The High Court decision in Alberta v Katanga dealt with two separate questions that are of interest. The first regards allocation of jurisdiction where the defendant is domiciled in an EU member state. It concerns the meaning of a company’s "central administration" under the EC Regulation that determines which European Union member state’s court has jurisdiction to hear a dispute, Council Regulation (EC) No. 44/2001 (Regulation).
The second question regards when it is proper for a court to exercise its discretion to allow a party to be served with a claim form outside the jurisdiction, i.e. to be served outside England and Wales, when in this case the defendants were not domiciled in EU member states. This involved consideration of whether the second and third defendants to be served were "necessary and proper parties" to the claim against the first defendant, who had been properly served with the claim form in London.
The claimant was Alberta Inc (Claimant), a Canadian company. The first defendant was Katanga Mining Limited (First Defendant), nominally a Bermuda corporation, listed on the Toronto Stock Exchange, resident in Canada for tax purposes, but with strong business connections to London.
The second defendant was Tain Holdings Limited and the third defendant was Wayland Management S.A. (Second and Third Defendants). They were respectively a BVI company and a Panama corporation, and there was no suggestion that they fell within the Regulation as being domiciled in an EU member state.
The underlying claim concerned a dispute between the owners of the three corporate parties who had fallen out over the ownership of a Congolese mining company.
Jurisdiction – where domiciled? - central administration
The First Defendant argued that the English court should decline to exercise jurisdiction over it because the Democratic Republic of Congo (DRC) was the proper forum (forum conveniens) in which the dispute should be resolved. The Claimant argued that, for the purposes of the Regulation, the First Defendant was domiciled in England. Under the Regulation, if the Claimant were able to establish this fact, the court would have no discretion to decline to exercise jurisdiction over the First Defendant, because no forum non conveniens ground for doing so is contained within the Regulation.
The judge held that, for the purposes of the Regulation, the First Defendant was domiciled in England, so that the court had no discretion to stay the action against it. This was because, under Article 60(1) of the Regulation, the First Defendant had its "central administration" in London.
The Claimant had to show a good arguable case that the First Defendant’s central administration was in England. It was a Bermudan company; it was listed on the Toronto stock exchange and was resident for tax purposes in Canada. The majority of its board was based outside the UK. Its actual business was mining operations all located in the DRC. Nonetheless, the judge held that the First Defendant's central administration was in London.
The judge stated that "central administration does not necessarily mean the same as central management and control, and central administration and principal place of business are […] alternatives, not necessarily to be found in the same place." The First Defendant’s Chief Financial Officer and Chief Executive Officer both resided in England, so that "London must be the centre from which management instructions are given when necessary." On the basis that "those who have the serious responsibilities in the company have their place of work" in London, London was where the company’s central administration was to be found.
Service out of jurisdiction – "necessary or proper parties"?
If a defendant is not domiciled in an EU member state, the permission of the court is required to serve it with a claim form when the defendant is located outside England and Wales. The question of whether the Second and Third Defendants were necessary or proper parties to the proceedings between the Claimant and the First Defendant arose because the Second and Third Defendants were applying to set aside service on them outside the jurisdiction.
The court may give permission to serve a defendant outside of the jurisdiction when another defendant has already been served with a claim form to start proceedings and "the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim." There must also be between the claimant and first defendant to be served a real issue which it is reasonable for the court to try.
The court held it had to decide whether "there is an issue involving [the Second and Third Defendants] and [the Claimant] which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve the issue." The judge found both limbs of the test to be satisfied.
In relation to the second limb (the desirability of adding the new party), the judge had to decide where the case could best be tried, "suitably for the interests of all the parties and for the ends of justice." He held "unhesitatingly" that England was preferable to the arguable alternative venue: the DRC. This was because the DRC lacked "a developed infrastructure within which the rule of law can be confidently and consistently upheld." Furthermore, the owner of the Claimant held genuine fears regarding his personal safety if he were to attend the trial as a witness in the DRC, and it was undesirable that he should feel restrained from attending the proceedings.
This decision shows that parties must look closely at the realities of their corporate administrations when considering their place of domicile. An English court, when it has a choice, may well be reluctant to exercise its discretion to decline jurisdiction when jurisdiction will then pass to a country, such as the DRC, which the court feels is not equipped properly to do justice between the parties.