Between: Royal Park Investments SA/NV Plaintiff v (1) S&P Global, Inc. (2) Standard & Poor's International, LLC. (3) S&P Global UK Ltd Defendants
| Jurisdiction | Cayman Islands |
| Judge | Justice Kawaley |
| Judgment Date | 03 June 2024 |
| Docket Number | CAUSE NO: FSD 37 OF 2023 (IKJ) (FORMERLY G 34 OF 2023) |
| Court | Grand Court (Cayman Islands) |
The Hon. Justice Kawaley
CAUSE NO: FSD 37 OF 2023 (IKJ) (FORMERLY G 34 OF 2023)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Application to set aside ex parte order granting leave to serve a writ out of the jurisdiction — tort claim — whether claim falls within applicable gateway — whether serious issue to be tried — appropriate forum — whether breach of duty of full and frank disclosure occurred — Grand Court Rules (2023 Revision), Order 11 rule 1 (1) (f) and 4 (2), Order 12 rule 8
Mr David Allison KC of counsel with Mr Rupert Bell, Ms Harriet Ter Berg and Ms Jamie Brislane of Walkers for the Defendants
Mr Tom Smith KC of counsel with Mr Stephen Leontsinis, Ms Annalisa Shibli and Ms Kirsten Bailey of Collas Crill for the Plaintiff
The Defendants apply by Summons dated 27 November 2023 to set aside the Ex Parte Order dated 23 May 2023 herein (the “Ex Parte Order”) granting the Plaintiff leave to serve the Amended Writ of Summons dated 4 May 2023 herein (the “Writ”) on them out of the jurisdiction.
The hearing lasted for three days. Over 20 ring binders were delivered to the Court. The Defendants' inappropriately titled ‘Skeleton Argument’ ran to 87 pages. The Plaintiff's aptly styled ‘Written Submissions’ ran to over 92 pages. Silky submissions were advanced with skill and conviction on each side. The contrast between the level of presentation made at the inter partes hearing and that made at the ex parte hearing (which lasted for only 1 hour) seemed to be an unusually stark one. It seemed surprising, almost a year later, that at the end of the initial 23 May 2023 hearing I thanked junior counsel for “a very thorough application”.
By the time of Mr Allison KC's reply at the end of the third day's hearing on 18 April 2024, I felt as if my provisional views had been so shaken and stirred that I would have to get to grips with the case completely anew. As it happens, the Defendants submitted that, in a practical sense, their application was a rehearing of the ex parte application.
A high-level view of the Plaintiff's case can be stated briefly. The Plaintiff, or RPI, is a Belgian special purpose entity, ultimately owned by the Belgian Government. It was created inter alia to acquire toxic assets purchased by Fortis Bank through its Cayman Islands branch, prior to the 2008 Global Financial Crisis, in reliance upon ratings issued by the Defendants. The purchases made were Collateralised Debt Obligations (“CDOs”) issued to Fortis Bank as an initial purchaser between 2006 and 2007. Of the eight issuers, seven were Cayman Islands companies (the “Securities”). The Securities were assigned AAA ratings by the Defendants who are alleged to have known that the tools they were using to evaluate the default risk of asset backed securities (in particular the CDO Evaluator) was seriously flawed. This allegedly constituted the tort of deceit.
As far as the jurisdictional requirements for obtaining leave are concerned, the Plaintiff's case can be summarised as follows:
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(a) there was a good arguable case that the claim fell within Order 11 rule 1 (1) (f) on the grounds that a tort was committed and “damage was sustained…within the jurisdiction” (with masterful understatement, the Plaintiff's Written Submissions acknowledged that identifying where this occurred “is not necessarily straightforward”);
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(b) there was a serious issue to be tried in relation to the controversial issues of (1) standing (by reference to New York and/or Belgian law), and (2) limitation. The Court should avoid conducting a mini-trial at the interlocutory stage;
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(c) the Cayman Islands was the most appropriate forum because the tort was committed here, damage sustained here, and the claim was, accordingly, governed by local law. No other available forum could be said to be more appropriate.
The Plaintiff contended that it discharged its fair presentation duties at the ex parte hearing.
