Matthew Hardwick KC success in Mittal jurisdiction battle
In an important success for the liquidators of Isle of Man company Global Steel Holdings Limited (in Liquidation) (“GSHL”), Matthew Hardwick KC (appearing with Christopher Pease, James Petkovic and Andre McKenzie of Harney Westwood & Riegels (BVI)) resisted the application of Pramod Mittal (brother of steel magnate Lakshmi Mittal) challenging the jurisdiction of the BVI Commercial Court in relation to this USD358m claim.
The claim arises out what the liquidators believe to be a vast asset stripping scheme orchestrated by Mr Mittal between 2008 and 2021: that as GSHL faced mounting creditor pressure arising out of a series of failed business ventures in Bulgaria, Montenegro and Nigeria, Mr Mittal removed hundreds of millions of dollars’ worth of assets and transferred them to different entities higher up within the structure of a family trust. On 26 July 2023 Mangatal J. (in the BVI) (1) granted a USD358m worldwide freezing order (and receivership order) in order to preserve and protect GSHL’s assets; and (2) permitted service of the claim on Mr Mittal at his family home in London. On 27 July 2023 Butcher J. made a mirror freezing order in respect of Mr Mittal in England.
Mr Mittal (and 3 co-defendant BVI companies) challenged the jurisdiction of the BVI Court, claiming that the service gateways were not met and that the proper forum for the trial was the Isle of Man (GSHL’s place of incorporation).
In his judgment handed down on 19 September 2024, Webster J. rejected the jurisdiction challenge in full. The Judgment contains a careful analysis of the always important (and often controversial) “necessary or proper party gateway” and the key requirement (Erste; Gunn v Diaz; BTA Bank v Sabyrbaev) to establish “utility” in the proceedings against the anchor defendants (Judgment/23-43). It is also important for Webster J’s analysis and rejection of Mr Mittal’s argument that (1) because the alleged breaches of Mr Mittal’s fiduciary duty concerned the “internal management” of an Isle of Man company; (2) the appropriate forum for the trial of the Claim was the Isle of Man (applying Pergamon Press v Maxell and Konameneni v Rolls Royce Industrial Power).
Webster J. rejected this. He accepted the liquidators’ contrary arguments that: (1) although the breach of fiduciary claims were governed by Manx law, there were “no significant differences” between Manx and BVI law (Judgment/63-65, 87 & 91); (2) since the central allegations were of asset-stripping designed to put assets beyond the reach of creditors, the wrongdoing did not “go to the internal management” of GSHL (Judgment/69-70); and in all the circumstances (3) the BVI was the more suitable forum for the trial (Judgment/91-92). The Judgment can be found here.
