Sabbagh v Khoury & Ors

Ms Sana Hassib Sabbagh, the Claimant (“Sana”), is the eldest of the three children and the only daughter of the late Hassib Sabbagh (“Hassib”) and the late Diana Tamari. Hassib died intestate on 12^th January 2010, having suffered a cerebral haemorrhage on 29^th June 2002. Hassib was until that time one of the driving forces in the Consolidated Contractors Company group of companies (“the CCC group”) alongside Mr Said Toufic Khoury the Second Defendant (“Said”), with whom he founded the CCC group in 1950. The CCC group is the largest engineering and construction group in the Middle East, now operating globally and valued recently at US$5 billion.

Sana seeks to pursue claims against various family members and companies owned and/or controlled by them in relation to alleged financial wrong-doing on their part since her father’s stroke and subsequent death. The families involved, namely the Sabbagh and Khoury families, are well-known and prominent Lebanese families. The companies involved are all incorporated in Lebanon. The CCC group has been involved in high profile litigation in this jurisdiction in the past, specifically between 2005 and 2011 (“the Masri litigation”) - see for example Munib Masri v Consolidated Contractors International Company SAL and others [2011] EWCA Civ 21.

Mr Wael Said Khoury, the First Defendant (“Wael”), is a cousin of Sana and now the non-executive chairman of the Eighth Defendant (“CCG”). Said is Wael’s father (and so Sana’s uncle). Mr Samer Said Khoury and Mr Toufic Said Khoury, the Third and Fourth Defendants respectively (“Samer” and “Toufic”), are Wael’s brothers. Mr Samir Hassib Sabbagh and Mr Suheil Hassib Sabbagh, the Fifth and Sixth Defendants respectively (“Samir” and “Suheil”), are Sana’s brothers. Mr Wahbe Abdallah Tamari, the Seventh Defendant (“Wahbe”), is another cousin of Sana.

Said is currently the president of the CCC group. Samer and Toufic are directors of CCG. CCG and Consolidated Contractors International Company SAL (Offshore), the Ninth Defendant (“CCIC”), are member companies of the CCC group. Since its formation in 1984, CCG has been the ultimate parent company for the CCC group. Each of the individual Defendants, except Samir, is a member of the board of directors of CCG. Hassib Holding SAL (“HH”) is a Lebanese company of which Samer, Samir, Suheil and Wahbe are directors and which is owned equally by Samir and Suheil.

In summary, Sana, who lives in New York, claims that the Defendants have variously, since her father’s stroke, conspired against both him and her to misappropriate his assets (“the asset misappropriation claim”) and, since her father’s death, to work together to deprive her of her entitlement to shares in CCG (“the share deprivation claim”). Wael is the anchor defendant for jurisdictional purposes. He resides and has at all material times resided in London. The other Defendants live or are based abroad. So, for example, Said, Samer, Toufic, Samir and Suheil are resident in Greece.

Proceedings were commenced by claim form issued on 9^th July 2013 (subsequently amended in September 2013). The claim form states that the claim is brought by Sana “both i) as a claim of her late father, which she is permitted to bring as his heir; and/or ii) in the Claimant’s own right, as a victim of the wrongs done by these Defendants.”

Particulars of Claim followed dated 15^th January 2014 alleging conspiracy against all of the Defendants. The value of the share deprivation claim is estimated at in excess of US$520 million and is pleaded as Sana’s primary claim. The value of the asset misappropriation claim is estimated at the relatively modest sum of some US$75 million.

By this time, however, Wael, Said, Samer, Toufic, Samir, Suheil, CCG and CCIC had served acknowledgments of service indicating an intention to dispute jurisdiction. Wahbe and HH followed suit in March and June 2014 respectively.

Those intentions were made good when, in October and November 2013, all the Defendants (save for Wahbe and HH) issued applications for a stay of the proceedings on the grounds that either the Court has no jurisdiction to hear the proceedings, alternatively should not exercise any jurisdiction that it might have. Wahbe issued the same application in March 2014, followed by an application from HH in June 2014 to set aside service.

Accordingly, no defences have been served to date by any of the Defendants. Nor has disclosure taken place, although Sana’s advisers have had access to certain company records. Rather, the Defendants bring jurisdictional challenges as set out more particularly below (“the jurisdiction applications”). These applications are the matters for present determination.

Consistent with the significant volume of material generated for the jurisdictional applications mentioned more particularly below, the jurisdictional issues have created the opportunity for each side to level heated personal accusation and counter-accusation at the other.

Thus for Sana it is said that the jurisdiction applications appear to have been raised solely for the purpose of delaying the progress of Sana’s claims and that the Defendants’ attacks are typical of the “plagues of modern litigation” referred to by Phillips LJ in New Hampshire Insurance Co and others v Philips Electronics North America Corp [1998] CLC 1062 (at 1067). It is said that the Defendants and their advisers have shown a general disregard to the Claimant and the Court in the manner in which they have conducted their defences. Reference is made to the Defendants’ alleged notoriety in this jurisdiction for their alleged involvement and conduct in the Masri litigation.

For the Defendants it is said that Sana has sought to “shoe-horn” her claim into England by the “device” of framing her claim in conspiracy and naming the only one of her cousins who lives in England as an “anchor” defendant. The Court is invited to “see through [her] charades, to recognise [her] claim for the blatant exercise in forum shopping that it is, and to decline or refuse to exercise jurisdiction accordingly” (see paragraph 5 of the written skeleton argument for Wael). Samer (in his third witness statement) describes Sana as “an extraordinarily greedy and selfish person”, “renowned in both families for her parsimony and greed”.

For the purpose of these applications alone, the Court has been provided with no fewer than thirty bundles of documents. Those bundles contain forty-two witness statements, together with the following expert reports (accompanied by sixteen bundles of exhibits) :

To that one adds some three hundred pages of written argument and six bundles of authorities. The hearing itself lasted five days, involving some eleven counsel spread amongst four teams of representatives.

The position is thus very far removed from that envisaged by Lords Templeman and Goff in Spiliada Maritime Corp v Cansulex Limited [1987] 1 AC 460 (at 465 G – H) where it was hoped that future submissions on the merits of trial in England and trial abroad would be measured “in hours and not days”. Nor is it consistent with the recent opinion of Lord Neuberger in VTB Capital plc v Nutritek International [2013] UKSC 5 at paragraphs 82 to 83 :

“82.

The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights.

83.

Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, un-controversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.”

As Flaux J said in Erste Group Bank AG v JSC “VMZ RED OCTOBER” [2013] EWHC 2926 (Comm) (at paragraph 11), although Lord Neuberger’s deprecation of the proliferation of documentation was in the context of the determination of appropriate forum, his observations are obviously equally applicable to other aspects of jurisdictional challenges.

The position has been compounded by two factors :

Nevertheless, the court must be seised properly of a cause or matter, and it is open to the Defendants, individually and collectively, to argue that it would not be. It has always been apparent that the jurisdiction applications would involve complex and lengthy issues, as evidenced by the directions made by Walker J. on 31^st January 2014. And, despite the hurdles identified above, the relevant parts of the evidence provided and the written and oral submissions on these applications have enabled me to reach the conclusions below that I have.

In 1950 Hassib and Said founded the CCC group in Palestine (together with Kamil Abd Al-Rhaman who withdrew in the 1970s). The CCC group subsequently re-established itself in Lebanon. CCG itself was established in 1984. At all material times since then, CCG has been the ultimate parent company for the CCC group.

Hassib and Said were appointed directors of CCG, with Hassib as chairman and Said as general manager. That remained the position until 2004 when Said was appointed chairman following Hassib’s stroke.

At various times between 2002 and 2010 Samer and Toufic were directors of CCG. Wael has been Executive Vice President of Strategic Development of the CCC group since 2002. He has been President of the Petroleum and Minerals Company within the CCC group since around 2005. He was an ad hoc member of the Executive Committee of the CCC group until 2008. He was elected to the board of directors of CCG in July 2012, and appointed as chairman in August 2013.

Upon establishment in 1984 CCG adopted Articles of Incorporation (“the 1984 Articles”) which were superseded by new Articles in 1997 (“the 1997 Articles”). The 1997 Articles were amended at shareholder meetings in May 1998 and October 2008. For the purpose of the jurisdiction applications, the parties have worked to the 1984 and 1997 Articles.

The 1984 Articles provided as follows :

Thus, as regards share transfers, the 1984 Articles required approval by a two thirds majority of CCG’s directors at the material time, and registration in CCG’s share register, signed off by appropriate officers (as per Article 10(C)). Materially identical provision was made in the 1997 Articles.

The 1984 Articles specified shareholders’ rights and, though providing for the indivisibility of shares as against the company, expressly permitted shareholders to transfer the bare ownership or the usufruct of their shares. Such transfers were subject to the proviso that relevant information of the separate interests be provided to CCG and recorded in its share register (as per Article 11). Again, materially identical provision was made in the 1997 Articles.

Usufruct rights entitled the usufructary to vote, receive dividends and benefit from such other rights as might be agreed, leaving to the bare owner the remainder of rights. On the death of the usufructary, the usufruct rights reverted to the bare owner, who thus became the full owner.

Article 45 of the 1984 Articles provided :

“ ….Disputes

Every dispute arising during the course of the existence of the company or during its liquidation, whether between shareholders themselves or between shareholders and the company itself, shall be solved through mediation or else through arbitration according to the regulation put in place by the First Board of Directors [for this purpose], provided that the general shareholders assembly has approved it.

Disputes are divided into two kinds :

A)

Individual disputes in which the aggrieved party has the right to file a claim according to the directives of Article 166 of the Trade Act against the company, and which the shareholders are not permitted to halt through the balloting process via the general shareholders assembly for the purpose of releasing from responsibility the members of the Board of Directors

B)

Disputes involving the general interests of the company; these cannot be directed against the Board of Directors or against one of its members except in the name of and on behalf of a group of shareholders, and in accordance with a decision from the regular general shareholders assembly.”

In April 1985 CCG adopted “Regulations for Conflict Resolution” for the purpose of Article 45 (“the Conflict Resolution Regulations”) as follows :

“Any conflict arising in the duration of the Company or during its liquidation whether between the shareholders or between the shareholders and the company, is to be settled through mediation. Otherwise arbitration is to be held according to the following grounds.

I. Mediation

First : Any conflict arising between any one shareholder and another or between several shareholders should be attempted to be resolved amicably through resolution

II. Arbitration…

Third :

1)

The defendant has the right, in case he had any counter-claim, to submit it to the Secretary at the same time as he presents his defenses, accompanied by the counter-claim fees….”

Article 45 of the 1997 Articles provided :

“Any dispute arising during the lifetime of the Company or in the course of its liquidation whether among the shareholders themselves or between them and the Company shall be referred to mediation, and in case of failure to reach agreement, the dispute shall be referred to arbitration according to rules set by the first Board of Directors which will be submitted for the approval of the Shareholders’ General Meeting.

Disputes are of two kinds :

A)

The individual dispute for which the injured party may proceed against the Company in accordance with the provision of Article 166 of the Commercial Law. The Shareholders may not hinder the filing of such legal proceedings by a vote from the General Meeting discharging the Members of the Board of Directors from liability.

B)

As to disputes pertaining to the general interests of the Company, they may not be directed against the Board of Directors or any of its members except in the name and on behalf of all the Shareholders in accordance with the resolution of the ordinary General Meeting.

Any shareholder who desires to file legal proceedings in respect of such disputes shall communicate their subject matter to the Chairman of the Board of Directors by registered letter to be sent at least forty days before the convening of the next General Meeting, when the Chairman of the Board of Directors will insert the proposition in the agenda of the said Meeting. Should the Meeting decide to reject the proposition, this decision shall be final and conclusive for all shareholders, and no one may raise anew the dispute in question.

Where the proposition is approved, the General Meeting shall appoint one or more attorneys to handle the dispute.”

At the heart of the Defendants’ defence to the share deprivation claim summarised in section D. below is a series of share transfer transactions in 1993 in particular, and following in 1995 and 1998, prior to Hassib’s death. As a result of these transactions it is said to be beyond argument that Hassib did not own any shares in CCG upon his death (with the result that Sana’s claim to an entitlement to a third of those shares is bound to fail). It is convenient to set out their detail here.

The transactions are confirmed in the first witness statement of Mr Ahmad Ladiki (“Mr Ladiki”), the current legal company secretary of CCG and of the CCC group. He has been legal counsel within CCG since 2005. Mr Ladiki states that he is satisfied that the transfers were all properly effected in accordance with Lebanese law and in accordance with CCG’s Articles of Incorporation. He exhibits the results of past information requests relating to the CCG from the Lebanese Commercial Registry, together with extracts from CCG’s share register.

Originally, in a submission of September 2012, Sana challenged these transactions as outright shams in the following terms :

“The “Sabbagh series of agreements” constitutes a set of artificial operations that have no legal validity… Consequently, Sana is entitled to claim the ownership of 1/3 of her late father’s shares…”

However, by the time of the substantive hearing of the jurisdiction applications it was clear that Sana now expressly does not dispute the “existence, validity or effectiveness” of the 1993, 1995 or 1998 transactions (see for example paragraph 60 of her skeleton argument).

On incorporation CCG had 120,000 shares split between Hassib and Said, save for 60 shares which were held by Consolidated Investment Company SARL (“CIC”), a company then jointly owned by Hassib and Said. In October 1991 CCG increased its shares to 400,000 with proportionate increases to Hassib and Said and CIC still owning 60 shares.

In March 1992 Hassib transferred his 50% share interest in CIC to Said, thus ceding majority control of CCG to Said.

On 18^th August 1993 Hassib entered into three bare ownership agreements, each expressly approved by Said (“the 1993 Agreements”). By these agreements, Hassib divested himself of all but 10 shares and usufructs to his children. More specifically, the 1993 Agreements provided for Hassib to transfer 199,960 of his 199,970 shares to his three children, subject to usufruct for his life, as follows :

Each agreement was in materially identical terms. Taking the agreement between Hassib and Sana as the example, it stated :

“AGREEMENT FOR THE TRANSFER OF BARE

Each agreement was initialled on each page by Hassib and Sana, Samir or Suheil as relevant and then signed individually by Hassib and Sana, Samir or Suheil, again as relevant. Each contract was also signed by Said, the only other shareholder of CCG, as acknowledgment for CCG. The contracts were executed in triplicate, with one to be lodged with CCG.

On 7^th September 1993 Hassib agreed a further share transfer of 2 shares each to Suheil and Samir, leaving him with ownership of 6 shares and his usufructs. Later that month CCG increased its shareholding to 600,000, meaning a 3 : 2 increase. Hassib’s shareholding thus rose from 6 to 9, with usufruct rising from 199,960 to 299,940.

On 7^th March 1995 Hassib transferred usufruct over a further 2 shares to Sana, leaving him with 9 full shares, and usufruct over 299,938 shares.

On 26^th June 1995 Hassib, Samir and Suheil each entered into a bare ownership transfer agreement with Sana (“the 1995 Agreements”) as follows :

Thereafter, as a result, Hassib had 2 shares and his usufructs. Sana had 59,998 bare shares and 2 full shares.

The 1995 Agreements were in broadly similar form to the 1993 Agreements, adjusted as necessary. Thus the preamble was agreed to constitute an integral part of the agreement. The preamble to each agreement between Sana and Samir and Sana and Suheil recorded the following :

“WHEREAS on [August (Footnote: ²)] 18 1993 the First Party entered into an agreement (“the Usufruct Agreement”) with [Hassib] pursuant to which i) [Hassib] sold and transferred to [Suheil] all of [Hassib’s] right, title and interest in and to 89.980 shares..subject to [Hassib’s] right to the retain the usufruct of…such shares, all more fully set forth in the Usufruct Agreement..”

Additionally, by Article 3 of each agreement, Sana acknowledged “that she had received a copy of, and is familiar with the terms of the Usufruct Agreement, dated August 18 1993, executed by [Hassib] and that the shares sold hereunder are sold subject to [Hassib’s] rights under the Usufruct Agreement.”

