The Privy Council has rendered its long-awaited decision in the Eurochem proceedings, overturning the Eastern Caribbean Court of Appeal and reaffirming that the case should proceed in the BVI. Harneys acted for the successful appellant, Eurochem. Our previous blogs relating to this high-profile appeal can be found here and here.
In summary, the issue of which jurisdiction was clearly and distinctly the more appropriate forum to try Eurochem’s claim arose in the context of applications: (i) to set aside leave to serve foreign defendants out of the jurisdiction; and (ii) to stay the BVI proceedings on jurisdiction grounds. In its claim Eurochem alleges that eighteen defendants are liable for their participation in five fraudulent schemes pursuant to which bribes were paid for the benefit of two of its former employees. Nine of the defendants are BVI companies that are said to have been used to pay, receive, conceal and/or launder the bribe monies.
Justice Wallbank, sitting in the BVI Commercial Court, had originally dismissed the applications to set aside leave to serve out and to stay the BVI claim. However, his decision was overturned by the Court of Appeal, primarily on two points:
- That Russia was an available alternative forum to try the claims; and
- That Russian law governed the claims, such that this tipped the balance of connecting factors and meant that Russia was the more appropriate forum.
The Privy Council found that the Court of Appeal was wrong to depart with Wallbank J’s decision on both points.
In relation to the availability of the Russian courts as an alternative forum, the Privy Council considered that Wallbank J had been justified in finding that he could not resolve conflicting expert evidence on the ability to bring the claims in Russia. As such, Wallbank J had been unable to find that Russia was an available forum, although he had been willing to assume it was available for the purposes of the set aside applications (where Eurochem has the burden of proving BVI was clearly and distinctly the more appropriate jurisdiction).
The Privy Council took the view that the governing law of the claims could not be ascertained and that Wallbank J had been correct not to reach any view on it. As a result, governing law should be treated a neutral factor in determining the more appropriate forum in this case.
Having disagreed with the Court of Appeal on these issues and preferring the approach of Wallbank J, the Privy Council considered this was sufficient to overturn the Court of Appeal’s judgment and reinstate the decision of Wallbank J, with the consequence that the claim would proceed in the BVI.
However, the Privy Council also indicated that in a case such as this, where a foreign national had deliberately incorporated BVI companies for use in an international fraudulent scheme, the breadth of remedies available in the BVI was a material aspect of the claim and practical justice might well not be done if the claim had to proceed in a jurisdiction where the same remedies were not available.
This final aspect of the Privy Council’s judgment is critical (albeit obiter) because it suggests that in other cases where there may be an alternative forum that is clearly and distinctly more appropriate there might still be grounds for the claimant to argue that a stay should not be granted if powerful remedies associated with anti-corruption and asset tracing, such as constructive trusts, are not recognised or cannot be utilised.