The Civil Division of the Court of Appeal handed down judgment in the case of SK Slavia Praha-Fotbal AS v Debt Collect London Ltd and Another [2010] EWCA Civ 1250 on 4th November 2010. The case concerned the repayment of a balance of nearly £2.9m under a series of similar loan agreements and a further £1m made against it under a Discounted Funding Agreement.

The appellant, a Czech company which owns a professional football club in the Czech Republic, was liable for advances repayable on demand. The balance demanded by letters in two months of 2009 was not met. The benefit of the loan agreements was assigned to the respondent, which issued proceedings against the appellant in London on 12 June 2009 and in the Czech Republic on 15th June 2009. At the time of service the respondents were not aware of proceedings issued in April 2009 by the appellant, as the requisite service fee had not been entered into court.

The High Court ruled that the English courts had jurisdiction by virtue of the agreements being exclusively governed by English law and being made with a company incorporated in England. Summary judgment was also ordered against the appellant.

Before the Court of Appeal, the appellant submitted that the High Court had misinterpreted Art.30.1 of Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition of Judgments in Civil and Commercial matters in the European Union (the Judgments Regulation). Arguing that the High Court should have found the Czech court was first seised of the matter, within the meaning of Art. 30.1, the appellant submitted that jurisdiction must either be declined under Art.27 of stayed as a matter of discretion under Art.28. An appeal was also made against the summary judgment order.

Considering first the jurisdiction appeal, the court outlined the relevant provisions of the Judgments Regulation. Referring to Art.30.1, the court noted that the fact of first lodging a document did not necessarily amount to a court being first seised. Evidence before the High Court outlined that filing a petition with the Czech court gave rise to an obligation to pay a fee and proceedings would not be served until such monies are paid into court. Also highlighted was a common practice to wait for information from the court rather than make immediate payment.

The appellant submitted there was no failure, rather that following standard practice according to Czech law it had waited to be contacted by the court and to equate delay with a failure to take required steps would be unjust and irrational. Dismissing this point, the court referred to an opinion promulgated by the Czech Supreme Court establishing that service will not occur before the payment of the requisite fee. Holding the appellants non payment before 6th August 2009 to be a failure to take required steps and not merely following practice, the court determined that the Art.30.1 disapplied the rule that a court is seised of proceedings at the point at which documents are lodged and dismissed the appeal against jurisdiction.

Examining the issue of a defence to the summary judgment, the court considered the defence, under Czech law, of shareholder loyalty. Specifically, one of the respondents was alleged to be a shareholder or person with substantial influence in the appellant company, and thus breached a duty not to place the appellant in danger to an inappropriate degree without justification. This was dismissed in the High Court and also dismissed by the Court of Appeal as having no real factual basis in English law and an arguable case of breach had not been made out evidentially.

The appeal on both points was dismissed by the court.