Each of the 1995 Agreements was again expressed to be a sale agreement. Each was signed by Sana and Samir or Suheil as appropriate. Each was also signed by Hassib and also by Said for CCG.

There is an undated declaration signed by Hassib stating as follows :

“...The sale and transfer of the bare ownership right of [CCG] o[f] 14997 shares by my son Suheil Sabbagh and o[f] 14996 shares by my son Samir Sabbagh in favour of my daughter Sana Sabbagh were executed, done and implemented upon my direct instructions. Further, Mr Said T. Khoury’s approval thereon and Mr Said T. Khoury’s signature on the sale deeds evidencing such sale and transfer on behalf of [CCG] in his capacity as President of [CCG] were executed, undertaken and achieved upon my recommendation, request and perseverance even though Mr Said. T.Khoury personally did not approve such sale and transfer.”

There was a 5 : 3 increase in CCG’s shareholding in December 1995, rising to 1,000,000 shares. Hassib then had 3 full shares, together with his usufructs. Sana had bare ownership of 99,996 shares and 4 full shares.

By a series of transfer agreements in March and April 1998 Sana transferred her whole 100,000 shareholding in CCG to Hassib, based on the 1993 and 1995 Agreements, as set out below (“the 1998 Agreements”).

On 21^st March 1998 Sana entered into what was expressed to be a sale agreement with Hassib, selling him the usufruct right on 4 shares at US$150 per share. The preamble recorded Sana’s “full uncontested ownership” of those rights. The share numbers were given. Board approval for the purpose of Article 10 of the Articles of Incorporation was recorded. The agreement was signed by Sana, Hassib and by Said, recording CCG’s approval.

On 9^th April 1998 Sana entered into what was described as another agreement to sell to Hassib, passing him the bare ownership in 100,000 shares for a stated price of US$2,000,000 which she acknowledged receiving by her signature, declaring that she would not have any right of any kind from then on. The preamble to the agreement recorded that Sana owned the bare ownership of the shares. Share numbers were given. Board approval for the purpose of Article 10 of the Articles of Incorporation was recorded. The agreement was signed by Sana, Hassib and by Said, recording CCG’s approval.

Article 6 of this agreement recorded that this sale, coupled with that of 21^st March 1998, meant that from that date on she did not hold any “right of interests on any single share of the issuer company”. Sana in fact received the sum of US$50 million in return for her exit from CCG.

On 14^th April 1998 Hassib passed on the bare ownership of 100,000 shares that he had purchased from Sana to CIC for US$10,000,000. The agreement with Sana of 9^th April 1998 was incorporated into the sale agreement. Share numbers were given. Board approval for the purpose of Article 10 of the Articles of Incorporation was recorded. The agreement was signed by Hassib and Said (at least in Arabic). CCG also acknowledged and approved the agreement.

On 16^th April 1998 Hassib entered into an agreement ostensibly to sell the usufruct in the 100,000 shares purchased from Sana to Al Khoury SA (“AK”), represented by Wael, for US$6 million. AK was owned beneficially by Said. AK acknowledged receipt of this sum by signature. The agreement records the bare ownership sale to CIC on 14^th April 1998. Share numbers were given. Board approval for the purpose of Article 10 of CCG’s Articles of Incorporation was recorded. The agreement was signed (at least in Arabic) by Hassib, and Wael for AK. CCG also acknowledged the agreement.

On 20^th May 1998 Hassib entered into an agreement with Suheil for the ostensible sale of the bare ownership in his last three full shares in CCG for US$600. The agreement was in similar form to the 1993 and 1995 Agreements, signed by Hassib and Suheil and acknowledged for CCG by the signature of Said.

At this stage, assuming the 1993, 1995 and 1998 agreements to have been valid, Hassib was left with just usufruct rights in shares in CCG.

The 1993, 1995 and 1998 transfers are said by the Defendants to have been recorded faithfully in CCG’s share register (Footnote: ³).

In July 2006 Suheil and Samir entered into agreements with HH selling their bare ownership interests in 199,953 shares each to HH for US$10 million each (“the 2006 Agreements”). The authenticity of these agreements is disputed by Sana. Board approval was recorded. The agreement was signed by Suheil and Samir respectively and acknowledged as approved by Said for CCG.

It is common ground that, upon Hassib’s intestate death, Sana, Samir and Suheil each inherited one-third of his assets. They are Hassib’s only heirs, as confirmed by the ruling of the Civil Magistrate in Beirut of 21^st April 2010.

As set out above, there are two heads of claim : the asset misappropriation claim (which is not brought against Wahbe and HH), and the share deprivation claim (which is brought against all Defendants).

The proper law applicable to each claim is said to be Lebanese, alternatively Greek, law.

On this claim Sana claims damages, an account and/or other relief arising out of the Defendants’ alleged wrongful participation in a conspiracy to deprive her of her entitlement to shares in CCG and the resulting dividends, contrary to Articles 121, 122 and/or 124 of the Lebanese Code of Obligations (or Articles 914, 919 and/or 281 of the Greek Civil Code). It is alleged that on his death, Hassib held 39.915% (or 399,915 shares) of CCG’s share capital. Sana was entitled to one-third of such holding. A claim for delivery up of shares was pleaded initially but has now been withdrawn.

Sana relies on the fact that on 13^th January 2010, the day after Hassib’s death, CCG requested authentication of the names of the shareholders in CCG from the Commercial Registry in Beirut (“the Commercial Registry”). (It is clear from documents now available that the genesis for this request pre-dated and was in fact wholly unrelated to Hassib’s death. It was a request made for the purpose of providing details for new bank accounts). The Register responded on 16^th January 2010, recording a shareholding of 399,915 shares on the part of Hassib in the following terms :

“To be returned to the applicant when filled in. After reviewing the file of the joint stock holding company registered in the commercial register on 26.11.1984 under No 30 under the commercial name “Consolidated Contractors Group SAL Holding” with a paid up capital of 100 million American Dollars divided into one million shares of 100 USD each distributed according to the attendance sheet added to the General Assembly held on 30.5.2009 as follows : Hassib Sabbagh 399,915 shares; Said Khoury 15 shares; Toufic Khoury 5 shares; Samer Khoury 5 shares; Wael Khoury 5 shares; Suheil Sabbagh 5 shares; Samir Sabbagh 5 shares; Al Khoury SA 599,895 shares; Consolidated Investments Company SARL 150 shares. This company is still operational and there is no other lien or incidence…”

Sana alleges that the Defendants hid her entitlement to shares in CCG from her, and improperly procured that those shares were transferred unlawfully to HH. On 1^st July 2010 HH’s board of directors gave Samer authority to open and operate bank accounts on behalf of HH in Lebanon and Switzerland. Samer was not a director or shareholder of HH at the time. On 27^th July 2010 there was a meeting of the general assembly of CCG. All of the individual Defendants other than Wahbe were present. Sana was not given notice. The minutes of the meeting record HH as owning 399,915 shares in CCG. At a further meeting of the general assembly of CCG on 31^st July 2010 not attended by Sana but again by all of the individual defendants bar Wahbe, HH was again recorded as owning 399,915 shares in CCG. It was resolved to distribute to shareholders dividends of US$150 million.

Sana relies on the fact that CCG later made a filing at the Ministry of Finance in Lebanon (on 27^th September 2012) that as at 31^st December 2010 Hassib remained the registered owner of all 399,915 shares held before his death.

Sana states that she did not discover the apparent transfer of shares to HH until about September 2012 and then as a result of her own investigations and not from information provided to her by any of the Defendants.

Sana alleges that in 2011, 2012 and 2013, as part of the conspiracy, the Defendants sought to persuade her that she had no rights of any value. On or about 30^th April 2011 Wahbe provided her with a document (which he states now that he was given by Samer) showing that she was only owed US$8.7 million by the CCC group. He sought to persuade her to sign an authenticated document stating that she was not owed anything, even before receipt of this sum. In September 2011 CCC gave forensic investigators instructed for Sana a document showing US$14.8 million as due to her. It was accompanied by a memorandum said to have been prepared “on the advice of Said…” stating that Said had taken decisions on behalf of Hassib during Hassib’s lifetime pursuant to a power of attorney given to him on 21^st May 1992 (“the 1992 power of attorney”).

In about April or May 2012 Samer sought to persuade Sana that her rights were only worth US$14.8 million. Similarly, in August 2012, Samer and Suheil sought to persuade her that her rights were worth US$53 million.

In September 2012 Sana informed the Defendants that she had discovered that Hassib had owned 399,915 shares in CCG at the time of his death. She alleges that Samer caused a threatening facsimile to be sent to her on 4^th September 2012 anonymously (from a car rental firm in Athens).

In a statement made in March 2014, Samer indicated that he was responsible for preparing a document as follows :

“WHY SANA SABBAGH HAS ZERO CHANCES OF GETTING ANY OF [HER] BROTHERS’ SHARES”

The document referred to Hassib having only “the usufruct of all shares of Suheil and Samir (while they had ownership rights since 1994) and accordingly only his name appeared in the Commercial Registry… following his passing away… the usufruct was transferred to Suheil and Samir who became the owners of both the usufruct and these shares...”. Samer stated that he prepared the document as a note for himself. It was faxed subsequently to Sana but he did not authorise or request such sending, nor did he know who in fact sent it.

On 25^th April 2013 Said’s lawyers wrote indicating an intention on his part to pay Sana the sum of US$14.8 million in respect of her “share” of the CCC group account. But the payment was conditional on a release by Sana of the CCC group from any further payment, to which Sana was not prepared to agree.

Sana claims damages, an account and/or other relief from the Defendants (other than Wahbe and HH) for alleged wrongful participation in a conspiracy to deprive Hassib (and so also ultimately her) of his assets between the date of his stroke and his death. Reliance is placed on Articles 121, 122 and/or 124 of the Lebanese Code of Obligations (or Articles 914, 919 and/or 281 of the Greek Civil Code). The claim is brought by Sana as Hassib’s heir and in her own right as a victim.

Before his stroke Hassib authorised CCIC to pay his family’s expenses and charitable donations out of his money held by CCG and derived from his share of CCG dividends and the proceeds of other investments held by him. After his stroke CCIC and CCG controlled a substantial proportion of Hassib’s money, with the knowledge, approval and participation of the Defendants (other than Wahbe and HH). The major, though not exclusive, source of money under their control was dividends of CCG. Very substantial dividends are said to have been paid to CCIC for the benefit of Hassib. CCIC also received very substantial monies for Hassib as a result of investments made by him previously. Sana pleads and asserts in her evidence (Footnote: ⁴) that the sums were held for Hassib by or to the order of both CCIC and/or CCG (Footnote: ⁵).

Sana claims that the Defendants (other than Wahbe and HH) misappropriated these assets by making improper and unauthorised investments with them, in particular in companies controlled and/or owned by them. The investments were not made in Hassib’s name, but in the name of one or more of the Defendants. The investments were made in shares in public companies, real estate and CCC group projects. Additionally, assets of Hassib were sold without any apparent benefit being passed on to him.

It is said that these Defendants knew, intended and foresaw that the harm to Hassib would also cause harm to Sana as a beneficiary on Hassib’s death.

After the commencement of these proceedings, by a letter dated 7^th January 2014, lawyers acting for CCG proposed mediation between the parties. That letter was sent to Sana, Suheil, Samir and HH. No mediation took place, at least none involving Sana.

On 12^th March 2014 a request for arbitration was issued by HH, Suheil, Samir and CCG with Sana named as the Respondent. The request stated :

“…5 Through these arbitral proceedings the Claimants seek in substance :

a determination as to ownership and entitlement to any rights in the shares of CCH of each of the first three Claimants and the Respondent;

a determination of the balance of any monies owed from Hassib Sabbagh’s shareholder’s account in CCH to each of the first Three Claimants and to the Respondent.

6.

These claims are within the scope of the Arbitration Agreement as they pertain to ownership and entitlement to CCH’s shares and to who is the beneficiary of the rights attached to these shares…similarly said Arbitration Agreement applies to each of the Parties’…entitlement as heir to all or a portion of Hassib Sabbagh’s shareholder account held by CCH.”

As set out in more detail below, Sana does not consider that she is bound by the Articles of Association of CCG, nor that there is an arbitrable dispute between her and the claimants in the arbitration. She will contest any attempt to obtain recognition or enforcement in the United Kingdom of any award in the Lebanese arbitration. She intends to play no part in the Lebanese process.

In their request for arbitration in March 2014 HH, Suheil, Samir and CCG offered Paris, France, as an alternative seat of arbitration if Lebanon were not acceptable to Sana.

The claims are brought against all Defendants except for HH, under Regulation 44/2001 (“the Brussels Regulation”) (or the Lugano Convention) :

HH was served out of the jurisdiction pursuant to the order of Flaux J on an ex parte application on 22^nd January 2014 on the basis that HH was a “necessary or proper party” to the proceedings against Wael (see CPR 6.37 and PD 6B para. 3.1(3)).

In overview then, the jurisdictional basis for the claim against Wael is his domicile here. Said, Samer, Toufic, Samir, Suheil, Wahbe and CCG are joined under Article 6 of the Brussels Regulation (or Lugano Convention). HH is brought under the “necessary or proper party” jurisdictional gateway under CPR 6.37.

The Defendants challenge the jurisdiction of this court as follows. In broad forensic terms it is said that the dispute “has everything to do with Lebanon and nothing to do with England” (see for example paragraph 5 of the skeleton argument for Wael). None of the Defendants save for Wael has any material personal or business connections with the English jurisdiction. The relevant events all occurred in Lebanon or Greece. The claims are not governed by English law. The main documents will be in Arabic and located in Lebanon or in Greece.

All the Defendants contend in essence :

HH contends further :

The Defendants sought recently to raise (without permission), an argument that Greece (as opposed to Lebanon) was “the natural and appropriate forum”. On 11^th June 2014 Eder J refused permission to the Defendants to do so (save in respect of Wahbe and HH, they having been served later than the other Defendants). It is agreed that the availability of any argument by Wahbe and HH in favour of Greece should await the outcome of the present applications.

In summary, therefore, the following key jurisdictional issues that fall for determination are :

After identifying the relevant tests under Article 6(1) and CPR 6.37, I propose to deal with each issue in turn so far as necessary or appropriate.

CPR 6.33 provides for service of proceedings outside the United Kingdom without the permission of the court where the claim is one which the court has power to determine under the Civil Jurisdiction and Judgments Act 1982 (“the CJJA”), subject to certain conditions. Under the Brussels Regulation and under the CJJA (the latter giving effect to the Lugano Convention), jurisdiction is conferred on the English courts.

Article 1 of the Brussels Regulation, which replaces the Brussels Convention, defines the subject matter and scope of the jurisdiction, namely civil and commercial matters subject to certain exclusions. As set out above, Article 2 states the general rule of jurisdiction, namely that a person domiciled in a member state shall be sued in the courts of that state irrespective of their nationality. Article 6(1) provides for jurisdiction to sue co-defendants. As explained in C198/97 Kalfelis v Bankhaus Schroder [1988] ECR 5565 at paragraph 19, Article 6(1) derogates from the general rule of jurisdiction in Article 2 and so is to be construed restrictively. It has been described as incorporating an anti-abuse provision (see also Sibir v Tchigrinski [2012] EWHC 1844 (QB) at paragraph 31).

To found jurisdiction under Article 6(1) a claimant must show to the standard of a good arguable case that the factors exist which allow the court to take jurisdiction. In Bols Distilleries v Superior Yacht Services [2007] 1 WLR 12 (at paragraph 28) this was said to mean that the claimant has to show a “much better argument” than the defendants on the material available that the requirements of the Brussels Regulation are met :

“….In practice, what amounts to a “good arguable case” depends on what requires to be shown in any particular situation in order to establish jurisdiction….So, applying the “good arguable case” standard, the claimants must show that they have a much better argument than the defendants that, on the material available at present, the requirements of form in article 23(1) are met and that it can be established, clearly and precisely, that the clause conferring jurisdiction on the court was the subject of consensus between the parties.”

