommercialmattersisderivedfromthesovereigntyofmemberstates,andsincetheeffectofjudicialactsisconfinedtoeachnationalterritory,legalprotectionand,hence,legalcertaintyinthecommonmarketareessentiallydependentontheadoptionbythememberstatesofasatisfactorysolutiontotheproblemofrecognitionandenforcementofjudgments:Jenardreport,OfficialJournal1979No.C.59/1,p.3.

    Ifmemberstatesweretorecogniseandenforceeachothersjudgmentsvirtuallyonthenod,itwasplainlydesirable,sofaraspossible,toagreeonacommonbasisforacceptingjurisdiction,soastominimisethenumberofoccasionsonwhichstateAwouldhavetorecogniseandenforceajudgmentgivenbystateBincircumstanceswherestateAwouldnotitselfhaveacceptedjurisdiction.Giventhereferenceinarticle220tothebenefitoftheirnationals,onemighthaveexpectedthecommonbasisofjurisdictiontobefoundedonnationality,astheJenardreport,OfficialJournal1979No.C.59/1,p.14,acknowledges.Butinsteadthecommonbasisofjurisdictionwasfirmlyfoundedonthedomicileofthedefendant.TheJenardreport,atp.13,explainstheintentionsoftheoriginalnegotiators:UnderlyingtheConventionistheideathatthememberstatesoftheEuropeanEconomicCommunitywantedtosetupacommonmarketwithcharacteristicssimilartothoseofavastinternalmarket.[*100]Everythingpossiblemustthereforebedonenotonlytoeliminateanyobstaclestothefunctioningofthismarket,butalsotopromoteitsdevelopment.Fromthispointofview,theterritoryofthecontractingstatesmayberegardedasformingasingleentity:itfollows,forthepurposeoflayingdownrulesonjurisdiction,thataverycleardistinctioncanbedrawnbetweenlitigantswhoaredomiciledwithintheCommunityandthosewhoarenot.ThedomicileoftheCommunitybaseddefendantisnotinallcasesadeterminativetest.Itwasnecessarytomakespecialprovisionforagreementsconferringexclusivejurisdictiononaspecificcourt,amatterwhichbecameofgreatlyincreasedimportanceontheaccessionoftheUnitedKingdomowingtothefrequencywithwhichjurisdictionisconferreduponUnitedKingdomcourtsininternationaltrade(Schlosserreport,OfficialJournal1979No.C.59/71,p.124,para.177),andcasesofdualdomicile(discussedintheSchlosserreport,atpp.9697,para.75p.120,para.162,andp.125,para.181):seearticles17and21oftheConventionof1968.ButfortheCommunitydomicileddefendantthestateofdomicileisthestateuponwhichjurisdictionisprimarilyconferred.ForthatreasonIrelandandtheUnitedKingdomcannotfoundjurisdictiononserviceduringtemporarypresenceinthecountrynorScotlandonthegroundslistedinsubparagraphs(b)and(c)ofthesecondparagraphofarticle3:seearticle3andparas.85and86oftheSchlosserreport,atpp.99100.Further:

    thejurisdictionofEnglishcourtsinrespectofpersonsdomiciledintheCommunitycannolongerbebasedonthegroundthattheclaimconcernsacontractwhichwasconcludedinEnglandorisgovernedbyEnglishlaw:Schlosserreport,p.100,para.87.

    Astheextractfromp.13oftheJenardreportquotedabovemakesclear,however,thereisaclearandfundamentaldistinctionbetweenthepositionoftheCommunitydomicileddefendantandthedefendantdomiciledelsewhere.Inrespectofthelatter,contractingstatesmay,byvirtueofarticle4oftheConventionof1968,continuetoapplytheirtraditionalrules:theFrenchmayasserttheirexorbitantjurisdictionunderarticles14and15oftheCivilCode(Jenardreport,pp.1920),theScotsonthebasesspecifiedinsubparagraphs(b)and(c)ofthesecondparagraphofarticle3,theEnglishonthebasisofserviceduringtemporaryresidenceorbecausethecontractwasmadehereorwasgovernedbyEnglishlaw.Thusinthepresentcase,Intercomfinanzbeing

