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Zacaroli J dismissed a challenge to the Court’s jurisdiction to determine a company’s claim for declarations that a recent financial restructuring had complied with the terms of an earlier intercreditor agreement. The restructuring concerned debts in the order of €1.2 billion owed by a group of companies manufacturing heat exchangers and cooling systems. Certain of the Defendants allege that the restructuring was effected in a manner which preserved a private equity fund’s control of the group, and the position of senior creditors, whilst selling the operating divisions at an undervalue through an unfair auction, at the expense of junior creditors.

The judgment contains an important analysis of the application of Article 8(1) of the Brussels Recast Regulation in the context of claims for declarations. It considers the extent to which the merits of such claims must be considered against the anchor defendants in isolation, how the potential impact of such claims upon related foreign proceedings should be approached, how the potential non-participation at trial of one or more parties may be addressed, and the relevance of the fact that some of the anchor defendants actively support the declarations being sought.

The Court proceeded on the basis that Article 8(1) imports a merits test (following the majority in Sabbagh v Khoury [2017] EWCA Civ 1120), that the merits are to be evaluated as at the date that the proceedings have been issued, and (following Henshaw J’s recent decision in Public Institution for Social Security v Al Rajaan [2020] EWHC 2979 (Comm)) that it was appropriate to consider “expediency” under Article 8(1) by reference not only to whether the claims are closely connected, but by reference to all the circumstances (including impact upon proceedings abroad).

The Court also considered the application of Article 25(1) of the Brussels Recast Regulation against the Sixth Defendant, in circumstances where it was accepted that D6 had not been party to an asymmetric jurisdiction clause as at the date proceedings commenced, but had become party thereafter, at a time when it had already commenced related proceedings in another jurisdiction (New York).

Andreas Gledhill QC and Shane Sibbel act for the First and Eighth Defendants. 

Please see the full judgment here.

Clerks

Staff