Algosaibi Bros v Saad Invs

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Forte and Mottley, JJ.A.)
• Judgment Date: 01 December 2010
• Court: Court of Appeal (Cayman Islands)
• Date: 01 December 2010

Court of Appeal

(Chadwick, P., Forte and Mottley, JJ.A.)

AHMAD HAMAD ALGOSAIBI AND BROTHERS COMPANY

and

SAAD INVESTMENTS COMPANY LIMITED and FORTY THREE OTHERS

E.A. McQuater, Q.C., D. Quest and P. Hayden for AHAB

T.A.G. Beazley, Q.C., B. Kennelly and J.P. Walton for Mr. Al Sanea;

S. Phillips, Q.C. and J. Golaszewski for the Maples defendants.

Cases cited:

(1) Abidin Daver, The, [1984] A.C. 398; [1984] 2 W.L.R. 196; [1984] 1 All E.R. 470; [1984] 1 Lloyd”s Rep. 339; (1984), 128 Sol. Jo. 99, referred to.

(2) Credit Agricole Indosuez v. Unicof Ltd., [2004] 1 Lloyd”s Rep. 196; [2003] EWHC 2676 (Comm), referred to.

(3) Reichhold Norway ASA v. Goldman Sachs Intl., [1999] 1 All E.R. (Comm) 40; on appeal, [2000] 1 W.L.R. 173; [2000] 2 All E.R. 679; [1999] 2 Lloyd”s Rep. 567, applied.

(4) Seaconsar Far East Ltd. v. Bank Markazi Jomhouri Islami Iran, [1994] 1 A.C. 438; [1993] 3 W.L.R. 756; [1993] 4 All E.R. 456; [1994] 1 Lloyd”s Rep. 1, referred to.

(5) Sim v. Robinow(1892), 19 R. (Ct. of Sess.) 665, referred to.

(6) Société Comm. de Réassurance v. Eras Intl. Ltd., The Eras Eil Actions, [1992] 1 Lloyd”s Rep. 570, referred to.

(7) SPhinX Group, In re, 2009 CILR 28, referred to.

(8) Spiliada Maritime Corp. v. Cansulex Ltd., The Spiliada, [1987] A.C. 460; [1986] 3 W.L.R. 972; [1986] 3 All E.R. 843; [1987] 1 Lloyd”s Rep. 1, applied.

Legislation construed:

Grand Court Rules 1995, O.11, r.1(1): The relevant terms of this sub-rule are set out at para. 15.

r.4(2): The relevant terms of this sub-rule are set out at para. 16.

Civil Procedure-service of process-service out of jurisdiction-pursuant to Grand Court Rules, O.11, r.4(2), applicant for service out to show Cayman Islands forum conveniens, i.e. forum in which case most suitably tried in interests of parties and justice-that defendant necessary and proper party under r.1(1)(c) weighs heavily in balance but not necessarily determinative-may take into account ‘Cambridgeshire’ factor, i.e. that resources used in preparing case for trial in Islands wasted if directed that trial take place elsewhere

Civil Procedure-case management-temporary stay of proceedings-no temporary stay of Cayman proceedings brought as of right pending outcome of foreign proceedings if no evidence that likely to result in decision binding on parties on issues otherwise to be tried in Islands-only appropriate if very strong reasons clearly outweighing disadvantages to plaintiff-stay to force plaintiff to institute proceedings abroad rarely, if ever, appropriate-decision to impose stay only interfered with on appeal for misdirection or manifest error

AHAB brought claims against Mr. Al Sanea and companies controlled by him in respect of an alleged fraud.

Mr. Al Sanea, who was resident in Saudi Arabia, had been the manager of one of the businesses of AHAB, a partnership established in Saudi Arabia. AHAB alleged that, while he was in control of the business, he and the companies he controlled fraudulently caused AHAB to suffer a loss of US$9.2bn. Proceedings were brought relating to debts owed by AHAB to Saudi banks before a body known as the ‘Saudi Committee,’ formed by royal order in Saudi Arabia in 2009. However, there was no written evidence recording the terms of the royal order, and the parties disagreed as to the Committee”s remit. AHAB commenced proceedings by writ in the Cayman Islands against Mr. Al Sanea and companies controlled by him in respect of moneys alleged to have been misappropriated. The Grand Court (Henderson, J.) granted leave to serve the writ on Mr. Al Sanea out of the jurisdiction.

Mr. Al Sanea applied to discharge the order granting leave to serve out.

In the alternative, he sought an order that the proceedings against him be struck out on forum non conveniens grounds, submitting that Saudi Arabia was the appropriate forum for the trial of the issues. Several of the defendant companies incorporated in the Cayman Islands (the ‘Maples defendants’) also sought to stay or strike out the proceedings against them on forum non conveniens grounds.