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    domiciledinnoneofthecontractingstates,itwouldnotviolatetheletterorthespiritoftheConventionsiftheEnglishcourtweretoassumejurisdictionoveritonanyofthetraditionalgrounds,howeverexorbitant.Forpurposesofrecognitionandenforcementnodistinctionisdrawnbetweenjudgmentsagainstdefendantsdomiciledwithinandjudgmentsagainstdefendantsdomiciledoutsidecontractingstates.While,therefore,theConventionsreducethenumberofcasesinwhichstateAwillhavetorecogniseandenforcejudgmentsgivenbystateBincircumstanceswherestateAwouldnotitselfhaveacceptedjurisdiction,theydonoteliminatesuchcasesaltogether.[*101]IncontendingthattheEnglishcourtwasnotonlyentitledbutboundtoacceptjurisdictioninLadenimorsproceedingsagainstthecompany,Mr.Briggsreliedinparticularonthewide,unambiguousandmandatorylanguageofarticle2.HealsoreliedonthethirdrecitalinthePreambletotheConventionof1968asshowingthatthepurposeoftheConventionwastodeterminetheinternationaljurisdictionofthecourtsofthecontractingstates.Itis,however,plain,adoptingtheapproachtointerpretationwhichIhaveoutlinedabove,thatarticle2mustbeinterpretedsoastoreflectthepurposeandschemeoftheConventionasawhole.ThereferencetointernationaljurisdictioninthePreambleis,inmyview,intendedtomakeclearthattheConventionisinnowayconcernedwiththenationaljurisdictionofthecourtsofthecontractingstates,i.e.withcaseslackinganyinternationalelement:Jenardreport,OfficialJournal1979No.C.59/1,p.8.Mr.BoyleforIntercomfinanzacceptedthat,sincethecompanyisdomiciledhere,andsincethereisnoexclusivejurisdictionclause,andsincenoproceedingshadbeenfirststartedinanothercontractingstate,theEnglishcourtwouldhavetoacceptjurisdictionifthealternativeforumallegedtobeappropriatewere,insteadofArgentina,thecourtofanyothercontractingstate.Inanychoiceofjurisdictionbetweenthecourtsofcontractingstates,heacceptedthattheConventionsprovideamandatoryandcomprehensivecode.ButhesubmittedthattheConventionsweredirectedanddirectedonlytocontrolofrelationsbetweencontractingstatesamongthemselves.IfthiscourtweretodeclinejurisdictioninfavouroftheArgentiniancourt,howcouldthatpossiblyprejudiceanyCommunityinterestwhichtheConventionsweredesignedtoprotectorpromote?If,ashecontended,theanswerwasthatitcouldnot,sincetheenforceabilityofanArgentinianjudgmentinanycontractingstatewoulddependonbilateralarrangementsbetweenArgentinaandthatstateanditwasveryunlikelythatanArgentinianjudgmentwouldbemorereadilyenforceablethananEnglishjudgment,thatwasasuresignthattheConventionswerenotintendedtoapplyinsuchasituation.BothpartiesmadereferencestoexcerptsfromtheJenardandSchlosserreports,whileurgingustoreadmoreextensivelyinthereports.Ithinkthereisanobviousdangerinseizingonoccasionalpassageshereandthereintheselongandcloselyreasonedreportstosupportoneviewortheotherwhenitisacknowledgedthatthepresentquestionwasneversquarelyaddressed.IhavereadthereportsmuchmoreextensivelythanthereasonableboundsoforalargumentpermittedtocounselandamintheresultofopinionthatthethrustofthereportsgivesmuchmoresupporttoMr.BoylesargumentforIntercomfinanzthantoMr.BriggsforLadenimor.Igiveoneexample.Bothreportsconsiderindetailtheexistenceofearlierbilateralortrilateralconventionsbetweencontractingstates,someofwhichareindeedlistedinarticle55oftheConventionof1968.Yet,saveforanisolatedandIthinkirrelevantreferencetoaconventionbetweenFranceandSwitzerlandonp.14oftheJenardreport,thereis(sofarasIcantrace)noreferencetoanyconventionbetweenanycontractingstateandanynoncontractingstate.OnMr.Boylesargumentthisisunderstandable:in[*102]theabsenceofanyconflictorpotentialconflictofjurisdictionbetweencontractingstates,theConventionshavenorole.If,however,theConventionsgovernrelationsbetweenacontractingstateandanoncontractingstateevenwhenthereisnoconflictorpotentialconflictbetweencontractingstates,onewouldexpectallconventionstofallforconsiderationandexamination.Mr.Briggswasabletorelyontworecentauthoritiesassupportinghissubmission.Thefirst,areserveddecisionofHobhouseJ.,wasS.&W.BerisfordPlc.v.NewHampshireInsuranceCo.[1990]2Q.B.631.InthatcasetheeffectiveplaintiffwasaNewYorkcompanyandthedefendant,althoughaNewHampshirecompany,carriedonbusinessandwasservedatanofficeintheCityofLondon.Thedefendantsoughtastay,contendingthatNewYorkwastheappropriateforum.Theplaintiffresisted,contendingthatbyvirtueoftheActandtheConventionsthecourthadnodiscretiontograntastayandthatinanyeventthegroundsforgrantingastaywerenotmadeout.Thejudgeagreedwiththeplaintiffonboththesepoints.TheargumentaddressedtousbyIntercomfinanz,ifcorrect,wouldhaveensuredthedefendantssuccessonthefirstofthesepoints,buttheargumentwasnotput.Thusthejudgedidnothavetoruleonitexpressly.Butthetenorofhisjudgmentstronglysuggeststhatifhehadhadtoruleonithewouldhaverejectedit.

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    Suchwastheinferencedrawn,inmyviewrightly,byPotterJ.inthesecondcase,ArkwrightMutualInsuranceCo.v.BryanstonInsuranceCo.Ltd.[1990]2Q.B.649.Inthoseproceedings,theplaintiffwasaMassachusettsinsurerandthedefendantswereEnglishreinsurersresistingaclaimunderpoliciesofreinsurance.BeforetheEnglishproceedingsbegan,thereinsurershadissuedproceedingsagainsttheinsurerinNewYorkforadeclarationthattheywerenotliabletotheinsurer.Afterissueoftheproceedingsherethereinsurersaskedthecourttostaythemintheexerciseofitsdiscretiononthegroundsofforumnonconveniensandlisalibipendens.Theinsurer,relyingontheActof1982andtheConventions,contendedthatthecourtnolongerhadsuchadiscretiontoexercise.CounselforthereinsurerstookissuewiththatpropositiononanumberofgroundswhicharequotedinthejudgmentofDillonL.J.,ante,pp.94D95D.Thejudge,inareservedjudgment[1990]2Q.B.649,rejectedthereinsurerssubmissionandupheld,atpp.662663,theinsurerssubmissionfoundedonthedecisionofHobhouseJ.:

    that,fortheEnglishcourttoretainitsformerwidediscretioninrespectofthedoctrineofforumnonconvenienswouldbeinconsistentwiththeConvention.

