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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Racy v Hawila [2004] EWCA Civ 209 (18 February 2004)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2004/209.html
Cite as: [2004] EWCA Civ 209

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Neutral Citation Number: [2004] EWCA Civ 209
A3/2003/1681

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(BLACKBURNE J)

Royal Courts of Justice
Strand
London, WC2
18 February 2004

B e f o r e :

LORD JUSTICE THORPE
LORD JUSTICE MAY
LORD JUSTICE JONATHAN PARKER

____________________

KHALED SALAM RACY Appellant/Claimant
-v-
SALAH JACQUES HAWILA Respondent/Defendant

____________________

(Computer-Aided Transcript of the Stenograph Notes of
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)

____________________

MR COLIN NASIR (a solicitor advocate) (instructed by Colin Nasir & Co) appeared on behalf of the Appellant
MR EWAN MCQUATER QC (instructed by Lovells) appeared on behalf of the Respondent

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

  1. LORD JUSTICE JONATHAN PARKER: This is an appeal by Mr Khaled Racy against an order made by Blackburne J on 11 July 2003 in an action ("the English action") brought by Mr Racy against Mr Salah Hawila. The judge's order begins by recording an election by Mr Racy to pursue the English action before he pursues proceedings commenced by him in Lebanon ("the Lebanese action") against Mr Hawila and a company called Midmac SARL ("SARL"). The order then recites undertakings by Mr Racy to use his best endeavours to procure that no further steps are taken in the Lebanese action pending final determination of the English action or further order of the English court, and that he will not take any steps to reactivate the Lebanese action within that time period. The order goes on to give procedural directions relating to the further conduct of the English action.
  2. As to costs, the order provides that Mr Racy is to pay Mr Hawila's costs of the application in any event, and that Mr Racy is to make an interim payment of £75,000 on account of such costs, the balance to be the subject of a detailed assessment on the standard basis.
  3. Finally, the order records the judge's refusal to grant permission to Mr Racy to appeal.
  4. Before the judge was an Application Notice by Mr Hawila in which Mr Hawila sought an order that the English action be stayed or dismissed, on the ground that Mr Hawila is a defendant in both the English action and the Lebanese action, and that the two actions concern the same or very similar subject-matter. However, at the hearing Mr Hawila sought relief of a more limited nature. The relief which he sought is set out by the judge in paragraph 41 of his judgment:
  5. "41. ... The precise relief that he seeks is that Mr Racy should be given a short further period within which to elect which action he wishes to pursue; if he fails within that period to make an election the court is invited to order a stay of the English action pending a determination of the Lebanese action whereupon the English action, if it continues to raise issues which have not been determined in the Lebanese action or which, even if determined, are not binding on the parties in the English action, may revive; if Mr Racy elects to continue with the English action, then provided the Lebanese action is stayed in the meantime, Mr Hawila would no longer pursue this application.
  6. At the hearing before the judge, Mr Racy was represented by Mr Simon Browne-Wilkinson QC and Mr Andrew de la Rosa, instructed by Colin Nasir & Co. Mr Hawila was represented by Mr Ewan McQuater QC, instructed by Lovells.
