08th May 2017
The Court of Appeal has handed down a judgment concerning the effect of exclusive jurisdiction agreements and how, notwithstanding clear wording of such an agreement, a party may nevertheless submit to the jurisdiction of the English Court and waive any right to rely upon an exclusive jurisdiction agreement in favour of the courts of another country.
This is the latest decision in the long-running Re Fi Call Ltd litigation between Apex Global Management Ltd and Global Torch Ltd: a major international fraud case arising out of telecommunications development in the Middle East. This appeal concerned the attempt of the fraudster Mr Almhairat and his company, Apex, to stay the execution of part of the judgment below on the basis that part of the judgment obtained by Global Torch was based upon a Share Purchase Agreement (“SPA”) which was subject to an exclusive jurisdiction agreement in favour of the courts of Saudi Arabia. This was a novel jurisdiction challenge as it was made after judgment had been given at the culmination of over four years litigation. Nevertheless, Mr Almhairat and Apex argued on appeal that during the litigation they had maintained that the SPA was a forgery to which they had never agreed. Therefore, they said, by analogy with the House of Lord’s decision in Fiona Trust v Privalov  UKHL 40 the correct point at which to raise a jurisdiction challenge based on the clause was after the English Court had determined that the SPA was in fact true and binding upon Apex. Curiously, they had put forward an alternative version of the SPA which they asserted was the genuine version, but the trial judge (Hildyard J) found that the true version was the one containing the exclusive jurisdiction clause and which had been signed by Mr Almhairat on behalf of Apex, so that it followed that them must have known from the outset that that was the true SPA.
Dismissing the Appeal, Gloster LJ (Black LJ and Sir Christopher Clarke agreeing) held that, notwithstanding the fact that the jurisdiction clause in the SPA encompassed the relevant dispute, Apex and Mr Almhairat had submitted to the jurisdiction of the English Court and/or waived their right to rely upon it by virtue of their conduct in engaging in the litigation without raising a jurisdiction challenge on this basis earlier. At the very latest the challenge ought to have been made when it became known to Apex that Global Torch was relying upon the SPA and its terms. Global Torch also successfully showed on appeal that Apex and Mr Almhairat had acted unconscionably and that there was evidence that Mr Almhairat or Apex would in any event refuse to submit to the jurisdiction of the courts of Saudi Arabia.
The decision emphasises the need for jurisdiction challenges to be made “as early as possible”. A late challenge will be treated within the relief from sanctions framework under CPR rule 3.9. Failing to make the challenge at an early stage may, as in the present case, result in a party being held to have submitted to the jurisdiction of the English Court notwithstanding any jurisdiction agreement to the contrary on the basis that any right to rely upon such agreement has been waived.
Michael Ryan appeared for Global Torch, the successful respondent to the appeal, together with Justin Fenwick QC and Daniel Saoul.
To view the judgment please click here.