    IdonothoweverthinkthatthejudgespecificallyaddressedhimselftocounselsargumentswhichIhavequoted,whichseemtomepowerfullypersuasive.Ladenimorsargumentisofcoursestrengthenedbythesetwofirstinstancejudgmentswhich,althoughnotbindingonus,areentitledto[*103]respect.Theyhave,however,provokedacriticalnotebearingtheveryconsiderableauthorityofMr.LawrenceCollinsin(1990)106L.Q.R.535.Iwouldformypartadopthisconclusion,atpp.538539:

    WhentheEuropeanCourtcomestoconsidertheapplicationoftheConventiontononcontractingstates,itshouldseektheanswerintreatyinterpretation,andultimatelyinpublicinternationallaw.TheConventionwasintendedtoregulatejurisdictionasbetweenthecontractingstates.ThustheConventionprovidesthatinprincipledomiciliariesofacontractingstateshouldbesuedinthatstate,subjecttoimportantandfarreachingexceptions,andnotinothercontractingstates.Onceacourtinacontractingstatehasjurisdictionitisentitled,visvisotherstates,toexercisethatjurisdictionandothercourtscannot.ButthestateswhichwerepartiestotheConventionhadnointerestinrequiringacontractingstatetoexerciseajurisdictionwherethecompetingjurisdictionwasinanoncontractingstate.ThecontractingstatesweresettingupanintraConventionmandatorysystemofjurisdiction.Theywerenotregulatingrelationswithnoncontractingstates.

    Section49oftheActpreservesthepoweroftheEnglishcourttostayordismissanyproceedingsbeforeit,onthegroundofforumnonconveniensorotherwise,wheretodosoisnotinconsistentwiththeConventionof1968.Theultimatequestion,therefore,iswhetherexerciseofthediscretionarypowerhereinissueinthepresentsituation,wheretheonlyalternativeforumisinanoncontractingstate,isinconsistentwiththeConventionof1968.IconcludethatitisnotandaccordinglyaccepttheargumentofIntercomfinanzonthispoint.SincepreparingthisjudgmentIhavehadtheadvantageofreadingindraftthejudgmentofDillonL.J.,withwhichIaminfullagreement.Likehim,IdonotthinkitnecessarytorequesttheCourtofJusticeoftheEuropeanCommunitiestoruleonthequestionofinterpretationoftheConventionof1968raisedinthiscasetoenablethiscourttogivejudgmentonit.RulingagainstLadenimoronpreliminaryquestion.Costsreserved.6February1991.Thesubstantiveappealwasrestoredforhearing.Cur.adv.vult.13March.Thefollowingjudgmentswerehandeddown.DILLONL.J.Thebackgroundtothisappeal,downtothegrantingofleavetoappealbyNichollsL.J.,issetoutinmyjudgment,handeddownon19December1990,ante,pp.90Detseq.,onapointarguedasapreliminaryissueintheappeal.Idonotneedtorepeatithere.Wearenowconcernedwiththesubstantiveissueontheappeal,viz.thedecisionofHarmanJ.thattheEnglishcourtandnottheArgentinecourtwastheappropriateforumforthetrialoftheissuesraisedbythepetition.ThisledhimtodismissIntercomfinanzs

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    summonsof20November1989wherebyIntercomfinanzhadclaimedtohavetheorderofMr.RegistrarBuckleygivingleavetoservethepetitiononIntercomfinanz,andtheconsequentservice,setasideandhadclaimedalsotohavethepetitionandallproceedingsthereonstayedonthegroundthattheArgentinecourtwastheappropriateforumforthetrialoftheissuesraisedbythepetition.AnyquestionwhichoftwocountriescourtsistheappropriateforumforthetrialofproceedingshastobedecidedaccordingtoSpiliadaprinciples:seeSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460.Thequestionisthereforetobedecidedatthediscretionofthejudgeatfirstinstance,anditiswellknownthatthegroundsonwhichtheappellatecourtmayinterferewiththeexerciseofthejudgesdiscretionareverylimited.LordTemplemanintheSpiliadacasestressed,atp.465G,thatinsuchacaseanappealshouldberareandtheappellatecourtshouldbeslowtointerfere.Thequestionwhetherthiscourtisentitledtointerfereistomymindthemostdifficultquestionontheappeal.AsIseeit,inthecontextofthisparticularcasewhatwehavetoconsiderfirst,ifthereistobeanypossibilityofthiscourtinterferingwiththedecisionofHarmanJ.,iswhetherthejudgeaskedhimselftherightquestions.Thatinvolvesconsidering(a)whatheshouldhaveaskedhimselfand(b)whatheactuallyaskedhimself,andcomparingthetwo.Ifhedidnotaskhimselftherightquestions,wehavetoconsiderwhattheconsequenceis.[*108]BeforeIturntothat,Icandisposeofonesubsidiarypoint.InSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460LordGoffofChieveleydevotesasectionofhisspeechtoconsideringhowtheprincipleoftheSpiliadacaseisappliedincaseswherethecourtexercisesitsdiscretionarypowerunderR.S.C.,Ord.11.ItsohappensthattheapplicabilityofOrder11tothispetitionraisesaquestionofsomedifficultytowhichIshallhavetocome.LadenimorssolicitorsappliedtoMr.RegistrarBuckleyfor,andobtained,leaveunderOrder11toservethepetitiononIntercomfinanzoutofthejurisdiction.ButLadenimoracceptsthattherewasmaterialnondisclosuretothecourtonitspartonthatapplication.HarmanJ.heldthatonthetrueconstructionofthevariousrulesinissuetheleavesoughtunderOrder11wasnotneeded,andsothenondisclosurewasimmaterial.Buthealsosaidthat,hadleavebeenneeded,thedefectsintheaffidavitinsupportoftheapplicationunderOrder11wouldhaveledhimatleasttosetasidetheorderforserviceoutwithoutmoreadoonthegroundthatithadbeenobtainedwithoutproperdisclosure.Inthiscourt,manymonthslater,neithersideasksustotakesuchasummarycoursewhichwouldmerelyleadtoafreshapplicationforleave.Bothpartieshaveputinalltheirevidence,andbothaskustodecidethesubstantiveissueonthatevidence.AsIunderstandthespeechofLordGoffofChieveleyintheSpiliadacase,whatthecourthadtolookforistheforum,havingcompetentjurisdiction,inwhichthecasemaybetriedmoresuitablyfortheinterestsofallpartiesandfortheendsofjusticeseethetestofLordKinnearinSimv.Robinow(1892)19R.665.TothatendifquestionsofonusandtheeffectofOrder11areforthemomentlefttothesidethecourtlooksfirstfortheappropriateornaturalforum,beingthatwithwhichtheactionhasthemostrealandsubstantialconnection:seetheSpiliadacase[1987]A.C.460,478.Itisthereforenaturaltoaskwhatthecaseoractionis,asHarmanJ.did.AtthispointIhavereservationsaboutHarmanJ.sapproach.HeseemstohaveacceptedasubmissionfromMr.BriggsforLadenimorthatproceedingswithinthetrustorcompanyjurisdictionoftheChanceryDivisionweretobedistinguishedfromproceedingsintheCommercialCourtwhichweretrulylitigationinterpartes.ThusHarmanJ.setsoutinhisjudgment,ante,p.81FG,thatcasesintheCommercialCourt,towhichmanyinternationalcasesarebrought,areallmattersoftruelitigationinterpartes.Buthethengoesonante,pp.81G82A,tocontrastapplicationsbytrusteesintheChanceryDivisionfordirectionsinrelationtotheirtrust.Hisconclusionseemstobe,atp.82A,thatonlytheEnglishHighCourthereinLondoncanregulatetheaffairsofanEnglishtrust.InlinewiththisapproachandwithMr.Briggsargument,HarmanJ.whenhecomes,atp.83C,toformulatethecrucialquestion,saysthatthequestionmustalwaysbehowisthiscompanyproperlytoberegulated?Inmyjudgment,however,thepetitioninthepresentcasebearsnoresemblancewhatsoevertoanapplicationtothecourtbytrusteesfordirectionsorguidance.Itislitigationinterpartes,betweenLadenimorandIntercomfinanz,justasmuchasanyactionintheCommercialCourt.[*109]Inconsideringtheconnectionoftheproceedingswitheachforum,thecourtisplainlynotlimitedtofactorsofconvenienceinthepreparationforandconductofatrial.Butequallythecourtmustnotignoresuchfactors.Itmustalsoconsideranyissuesoflawthatariseinthecase,andanyspecialfactorindependentofthepartieswhichmaymaketrialinoneforumratherthantheothermoreappropriatesuchastheCambridgeshirefactorinSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.