Aikens LJ considered this dictum in Joint Stock Co Aeroflot – Russian Airlines v Berezovsky and others [2013] EWCA Civ 784. At paragraph 50 he stated :

“There has been debate on whether the qualifier “much” to the phrase “the better of the argument” adds anything. In Briggs & Rees “Civil Jurisdiction and Judgments” the authors suggest…that the use of “much” …should be “allowed to slip from view”. I respectfully agree. The only point of the word is to emphasise the fact that if the two arguments are equal, then the party asserting the Article 23 jurisdiction will not succeed. Too much emphasis on the word “much” would simply lead to the error of imposing too high a standard of proof on the party wishing to establish the Article 23 jurisdiction. The whole point of the jurisprudence on the standard of proof in jurisdictional disputes is to emphasise that such decisions are made at an early stage in a dispute and the same or very similar questions on the substantive dispute…may have to be decided at the trial.”

All necessary factors must be considered - see Gard Marine and Energy Ltd v Tunnicliffe and others [2011] Bus LR 839). Thomas LJ referred there (at paragraph 24) to the application of a “broad common sense approach and avoiding an over-sophisticated analysis” when considering the risk of irreconcilability. Then having considered the approach identified by the European Court of Justice in Freeport plc v Arnoldsson (Case C-98/06) [2008] QB 634, Thomas LJ said (at paragraph 35) :

“...I consider that the court should approach the matter in the light of the policy of the Convention to produce predictable results on the principle of the Convention that jurisdiction is generally based on the defendant’s domicile. In seeing whether an exception to this general rule exists in a given case, the court must assess the connection between the claims to see whether there is a risk of irreconcilable judgments arising out of separate proceedings such that there may be a divergence in the outcome where there is “the same situation in law and fact”. In so doing, it is necessary for a national court to look at all the factors. Beyond this, I do not think it is desirable to go in the light of the established case law. It is not necessary to discuss or decide the precise meaning of “irreconcilable judgments” to decide this case…or enter into a wider debate on possible problematic results that might arise in practice…”

CPR 6.36 provides for service out of the jurisdiction with the permission of the court. CPR 6.37 provides :

“(1)

An application for permission under rule 6.36 must set out :

which ground in paragraph 3.1 of Practice Direction 6B is relied on;

that the claimant believes that the claim has a reasonable prospect of success;…

(3)

The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.”

Paragraph 3.1 of Practice Direction 6BPD provides materially as follows :

“3.1

The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where ….

(3)

A claim is made against a person (“the defendant”) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –

a)

there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and

b)

the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.”

Thus, although a single burden test (Footnote: ⁶), there are three hurdles for a claimant to overcome :

The “necessary or proper party” test is at least as broad as the court’s power to add or substitute a party under CPR 19.2 (2) (see United Film Distribution Ltd v Chhabria [2001] EWCA Civ 416 at paragraphs 36 to 38 and Altimo Holdings v Krygyz Mobil Tel Ltd [2011] UKPC 7 at paragraph 87.) For present purposes, it is therefore sufficient for Sana to show that there is a serious issue involving HH which is connected to the matters in dispute in the proceedings, and it is desirable to add HH so that the court can resolve that issue.

As is already apparent, the existence of a triable claim against Wael is the gateway to jurisdiction. Without such a claim, not only will the claim against Wael itself be abusive, but it will not be expedient for his co-defendants to be sued here and extraterritorial jurisdiction against them will not be established. Dicey, Morris & Collins on the Conflict of Laws (15^th Edn) (“Dicey”) put it in this way (in rule 35) :

“Under English law the claimant has to show that there is a real issue on the merits that the court may reasonably be asked to try as to the liability of the additional defendant domiciled in England.”

The well-established practice of the English courts is thus to establish whether there is a real claim against the anchor defendant, that is to say a claim with a real prospect of success. There needs to be proper scrutiny in this regard. As Lloyd LJ said in Golden Ocean Assurance Ltd v Martin (The Golden Mariner) [1990] 2 Lloyd’s Rep 215 at 222 (cited with approval in Altimo Holdings v Kyrgz Mobil Tel Ltd (supra) at paragraph 73) :

“I agree…that caution must always be exercised in bringing foreign defendants within our jurisdiction under Ord 11 r 1(1)c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction.”

But the test remains whether or not there is a serious issue to be tried (see Altimo Holdings v Kyrgz Mobil Tel Ltd (supra) per Lord Collins at paragraph 68). This engages the test for summary judgment under CPR Part 24. The claimant must show some real prospect of success. The court will disregard prospects which are false, fanciful or imaginary. Where extremely serious allegations are made, the proof to establish that there is a serious issue to be tried must be commensurate to the seriousness of the allegation (see Ashton Investments Ltd v Rasal [2006] EWHC 2545 (Comm)).

In considering whether it is satisfied, the court must not engage in some form of mini-trial on the merits at this early interlocutory stage : see Swiss Reinsurance Company Limited v United India Insurance Company [2002] EWHC 741 (Comm) at paragraph 27 and Gulati and others v MGN Limited [2013] EWHC 3392 (Ch). There Mann J said at paragraph 6 :

“… In relation to summary judgment applications the position is as follows :

the usual way of trying disputes is to have a trial after the “normal processes” of disclosure and interrogatories have been gone through, though there are exceptions to that. One such exemption is that summary judgment may be given against a claimant if it is “clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based” (Three Rivers v Bank of England (No 3) [2003] 2 AC 1 at para 95 per Lord Hope of Craighead).

ii)

The simpler the case, the easier it will be to take that view. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents, without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman [2001] 1 All ER 91 at 95, that is not the object of the rule [CPR 24]. It is designed to deal with cases that are not fit for trial at all. So there should not be [a] mini-trial.

iii)

Judgment may be given against the claim if it has “no real prospect of succeeding”. The word “real” distinguishes fanciful prospect of success…they direct the court to the need to see whether there is a “realistic” as opposed to a “fanciful” prospect of success (Swain v Hillman at page 92j).

iv)

The prohibition on mini-trials does not mean that everything that is said has to be accepted at face value. “In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent on those factual assertions may be susceptible of disposal at an early stage so as to save the costs and delay of trying an issue the outcome of which is inevitable” (ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at paragraph 10 per Potter LJ).”

And once jurisdiction is established, it is simply inappropriate for there to be a detailed examination of merits (see the comments of Lord Goff in Seaconsar v Bank Markazi [1994] 1 AC 438 at 455G), though it is right to note here of course that the merits lie at the heart of the establishment of jurisdiction.

The mere fact that the anchor defendant is sued only for the purpose of bringing in other defendants is not fatal to proper joinder of those other defendants. Whilst it is a factor in the exercise of the court’s discretion, it is not an element in the question of whether the action is “properly brought” against the anchor defendant, provided that there is a viable claim against the anchor defendant (see Altimo Holdings v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at paragraph 79).

Finally on the principles to be applied, it is said for Sana that a view on the merits of one of Sana’s claims should inform the view to be taken on the other. There is a certain logic to this submission. But it would by no means be wrong either in principle or fact to take the view that the asset misappropriation claim raised a triable issue and the share deprivation claim did not, or vice versa. The underlying facts and issues on the claims are very different, even though conspiracy is alleged in each. And each claim falls to be considered separately. That is the language of Article 6(1) and CPR 6.33.

There are the following essential ingredients to success for Sana on the share deprivation claim for present purposes :

The Defendants submit that the share deprivation claim is hopeless because there is no proper basis to dispute the effectiveness of the documented share transfers in 1993, 1995 and 1998 referred to in section C. above whereby Hassib transferred his shares to his children during his lifetime. Sana now accepts that the relevant transfers are valid and legally effective sales agreements. Thus it is unarguable that Hassib’s estate included 399,915 shares in CCG at the time of his death. Moreover, Sana has no prospect of establishing an entitlement on the basis that the transfers were gifts. It is also said to be unarguable that Wael (or the other Defendants) had the necessary mens rea of intentional wrongdoing or that he performed some act to cause Sana harm.

What is said for Sana is that there is an arguable case that necessary formalities were not completed. Accordingly, Sana can maintain that Hassib owned the shares at the date of his death such that she is entitled to a one-third share of them. Further or alternatively, the transfers were in truth only gifts and so lapsed as a matter of Lebanese law on Hassib’s death. Generally, it is said that this is a complex dispute not suitable for summary determination and issues such as Wael’s knowledge are ones which should be allowed to proceed to trial.

I remind myself of the relatively low threshold test that the merits of the claim must pass at this stage, of the limitations of the exercise on an application such as this and in particular of the need to avoid a mini-trial. However, even if detailed, the corporate share transfer history relating to Hassib’s shares in CCG which is central to the Defendants’ defence can, for example, be traced clearly though the 1993, 1995 and 1998 Agreements (as set out in section C. above).

Having considered carefully the relevant material and the competing submissions of the parties, I have reached the clear conclusion that the share deprivation claim does not carry a real prospect of success.

As set out above, Sana now accepts that the 1993, 1995 and 1998 Agreements were valid and legally effective. This is a central concession made, at least expressly, late in the day. It is noteworthy that, despite Sana having been provided with the 1993, 1995 and 1998 Agreements in 2012, and having made a positive case (that they were shams and ineffective) against them in her submission of September 2012, the subsequent Particulars of Claim do not address them at all. In circumstances where the burden lies on Sana to establish share ownership in CCG by Hassib at the time of his death, the omission is striking.

The concession drives Sana to have to contend that, nevertheless, ownership of Hassib’s shares in CCG was not transferred to her brothers under those agreements because certain formalities required for transfer by the 1984 (or 1997) Articles and the Code of Commerce were not completed over the many years following until Hassib’s death.

It is common ground what those necessary formalities were, namely :

At the outset, I accept the submission for the Defendants that the share deprivation claim is profoundly unattractive. Sana contends that the transfers by Hassib of shares to her brothers in 1993 were not in fact effected in 1993 in circumstances where the transfer by Hassib to her in 1993 (in identical terms and circumstances save as to amount) was. By the 1998 transfers she sold the very shares that she so received : they represented 50% of what she then sold. In return, whether as strict consideration or not, she received US$50million. The unattractiveness of the claim is not of course determinative in itself and the issues must be approached substantively, but it is relevant context. It informs the credibility of the claim : it is hardly a promising platform for Sana to have to allege a conspiracy against the Defendants by reference to their alleged performance of the very thing which she accepts that her father (Hassib) wanted and agreed should happen in 1993 and from which arrangements she has already benefitted substantially.

Moreover, it is unarguable that the relevant shareholders and directors of CCG at all material times did not approve the transfers. Said signed all of the 1993, 1995 and 1998 agreements. There is no realistic dispute but that he was at all material times a proper representative of CIC (as evidenced by the shareholder meetings of CCG in June and September 1993).

As to the factual dispute as to whether the necessary formalities were completed, it is right to say that there is no primary evidence of board approval for each of the transfers (for example in the form of minutes) or of the reissue of all share certificates (although there is direct evidence of the reissue of some). It was said in oral submission for the Defendants that it has not been possible to find the relevant documents.

However, Mr Ladiki’s evidence, as referred to above, is that he is satisfied that the transfers were all effected properly in accordance with Lebanese laws and in accordance with CCG’s Articles of Incorporation. This is consistent with the general impression gleaned from the available documentation, including the 1993, 1995 and 1998 Agreements themselves, that the parties were concerned to comply with, not ignore, any formal requirements. Moreover, in addition to the relevant shareholders and directors of CCG signing each transfer, board approval is expressly recorded in the 1998 Agreements (which are founded in turn on the validity of the 1993 and 1995 Agreements). By way of example, Article 7 of the agreement between Sana and Hassib read as follows :

“Both parties declare that they have obtained the agreement of the Board of Directors of the issuer company according to the principles provided for in Article 10 of the Articles of Incorporation and therefore they have agreed to notify the issuer company, a copy of this agreement to be registered in the register of shareholders and consequently to transfer the bare ownership of the sold shares in the name of the Second Party.”

As for the issuing of share certificates, specific share numbers are referred to in the 1998 Agreements. It is difficult to see how those share numbers could exist without the relevant share certificates being in place. Moreover, there is direct evidence from Suheil that relevant share certificates were issued. In 1998 Suheil pledged his shares in CCG to Arab Bank (Switzerland) Ltd (“Arab Bank”) in order to raise the funds to go to Sana. A letter dated 6^th April 2008 from Arab Bank to Suheil refers to receipt of the relevant share certificates (nos 198 to 200152). Those shares emanated from the 1993 Agreements. In April 2001 Suheil requested return of the share certificates, with which request Arab Bank duly complied on 27^th April 2001.

In these circumstances, I accept the defence submission that it is no more than a purely speculative case that the necessary board approval and reissue of share certificates did not take place. Even if I am wrong in this conclusion, and there is a serious factual issue to be tried as to whether or not there was board approval and re-issue of share certificates, the merits of the share deprivation claim are left hanging by a thread even before one turns to, for example, issues of waiver and knowledge.

I turn then to the third requirement, namely entry of share transfers on CCG’s share register. On the face of CCG’s share register, each and every one of the transfers involving Hassib and/or Sana was registered on CCG’s share register (on Hassib and/or Sana’s pages). Mr Ladiki says that he has inspected and copied faithfully the original pages which he exhibits in his evidence. The entries are extremely detailed, recording sequentially the dates and precise numbers of shares transferred. Criticism is made of the absence of any evidence from Mr Noureddin, who was CCG’s company secretary in 1993, in relation to the share register (and indeed more generally). But there is no reason to disbelieve Mr Ladiki’s evidence as to the authenticity of the share register (or otherwise on factual corporate matters).

Sana now seeks positively to challenge the authenticity of the register, at least so far as Hassib’s pages are concerned. (The scope of the challenge on authenticity was not always clear. It was suggested during the hearing that the challenge extended to Sana’s page as well. Such a challenge was described by the Defendants as “preposterous”, given Sana’s position on the 1993, 1995 and 1998 Agreements involving her. I agree. The difficulty then facing Sana is the fact that the allegedly false entries on Hassib’s page correspond to those on her (genuine) page.)

Sana complains that the original pages have not been produced for her inspection in London. However, the entire original register has been offered to Sana’s English or Lebanese advisers for inspection in Beirut, where the register is, in Arabic. Such offer was made in March 2014 and repeated in June 2014. Sana could readily have instructed her Lebanese lawyers or other experts (as she did in 2012) to inspect in Beirut, which might be thought to be the most effective and reliable method of inspection in any event. No explanation was advanced as to why such inspection has not taken place, save that Sana wished to have her London advisers carry out the inspection in London. Mention is also made for Sana that the register pages for Suheil and Samir have not been made available. But this is because they had not been requested by Sana. Nor is there any reason to think that they would be at odds with the pages for Hassib and Sana. And, as already indicated, the entire original register has been offered for inspection. There is the additional forensic point that, given the sequential nature of the entries on the register and the lack of challenge to the transfers in 1995 and 1998, the forgerer would have had to have the foresight to leave a perfect gap for the 1993 transfers when making the entries for 1995 and 1998 - an implausible scenario. I do not consider there to be a real prospect of successful challenge to the authenticity of CCG’s share register.

There is therefore no properly arguable basis for the claim that the transfers the subject of the 1993, 1995 and 1998 Agreements were not recorded as necessary on CCG’s share register.

In short, in my judgment, Sana’s position on the non-completion of formalities is unreal, at odds with the documents and unsustainable.

A separate and discrete defence arises out of CCG’s share register. Under Lebanese law, for companies such as CCG, title to and ownership of shares result from registration on the company’s share register.

Article 455 of the Code of Commerce provides as follows :

“In the case of a registered security, the title of the owner of the security is established by an entry made in his name on the registers of the issuing establishment. Ownership of the security results from the entry itself.”

Article 456 of the Code of Commerce similarly provides in relation to transfers :

“Transfers of the registered security are operated by a declaration of transfer entered on the registers and signed by he who makes the assignment or by proxy …This transfer grants the new registered holder a personal and direct right; the debtor establishment cannot oppose him any exception relating to previous holders.”