  7. It appears that the English action is on course for trial in June of this year.
  8. The judge handed down a written judgment on 11 July 2003, having previously circulated a draft of the judgment to the parties' legal advisers. In the draft judgment, and in the judgment in its final form, as subsequently handed down, the judge decided, in the exercise of his discretion, to grant the more limited relief sought by Mr Hawila, and to give Mr Racy a period of 21 days in which to elect which of the two actions to pursue first. At the adjourned hearing when the judgment was handed down, Mr Racy appeared by Mr Colin Nasir (solicitor-advocate), who also appears for Mr Racy on this appeal. At the commencement of the hearing, Mr Nasir informed the judge that Mr Racy would elect to pursue the English action first, and the hearing proceeded on that basis. This explains the form which the judge's order took. However, in the course of the same hearing (as also appears from the order) Mr Nasir also sought permission to appeal, which the judge refused.
  9. An Appellant's Notice was duly issued by Mr Racy, seeking permission to appeal. That application came before me on the papers, and I refused it. The application was renewed at an oral hearing, without notice, which took place before the Vice-Chancellor. The Vice-Chancellor granted permission to appeal. The Vice-Chancellor's judgment was expressed to be on the basis, which Mr Nasir had confirmed in the course of his oral submissions to the Vice-Chancellor, that Mr Racy's election to pursue the English action first had been conditional on Mr Racy having first exhausted his rights of appeal.
  10. An application was then made by Mr Hawila to set aside the Vice-Chancellor's order granting permission to appeal, on the basis that on the renewed application Mr Nasir had misled the court when he stated that Mr Racy's election had been conditional; that the election had been unconditional; and that in the circumstances it was not open to Mr Racy to seek permission to appeal. That application came before me on 3 November 2003, when I dismissed it.
  11. This is the hearing of the substantive appeal.
  12. Since the hearing before the judge, steps have been taken by Mr Racy to -- and I use what I hope is a neutral expression -- bring the Lebanese action to a halt.
  13. The judge summarises the background to the two actions in paragraph 3 of his judgment:
  14. "3. ... At the heart of Mr Racy's claim is a business relationship between himself and Mr Hawila which, he claims, went back many years and extended to many countries and many differing business and other interests. A part of that relationship was conducted, he says, through the medium of a group of companies called the Midmac Group. The holding company of that group is a Luxembourg company called Midmac Holding Corporation SA ('MHC') of which all but six shares out of its issued 40,000 shares are divided in the ratio of 2:1 between a Jersey company called Midmac Inc (holding 26,662 shares) in which, through various off-shore arrangements, Mr Hawila is interested and Ochil Holdings Limited (holding 13,332 shares) in which, through other off-shore arrangements, Mr Racy is interested. ['SARL'] - the subject matter of the Lebanese action - is virtually a wholly owned subsidiary of MHC in that MHC holds 9,560 of its shares out of 9,600 in issue (ie over 99%). SARL does not itself carry on any business but acts as a holding company for, principally if not exclusively, a Qatari entity which carries on business as a construction company in Qatar and elsewhere in the Middle East. Mr Racy holds 20 shares in SARL and one share in MHC out of the 40,000 in issue in that company."