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    460.Sofarasfactorsoflawareconcernedthefundamentalpointtomymindinthiscaseisthatthiscompanyhasatwofoldposition.OntheonehanditwasincorporatedinEnglandandsoissubjecttothewindingupjurisdictionoftheEnglishcourtundertheInsolvencyAct1986,andsubjecttothegeneraljurisdictionoftheEnglishcourtundertheCompaniesAct1985.IthasmadeallreturnstotheCompaniesRegistryherethatarerequiredbyUnitedKingdomlaw,hasaregisteredofficehereandhasregularlyhelditsannualgeneralmeetingshere,albeitforformalbusinessonlysincetheshareswereacquiredbyLadenimorandIntercomfinanzin1979.ItsaccountscontinuetobemadeupinaccordancewiththerequirementsofUnitedKingdomlawastothepaymentofdividendsinparticularontheadviceofEnglishsolicitorsitabstainedfrompayingdividendsoutofcurrenttradingprofitsatatimewhenitstillhadaccumulatedtradinglossesfrompastyears.Ontheotherhand,thecompanysbusinesshasalwaysbeencarriedoninArgentinaandnowhereelse.IthasaregisteredofficeinArgentinaandcomplieswithallrequirementsofArgentinalaw.Itiscommongroundthatunderarticle124oftheArgentineCompanyLawthecompanyfallstobeconsideredasalocalcompanyformedandregisteredinArgentinaitisthussubjecttothewindingupjurisdictionoftheArgentinecourt.ThereisnothingsurprisinginthisiftheroleswerereversedandthecompanyhadbeenincorporatedinArgentinabuthadalwayscarriedonallitsbusinessactivitiesinEngland,itwouldhavehadtohavehadanofficeforserviceofprocesshereandwouldhavebeensubjecttothewindingupjurisdictionoftheEnglishcourtaswellastothatoftheArgentinecourt.ThecaseputinthepetitionisthatitisallegedbyLadenimor(1)thattheaffairsofthecompanyhavebeen,arebeingandforaslongasthesameremainunderthecontrolofaMr.AtilioGibertoni(who,itisalleged,beneficiallyownsandcontrolsIntercomfinanz)willbeconductedinamannerwhichisunfairlyprejudicialtotheinterestsofLadenimorandfurtheroralternatively(2)thatitisjustandequitablethatthecompanyshouldbewoundup.ThemattersoffactreliedoninsupportofthatcasearealmostentirelyconcernedwiththemanagementofthecompanyinArgentina,andwithwhathashappenedinArgentina.Itissaid,forinstance,thatunderMr.Gibertoniscontrolandbyhisprocurementthefollowingmatterstookplace.(i)ThecompanyenteredintothebusinessofcattlebreedinginArgentina.TheherdsownedbythecompanyhavebeenmixedwiththeherdsownedbyotherArgentinecompanieswhichMr.Gibertonicontrols,andallcalvesborntothemixedherdshavebeenattributedto[*110]thoseotherArgentinecompaniestotheexclusionofthecompany.ThusthecompanysshareoftheprofitsofthecattlebreedinghasbeendivertedtoMr.Gibertonisothercompanies.(ii)From1984tothepresenttimethecompanyhasmadeloanstoArgentinecompaniesownedorcontrolledbyMr.Gibertoniwhich(a)werenotmadeforthebenefitofthecompanyanddetractedfromthecompanysabilitytodevelopitsprimarydepartmentstorebusinessor(b)fellshortofthebestcommercialinvestmentofanycapitalsurplustothecompanysworkingrequirementsthenreasonablyobtainablewithinArgentinaand(c)wereinseveralcasesmadeinfavourofcompanieswithdeterioratingbalancesheetsrepresentingariskofdefault.(iii)ThecompanyinOctober1983andagainin1987acquired,fromArgentinecompaniesownedorcontrolledbyMr.Gibertoniandatvastlyexcessiveprices,sharesconstitutingaminorityinterestinanotherArgentinecompany,TimboS.A.,whichwasinthemajorityownershipandcontrolofMr.Gibertoniand(iv)whenitwasdecidedthatbecausethecompanycouldnot,underUnitedKingdomlaw,lawfullypaydividendsoutofitstradingprofits,loansshouldbemadetotheirshareholdersinproportiontotheirshareholdings,theamountsattributabletoLadenimorsshareswerenotpaidtoLadenimorbut,itwouldseem,toabankaccountinLuganowhichitissaidwasunderthecontrolofMr.Gibertoni.ItisalsosaidthattheMiserocchifamily,whowereItalianandcontrolLadenimor,havebeenexcludedbyIntercomfinanz/Mr.Gibertonifromallparticipationinthemanagementofthecompany.ItfollowsthatallcontemporarydocumentsrelatingtothematterswhichwillhavetobeinvestigatedatthetrialoftheissuesraisedinthepetitionwillhavebeenwritteninSpanish,orpossibly,inthecaseofcorrespondencewiththeMiserocchi's,inItalianandwillhavetobetranslatedintoEnglishifthetrialisinEngland.MoreovermostofthewitnesseswillbeSpanishspeakingpeoplewhodonotknowEnglishandwillhavetogiveevidencethroughinterpretersifthetrialisinEngland.Thatwouldnecessarilymakeitmoredifficultforajudgetoassessthetruthfulnessandhonestyofwitnesses.Mr.Briggsrightlypointedoutthattheextenttowhichoralevidencewouldbeneededatthetrialwoulddependonhowfaritwaspossibleforthepartiestoagreethefactsafterexchangeofwitnessstatements.ButheconcededthatifthetrialofthepetitiontookplaceinEnglanditwouldbeinhiswords,aprettyghastlytrial.

