Immovable property in the United Kingdom

Article 22(1) gives international jurisdiction to the courts of a Lugano State, but not to the courts for a particular place within that Lugano State. Accordingly, where the land in question is within the United Kingdom, the Convention gives exclusive jurisdiction only to the courts of the United Kingdom. It is therefore necessary, as a matter of internal United Kingdom law, to allocate national jurisdiction to the separate law districts which comprise the United Kingdom. The rule of internal law allocates jurisdiction to the part of the United Kingdom in which the land is situated.

Immovable property in a non-Lugano State

The discussion of how the Lugano Convention might still make a contribution to the issues which arise when proceedings have as their object rights in rem in or tenancies of immovable property in a non-Lugano State will be found below.^[1] The apparent silence of the Convention (and for that matter, the Regulation), on this issue must proceed from the fact that the States party to the Convention cannot lay down the law of jurisdiction for a non-Lugano State. That being said, if an English court has no jurisdiction to adjudicate in proceedings which have as their object the tenancy of land which is visible from the white cliffs of Dover, it would be most surprising to be told that the result was otherwise, and they did have jurisdiction and could be required to adjudicate, in proceedings which sought to enforce legal title to land in Red China or tenancies in Darkest Peru.

Companies with their seat in a Lugano State: Article 22(2)

Article 22 of the Convention goes on to provide that:

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

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

Article 22(2) applies to certain proceedings brought in respect of companies and partnerships; it may also extend to other unincorporated associations such as clubs. But the question of which proceedings fall within its scope is not as plain as may appear at first sight. Though the original version of this provision in the Brussels Convention had not been worded quite as clearly as the Lugano Convention (and Regulation) now is, the English courts had held that it required the validity of the decisions, rather than just the decisions themselves, of the company’s organs to form the object of the action brought, which in turn may have required the principal subject matter of the proceedings to be identified. However that may have been, the position is now clarified by the insertion of the words ‘the validity of’ before the reference to ‘the decisions of their organs’.

It follows that if the proceedings are founded on a dispute about the constitutionality or regularity of internal company procedures, such as the validity or invalidity of the appointment of directors, the composition of the board and so forth, Article 22(2) should be engaged. Issues of internal corporate management and governance are most sensibly determined by the courts of the seat applying their own company law. No other court is likely to be able to make a good job of what may be a complicated legal task; no other court is likely to be able to order or impose the remedy which will meet the needs of the case. By contrast, the Article does not apply where the legal proceedings which are brought against the corporation concede that the corporation had the legal power to make the decision of which complaint is made, with the consequence that the validity of its decision is not in question, even though complaint is made that the company, or a corporate officer,^[2] should not have exercised its powers in the way in which it did. It has been held that proceedings which seek to challenge or establish the legality of the composition of the board of directors fall within the Article, for this is an inevitable precondition to the validity of the decision of this particular corporate organ; and even if this were to involve a slight loosening of the interpretation given to Article 22(2), it is rational that such issues of company law should be resolved by the courts and in accordance with the law of the seat of the company. So for example, proceedings which seek an order directing a company to convene a shareholders’ meeting are within the Article. The law, at this point, probably reflects the sense that, in the legal systems of most States, matters of corporate indoor management and general corporate constitutionality belong in, and only in, the courts of the seat.

• [1] In fact what is said in this paragraph applies equally to the other rules of Art. 22, but at this point it is said once, not five times. 2 Schlosser [1979] OJ C59/71, [162]; see also Phillips v Symes [2002] 1 WLR 853, whether the partnership was created formally or informally, and as including the winding-up of its affairs. 3 Newtherapeutics Ltd v Kat: [1992] Ch 226. But in Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah [1996] 1 Lloyd's Rep 7, the Court of Appeal doubted the significance of the distinction drawn by Knox J in Newtherapeutics Ltd v Katz. Stuart-Smith LJ had expressed the view that, even if it was the validity of the decisions which was in issue, this expression should be interpreted so as to include within it ‘consideration of the meaning and effect of decisions of the relevant organs’. See also FKI Engineering Ltd v Dewind Holdings Ltd [2007] EWHC 72 (Comm), [2007] ILPr 17, affirmed on other grounds, [2008] EWCA Civ 316, [2009] 1 All ER (Comm) 118. 4 The apparent interchangeability of ‘object’ and ‘subject’ is disconcerting but not significant.
• [2] Chaudhary v Shatter [2009] EWCA Civ 1176, [2010] 2 All ER 1031. 2 C-372/07 Hassett v South Eastern Health Board [2008] ECR 1-7403. 3 Speed Investments Ltd v Formula One Holdings Ltd (No 2) [2004] EWCA Civ 1512, [2005] 1 WLR 1936; cf Marriott v Fresson [2020] EWHC 2515 (Ch) (proceedings to enforce a contract between shareholders for the transfer of shares not within the article). 4 Re Zavarco Pic [2015] EWHC 1899 (Ch), [2016] Ch 128. 5 [2010] EWCA Civ 390, [2012] QB 176. Applied in Depfa Bank Pic v Provincia di Pisa [2010] EWHC 1148 (Comm), [2010] ILPr 930; UBS AG v Komrnunale IVasserwerke Leipzig GmbH [2010] EWHC 2566 (Comm), [2010] 2 CLC 499. 6 C-144/10, [2011] ECR 1-3961. 7 It also confirmed, entirely correctly, that the fact that proceedings had been started in the German court furnished no basis for a contention that the English court should stay its proceedings while the German court made a reference to the European Court. See also Depfa Bank Pic v Provincia di Pisa [2012] EWHC 687 (Comm); [2012] ILPr 458.