- March 5, 2014
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
In a case of interest to anyone engaged in cross-border litigation, the High Court has declined jurisdiction in a big money insolvency dispute on the basis that the courts of Saudi Arabia are ‘clearly and distinctly a more appropriate forum’ for the matter to be heard.
The liquidators of a Cayman Islands registered company argued that shares to the value of $318 million in which the company had a beneficial interest had been transferred to a Saudi Arabian company. It was submitted that the shares had been transferred after the initiation of winding up proceedings and that the transactions were therefore void by operation of Section 127 of the Insolvency Act 1986.
Although the company had been wound up in the Cayman Islands, the liquidators had opted to issue proceedings in London in an attempt to recover the value of the shares and other relief against the Saudi Arabian company, which had a presence in England but none in the Cayman Islands. The latter denied liability and disputed the jurisdiction of the courts of England and Wales to hear the matter.
In upholding those arguments and staying the English proceedings, the Court noted that the transferee of the disputed shares was a Saudi Arabian public company and that all the shares were in companies incorporated in Saudi Arabia. The individual who transferred the shares was also a Saudi Arabian national and resident.
Those and other factors overwhelmingly indicated that the transactions in issue were governed by the laws of Saudi Arabia. Ruling that that was the ‘decisive factor’ in this particular case, the Court noted, “The governing law is always an important factor in forum challenges because it is generally preferable, all other things being equal, that a case should be tried in the country whose law applies.”