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    Thereisafurtherminorfactorthat,asIunderstandtheposition,therehavebeenotherproceedingslaunchedbyLadenimorortheMiserocchifamilyinrelationtootherArgentinecompanies,inwhichallegationssimilartothoseraisedinthepetitionhavebeenmade.Mr.BriggsurgesthattherelationshipbetweentheshareholdersinthecompanyisgovernedbythememorandumandarticlesofassociationwhicharegovernedbyEnglishlaw.Buttheallegationsinthepetitiondonotdependontheconstructionofthememorandumandarticles.HealsoseekstoplacesomerelianceonthefactthatwhenIntercomfinanzandLadenimorboughtthesharecapitalofthecompanyin1979,theyboughtfromanEnglishbank,GrindleyBrandt's,underacontractwhichisgovernedbyEnglishlaw.Nothingturns,however,ontheirobligationsquaGrindleyBrandt's.Thoughtheyofcourseknewthat[*111]theywerebuyingthesharecapitalofacompanyincorporatedinEngland,theyalsoknewthatitwasacompanywhosewholebusinesswasinArgentinaandwassubjecttoArgentinelaw.HarmanJ.plainlyappreciatedthatthefactualissuesindisputefavouredtrialinArgentina.Hecommented,ante,p.83B,thatthereisnodoubtthatalltheprincipalwitnessesareArgentiniananoverstatementinthattheMiserocchisareItalian.Butinconsideringwhichwasthemoreappropriateforumheseemstohaveputthefactualissuestooneside,andconcentratedonlyonthefactthattheremediessoughtbyLadenimorbythepetitionwereremediesmadeavailablebyEnglishstatutesinrespectofacompanyincorporatedinEngland.Thushesays,atp.83C,puttingwhathesawasthecrucialquestion:Nonetheless,asitseemstome,thequestionmustalwaysbe:'Howisthiscompanyproperlytoberegulated?'Hethengoeson,ante,p.83:

    WhenoneislookingatacompanyincorporatedinEngland,whichhasitslifeandbeingonlybyvirtueoftheactoftheEnglishlawcreatingthisartificialperson,itistomymindextremelydifficulttoseethatitcanbeappropriatetoholdthat'theforum'appropriatetodecidethatsortofmatterisanyforumotherthantheforumoftheEnglishcourt.Itis,asMr.Briggssubmitted,inmyview'blindinglyobviouswhattheanswertothequestionisoncethequestionisposed.

