COURT OF APPEAL
In re HARRODS (BUENOS AIRES) LTD.
Authoritative version at:  Ch. 72
COUNSEL: Michael Briggs for Ladenimor.
Alan Boyle for Intercomfinanz.
George Bompas for the company.
SOLICITORS: Bower Cotton & Bower; Frere Cholmeley; Clifford Chance.
JUDGES: Harman J. Dillon, Stocker and Bingham L.JJ.
DATES: 1990 April 2, 3, 4, 5, Nov. 29, 30; Dec. 19;
1991 Feb. 6, 7, 8; March 13
HARMAN J. On 7 July 1989 a petition was presented to this court in the matter of a company called Harrods (Buenos Aires) Ltd. The petition was presented by a company incorporated in Switzerland, called Ladenimor S.A. It specifies that the company was incorporated in September 1913 in England. Its registered office is at Royex House, an address very well known in this court. Its nominal capital is £5,457,000 sterling. Ladenimor holds a large percentage, 49 per cent., of the issued shares of the company. The object of the company is:
to carry on, in Buenos Aires, in the Argentine Republic and elsewhere in South America, the business of a universal supply company and general stores in all its branches.
The remainder of the companys shares, other than those held by Ladenimor are held by the first respondent, Intercomfinanz S.A., which is a Swiss company that has a controller or beneficial owner named Gibertoni.
The petition sets out allegations as to relationships between Mr. Gibertoni and the individuals behind Ladenimor. It alleges that in September 1979 they made an agreement in principle to acquire the shares in the company, and at that date its only activity was the running of a large department store in Florida Street, Buenos Aires. The share capital was acquired and the very substantial price was paid by instalments between November 1979 and December 1984. Mr. Gibertoni ran the company and had complete de facto control of it with the agreement of Ladenimor. In 1985, Mr. Gibertoni and the Italian family behind Ladenimor fell out, and various matters then took place in regard to the companys business. Amongst other matters the company was advised by the formerly well known firm of Clifford Turner, the solicitors for the company, as to how distributions might be made by the company, which had a lack, according to English law then applicable, of distributable reserves, so that it was unable to pay a dividend. Upon advice, a structure of loans was created but, according to the allegation in the petition, Ladenimor did not receive the alleged part of the loans intended to be for its 49 per cent. of the interest in the company.
Further, the petition alleges that the company had its activities diversified into cattle breeding, but that that cattle breeding was remarkably unsuccessful in that, throughout the period September 1984 to March 1986 there were according to the records no calves at all born of the companys cattle. It is alleged that that leads to an inference that [*77] the affairs of the cattle were being manipulated in a way that disadvantaged the company. It is further alleged that other transactions took place in a sort of bond issued in Argentina called a Bonex, which were disadvantageous to the company compared with the loans also made by the company to another Argentine company controlled by Mr. Gibertoni. Another allegation concerns the acquisition of shares from a further company in Argentina controlled by Mr. Gibertoni, at a grossly excessive price and so on, leading to the conclusion, in paragraphs 41 and 42 of the petition:
41. In the premises the affairs of the company have been, are being and for as long as the same remain under the control of Mr. Gibertoni will be conducted in a manner which is unfairly prejudicial to the interests of the petitioner.
42. Further or alternatively it is just and equitable that the company should be wound up. Upon a winding up of the company, a substantial surplus would be distributable to its members.
The prayer seeks in paragraph 1 that Intercomfinanz S.A. be ordered to purchase Ladenimors shares on a particular valuation basis; there is a temporary order sought in paragraph 3 and, alternatively, in paragraph 4 an order for the winding up of the company under the Companies Act 1985. The petition was to be served upon the company at its own registered office at Royex House, and upon Intercomfinanz at Lugano.
That was followed by an application made ex parte which sought leave to serve the petition out of the jurisdiction, pursuant to R.S.C., Ord. 11; presumably, I do not think I have seen the actual application, pursuant to Ord. 11, r. 1(1)(a). By that provision service out is permissible because in the action, so called, begun by writ, so called (those words apply to an application to the court by petition) relief was sought against a person domiciled within the jurisdiction. Plainly, that would have been the appropriate case because the company is a person within the jurisdiction subject to the petition, and the service on Intercomfinanz is on a person outside the jurisdiction.
The application to serve out was supported by a somewhat exiguous two-page affidavit, by an assistant solicitor, which was severely, and in my view justifiably criticised by Mr. Boyle for the applicant in this summons. He did so on the ground that the affidavit was in breach of the golden rule, sometimes referred to as the rule in The Hagen  P. 189, sometimes referred to as the rule in Rex v. Kensington Income Tax Commissioners, Ex parte Princess Edmond de Polignac  1 K.B. 486, but in any event the rule that on all ex parte applications full and frank disclosure of any matter that may influence the judge in exercising his discretion ex parte must be made by the person applying. In my view the golden rule plainly was not satisfied.
The order was in fact made by Mr. Registrar Buckley, and service eventually took place after a long time. Thereupon, this summons was issued on 20 November 1989. The summons by Intercomfinanz sought an order from the registrar, now adjourned to me, seeking to set aside the order giving leave to serve out and an order that service be set aside; the summons also sought an order that the petition and all [*78] proceedings thereunder be stayed. Those are, in a sense, quite separate applications. Paragraphs 1 and 2 are based upon the golden rule, and would not bring the proceedings to an end. They would simply result in the order and the service being set aside and the petitioner being left to start again if it could properly manage to do so. Paragraph 3 is an order effectively driving the petitioner from this judgment seat.
On the matter being argued before me Mr. Briggs, in a most cogent argument, submitted to me that Ord. 11, r. 1 was not in fact applicable to this matter, and leave to serve the respondent was not necessary. He made that submission by reference to the rules which govern these sorts of proceedings. Firstly, the Insolvency Rules 1986 (S.I. 1986 No. 1925), which provide in relation to a petition, by rule 4.22(4): The petitioner shall, at least 14 days before the return day, serve a sealed copy of the petition on the company. That is the only requirement for service in the Insolvency Rules 1986 at that point. That was complied with. That results in the service on the company being effective. Rule 4.23(1) provides: On the return day the court shall give such directions as it thinks appropriate with respect to the following matters as to service and other matters, including, under rule 4.23(2), whether any of the persons in rule 4.10 is to be served with the petition.
By rule 12.12(1), Order 11 does not apply in insolvency proceedings. The result is that the code for insolvency proceedings is in the Insolvency Rules 1986 and Order 11 has nothing to do with petitions seeking the winding up of the company, whether by a creditor for debt, or by a contributory upon the just and equitable ground. Rule 12.12(3) provides:
Where for the purposes of insolvency proceedings any process or order of the court, or other document, is required to be served on a person who is not in England and Wales, the court may order service to be effected within such time, on such person, at such place and in such manner as it thinks fit
Thus, the insolvency court is in control of the method, time and so forth of service, and there is no requirement for leave to serve out, nor does the provision of Ord. 11, r. 4(2), that no leave shall be granted unless it is made to appear to the court that the case is a proper one for service out of the jurisdiction, which throws a burden upon the person seeking leave to show a prima facie case, apply to insolvency proceedings.
All that seems to me extremely obvious and natural. An English company, being an artificial person created pursuant to this very statute, subject to the jurisdiction inevitably of this court, must plainly be properly brought before this court, and the fact that other persons outside the jurisdiction may need also to be heard is sufficiently covered by the power and requirement to give directions about service on them. Thus, if this petition were simply a petition for a just and equitable winding up there could be, in my judgment, no doubt that Order 11 would have nothing to do with the matter at all.
The Insolvency Rules 1986, however, do not necessarily apply to petitions under section 459. To them, the Companies (Unfair Prejudice Applications) Proceedings Rules 1986 apply. These were made, as was pointed out, 10 days later than the Insolvency Rules, in November 1986. [*79]
These are rules applying to petitions presented under Part XVII of the Act of 1985 which, of course, includes section 459 of that Act. Rule 2(2) provides: Except so far as inconsistent with the Act and these Rules, the Rules of the Supreme Court apply to proceedings under Part XVII of the Act with any necessary modifications, but rule 4(1) provides: The petitioner shall, at least 14 days before the return day, serve a sealed copy of the petition on the company and, under rule 4(2):
In the case of a petition based upon section 459 of the Act, the petitioner shall also, at least 14 days before the return day, serve a sealed copy of the petition on every respondent named in the petition.
Thus, there are mandatory directions in these rules requiring services on the company, which must be a company having a place for service within the jurisdiction and, therefore, there is no question of service out under rule 4(1) and, under rule 4(2), a mandatory requirement for every respondent named to be served. It would seem curious if the rule mandatorily obliged the petitioner to serve respondents named in the petition, but also required the petitioner to get leave to make such service. There would be, to my mind, an inevitable conflict between those two rules.
Mr. Boyle observed correctly that these rules do not, unlike the Insolvency Rules 1986, specifically exclude Order 11 but, in my judgment, service is sufficiently dealt with by rule 4, in the two paragraphs there set out, plus the provisions under rule 5(a), enabling the court on the return day to give directions for service of the petition on any person that it thinks fit. Those provisions seem to me to amount to a code for service of company petitions, bearing in mind the provisions of rule 2(2), so that it would be inconsistent with these rules for Order 11 to apply also to section 459 petitions. In my judgment, despite Mr. Boyles extremely elegant reasoning upon the point, Mr. Briggs argument is undoubtedly correct. In my judgment, there is no requirement in respect of petitions, either under the Insolvency Rules 1986 or under the Companies (Unfair Prejudice Applications) Proceedings Rules 1986, requiring leave for service out of the jurisdiction under Order 11.
Further, it is to be noticed that Ord. 11, r. 1(2) itself provides:
Service of a writ - which in this context includes a petition - out of the jurisdiction is permissible without the leave of the court provided that each claim made by the writ - the prayers in the petition, I suppose, is the proper way to read that - is (b) a claim which by virtue of any other enactment the High Court has power to hear and determine notwithstanding that the person against whom the claim is made is not within the jurisdiction of the court or that the wrongful act, neglect or default giving rise to the claim did not take place within its jurisdiction.
In my judgment, were it necessary to go back to Order 11, which I do not believe it is as I read the two sets of rules applicable to this petition, [*80] that second limb of rule 1(2)(b) would apply because the claim here would be a claim by virtue of an enactment, viz. the Companies Act 1985, which the High Court undoubtedly has power to hear. That must be so because this is a petition which falls precisely, in my judgment, within the opening words of section 459, which provides: A member of a company - and note there are no restrictions whatever as to residence, nationality or other qualification, save that the applicant be a member (i.e. a shareholder or a person entitled to be entered on the register of members of the company) - may apply to the court by petition for an order under this Part . . . That plainly, then, gives the court jurisdiction to hear and determine that petition, and that is so notwithstanding, in my view, the fact that the wrongful act, neglect or default giving rise to the petition did not take place within this courts jurisdiction. Thus, in my view, there can be no doubt at all that leave to serve this petition out was never required.
On that basis the application for leave to serve out was misconceived. It was wholly unnecessary and the defective affidavit, which would, in my view, have been in breach of the golden rule and would have led me at least to set aside the order for service out without more ado on the ground that it had been obtained without proper disclosure, was all a wholly wasted exercise and gave rise to no consequences at all. I shall, therefore, pay no further attention to paragraphs 1 and 2 of the summons now before me, on the ground that the order of Mr. Registrar Buckley was an unnecessary order and the application was an unnecessary application. There was a right to serve and, therefore, no question of the inadequacy of the affidavit has any material bearing upon this case.
I turn to the matter which is really the substance of this application, and that is the question whether the court should make an order for a stay. The foundation for Mr. Boyles extremely interesting and intelligent argument is, of course, Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, particularly Lord Goff of Chieveleys speech. I cannot resist observing that on one part of the Spiliada case it is demonstrable that the views of the House of Lords are wholly out of touch with reality. Lord Templeman, at p. 465F, observed that he hoped that in future the judge will be allowed to study the evidence and refresh his memory of the speech of his noble and learned friend, Lord Goff, in the quiet of his room without expense of the parties. He will not be referred to other decisions on other facts, and submissions will be measured in hours, not days. An appeal should be rare and the appellate court slow to interfere.
This matter came on before me at 2 oclock on Monday. I am delivering judgment at a quarter to four on a Thursday afternoon. I do not regard any minute of the time that has been taken before me as having been wasted. The matter is, in my view, difficult. I have been assisted by extremely able arguments from all three of the counsel before me, to each of whom I am greatly indebted. Lord Templemans observations bear no relation to any conceivable way in which this matter could have been conducted. Where I should have found the time to read the evidence, which runs in the exhibits to some hundreds of [*81] pages and in the affidavits alone to 134 pages, I cannot imagine. The result is that Lord Templemans wishes are wholly incapable of performance and have not been performed.