There is a dispute between the Lebanese law experts as to whether registration is determinative as a matter of Lebanese law, or merely just evidence of a transfer. Mr Abirached says that the clear effect of the Code of Commerce, namely that there is no legal basis for going behind the register, is well-recognised. Professor Bacache states that registration is a form of evidence or proof but is not an absolute proof. Adopting the approach most favourable to Sana, namely that of Professor Bacache, it cannot be said that there is anything to undermine the accuracy of the record on CCG’s share register or any reason not to treat it as proof of valid transfer. I accept that this is another reason why there is no serious issue to be tried based on a challenge to CCG’s share register.

The Defendants go further and submit that, whilst there may be a dispute as to the evidential effect of the share register, there is no dispute between the Lebanese law experts as to the effect of Article 455, namely that registration is determinative of ownership. Thus, Sana at most has a right to apply to rectify the share register. This point was raised for the first time in submission in reply. I am not persuaded that Professor Bacache would necessarily agree with it. He certainly does not do so in terms. Whilst he refers to Article 455 which speaks of “a registered security”, he goes on to say (at paragraph 243 of his first report) that “[r]egistration means the proper and correct registration.” In my judgment, this defence submission cannot be accepted on a summary basis.

Even if there were a serious issue to be tried as to whether or not the necessary formalities were completed as a matter of fact, three further defences are raised under issue 1 :

As for waiver, so far as the requirements under the 1984 Articles are concerned, these are contractual only, for the benefit of the company and shareholders as a matter of agreement. They are capable of waiver. In his third report Mr Abirached states the following :

“[B]1.3 I note that Article 10 of [CCG’s] by-laws requires the approval of the Board of Directors by a majority of two-thirds of its members for any transfer of shares. However, where some of the formalities in Article 10 had not been followed strictly (for example, had there been no formal meeting of the Board of Directors to approve a particular transfer), such formalities would be deemed waived in circumstances where two thirds of the members of the Board of Directors sign or approve the transfer, or if it were to be unanimously accepted by the shareholders in the company. ... Such approval would validate the transfers in application of the theory of the results legal equivalence (théorie d l´equivalence juridique). This theory is as follows : Theory of the results legal equivalence : Doctrinal explanation consisting in recognizing the same value to the results obtained by following a path other than the ordinary one, by reason of the fact that such parallel means, given the circumstances, lead to results at least as satisfying as the regular processes regarding the respect of the objectives of the law or the objective of individual wills…”

This is said to be the Lebanese equivalent of the Duomatic (Footnote: ⁸) principle, namely that approval by all relevant shareholders to a transaction is sufficient to waive any want of formality. The informal agreement of all shareholders amounts to ratification of the transaction in question.

For Sana it is said that she has not had the opportunity to respond on the point of law with evidence from Professor Bacache. I am unimpressed by this argument. The issue has been directly in play from at least the point in time when Mr Abirached’s third report was served (on 16^th May 2014). Sana could have sought permission from Eder J at the pre-trial review on 11^th June 2014 to serve responsive evidence on the point if there was a dispute, particularly when the burden on showing a difference in the law is on the party alleging such a difference. Moreover, Sana has in any event served substantive evidence on the question of forum non conveniens outside the prescribed timetable when she wanted to (on 4^th July 2014).

On the facts here, all relevant shareholders signed the 1993 Agreements, namely Hassib and Said (who owned shares directly and indirectly through CIC). By 1993 CIC was owned entirely by Said, having formerly been owned by Hassib and Said. Said’s representative authority for CIC at the time can also be seen well from the minutes of shareholder meetings of CCG in June and September 1993, as set out above.

I therefore conclude that Sana does not have a real prospect of establishing the necessary ownership of shares by Hassib on his death, since there is no real prospect of disputing the fact that any want of formality has been waived by the relevant parties.

On the other hand, I am not persuaded that I should find that the claim has no real prospect of success because Sana is estopped contractually from contesting effective completion, attractive though the argument appears and attractively as it was advanced.

This submission was promoted in terms for the first time during oral opening submission for the Defendants. Reliance is placed on Springwell Navigation Corp v JP Morgan Chase Bank and others [2010] 2 CLC 705. There at paragraphs 143 and 144 Aikens LJ stated :

“143.

Before I examine Lowe v Lombank and subsequent cases on this issue, I will try and analyse the matter from principle. If A and B enter into a contract then, unless there is some principle of law or statute to the contrary, they are entitled to agree what they like. Unless Lowe v Lombank is authority to the contrary, there is no legal principle that states that parties cannot agree to assume that a certain state of affairs is the case at the time the contract is concluded or has been so in the past, even if that is not the case, so that the contract is made upon the basis that the present or past facts are as stated and agreed by the parties…

144.

So in principle and always depending on the precise construction of the contractual wording, I would say that A and B can agree that A has made no pre-contract representations to B about the quality or nature of a financial instrument that A is selling to B. Should it make any difference that both A and B know at and before making the contract that A did, in fact, make representations, so that the statement that A had not is contrary to what each sides knows is the case? Apart from the remarks of Diplock J in Lowe v Lombank, Mr Brindle did not show us any case that might support the proposition that parties cannot agree that X is the case even if both know that this is not so. I am unaware of any legal principle to that effect. The only possible exception might be if the particular agreement between A and B on the certain state of affairs concerned contradicts some other specific or more general rule of English public policy. Like Moore-Bick LJ in Peekay I see commercial utility in such clauses being enforceable, so that parties know precisely the basis on which they are entering into their contractual relationship.”

Aikens LJ then went on to review the authorities, including Lowe v Lombank Ltd [1960] 1 WLR 197 and Peekay Intermark Ltd v Australia and New Zealand Banking Group [2006] 2 Ll Rep 511, concluding that the position in law was as he believed it to be as a matter of principle as set out above.

Thus it is said for the Defendants that, as a matter of English law, Sana is bound by her acknowledgments of the validity of the 1993 Agreements in the 1995 and 1998 Agreements. There is no evidence suggesting a difference in Lebanese law and the “presumption of sameness” applies as set out in PT Pan Indonesia Bank Limited TBK v Marconi Communications International Ltd [2005] EWCA Civ 422. There at paragraph 70 Potter LJ stated :

“70.

In deciding issues raised before the court which are asserted to be governed by foreign law, the court proceeds upon the basis that such law is to the same effect as English law unless material is provided which demonstrates the contrary. Mere assertion is insufficient unless it is supported by credible evidence as to the foreign law. This is a necessary rule if proceedings are not to be stultified or unduly delayed, particularly in the interlocutory stages, in any case where the answer to a claim with a foreign element is clear so far as English law is concerned…the party who asserts that the application of foreign law would provide a different result bears the burden of satisfying the court that this is so…”

Although the Defendants accept that the contractual estoppel only binds the parties to the 1995 and 1998 Agreements, the effect of such an estoppel is said to impact on the whole structure of the share deprivation claim against all of the Defendants. The dispute in relation to the 1993 Agreements is said only to arise between Sana and her brothers with whom she contracted in 1995; that is the relevant dispute and Sana is bound contractually against them by her acknowledgments in the 1995 Agreements in particular. If Sana is barred as against her brothers, then she cannot show her pleaded case of entitlement.

The Defendants sought to demonstrate that this was no new point of law. However, whilst I accept that it has always been clear that the Defendants would be relying on the 1993, 1995 and 1998 Agreements, I am not satisfied that Sana ought to have been alive to this particular line of argument in advance of the hearing so as to be able to adduce expert evidence of Lebanese law on the point had she so wished. Points of importance should be taken clearly and on proper notice, so that there can be no doubt as to the issues arising. Professor Slim deals with the “theory of the autonomy of the will” and the fact that contracts are binding on the parties and Professor Bacache appears to agree broadly with what he says in this regard. But the points are dealt with only in the most general of terms (see sections 2 and 7 of Professor Slim’s first report). There is no mention, for example, of the theory of the autonomy of the will resulting in the parties being bound by agreement as to an assumed (even if incorrect) state of affairs. The Defendants accept that the authority of Springwell was new - indeed it was not produced to Sana as an authority until after the hearing had commenced – and that the label of “contractual estoppel” was new. In those circumstances, it does not appear to me to be fair to hold Sana to the “presumption of sameness” or to rule on the merits of the issue on a summary basis.

As reflected above, a separate issue was advanced for the Defendants by reference to Articles 10 and 11 of the 1984 Articles. It is said that Article 10 creates a pre-emption right in favour of existing shareholders and directors. Article 10 is there for the benefit only of existing shareholders and directors, and not for the benefit of the transferor. It is there to protect shareholders and directors against unacceptable dilution or concentration of voting rights. It is for the directors to take the necessary steps for the protection of existing shareholders but not for the transferor to complain if they are not carried out. Thus Hassib could not have asserted any invalidity of transfers to his children pursuant to the 1993 Agreements, with the result that Sana cannot maintain an entitlement to the shares upon his death.

This too was a point raised for the first time in oral submission for the Defendants. It is not addressed in the evidence of the Lebanese law experts as a matter of legal principle. It was not addressed in oral response by Sana. In my judgment it does not carry the conviction or clarity necessary at this stage for a positive decision on a summary basis that Hassib cannot be said to have owned the relevant shares in CCG at the time of his death.

Sana relies on a number of additional matters generally relevant to issue 1 (Footnote: ⁹), namely :

Whether or not it is fair, as the Defendants do, to describe these matters as “smoke and mirrors”, they do not in my judgment give rise to a sufficient prospect of success on issue 1 (or the share deprivation claim generally).

As for the question of board minutes, it appears that some minutes of meetings in October 2008 and July 2010 may have been inaccurate in recording physical meetings involving Wael (at precise times and dates). Additionally, there are minutes for CCIC in October 2002 purporting to show Hassib’s presence at a meeting when he was in fact receiving intensive rehabilitation treatment in New York at the time.

I do not consider that these matters advance Sana’s case either in relation to the question of authenticity of CCG’s share register or more generally. Whether or not there are inaccuracies or inconsistencies as alleged, the relevant wording in the minutes appears repeatedly in CCG’s minutes and is largely formulaic. Forgery of CCG’s share register would be of a quite different and specific order. Moreover, the minutes are relied on positively by Sana as evidence of the Defendants’ conspiracy, that is to say they are relied on as demonstrating Wael’s “involvement in the meetings said to be of central relevance to the share deprivation claim” (Footnote: ¹⁰).

As for the changing nature of the Defendants’ case in relation to the transfer of shares to HH, it is right to record that in October 2013 the evidence of Mr Shuttleworth of Jones Day, who has at all material times been Wael’s solicitor, was to the effect that on Hassib’s death, Samir and Suheil had bare title to 399,915 shares in CCG, and that such shares were not transferred to HH until July 2010. The solicitor then acting for all the other Defendants adopted that evidence in November 2013. Following a request for further information, the Defendants’ case changed : Mr Shuttleworth’s third witness statement deposed to the fact that the transfer of shares to HH in fact took place in 2006. Bare ownership in the 399, 915 shares were held equally by Suheil and Samir - “through HH” - after 2006. The 2006 Agreements were then provided to Sana for the first time in January 2014. As indicated above, their authenticity is challenged by Sana.

The Defendants’ position is that Mr Shuttleworth’s original evidence was inaccurate, but the inaccuracy is innocent and in any event of no consequence. In oral submission, it was said that the error was to use Samir and Suheil as “a proxy” for HH. The alleged error was made at a stage when only a claim form had been served and was corrected subsequently after there had been time to analyse the precise sequence of events.

Whether or not it was simple error, the short point is that the transfer of shares to HH is immaterial to the share deprivation claim. There is no suggestion that Hassib was party to the transactions in 2006, or that he in any way received any shares as a result of the 2006 Agreements. The transfers under the 2006 Agreements make no difference to the question of his share entitlement upon his death.

Finally and for the avoidance of doubt, I have also considered two specific documents that are or might be relied on to support Sana’s case of share ownership on the part of Hassib, namely the Commercial Registry’s report of 16^th January 2010 and a tax filing in 2011 (Footnote: ¹¹).

As for the Commercial Registry’s report of 16^th January 2010, it is common ground between the Lebanese law experts that registration with the Commercial Registry was not mandatory for CCG. Because of its status as a “société anonyme” CCG was required to file only limited information and documents. It was not required to register evidence of its shareholders or any changes to its shareholders. Thus the Commercial Registry was not CCG’s share register.

The Commercial Registry keeps records of corporate information and provides this information on request in the form of certificates. What was filed at the Commercial Registry on behalf of CCG was information about meetings and voting shareholders. Months or even years may pass between filings. The Commercial Registry is used primarily by third parties to ascertain who is authorised properly to act on behalf of a company and bind it. In responding to requests, it will simply use the most recent information on its records.

The result provided on 16^th January 2010 was therefore accurate so far as it went. It gave information expressly “according to the attendance sheet added to the General Assembly held on 30.5.2009” and not anything else. As at 30^th May 2009 Hassib did indeed have usufructs to 399,915 shares. The Commercial Register response did not establish that Hassib had any shares as at 16^th January 2010. The presumption of accuracy of the Registry records does not assist. The report of 16^th January 2010 does not in these circumstances advance Sana’s claim on share ownership by Hassib at the time of his death in any material way.

As for the tax filing, CCG filed a lengthy income tax statement with the Lebanese Ministry of Finance dated 27^th December 2011. The statement covered the 2010 financial year from 1^st January 2010 to 31^st December 2010. In a “Statement of Capital Distribution” shareholders were listed. Hassib was listed first in the list and shown as owning 399,915 shares. That would have been accurate on the basis of usufruct ownership up to 12^th January 2010 but, on the Defendants’ case, was inaccurate on any view for any period thereafter.

Mr Ladiki’s evidence is that the statement was completed in error by the employee responsible for completion of the form. In the following year, the capital distribution statement filed in 2012 for the year 2011 financial year, did not show Hassib as a shareholder. Indeed, it was not referred to in oral submission for Sana.

For all these reasons, separately and cumulatively, there is in my judgment no serious issue to be tried under issue 1 :

If I am wrong in my conclusion on issue 1, then issue 2 arises. It raises the following sub-issues :

Sana’s skeleton argument made the contention that the transfers under the 1993 Agreements were to be characterised as gifts by Hassib to his sons, albeit only in passing (at paragraph 78). In the course of oral submission for Sana, however, it was said in unequivocal terms that Sana did not rely in any way on the merits of an assertion that the transactions were gifts and not sales. That concession was then withdrawn swiftly for Sana after the Defendants made it clear in their reply submissions that this was fatal to the share deprivation claim : if the transfers under the 1993, 1995 and 1998 Agreements were sales, then they continued to bind Hassib’s estate on his death, irrespective of the completion of any formalities. Sana could have no entitlement to the shares in any event.

The characterisation issue is thus live between the parties. Its relevance as indicated is as follows : if the transfers were sales, they are binding on Hassib’s estate, whether or not transfer was fully effected and Sana could not claim any entitlement to a claim by reference to the CCG shares in question. If on the other hand they were only gifts, then any obligation to Samir and Suheil died with Hassib. Professor Bacache puts it this way so far as material (in his first report) :

“217.

The 1993 agreements are between Hassib...and his children and are made in the form of sale agreements.

218.

In Lebanon sale contracts between father and son are presumed to be gifts (donations) unless the contrary is proved; it is a strong factual presumption…Gifts disguised as contracts are referred to as “simulated gifts”.

219.

The factors which might be used to displace the presumption of gift encompass all relevant facts, but include (without limitation):

a)

the price stated to be paid and whether this reflects the value of the asset;

b)

whether the price was in fact paid to the seller;

c)

the economic situation of the children to whom the gift is being given; and

d)

relationship between the parties…..

221.

According to Article 197 COC paragraph 2, the simulated cause (in this case the gift) does not invalidate the contract which remains valid if the real cause of the contracted obligations is lawful.

222.