    Witheveryrespecttothejudge,theanswerisonlyblindinglyobvioustohimbecauseofthepremiseswhicharebuiltintothewayhehasposedhisquestion.Theseareinpart,asIreadthejudgmentasawhole,hisanalogyofanapplicationtotheEnglishcourtfordirectionsinrespectofanEnglishtrust.ButmoreseriouslyinmyjudgmenthehasfailedtokeepinmindatthiscrucialstageinhisjudgmentthatthiscompanyisbyArgentinelawtobeconsideredasalocal,Argentiniancompany.IdonotregarditasatallblindinglyobviousthatreliefforthedishonestmanagementofanArgentiniancompanyinArgentinashouldbegrantedbyacourtotherthantheArgentiniancourt.Thatillustratesthatthequestionformulatedmaybylimitingthepremisesonwhichitisformulateddictatetheanswer.Thatisinmyrespectfulviewwhatthejudgehasdonehere,insteadofconcentratingonthequestionasputinSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460.Onecantestthematterfurtherbyananalogy.Letitbeassumed,contrarytothefact,thattheonlyreliefclaimedinthepetitionisacompulsorywindinguporderonjustandequitablegrounds.(IfullyappreciatethatthatisveryfarfrombeingLadenimorspreferredalternative,sinceawindinguporderwouldnot,withoutsubsequentmisfeasanceproceedings,compensateLadenimorforthewrongswhich,ifLadenimorisright,ithassufferedfromMr.Gibertonismanagementofthecompany).TheevidenceofArgentinelawbeforethiscourtisscantybutnotdisputed.ItconsistsofanaffidavitbyaDr.Bomchil,apartnerinaBuenosAireslawfirmwhohasbeenapractisinglawyerinArgentinasince1973andisoneofthethreedirectorsofthecompany,[*112]andanaffidavitbyaMr.Seitun,whowasenrolledasanadvocateinArgentinain1985andhasforseveralyearsadvisedMr.Gibertoniandanumberofthecompaniesreferredtointhepetition.Itappearsfromtheirevidencethatunderarticle94(4)oftheArgentineCompanyLaw,acompanycanbewoundupbytheArgentinecourtifthefulfilmentofthecorporateobjectisimpossible.Dr.Bomchilstatesthatthisappliesincompaniesandpartnershipswheredisagreementbetweenthemembersonhowtheentitysbusinessshouldbeconductedhasturnedthefulfilmentofitsobjectintoanimpossibleachievement.Hecontinues:

    Inthecaseofcompaniestherehavebeenseveralcasesinwhichthecourtshaveconsideredthe'affectiosocietatis(thewillingnessoftheshareholderstodobusinesstogether)tobeanessentialelementofthecompanyscontinuedexistence,particularlyincompanieswithsmallnumbersofshareholders,andconsequentlyhaveruledthatalackofthesamejustifiesanorderwindingupthecompany.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 19/28

    ThatapproachseemstobearresemblancestothepositiononjustandequitablewindinguppetitionswhichtheEnglishcourtsreachedbythedecisionoftheHouseofLordsinInreWestbourneGalleriesLtd.[1973]A.C.360afteranearlierdivergenceofjudicialopinion.SinceLadenimorhasnottroubledtoputinanyrelevantevidenceofArgentinelaw,IdonotthinkthatwecanatthisstagerejecttheevidenceofDr.BomchilandMr.SeitunbecausetheyhavenotspeltoutindetailhowthejurisprudenceinArgentinahasdevelopedonatopicwhichtheEnglishcourts,beforetheWestbourneGalleriescase,founddifficult.Accordingly,acceptingtheiruncontradictedevidenceforpresentpurposes,Iwouldhavenodoubtthat,iftheonlyreliefsoughtbythepetitionerwereawindingupofthecompanyonjustandequitablegrounds,theArgentinecourtwouldbethecourtwithwhichtheaction/disputehadthemostrealandsubstantialconnection,andtheArgentinecourtwouldbethecourtinwhichthecasewouldbetriedmoresuitablyfortheinterestsofallpartiesandfortheendsofjustice.ThisisperhapsunderlinedbythefactthattheevidenceraisesadoubtwhetherawindingupordermadeagainstthecompanybytheEnglishcourtwouldberecognisedbytheArgentinecourtsastheassetsareinArgentinaawindingupordermadebytheEnglishcourtwouldbeofverylimiteduseifitwasnotrecognisedinArgentina.ThecrucialfactorinthepresentappealisthereforethattheprimaryreliefwhichLadenimorseeksistheorderundersection459and461oftheCompaniesAct1985thatIntercomfinanzpurchaseLadenimorssharesinthecompanyatapricerepresenting49percent.ofthevalueofthecompanyanduponthebasisthattherebeaddedbacktothevalueofthecompanysuchlossasmaybefoundtohavebeencausedtoitbythematterscomplainedofinthepetition.ItisclearfromMr.SeitunsaffidavitthatacompulsoryacquisitionofLadenimorssharessuchasthatsoughtinthepetitionisnotavailableinArgentina.WhatisavailableinArgentinais,asIunderstandtheevidence,firstlyawindinguporder,whichwouldleadtotherealisation[*113]oftheremainingassetsofthecompanyanddistributionofthenetproceedsamongtheshareholders,andsecondlyandadditionallyaclaimfordamagesunderarticle54oftheArgentineCompanyLaw.InMr.Seitunstranslation,article54provides:

    Thepartnersorcontrollingentitieswhofraudulentlyorwithnegligencecausedamagestoacompanyarejointlyandseverallyliabletorepairsuchdamages,andcannotpretendtocompensatewiththeprofitthattheymayhavegeneratedinotherbusiness.Thepartnerorcontrollingentitythatappliesfundsofthecompanytohisownuseorbusinessorthatofthirdpartiesmustbringtothecompanyanyresultingprofit,buthewillbearanyloss.Anycompanyactivitythathiddenlyprocuresobjectivesforeigntothecompany,thatisjustawaytoviolatethelaw,thepublicorderortofrustraterightsofthirdparties,willbedirectlyattributabletothemembersorcontrollingpartieswhomadeitpossible,whowillrespondjointlyandseverallyandwithoutlimitationfordamagescaused.

    Dr.Bomchilsays,andithasnotbeenchallenged,inrelationtoarticle54:

    Anyshareholdermaysueothershareholdersbasedonthisprovision.Ineffectarticle54makesthecontrollingshareholdersliableforanegligentorunlawfulhandlingofthecompanysbusiness.

