27 November 2013
 EWCA Civ 1493
Court of Appeal (Longmore, Jackson, Vos LJJ)
Which law applies to applications to bring additional claims?
In another instalment of the Tchenguiz saga, Kaupthing Bank lost its appeal against an order of Asplin J (see  EWHC 75 (Ch)) permitting the third defendant, Mr Adalsteinsson, to bring new claims against it under CPR Part 20. Kaupthing Bank entered a winding up procedure in Iceland some 21 months after the initial claims were commenced in England but before the Part 20 applications were made.
The case turned on the meaning of “pending lawsuit concerning an asset or a right of which [Kaupthing] has been divested” in article 32 of Directive 2001/24/EC on the Reorganisation and Winding Up of Credit Institutions. English procedural law only governed the Part 20 applications if they came within this provision. Both Kaupthing and Mr Adelsteinsson were already parties to the litigation, certain parts of which concerned “an asset or a right of which Kaupthing has been divested”. The crucial question therefore concerned the proper meaning of pending lawsuit: did it refer to existing claims or to proceedings in their entirety?
The Court of Appeal found that the phrase “pending lawsuit” must refer to proceedings in their entirety. Any other result would be “unworkable” and a “procedural nightmare”. The Directive could not have been intended to slice up existing legal proceedings, after the insolvency of one party, according to whether each claim or cross-claim concerned an asset or right of which the company had been divested. Accordingly, the Part 20 applications were subject to English procedural law. The status of the foreign insolvency was a matter to be taken into account in the court’s exercise of its discretion. In this case, the judge had made no error in her approach and her decision to allow the Part 20 claims would stand.
An important decision about how to deal with additional claims contemplated within an English action after a foreign, but European, credit institution insolvency has intervened. It should be borne in mind that the English courts will not automatically decline jurisdiction over the new claims but will consider the foreign insolvency proceedings as a factor in the exercise of their discretion.