Icelandic banks, jurisdiction and the Lugano Convention—Tchenguiz and others v Grant Thornton UK LLP and others

Icelandic banks, jurisdiction and the Lugano Convention—Tchenguiz and others v Grant Thornton UK LLP and others

What should lawyers take from the latest decision in the ongoing Kaupthing litigation? Lydia Pemberton, barrister at St Philips Chambers, considers the judgment of Mrs Justice Carr dealing with the application of the Insolvency Regulations and the Lugano Convention.

Original news

Tchenguiz and others v Grant Thornton UK LLP and others [2015] EWHC 1864 (Comm), [2015] All ER (D) 36 (Jul)

The fourth and fifth defendants (Kaupthing and Jóhannes Rúnar Jóhannsson (JJ) respectively) sought the dismissal or stay of the proceedings. The Commercial Court held that the proceedings against Kaupthing had been brought in breach of a prohibition on legal action against it contained in art 116 of the Icelandic Bankruptcy Act 1991, which had effect in the UK by reason of the Credit Institutions (Reorganisation and Winding Up) Regulations 2004, SI 2004/1045, reg 5 (the Credit Institutions Regulations). However, the claims against both Kaupthing and JJ were not excluded by the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, art 1(2)(b).

How did the issue arise?

On 24 November 2008, the Icelandic Court had made a moratorium order against Kaupthing Bank HF (Kaupthing) due to its insolvency, under the Financial Undertakings Act 2003. Kaupthing was made the subject of a winding-up order on 22 November 2010.

On 27 November 2014 Vincent Aziz Tchenguiz (VT) and others issued proceedings against a number of parties including Kaupthing, in respect of whom VT was a former customer, and JJ, a member of the winding-up committee appointed over Kaupthing. The claimants alleged various torts including malicious prosecution of VT, conspiracy to injure the claimants by unlawful means and malicious procurement of the arrest and search warrants and execution of the same against VT.

The proceedings were issued without any prior notice and were served out of the jurisdiction without first seeking the court’s permission on the basis that the defendants

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.