    WedonotknowhowtheArgentinejurisprudencehasdevelopedinrelationtoarticle54,andMr.BriggssubmitsthatitisveryfarfromclearthatLadenimorwouldbeabletorecoverdamagesagainstIntercomfinanzunderarticle54inrespectofLadenimorslossesoccasionedbythemattersallegedinthepetition,assumingthemtobeestablished.Hesaysadditionallythatarticle54couldnotcompensateLadenimorforthelossitwouldsufferifasaresultofthematterscomplainedofinthepetitionthereisawindinguporderandaforcedsalebytheliquidatorofthecompanysremainingassets.AsIseeit,anysalebyaliquidatorofthecompanysmainasset,thedepartmentstore,wouldbelikelytobeasaleofitasagoingconcern,unlessahigherpricecouldbeachievedbyasaleforredevelopment,andnotasaleonabreakup.Butasalebytheliquidatorofthedepartmentstoreasagoingconcernmightyetbeaforcedsaleinthattheliquidatormightnotbesellingatthebesttimeonecannotusefullyspeculate.Beforeconsideringhowtheclaimforreliefundersection459oftheCompaniesAct1985,andthatdifferenceinthatfieldbetweenEnglishandArgentinianrelief,affectstheapplicationinthiscaseofSpiliadaMaritimeCorporationv.CansulexLtd.[1987]A.C.460principlesIfinditappropriatetoconsiderthepositionunderR.S.C.,Ord.11,sinceintheSpiliadacaseLordGoffstated,atp.480H,thatintheOrder11casestheburdenofproofrestsontheplaintiffwhereasintheforumnonconvenienscasesthatburdenrestsonthedefendant.

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 20/28

    UndertheCompaniesAct1948,thesamestatutecontainedboththeprovisionsforthecompulsorywindingupofacompanyonjustand[*114]equitablegroundsonthepetitionofacontributory,and,insection210,aprovisionrathermorelimitedinitsscopethanthepresentsection459oftheActof1985forreliefagainstoppression.Applicationsundereitherheadweregovernedbythesamesetofrules,theCompanies(Windingup)Rules1949(S.I.1949No.330(L.4)).ThoseRulesrequiredthepetitiontobeservedonthecompany,butdonotappeartohaverequiredserviceonanyoneelse.Thepracticewhichdevelopedprobablyinevitablyinviewofthewaysection210wasdraftedwasthatapetitioner,whowantedhissharestobeboughtfromhimundersection210by,e.g.,anoppressivemajority,wouldaskintheonepetitioninthealternativeforapurchaseorderundersection210orawindinguporderonjustandequitablegrounds.Section210oftheActof1948wasreplacedbyprovisionsintheCompaniesAct1980inthesametermsasthosenowtobefoundinsections459and461oftheCompaniesAct1985.Butwhilethoseprovisions,relatingtowhatareforconveniencecalledunfairprejudiceapplicationsremaininaCompaniesAct,theActof1985,thestatutoryprovisionsforthewindingupofcompanies,includingthewindingupofasolventcompanyonacontributoryspetitiononjustandequitablegrounds,arenowtobefoundinadifferentstatute,theInsolvencyAct1986.Theconsequenceisthatwhere,ashere,apetitionercombinesinonepetitionanapplicationforreliefforunfairprejudiceundersection459andanapplicationforawindinguporderonjustandequitablegrounds,therearetwodifferentsetsofrulesapplicabletothealternativeapplications.ThesearetheCompanies(UnfairPrejudiceApplications)ProceedingsRules1986andtheInsolvencyRules1986.Boththesesetsofrulesweremadeunderthesamestatutoryprovision,namelysection411oftheInsolvencyAct1986(astowhichseesection461(6)oftheCompaniesAct1985asamended),bythesamerulemakingauthority,namelytheLordChancellorwiththeconcurrenceoftheSecretaryofStateafterconsultingtheInsolvencyRulesCommitteereferredtoinsection413oftheInsolvencyAct1986.Theyweremadewithinthesamemonth,thoughnotonthesameday,andcameintooperation/forceonthesamedate,29December1986.ButitisfarfromclearthattheyhavethesameeffectinrelationtoOrder11.IntheInsolvencyRules1986,whichcoveraverywiderangeofmattersindetail,itisexpresslyprovidedinrule12.12thatOrder11andthecorrespondingCountyCourtRules1981donotapplyininsolvencyproceedings.Insolvencyproceedingsaredefinedinrule13.7asmeaninganyproceedingsundertheInsolvencyAct1986ortheInsolvencyRules.Inlieuitisprovidedbyrule12.12(3):

    Whereforthepurposesofinsolvencyproceedingsanyprocessororderofthecourt,orotherdocument,isrequiredtobeservedonapersonwhoisnotinEnglandandWales,thecourtmayorderservicetobeeffectedwithinsuchtime,onsuchperson,atsuchplaceandinsuchmannerasitthinksfit

    Bycontrast,intheCompanies(UnfairPrejudiceApplications)ProceedingsRules1986,whichareaveryshortsetofrules,thereisnoreferencetoOrder11.Butitisprovidedinrule2(2):[*115]

    ExceptsofarasinconsistentwiththeActandtheseRules,theRulesoftheSupremeCourtandthepracticeoftheHighCourtapplytoproceedingsunderPartXVIIoftheActintheHighCourt

    withanappropriatealternativeprovisioninrelationtocountycourts.TheActhereistheCompaniesAct1985andPartXVIIofitincludessections459and461.HarmanJ.heldthatR.S.C.,Ord.11nonethelessdidnotapplytoanapplicationundersections459and461.Hereachedthatconclusionfortworeasons.OnewasthatheheldthatthepositionwascoveredbyR.S.C.,Ord.11,r.1(2)(b)andserviceoutofthejurisdictionwithoutleaveofthecourtwastherebypermitted.Rule1(2)provides:

    Serviceofawritoutofthejurisdictionispermissiblewithouttheleaveofthecourtprovidedthateachclaimmadebythewritiseither:(a)or(b)aclaimwhichbyvirtueofanyotherenactmentsc.otherthantheCivilJurisdictionandJudgmentsAct1982theHighCourthaspowertohearanddeterminenotwithstandingthatthepersonagainstwhomtheclaimismadeisnotwithinthejurisdictionofthecourtorthatthewrongfulact,neglectordefaultgivingrisetotheclaimdidnottakeplacewithinitsjurisdiction.