The matter that is of importance, however, is Lord Goffs speech, which is obviously extremely well known. It is very important, however, to remember that even a speech by so very able a lawyer as Lord Goff undoubtedly is, assented to expressly by other members of the House, so that it constitutes the unanimous view of the House, must not be construed as if it were a statute. Every word is not to be taken as literally applying to every other case. It is to be taken as setting out his Lordships reasoning in reaching the principles which he expressed and to which his brethren assented. The principle is one which is of fairly recent development. The Spiliada case itself is under four years old, and the decisions before it, which led up to it, are mostly, I think, within the last decade.
The doctrine is commonly called forum non conveniens, although it is very important to remember, as Lord Goff specifically pointed out, that conveniens is not adequately translated as convenient. It is used in the sense in which lawyers use the word convenience, as in the phrase balance of convenience in cases when the court is deciding whether or not to grant an injunction. In such cases what the court is trying to do is achieve a balance of justice, or a balance of fairness between the parties, upholding existing rights and not upsetting matters which later will have to be undone, preserving the status quo so far as is reasonably possible. That is not convenience in the sense of what is nice and easy for the parties in any proper sense, and nor here do the words forum non conveniens mean the most handy court into which to pop.
The phrase means, and it is clearly laid out as a matter of principle by Lord Goff, where he cited, Lord Keith of Kinkel in The Abidin Daver  A.C. 398, 415, where he had referred to the natural forum as being that with which the action had the most real and substantial connection and Lord Goff said  A.C. 460, 478A: it is for connecting factors in this sense that the court must first look.
Lord Goff, it must be remembered, was dealing with a case from the Commercial Court concerning the shipping of a cargo, I think sulphur - it does not really matter - in a ship from Canada to England. The connection of the case with England was not particularly obvious. It was a case in the Commercial Court to which many international cases are brought, and where the rights of the parties are frequently dependent upon express provisions that English law shall apply in the contract. The rights are almost always rights to sums of money by way of damages for some breach of contract or perhaps, although more rarely, in tort, and the matters are all matters of true litigation inter partes. None of the phrases in Lord Goffs observations naturally and easily apply to cases such as the Chancery Division is so commonly concerned with, where a party applies to it for assistance and guidance and it may be for a discharge of liabilities.
For example, if English trustees beset by conflicting claims from beneficiaries come to the court to have determined what their duty may be; if trustees of pension funds come to a court and surrender any [*82] discretion they may have to choose as to who shall be the recipient of surplus funds, so that the court, acting on proper principles and considering the terms of the pension fund trust deed, can decide where the moneys should go. Those matters are very much matters which are not matters of a lis inter partes, with rights to damages one way or the other and where, above all, the person seeking relief from the court, can effectively only get relief from the court being the English High Court here in London. That is so because a trustee can be sued by a beneficiary to account for the trust property at any time, and it is only if the trustee has an order of the court confirming the administration that he is safe from future action. Thus, the trustee has to be protected and is entitled to be protected. That is miles from a claim by one corporate owner of a ship against another corporate owner of cargo for damages for mis-shipping the relevant substance.
Here in this present case, again, one has a matter which is very far from the formulations adopted by Lord Goff. Here one has an application by a member of an English company, pursuant to an express right given by an English statute, in respect of a matter where the English law gives a particular remedy by section 461 of the Act of 1985 as a matter of discretion, enabling it to effect what Mr. Briggs rather neatly described as corporate divorce. The order made requires a buy-out by one side of the other, and it may be by the petitioner of the respondent, or by the respondent of the petitioner, or it may in many cases be by the company of the petitioner. That will alter the future conduct of the affairs of the company, which will affect many people other than the two major protagonists in their future rights and entitlements. All such matters are plainly matters where the English law applies to the English artificial entity which has been created. None of that has much resemblance to a lis inter partes in the Commercial Court.
Nonetheless, in my judgment the Spiliada propositions about trying to assess what is the most appropriate forum do apply in the sense that, so far as they lay down principles, those are universal principles of English law. The question whether a stay should be granted is answered by applying the following test, according to Lord Goff, at p. 476:
a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action
I have, therefore, to say: what is the appropriate forum for the trial of this action? To answer that question I have to pose another: what is this action? This action is a petition, in my judgment, for relief against the conduct of the companys business in a manner unfairly prejudicial to some part at least of its members, including Ladenimor. The court will hear a whole series of instances of things that have been done, acts that have been committed, and it will have to decide whether the allegation that this or that was done is true or false. But in the end what the court, in my judgment, has to do in these matters is reach an overall conclusion: has Ladenimor suffered by reason of the conduct of the [*83] companys affairs in such a manner as to be unfairly prejudicial to it? That is a general conclusion, but it is the essential conclusion and the foundation for the jurisdiction.
Section 461 says that the court may not make any order, unless it is so satisified. Mr. Boyle submitted to me that the question was not properly formulated as to what was the issue in this petition by making that conclusion. He submitted that that was not the issue in the petition. The issue in the petition was whether the substantive complaints - his phrase - the particular acts complained of, I would say, had been committed. Here it is quite clear that what the petitioner alleges is a whole series of acts committed in Argentina. There is no doubt that all the principal witnesses are Argentinian. There is no doubt that the books of the company are in the Argentine. There is no doubt that the company, although an English company, and although it has its annual general meetings here, has its accounts in sterling, has its minute book of general meetings kept here, yet the residence for tax purposes of the company is Argentina and not England.
Nonetheless, as it seems to me, the question must always be: How is this company properly to be regulated? When one is looking at a company incorporated in England, which has its life and being only by virtue of the act of the English law creating this artificial person, it is to my mind extremely difficult to see that it can be appropriate to hold that the forum appropriate to decide that sort of matter is any forum other than the forum of the English court. It is, as Mr. Briggs submitted, in my view blindingly obvious what the answer to the question is once the question is posed.
Mr. Boyle submitted that that was not a proper approach to the matter, and I have to start with even scales and put into the balance on each side the various possible factors which Lord Goff listed. In my view, I do have to start with even scales, and I do have to consider what factors effect the matter, but when I find, when I am asked, to stay a petition and drive from the English seat of justice a person entitled by English statute to a remedy which it is conceded is not available anywhere else, it is impossible, that being a relationship governed by English law, for one to come to a conclusion that another forum will be the better or the more appropriate forum. It seems to me quite wrong to say that the issues that have to be decided are the particular factual issues as to what has been done. Those are steps, facts that have to be proved along the way to deciding the eventual issue, and the same, in my judgment, applies to the question whether the company should be wound up upon the equitable ground or not.
The evidence as to Argentine law, which would be relevant if one were in doubt as to the matter and were considering whether or not substantial justice could be obtained in the other forum, is interesting and curious. It is quite plain that Argentine law provides fairly extensive protection to shareholders in companies against wrongdoings by those managing the companies. It is clear that the Argentine law can provide for the winding up of Argentine companies. The oddity lies in the apparent provisions of Argentine law. Argentine law, by article 118 of what, I think, is the Companies Law - it is defined in the affidavits as [*84] C.L., and I hope I have not misunderstood it - provides that a branch of a foreign company is required to be registered in Argentina according to certain particular laws.
This company, Harrods (Buenos Aires) Ltd., registered itself as a branch of the English company, stating that the branch had no capital of its own, stating that the company had a capital of £5\4m.-odd sterling, stating that the company, not the branch, had objects of very wide extent and plainly complied in all respects with article 118. So much one would expect, and so much would be similar to our own company practice requiring foreign companies to give notice to the registrar under the relevant sections when they seek to set up a place of business here.
If a company is registered in accordance with article 118 then Argentine law provides that the law of the place of incorporation shall govern the fundamental points as to the companys existence and so forth. If that article were applicable English law would apply to this matter if tried in Argentine courts. That would make it plainly desirable that the English court try the case, because the English court is likely, in general terms, to be better at applying English law than a foreign court acting on expert evidence, however able.
Despite the provisions of article 118, Argentine law goes on in article 124 to provide - I read from what is called a free translation:
A company incorporated abroad which has its seat in the Republic, or whose principle corporate purpose is sought to be accomplished in the same, shall be considered as a local corporation in relation to the accomplishment of its incorporation and modification and the control of its performance.
I have had shown to me a textbook by an Argentine academic, a professor who was formerly a member of the Court of Appeal in Argentina, on this very subject. The evidence is really not in controversy before me that a foreign company which has its seat, its principal office, I suppose, is the best English equivalent to seat, in the Republic is treated in the Argentine courts as an Argentine company. Such a company is taken out of article 118 which treats it as a foreign company which has registered a branch in Argentina. And alternatively, if a foreign companys principal corporate purpose, limiting the word principal to mean only corporate purpose being its business, is carried on in the Argentine, then again the Argentine law, as it were, adopts and takes over the company.
That seems to me to be an unusual form of provision. There is no such provision in English law, and I know of no such provision in such other systems of continental company law as those with which I have any familiarity. Nonetheless, that is what the law is. The result in the case of this company, which has its whole business carried on within Argentina, has its main directing office in Argentina, whose directors live, meet and have their daily lives and being in Argentina, is that it would probably be held to have its seat in Argentina. Alternatively, it would certainly, even within the restrictive understanding of the word [*85] principal, be held to carry on business exclusively within Argentina. The result would be that Argentine law would apply and the English law would be ousted.
The result of that would be that Ladenimor could not obtain, according to the undoubted and uncontroverted evidence before me, the remedy which it primarily seeks, the corporate divorce or buy-out. It could, perhaps, obtain a winding up on grounds that seem not at all dissimilar to a just and equitable winding up, but the petition is quite plainly aimed, and Mr. Briggs asserted justifiably that it was, primarily at obtaining a buy-out on the proper basis of valuation, giving Ladenimor all the value which it was entitled to. That, in Argentina, cannot be obtained. That, by English standards applying to this English company, is a right that Parliament has granted. That right I would be defeating if I were to grant a stay in this case.
It seems to me that that right being defeated, the fact that another right, which is the fall-back position in this country of a just and equitable winding up, would be available in Argentina by way of a winding up and sale of the assets so that the parties would be separated, is not enough to ensure that substantial justice would be done. It is notorious in England that, upon a winding up, less is obtained from assets in a sale by a liquidator than is obtained by some other form, for example by an administrator appointed by the court under the Insolvency Act 1986 or, even better, by a receiver appointed by a debenture-holder. I have no reason to suppose that that general proposition, that a forced sale by a liquidator tends to produce a worse price, is not true in Argentina as in England. It is, in fact, a proposition of elementary commercial sense. That being so, there is plainly a serious disadvantage to Ladenimor if the petition were to be stayed on the ground, which I do not accept, that the Argentine court was the more appropriate forum. It would still result in Ladenimor being deprived of substantial justice, as I see the case, and upon that ground also I would not conclude that there should be any stay. For those reasons, I have reached a clear conclusion that paragraph 3 of this summons is not justified, and no stay should be ordered.
INTERLOCUTORY APPEAL from Harman J.
Pursuant to leave granted by Nicholls L.J. on 14 June 1990, Intercomfinanz appealed by a notice dated 25 June 1990, on the grounds, inter alia, that the judge had failed properly to apply the principles laid down in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, that the remedies available in proceedings brought in Argentina were such as to enable practical justice to be done should the factual basis for the complaints made in the petition be established, that by [*86] reason of factual circumstances specified in the notice Argentina was the more appropriate forum, and that for those and other reasons the judge had erred in his decision.
Cur. adv. vult.
19 December 1990. The following judgments were handed down.
DILLON L.J. This case comes before this court on appeal from a decision of Harman J. in the Chancery Division of 5 April 1990.
The proceedings in which the appeal is brought are entitled In the matter of Harrods (Buenos Aires) Ltd. That company (the company) was incorporated in England in 1913 under the Companies Acts 1908 and 1913, and its registered office is and has always been in England. But its business is and has always been exclusively carried on in Argentina and its central management and control is exercised in Argentina; its principal activity is to carry on a department store or general store in Buenos Aires.
Since 1979, the company has had two shareholders only, both of which are companies incorporated in Switzerland and whose central management and control is exercised in Switzerland, viz., the present appellant Intercomfinanz S.A., which owns 51 per cent. of the issued share capital of the company and the present respondent, Ladenimor S.A., which owns the remaining 49 per cent.
The present proceedings were commenced on 7 July 1989 by the presentation by Ladenimor in the Companies Court of a petition under the Companies Act 1985 and the Insolvency Act 1986. The primary case put forward by Ladenimor is that the affairs of the company have been and are being conducted by the present management in a manner which is unfairly prejudicial to Ladenimor within the meaning of section 459 of the Companies Act 1985, and the primary relief sought is an order that Intercomfinanz purchase Ladenimors shares in the company at a price representing 49 per cent. of the value of the company and upon the basis that there be added back to the value of the company such loss as may be found to have been caused to the company by the matters complained of in the petition. In the alternative, however, it is submitted in the petition that it is just and equitable that the company should be wound up, and a compulsory winding up order is sought under the Insolvency Act 1986. It is not in doubt that the company is solvent. [*91]
Under the relevant statutory rules, the company was a necessary party to the proceedings, whether the relief sought was a winding up order, or merely an order against Intercomfinanz under section 459 of the Act of 1985, and there was of course no difficulty in serving the company at its registered office in England. In addition, on ex parte application Ladenimor obtained from Mr. Registrar Buckley on 12 July 1989 an order under R.S.C., Ord. 11, giving leave to Ladenimor to serve the petition on Intercomfinanz out of the jurisdiction.