As a gift, the contracts would only be valid and effective while the donor was alive. This is the effect of Article 504 COC and 505 COC which distinguish between gifts between living persons and gifts after death.”

Sana submits that the transfers under the 1993 Agreements were more likely gifts than sales. Professor Bacache (in his first report at paragraphs 218 to 219) expresses the opinion that in Lebanon contracts between father and son are presumed to be gifts unless the contrary is proved. It is a strong factual presumption. The factors which might be used to displace the presumption of gift encompass all relevant facts, including :

Sana states also that it is unlikely that Hassib would have asked his children to pay for his shares, and there is no evidence that they did so pay. Samer’s evidence suggests that Suheil and Samir received their proportion of Hassib’s wealth in the form of Hassib’s shares. Sana also suggests that the stated purchase prices of US$6million in 1993 seem to be undervaluations.

The Defendants rightly submit that this is effectively a plea of sham, for which there must be cogent evidence. Whilst Sana’s position sits most uneasily with her concession that the 1993, 1995 and 1998 Agreements, which refer expressly to the purchasing and selling of shares, are valid and legally effective, I consider it to be arguably open to her to nevertheless contend that they are to be characterised as gifts, not sales.

The Defendants’ position then turns to the evidence of Professor Najm. Her evidence in her first report on the subject of gifts under Lebanese law contains the following :

“117.

Under Lebanese law, only the judge has the power to annul or invalidate a contract; until the judiciary annulment is made, the rights and obligations resulting from the agreement are fully sustained (Article 233 COC). This general principle is also applied to donations, as donations are subject to the general rules of contracts and obligations.

118.

Concealed donations – ie proceeding from a generous intent behind the disguise of valuable consideration – are valid under Lebanese law, as long as they do not contravene mandatory rules.

119.

Specifically, re-characterisation of a sale agreement into a donation shall be decided by the judge at the request of any party, provided evidence is brought that the act was made with an intention to make a donation…and that the asset was transferred without monetary counterpart, or with a fictive or derisory counterpart…”

Professor Bacache does not challenge these passages in Professor Najm’s report.

The Defendants’ short point is that this is a matter of substantive provision in Lebanese law and no application for re-characterisation has been made (to a judge or arbitrator). Thus, as matters stand, the 1993, 1995 and 1998 Agreements stand as sales.

As a separate point, the Defendants also seek to draw a distinction between the time when a contract of gift becomes irrevocable and when the gift takes place, that is to say performance. At paragraph 121 of her first report Professor Najm opines :

“Pursuant to Article 507 COC, “the donation is perfected and the transfer of movable as well as immovable property is effective when the donor knows of the donee’s acceptance, subject to the following provisions.” At this moment, the contract is formed and the donation is “perfect” and irrevocable. Thus, the donation is a consensual and not a formal contract under Lebanese law, as it is deemed perfect by the very consent of the parties, such consent being sufficient to convey the property of the given asset.”

So the Defendants say that the 1993, 1995 and 1998 Agreements are irrevocable even if they are (still executory) gifts, if the gift is agreed to be accepted. They contend that Professor Bacache’s evidence (at paragraph 216 of her first report) shows that he generally agrees with paragraphs 117 through to paragraph 122 of Professor Najm’s evidence. Nothing is said about the question of irrevocability. Rather Professor Bacache, so it is said, focuses only on performance.

I am attracted in particular to the Defendants’ short point that, in the absence of any (successful) application for re-characterisation, the 1993, 1995 and 1998 Agreements can only be treated as valid sales agreements. However, I am not persuaded that either point is sufficiently clear cut on the evidence so as not to be properly arguable either way. There is, for example, no suggestion that an application for re-characterisation could not be made by Sana now (Footnote: ¹²). And the distinctions that the Defendants seek to draw in Professor Bacache’s evidence between irrevocability and performance are fine ones. I am not confident that they are necessarily fair. For example, Professor Bacache’s statement (at paragraph 231) :

“…..If the transfer is not properly effected during the lifetime of the donor, the transfer becomes ineffective and non-existent.”

is capable of more than one interpretation and arguably wide enough to cover the question of irrevocability.

I therefore do not accept on a summary basis that these points advanced by the Defendants on issue 2 are, as they put it, “unanswerable”.

Quite separately and centrally, the question of knowledge on the part of Wael arises for consideration. I address it on the basis that I am wrong in my conclusion on issue 1, and so on the assumption that there is a serious issue to be tried as to whether the necessary formalities for transfer were completed before Hassib’s death (and on the assumption on issue 2 that there is a serious issue to be tried as to whether the 1993 Agreements were in fact agreements for gifts not sales). I also address it on the basis of Sana’s concession that the 1993, 1995 and 1998 Agreements are valid and effective.

The pleaded basis of knowledge on his part is to be found in paragraph 23 of the Particulars of Claim as follows :

“On or shortly after 16 January 2010 all of the Defendants would have become aware (if they did not already know) that Hassib owned 399915 shares in CC Holding at the date of his death. This is to be inferred from :

(1)

the fact that the request to the commercial registry was made by, and the response was provided to, CC Holding;

(2)

the control by the Individual Defendants (except Mr Tamari) of CC Holding;

(3)

the timing of the request, just one day after Hassib died;

(4)

the significance of the subject matter to all the Defendants;

(5)

the very close co-operation and mutual assistance, even where this involves conduct that it is illegitimate…as demonstrated by [the Masri litigation];..

(7)

subsequent events, as described herein.”

The attempt to infer relevant knowledge from the timing of the request to and the response from the Commercial Registry is in my judgment hopeless. As for the timing of the request to the Commercial Registry, the fact that it was made on the day after Hassib died was pure coincidence, as the documents now available demonstrate :

Thus the request of 13^th January 2010 was not in any way related to Hassib’s death and gives no cause for suspicion of wrongdoing on the part of Wael (or any of the Defendants).

As for the content of the response of the Commercial Registry, it cannot sensibly give rise to the inference suggested once the role of the Commercial Registry in relation to a company with CCG’s status is understood and in any event in circumstances where the information is given expressly by reference to records from a meeting in May 2009. That information was of course also accurate, given Hassib’s ownership of usufruct shares.

The question is then posed rhetorically : what then is left to support the necessary (and serious) allegation of knowledge leading to intentional wrongdoing on the part of Wael? The remaining pleaded matters are general only. Alleged control of CCG, close co-operation between the Defendants and the Masri litigation, of which more below, provide no basis for inferring knowledge on the part of Wael regarding Hassib’s ownership of shares. I can identify nothing in the “subsequent events” set out in the Particulars of Claim that materially advances the case on knowledge by Wael of ownership of shares by Hassib on his death.

In my judgment there is no properly arguable basis for establishing knowledge on the part of Wael that Hassib had not parted with his shares in CCG before his death (save for usufruct interests which lapsed on death). The material documents all point in the other direction. The 1993, 1995 and 1998 Agreements are wholly inconsistent with the understanding alleged by Sana. Sana’s own pleaded case is that the Defendants closely co-operated and worked together. There is no suggestion that Wael was unaware of these agreements – for a period of some 17 years. Indeed, the 1998 Agreements culminated in the transfer of 100,000 shares to AK of which Wael was the representative. CCG’s share register also points in the other direction, since it records the transfers involving Hassib in 1993, 1995 and 1998. Sana’s own final exit from CCG under the 1998 Agreements is also only consistent with Hassib parting with his shares to his children (save for usufruct) before his death.

Nor is there any reason to suspect, for example, that any of CCG’s lawyers would have informed Wael (or indeed any of the Defendants) that Hassib owned 399,915 shares upon his death because of some procedural failure to comply with the 1984 Articles, let alone that the transfers fell as a matter of law to be recharacterised as gifts (with the result that they remained binding on Hassib despite procedural failure). On the contrary, their evidence is a positive assertion of a belief that all necessary formalities were complied with in relation to the 1993, 1995 and 1998 Agreements and the transfers effected fully.

Added to the question of knowledge is the point made fairly by the Defendants that it is difficult to identify precisely in what act of (intentional) wrongdoing Wael is supposed to have engaged. Although this is grist to the mill, the Defendants accepted that it did not add materially to the arguments on the merits, and I do not rely on it for present purposes.

In conclusion, even if there was some formal corporate failing such as a failure to reissue a share certificate in 1993, which has not been waived, and my conclusions on issues 1 and/or 2 are wrong, the evidence does not come close to establishing an arguable case of conspiratorial knowledge on the part of Wael. I take fully on board the submission for Sana that there has not, for example, been full disclosure. But there has to be at least a prima facie case of knowledge to justify going forward on a serious allegation of intentional wrongdoing. In my judgment, there is none. There is a total absence of reality in the share deprivation claim. This conclusion on knowledge alone is enough to dispose of the share deprivation claim.

The broad thrust of the asset misappropriation claim has been outlined above. In more detail it is right to emphasise that (at paragraph 33 of the Particulars of Claim) Sana identifies particular transactions which she is currently able to identify as representing examples of debited sums which she alleges were not for legitimate expenses as follows :

“..(1) Following Hassib’s stroke, CCIC debited from what would otherwise be due to Hassib not only sums that were referable to legitimate expenses but also other sums. This was done with the knowledge, approval and participation of all of the Individual Defendants (with the possible exception of Mr Tamari).

(2)

In particular…the following represent examples of debited sums which were not for legitimate expenses….

a)

Investments totalling approximately US$40 million made in S & K Holding SAL, a Lebanese holding company incorporated in or about May 2004….

b)

Investments made in Al-Said Ltd, which were made on the instructions of Toufic Khoury and Wael Khoury….

c)

Investments recorded in a memorandum from Samer Khoury to Said Khoury of 7 August 2007 with the subject “Sabbagh/Khoury Investment Company”….

d)

Investments in Dana Holding SAL…..

e)

Investments in Safa Holding SAL…

f)

Further investments believed to have been made with Hassib’s money, namely :

i)

268,000 shares in Arab Bank;

ii)

a share of land plot 2741 in Shbineyeh, Lebanon;

iii)

Delma Power Co;

iv)

Solidere, Lebanon;

v)

Arabian Industrial Gases;

vi)

S & K Properties SAL (another subsidiary of S & K Holding);

vii)

shares of land plots..in Beirut, Lebanon;

viii)

Kremenco;

ix)

CC Energy Development SAL (Offshore);

x)

SRD Company Ltd;

xi)

Diana Global Co;

xii)

Karak Development Corporation; and

xiii)

Solomon Pools….”

g)

Substantial payments for “Aircraft expenses”….

h)

A payment totalling approximately US$12 million, for the repayment of a loan taken by Suheil Sabbagh from CCC…”

The allegedly wrongful sales of specific assets are also particularised.

The Defendants have not in their evidence on the jurisdiction applications addressed each of these specific transactions individually or in any detail. Rather, they take their defences at a high level, specifically for present purposes as follows :

Certainly by the end of the hearing, the Defendants’ case on the merits was limited to the submission that there was no arguable case that Wael had the necessary knowledge. The Defendants were right to concede the existence of triable issues on practice, capacity and powers of attorney. But because it is relevant when it comes to assessment of the question of knowledge, despite this concession, it is nevertheless necessary for me to spell out the issues, at least in outline.

As to practice, the Defendants’ evidence is to the effect that, from the time when CCG was established, separate shareholder accounts were operated for Hassib and Said by the group’s accounts staff. Dividends were credited. Family expenses were deducted. Investments were made, not necessarily in the name of CCG, but in the names of individual shareholders or in other corporate names (see paragraphs 11 and 12 of the witness statement of Mr Jamal Nakhleh, the financial controller of CCG). Mr Nakhleh states that this was “occasionally” done for local regulatory reasons. In such cases, it would be understood that the investments would nevertheless be held on behalf of CCG as a whole. It is said that after Hassib’s stroke, the accounts and investments continued to be managed in the same way.

But, as indicated above, the Defendants’ evidence does not address any individual payments (Footnote: ¹³), and in particular does not address why and how they fell within this alleged practice. The extent and nature of the practice and whether or not the payments impugned by Sana properly fell within any such practice raises triable issues. The Defendants have provided only one clear example of the alleged practice before 2002. There is no explanation as to why it was necessary, for local regulatory reasons or otherwise, to make the particular investments complained of with Hassib’s monies in the names of other individuals or companies.

The Defendants do address specifically the use of Hassib’s monies for investment in S & K Holding SAL (“S & K”), a company incorporated in or about May 2004. They point to an internal memorandum from Said to Mr Nakhleh dated 12^th February 2004 (Footnote: ¹⁴) said to be the origin of S & K as follows :

“New company for equipment and assets

As agreed with Mr Sabbagh, please proceed in all necessary arrangements to hold selected assets of CCC up to a total of US$100 million including the two air planes, CCC offices and new concessions. CCC shall remain the beneficiary of these assets which shall remain deployed for CCC operations. We also agreed that the shares of this new company be equally shared between Suheil, Samir, Tawfic, Samer and Wael (20% each).”

So it is submitted that there cannot be anything sinister in investments in S & K (which represents a very large part of the asset misappropriation claim). Its assets were to be held for CCG. However, at least one question that arises here is that of Hassib’s capacity, and whether or not he had the necessary capacity to give this sort of agreement in or about February 2004.

As for Hassib’s capacity, there is evidence either way. In my judgment there is a triable issue as to whether or not Hassib had capacity following his stroke to authorise the investments under scrutiny. By way of example only, I refer to the evidence of Hassib’s private nurse and his neurologist. His nurse, Marie Desire, became involved with Hassib’s care shortly after his stroke. Sana employed her to care for Hassib until his death. She says that she travelled with Hassib wherever he went, working a daily 12 hour shift. She describes his physical condition, that he could not feed himself and was often sleepy and mostly in a wheelchair. As to his mental condition, it was not possible to have a proper conversation with him. His concentration and memory were poor. He did not appear always to understand what was said to him. Hassib’s neurologist, Dr Patrick Sweeney, met Hassib in November 2003 and thereafter saw him about twice a year until his death. In his opinion :

“….[Hassib’s] stroke left him virtually mute and he did not engage with me the entire time that I treated him. In my opinion the stroke resulted in cognitive impairment…

In my view Mr Sabbagh had limited mental capacity throughout the period that I was treating him. He certainly did not have sufficient mental capacity to understand investment transactions or decisions. He would also not have had testamentary capacity…”

In the context of capacity, reliance is placed by the Defendants on a letter purportedly written by Hassib in New York on 17^th December 2003 to Said. In the letter of 17^th December 2003 Hassib suggested that Said had not treated Sana as he would have expected and hoped. He referred to occasions when Said had refused Sana the use of Hassib’s plane when she needed it. This had caused him great pain and sadness. Hassib therefore asked Said to give Sana “the price of a plane, which is 24 Million USD”, to be transferred into his name immediately.

Said responded from Athens by letter dated 28^th January 2004. He rejected the request, describing the letter as “flagrant defamation”. He was sure that the letter did not reflect Hassib’s words or thoughts. He stated that Sana’s allegations were all “slanders” in order to obtain additional sums of money, giving her “multiple” of what her brothers deserved. As for the request for money, Hassib had all the right to ask for any amount he wanted, but only if the amounts were in the company’s profits. Hassib was a debtor currently to the company. Such matters would have to await the meeting of the annual ordinary general assembly when dividend distribution would be decided. On 21^st July 2004 Hassib signed a letter in New York repeating his request for US$24 million for a private plane for Sana.

The Defendants suggest that as a result it hardly lies in Sana’s mouth to complain of a lack of capacity on the part of Hassib when she herself relied on him as having relevant capacity and/or exploited him. In my judgment, this is an essentially forensic point only. It may make Sana’s case on Hassib’s capacity unattractive, but it does not detract from the fact that there are triable issues relating to Hassib’s capacity to make complex and valuable financial decisions after his stroke.

And, crucially and in any event, there is no evidence from Said or anyone else that Hassib, with or without capacity, actually approved the transactions of which complaint is made.

As for the Powers of Attorney, Hassib appears to have entered into two powers of attorney, one dated 22^nd May 1992 (“the 1992 Power of Attorney”) and the other after his stroke, on 20^th May 2004 (“the 2004 Power of Attorney”).

