UK: Court Of Appeal Clarifies The Rule On Forum Conveniens: The ´Natural´ Forum Is Not Necessarily The ´Appropriate´ Forum

Last Updated: 24 October 2009
Article by Jeremy Mash

It has long been established that, in cases not covered by the Brussels Regulation or Lugano Convention, the English courts will only accept jurisdiction if England is the most appropriate forum to determine the claim, i.e. the forum conveniens. This typically raises questions such as where the parties respectively carry on business, where witnesses are resident and which are the laws governing the relevant transaction.

In Deripaska v Cherney, the Court of Appeal was called upon to go further and make clear that there was a two stage test at issue and that a claimant might serve its claim form in another jurisdiction to the one that was the "natural" jurisdiction if there were unusual circumstances which indicated that another jurisdiction was more suitable in the interests of justice. One such circumstance to be taken into account was whether there was any risk that the claimant would not obtain a fair trial in the "natural" jurisdiction.

The judge at first instance duly followed the principles articulated by Lord Goff in The Spiliada Maritime Corporation v Cansulex (The Spiliada) [1987] AC 460 that although it was usual for cases to be heard in their "natural" jurisdiction, i.e. the place with which the case had the most real and substantial connection, the court had to consider any unusual circumstances which might affect that presumption. One such circumstance was whether the claimant would be likely to obtain a fair trial in the "natural" jurisdiction. If, in the courts view, there was "cogent evidence" that the claimant could not obtain justice in the "natural" jurisdiction, a stay of the proceedings could be granted.

Applying those principles to this case, the judge considered that there was sufficient evidence of a risk of the claimant (Michael Cherney) being assassinated, being vulnerable to prosecution based on trumped-up charges in Russia or being subject to state interference by Russia in the judicial process. On the other hand, the parties were no strangers to England, as they had made their contract in this jurisdiction and the defendant (Oleg Deripaska) himself owned properties and held a large number of assets here. Taking these factors together, the judge decided that, while Russia was the natural forum, England was the most appropriate jurisdiction in which the claim could be tried in the interests of the parties and in the interests of justice.

Mr Deripaska appealed against the court's decision on two grounds. Firstly, he claimed that as there had been a decision that another country, i.e. Russia, was the natural forum, that should have been the end of the matter and there should not have been any further consideration as to whether the parties would experience a fair trial or not. Secondly, he argued that in any event the evidence before the judge had not been sufficiently "cogent" to allow him to hold that England was the appropriate forum.

In relation to the first ground of appeal, the Court of Appeal restated that the principles from The Spiliada applied both to an initial application by a claimant for permission to serve proceedings out of the jurisdiction and to an application by a defendant for a stay following a grant of such permission, the only difference being where the burden of proof lay, i.e. on the claimant in the former case and on the defendant in the latter case. In both cases, the court had a duty to consider any unusual circumstances surrounding the case and, in particular, any circumstances that would affect whether the parties would obtain a fair trial in another forum. "Natural" and "appropriate" were not the same thing and such additional factors could mean that the English court was appropriate even when it was not the natural forum.

In relation to the second ground of appeal, the Court of Appeal noted that the evaluation of evidence remained a matter for the first instance judge. The Court of Appeal could only interfere with the judge's conclusions if it appeared that the evidence available to the judge had not been sufficient to support them. The Court of Appeal confirmed that the evidence available to the judge in this case was sufficiently "cogent" to suggest that Mr Cherney would be at risk of not obtaining a fair trial if he were forced to pursue his claim in Russia. The judge had therefore had good reason for his decision to refuse a stay of the English proceedings.

On one level, the case has excited media interest in the contest between two Russian oligarchs and the issues of Russian state interference with the judicial process. More importantly for lawyers, the forum conveniens test is shown to be not simply a control on forum shopping but a wider test, which in extreme instances may compel the English courts to consider the availability or unavailability of substantial justice in other countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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