The upshot of that was that Intercomfinanz, by its English solicitors, issued a summons of 20 November 1989 claiming (1) an order that the order of Mr. Registrar Buckley giving leave to serve the petition on Intercomfinanz be set aside; (2) an order that the service of the petition on Intercomfinanz be set aside; and (3) an order that the petition and all proceedings thereon be stayed, on the grounds that there was another forum (namely Argentina) having competent jurisdiction which was the appropriate forum for the trial of the issues raised by the petition.
That summons came before Harman J. and by his order now under appeal he dismissed it. He held, in effect, first, that leave under Order 11 to serve the petition out of the jurisdiction was never required, on a true appreciation of the statutory position - with the consequence that any lack of proper disclosure in the affidavit which was put before Mr. Registrar Buckley was immaterial - and secondly, that the English court, and not the Argentine court, was the appropriate forum for the trial of the issues raised by the petition.
Harman J. refused Intercomfinanz leave to appeal against his order, but leave to appeal was granted by Nicholls L.J. on 14 June 1990. He commented:
Although the company was incorporated in England, and although a decision on whether or not to grant a stay is a matter of discretion for the judge, Intercomfinanz S.A. has a seriously arguable case on the application of the Spiliada principles [Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460] in the unusual circumstances present here.
In this court a preliminary issue of importance has been taken on behalf of Ladenimor. It is submitted that as the result of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 between the original member states of the E.E.C., to which the United Kingdom, Denmark and Ireland acceded in 1978 after joining the E.E.C., the English court has no jurisdiction to refuse on the grounds of forum non conveniens to decide the issues raised by the petition or to stay the petition, since the company is for the purposes of the Convention domiciled in England (albeit also domiciled in Argentina).
The terms of the Convention are set out in Schedule 1 to the Civil Jurisdiction and Judgments Act 1982, and under section 2 of that Act, the Convention has the force of law in the United Kingdom. The Preamble to the Convention sets out the genesis of the Convention in the following terms: [*92]
The high contracting parties to the Treaty establishing the European Economic Community, desiring to implement the provisions of article 220 of that Treaty by virtue of which they undertook to secure the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals; anxious to strengthen in the Community the legal protection of persons therein established; considering that it is necessary for this purpose to determine the international jurisdiction of their courts, to facilitate recognition and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements; have decided to conclude this Convention
The scope of the Convention is prescribed in article 1 in Title I. With exceptions which are immaterial to the present case it is to apply in civil and commercial matters whatever the nature of the court or tribunal. Title II, comprising articles 2 to 24, is headed Jurisdiction. Section 1 of the Title, comprising articles 2 to 4, is headed General provisions. Article 2 provides:
Subject to the provisions of this Convention, persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state .
That is the article fundamental to the preliminary issue.
It is not in doubt that the company is domiciled in the United Kingdom, although also domiciled in Argentina, and that Intercomfinanz and Ladenimor are domiciled in Switzerland: see section 42(3) and (6) of the Act of 1982.
Article 3 of the Convention provides that persons domiciled in a contracting state may be sued in the courts of another contracting state only by virtue of the rules set out in articles 2 to 6 of Title II. The second paragraph of article 3 then lists particular provisions of the laws of the various contracting states including the United Kingdom which are not to be applicable as against persons domiciled in other contracting states; the details are not relevant.
Article 4 then provides:
If the defendant is not domiciled in a contracting state, the jurisdiction of the courts of each contracting state shall, subject to the provisions of article 16, be determined by the law of that state. As against such a defendant, any person domiciled in a contracting state may, whatever his nationality, avail himself in that state of the rules of jurisdiction there in force, and in particular those specified in the second paragraph of article 3, in the same way as the nationals of that state.
There are then further articles setting out detailed provisions, many of which in various respects qualify article 2. I shall have to refer to some of these later. There are also, under Title III, detailed articles from 25 to 49 dealing with the recognition and enforcement of judgments.
It is in particular to be noted that the doctrine of forum conveniens under English and Scottish law, as elaborated by Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, is [*93] not a recognised basis for jurisdiction under any of the articles of the Convention where the contest is between the jurisdiction of contracting states. As between the contracting states the general principle of the Convention is that the court first properly seised of a cause of action under the Convention shall exercise jurisdiction. Thus articles 21 and 23 provide:
21. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different contracting states, any court other than the court first seised shall of its own motion decline jurisdiction in favour of that court .
23. Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.
Against that background section 49 of the Act of 1982 provides that nothing in the Act shall prevent any court in the United Kingdom from staying, sisting, striking out, or dismissing any proceedings before it on the ground of forum non conveniens or otherwise where to do so is not inconsistent with the Convention. It is implicit in that section, in my judgment, that the court cannot stay or strike out or dismiss any proceedings on the ground of forum non conveniens where to do so would be inconsistent with the Convention, and that covers all cases where the defendant in proceedings in England is domiciled in England and the conflict of jurisdiction is between the jurisdiction of the English court and jurisdiction of the courts of some other contracting state.
The crucial question in the present case is whether the English court can stay, strike out or dismiss proceedings on the ground of forum non conveniens, where the defendant in the English proceedings is domiciled in England, but the conflict of jurisdiction is between the jurisdiction of the English court and the jurisdiction of the courts of a state which is not a contracting state, no other contracting state being involved.
That question came before the Commercial Court in S. & W. Berisford Plc. v. New Hampshire Insurance Co.  2 Q.B. 631. In that case the second plaintiff, which was the relevant plaintiff, was an American company based in New York. The defendant was an American insurance company domiciled in New Hampshire, but the disputes arose out of the operations of the defendants London branch, and consequently the defendant was deemed, for the purpose of the Convention, to be domiciled in the United Kingdom. It was held by Hobhouse J. in those circumstances (a) that since the parties had not agreed that the courts of any other contracting state should have jurisdiction, article 2 of the Convention required that the defendant should be sued in the United Kingdom, (b) that to stay the proceedings on the ground of forum non conveniens - viz., that the courts of New York were the more appropriate forum - would be inconsistent with the Convention, and (c) that, accordingly, the English court had no jurisdiction under section 49 of the Act of 1982 to stay the action.
The ratio of the judgment of Hobhouse J. is to be found in the passage at pp. 643G-645D. The crux is, in my judgment, to be found, where the judge said, at p. 645: [*94]
It is clear that the Convention is designed (subject to article 4) to achieve uniformity and to 'harmonise' the relevant procedural and jurisdictional rules of the courts of the contracting states. The Convention leaves no room for the application of any discretionary jurisdiction by the courts of this country; the availability of such a discretion would destroy the framework of the Convention and create lack of uniformity in the interpretation and implementation of the Convention.
That decision of Hobhouse J. was followed by Potter J. in Arkwright Mutual Insurance Co. v. Bryanston Insurance Co. Ltd.  2 Q.B. 649. In that case the plaintiff, an American insurance company, had a claim on London reinsurers who disputed the claim on the ground that the loss was not covered by the policy. The reinsurers commenced proceedings against the plaintiff in New York for a declaration that they were not liable. The plaintiff then commenced an action in London against the reinsurers claiming payment, and the reinsurers applied to stay the English proceedings on the ground of forum non conveniens and lis alibi pendens. They contended that the New York court was the more appropriate court to decide the issue. The arguments in favour of a stay were summarised by Potter J. under eight heads, at pp. 660-661. Heads (1) to (6) read:
(1) The Convention, being concerned, or principally concerned, to govern relations between contracting states, which thereby adopted mutual obligations and accepted regulation of their own potentially competing jurisdictions, should not readily be construed as operating so as to deprive or inhibit non-contracting states in relation to cases where the jurisdiction of such states would otherwise plainly be most appropriate for determination of the dispute in question. The Convention being concerned to decide which of the contracting states should assume jurisdiction in cases of competition inter se, no violence is done or inconsistency effected by one contracting state staying proceedings in its courts in favour of a non-contracting state.
(2) The general rule as to domicile imposed by article 2 is not to be regarded as so overwhelming or all-pervading as to preclude stay in all cases where it is not expressly required or permitted by the Convention. The rule of domicile is the prima facie rule only, within a sophisticated framework of provisions which recognise a number of exceptions in individual situations, the most logical and compelling of which are those dealt with in articles 5 to 6A (special jurisdiction), article 16 (exclusive jurisdiction) and article 17 (foreign jurisdiction clauses).
(3) Any English court should be slow so to construe the Convention as to inhibit the valuable and important jurisdiction of stay on grounds of forum non conveniens, which is designed to promote comity, to encourage efficiency in the resolution of disputes, to prevent duplication of time and cost of litigation, and to avoid inconsistent judgments in two jurisdictions. [*95]
(4) Albeit articles 21 to 23 constitute a more limited and rigid scheme for allotment of jurisdiction than that achieved by application of a general principle of forum non conveniens they are concerned to give effect to the network of provisions in articles 2 to 20 and to avoid the risk of inconsistent judgments in two or more contracting states, by requiring dismissal or stay of actions in favour of the court of the contracting state first seised. If there is no jurisdiction for a contracting state in which a defendant is domiciled or otherwise properly sued to decline jurisdiction, or to stay, in favour of the courts of a non-contracting state, that creates the remarkable situation whereby the Convention determines the appropriate forum (according to its own provisions) for the competing jurisdictions of contracting states, but requires entertainment of suit in the domicile of the defendant (without the application of any test of appropriateness) where a non-contracting state is concerned.
(5) Even if the Berisford case is right in respect of the broad principle of forum non conveniens, it need and should not be applied in respect of the more limited case of lis alibi pendens, the very ground of stay contemplated by article 21 in respect of contracting states.
(6) Given that the purposes of the Convention are avoidance within the courts of the Community of inconsistent judgments and simplification of enforcement of judgments within those courts neither purpose will be disturbed by the exercise of a jurisdiction to stay on grounds of forum non conveniens and/or lis alibi pendens in favour of the courts of a non-member state.
These arguments, however, though recognised, at p. 661, as powerful, were rejected by Potter J. on the ground that he agreed with the decision of Hobhouse J. in the Berisford case  2 Q.B. 631 and preferred the logic of the Berisford case.
The answer to the question depends on the true construction of the Convention and that is a matter of European law. The Court of Justice of the European Communities has jurisdiction to give rulings on the interpretation of the Convention under the Protocol on the interpretation of the Convention of 1968 by the European Court, signed at Luxembourg in June 1971. The text of the Protocol of 1971 is set out as Schedule 2 to the Act of 1982, and that specifies the courts which may request the Court of Justice to give preliminary rulings on questions of interpretation; they include the courts of the contracting states when they are sitting in an appellate capacity.
In addition the Act of 1982 provides by section 3(1) that
Any question as to the meaning or effect of any provision of the [Convention] shall, if not referred to the European Court in accordance with the Protocol of 1971, be determined in accordance with the principles laid down by and any relevant decision of the European Court.
It is further provided that in ascertaining the meaning or effect of any provision of the Convention the courts may consider the reports of Mr. P. Jenard and Professor Peter Schlosser, Official Journal 1979 No. [*96] C. 59/1 and 59/71, and shall give them such weight as is appropriate in the circumstances. These reports are both referred to in the judgments of Hobhouse J. in the Berisford case and of Potter J. in the Arkwright case and in this court we have had copious citation from both reports. For my part, I find it difficult to give much weight to the reports in relation to the question with which we are concerned because I do not think that Mr. Jenard or Professor Schlosser had that question in contemplation. There are general statements in the reports which can be used as pointers either way, without themselves solving the question in issue. Moreover at the time even of the Schlosser report, the English doctrine of forum conveniens was considerably less fully developed than it is now; the decision in The Abidin Daver  A.C. 398 and even more, Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, came later.
As I see it the starting point in approaching the construction of the Convention must be article 220 of the E.E.C. Treaty, since the Preamble to the Convention shows as the starting point the desire of the parties to implement that article. The object of article 220 was to secure the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals between the member states of the Community.
