On 28 July 2021, Trower J handed down the latest judgment in the long-running Koza litigation.
The case, which started in 2016, has already taken three trips to the Court of Appeal and one to the Supreme Court, and has generated important judgments on jurisdiction ([2019] 1 WLR 4830), interim injunctions ([2021] 1 WLR 170), abuse of process (ibid), and the circumstances in which a company can be restrained from funding the costs of a dispute between different stakeholders ([2021] EWHC 786).
The latest judgment, unlike those mentioned above, dealt with the substance of the dispute, and in particular the question of whether the bulk of the claim being advanced by the Claimants gave rise to a serious issue to be tried.
In short, the Claimants, who are an English company, Koza Ltd, and its sole director, Mr Ipek, were seeking injunctive and related relief to preclude Koza Altin, a Turkish company and Koza Ltd’s 100% ordinary shareholder, from exercising any of its shareholder rights. The basis for the claim in issue was a contention that those currently in control of Koza Altin should not be “recognised” by the English court as having any authority to cause Koza Altin to do anything as a shareholder of Koza Ltd, because (it was said) their appointment, which took place pursuant to a judgment which had been given in Turkish criminal proceedings, was politically motivated, unfair, and constituted a violation of Mr Ipek’s human rights. The Claimants also argued in the alternative that allowing Koza Altin to exercise its shareholder rights would constitute the indirect enforcement of a foreign penal law.
Trower J held that the Claimants’ primary contention was misconceived as a matter of law because (i) Koza Altin’s rights as a shareholder of Koza Ltd did not derive from and were unaffected by anything that had occurred in the Turkish proceedings, (ii) those in control of Koza Altin had been validly appointed as directors under the lex incorporationis, and (iii), in those circumstances, following the approach of the House of Lords in Williams & Humbert Ltd v W&H Trademarks Jersey Ltd [1986] AC 368, the Claimants’ allegations relating to how the Turkish criminal proceedings had been conducted were legally irrelevant.
As to the Claimants’ alternative case, Trower J held that it too was misconceived as the rule relied on by the Claimants, properly stated, was that the court will not enforce foreign penal laws – it did not require, or permit, the court to actively prevent the exercise of otherwise valid legal rights.
Accordingly, Trower J concluded that the Claimants’ “non-recognition” case did not give rise to a serious issue to be tried.
As well as closing the book (for now) on that part of the case, the judgment contains valuable general guidance on what it means to “recognise” a foreign judgment, when the English court will (and will not) enquire into the substance of such a judgment or the propriety of the proceedings in which it was issued, and the scope of the prohibition on the enforcement of foreign penal laws.
David Caplan has acted for the Defendants throughout the litigation, instructed by Mishcon de Reya LLP.
A copy of the judgment is available here.