Al Assam & ors v Tsouvelekakis [2022] WTLR 787

Analysis

The claimants were the Dubai-resident settlors and beneficiaries of two Cyprus-law trusts and two trust-owned companies incorporated in Panama and the British Virgin Islands. The trustee of both trusts was a Cypriot company, controlled by directors also resident in Cyprus. The defendant gave investment advice to the trustee. On the defendant’s advice, substantial trust funds were invested in two Cypriot telecommunications companies carrying on business in Greece in which the defendant was alleged to have some involvement.

From at least 2016 the defendant was resident in England. In October 2021 the claimants issued and served on the defendant High Court proceedings alleging, inter alia, against the defendant:

1. (i) negligence in failing to take reasonable care to invest trust funds to ensure capital preservation;
2. (ii) breach of a fiduciary duty, arising from the history of trust and confidence reposed in him, in not advising where he had a conflict of interest;
3. (iii) deceit in lying to the claimants by providing false portfolio reports;
4. (iv) dishonest assistance in the breach of trust by the trustee in making speculative high-risk investments; and
5. (v) tortious and contractual claims under Swiss law.

It was agreed that claims (i) to (iv) would be governed by Cyprus law, which was broadly similar to English law.

The defendant applied for an order that the court decline jurisdiction and stay the claims on the basis that Cyprus was the more suitable and appropriate forum. It was agreed that, had the Brussels Regulation Recast (Regulation 1215/2012) applied, it would have required the defendant to be sued in England and Wales, but that regulation did not apply and the application fell to be determined on common-law principles. The claimants asserted that, even if Cyprus was the most appropriate forum, the likely delays of up to six years in bringing proceedings to trial would effectively deny them justice in that jurisdiction. Evidence was given by two Cyprus-qualified lawyers in relation to the key issues of Cyprus law.

The issue to be determined was:

1. (1) Had the defendant established that Cyprus was the more suitable and appropriate forum?

Held:

1. (1) Adopting the test set out in Spiliada Maritime Corporation v Cansulex Ltd [1986], the defendant had shown that the Cyprus courts were ‘available’ to hear the claimants’ claims. The expert evidence showed that the Cyprus courts would have jurisdiction where:
   1. (a) they had jurisdiction generally under Cypriot rules of private international law; and
   2. (b) a specific district court in Cyprus would have jurisdiction.
2. Both limbs were likely to be satisfied, because the Nicosia district court would be likely to accept jurisdiction if its district was where the trustee’s registered office was located (which was also where the beneficiaries’ interests were taken to be located), or where the investment recommendations were given, or where the investment decisions were made (paras [16-26]).
3. (2) Obiter, it was not clear that a voluntary submission by the defendant to the jurisdiction of the Cyprus courts would confer jurisdiction. Article 26 of the Recast Regulation did have direct effect in Cyprus as a member state, but it was not clear that this article applied equally to a person not domiciled in a member state (paras [27-32]).
4. (3) The defendant had not shown that Cyprus was clearly the more appropriate forum. The court considered the following key factors:
   1. (i) Although the case did not revolve around the defendant’s evidence to the extent suggested by the claimants, his residence in England was of significance, and none of the other parties resided in Cyprus.
   2. (ii) The location of the trustee and its directors did not demonstrate that relevant events ‘took place’ in Cyprus; in an international transaction of this type the factual enquiry is likely to involve analysis of electronic communications whose ‘location’, if any, carries little weight.
   3. (iii) Most of the key witnesses spoke English fluently, if not as a first language. Their travel costs and the costs of expert evidence on Cyprus law were likely to be comparatively small.
   4. (iv) The applicability of Cyprus law tended in favour of that jurisdiction, but it was agreed that Cyprus law was similar to English law on the points in issue, and there would still be a material Swiss law component to the claim.
   5. (v) The overall shape of the litigation did not favour Cyprus. Previous proceedings against the trustee had to be brought in Cyprus because the Recast Regulation required them to be so. Spiliada and VTB Capital plc v Nutritek International [2013] applied (paras [35-60]).
5. (4) Obiter, the claimants had not shown a real risk that they would not obtain justice in Cyprus by reason of delays in the court system and the fact that some claims would now be time-barred. Considerations of comity and caution require that courts should be cautious before concluding that the legal system in a friendly state would deny the claimants justice. The ten-year limitation period for the Swiss law claims demonstrated that the claimants had had ample time to bring proceedings, and indeed did so against the trustee in 2019 before discontinuing them (paras [67-68]).

Application dismissed.

JUDGMENT JUDGE JONATHAN RICHARDS: [1] The Defendant lives in England. The Claimants have served proceedings on him in England. The Defendant takes no point on the efficacy of that service and accepts that the English courts have jurisdiction to try the claim. However, by application notice dated 29 October 2021, he has applied for an …

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