    Astothat,wehavehadtheadvantage,whichHarmanJ.didnothave,ofresearchbycounselintotheantecedentsoftherule.Itwasfirstintroducedin,forpracticalpurposes,itspresentform,byparagraph5oftheRulesoftheSupremeCourt(No.2)

  • 21/8/2015 InreHarrods(BuenosAires)Ltd.

    http://www.uniset.ca/lloydata/css/1992Ch72.html 21/28

    Order1963(S.I.1963No.1989L.16).ItseemsplainthatthereasonforitsintroductionwastheenactmentoftheCivilAviation(Eurocontrol)Act1962.ThatActwasenactedtogiveeffecttoaninternationalConventionconcludedatBrusselsandsection7(3)provides:

    AcourtinanypartoftheUnitedKingdomshallhavejurisdiction(a)tohearanddetermineaclaimforchargespayabletotheministerbyvirtueofregulationsundersection4ofthisAct,notwithstandingthatthepersonagainstwhomtheclaimismadeisnotresidentwithinthejurisdictionofthecourt(b)tohearanddetermineaclaimagainsttheorganisationfordamagesinrespectofanywrongfulact,neglectordefault,notwithstandingthatthatact,neglectordefaultdidnottakeplacewithinthejurisdictionofthecourtorthattheorganisationisnotpresentwithinthejurisdictionofthecourt:Providedthatacourtshallnothavejurisdictionbyvirtueofparagraph(b)ofthissubsectioninrespectofdamageorinjurysustainedwhollywithinoroveracountrytowhichthisActdoesnotextend.

    ThatisthewordingpickedupinOrd.11,r.1(2)(b).Itappears,however,thatrule1(2)(b)mayhavebeenintendedtohaveawiderscopethanonlyapplyingwhereitsactualwordinghasbeenusedinastatute,asinsection7(3)oftheCivilAviation(Eurocontrol)Act1962.TherearesomeActs,suchastheCarriagebyAirAct1961andtheCarriageofGoodsbyRoadAct1965,whichwereenactedto[*116]makethetermsofcertaininternationalConventionstowhichtheUnitedKingdomhadaccededpartofUnitedKingdomlaw.ActionsbroughtundertheseActswereatonetimelistedinOrd.11,r.1(1)asamongthecasesinwhichleavetoserveoutofthejurisdictioncouldbeobtainedunderOrder11.Buttheyarenolongersolisted.ItmayhavebeenthoughtthatasthejurisdictionprovisionsoftheConventions,layingdowninwhatcourtsproceedingscanbebrought,arenowpartofthestatutesandhaveforceinthiscountrybyvirtueofthestatutes,leaveunderOrder11isnotnecessarybecauseofOrd.11,r.1(2)(b)andsothesestatutesshouldnotbelistedinOrd.11,r.1(1).ButinmyjudgmenttobewithinOrd.11,r.1(2)(b)anenactmentmust,ifitdoesnotusetheprecisewordingintherule,atleastindicateonitsfacethatitisexpresslycontemplatingproceedingsagainstpersonswhoarenotwithinthejurisdictionofthecourtorwherethewrongfulact,neglectordefaultgivingrisetotheclaimdidnottakeplacewithinthejurisdiction.Itisnotenough,inmyjudgment,thattheenactment,liketheCompaniesAct1985,givesaremedyingeneralcasesagainstothermembersofthecompanywithoutanyexpresscontemplationofaforeignelement.Indeedifthejudgesreasoningonthispointwererightitwouldseemthatanyproceedingstoclaimaninjunctioncouldbebrought,withoutleaveunderOrder11,againstapersonwhoisnotwithinthejurisdictionofthecourtandcouldproceedtotrialwithoutanysuchleavebecauseunderanenactment,section37oftheSupremeCourtAct1981,theHighCourthaspowerbyorder(whetherinterlocutoryorfinal)tograntaninjunctioninallcasesinwhichitappearstothecourttobejustandconvenienttodoso.HarmanJ.salternativereasonforholdingthatanapplicationunderOrder11wasnotnecessarywhereitwasdesiredtoserveapetitionundersection459oftheCompaniesAct1985onapersonwhowasnotwithinthejurisdictionofthecourtwasfoundedonrule2(2)oftheCompanies(UnfairPrejudiceApplications)ProceedingsRules1986.HeconsideredthatitwasinconsistentwiththeCompaniesAct1985andthoseRulesthatOrder11shouldapplytosuchapetition.Heconsideredinparticularthatservicewascomprehensivelydealtwithbyrule4oftheRulesof1986,whichrequiredserviceofapetitionundersection459oftheActof1985oneveryrespondentnamedinthepetitionaswellasonthecompany.Heconsideredthatitwouldbecuriousiftherulemandatorilyobligedthepetitionertoserverespondentsnamedinthepetition,butyetthepetitionerhadtogetleavetoeffectsuchserviceheconcludedthattherewouldbeaninevitable


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