To achieve such recognition and enforcement it was evidently decided that the contracting states should have a common basis of international jurisdiction - or jurisdiction in the international order - in the matters which fall within the scope of the Convention. But the common basis of jurisdiction envisaged does not apply worldwide since under article 4, if a defendant is not domiciled in a contracting state the jurisdiction of the courts of each contracting state is to be determined by the national law. The desideratum expressed in Professor Schlossers report, Official Journal 1979 No. C. 59/71, p. 97, para. 78, that
A plaintiff must be sure which court has jurisdiction. He should not have to waste his time and money risking that the court concerned may consider itself less competent than another.
is thus very obviously not met where the defendant is not domiciled in a contracting state. Indeed the following passages in paragraph 78 appear to show that the Professor was only concerned in the paragraph with the protection of persons domiciled in the contracting states and with choices, which should not be on the ground of forum conveniens, between the courts of several contracting states having jurisdiction. That is in line with references in the Jenard report, e.g. the reference in Official Journal 1979 No. C. 59/1, p. 7, to an autonomous system of international jurisdiction in relations between the member states and the statement on p. 15 that
the purpose of the Convention is also, by establishing common rules of jurisdiction, to achieve, in relations between the six and in the field which it was required to cover, a genuine legal systematisation which will ensure the greatest possible degree of legal certainty. [*97]
For the English court to refuse jurisdiction, in a case against a person domiciled in England, on the ground that the court of some non-contracting state is the more appropriate court to decide the matters in issue does not in any way impair the object of the Convention of establishing an expeditious, harmonious, and, I would add, certain, procedure for securing the enforcement of judgments, since ex hypothesi if the English court refuses jurisdiction there will be no judgment of the English court to be enforced in the other contracting states. Equally and for the same reason such a refusal of jurisdiction would not impair the object of the Convention that there should, subject to the very large exception of article 4, be a uniform international jurisdiction for obtaining the judgments which are to be so enforced.
But if the English court as a result of article 2 of the Convention does not have the power to decline jurisdiction to entertain an action against a person domiciled in England on the ground that the courts of a non-contracting state are the more appropriate forum, the English court must equally have no power to refuse to entertain such an action on the ground of lis alibi pendens, if the lis is pending in the courts of a non-contracting state. Articles 21 and 22 of the Convention are only concerned with the position where proceedings involving the same cause of action and between the same parties, or where related actions, are brought in the courts of different contracting states. There is nothing at all in the Convention to deal with the situation where there is one lis pending in a court of a contracting state against a person domiciled in that state and another, and possibly earlier, lis pending, in proceedings involving the same cause of action or in a related action, in the courts of a non-contracting state.
Again article 17 of the Convention provides that if the parties have agreed that the courts of a particular contracting state shall have exclusive jurisdiction to settle any disputes which may arise in connection with a particular legal relationship, then the courts of that state shall have exclusive jurisdiction to settle such disputes. There is nothing at all in the Convention to deal with the situation where the parties have agreed that the courts of a non-contracting state shall have exclusive jurisdiction to resolve their disputes. But if article 2 has the full mandatory effect which Hobhouse J. in the Berisford case  2 Q.B. 631 thought it has, the English courts would be bound to hear and decide an action against a person domiciled in England even though both parties to the action had agreed that the courts of some non-contracting state - be it New York or Argentina - should have exclusive jurisdiction.
Such results would, in my judgment, be contrary to the intentions of the Convention. Since the Convention is merely an agreement between the contracting states among themselves, I do not agree with Hobhouse J. that the framework of the Convention would be destroyed if there were available to the English court a discretion to refuse jurisdiction, on the ground that the courts of a non-contracting state were the appropriate forum, in a case with which no other contracting state is in any way concerned. I do not accept that article 2 has the very wide mandatory [*98] effect which Hobhouse J. would ascribe to it where the only conflict is between the courts of a single contracting state and the courts of a non-contracting state.
Respectfully differing, therefore, from the rulings of Hobhouse J. and Potter J. in S. & W. Berisford Plc. v. New Hampshire Insurance Co.  2 Q.B. 631 and Arkwright Mutual Insurance Co. v. Bryanston Insurance Co. Ltd.  2 Q.B. 649, I would reject the preliminary issue raised by Ladenimor, and I would hold that the English court has jurisdiction to stay or dismiss the petition on the grounds of forum non conveniens if the English court holds that the courts of Argentina are the more appropriate forum to decide the issues.
I would add that it is not appropriate, in my judgment, for this court to request the Court of Justice of the European Communities to give a ruling on this issue.
STOCKER L.J. I have read the judgments of Dillon and Bingham L.JJ., which I agree with, and I have nothing to add.
BINGHAM L.J. Before the judge it was common ground that he had a discretion to stay Ladenimors proceedings against the company on the ground of forum non conveniens if he was of the opinion that, applying the Spiliada test (Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460) in this rather novel situation, good reason for doing so existed. The question in issue was whether the judge should exercise that discretion in favour of the Argentinian court on the ground that it was the appropriate forum for trial of the proceedings.
In this court Mr. Briggs for Ladenimor contended that the judge had no such discretion. He based this argument on the Civil Jurisdiction and Judgments Act 1982 and the Conventions to which that Act gave the force of law in the United Kingdom. His submission was, in brief, that since the company was, by virtue of section 42 of the Act of 1982, domiciled here, the Conventions required the English court to accept jurisdiction and forbade it to decline jurisdiction in favour of the Argentinian court whether that was judged to be the appropriate forum or not. Mr. Briggs accepted that, despite the Act and the Conventions, the judge retained a discretion to stay Ladenimors proceedings against Intercomfinanz, which is not on any showing domiciled here, but he submitted that Intercomfinanzs application to stay had to be judged on the basis that the proceedings against the company would continue in any event. The argument thus raised is of some obvious general importance.
In interpreting the Act of 1982 our task is, as always, to ascertain the intention of Parliament and give effect to it. But in so far as the Act is intended to give legal effect to the Conventions and to implement the United Kingdoms international obligation to give legal effect to the Conventions, we must assume - in the absence of a clear indication to the contrary, which is not to be found here - that Parliament intended the Conventions to be incorporated into English law so as faithfully to reflect the international consensus embodied in them. The Conventions themselves are in part set out in Schedules to the Act, but it cannot be [*99] doubted that in interpreting them we are required to consider first the objectives and scheme of the Conventions, and secondly the general principles which stem from the corpus of the national legal systems of the contracting states: L.T.U. Lufttransportunternehmen G.m.b.H & Co. K.G. v. Eurocontrol (Case 29/76)  E.C.R. 1541. For this purpose we must adopt an international and communautaire, not a national and chauvinistic, approach. Although these Conventions do not expressly provide, like article 18 of the Rome Convention on the law applicable to contractual obligations (see the Contracts (Applicable Law) Act 1990 and Schedule (1) thereto), that
In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application,
it is plain that that is the basis upon which we should act.
As the Preamble to the Convention of 1968 and the Jenard report, Official Journal 1979 No. C. 59/1, p. 1 et seq., make clear, that Convention was negotiated pursuant to the obligation undertaken by the original member states in article 220 of the E.E.C. Treaty to
enter into negotiations with each other with a view to securing for the benefit of their nationals the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards.
When instigating the negotiations which led to the Convention of 1968, the Commission of the E.E.C. observed:
As jurisdiction in both civil and commercial matters is derived from the sovereignty of member states, and since the effect of judicial acts is confined to each national territory, legal protection and, hence, legal certainty in the common market are essentially dependent on the adoption by the member states of a satisfactory solution to the problem of recognition and enforcement of judgments: Jenard report, Official Journal 1979 No. C. 59/1, p. 3.
If member states were to recognise and enforce each others judgments virtually on the nod, it was plainly desirable, so far as possible, to agree on a common basis for accepting jurisdiction, so as to minimise the number of occasions on which state A would have to recognise and enforce a judgment given by state B in circumstances where state A would not itself have accepted jurisdiction. Given the reference in article 220 to the benefit of their nationals, one might have expected the common basis of jurisdiction to be founded on nationality, as the Jenard report, Official Journal 1979 No. C. 59/1, p. 14, acknowledges. But instead the common basis of jurisdiction was firmly founded on the domicile of the defendant. The Jenard report, at p. 13, explains the intentions of the original negotiators:
Underlying the Convention is the idea that the member states of the European Economic Community wanted to set up a common market with characteristics similar to those of a vast internal market. [*100] Everything possible must therefore be done not only to eliminate any obstacles to the functioning of this market, but also to promote its development. From this point of view, the territory of the contracting states may be regarded as forming a single entity: it follows, for the purpose of laying down rules on jurisdiction, that a very clear distinction can be drawn between litigants who are domiciled within the Community and those who are not.
The domicile of the Community-based defendant is not in all cases a determinative test. It was necessary to make special provision for agreements conferring exclusive jurisdiction on a specific court, a matter which became of greatly increased importance on the accession of the United Kingdom owing to the frequency with which jurisdiction is conferred upon United Kingdom courts in international trade (Schlosser report, Official Journal 1979 No. C. 59/71, p. 124, para. 177), and cases of dual domicile (discussed in the Schlosser report, at pp. 96-97, para. 75; p. 120, para. 162, and p. 125, para. 181): see articles 17 and 21 of the Convention of 1968. But for the Community-domiciled defendant the state of domicile is the state upon which jurisdiction is primarily conferred. For that reason Ireland and the United Kingdom cannot found jurisdiction on service during temporary presence in the country nor Scotland on the grounds listed in sub-paragraphs (b) and (c) of the second paragraph of article 3: see article 3 and paras. 85 and 86 of the Schlosser report, at pp. 99-100. Further:
the jurisdiction of English courts in respect of persons domiciled in the Community can no longer be based on the ground that the claim concerns a contract which was concluded in England or is governed by English law: Schlosser report, p. 100, para. 87.
As the extract from p. 13 of the Jenard report quoted above makes clear, however, there is a clear and fundamental distinction between the position of the Community-domiciled defendant and the defendant domiciled elsewhere. In respect of the latter, contracting states may, by virtue of article 4 of the Convention of 1968, continue to apply their traditional rules: the French may assert their exorbitant jurisdiction under articles 14 and 15 of the Civil Code (Jenard report, pp. 19-20), the Scots on the bases specified in sub-paragraphs (b) and (c) of the second paragraph of article 3, the English on the basis of service during temporary residence or because the contract was made here or was governed by English law. Thus in the present case, Intercomfinanz being domiciled in none of the contracting states, it would not violate the letter or the spirit of the Conventions if the English court were to assume jurisdiction over it on any of the traditional grounds, however exorbitant. For purposes of recognition and enforcement no distinction is drawn between judgments against defendants domiciled within and judgments against defendants domiciled outside contracting states. While, therefore, the Conventions reduce the number of cases in which state A will have to recognise and enforce judgments given by state B in circumstances where state A would not itself have accepted jurisdiction, they do not eliminate such cases altogether. [*101]
In contending that the English court was not only entitled but bound to accept jurisdiction in Ladenimors proceedings against the company, Mr. Briggs relied in particular on the wide, unambiguous and mandatory language of article 2. He also relied on the third recital in the Preamble to the Convention of 1968 as showing that the purpose of the Convention was to determine the international jurisdiction of the courts of the contracting states. It is, however, plain, adopting the approach to interpretation which I have outlined above, that article 2 must be interpreted so as to reflect the purpose and scheme of the Convention as a whole. The reference to international jurisdiction in the Preamble is, in my view, intended to make clear that the Convention is in no way concerned with the national jurisdiction of the courts of the contracting states, i.e. with cases lacking any international element: Jenard report, Official Journal 1979 No. C. 59/1, p. 8.
Mr. Boyle for Intercomfinanz accepted that, since the company is domiciled here, and since there is no exclusive jurisdiction clause, and since no proceedings had been first started in another contracting state, the English court would have to accept jurisdiction if the alternative forum alleged to be appropriate were, instead of Argentina, the court of any other contracting state. In any choice of jurisdiction between the courts of contracting states, he accepted that the Conventions provide a mandatory and comprehensive code. But he submitted that the Conventions were directed and directed only to control of relations between contracting states among themselves. If this court were to decline jurisdiction in favour of the Argentinian court, how could that possibly prejudice any Community interest which the Conventions were designed to protect or promote? If, as he contended, the answer was that it could not, since the enforceability of an Argentinian judgment in any contracting state would depend on bilateral arrangements between Argentina and that state and it was very unlikely that an Argentinian judgment would be more readily enforceable than an English judgment, that was a sure sign that the Conventions were not intended to apply in such a situation.
Both parties made references to excerpts from the Jenard and Schlosser reports, while urging us to read more extensively in the reports. I think there is an obvious danger in seizing on occasional passages here and there in these long and closely-reasoned reports to support one view or the other when it is acknowledged that the present question was never squarely addressed. I have read the reports much more extensively than the reasonable bounds of oral argument permitted to counsel and am in the result of opinion that the thrust of the reports gives much more support to Mr. Boyles argument for Intercomfinanz than to Mr. Briggs for Ladenimor. I give one example. Both reports consider in detail the existence of earlier bilateral or trilateral conventions between contracting states, some of which are indeed listed in article 55 of the Convention of 1968. Yet, save for an isolated - and I think irrelevant - reference to a convention between France and Switzerland on p. 14 of the Jenard report, there is (so far as I can trace) no reference to any convention between any contracting state and any non-contracting state. On Mr. Boyles argument this is understandable: in [*102] the absence of any conflict or potential conflict of jurisdiction between contracting states, the Conventions have no role. If, however, the Conventions govern relations between a contracting state and a non-contracting state even when there is no conflict or potential conflict between contracting states, one would expect all conventions to fall for consideration and examination.