The 1992 Power of Attorney provided as follows :

“Absolute General Power of Attorney

I the undersigned Hassib Geryes Sabbagh…in my capacity as the chairman of the board of directors of [CCG], hereafter referred to as “the Company”, do hereby state pursuant to this official document that I have granted to Mr Said Tawfic Al-Khoury an Absolute General Power of Attorney, subject to his discretion and action in all matters done in accordance with the law and the Memorandum of Incorporation of the Company, with the legal capacity to act and dispose in administering its affairs as well as all the business and assets of the Company, without any limitation and at all times and in all locations...”

Assuming the 1992 power of attorney to be genuine, there is a triable issue between the Lebanese law experts as to whether it gave Said power to represent Hassib in his personal capacity, as opposed to in his capacity as chairman of CCG (in which case it cannot avail the Defendants in the disposition of Hassib’s personal assets) (see Professor Bacache’s first report at paragraphs 267 to 286 and Mr Abirached’s third report at paragraphs 3.4 to 3.7). Mr Abirached also states that a power of attorney endures even after incapacity if the attorney is unaware of the incapacity. But Said obviously knew of Hassib’s stroke and at the very least arguably knew of material incapacity.

As for the 2004 power of attorney, Sana questions whether the document is genuine, being purportedly signed by Hassib two years after his stroke. It is apparently sealed at the Jordanian Embassy and would be governed, submits Sana, by Jordanian law. It is a general power of attorney granted on its face by Hassib to Said. Sana points to the absence of any Jordanian law evidence as to the validity of a power of attorney signed by someone with limited capacity.

All this leads me to the Defendants’ central point on the merits for present purposes. For Wael it is said that there is no tenable basis for any allegation by Sana of intentional wrongdoing on his part and so no realistic prospect of establishing against him any delict in Lebanese (or Greek law).

Reliance is first placed by the Defendants on evidence to the effect that the debits were effected by accounting staff (and not Wael) and that he had no involvement in administrative matters. But that ignores the fact that authority for the transfers using Hassib’s shareholder account had to be given in the first place, even if only by Said. This in turn raises triable issues as to the knowledge of and involvement in the transactions on the part of Wael in what was generally a close family situation.

Sana raises a question as to whether Hassib’s money was used to fund S & K in which Wael was a 20% shareholder and director. Whatever intentions Said had in relation to S & K, there are triable issues as to Hassib’s ability to agree and Wael’s knowledge of any relevant inhibition in that regard. Wael also actioned or gave instructions for several of the impugned investments, such as the payments to Al-Said Ltd and substantial payments into the Sabbagh/Khoury Investment company. He held shares in Dana Holding SAL and was involved in putting Hassib’s money into Safad Holding SAL. He participated in the purchase of land in Shbineyeh using Hassib’s money. It is said for Wael that there is no document to suggest anything improper about any of these investments. But triable issues are raised in that regard given Hassib’s condition and the possibility that Wael, as a family member, knew of material impairment. Triable issues are also raised in relation to the propriety of the investments, given the fact that there are triable issues as to scope and nature of the alleged practice of making investments in the names of others and the possibility that Wael knew that there was no such practice, alternatively that the investments in question did not fall within it.

The Defendants also submitted that the allegation of knowledge of impropriety rested on the erroneous premise that Wael knew and believed that Sana still had interests in CCG after 1998 (when everybody believed she had exited it and parted with any such interest in 1998). I do not accept that this is necessarily so : Sana had an interest as a future potential beneficiary of Hassib on his death. The Defendants also referred to the impossibility of Wael being on notice in any way that the powers of attorney were invalid in some way. In circumstances where the scope of the 1992 power of attorney is not clear on its face (even arguably to a layman) and where the circumstances surrounding the execution of the 2004 power of attorney are unclear, I do not accept this either.

In short, I reject the Defendants’ submission that there is no prospect of any cogent evidence that Wael knew that the payments were improper and un-authorised. Whether it be a strong or a weak claim, I am satisfied as matters stand that there is a real issue to be tried in relation to intentional wrongdoing by Wael and it is arguable that Wael was complicit in any relevant wrongdoing on the asset misappropriation claim, if wrongdoing there was (which there arguably was). I am not prepared to dismiss it on a summary basis at this stage. That is not to express a view as to whether the surviving claim is weak or strong, nor to rule out any future strike-out or summary judgment application, for example when disclosure has taken place.

There is no inconsistency in my conclusions on the asset misappropriation claim and on the share deprivation claim. The nature of the alleged wrongdoing in each is quite different, even if the cause of action is the same and the parties to the alleged conspiracies are similar. The asset misappropriation is an altogether more substantive claim on the merits (putting aside the question of knowledge), as the Defendants accept. It is arguable that there has been wrongdoing. And specifically as to knowledge, any such wrongdoing could have been transparent to Wael (and the other relevant Defendants) (and known of) through their involvement in the business and investments of CCG in a way that the alleged technical corporate failings in relation to historic share transfer agreements and their alleged consequences in the share deprivation claim cannot be said to have been. There is not the same air of total unreality in the asset misappropriation claim.

Finally on the merits I address Sana’s submissions made by reference to the Defendants’ alleged conduct of the jurisdiction applications and by reference to the Masri litigation.

On the first ground, reference is made to the following matters : alleged wrongful attempts to interfere with Sana’s appointment of Lord Grabiner QC as one of her counsel, Mr Chedid’s letter of 7^th January 2014 already addressed above, issues relating to inspection of documents, and allegedly unreliable witnesses. I gain no material assistance from these allegations, which Sana accepts are not “strictly relevant”, for the purpose of assessing the merits of the claims. The allegations are highly contentious and were not developed for Sana in oral submission (save in relation to Mr Chedid’s letter).

On the second ground, a crude outline of this huge litigation suffices for present purposes. It involved at the outset commercial (contractual) claims by Mr Munib Masri against various CCG companies and various individual defendants, including Said, but not Wael. Mr Masri claimed that he was entitled to a revenue of shares from a Yemeni oil concession. There was first a significant jurisdiction hurdle, which Mr Masri overcame. Two CCG companies were in due course found liable to Mr Masri, namely CCIC and Consolidated Contractors (Oil and Gas) SAL (“CCOG”) for substantial sums (some US$60 million exclusive of interest and costs). Enforcement proceedings against those companies followed. Although other directors were involved at this stage as parties, Wael was not. Enforcement proved unsuccessful, leading Mr Masri to issue committal proceedings. To these proceedings Wael was named as an alleged director of CCOG for part of the material time. On the committal proceedings, findings of contempt were made against CCIC and CCOG. The committal proceedings against Wael never reached a hearing. There was instead a global settlement between the parties of all matters, including of conspiracy proceedings which had by then also been issued by Mr Masri against Khoury and Sabbagh family members, including Wael. The thrust of those proceedings was an allegation of a conspiracy to defeat the judgments against CCIC and CCOG. In relation to the committal proceedings of which the court was seised, Christopher Clarke J imposed no sanctions on CCIC and CCOG and dismissed the committal proceedings against Wael in the light of Mr Masri’s indication that he did not wish to pursue them.

Sana’s reliance on the Masri litigation has generated much heated debate. There is first an issue as to admissibility. The Defendants contend that, as a matter of principle, judicial findings in previous litigation are not admissible and that is the case even if, unlike in this case, they related to the same subject matter (see Hollington v Hewthorn [1943] KB 587 (“Hollington v Hewthorn”) and, for example, Rogers v Hoyle [2014] 3 WLR 148).

Sana, on the other hand, contends that the rule in Hollington v Hewthorn does not prevent the use of findings in other litigation at an interlocutory stage. This is because the rationale of the rule in Hollington v Hewthorn is to exclude findings that are no more than the opinion of another person, based on unknown facts, so as to preserve the fairness of the trial. There is no risk to fairness of a trial if such material is introduced on the question of whether or not there is a serious issue to be tried. Such material can assist in identifying the evidence which can reasonably be expected to be available at trial, to which a court is entitled to have regard at the interlocutory stage. Reliance is placed on Joint Stock Co Aeroflot – Russian Airlines v Berezovsky (supra). There, when considering the question of whether or not there was a serious issue to be tried for the purpose of service out of the jurisdiction, Aikens LJ held that the claimant could rely on the findings of the Swiss criminal court :

“116.

The judge concluded that this claim was in need of further particularisation, but there was enough in the pleaded case to meet “this not very demanding threshold”…I agree. For the purposes of demonstrating that there is “a serious issue to be tried”, Aeroflot can properly rely on the Swiss criminal court finding that, in the “Andava fraud” affair, Finance was involved in the movement of funds whose origin was Aeroflot…”

In any event, Sana contends that there is no restriction on the use of recitals of evidence given at trial.

The Defendants counter with reliance on the earlier Privy Council decision in Calyon v Michailidis and others [2009] UKPC 34 (Footnote: ¹⁵). There the claimants made an application for summary judgment in their claim for ownership of a collection of Art Deco furniture. They failed at first instance, but succeeded in the Court of Appeal. Their claim was based centrally on what was said by them to be a conclusive determination of ownership of the art collection in their favour by the Greek court. No other evidence of ownership was advanced for the claimants, even though ownership was critical to the claimants’ case (see paragraph 19 of the judgment).

The Privy Council ruled that the judgment of the Greek court could not be relied on, adopting the reasoning in Hollington v Hewthorn, and dismissed the application for summary judgment. It described the essential reasoning in Hollington v Hewthorn as “compelling : unless the second court goes into the facts itself, it cannot actually tell what weight it should properly attach to the previous decision. Which means that the previous decision itself cannot be relied upon.” (see paragraph 27). The Defendants also point to the fact that it is not clear whether, in Aeroflot, any point on admissibility was taken. There is no mention of the rule in Hollington v Hewthorn.

I am inclined to agree with Sana that the findings of another court may be relied on at an interlocutory stage for the limited purpose of demonstrating whether there is a serious issue to be tried, for example in considering what material at trial there might be. The Court of Appeal in Joint Stock Co Aeroflot – Russian Airlines v Berezovsky (supra) clearly thought it appropriate to do so, and would have been well aware of the relevant principle in Hollington v Hewthorn. To deploy the findings of another court in this way does not endanger a fair trial for any of the parties. The situation in Calyon v Michailidis and others (supra) is distinguishable : there the findings of the Greek court were being relied on as conclusive, alternatively probative, evidence of a central plank of the claimants’ case, without more.

Thus, to the extent that the Masri litigation is being used simply to inform the question of whether there is a properly arguable claim in prospect, that is, in my judgment a legitimate exercise in principle. To the extent that Sana seeks to use any findings in the Masri litigation as admissible evidence to prove a fact in issue or a fact relevant to the issue in these proceedings, I agree with the Defendants that she cannot do so (see paragraph 28 of the judgment in Calyon v Michailidis and others (supra)).

Putting to one side the debate as to admissibility, however, the Masri litigation does not in my judgment illuminate the merits of the claims against Wael in any meaningful way. The Masri litigation involved a commercial claim between different parties. Wael was not a party to any of the substantive claims in the Masri litigation (save possibly for the uncompleted conspiracy claim). He became involved at the enforcement stage, but no findings have ever been made against him. He strenuously resisted them. His evidence is that he opposed CCG’s conduct in resisting enforcement of the English court orders and played no part in such resistance.

The situation in the Masri litigation is on any view very far removed from what is here essentially a bitter family dispute. No findings of any sort, let alone of intentional wrongdoing, have ever been made against Wael. I do not consider that any adverse inference can be drawn against Wael from the litigation for the purpose of the present claims against him brought by Sana, nor do I consider that any findings in the Masri litigation are relevant to the question, for example, of what material there might be in relation to the share deprivation or asset misappropriation claims.

In conclusion, I find :

The result is that the claims against Wahbe and HH, who or which are only party to the share deprivation claim, effectively fall away without more. And only the asset misappropriation claim against the remaining Defendants falls to be considered further.

The Defendants seek to submit that even if there are serious issues to be tried on the merits against Wael, there are no serious issues to be tried against the Second to Ninth Defendants and there is no good arguable case for jurisdiction against the Second to Ninth Defendants under Article 6(1).

As a preliminary objection, Sana takes the point, in my judgment reasonably, that this contention does not form part of the Second to Ninth Defendants’ applications. Those applications make it clear that the application by reference to the absence of a serious issue to be tried for the purpose of Article 6(1) is limited to the case against Wael and not broader. The broader contention was raised for the first time by the Defendants in the skeleton argument for Samir, Suheil, Wahbe and HH. Sana says that, had the application extended to these matters, further evidence would have been submitted, in particular, in relation to the individual positions and involvements of each of the additional Defendants.

I accept that Sana is prejudiced by the late taking of this point, which is one that ought to have been taken formally in the applications and on any view on proper notice. The Defendants’ additional points under Article 6(1) are thus not properly open to them. The Defendants are right to say that it was always for Sana to satisfy the requirements of Article 6(1) against all of them. But if there was to be a challenge as to whether or not she had done so, it needed to be raised formally and timeously.

However, for the avoidance of doubt, were the points to have been open to the Defendants, I would in any event have dismissed them.

In my judgment, and considering the relevant additional Defendants separately and individually, there is a good arguable case for jurisdiction in respect of each on the asset misappropriation claim.

As with the asset misappropriation claim against Wael and by analogous reasoning, there are serious issues to be tried on that claim against Said, Samer, Toufic, Samir, Suheil, CCG and CCIC.

The question then is whether or not “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

The Defendants point to a difference between the tort of conspiracy in English law and the parallel delict in Lebanese and Greek law. So on Lebanese law Professor Najm states in her first report :

“Lebanese law does not recognise any specific tort that finds its very source in the agreement (to perform an illegal act). In Lebanese law a tort is fundamentally based on individual liability. If a person is held personally liable under Lebanese law, it is because of his or her own act or omission and within the limits of the damage he/she has caused to another person…the joint liability provided for in Article 137 of the Code of Obligation does not alter the individual basis of liability.”

The Defendants rely on the reports of Professor Polyzogopoulos and Professor Lekkas as support for the proposition that the same approach applies as a matter of Greek law.

As a result, submit the Defendants, there is no risk of irreconcilable judgments. To find one co-defendant liable in one country and another co-defendant not liable would not be inconsistent. It is the individual liability of each defendant that is the gist of the action against them under Lebanese and Greek law. Liability on the part of one co-defendant does not comport the likelihood or fact of another co-defendant being liable.

In my judgment, the Defendants’ submission in this regard is devoid of merit. There are on any view of the relevant law multiple overlapping questions of fact and law in relation to all of the Defendants to the asset misappropriation claim - to name but a few : whether or not Hassib had capacity; the scope and nature of any accounting practices within CCG; the scope of the powers of attorney and the valuation of any losses. These issues arise in relation to each relevant Defendant. Questions of individual knowledge and intention are also likely to involve interlinked issues of fact.

The Defendants sought to counter this by saying that there would nevertheless be no inconsistency in “outcome”. In my judgment this is to read the word “judgments” in Article 6(1) too narrowly. The intention is not simply to avoid irreconcilable outcomes in terms of the end result. The public policy lies not just in favour of consistent outcomes not only in terms of liability, but also in terms of the findings made along the road to liability. The prospect of irreconcilable findings in different courts on relevant issues of fact in an alleged conspiracy is an unpalatable one.

Moreover, even if the broad-brush approach endorsed by the Court of Appeal in Gard Marine and Energy Ltd v Tunnicliffe and others (supra) permitted of a detailed analysis of Lebanese (and Greek) law, I am not persuaded that arguments to the effect that Lebanese law is based on individual fault or liability assist the relevant Defendants. Thus, for example, a conspirator’s individual fault and liability may derive from his agreement to harm even if he does not perpetrate the harm himself -see the first report of Professor Bacache at paragraphs 145 and 146. There Professor Bacache states that if the elements of a conspiracy as described in Halsbury’s Laws of England :

“Tortious conspiracy is an unlawful combination of two or more people, intended to cause and in fact causing injury to the claimant. The tort takes two forms : conspiracy to cause loss by the use of independently unlawful means, and conspiracy to injure by lawful means.”

were proven, this would be qualified by a Lebanese judge as a delict giving rise to pecuniary compensation.