The Defendants contended:
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(a) there was no good arguable case that damage was sustained by Fortis Bank in the Cayman Islands, because there was no tangible evidence that anything relevant to the claim actually occurred here. The applicable gateway test was not met;
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(b) there was not a serious issue to be tried because (1) it was clear as a matter of New York law, in particular, that RPI was not assigned the right to pursue the tort claim from Fortis Bank, and (2) its claim was clearly time-barred;
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(c) the Plaintiff had not established that the Cayman Islands was the most appropriate forum. The starting point in tort claims is that the jurisdiction where the tort was committed is the natural forum. That was clearly not the Cayman Islands.
Finally, the Defendants contended that the Ex Parte Order ought in any event to be set aside on the grounds of material non-disclosure and/or an unfair presentation.
Before considering the merits of the contentious jurisdictional issues, it is important to identify the governing legal principles in relation to how the Court should approach:
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(a) the relevant Order 11 rule 1(1) gateway;
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(b) the question of whether there is a serious issue to be tried on the merits of the Plaintiff's claim (Order 11 rule 4 (2)); and
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(c) the appropriate forum requirement (Order 11 rule 4 (2)).
There was no material dispute as to the general content of the governing legal principles. Controversy centred on how those principles should be applied.
Three issues call for attention. Firstly, the parameters of the relevant gateway, secondly, the evidential requirements for establishing that a claim falls within those parameters and, thirdly, the legal requirements for establishing the most contentious limb of the rule.
GCR Order 11 rule 1 (1) provides that “service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ”:
“(f) the claim is founded on a tort, fraud or breach of duty whether statutory at law or in equity and the damage was sustained, or resulted from an act committed, within the jurisdiction;…”
It is well settled that the plaintiff relying on a particular gateway for obtaining leave to serve out must establish a “good arguable case” that the claim falls within the relevant gateway. What that means in practice has often been stated in somewhat cryptic terms. For instance, Lord Collins in Altimo Holdings v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804, where this requirement was not a significant concern, held:
“71…In this context ‘good arguable case’ connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555–7 per Waller LJ, affd [2002] 1 AC 1; Bols Distilleries BV v Superior Yacht Services [2006] UKPC 45, [2007] 1 WLR 12, [26]–[28]…”
Both counsel accordingly commended the following passage in the case of Brownlie v Four Seasons Holdings Inc. [2018] 1 WLR 192 (UKSC) to the Court:
“7… What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the Court must take a view on the material available if it can reliably do so; but (Hi) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. I do not believe that anything is gained by the word ‘much’, which suggests a superior standard of conviction that is both uncertain and unwarranted in this context.”
I accept this helpful and highly persuasive judicial guidance in relation to the factual dimensions of applying the relevant gateway test. The Defendants' counsel relied further on Lord Collins' encouragement to courts to determine, if it is possible to do so, questions of law which arise in relation to jurisdictional challenges generally, in Altimo Holdings (at paragraph 81). The relevant dictum was approved by Males LJ in Airbus SAS v Generali Italia SpA [2019] Bus LR 2997:
52. Sometimes, however, it will be sensible, when a question of law arises on an application to challenge jurisdiction, for the court to decide it rather than merely deciding whether it is sufficiently arguable. This is well established, as Lord Collins of Mapesbury explained in Altimo Holdings & Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2012] 1 WLR 1804 at [81]:
‘A question of law can arise on an application in connection with service out of the jurisdiction, and, if the question of law goes to the existence of jurisdiction, the court will normally decide it, rather than treating it as a question of whether there is a good arguable case: E F Hutton & Co (London) v Mofarrij [1989] 1 WLR 488, 495; Chellaram v Chellaram (No 2) [2002] 3 All ER 17, para 136.’”
It was then argued:
“127. In the present case, the key issue is whether the facts pleaded by RPI are sufficient in law to demonstrate that the jurisdictional gateway under Order 11, r.1 (1) (f) is applicable. That is an issue of law that the Court can and should determine at this hearing.”
This submission in my judgment mischaracterises the relevant dispute because it imports into the context of a...
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