    In paragraphs 4 to 13 of the judgment the judge summarises the issues in the Lebanese action as follows:

    "4. With that preface I come straight to the Lebanese action. It was initiated by a summons dated 21 February 2002. Mr Racy is the claimant, Mr Hawila the first defendant and SARL the second defendant. Mr Racy's claim is for the liquidation of SARL and the appointment of a liquidator. A less than perfect translation into English of the summons was in evidence.
    5. Mr Racy appears to sue as a shareholder of SARL in right of his holding of 20 shares in that company, ie less than 0.25% of its issued share capital. He pleads that Mr Hawila holds another 20 shares, a Mr Malek another 20 and that the remainder, ie over 99% of the share capital, is held by MHC. He pleads that MHC is owned by himself and Mr Hawila in the ratio of one-third by himself and two-thirds by Mr Hawila.
    6. Mr Racy goes on to plead that he, Mr Hawila and Mr Malek were SARL's only directors but that at the end of 1984 Mr Malek retired and sold to Mr Hawila the shares that he owned in the various companies of what he refers to simply as 'the group'. That is obviously intended to refer to the Midmac Group. He says that as between himself and Mr Hawila the ratio of ownership since the beginning of 1985 had been 2:1 in favour of Mr Hawila.
    7. Then, after noting that SARL was incorporated to operate as a construction and engineering contractor and that it has not carried out any work in the Lebanon but instead has restricted its activity to other Middle Eastern countries operating through a subsidiary, Mr Racy pleads that he was in charge of engineering matters and resided most of his time in Qatar, Iraq and Saudi Arabia while Mr Hawila became the effective chairman of the group and resided in London. He pleads that he and Mr Hawila incorporated a services company called Mid Orient Technical Services ('MOTS') which became the principal and effective head office of the whole word-wide group of companies owned by himself and Mr Hawila.
    8. In paragraph 9 he pleads that 'the persons in charge of accounting matters in the British service company' - which I take to be a reference to MOTS - prepared annual balance sheets for all of the companies in the group including SARL for which two kinds of balance sheet were prepared: (a) annual so-called 'local non-consolidated balance sheets' which were restricted to SARL's activities inside the Lebanon and made no mention of work carried out abroad through its subsidiaries and (b) consolidated annual balance sheets covering all of SARL's activities, both inside and outside the Lebanon, including 'partners' drawings' as well as accounts covering its subsidiaries in Qatar and Iraq. Mr Racy then pleads that the non-consolidated balance sheets did not disclose SARL's true financial position although the consolidated balance sheet did.
    9. In paragraph 11 Mr Racy pleads that SARL's Qatari subsidiary suffered a $23 million loss. In paragraph 12 he pleads that, in view of the exclusive control exercised by Mr Hawila and his employees in London over the accounts of SARL and of the remainder of the Midmac Group, he requested Mr Hawila and the financial director working for him, a Mr Nasr, to prepare a comprehensive report showing the 'partners' accounts' for the period between 1 January 1985 and 31 December 1998. He goes on to plead that on 19 December 1999 Mr Nasr reported that the total of Mr Hawila's drawings amounted to $18,685,000. He pleads that after 1985 he and Mr Hawila agreed to keep their drawings 'equitable and commensurable' with expected benefits and losses but that Mr Hawila broke the agreement by making withdrawals thereby rendering him liable to SARL for $12,299,000 with interest. He pleads that this caused SARL to incur huge losses and become insolvent.
    10. In paragraph 15 Mr Racy claims that a dispute has arisen between himself and Mr Hawila (whom he jointly describes as 'the true and effective partners' in SARL) as a result of Mr Hawila's 'illegal behaviour and his appropriation' of SARL's assets. In paragraph 16 he refers to a dispute over 'consultative fees' amounting to approximately $21 million, says that it and other matters put an end to their relationship but does not otherwise explain how those fees fit into the scheme of things.
    11. Mr Racy pleads four grounds for winding up SARL. First, there is what is described as 'the strong dispute' between himself and Mr Hawila as 'the only true and effective partners' in SARL resulting from Mr Hawila's control of that company (including its finances and accounts) and his action in making excessive withdrawals. The second ground is what he alleges to be SARL's loss of over three-quarters of its capital as a result of the $23 million loss sustained by the Qatari subsidiary and Mr Hawila's withdrawal of $12,299,000. The third ground refers to Mr Hawila's alleged control of SARL's accounts and what is said to be Mr Hawila's action in publishing SARL's incomplete balance sheet amounting, it is alleged, to 'an attempt to take over the company's assets and to falsify its accounts' and conceal its true value from persons intending to contract with it and its bankers. The fourth ground is said to be the failure after 1983 to appoint managers of SARL coupled with their present inability, as 'the only and effective partners' in SARL, to make fresh appointments.
    12. He concludes by pleading that it is imperative to dissolve SARL and appoint a liquidator to recover the amounts due to it that Mr Hawila has misapplied.
