The Court of Appeal has held that the place of the event giving rise to damage in a claim alleging conspiracy to injure by unlawful means is where the conspiracy was hatched. As the claimant bank had far the better of the argument that this was England, the English courts had jurisdiction: Khrapunov v JSC BTA Bank  EWCA Civ 40.
More generally, the decision suggests that when looking for the place of the event giving rise to damage, the court should focus on the events which set the tort in motion, and it is irrelevant for jurisdiction purposes that damage is required before a cause of action is complete.
The test for jurisdiction in tort cases isn’t always easy to apply, particularly in cases concerning economic loss. This is the latest case in which the Court of Appeal has considered the applicable principles. For our posts on the earlier Court of Appeal decisions see here and here.
The decision is also of interest for its consideration of what amounts to unlawful means for the purposes of the tort of conspiracy to injure by unlawful means. That part of the decision will be considered in a separate blog post, to be published shortly.
This decision is the latest in the long-running saga of litigation between JSC BTA Bank and its former Chairman, Mr Ablyazov, and his associates. The Bank has claims in excess of US$4.6 billion against Mr Ablyazov in relation to alleged misconduct of the Bank’s affairs, and judgments have been entered against him. These proceedings concern a claim by the Bank against Mr Ablyazov’s son-in-law, Mr Khrapunov, for the tort of conspiracy to injure the Bank by unlawful means. It is alleged that Mr Khrapunov conspired with Mr Ablyazov to hide Mr Ablyazov’s assets from the Bank or dissipate them, in breach of an English worldwide freezing order and receivership order. The unlawful means relied on are breaches of the freezing and receivership orders.
Mr Ablyazov lived in England between 2009 and February 2012, when he fled the jurisdiction to avoid being committed to prison for contempt of court. He is currently in France. Mr Khrapunov lives in Switzerland. Whether the court had jurisdiction against Mr Khrapunov therefore depended upon the terms of the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ L 339/3 of 21.12.07). Mr Justice Teare held that the English court had jurisdiction but only in respect of events taking place prior to Mr Ablyazov fleeing the country in 2012. Both parties appealed.
The Court of Appeal (Sales LJ giving the leading judgment with which Beatson and Gloster LLJ agreed) held that breaches of a court order qualified as unlawful means for the purposes of the tort of conspiracy to injure by unlawful means. This aspect of the judgment will be addressed in a separate blog post.
Turning to the question of jurisdiction, the court first considered whether the Bank could sue Mr Khrapunov in England on the basis that Mr Ablyazov was domiciled in England and they could therefore rely on Article 6 of the Lugano Convention. This permits a party domiciled in a member state to be sued, where he is one of a number of defendants, in the courts for the place where any one of them is domiciled.
Under section 41A of the Civil Jurisdiction and Judgments Act 1982, an individual is domiciled in the UK if he is resident here and the nature and circumstances of his residence indicate that he has a substantial connection with the UK. It was clear that Mr Ablyazoz was not resident here, having fled the jurisdiction in 2012. Nor, with a prison sentence hanging over his head, did he have any intention of returning. The Bank argued however that he should be taken still to be domiciled in England because in leaving the jurisdiction he had violated an obligation under the freezing order, and a person should not be allowed to benefit from their own wrong.
The court rejected this argument. Reading such a proviso into section 41A would undermine the intended clarity of effect of the provision. In any event, such a qualification would only prevent a person from taking advantage of an unlawful act of their own. So it would not prevent Mr Khrapunov, as opposed to Mr Ablyazov, from relying on the terms of section 41A.
Jurisdiction in tort claims
If the English court was to have jurisdiction, it was therefore necessary for the Bank to bring their claim within the tort provisions in the Lugano Convention.
Article 5 of the Convention provides that a person domiciled in a member state (so Switzerland in Mr Khrapunov’s case) may be sued in matters relating to tort in the courts for the place where the harmful event occurred or may occur.
This provision permits the English courts to exercise jurisdiction if England is the place where the damage occurred or England is the place of the event giving rise to the damage.
So far as the place where damage occurred is concerned, this means direct damage, not indirect damage or consequential loss. The court rejected an argument that the Bank suffered direct damage in England because the English freezing order and judgments had been reduced in value by the alleged actions of Mr Krapunov. That was consequential damage. The direct damage was sustained in the foreign jurisdictions (Switzerland, Belize and Russia) where the Bank’s opportunity to execute its judgments was lost or hindered.
The Bank was successful however in arguing that England was the place of the event giving rise to the damage, as this is where the conspiracy was allegedly hatched in about 2009. The court rejected the approach of Teare J who considered that the relevant event was the implementation of the conspiracy by way of instructions given by Mr Ablyazov. Teare J’s approach meant that the English court would only have jurisdiction in respect of instructions given prior to Mr Ablyazoz leaving the country in 2012. Under the Court of Appeal’s approach, the court had jurisdiction in respect of all events which took place as a result of the 2009 agreement. This prevented multiple proceedings, increased costs, delay and the risk of irreconcilable judgements.
More generally, in determining the relevant event for the purposes of jurisdiction, the court focused on the event which was the legal foundation or principal foundation of the Bank’s claim – put another way, the events which put the tort in motion. In a conspiracy claim that was the making of the agreement, in the same way that in a negligent misstatement claim it was the making of the statement (Domicrest Ltd v Swiss Bank Corporation  QB 548) and in a defamation case it was where the publisher of the newspaper was established (Shevill v Press Alliance  2 AC 18). It did not matter that damage was required for the cause of action in tort to be complete, as such technicalities of English law were not relevant to application of autonomous concepts in the Lugano Convention.