Commercial Court refuses to stay claim against Barclays

30/01/20

SCOR, one of the world’s largest reinsurance companies, was today successful in resisting Barclays’ application to stay a Commercial Court claim brought against the bank on the basis that the claim is “related” to criminal proceedings brought in Paris.

The background

SCOR’s claim arises out of an unsolicited offer in August 2018 made by Covéa, another large French insurance group, to acquire a majority shareholding in SCOR. Covéa’s CEO, Mr Derez, was also a director of SCOR. Barclays was engaged by Covéa as a financial advisor in connection with the offer. SCOR alleges that Mr Derez, in his capacity as a director of SCOR, acquired confidential and highly sensitive information regarding SCOR’s financial position, which Mr Derez passed on to Barclays to support its work on Covéa’s intended acquisition.

That gave rise to several sets of proceedings. In January 2019, SCOR commenced criminal proceedings in France against Mr Derez and Covéa, which included an ancillary claim for compensation. Later on the same day, it commenced a claim in the Commercial Court in England against Barclays for breach of confidence. In February 2019, it started civil proceedings in France against Mr Derez and Covéa.

Barclays applied to stay the Commercial Court proceedings under Article 30 of the Recast Brussels Regulation, on the basis that those proceedings were related to the French criminal proceedings (it being common ground that the French court was first seised).

The decision

Christopher Hancock QC (sitting as a Deputy High Court Judge) today rejected Barclays’ application for a stay.

In determining whether two actions are “related”, the judgment calls attention to an apparent tension between two recent Court of Appeal authorities, Privatbank v Kolomoisky [2019] EWCA Civ 1709 and Euroeco Fuels v Sczezin and Swinoujscie Seaports [2019] EWCA Civ 1932. According to Privatbank, it may be expedient for two actions to be heard together notwithstanding that they cannot in fact be consolidated. However, the subsequent Euroeco decision appears to suggest that actions are related only where it is actually possible for them to be heard and determined together. The Court proceeded on the assumption that Privatbank laid down the correct test. On that basis, the Court held that the actions were “related” for the purposes of Article 30, in the sense that it would hypothetically be desirable to try the actions together to avoid the risk of inconsistent judgments – even though the actions could not actually be consolidated.

Notwithstanding that the actions were related, the Court declined to order a stay as a matter of discretion. Points that weighed against a stay included:

1. In circumstances where the actions could not be consolidated, the starting-point (based on Privatbank) was that the bank needed to show “some strong countervailing factor” to justify a stay.
2. The fact that the first set of proceedings was criminal in nature (and included only an adjunct civil claim) weighed against a stay, based on dicta of Lord Bingham in Haji-Ioannou v Frangos [1999] 2 Lloyd’s Rep. 337.
3. Although overlapping issues arose in the two sets of proceedings, the proceedings could not be said to be closely related: in particular, a different standard of proof applied in the French and English proceedings.

The case will be of particular interest to practitioners grappling with the test of relatedness in the light of Privatbank and Euroeco, and with those considering the relationship between civil and criminal proceedings arising out of the same subject matter.

The judgment is here.