Cross-border disputes: EU rules oblige English Courts to hear claim v. UK-domiciled Defendant despite Saudi jurisdiction clause (but Judge discharges worldwide freezing order)

The Judgment in Gulf International Bank BSC v Sheik Badr Fahad Ibrahim Aldwood [2019] EWHC 1666 (QB) concerned a claim brought in the English Courts by a Bahrain bank (with branch in Saudi Arabia) against a Saudi citizen who, following the imminent failure of Saudi companies whose debts he had personally guaranteed, had recently moved to the UK. The Judge made two principal decisions.

First, he ruled that, despite the existence of a choice of Court agreement in favour of a non- EU/Lugano country (the Kingdom of Saudi Arabia):

• the English Courts nevertheless had jurisdiction in respect of the substantive claim because the Defendant was domiciled in the UK; and
• as a consequence, pursuant to the application of the EU principle in Owusu v Jackson following the recasting of the Brussels I Regulation, the English Courts were unable to decline to hear that claim or stay the proceedings.

Secondly, the Judge discharged the English worldwide freezing order which the Claimant had previously obtained against the Defendant on a "without notice" basis in support of the English proceedings. That was because the Defendant's behaviour, whilst being less than admirable, nonetheless provided insufficient evidence of a real risk of dissipation, or unjustified dealing, of assets.

Crucially in relation to the jurisdiction issue, the Judge said that he could not have declined to hear the claim or stayed the proceedings even if the Saudi jurisdiction clause was exclusive. It is this view which may spark controversy amongst global lawyers.

If correct, it would mean that where civil or commercial proceedings against an EU/Lugano- domiciled Defendant are commenced first in the Courts of an EU/Lugano country (i.e. an EU Member State or Iceland, Switzerland or Norway), such Courts will not, and indeed cannot, honour an exclusive choice of Court agreement in favour of a non- EU/Lugano country by declining jurisdiction or staying their proceedings unless (in the case of the Courts of an EU Member State) the non- EU/Lugano country selected by the parties is, like the EU, bound by the Hague Convention on Choice of Court Agreements of 2005 and that Convention applies in the circumstances. Only Mexico, Montenegro and Singapore are currently so bound. Although China, Ukraine and the USA have also signed that Convention, it is not yet in force in those countries.