In conclusion, in my judgment, it is not open to the Defendants belatedly to expand the scope of their applications in relation to Article 6(1) as they now seek to do. Even if it were so open, then considering all necessary factors, I would find that there is a good arguable case that the factors exist which allow the court to take jurisdiction over the claims against Wael’s co-defendants to the asset misappropriation claim.

There are two elements to the Defendants’ application to stay : application for mandatory stay under s.9 of the Arbitration Act 1996 (“the Arbitration Act”) and further or in the alternative, discretionary stay in the Court’s inherent jurisdiction and/or as a matter of case management under CPR 3.1 (2) f). The stays are sought by reference to the arbitration clause in Article 45 of the 1984 and 1997 Articles of Incorporation, as supplemented by the Conflict Resolution Regulations. Given my findings on the merits of the share deprivation claim, no question of stay by reference to the 1993 Agreements, which could only affect that claim, arises.

Neither the fact of an ongoing arbitration, nor the parties’ willingness or otherwise to participate in arbitration, determines whether the court must stay proceedings under s.9 of the Arbitration Act : see AES Ust-Kamenogorsk Hydropower Plant LLP v Ust Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889 at paragraph 23. But the fact and status of any parallel arbitration may be important in the context of discretionary stay.

S.9 of the Arbitration Act provides materially as follows :

“9(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter…

(4)

On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed.”

There is no suggestion here that Article 45 is null and void, inoperative or incapable of being performed. The obligation to stay all (or part) of the asset misappropriation claim is thus mandatory if the relevant Defendants can show, on a balance of probabilities (Footnote: ¹⁶), that the asset misappropriation claim (or part of it) falls within Article 45.

As for discretionary stay, if only some of the asset misappropriation claim is to be the subject of a mandatory stay, the balance of proceedings may be stayed so as to avoid undesirable parallel proceedings – see for example Reichhold Norway ASA v Goldman Sachs International [2001] 1 WLR 173.

It was submitted orally for Sana that if the question of discretionary stay arose, I should not determine that matter now but rather adjourn it for further submission. No particular reason was advanced as to the justification for or benefit to be derived from such a course, and I can see no good reason why it should be adopted, were the issue to arise. The parties had the full opportunity to advance such submissions as they wished on the question of discretionary stay. The various potential outcomes have always been readily identifiable.

As already set out above but for ease of reference, Article 45 of the 1997 Articles provided :

“Any dispute arising during the lifetime of the Company or in the course of its liquidation whether among the shareholders themselves or between them and the Company shall be referred to mediation, and in case of failure to reach agreement, the dispute shall be referred to arbitration according to rules set by the first Board of Directors which will be submitted for the approval of the Shareholders’ General Meeting.

Disputes are of two kinds :

The individual dispute for which the injured party may proceed against the Company in accordance with the provision of Article 166 of the Commercial Law. The Shareholders may not hinder the filing of such legal proceedings by a vote from the General Meeting discharging the Members of the Board of Directors from liability.

As to disputes pertaining to the general interests of the Company, they may not be directed against the Board of Directors or any of its members except in the name and on behalf of all the Shareholders in accordance with the resolution of the ordinary General Meeting.

Any shareholder who desires to file legal proceedings in respect of such disputes shall communicate their subject matter to the Chairman of the Board of Directors by registered letter to be sent at least forty days before the convening of the next General Meeting, when the Chairman of the Board of Directors will insert the proposition in the agenda of the said Meeting. Should the Meeting decide to reject the proposition, this decision shall be final and conclusive for all shareholders, and no one may raise anew the dispute in question.

Where the proposition is approved, the General Meeting shall appoint one or more attorneys to handle the dispute.”

A stay of the asset misappropriation claim (or any part of it) under Article 45 would be mandatory as against all the Defendants to that claim save for CCIC, which is not a shareholder in CCG (and possibly HH in the event that Sana were to challenge that there was an effective transfer of shares at any stage to HH).

In summary, two questions arise :

The question of whether Sana is bound is governed by Lebanese law, and the parties have adduced expert evidence accordingly. The proper role of the experts is of course to set out the principles of Lebanese law, rather than to construe or apply those principles to the facts, which is for the court to do (see for example Dicey at paragraph 9-019).

If an application for stay is resisted on the basis that no arbitration agreement exists, the court may determine to decide on the evidence before the court that such an agreement does exist in which case (if the disputes fall within the terms of that agreement) a stay must be granted; or it may stay the proceedings on the basis that it will be left to the arbitrators to determine their own jurisdiction under the kompetenz-kompetenz principle (which Lebanese law recognises); or it may refer the matter to full trial; or it may decide that no arbitration agreement exists and to dismiss the application for a stay (see Dicey at paragraph 16-076). I have heard full argument on Article 45 and all the parties positively contend that I should decide the matter now. I propose to do so.

The characterisation of the claims is a matter of English law and for this Court to do as a matter of substance and not form – see Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Association Co Ltd [2004] 2 CLC 1189 at paragraphs 55 to 58.

Thus the exercise is :

I turn first to the question of whether Sana is bound in principle by Article 45. The following principles of Lebanese law are agreed in principle between the experts :

Moreover, and centrally for present purposes, the experts are agreed that by virtue of Article 222 of the Lebanese Code of Obligations and Contracts, the obligation to arbitrate binds an heir who makes a claim as heir which would be subject to arbitration if brought by the deceased. Article 222 provides :

“Agreements extend to the universal successors of the parties. They produce in their favour or against them, in principle, their effects, either immediately (creditors) or after the death of one the parties or one of them (heirs, universal or as universal legatee.”

Professor Slim opines to this effect in paragraphs 44 to 46 and paragraphs 65 to 66 of his first report. At paragraph 162 of his report Professor Bacache agrees :

“As for the potential application of an arbitration clause in the case of an heir, it is crucial to examine in which quality the heir is presenting his or her claim. In case the claimant is acting in his quality as an heir or as an ayant-cause (ie a successor in title), the claimant is tied by the contracts signed by the deceased. However, if the claimant is not claiming as an ayant-cause under a contract signed by the deceased but on the ground of his personal legal rights, the arbitration clause will not apply. Accordingly, merely being an heir is not enough; consideration must be given to the rights of the deceased and whether those rights arise under a contract containing an arbitration clause.”

I accept the obvious submission for Sana that she is not a shareholder in CCG. She has not been one since 1998. Nor does the asset misappropriation claim arise out of events during a period when she was a shareholder. Nor does Sana claim in the asset misappropriation claim an entitlement to have been a shareholder in CCG.

However, Sana does expressly bring the asset misappropriation claim of Hassib - as Hassib’s heir, as well as the asset misappropriation claim brought in her own independent right. Thus the claim form states :

“This claim is brought by the claimant both (i) as a claim of her late father, which she is permitted to bring as his heir; and/or (ii) in the Claimant’s own right, as a victim of the wrongs done by the Defendants.”

At paragraph 16.3 of the Particulars of Claim Sana pleads :

“16.

Hassib died intestate. Accordingly, on his death, Ms Sabbagh became entitled to a one-third share of all of his assets, rights and interests, including in…

(3)

his claims against the Defendants in respect of the wrongs done to him as described at paragraph 14 above.”

The wrongs “described at paragraph 14 above” are those identified in and relied on for the asset misappropriation claim :

“14.

Moreover, at the time of his death, Hassib also had certain rights and/or claims against the Defendants…That is because :

Prior to his stroke, Hassib authorised CCIC to pay day-to-day expenses and charitable donations for Hassib and his three children out of his money, which was held by CCC and derived from his share of CC Holding dividends and the proceeds of other investments which he held;

Following his stroke, CCIC and CC Holding controlled large amounts of Hassib’s money, primarily derived from dividends of CC Holding, together with other rights and interests, with the knowledge and participation of the each of the Individual Defendants (except for Mr Tamari);

These Defendants, when controlling Hassib’s money, rights and interests, took the opportunity to harm him by misappropriating his assets through improper and unauthorised investment of his money…”

Thus, her father’s rights and/or claims on the asset misappropriation claim are the very ones that Sana brings as his heir.

That, however, is not an end of the matter. It is necessary to look at the extent to which Sana would then be bound as heir (Footnote: ¹⁸). Professor Slim states at paragraph 65 of his first report :

“63…a person who brings a claim on the basis of a contract which contains an arbitration clause, more specifically a claim based on the non-performance of such a contract, cannot in the same time under Lebanese law, argue that the arbitration clause inserted in that contract does not exist or is not binding on him/her/it…

Heirs, as stated above, are bound by agreements entered into by the deceased. Therefore, if the claim brought by an heir is related to rights acquired on the basis of the articles of association, they are bound by the arbitration agreement.

The arbitration clause is also binding over a person who claims a right to dividends attached to shares and who requests an account of these dividends if the claim brought by such a person is made in his/her/it[s] capacity as shareholder or former shareholder or heir to a shareholder because his/her/its claim is in this case based on the articles of association.”(emphases added)

Professor Bacache agrees at paragraph 177 of his first report :

“177.

I also consider that an heir will be bound by an arbitration clause in the Articles of Association if his claim falls within the scope of the clause. This may be the case where the claim is based on rights conferred on him (or the deceased) by the Articles of Association. To this extent, I agree with Professor Slim’s view at paragraphs 65 and 66 of his report.” (emphasis added)

Hassib, and so Sana as his heir, would only therefore be bound on the asset misappropriation claim to the extent that it was based on the 1984 or 1997 Articles.

The Defendants contend, though Sana denies, that Sana asserts Hassib’s right to all sums that should have been credited to his shareholder account by way of dividends less legitimate expenses (see paragraphs 30, 31 and the prayer for relief in the Particulars of Claim). The Defendants point in relation to unpaid dividends to Articles 42 and 43 of the 1984 and 1997 Articles which set out provisions for the distribution and payment of profits. Sana also asserts wrongful deductions. The Defendants contend that the asset misappropriation claim is no more than an accounting claim based on the alleged mismanagement of a running shareholder account.

In my judgment this is to mis-characterise and oversimplify the asset misappropriation claim. Properly construed and as a matter of substance, the asset misappropriation claim brought by Sana in respect of Hassib’s rights is based in delict for conduct analogous to an English law conspiracy. The source of the alleged liability is rooted in the general law, not a specific contract such as the 1984 or 1997 Articles of Association. This is reinforced by the fact that there is no pleaded claim (or even mention of the 1984 or 1997 Articles in the Particulars of Claim) (Footnote: ¹⁹). This is not just “clever pleading”or a “label”, as the Defendants would have it, but a substantive approach that leads to additional burdens and hurdles in the path of a successful claim. The asset misappropriation claim brought as heir is that the relevant Defendants took control of Hassib’s assets and knowingly misappropriated his money, rights and interests for their own benefit. Nor do I accept that there is a separate accounting claim that falls for mandatory stay. Such accounting exercise as there may be would be part of the exercise of examining whether or not there was conspiratorial misappropriation and, if so, to what extent.

The asset misappropriation claim is therefore not based on the 1984 or 1997 Articles (or any of CCG’s Articles of Association) so as to bind Hassib (or Sana as his heir) under Article 45. Thus Hassib would not have been bound as a shareholder to arbitrate his claims in the asset misappropriation against CCG and the other relevant (shareholder) Defendants, and nor is Sana in bringing his claim as his heir. This conclusion applies to the asset misappropriation claim which Sana brings expressly as Hassib’s heir, and also (and all the more so) to the asset misappropriation claim which she brings in her own right.

In these circumstances, further questions as to the proper scope of the claims covered by Article 45 (by reference to clauses A) and B)) and discretionary stay fall away. There was never any real suggestion that a discretionary (case management) stay was appropriate absent mandatory stay of at least part of the claim in question.

The applicability of the Brussels Regulation to the claims is logically an anterior question to any of the matters addressed above. It is therefore right that I should consider it in relation to both the share deprivation and the asset misappropriation claims, despite my findings on the merits of the share deprivation claim.

The Defendants contend that the claims fall outside the Brussels Regulation altogether because of Article 1(2), alternatively fall within the exception in Article 22 (2) which should then be applied reflexively so as to stay these proceedings as a matter of discretion. At one stage they also contended that the claims fell within the exception in Article 22(3), but that is no longer pursued.

The Brussels Regulation provides a comprehensive code or jurisdiction for the courts of the member states of the European Union. The general rule is that all civil and commercial matters are subject to the Brussels Regulation and that, pursuant to Article 2, defendants should be sued at the place of their domicile.

It was submitted for Sana that where other Articles exclude or provide exceptions to this general principle, they must be construed strictly and not given an interpretation broader than is required by their objective : see for example Case C-292/08 German Graphics Graphische Maschinen GmbH v van der Schee [2010] ILPr 1 (at paragraphs 23 to 25) (“German Graphics”) . The Defendants rejected this, at least in relation to Article 1(2), on the basis that German Graphics was a case in respect of insolvency where, unlike succession, the scope of insolvency proceedings is specifically defined (see in particular Article 2) and Annex A of Council Regulation (EC) No 1346/2000 on insolvency proceedings (“the Insolvency Regulation”).

I am not persuaded that the statements in German Graphics are not of more general application than simply in the insolvency context. The statement (in paragraph 23) to the effect that Article 1(1) of the Brussels Regulation should be broad in its scope was a general one (see for example the comments made to similar effect in the context of Article 22 in JP Morgan NA v Berliner Verkehrsbetriebe [2012] QB 199 (“BVG”) addressed below). But in any event my findings below do not depend on whether a narrow or a broad approach to construction is taken. The Defendants accept, in relation to Article 22, that it is to be given a restrictive interpretation, no wider than necessary to ensure that, in the interests of the proper administration of justice, exclusive jurisdiction is given to the court of the state concerned with the relevant company, reflecting the fact that they are derogations from the basic jurisdictional regime – see Ferrexpo v Gilson [2012] 1 Lloyds Rep 588 at paragraph 145.

The court should interpret the terms of the Regulation autonomously so as to ensure its uniform application. The objectives of the Regulation include unification of the rules on jurisdiction of the contracting states, and to reinforce the legal protection available to persons established in the European Union by allowing a claimant readily to identify the court before which he may bring an action and a defendant reasonably to foresee the court before which he may be sued (see Dicey at paragraph 11-068).

It is common ground that the scope of the Brussels Regulation must be read so as to dovetail with other applicable relevant European legislation (such as the Rome I and II Regulations on the law applicable to contractual and non-contractual obligations respectively), and be interpreted purposively as European legislation alongside relevant preparatory materials such as the Schlosser Report [1979] OJ C59/71.

The material general principles underlying the Brussels Regulation can be found in its Recitals as follows :

“7)

The scope of the Regulation must cover all the main civil and commercial matters apart from certain well-defined matters…

8)

There must be a link between proceedings to which the Regulation applies and the territory of the Member States bound by this Regulation. Accordingly common rules on jurisdiction should, in principle, apply when the defendant is domiciled in one of those Member States…

11)

The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction;

12)

In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice;…

14)

The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation…”

Following the Recitals, Article 1 of the Brussels Regulation provides materially :

“1.

This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

2.

The Regulation shall not apply to :

a)

the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession;…”

It is important to note that the concept of “succession” in Article 1(2)(a) has an autonomous meaning and the relevant concept is “succession” and not “rights in property arising out of succession” (as the Defendants now accept (Footnote: ²⁰)) .

Article 4(1) provides as follows :

“If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State.”

Article 22 provides materially :

“The following courts shall have exclusive jurisdiction, regardless of domicile :

…2. in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the course of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law;…”

It is to be noted that Article 22 is a powerful provision, in that it overrides, for example, exclusive jurisdiction agreements (see Article 23) and the principle of voluntary submission to jurisdiction (see Article 24). The expression “have as their object” means to be “principally concerned with” – see BVG at paragraph 90 and Ferrexpo v Gilson (supra) at paragraph 145.

