Jurisdiction – art.1(2)(b) Lugano Convention – reg.5 Credit Institutions (Reorganisation and Winding up) Regulations 2004

The claim is one of several brought by Vincent Tchenguiz in relation to the aborted SFO investigation of his involvement in the collapse of the Icelandic bank, Kaupthing. Claims of malicious prosecution and conspiracy are made against, inter alia, Kaupthing and Mr Johannsson, a member of its Winding up Committee.

The English court’s jurisdiction, said to arise under the Lugano Convention, was challenged on the basis that the claim fell within art.1(2)(b) of the Convention’s exclusion of “proceedings relating to the winding-up of insolvent companies…”. The court rejected that challenge.

The test was whether the claim derived directly from the winding up proceedings and was closely connected with them (following Rubin v Eurofinance [2013] 1 AC 236). This test was construed narrowly. The fact that the claim was consequential upon, or arose in the context of, the winding up was insufficient. The claim did not derive directly from the winding-up because, although the impugned activities of Mr Johannsson took place in his capacity as a member of the Winding up Committee, they did not relate to his discharge of the functions of that office. The role merely provided the opportunity for the alleged conspiracy. Further, Carr J said (obiter) that even claims relating to the discharge of the officeholder’s duties could lack a sufficiently close connection to the winding up, for example a fraudulent misrepresentation by an administrator in the course of selling an asset.

The claim against Kaupthing was nevertheless stayed, because an Icelandic provision prohibiting legal action against credit institutions in an Icelandic liquidation was validly imported into English law by reg.5 of the Credit Institutions (Reorganisation and Winding up) Regulations 2004.

The case illustrates that foreign claims against an insolvency office holder will often be governed by the jurisdictional regime of the Judgments Regulation (1215/2012) (or equivalently the Lugano Convention) because the exclusion in those regimes for insolvency proceedings is narrow. But, in the European context at least, the insolvent estate will usually be shielded from foreign claims by the provisions of its local insolvency regime.