Mr. Briggs was able to rely on two recent authorities as supporting his submission. The first, a reserved decision of Hobhouse J., was S. & W. Berisford Plc. v. New Hampshire Insurance Co.  2 Q.B. 631. In that case the effective plaintiff was a New York company and the defendant, although a New Hampshire company, carried on business and was served at an office in the City of London. The defendant sought a stay, contending that New York was the appropriate forum. The plaintiff resisted, contending that by virtue of the Act and the Conventions the court had no discretion to grant a stay and that in any event the grounds for granting a stay were not made out. The judge agreed with the plaintiff on both these points. The argument addressed to us by Intercomfinanz, if correct, would have ensured the defendants success on the first of these points, but the argument was not put. Thus the judge did not have to rule on it expressly. But the tenor of his judgment strongly suggests that if he had had to rule on it he would have rejected it.
Such was the inference drawn, in my view rightly, by Potter J. in the second case, Arkwright Mutual Insurance Co. v. Bryanston Insurance Co. Ltd.  2 Q.B. 649. In those proceedings, the plaintiff was a Massachusetts insurer and the defendants were English reinsurers resisting a claim under policies of reinsurance. Before the English proceedings began, the reinsurers had issued proceedings against the insurer in New York for a declaration that they were not liable to the insurer. After issue of the proceedings here the reinsurers asked the court to stay them in the exercise of its discretion on the grounds of forum non conveniens and lis alibi pendens. The insurer, relying on the Act of 1982 and the Conventions, contended that the court no longer had such a discretion to exercise. Counsel for the reinsurers took issue with that proposition on a number of grounds which are quoted in the judgment of Dillon L.J., ante, pp. 94D-95D.
The judge, in a reserved judgment  2 Q.B. 649, rejected the reinsurers submission and upheld, at pp. 662-663, the insurers submission founded on the decision of Hobhouse J.:
that, for the English court to retain its former wide discretion in respect of the doctrine of forum non conveniens would be inconsistent with the Convention.
I do not however think that the judge specifically addressed himself to counsels arguments which I have quoted, which seem to me powerfully persuasive.
Ladenimors argument is of course strengthened by these two first instance judgments which, although not binding on us, are entitled to [*103] respect. They have, however, provoked a critical note bearing the very considerable authority of Mr. Lawrence Collins in (1990) 106 L.Q.R. 535. I would for my part adopt his conclusion, at pp. 538-539:
When the European Court comes to consider the application of the Convention to non-contracting states, it should seek the answer in treaty interpretation, and ultimately in public international law. The Convention was intended to regulate jurisdiction as between the contracting states. Thus the Convention provides that in principle domiciliaries of a contracting state should be sued in that state, subject to important and far-reaching exceptions, and not in other contracting states. Once a court in a contracting state has jurisdiction it is entitled, vis-à-vis other states, to exercise that jurisdiction and other courts cannot. But the states which were parties to the Convention had no interest in requiring a contracting state to exercise a jurisdiction where the competing jurisdiction was in a non-contracting state. The contracting states were setting up an intra-Convention mandatory system of jurisdiction. They were not regulating relations with non-contracting states.
Section 49 of the Act preserves the power of the English court to stay or dismiss any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the Convention of 1968. The ultimate question, therefore, is whether exercise of the discretionary power here in issue in the present situation, where the only alternative forum is in a non-contracting state, is inconsistent with the Convention of 1968. I conclude that it is not and accordingly accept the argument of Intercomfinanz on this point.
Since preparing this judgment I have had the advantage of reading in draft the judgment of Dillon L.J., with which I am in full agreement. Like him, I do not think it necessary to request the Court of Justice of the European Communities to rule on the question of interpretation of the Convention of 1968 raised in this case to enable this court to give judgment on it.
Ruling against Ladenimor on preliminary question.
6 February 1991. The substantive appeal was restored for hearing.
Cur. adv. vult.
13 March. The following judgments were handed down.
DILLON L.J. The background to this appeal, down to the granting of leave to appeal by Nicholls L.J., is set out in my judgment, handed down on 19 December 1990, ante, pp. 90D et seq., on a point argued as a preliminary issue in the appeal. I do not need to repeat it here.
We are now concerned with the substantive issue on the appeal, viz. the decision of Harman J. that the English court and not the Argentine court was the appropriate forum for the trial of the issues raised by the petition. This led him to dismiss Intercomfinanzs summons of 20 November 1989 whereby Intercomfinanz had claimed to have the order of Mr. Registrar Buckley giving leave to serve the petition on Intercomfinanz, and the consequent service, set aside and had claimed also to have the petition and all proceedings thereon stayed on the ground that the Argentine court was the appropriate forum for the trial of the issues raised by the petition.
Any question which of two countries courts is the appropriate forum for the trial of proceedings has to be decided according to Spiliada principles: see Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460. The question is therefore to be decided at the discretion of the judge at first instance, and it is well known that the grounds on which the appellate court may interfere with the exercise of the judges discretion are very limited. Lord Templeman in the Spiliada case stressed, at p. 465G, that in such a case an appeal should be rare and the appellate court should be slow to interfere. The question whether this court is entitled to interfere is to my mind the most difficult question on the appeal.
As I see it, in the context of this particular case what we have to consider first, if there is to be any possibility of this court interfering with the decision of Harman J., is whether the judge asked himself the right questions. That involves considering (a) what he should have asked himself and (b) what he actually asked himself, and comparing the two. If he did not ask himself the right questions, we have to consider what the consequence is. [*108]
Before I turn to that, I can dispose of one subsidiary point. In Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 Lord Goff of Chieveley devotes a section of his speech to considering how the principle of the Spiliada case is applied in cases where the court exercises its discretionary power under R.S.C., Ord. 11. It so happens that the applicability of Order 11 to this petition raises a question of some difficulty to which I shall have to come. Ladenimors solicitors applied to Mr. Registrar Buckley for, and obtained, leave under Order 11 to serve the petition on Intercomfinanz out of the jurisdiction. But Ladenimor accepts that there was material non-disclosure to the court on its part on that application. Harman J. held that on the true construction of the various rules in issue the leave sought under Order 11 was not needed, and so the non-disclosure was immaterial. But he also said that, had leave been needed, the defects in the affidavit in support of the application under Order 11 would have led him at least to set aside the order for service out without more ado on the ground that it had been obtained without proper disclosure. In this court, many months later, neither side asks us to take such a summary course which would merely lead to a fresh application for leave. Both parties have put in all their evidence, and both ask us to decide the substantive issue on that evidence.
As I understand the speech of Lord Goff of Chieveley in the Spiliada case, what the court had to look for is the forum, having competent jurisdiction, in which the case may be tried more suitably for the interests of all parties and for the ends of justice; see the test of Lord Kinnear in Sim v. Robinow (1892) 19 R. 665. To that end - if questions of onus and the effect of Order 11 are for the moment left to the side - the court looks first for the appropriate or natural forum, being that with which the action has the most real and substantial connection: see the Spiliada case  A.C. 460, 478.
It is therefore natural to ask what the case or action is, as Harman J. did. At this point I have reservations about Harman J.s approach. He seems to have accepted a submission from Mr. Briggs for Ladenimor that proceedings within the trust or company jurisdiction of the Chancery Division were to be distinguished from proceedings in the Commercial Court which were truly litigation inter partes. Thus Harman J. sets out in his judgment, ante, p. 81F-G, that cases in the Commercial Court, to which many international cases are brought, are all matters of true litigation inter partes. But he then goes on ante, pp. 81G-82A, to contrast applications by trustees in the Chancery Division for directions in relation to their trust. His conclusion seems to be, at p. 82A, that only the English High Court here in London can regulate the affairs of an English trust. In line with this approach and with Mr. Briggs argument, Harman J. when he comes, at p. 83C, to formulate the crucial question, says that the question must always be how is this company properly to be regulated?
In my judgment, however, the petition in the present case bears no resemblance whatsoever to an application to the court by trustees for directions or guidance. It is litigation inter partes, between Ladenimor and Intercomfinanz, just as much as any action in the Commercial Court. [*109]
In considering the connection of the proceedings with each forum, the court is plainly not limited to factors of convenience in the preparation for and conduct of a trial. But equally the court must not ignore such factors. It must also consider any issues of law that arise in the case, and any special factor independent of the parties which may make trial in one forum rather than the other more appropriate such as the Cambridgeshire factor in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460.
So far as factors of law are concerned the fundamental point to my mind in this case is that this company has a twofold position.
On the one hand it was incorporated in England and so is subject to the winding up jurisdiction of the English court under the Insolvency Act 1986, and subject to the general jurisdiction of the English court under the Companies Act 1985. It has made all returns to the Companies Registry here that are required by United Kingdom law, has a registered office here and has regularly held its annual general meetings here, albeit for formal business only since the shares were acquired by Ladenimor and Intercomfinanz in 1979. Its accounts continue to be made up in accordance with the requirements of United Kingdom law as to the payment of dividends; in particular on the advice of English solicitors it abstained from paying dividends out of current trading profits at a time when it still had accumulated trading losses from past years.
On the other hand, the companys business has always been carried on in Argentina and nowhere else. It has a registered office in Argentina and complies with all requirements of Argentina law. It is common ground that under article 124 of the Argentine Company Law the company falls to be considered as a local company formed and registered in Argentina; it is thus subject to the winding up jurisdiction of the Argentine court. There is nothing surprising in this; if the roles were reversed and the company had been incorporated in Argentina but had always carried on all its business activities in England, it would have had to have had an office for service of process here and would have been subject to the winding up jurisdiction of the English court as well as to that of the Argentine court.
The case put in the petition is that it is alleged by Ladenimor (1) that the affairs of the company have been, are being and for as long as the same remain under the control of a Mr. Atilio Gibertoni (who, it is alleged, beneficially owns and controls Intercomfinanz) will be conducted in a manner which is unfairly prejudicial to the interests of Ladenimor and further or alternatively (2) that it is just and equitable that the company should be wound up. The matters of fact relied on in support of that case are almost entirely concerned with the management of the company in Argentina, and with what has happened in Argentina. It is said, for instance, that under Mr. Gibertonis control and by his procurement the following matters took place.
(i) The company entered into the business of cattle breeding in Argentina. The herds owned by the company have been mixed with the herds owned by other Argentine companies which Mr. Gibertoni controls, and all calves born to the mixed herds have been attributed to [*110] those other Argentine companies to the exclusion of the company. Thus the companys share of the profits of the cattle-breeding has been diverted to Mr. Gibertonis other companies. (ii) From 1984 to the present time the company has made loans to Argentine companies owned or controlled by Mr. Gibertoni which (a) were not made for the benefit of the company and detracted from the companys ability to develop its primary department store business or (b) fell short of the best commercial investment of any capital surplus to the companys working requirements then reasonably obtainable within Argentina and (c) were in several cases made in favour of companies with deteriorating balance sheets representing a risk of default. (iii) The company in October 1983 and again in 1987 acquired, from Argentine companies owned or controlled by Mr. Gibertoni and at vastly excessive prices, shares constituting a minority interest in another Argentine company, Timbo S.A., which was in the majority ownership and control of Mr. Gibertoni and (iv) when it was decided that because the company could not, under United Kingdom law, lawfully pay dividends out of its trading profits, loans should be made to their shareholders in proportion to their shareholdings, the amounts attributable to Ladenimors shares were not paid to Ladenimor but, it would seem, to a bank account in Lugano which it is said was under the control of Mr. Gibertoni.
It is also said that the Miserocchi family, who were Italian and control Ladenimor, have been excluded by Intercomfinanz/Mr. Gibertoni from all participation in the management of the company. It follows that all contemporary documents relating to the matters which will have to be investigated at the trial of the issues raised in the petition will have been written in Spanish, or possibly, in the case of correspondence with the Miserocchi's, in Italian and will have to be translated into English if the trial is in England. Moreover most of the witnesses will be Spanish speaking people who do not know English and will have to give evidence through interpreters if the trial is in England. That would necessarily make it more difficult for a judge to assess the truthfulness and honesty of witnesses. Mr. Briggs rightly pointed out that the extent to which oral evidence would be needed at the trial would depend on how far it was possible for the parties to agree the facts after exchange of witness statements. But he conceded that if the trial of the petition took place in England it would be in his words, a pretty ghastly trial.
There is a further minor factor that, as I understand the position, there have been other proceedings launched by Ladenimor or the Miserocchi family in relation to other Argentine companies, in which allegations similar to those raised in the petition have been made.
Mr. Briggs urges that the relationship between the shareholders in the company is governed by the memorandum and articles of association which are governed by English law. But the allegations in the petition do not depend on the construction of the memorandum and articles. He also seeks to place some reliance on the fact that when Intercomfinanz and Ladenimor bought the share capital of the company in 1979, they bought from an English bank, Grindley Brandt's, under a contract which is governed by English law. Nothing turns, however, on their obligations qua Grindley Brandt's. Though they of course knew that [*111] they were buying the share capital of a company incorporated in England, they also knew that it was a company whose whole business was in Argentina and was subject to Argentine law.
