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Challenging jurisdiction in a claim for fraud

Author: Nicola Sharp  24 February 2023
2 min read

Nicola Sharp of Rahman Ravelli summarises a case where defendants sought to take proceedings out of the English High Court.

The High Court recently heard a challenge to its jurisdiction in a case of alleged fraud. In Harrington & Charles Trading Company & Ors v Mehta & Ors [2023] EWHC 3027 (Ch), the defendants applied for an order that the court decline jurisdiction over the proceedings, arguing that India was a more appropriate forum.

It is an unusual move to seek to move proceedings out of the English High Court. More commonly, parties seek to find a reason to use the English legal system, because of its reputation for fairness, proportionality and efficiency.

So what were the reasons that the defendants in this case fought so hard to get the proceedings transferred out?

The underlying claims

In order to get to grips with the jurisdictional challenge, it is important to understand some of the context of this claim and the alleged fraud. This is complex litigation and the facts around the alleged fraud are complicated.

The claimants (companies registered in England) allege that the first to fourth defendants were complicit in a USD 1 billion fraud whereby the proceeds of bullion advanced by two companies were misappropriated, laundered and concealed through multiple layers of corporate entities. The vast majority of the proceeds were said to have ended up in entities owned and / or controlled by the first to fourth defendants.

The claimant companies are said to have been used as vehicles in the alleged fraud, as one layer of the corporate entities through which the proceeds of the alleged fraud are said to have passed.

Following a number of previous hearings, the current application sought to challenge the jurisdiction of the English courts to hear the underlying claims.

The “centre of gravity” in the case

The defendants (or the applicants in this hearing) submitted that India was “the centre of gravity” in relation to this case. While the defendants, who are all (bar one) members of the Mehta family, used to live in India, they were all currently resident in England and had been for some time.

The judge noted that this was “not a case where the claimants were able to take advantage of a fleeting visit to this jurisdiction by one or more of the applicants in order to effect service of the proceedings in action”. Jurisdiction had been founded as of right in the proceedings, i.e. the defendants had been served with proceedings within the jurisdiction. It was for the defendants to show that another forum was clearly more appropriate than England.

The defendants had all left India by the time of the alleged fraud and the judge found that there was “very little to point to India being the centre of gravity.”

The judge did, however, accept that India was an available forum in which to bring proceedings. The case involved an alleged international fraud, and India was a viable candidate for jurisdiction. But so was England. Indeed, the case could have been made (theoretically) for other jurisdictions.

One of the reasons the judge did not decline jurisdiction, was that India did not emerge as “the front runner”, let alone the clear front runner, in terms of jurisdiction. At best, its claim to jurisdiction was equal with that of England.

Beneficial

If you have a potential claim, particularly a claim for alleged fraud, it will usually be beneficial to bring it in the High Court of England and Wales. The English judiciary has a reputation for objectivity, fairness and intellectual excellence in navigating complicated legal disputes. While the court lists are busy, the system is more efficient than many other jurisdictions.

Even if the company involved in the claim is an overseas entity, there may be valid arguments to litigate in the English courts. But that will always be fact specific.

Nicola Sharp C 09983

Nicola Sharp

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nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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