The Grand Court (Smellie, C.J.) dismissed Mr. Al Sanea”s application to discharge the order granting leave to serve the writ on him out of the jurisdiction, having found that he was a necessary and proper party to these proceedings and that the most appropriate forum for these proceedings was the Cayman Islands. It also dismissed his and the Maples defendants” applications to stay or strike out the proceedings against them on forum non conveniens grounds. However, it held that Saudi Arabia, if it offered an available forum, might be the more appropriate forum for the trial of the underlying allegations of fraud against Mr. Al Sanea, and ordered a temporary ‘case management’ stay of these proceedings in order to allow the Saudi Committee to reach a conclusion and/or to allow AHAB to petition the Saudi courts-including the Sharia courts and the Board of Grievances-for the resolution of the allegations of fraud.

The application to discharge the order granting leave to serve out

Mr. Al Sanea sought to appeal against the dismissal of his application to discharge the order granting leave to serve out, submitting that (a) the Chief Justice was wrong to treat his finding that Mr. Al Sanea was a necessary and proper party as ‘virtually conclusive’ of the issue of whether the case was a proper one for service out under GCR, O.11, r.4(2); (b) the Chief Justice wrongly took into account the ‘Cambridgeshire’ factor-that the resources used in preparing the case for trial in the Cayman Islands would be wasted if it were now directed that the trial should take place in Saudi Arabia-in determining the appropriate forum for the trial; (c) the Chief Justice did not give enough weight to the fact that Mr. Al Sanea and other parties were resident in Saudi Arabia; (d) the Chief Justice”s uncertainty as to the appropriate forum for the trial in relation to the temporary case management stay ought to have led him to discharge the order granting leave to serve out; and (e) the temporary stay was so integral to the reasoning behind the refusal to discharge the order granting leave to serve out that, were it set aside on this appeal, the court would need to revisit the question of whether to discharge the order granting leave to serve out.

AHAB submitted in reply that the court should uphold the Chief Justice”s dismissal of the applications on the jurisdiction summons, since (a) he directed himself correctly in accordance with the law; (b) his finding that Mr. Al Sanea was a necessary and proper party to the claims in the proceedings, thereby satisfying the condition in r.1(1)(c), was correct; (c) he correctly applied the test of whether the Cayman Islands were the forum in which the case could most suitably be tried in the interests of the parties and of justice in determining whether the case was a proper one for service out pursuant to r.4(2); (d) he did not fall into the

error of thinking that his finding that Mr. Al Sanea was a necessary and proper party was determinative of the question of the appropriate forum for the trial, but rightly held that it weighed heavily in the balance of competing factors; (e) he was entitled to take account of the ‘Cambridgeshire’ factor as he did; (f) the weight he gave to individual competing factors was a matter for him that should not be interfered with on appeal; (g) his uncertainty about the appropriate forum when considering the temporary stay related to the appropriate forum for the trial of the underlying allegations of fraud, rather than the trial of these proceedings, and therefore need not have led him to conclude that this was not a proper case for service out; and (h) the temporary stay itself was not relevant to the reasons for dismissing Mr. Al Sanea”s application.

The forum non conveniens application

Mr. Al Sanea and the Maples defendants further sought to appeal against the dismissal of their applications to strike out or stay the proceedings against them on forum non conveniens grounds.

AHAB submitted in reply that (a) the court accepted that the Chief Justice was entitled to take the view that this was a proper case for service out of the jurisdiction as a result of his finding that the Cayman Islands were the appropriate forum for the trial; and (b) therefore there could be no basis for directing a general stay of proceedings against the Maples defendants on forum non conveniens grounds.

The temporary case management stay

AHAB sought to set aside the temporary case management stay, submitting that (a) the Chief Justice failed to consider the relevant question of whether the advantages of imposing such a stay clearly outweighed the disadvantages to AHAB; (b) the Chief Justice was not entitled temporarily to stay the plaintiff”s proceedings, commenced as of right in the Cayman Islands, for the purposes of the plaintiff”s commencing parallel proceedings in another jurisdiction; (c) on the basis of the evidence set out, there was no reason to expect that the Saudi Committee, the Sharia courts or the Board of Grievances would reach a decision which might be determinative of AHAB”s claims against Mr. Al Sanea within a measurable period, or at all; (d) proceedings in Saudi Arabia would not resolve issues which would otherwise have to be tried in the Cayman Islands; (e) the outcome of proceedings in Saudi Arabia would be accepted as binding as between AHAB and the Cayman companies in liquidation (who would be unlikely to submit to the Saudi Arabian jurisdiction); (f) the stay made it possible that the allegations of fraud might be tried in both Saudi Arabia and the Cayman Islands, with the potential for inconsistent findings; and (g) the advantages of imposing a stay therefore could not be said clearly to outweigh the disadvantages.

The court considered (a) the circumstances in which it would be appropriate to order a temporary case management...