Harman J. plainly appreciated that the factual issues in dispute favoured trial in Argentina. He commented, ante, p. 83B, that there is no doubt that all the principal witnesses are Argentinian - an overstatement in that the Miserocchis are Italian. But in considering which was the more appropriate forum he seems to have put the factual issues to one side, and concentrated only on the fact that the remedies sought by Ladenimor by the petition were remedies made available by English statutes in respect of a company incorporated in England. Thus he says, at p. 83C, putting what he saw as the crucial question: Nonetheless, as it seems to me, the question must always be: 'How is this company properly to be regulated?' He then goes on, ante, p. 83:
When one is looking at a company incorporated in England, which has its life and being only by virtue of the act of the English law creating this artificial person, it is to my mind extremely difficult to see that it can be appropriate to hold that 'the forum' appropriate to decide that sort of matter is any forum other than the forum of the English court. It is, as Mr. Briggs submitted, in my view 'blindingly obvious what the answer to the question is once the question is posed.
With every respect to the judge, the answer is only blindingly obvious to him because of the premises which are built into the way he has posed his question. These are in part, as I read the judgment as a whole, his analogy of an application to the English court for directions in respect of an English trust. But more seriously in my judgment he has failed to keep in mind at this crucial stage in his judgment that this company is by Argentine law to be considered as a local, Argentinian company. I do not regard it as at all blindingly obvious that relief for the dishonest management of an Argentinian company in Argentina should be granted by a court other than the Argentinian court. That illustrates that the question formulated may by limiting the premises on which it is formulated dictate the answer. That is in my respectful view what the judge has done here, instead of concentrating on the question as put in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460.
One can test the matter further by an analogy. Let it be assumed, contrary to the fact, that the only relief claimed in the petition is a compulsory winding up order on just and equitable grounds. (I fully appreciate that that is very far from being Ladenimors preferred alternative, since a winding up order would not, without subsequent misfeasance proceedings, compensate Ladenimor for the wrongs which, if Ladenimor is right, it has suffered from Mr. Gibertonis management of the company). The evidence of Argentine law before this court is scanty but not disputed. It consists of an affidavit by a Dr. Bomchil, a partner in a Buenos Aires law firm who has been a practising lawyer in Argentina since 1973 and is one of the three directors of the company, [*112] and an affidavit by a Mr. Seitun, who was enrolled as an advocate in Argentina in 1985 and has for several years advised Mr. Gibertoni and a number of the companies referred to in the petition.
It appears from their evidence that under article 94(4) of the Argentine Company Law, a company can be wound up by the Argentine court if the fulfilment of the corporate object is impossible. Dr. Bomchil states that this applies in companies and partnerships where disagreement between the members on how the entitys business should be conducted has turned the fulfilment of its object into an impossible achievement. He continues:
In the case of companies there have been several cases in which the courts have considered the 'affectio societatis (the willingness of the shareholders to do business together) to be an essential element of the companys continued existence, particularly in companies with small numbers of shareholders, and consequently have ruled that a lack of the same justifies an order winding up the company.
That approach seems to bear resemblances to the position on just and equitable winding up petitions which the English courts reached by the decision of the House of Lords in In re Westbourne Galleries Ltd.  A.C. 360 after an earlier divergence of judicial opinion. Since Ladenimor has not troubled to put in any relevant evidence of Argentine law, I do not think that we can at this stage reject the evidence of Dr. Bomchil and Mr. Seitun because they have not spelt out in detail how the jurisprudence in Argentina has developed on a topic which the English courts, before the Westbourne Galleries case, found difficult.
Accordingly, accepting their uncontradicted evidence for present purposes, I would have no doubt that, if the only relief sought by the petitioner were a winding up of the company on just and equitable grounds, the Argentine court would be the court with which the action/dispute had the most real and substantial connection, and the Argentine court would be the court in which the case would be tried more suitably for the interests of all parties and for the ends of justice. This is perhaps underlined by the fact that the evidence raises a doubt whether a winding up order made against the company by the English court would be recognised by the Argentine courts; as the assets are in Argentina a winding up order made by the English court would be of very limited use if it was not recognised in Argentina.
The crucial factor in the present appeal is therefore that the primary relief which Ladenimor seeks is the order under section 459 and 461 of the Companies Act 1985 that Intercomfinanz purchase Ladenimors shares in the company at a price representing 49 per cent. of the value of the company and upon the basis that there be added back to the value of the company such loss as may be found to have been caused to it by the matters complained of in the petition.
It is clear from Mr. Seituns affidavit that a compulsory acquisition of Ladenimors shares such as that sought in the petition is not available in Argentina. What is available in Argentina is, as I understand the evidence, firstly a winding up order, which would lead to the realisation [*113] of the remaining assets of the company and distribution of the net proceeds among the shareholders, and secondly and additionally a claim for damages under article 54 of the Argentine Company Law.
In Mr. Seituns translation, article 54 provides:
The partners or controlling entities who fraudulently or with negligence cause damages to a company are jointly and severally liable to repair such damages, and cannot pretend to compensate with the profit that they may have generated in other business. The partner or controlling entity that applies funds of the company to his own use or business or that of third parties must bring to the company any resulting profit, but he will bear any loss. Any company activity that hiddenly procures objectives foreign to the company, that is just a way to violate the law, the public order or to frustrate rights of third parties, will be directly attributable to the members or controlling parties who made it possible, who will respond jointly and severally and without limitation for damages caused.
Dr. Bomchil says, and it has not been challenged, in relation to article 54:
Any shareholder may sue other shareholders based on this provision. In effect article 54 makes the controlling shareholders liable for a negligent or unlawful handling of the companys business.
We do not know how the Argentine jurisprudence has developed in relation to article 54, and Mr. Briggs submits that it is very far from clear that Ladenimor would be able to recover damages against Intercomfinanz under article 54 in respect of Ladenimors losses occasioned by the matters alleged in the petition, assuming them to be established. He says additionally that article 54 could not compensate Ladenimor for the loss it would suffer if as a result of the matters complained of in the petition there is a winding up order and a forced sale by the liquidator of the companys remaining assets. As I see it, any sale by a liquidator of the companys main asset, the department store, would be likely to be a sale of it as a going concern, unless a higher price could be achieved by a sale for redevelopment, and not a sale on a break-up. But a sale by the liquidator of the department store as a going concern might yet be a forced sale in that the liquidator might not be selling at the best time; one cannot usefully speculate.
Before considering how the claim for relief under section 459 of the Companies Act 1985, and that difference in that field between English and Argentinian relief, affects the application in this case of Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 principles I find it appropriate to consider the position under R.S.C., Ord. 11, since in the Spiliada case Lord Goff stated, at p. 480H, that in the Order 11 cases the burden of proof rests on the plaintiff whereas in the forum non conveniens cases that burden rests on the defendant.
Under the Companies Act 1948, the same statute contained both the provisions for the compulsory winding up of a company on just and [*114] equitable grounds on the petition of a contributory, and, in section 210, a provision rather more limited in its scope than the present section 459 of the Act of 1985 for relief against oppression. Applications under either head were governed by the same set of rules, the Companies (Winding up) Rules 1949 (S.I. 1949 No. 330 (L.4)). Those Rules required the petition to be served on the company, but do not appear to have required service on anyone else. The practice which developed - probably inevitably in view of the way section 210 was drafted - was that a petitioner, who wanted his shares to be bought from him under section 210 by, e.g., an oppressive majority, would ask in the one petition in the alternative for a purchase order under section 210 or a winding up order on just and equitable grounds.
Section 210 of the Act of 1948 was replaced by provisions in the Companies Act 1980 in the same terms as those now to be found in sections 459 and 461 of the Companies Act 1985. But while those provisions, relating to what are for convenience called unfair prejudice applications remain in a Companies Act, the Act of 1985, the statutory provisions for the winding up of companies, including the winding up of a solvent company on a contributorys petition on just and equitable grounds, are now to be found in a different statute, the Insolvency Act 1986. The consequence is that where, as here, a petitioner combines in one petition an application for relief for unfair prejudice under section 459 and an application for a winding up order on just and equitable grounds, there are two different sets of rules applicable to the alternative applications. These are the Companies (Unfair Prejudice Applications) Proceedings Rules 1986 and the Insolvency Rules 1986.
Both these sets of rules were made under the same statutory provision, namely section 411 of the Insolvency Act 1986 (as to which see section 461(6) of the Companies Act 1985 as amended), by the same rule-making authority, namely the Lord Chancellor with the concurrence of the Secretary of State after consulting the Insolvency Rules Committee referred to in section 413 of the Insolvency Act 1986. They were made within the same month, though not on the same day, and came into operation/force on the same date, 29 December 1986. But it is far from clear that they have the same effect in relation to Order 11.
In the Insolvency Rules 1986, which cover a very wide range of matters in detail, it is expressly provided in rule 12.12 that Order 11 and the corresponding County Court Rules 1981 do not apply in insolvency proceedings. Insolvency proceedings are defined in rule 13.7 as meaning any proceedings under the Insolvency Act 1986 or the Insolvency Rules. In lieu it is provided by rule 12.12(3):
Where for the purposes of insolvency proceedings any process or order of the court, or other document, is required to be served on a person who is not in England and Wales, the court may order service to be effected within such time, on such person, at such place and in such manner as it thinks fit
By contrast, in the Companies (Unfair Prejudice Applications) Proceedings Rules 1986, which are a very short set of rules, there is no reference to Order 11. But it is provided in rule 2(2): [*115]
Except so far as inconsistent with the Act and these Rules, the Rules of the Supreme Court and the practice of the High Court apply to proceedings under Part XVII of the Act in the High Court
with an appropriate alternative provision in relation to county courts. The Act here is the Companies Act 1985 and Part XVII of it includes sections 459 and 461.
Harman J. held that R.S.C., Ord. 11 nonetheless did not apply to an application under sections 459 and 461. He reached that conclusion for two reasons. One was that he held that the position was covered by R.S.C., Ord. 11, r. 1(2)(b) and service out of the jurisdiction without leave of the court was thereby permitted. Rule 1(2) provides:
Service of a writ out of the jurisdiction is permissible without the leave of the court provided that each claim made by the writ is either: - (a) or (b) a claim which by virtue of any other enactment - sc. other than the Civil Jurisdiction and Judgments Act 1982 - the High Court has power to hear and determine notwithstanding that the person against whom the claim is made is not within the jurisdiction of the court or that the wrongful act, neglect or default giving rise to the claim did not take place within its jurisdiction.
As to that, we have had the advantage, which Harman J. did not have, of research by counsel into the antecedents of the rule. It was first introduced in, for practical purposes, its present form, by paragraph 5 of the Rules of the Supreme Court (No. 2) Order 1963 (S.I. 1963 No. 1989 L. 16). It seems plain that the reason for its introduction was the enactment of the Civil Aviation (Eurocontrol) Act 1962. That Act was enacted to give effect to an international Convention concluded at Brussels and section 7(3) provides:
A court in any part of the United Kingdom shall have jurisdiction - (a) to hear and determine a claim for charges payable to the minister by virtue of regulations under section 4 of this Act, notwithstanding that the person against whom the claim is made is not resident within the jurisdiction of the court; (b) to hear and determine a claim against the organisation for damages in respect of any wrongful act, neglect or default, notwithstanding that that act, neglect or default did not take place within the jurisdiction of the court or that the organisation is not present within the jurisdiction of the court: Provided that a court shall not have jurisdiction by virtue of paragraph (b) of this subsection in respect of damage or injury sustained wholly within or over a country to which this Act does not extend.
That is the wording picked up in Ord. 11, r. 1(2)(b).
It appears, however, that rule 1(2)(b) may have been intended to have a wider scope than only applying where its actual wording has been used in a statute, as in section 7(3) of the Civil Aviation (Eurocontrol) Act 1962. There are some Acts, such as the Carriage by Air Act 1961 and the Carriage of Goods by Road Act 1965, which were enacted to [*116] make the terms of certain international Conventions to which the United Kingdom had acceded part of United Kingdom law. Actions brought under these Acts were at one time listed in Ord. 11, r. 1(1) as among the cases in which leave to serve out of the jurisdiction could be obtained under Order 11. But they are no longer so listed. It may have been thought that as the jurisdiction provisions of the Conventions, laying down in what courts proceedings can be brought, are now part of the statutes and have force in this country by virtue of the statutes, leave under Order 11 is not necessary because of Ord. 11, r. 1(2)(b) and so these statutes should not be listed in Ord. 11, r. 1(1).
But in my judgment to be within Ord. 11, r. 1(2)(b) an enactment must, if it does not use the precise wording in the rule, at least indicate on its face that it is expressly contemplating proceedings against persons who are not within the jurisdiction of the court or where the wrongful act, neglect or default giving rise to the claim did not take place within the jurisdiction. It is not enough, in my judgment, that the enactment, like the Companies Act 1985, gives a remedy in general cases - against other members of the company - without any express contemplation of a foreign element. Indeed if the judges reasoning on this point were right it would seem that any proceedings to claim an injunction could be brought, without leave under Order 11, against a person who is not within the jurisdiction of the court and could proceed to trial without any such leave because under an enactment, section 37 of the Supreme Court Act 1981, the High Court has power by order (whether interlocutory or final) to grant an injunction in all cases in which it appears to the court to be just and convenient to do so.
