England has for many years been a leading centre for international disputes, with foreign parties often trying to litigate in London. One of the ways in which English jurisdiction can be established over a dispute is if one of the defendants is domiciled in England. However, 'domicile' for these purposes is not the same as it is for tax law. A recent judgment of the Commercial Court, in Tugushev v Orlov, shows that domicile (or residence) can be established even if the physical number of days a person spends in England is not significant.
Tugushev v Orlov: Background
This "bitter" dispute between two high profile Russian businessmen and their associates centres on the ownership of an international fishing business, the Norebo Group. Last year, the English Court granted worldwide freezing orders against Mr Orlov. Mr Orlov then challenged jurisdiction, but the Court has now concluded that Mr Orlov's challenge fails and, subject to any appeal, the litigation will therefore proceed in England.
The judgment is an important reminder that the question of where a defendant is domiciled is highly fact sensitive. Indeed, the Court can conclude a defendant is resident in England even if he or she has spent possibly less than two months of a year in the jurisdiction, as was the case here. It is also worth noting that, for jurisdiction purposes, a defendant can be domiciled in multiple places: it is not one jurisdiction to the exclusion of all others.
There are a number of ways in which the English Courts can claim jurisdiction over a dispute. Key provisions which are often relied on are:
- If the parties agree a contract subject to English jurisdiction.
- If a defendant is "domiciled" in England.
- In tort claims, where England is the place where the "harmful event" "occurs or may occur".
- Where there are multiple defendants, if there is one defendant who is subject to English jurisdiction, the claimant can treat them as an 'anchor defendant' and obtain permission to sue any other "necessary or proper party" to that claim.
Key factors in deciding Jurisdiction
In most cases, it is fairly easy to determine where a defendant is domiciled. However, high net worth individuals or business people may travel a lot and have multiple homes in different countries. In these cases, domicile is not always clear cut. The judgment in Tugushev v Orlov provides useful guidance on how the English Court will approach this:
- In analysing whether a defendant is “domiciled” in England the Court will not count the number of days they spent in England and apply a “numbers game”. Instead, it will look at whether the time the defendant spent in the jurisdiction is for a “settled” purpose and in a “settled” pattern. In this case, Mr Orlov visited England almost every month, frequently on a weekend. When in England, he was almost always accompanied by his partner and they stayed exclusively at his flat, where his children would also stay and visit. In the seven months before the claim form was served on Mr Orlov, he spent on average only 3.5 days a month in England. However, this was not considered to override the Court's conclusion that he visited England for settled purposes and in a settled pattern.
- The Court also placed significant weight on the fact that Mr Orlov’s ex-wife and children permanently resided in London, and the fact that his partner often travelled with him using her “Indefinite Leave to Remain” status to enter the UK. The fact that Mr Orlov himself travelled under a business visa did not prohibit him from having a usual residence in England.
- This case shows that the English Court continues to take a broad view of what it means to be domiciled in England. It follows on from a recent decision in Bestolov and Povarenkin, also a dispute between two Russian businessmen. In that case, Mr Povarenkin's regular visits to England to see his wife and two young children was a key factor, and the Court also thought it was relevant that his wife intended to apply for "Indefinite Leave to Remain” in England.
By way of contrast, in Cherney v Deripaska (a decision dating back to 2007), the Court came to a different conclusion, despite the fact that Mr Deripaska spent between two to three months a year in England (possibly more than Mr Orlov). The key difference in that case was the purpose of the visits. While both Mr Orlov and Mr Povarenkin visited (amongst other things) to see family, Mr Deripaska travelled for business and without a regular purpose or pattern.
Large fraud cases tend to be international, with multiple possible defendants in different jurisdictions. These cases show how important it is to consider every case on its facts, when it comes to the question of jurisdiction. Two people may spend exactly the same amount of time in England, but one may be domiciled here whereas the other will not. In investigating the relevant facts, it is particularly important to look at the purpose of any visits to England, rather than just the amount of time spent here.