The dispute concerned control of an English company and the authority of trustees appointed to its Turkish parent. For jurisdiction under the Brussels I Recast Regulation, the Supreme Court examined the two claims separately. A dispute about the authority to act for the Turkish company could not be brought within the English company-law jurisdiction simply by joining it to a claim about the English company.
Koza Altin is a publicly listed Turkish gold-mining company in the Koza Ipek Group, formerly controlled by Mr Ipek and his family. Koza Ltd, incorporated in England in 2014, is its wholly owned subsidiary. Mr Ipek says that he and the Group were unfairly targeted by the Turkish authorities, including through a criminal investigation. In September 2015 he caused changes to Koza Ltd’s constitution: a new class of “A” shares was created, two of them were issued to him and his brother, and a new article 26 was introduced requiring the prior written consent of the “A” shareholders before the articles could be changed or the directors replaced. The respondents say these changes are valid; the appellants say they are unlawful attempts to entrench control of Koza Ltd.
Law Teacher writing support
Writing a law essay?
We choose a writer who is an expert in your area of law and qualified to at least the academic level you select. Most of our writers hold a master’s degree or PhD, have teaching experience, or both.
Send us your question and, if you wish, any marking criteria. We’ll write an essay to your instructions.
In the Turkish criminal proceedings, a judge appointed trustees to control Koza Altin and other Group companies in place of the existing management. The first to fifth appellants were later appointed as those trustees. In July and August 2016 the trustees caused Koza Altin to serve notices under the Companies Act 2006 requiring a general meeting of Koza Ltd to consider resolutions removing its directors and replacing them with three of the trustees.
The two claims
Mr Ipek and Koza Ltd sought an urgent injunction to stop the meeting. They advanced two distinct claims. The English company law claim was that the notices were void under section 303(5)(a) of the 2006 Act because an “A” shareholder had not consented, so any resolutions would breach article 26 and be ineffective. The authority claim was that the English courts should not recognise the trustees’ authority to cause Koza Altin to act as a shareholder of Koza Ltd. They said the appointments were only interim and were made in breach of Turkish law, the European Convention on Human Rights and natural justice, so recognition would be contrary to public policy.
They argued that permission to serve out was unnecessary because article 24(2) of the Brussels I Recast Regulation gave the English courts exclusive jurisdiction over the whole claim. Article 24(2) gives the courts of the member state in which a company has its seat exclusive jurisdiction, regardless of domicile, in proceedings which have as their object the validity of the company’s constitution, its nullity or dissolution, or the validity of the decisions of its organs. It was common ground that the article applied even though Turkey is not an EU member state. Snowden J accepted the jurisdiction submission and granted interim relief.
The decisions below
Koza Altin and the trustees challenged jurisdiction. They accepted that the English courts had article 24(2) jurisdiction over Koza Altin on the English company law claim, which concerns Koza Ltd, but said there was no such jurisdiction over the authority claim, which concerns the conduct of Koza Altin’s business, and none over the trustees on any part of the claims. Asplin J dismissed the challenge. It was common ground that the English company law claim fell within article 24(2). She treated the authority claim as inextricably linked with it and regarded the challenge to Koza Altin’s ability to act in relation to Koza Ltd as the principal subject matter of the proceedings as a whole.
The Court of Appeal dismissed the appeal. It held that article 24(2) required an overall evaluative judgment of what the proceedings were principally concerned with, which here was a challenge to Koza Altin’s ability to act as a shareholder of Koza Ltd in relation to Koza Ltd’s internal affairs. That remained so even if some of the relief, viewed in isolation, went to the validity of decisions of Koza Altin’s organs. It also held that jurisdiction extended to the trustees, even though they were not necessary parties, because the subject matter was the same and the aims of avoiding conflicting decisions and trying the case in the best-placed courts applied.
Why the claims had to be kept separate
Lord Sales, with whom Lord Reed, Lord Hodge, Lady Black and Lord Briggs agreed, allowed the further appeal. Because article 24(2) creates exclusive jurisdiction, its meaning can be tested by treating Turkey as if it were a member state. Exclusive jurisdiction cannot be shared. Unlike the Regulation’s general and special jurisdiction rules, under which more than one member state may have jurisdiction and priority is then settled by which court is first seised, article 24 displaces those rules. Its application must therefore be highly predictable and capable of only one correct answer. A broad evaluative judgment on which courts might reasonably differ is inconsistent with that scheme.
The Court of Justice has repeatedly required a strict, narrow reading of this exclusive-jurisdiction rule and its predecessor. It covers disputes in which a party challenges the validity of a decision of a company’s organ under the applicable company law or the provisions governing that organ. A mere link with such a decision is not enough. In a contractual claim, questions about whether a company validly decided to enter the contract are ancillary; they do not make the validity of the organ’s decision the principal subject matter and do not transfer the proceedings to the courts of the company’s seat. The Court of Appeal had reversed that approach. It used one claim that did fall within article 24(2) to pull in a conceptually distinct claim that did not.
The two claims here are connected, but they are not inextricably bound together. The English company law claim can be decided on its own terms without examining whether the trustees validly caused Koza Altin to act. The authority claim can likewise be decided without examining article 26 or the “A” shares. Assessed on its own, the authority claim has as its principal subject matter the validity of decisions of the organs of Koza Altin, a company seated in Turkey. If Koza Altin were seated in Greece, article 24(2) would allocate that claim exclusively to the Greek courts, not the English courts. The same construction applies where the other state is Turkey.
That reading serves the purposes identified when the rule was introduced and later confirmed by the Court of Justice: legal certainty, a single authoritative judgment, and trial in the courts best placed to deal with the dispute because information about the company is notified and made public in the state of its seat. It also avoids inconsistent assessments, under the law of the seat, of the same organ decisions affecting subsidiaries in several states. A later Court of Justice decision on rights in land likewise refused to treat a linked claim as falling within exclusive jurisdiction merely because another claim in the same proceedings did. The law was acte clair: article 24(2) does not cover the authority claim.
The trustees
The proceedings against the trustees are principally concerned with the authority claim, so article 24(2) gives the English courts no jurisdiction over them on that claim. Nor does jurisdiction over the English company law claim against Koza Altin extend to the trustees. They are not necessary parties to that claim and are further removed from it. Once the two claims are considered separately, a strict reading excludes the trustees from the latter claim as well. The aims of avoiding conflicting decisions on each claim’s own subject matter, and of trying each claim in the courts best placed to do so, point the same way.
Because Turkey is not an EU member state, the Regulation does not itself give the Turkish courts exclusive jurisdiction over the authority claim. The English courts might therefore assume jurisdiction over that claim on some other basis under the rules governing service out of the jurisdiction. That possibility did not arise here, because jurisdiction had been assumed solely under article 24(2).
Verdict: The Court unanimously allowed the appeals. Article 24(2) gave the English courts jurisdiction over Koza Altin on the English company-law claim only. It gave them no jurisdiction over the trustees or over the claim challenging authority to act for the Turkish company.
Source: Akçil and others v Koza Ltd and another [2019] UKSC 40