Harman J.s alternative reason for holding that an application under Order 11 was not necessary where it was desired to serve a petition under section 459 of the Companies Act 1985 on a person who was not within the jurisdiction of the court was founded on rule 2(2) of the Companies (Unfair Prejudice Applications) Proceedings Rules 1986. He considered that it was inconsistent with the Companies Act 1985 and those Rules that Order 11 should apply to such a petition. He considered in particular that service was comprehensively dealt with by rule 4 of the Rules of 1986, which required service of a petition under section 459 of the Act of 1985 on every respondent named in the petition as well as on the company. He considered that it would be curious if the rule mandatorily obliged the petitioner to serve respondents named in the petition, but yet the petitioner had to get leave to effect such service; he concluded that there would be an inevitable conflict between the two rules.
I am afraid that I do not agree. It is a commonplace that a plaintiff has to serve all the defendants named in his proceedings but if defendants are not within the jurisdiction of this court he has to get leave under Order 11 to do so, so that it can be tested whether the foreigner should be brought before this court. I do not therefore see any inconsistency or inevitable conflict.
I do not know why it was thought fit to disapply Order 11 in the Insolvency Rules 1986 and not, at any rate in plain terms, in the Companies (Unfair Prejudice Applications) Proceedings Rules 1986. [*117]
Indeed I do not know if anyone ever gave conscious attention to that question. But the provision in rule 2(2) of those Rules and the practice of the High Court applicable to proceedings under Part XVII of the Companies Act 1985 in the High Court has the effect, in my judgment, that Ladenimor needed to obtain leave under Order 11 before it could serve the petition on Intercomfinanz in so far as the petition claimed relief against Intercomfinanz under sections 459 and 461 of the Act of 1985.
Consequently the burden of showing that relief should be sought here rather than in Argentina rests on Ladenimor.
Against this background, somewhat lengthily set out, my view is that Harman J. misdirected himself as to the nature of these English proceedings by petition in the Companies Court and partly for that reason asked himself the wrong question at the crucial stage in his judgment, ante, p. 83C. That led him directly to the answer to the answer he gave to the summons before him. He also misdirected himself in relation to Order 11, but since he did not decide the case on onus that was not material to his conclusion.
My own view is that in all the circumstances, and even in the light of the claim for relief under sections 459 and 461 of the Companies Act 1985, the Argentine court is the court with which the dispute has the most real and substantial connection. Even so, it remains to consider whether Ladenimor can nonetheless show that the loss of the procedural benefit in this country of the availability as a form of relief of a purchase order under sections 459 and 461 of the Act of 1985 is so serious that leave to proceed in this country should be given and the service under Order 11 should be allowed to stand because in the absence of that form of relief substantial justice will not be done in the appropriate forum, viz. Argentina: see Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, 482F.
Protecting ordinary shareholders against aggression by the majority has always been a problem in company law. See the turgid history of the minority shareholders action, apart from the problems of a just and equitable winding up petition before In re Westbourne Galleries Ltd.  A.C. 360. Section 210 of the Companies Act 1948 was therefore when introduced a significant step forward. But in England, as opposed to Scotland, difficulty was experienced in applying the section. Jenkins L.J. recorded in In re H.R. Harmer Ltd.  1 W.L.R. 62, 75, that there was no English case before the Harmer case on which an order had been made under the section. He then referred to Scottish decisions, including a decision in the House of Lords in Scottish Co-operative Wholesale Society Ltd. v. Meyer  A.C. 324, which had pointed the way forward. Even so, however, for several years before the enactment of the Companies Act 1980 which introduced the provisions, now to be found in sections 459 and 461 of the Companies Act 1985, it was generally known that more extensive provisions than section 210 of the Act of 1948 had been introduced by legislation in other English speaking jurisdictions where the company law had been derived from English company law and, ultimately, from the Companies Act 1862 (25 [*118] & 26 Vict. c. 89). I therefore regard sections 459 and 461 of the Act of 1985 as very desirable safeguards for shareholders against a very real wrong.
In Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, 483, Lord Goff suggested that in some cases it may be possible to reconcile the procedural advantages available to one party under one of the competing jurisdictions with the closer ties between the case and the other jurisdiction by imposing conditions on a grant of leave to bring proceedings here or on a stay of proceedings here. In the present case, however, I cannot see any possible reconciliation; conditions imposed by the English court cannot give the Argentine court jurisdiction to make a purchase order against Intercomfinanz of Ladenimors shares.
It is, therefore, a question of weighing the extent by which the remedy for oppression available in England under section 459 of the Act of 1985 is better than the combined remedies of a winding up order and an award of damages under Argentine law against the very close ties between the case and Argentina and the huge advantages of having the trial in Argentina. I personally regard the remedy under section 459 as significantly preferable to the combination of remedies in Argentina. Indeed, it was because the remedies previously available in England, which would have included a combination of a winding up order and subsequent misfeasance proceedings in the liquidation, were unsatisfactory that the predecessor of sections 459 and 461 of the Act of 1985 was enacted in the Companies Act 1980. I therefore personally find the balancing exercise difficult. I could not say that the conclusion the judge reached, by whatever route, was, as a conclusion, obviously wrong.
Is the result that Ladenimor has failed to discharge the onus on it in an Order 11 case of showing not merely that England is the appropriate forum for the trial but that this is clearly so? (See Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460, 481E.) Or is the result that for this court to decide the balancing exercise in favour of Argentina would simply be for this court to form a different view of the weight to be given to the factors which the judge had in mind and so would not be a permissible course for an appellate court? (See the Spiliada case, at p. 486C-D.)
After some hesitation, I have formed the view that the latter is the correct assessment of the position, and that, though I disagree with the route by which the judge reached his conclusion, this court cannot interfere with that conclusion.
Accordingly, I would dismiss this appeal.
STOCKER L.J. I have had the benefit of reading in draft the judgments of Dillon and Bingham L.JJ. They reach different conclusions, although in agreement that in some respects the judge seems to have incorrectly applied the principles enunciated in the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460. Both are in agreement with regard to the construction of R.S.C., Ord. 11, r. 1(2)(b) and of the Insolvency Rules 1986 and the Companies (Unfair [*119] Prejudice Applications) Proceedings Rules 1986, and I do not propose in this judgment to add any comment of my own on these matters, save to say that I agree with their views.
I therefore confine this judgment to the question whether or not the judge correctly applied the principles of the Spiliada case to the facts of this case, and if he did not whether this court is entitled to interfere with the judges exercise of his discretion. It seems to me that it was mainly upon the resolution of the latter question that Dillon and Bingham L.JJ. reached different conclusions as to the outcome of this appeal.
The basic principle enunciated by Lord Goff of Chieveley in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 appears at p. 476:
In my opinion, having regard to the authorities (including in particular the Scottish authorities), the law can at present be summarised as follows. (a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
As to the proper method by which a court should apply this basic principle in cases of stay of proceedings, Lord Goff, at p. 478A, cited Lord Keith of Kinkel in The Abidin Daver  A.C. 398, 415: the 'natural forum' as being 'that with which the action had the most real and substantial connection.' Lord Goff continued  A.C. 460, 478:
So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction and the places where the parties respectively reside or carry on business. If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction
These are principles of general application.
The questions, as it seems to me, which arise on this appeal are: (i) Did the judge correctly apply these principles in reaching his conclusion? (ii) If he did not, was his discretion correctly exercised nonetheless? (iii) If it was not, is this court entitled to substitute its own discretion for that of the judge? (iv) If so, what is the consequence of the exercise of that discretion by this court? [*120]
The first question involves examination of the approach adopted by the judge. He cites Lord Goffs dictum already cited that the natural forum [is] that with which the action had the most real and substantial connection, and his further statement It is for connecting factors that the court must first look. Thus far, it would appear that the judge had the Spiliada approach to the problem in mind. However, he does not then proceed to consider the connecting factors. In fact, he goes on to draw a distinction between the type of action with which the Spiliada case was concerned and non-adversarial proceedings in the Chancery Division, and seems to have found that different principles may be appropriate in such circumstances, for he says, ante, p. 82:
Here in this present case, again, one has a matter which is very far from the formulations adopted by Lord Goff. Here one has an application by a member of an English company, pursuant to an express right given by an English statute, in respect of a matter where the English law gives a particular remedy by section 461 of the Companies Act 1985 as a matter of discretion, enabling it to effect what Mr. Briggs rather neatly described as 'corporate divorce.' The order made requires a buy-out by one side of the other, and it may be by the petitioner of the respondent, or by the respondent of the petitioner, or it may in many cases be by the company of the petitioner. That will alter the future conduct of the affairs of the company, which will affect many people other than the two major protagonists in their future rights and entitlements. All such matters are plainly matters where the English law applies to the English artificial entity which has been created. None of that has much resemblance to a lis inter partes in the Commercial Court.
Harman J. has not at that stage considered the connecting factors in deciding what is the most appropriate forum, but having posed this question to himself, answers it by reference to the question what is this action? and he answers his question as follows, ante, pp. 82-83:
I have, therefore, to say: what is the appropriate forum for the trial of this action? To answer that question I have to pose another: what is this action? This action is a petition, in my judgment, for relief against the conduct of the companys business in a manner unfairly prejudicial to some part at least of its members, including Ladenimor. The court will hear a whole series of instances of things that have been done, acts that have been committed, and it will have to decide whether the allegation that this or that was done is true or false. But in the end what the court, in my judgment, has to do in these matters is reach an overall conclusion: has Ladenimor suffered by reason of the conduct of the companys affairs in such a manner as to be unfairly prejudicial to it? That is a general conclusion, but it is the essential conclusion and the foundation for the jurisdiction.
This answer seems to me to beg the question, and I agree with the comment of Bingham L.J. that the question the judge posed to himself cannot properly be answered by reference to the relief claimed. This [*121] seems to be an error compounded by the fact that I cannot agree that the proceedings with which this court is concerned are of non-adversarial type which the judge suggests they are. The whole issues which the court of trial will have to resolve turn upon the resolution of disputed issues of fact requiring lengthy and complicated investigation of these facts. The issue before the parties, so far as the buy-out relief under sections 459 and 461 of the Companies Act 1985 is concerned is, at least in this case, essentially adversarial, and the Spiliada principles are very relevant and the starting point ought to have been consideration of the connecting factors in order to ascertain the most appropriate forum. The judge then makes a short, if not cursory, reference to the fact that the issues before the court at trial will involve investigation of a whole series of acts committed in Argentina, but does not otherwise at this stage analyse what will be involved in such an investigation. Indeed, he seems to discount the difficulties involved in this process. He then poses to himself the question How is this company properly to be regulated? a question which seems to me to pre-empt the conclusion, having regard to the judges general approach to the problem. He answers the question as follows, ante, p. 83:
When one is looking at a company incorporated in England, which has its life and being only by virtue of the act of the English law creating this artificial person, it is to my mind extremely difficult to see that it can be appropriate to hold that 'the forum' appropriate to decide that sort of matter is any forum other than the forum of the English court. It is, as Mr. Briggs submitted, in my view 'blindingly obvious what the answer to the question is once the question is posed. when I am asked, to stay a petition and drive from the English seat of justice a person entitled by English statute to a remedy which it is conceded is not available anywhere else, it is impossible, that being a relationship governed by English law, for one to come to a conclusion that another forum will be the better or the most appropriate forum.
In my view, the approach of the judge with regard to the first stage laid down by Lord Goff in the Spiliada case was seriously flawed.
I will not set out in detail the multifarious issues which will arise, and which point to a very strong connection with Argentina. They appear from the terms of the petition, which has been set out in the judgment of Dillon L.J. All the witnesses will have to give their evidence in Spanish. All the documents and relevant books of account, not only of this company, but other companies, the consideration of which may be involved, are in Argentina. The evidence of the documents will require them to be translated. The relevant events all took place in Argentina. The difficulties of a trial in this country are such that it is not easy to see how such a trial is to be conducted. At the very least, it will present a formidable task for a trial judge.
For these reasons, I would, without hesitation, reach the conclusion that at the end of the first stages of the Spiliada test the appropriate forum would be Argentina. At this point the second stage of the Spiliada test fell to be considered, that is to say that even if the [*122] connecting factors indicate that the appropriate forum would be Argentina, if there are circumstances by reason of which justice requires that a stay should nevertheless not be granted, i.e. that it can be established by cogent evidence that the plaintiff will not obtain justice in a foreign jurisdiction, then a stay should not be granted. This is an overriding consideration, so that even if the judge is in error with regard to the appropriate forum, he will nevertheless have reached the correct conclusion in the exercise of his discretion if he made a reasonable appraisal of the factors and drew a conclusion from that appraisal which could properly be supported. The judge did not specifically consider this aspect of the matter as the second stage of the Spiliada test. He expressed his conclusion in these terms, ante, p. 85:
The result of that would be that Ladenimor could not obtain, according to the undoubted and uncontroverted evidence before me, the remedy which it primarily seeks, the corporate divorce or buy-out. It could, perhaps, obtain a winding up on grounds that seem not at all dissimilar to a just and equitable winding up, but the petition is quite plainly aimed, and Mr. Briggs asserted justifiably that it was, primarily at obtaining a buy-out on the proper basis of valuation, giving Ladenimor all the value which it was entitled to. That, in Argentina, cannot be obtained. That, by English standards applying to this English company, is a right that Parliament has granted. That right I would be defeating if I were to grant a stay in this case.