Whilst the result here does not turn on questions of burden and standard of proof, it is for Sana to prove that the claims fall within the Regulation in principle, and for the Defendants to prove that they fall within Article 22(2), in each case to the standard of “good arguable case” (see generally Canada Trust Co v Stolzenburg (No 2) [1988] 1 WLR 547 at 555 and Konkola Copper Mines plc v Coromin Ltd [2006] EWCA Civ 5 at paragraphs 75 to 101).

Consistent with recital 11 of the Brussels Regulation, the share deprivation and asset misappropriation claims (which on any view are civil or commercial without more) will therefore be subject to the Brussels Regulation and available at the defendant’s place of domicile, unless the principal subject-matter of the proceedings is either subject to exclusion under Article 1(2) or exception under Article 22(2). The court must consider whether there is a principal subject-matter which the sound administration of justice necessitates (or would if Lebanon were a member state) the non-application of the general rules under the Brussels Regulation.

In identifying the principal subject-matter of the proceedings, the court looks to substance not form. It is necessary to look at each claim separately, but the exercise is then to characterise the proceedings as a whole. The defence (or issues likely to be raised by way of defence) are relevant to the assessment – see paragraph 21 of BVG. Whilst concerned with substance, the court is nevertheless concerned with the (substance of the) claim that has actually been brought, even if for purely tactical jurisdictional reasons – see Cooper Tire & Rubber Co Europe Ltd and others v Bayer Public Co Ltd and others [2010] Bus LR 1697 (Footnote: ²¹).

Further, in the context of Article 22 the Court of Appeal in BVG confirmed (at paragraphs 85 to 87) that the exercise is to make “an overall classification” and an “overall judgment” to see if the proceedings were principally concerned with one of the matters set out in Article 22, to assess whether the proceedings are so closely connected within the scope of the Article that the proceedings should not be tried anywhere else but in the court of the state of the company’s seat. Even if there was a single issue within Article 22 that was dispositive of the proceedings as a whole, it did not mean that the proceedings were principally concerned with an issue under Article 22. The Jenard Report [1979] OJ C59/1 (Footnote: ²²) (at 59/10 and 59/11) is also consistent with the approach in BVG in the context of succession.

In Case C-185/07 West Tankers Inc v Allianz SpA and another [2009] 1 AC 1138 (at paragraph 22) the focus was placed on the nature of the rights which the proceedings serve to protect :

“…in order to determine whether a dispute falls within the scope of Regulation No 44/2001, reference must be made solely to the subject matter of the proceedings : the Marc Rich case [1991] ECR 1-3855, para. 26. More specifically, its place in the scope of Regulation No 44/2001 is determined by the nature of the rights which the proceedings in question serve to protect : the Van Uden case [1999] QB 1225, para. 33.”

Making an overall judgment and classification by reference to the individual claims, as it is right to do in accordance with the principles outlined above, and looking through a European lens, I do not accept that the principal subject-matter of the share deprivation or asset misappropriation claim is either succession for the purpose of Article 1(2) nor the validity of decisions of the organs of CCG for the purpose of Article 22(2). As a matter both of instinct and analysis, neither succession nor the validity of CCG’s corporate decisions can fairly be said to be the principal focus of the claims as a whole. Nor do I accept (and it was not suggested) that the sound administration of justice necessitates non-application of the general rules under the Brussels Regulation. So, for example, the resolution of the dispute affects only the parties to the dispute and on any view there are other issues arising that are outside Article 22.

Put simply, Sana’s claims are for tortious conspiracy (or the Lebanese or Greek law equivalents) on the part of the Defendants to deprive her father and/or herself of valuable assets. The root of her entitlement (and an essential element of her claims) may be her position as heir and her inheritance but that status is not the principal subject matter. There is in fact no dispute that as Hassib’s daughter she is entitled to bring the asset misappropriation claim as Hassib’s heir or her own claim on the asset misappropriation claim to a one third share of Hassib’s assets on his death or on the share deprivation claim. No relevant issue of Lebanese succession law arises in these claims, and I was not taken to any expert evidence in this regard.

As already indicated, I do not accept the Defendants’ central submission that the claim for conspiracy is merely a “bolt-on”. It is a substantive claim which carries with it significant additional hurdles on the merits on which the Defendants heavily rely elsewhere in their attacks on the claims (for example as to knowledge). The Defendants cannot seek to reap the benefit of that but then seek to escape its burden. If the focus is to be on the nature of the rights being litigated, the rights sought to be protected are the personal rights of Hassib, through Sana as his heir, and of Sana herself not to be defrauded. I do not accept that those rights are purely incidental to the question of ownership. They are central. Nor do I accept that the fact that Sana may claim by way of remedy on the alleged conspiracy delivery up of shares in, for example, S & K (to the extent that she still does, since she withdrew her claim for delivery up of shares in CCG), or an account, alters the fact that the focus of the proceedings is the alleged conspiracy.

I was taken to the Regulation (EU) No 650/2012 of the European Parliament and of the Council on succession (“the Succession Regulation”). (The United Kingdom has in fact opted out of the Succession Regulation, but it remains an aid to interpretation). The Defendants relied on its provisions in broad terms for the proposition that the concept of succession should be widely read. They submitted also in particular that anything included in the Succession Regulation could be taken to be excluded from the Brussels Regulation, and relied on Article 23. That Article provides that the law determined under Articles 21 or 22 should govern the succession as a whole, and in particular :

“i)

any obligation to restore or account for gifts, advancements or legacies when determining the shares of the different beneficiaries.”

Thus it was submitted that where one is carrying out the exercise of working out what was and was not in an estate, then that is a succession matter, even if it involves examining transactions that pre-date death.

However, none of this detracts from my conclusion that the principal subject-matter of both the share deprivation claim and the asset misappropriation claims is not succession (even if succession matters are raised in the claims). As was pointed out for Sana, the present claims raise substantive (and central) factual and legal issues that fall outside Article 23 of the Succession Regulation. Nor does Sana, for example, claim an entitlement to clawback of excessive gifts.

The parties also referred to various authorities in relation to succession, although such authority is limited and, at least so the Defendants submitted, of no great assistance.

I turn first to Case 133/78 Gourdain v Naidler ECJ [1979] ECR 733 . There in relation to the bankruptcy exception in the Brussels Convention it was held (at paragraph 4) :

“If decisions relating to bankruptcy and winding up are to be excluded from the scope of the Convention, they must derive directly from the bankruptcy or winding-up and be closely connected with the proceedings for the “liquidation des biens” or the “reglement judiciaire”.

So it is said here that the share deprivation claim and the asset misappropriation claim derive directly from Hassib’s death and are closely connected with her rights of succession to his assets.

But in Gourdan v Naidler the court was referring to the situation where the challenge was to decisions relating to bankruptcy and winding up. There is here no challenge to a decision relating to Sana’s entitlement to a one-third interest or to her entitlement to bring Hassib’s claims as his heir. Those entitlements are accepted. The challenge here is to the alleged activities of the Defendants in conspiring against Sana (and Hassib before his death). The central questions of fact are whether there was wrongdoing and, if so, the extent to which each Defendant was knowingly involved in it.

Reference was also made to In re Hayward [1997] Ch 45 (Footnote: ²³). Mr Hayward bought a Minorcan villa with a Mr Hulse in what was said to be “indivisible halves”. Mr Hayward was then rendered bankrupt and died. His widow purported to transfer half of the house to Mr Hulse. Mr Hayward’s trustee in bankruptcy brought a claim to establish his right to half of the villa. With reference to the Brussels Convention, Rattee J said this (at 53G-54A) :

“For my part, I cannot see that the claim made by the originating application by the trustee in bankruptcy can properly be said to raise any question of succession…Succession was in no sense the principal subject-matter of the proceedings. The trustee’s claim was simply on the basis that the bankrupt had been entitled to a half-share of the villa and that, on his appointment as trustee, the trustee had taken over the bankrupt’s entitlement thereto. That in no sense, in my judgment, raises any questions of succession.”

The Defendants submitted that if it had been Mr Hayward’s widow asserting title to a half share of the villa that would have been an assertion of her rights under the law of succession. This again does not advance the Defendants’ position materially as to whether or not the principal subject-matter of Sana’s claims here is succession.

Of more relevance may be Rattee J’s analysis of the bankruptcy jurisdiction. At 55B he stated :

“The only connection between these proceedings and bankruptcy, it seems to me, is that the title sought to be established by the trustee depends, as a first step, on the fact that, as trustee in bankruptcy under the English statute, the trustee is entitled to whatever property was vested in Mr Hulse at the date of the bankruptcy. That does not, in my judgment, make bankruptcy the principal subject-matter of the proceedings…”

This is a more apt analogy with the correct analysis on the facts of the share deprivation and asset misappropriation claims. Sana’s entitlement as heir in principle is a first (and uncontested) step but it is not the principal subject-matter. And the facts here are stronger than in In re Hayward, in that the causes of action here lie in an alleged substantive conspiracy.

Vilain v Vilain [2003] I.L.Pr.52 was also referred to. This involved a dispute between co-heirs to an estate in France. The issue was whether a grain silo was the property of a deceased or of a company and thus whether the deceased died possessed of the silo. By the time that the matter reached the Luxembourg court (on enforcement), the issue was raised as to whether or not it was a succession matter. The Luxembourg Court of Appeal stated (at 286 of the full judgment in translation) :

“It must be observed that the provisional settling of the legal relationships between co-heirs is closely linked to the partition and settlement operations for the estate of their authors and consequently, this provisional regulation falls outside the field of application of the Convention, since it is not established, in view of the ruling, that the disputed rights arose independently of the succession at the origin of the difficulties.”

The facts of the case in Vilain, involving a dispute between co-heirs as to interim payments to be made by one to the other pending distribution of the deceased’s estate, are very far removed from those of the present claims, and the decision is of no precedential value. It does not advance the question either of scope of a succession claim, nor whether or not succession is the principal subject-matter.

Finally, the exclusion of revenue matters in Article 1(1) of the Brussels Regulation was considered recently by the European Court of Justice in Case C-49/12 Revenue and Customs Commissioners v Sunico ApS and another [2014] QB 391. The UK Revenue authorities brought a claim for conspiracy in relation to an alleged VAT fraud. The court held that this was not an excluded revenue matter. At paragraphs 36 and 37 it was held :

“36.

In that regard it should be noted that the factual basis of the claim before the court is the alleged fraudulent conduct of Sunico and the other non-residents sued in that court…

37.

So far as the legal basis of the commissioners’ claim is concerned, their action against Sunico is based not on United Kingdom VAT law, but on Sunico’s alleged involvement in a conspiracy to defraud, which comes under the law of that member state.”

At paragraph 41 the court went only to hold that, even though the amount of damages claimed corresponded to the amount of output VAT payable, the matter was still a civil and commercial, not a revenue, matter.

The approach adopted here supports my conclusions above. The Defendants point out that the liability of Sunico AP (“Sunico”) to pay VAT did not form the basis of the action, since Sunico was not itself subject to the VAT regime. But the fact remains that the focus was on the factual basis of the claim being the alleged fraudulent conduct of Sunico and others. So here the focus is on the Defendants’ alleged involvement in a conspiracy to defraud. On any view, the decision does not undermine my conclusions above.

As for any challenge to corporate decisions, there are, for example, no questions of ultra vires raised (Footnote: ²⁴). The validity of any corporate decisions is expressly not challenged : the challenges are as to their proper characterisation or correctness. In any event, it is not possible fairly to say that the key decision or event in the share deprivation claim is CCG’s decisions to recognise the validity of the 1993, 1995 and 1998 Agreements. Whether or not there is, as it was put for the Defendants, a “full-frontal attack” on such decisions, that seems to me an entirely artificial and strained approach to identification of the central subject-matter of that claim which is the alleged collective wrong-doing of the Defendants in a conspiracy to harm Hassib and/or Sana. The Defendants’ position is even weaker when it comes to the asset misappropriation claim, where they must allege that the principal concern of the claim is the validity of CCG decisions as to what dividends to credit and what amounts to debit.

In these circumstances, no question of any reflexive application under Article 22 thus arises. Nor, in the light of these findings, does the separate question of forum non conveniens arise.

In the light of my findings on the merits of the share deprivation claim against Wael, there is no basis for service out of the jurisdiction on HH under CPR 6.37. There is no “real issue which it is reasonable for the court to try” against Wael on the share deprivation claim.

In these circumstances, the additional issues raised by HH under CPR 6.37 do not arise. For the sake of completeness, however, had I found there to be a real issue to be tried on the share deprivation claim against Wael, I would have had no hesitation in upholding service out of the jurisdiction on HH.

HH first takes the point that Sana failed to comply with CPR 6.37(1) b), since her application did not set out that Sana believed that the claim against HH had a reasonable prospect of success. The requirement in CPR 6.37(1)(b) for a claimant to state the belief that the claim has a reasonable prospect of success is a substantive one. But on the facts here, the objection is at best a technical one only and I dismiss it. Whilst it is true that the supporting (third) witness statement of Sana’s solicitor did not state in terms that Sana held the relevant belief, such a belief was implicit in the thrust of his evidence. There, for example, Mr Lloyd stated that Sana believed that HH was a necessary or proper party (at paragraphs 8.3 and 10). And Sana’s belief as required was confirmed expressly through counsel in the course of the hearing before me.

If there were a real issue which it was reasonable for the court to try against Wael on the share deprivation claim, there would by analogy be a serious issue to be tried against HH. Wael is said to have conspired with Samir and Suheil, Samer and Wahbe, each of whom has been involved with HH since mid-2010 at the latest and HH is said to have benefitted directly from the alleged conspiracy.

Equally, if the share deprivation claim against Wael (and the other Defendants) were going forward in this jurisdiction, in my judgment HH would clearly be a necessary or proper party and England would be the proper forum for the claim against HH.

As for being a necessary or proper party, there would be a serious issue involving HH which would be connected to the matters in dispute in the proceedings. It would certainly be desirable to add HH so that the court could resolve that issue too. The share deprivation claim includes the allegation that HH and Wael were two members of a group of defendants working together to deprive Sana of her entitlement to shares. It would be appropriate for there to be a single court investigation into that alleged conspiracy. As set out in section I. above, for jurisdiction not to be granted here would involve the risk of inconsistent judgments on overlapping issues of fact and law, as well as increased costs and litigation time. Whether or not there is merit in other matters relied on at the time of the ex parte application for service out of the jurisdiction, this was the first matter relied upon by Sana in support of her contention that HH was a necessary or proper party (see Mr Lloyd’s third witness statement at paragraph 29(1)).

As for forum conveniens, the factors making a defendant a necessary or proper party weigh heavily in favour of a finding that England is the appropriate forum – see In the matter of the Eras Eil Actions [1992] Lloyds Rep 570 at 591B and JSC BTA Bank v Granton Trade Ltd [2010] EWHC 2577 (Comm) at paragraph 17.

As is apparent, the jurisdiction applications are bristling with issues. However, despite the multiplicity of points taken by the parties on all sides, and drawing the wood from the trees, the path forward in my judgment is ultimately clear.

In summary, for the reasons set out above, I conclude :

For the avoidance of doubt, I reject the suggestion of bad faith against Sana in relation to the issuing of the present proceedings. The proceedings were not merely a device to avoid litigation in Lebanon. The claims may have been framed with an eye on jurisdictional issues. That is permissible and unobjectionable without more. It is right that I have found the share deprivation claim to be without any merit. But that reflects the fact that since the proceedings were issued, matters have moved on. I have in mind in particular, for example, the evidence on completion of formalities, clarification as to the timing of the request by CCG of the Commercial Register on 13^th January 2010 for declaration, and clarification of the scope of the Commercial Registry response.

I therefore order that :

I invite the parties to draw up an order reflecting the above and to agree any consequential matters, including costs, so far as possible. I conclude by recording my thanks to all counsel for their able and responsive assistance and submissions throughout the hearing of these applications.