AK Investment v. Kyrgyz Mobil Tel [2011] 4 All ER 1027

Facts: A Russian telecoms company incorporated in Kyrgyzstan commenced proceedings against another company in Isle of Man, attempting to enforce a judgment given in Kyrgyzstan against a company incorporated in the Isle of Man (the judgment debtor). In a counterclaim, the judgment debtor sought a declaration that the Kyrgyzstan judgment had been obtained by fraud (and claimed damages). The judgment debtor sought the permission of the Manx High Court to serve the counterclaim out of the jurisdiction on a number of foreign Ds (application for service outside the jurisdiction). There was evidence that the Kyrgyzstan court was corrupt and not independent, so that its judgements were political decisions as there was a recent coup.

Outcome: Although Kyrgyzstan was the natural forum (one company as entirely based out of Kyrgyzstan & other companies involved in proceedings in Kyrgyzstan), the Manx Court didn’t stay proceedings because it held that practical justice would not be done if Kyrgyzstan court (the judgement would be political and corrupt). This discretion was upheld by the Privy Council.

Held: The Court may rule on whether there is a “real risk” that justice will not be obtained in foreign system (e.g. because of lack of independence, competence, corruption). While it is within the Court’s power to do this, the interests of international comity require that the Court be very cautious before reaching this conclusion. There needs to be cogent (a lot) evidence that the foreign court is corrupt; generalised, anecdotal material is not enough.

Held (Lord Collins at [97]): “comity requires that the court be extremely cautious” before reaching this conclusion.

Test: Whether there is a “real risk” that justice would not be obtained in foreign court.

Principle: In the exercise of discretion, a court may take into account cogent evidence that there is a real risk a party would not obtain justice in a foreign legal system by reason of lack of independence or corruption in that legal system.

Note: Although this case concerned an application for service outside the jurisdiction, academics suggest it can be used in the context of foreign jurisdiction clauses. If the contract had included a Kyrgyzstan jurisdiction clause, that clause would not be given effect.