In my view the proper test is whether or not Ladenimor can obtain justice in Argentina. There is no requirement that it should be able to obtain the identical relief. Lord Goff of Chieveley said in de Dampierre v. de Dampierre  A.C. 92, 110:
I find it impossible to conclude that, objectively speaking, justice would not be done if the wife was compelled to pursue her remedy for financial provision under such a regime in the courts of a country which provide, most plainly, the natural forum for the resolution of this matrimonial dispute.
It is true that the Argentine courts cannot make a buy-out order under section 459 of the Companies Act 1985. This is not, in my view, decisive of the matter as the judge considered that it was. The judge did not consider whether the remedy - damages - was such as to provide Ladenimor with substantial justice, even though the cause of action by which this was to be obtained differed from the statutory provision available in this country. The Argentine courts can make a winding up order on the equivalent of a just and equitable ground, and such an order might be advantageous to Ladenimor since a winding up order obtained in this country might not be recognised in Argentina. Argentine law with regard to the scope of the remedy in damages was uncontroverted for the purpose of this application before the court, and would seem to be apt to include compensation for any loss sustained through the fact of winding up, and consequent sale of the assets or of the business as a going concern if this was due to the conduct of the [*123] majority shareholder. It was not, in my mind, established that the remedy available in Argentina was significantly of less value than the remedy available in this country under section 459 of the Act of 1985.
Thus, the question for this court is whether or not the discretion exercised by the judge should be set aside on established grounds, since it cannot this court cannot interfere or exercise its own discretion afresh. The judge did not correctly apply the Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 test in order to ascertain the appropriate forum, and in my view, in failing to do so, he reached a manifestly wrong conclusion. He did not apply the correct test as to whether or not substantial justice could be obtained in Argentina. These matters seem to me to be so fundamental to the proper exercise of discretion that this court is entitled to set that discretion aside and exercise its own discretion. In the exercise of that discretion, I would, for my part, grant a stay. I do so for the reasons I have given, and for those expressed by Bingham L.J.
Accordingly, I would allow this appeal.
BINGHAM L.J. On the construction of R.S.C., Ord. 11, r. 1(2)(b), the Insolvency Rules 1986 and the Companies (Unfair Prejudice Applications) Proceedings Rules 1986 I am in complete agreement with the judgment of Dillon L.J., which I have had the benefit of reading in draft. Although we are differing from the judge, there is nothing I can usefully add. It follows that our approach to onus must also differ from that of the judge. But it is common ground that the outcome of this appeal cannot turn on fine questions of onus. The judge did not rule against Intercomfinanz because it had failed to discharge the onus which (as he held) lay on it, but because the greater appropriateness of the English forum was in his judgment blindingly obvious. The substantial issue on the appeal is whether that judgment is shown to be wrong. I am therefore content to approach the case as if the burden lay on Intercomfinanz, although in truth it lay on Ladenimor.
Before applying the Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 test, the judge posed the question: What is this action? That was a very pertinent question. One cannot decide where a matter should be most appropriately and justly tried without being clear what is to be tried. But I do not think the question should be answered simply by reference to the relief claimed, since in an English action the relief claimed will almost inevitably be framed in English terms, particularly where it is statutory. An English pleader will not claim triple damages or dommage-intŽrt, appropriate as such relief may be elsewhere. Thus when the judge answered the question by quoting part of the language of section 459 of the Companies Act 1985 he was unconsciously building in a bias towards the choice of an English forum.
I regard this case as one in which the minority shareholder complains that the majority shareholder, through Mr. Gibertoni, has abused its power as majority shareholder and caused the company to pursue objects outside its corporate objects, to lend money to and invest in companies connected with Mr. Gibertoni, to divert money which should have been advanced to the minority shareholder and to deny board [*124] representation to the minority shareholder, in each case to the prejudice of the company and the minority shareholder. The minority shareholder seeks an order that the majority shareholder buy its shares at a price uplifted to make good the depreciation which the majority shareholders conduct has caused to the actual value of the shares. Thus the minority shareholder seeks severance of its relations with the majority shareholder and the company with full compensation for the majority shareholders wrongdoing. Alternatively, the minority shareholder seeks an order that the company be wound up. This is all relief which the English court can give if the minority shareholder makes good its complaints.
It is no doubt true, as the judge pointed out, that the Spiliada test must be applied having due regard to the nature of the proceedings in question, and in Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 itself the House may well have had ordinary adversarial litigation primarily in mind because that is what it was dealing with and what most of the antecedent cases were concerned with. The principles laid down by Lord Goff in the Spiliada case were, however, entirely general in their terms and de Dampierre v. de Dampierre  A.C. 92 makes plain that their application is not limited to ordinary adversarial litigation. The essential test remains the same, as the judge recognised when he set out to apply it.
The starting point must be the basic principle formulated by Lord Goff in the Spiliada case  A.C. 460, 476:
that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
The words I have emphasised make clear, as does the reference to justice, that a broad overall view must be taken: the primary task is not to decide which forum is advantageous or disadvantageous to any particular party. The court should look first to see what factors there are, taking this broad overall view, which point in the direction of another forum (see p. 477G); at that stage it is connecting factors (including convenience, expense, availability of witnesses, governing law, place of residence and place of business) which must be considered: see p. 478A-B. If it is shown that there is some other available forum which prima facie is clearly more appropriate for the trial of the action a stay will ordinarily be granted unless on a consideration of all the circumstances justice requires that a stay should not be granted: see p. 478C-D. If a plaintiff can show that he will not obtain justice in the foreign jurisdiction, that is of course a powerful reason for refusing a stay (p. 478D), since in such a case the foreign forum can scarcely be a more suitable forum for the interests of all the parties and for the ends of justice.
It is common ground that the factors connecting this action with the Argentine forum are strong and obvious. All the economic, logistical and management considerations which loom large in any substantial [*125] action point strongly towards Argentina. The company carried on business, and the acts complained of were done, there not here. The witnesses are there, not here, and in the main speak Spanish, not English, a significant matter in an action where credibility is very much in issue. The documents and records are there, not here, and are in Spanish, not English. The court there would bring to the evaluation of factual evidence a familiarity with local conditions which a court here would necessarily lack. Expert evidence would be needed here which would not be needed there. The court there would be much better placed to assess the significance of related proceedings which have already taken place there. While an English court called on to try this case would no doubt do so as best it could, the difficulties would in my view be such as to make the reliability of the outcome problematical.
The factor which is relied on as connecting this action with England is the incorporation of the company here. This has certain formal consequences inasmuch as it has a registered office here, annual meetings are held here, the companys local accounts are translated into sterling and the minute book of general meetings is kept here. It has also had certain practical consequences: the evidence shows that legal advice was taken in London to ensure that English company law rules were not infringed when a distribution to shareholders was to be made. But the point which Mr. Briggs, for Ladenimor, stressed in argument, and which I think impressed the judge, was that the relationship of the three parties involved in this action (Ladenimor, Intercomfinanz and the company) is by virtue of the companys English corporation an English law relationship. The companys constitution, contained in its memorandum and articles, is framed with reference to English company law, which accordingly governs the rights and obligations of the parties among themselves. Now, when it is alleged that the relationship has broken down, the English court is said to be the obvious forum to resolve the dispute as the forum most familiar with the governing law and practice.
These are not negligible considerations. The only question is whether they can bear the preponderant weight which the judge gave to them. I am of opinion that they cannot and for two main reasons: (1) While we know little or nothing of the history of the company before 1979, it seems highly improbable that the present shareholders, if promoting the company today (or in 1979) would choose or have chosen to incorporate it in England. It is hard to think of a reason why they should wish to incorporate the company in a place so far removed geographically, economically and culturally from its commercial base and management. If this is so, the English incorporation of the company may fairly be regarded as an anomalous historical survival. The situation is not closely analogous with that in which parties to a contract deliberately choose to subject their bargain to the provisions of a given law. (2) In parallel with its somewhat ghostly legal existence in England the company has a legal, in addition to a robust corporeal, existence in Argentina. That the effect of Argentine law is to treat the company as if it were an Argentine corporation is no longer in controversy. Thus while English law treats the company as English, Argentine law treats the company as [*126] Argentine. In a case where nothing appears to turn on the details of the companys constitution, the ultra vires rule being apparently the same in both jurisdictions, these considerations seem to me to deprive the companys English incorporation of almost all the force it might otherwise have.
At the first stage of the Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 test, I reach a conclusion almost as strong as that of the judge but to the opposite effect. It seems to me clear on the evidence that the Argentine court has jurisdiction to entertain this action (although the relief it can give is different, as considered below) and that it is the forum in which the action may be tried much more suitably for the interests of all the parties and the ends of justice.
The judge was powerfully impressed by the fact that the Argentine court cannot afford the buy-out relief claimed by the minority shareholder under section 459 of the Companies Act 1985. As I understand him, he regarded this as a very weighty factor connecting this action with the English forum. I think this matter more properly falls for consideration at the second stage of the Spiliada test when (the greater appropriateness of another forum having been established) it is necessary to consider whether justice requires that a stay should not be granted and whether it appears that one party cannot obtain justice in the foreign forum. In applying this test it cannot of itself be enough that some difference exists between English law or procedure and those of the foreign forum because such will always be the case (and was, for example, in de Dampierre v. de Dampierre  A.C. 92). The test must be applied as one of substance, not legal technicality.
If I have correctly characterised the substance of this action, it seems to me exaggerated to hold that the minority shareholder cannot obtain substantial justice in Argentina. If successful, it will not obtain an order for purchase of its shares by the majority shareholder at a price uplifted to take account of loss caused by the majority shareholders conduct. Uncontradicted evidence of Argentine law does, however, establish that the minority shareholder may if successful recover against the majority shareholder damages for loss caused by the majority shareholders deceit or negligence. The majority shareholder is directly liable for negligent or unlawful handling of the companys business. There is nothing in the evidence to suggest that the damages recoverable by the minority shareholder would not include compensation for loss sustained on sale of the companys business or assets during winding up, even though the minority shareholder had asked for the company to be wound up, if the request for winding up were shown to be a direct result of the majority shareholders conduct. Nor, as it seems to me, is there evidence to support the judges proposition (however true in this country) that sale of a companys assets by a liquidator would be likely to produce a depreciated price in Argentina; much might turn on an Argentine liquidators power to continue the companys business until it could be profitably sold as a going concern. On the facts of this case, I can see no reason why the relief obtainable in England is significantly better than the relief obtainable in Argentina and the evidence falls far short of showing that it would be unjust to confine the majority shareholder to [*127] its remedies in Argentina. The alternative relief sought by the minority shareholder in its petition, the winding up of the company, may be granted in either forum; the only difference is that an English order will be ineffective in Argentina (where it matters) whereas an Argentine order will be effective there. And an Argentine winding up order will of course sever the minority shareholders relations with the majority shareholder and the company.
Assuming, as the judge held, that the onus of showing that a stay should be granted lay on the majority shareholder, I consider that it has comfortably discharged that onus. But the Court of Appeal must be very slow to interfere, and to reach a different conclusion is not good ground for doing so in a discretionary field unless the judges exercise of discretion can be impugned on the familiar grounds. I consider it can. In posing as the question to be answered How is this company properly to be regulated?, the judge did not direct himself in accordance with Spiliada Maritime Corporation v. Cansulex Ltd.  A.C. 460 and moreover put the question in a way which pre-empted the answer, since he plainly regarded the Spiliada test as not altogether apt where a case fell within the supervisory jurisdiction of the Companies Court or the Chancery Division. In my view, this is in all essentials adversarial litigation (as evidenced by the fact that the company has not been represented before us) and the judge erred in regarding it otherwise, as he did in finding any analogy with the administration of a trust. I do not think the judge attempted to weigh (although he did briefly mention) the factors connecting this action with Argentina, nor did he pay due regard to the companys legal as well as factual existence in Argentina. He did not adequately consider how, in substance, the relief available to the minority shareholder in Argentina fell short of the relief available here, and made no mention of the minority shareholders right to damages, a very important feature of the relief available in Argentina. In short, the judge clearly felt that only the Companies Court could be the proper forum in which to resolve a dispute of this kind involving an English company. That approach may be understandable, but it is not in my view the approach laid down by the Spiliada case  A.C. 460.
I accordingly conclude that Harman J. misdirected himself and that it is for this court to exercise its discretion afresh. Doing so, I would allow the appeal and grant Intercomfinanz the stay it seeks.
Appeal allowed with costs.
Proceedings under petition stayed.
Leave to appeal.