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The procedural clash: case management stay, or can I go now?

Shulman v Kolomoisky and Bogolyubov [2018]

In what circumstances may a court stay determination of a co-defendant’s jurisdiction challenge once the claim against an anchor defendant has been dismissed? That question was addressed, for the first time, in Shulman v Kolomoisky and Bogolyubov [2018] EWHC 3182 (Ch).

The claimant purported to serve proceedings on the second defendant (the “anchor defendant”) in England on the basis that he was domiciled there. The claimant then served the proceedings on first defendant (the “co-defendant”), who was domiciled in Switzerland, under Article 6(1) of the Lugano Convention on the basis that the claim against him was so closely connected to the claim against the anchor defendant that it was expedient to determine them together to avoid the risk of irreconcilable judgments. 

Both defendants challenged the English court’s jurisdiction. The anchor defendant’s challenge, which was determined first, succeeded because Barling J held that the anchor defendant was not domiciled in England when the claim form was issued. The claim against the anchor defendant was accordingly dismissed for want of jurisdiction. 

The claimant then applied to the Court of Appeal for permission to appeal against Barling J’s order and also applied for a stay of the co-defendant’s jurisdiction challenge pending determination of that permission to appeal application and, if permission was granted, determination of the appeal. 

Chief Master Marsh granted the latter stay on case management grounds despite the fact that it was common ground that the co-defendant’s jurisdiction challenge had to succeed following the dismissal of the claim against the anchor defendant. The Chief Master held that a stay was simpler and less artificial than requiring costs to be incurred on a further, protective, appeal for the event that the claimant’s appeal against Barling J’s order succeeded. 

The High Court allowed the co-defendant’s appeal. Fancourt J held that the Chief Master had failed to take into account what was “by some way” the most important factor in exercising his discretion, namely that it was common ground that the court had no jurisdiction to hear the claim against the co-defendant ([25] and [28]). Since that was common ground, it was difficult to see, except possibly in an exceptional case, how case management considerations can outweigh the absence of jurisdiction ([26]). Examples of an exceptional case would be where judgment on an appeal against the dismissal of the claim against the anchor defendant was imminent or where the dismissal of the claim against the anchor defendant was “wholly irrational” ([21]).

Stephen Atherton QC and Malcolm Jarvis appeared for the successful appellant instructed by Fieldfisher LLP.

A copy of the judgment is attached.

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