Judge decides whether to stay claim brought against English holding company

The Kenyan claimants brought a claim against the first defendant, the English ultimate holding company of the second defendant (a Kenyan company). The first defendant applied for a stay of proceedings brought against it and argued that the claim should not be allowed to proceed in England. It argued that the claim against it had only been brought for the improper purpose of attracting the second defendant into the English court's jurisdiction.

The ECJ decision of Owusu v Jackson [2005] decided that if an English court is seised of proceedings against a defendant domiciled in England, it cannot stay proceedings in favour of a non-Member State court on the ground that the non-Member State court is the more appropriate forum to hear the case. (Under the recast Regulation, since 10th January 2015 the EU courts have a discretion to stay their proceedings in favour of a non-EU court if the non-EU court was first seised (which was not the position in this case)).

One of the issues in this case was whether a stay could be ordered because the claim did not raise a real issue to be tried. The judge held that it could not. Although the English court retains a residual discretion "The cases show that this residual discretion must not be exercised in such a way as to circumvent Owusu by, so to speak, the back door. The cases do not suggest that the merits of the claim are relevant to the question whether this discretion should be exercised; the court has other powers to deal with weak claims. The cases give no guidance about the 'exceptionally strong grounds' that are required to found the exercise of the discretion … They do not suggest that the discretion can be exercised where there are no proceedings pending in a foreign jurisdiction against the non-domiciled defendant. In my judgment, the effect of a stay would be to circumvent Owusu".

The judge found that there was no real issue between the claimants and the first defendant (and so the claim against the first defendant could not proceed and service against the second defendant should be set aside). This case differed from Chandler v Cape Plc , where the Court of Appeal held that a parent company had been responsible for the health and safety of its subsidiary's employees. The second defendant here was not a direct subsidiary of the first defendant and the two defendants did not have close geographical links. Furthermore, the claimants here were seeking to impose liability on the defendants for the criminal acts of third parties, rather than the tortious acts of a defendant.