    13. In a response to that summons Mr Hawila has challenged the jurisdiction of the Beirut court to entertain the Lebanese action. His first basis of challenge is founded upon the fact that, as alleged, SARL is as to 477 parts out of 480 owned by MHC, the Luxembourg parent company. The challenge is that, insofar as Mr Racy's claim is based upon a dispute between the two of them, the dispute in question concerns MHC and not SARL, the resolution of which is a matter for the Luxembourg and not the Lebanese court. His second basis of challenge is that as he and Mr Racy only own one share each in MHC out of the 40,000 issued by that company and only one each out of 480 parts in SARL (equivalent to 20 out of 9,600), it does not fall to Mr Racy to speak on behalf of MHC and allege that SARL is deadlocked. On the contrary, he says, SARL held a shareholders' meeting on 14 December 2001 which approved its 1990 accounts and resolved upon an increase in its capital. Mr Hawila goes on to say that, even if the Beirut court has jurisdiction, it should reject the four grounds put forward by Mr Racy for putting SARL in liquidation. Mr Hawila then refers to a variety of matters going to the merits of those four grounds. SARL too has filed a response raising similar issues going to both jurisdiction and to the general merits. These responses (served on 29 April 2002 and 10 June 2002) were themselves the subject of counter-responses by Mr Racy filed on 8 October 2002 to which Mr Hawila and SARL have each filed yet further responses, Mr Hawila's dated 12 November 2002 and SARL's dated 7 January 2003. I was told that at the beginning of this month an order was made by the Beirut court directing the parties to attend on 16 October 2003."
  15. In paragraphs 14 to 31 of the judgment, the judge turns to the English action saying this:
  16. "14. I now turn to Mr Racy's action in this jurisdiction in which Mr Hawila makes his application and which I will refer to as 'the English action'. It was started by a claim form issued on 6 December 2002 and was accompanied by very extensive particulars of claim running to over 50 pages.
    15. There are three main elements to Mr Racy's claims in the English action: (1) an alleged partnership between himself and Mr Hawila entered into in early 1985 in succession to an earlier partnership formerly carried on by them and a Mr Malek (the same person of that name referred to in the Lebanese actions), (2) a contract between them said to have arisen out of a telephone conversation on 19 May 1986 and a deed between them entered into on 14 April 1986 and (3) breach of a fiduciary duty said to have been owed to him by Mr Hawila arising out of a fiduciary relationship between them.
    16. Their business relationship is allegedly said to have started in the late 1960s when they were employed in the construction industry in Qatar. Mr Racy pleads that by 1975 he and Mr Hawila and Mr Malek were equal shareholders in a company called Orient Lebanon and that between 1975 and 1981 the three of them set up and thereafter operated through a structure of companies called the Midmac Group. He alleges that the most significant of the companies in the group were: (1) MHC, the Group's holding company the shares in which were, save for very small holdings held by outsiders, owned legally or beneficially in equal shares by himself, Mr Hawila and Mr Malek, (2) SARL, (3) Midmac Contracting (a Qatari company owned and controlled by SARL and operating in Qatar), (4) Midmac SA (a Saudi company owned as to 65% by MHC and as to the balance by Saudi nationals), and (5) MOTS. Mr Racy pleads that MOTS became a service company for the Midmac Group and its London offices in effect the Group's head office from which all joint activities were controlled. Much of this repeats what is already pleaded in the Lebanese action.
    17. Mr Racy goes on to say that the Midmac Group increasingly engaged in activities outside the construction field, especially in the property and financial fields, for which purposes other Midmac companies were created. He alleges he, Mr Hawila and Mr Malek engaged together in business activities outside the Midmac Group operating through corporate and non-corporate vehicles or, in some cases, in the name of one or more individually of the three of them.
    18. Paragraph 11 pleads that, after formation of the Midmac Group, money was frequently circulated among the various group companies, according to their needs and that an annual consolidated balance sheet was prepared for MHC (the holding company).
    19. Paragraph 16 pleads that from late 1981 withdrawals by the three participants of funds for business and personal purposes, which up to then had been made from different accounts held by various Midmac Group companies, became consolidated into one account for each of them held nominally by SARL although each of them could continue to draw on different Midmac Group accounts. These accounts, it is pleaded, were referred to as 'the Partners' Accounts'. The underlying understanding, it is said, was that withdrawals should reflect their respective entitlements to no more than one third of the net assets of the Midmac Group and non-Midmac Group businesses and investments.
    20. Mr Racy pleads in paragraph 22 that the business relationship between the three of them from 1975 to 1985 was that of partners sharing equally in the profits and losses of the Midmac Group and non-Midmac Group businesses and investments. He goes on to plead that in 1986 Mr Malek retired and that his one-third share in the overall business was acquired by Mr Hawila. He pleads his concern at the time that his existing right to one third of the net profits and assets of the Midmac Group and non-Midmac Group businesses and investments should not thereby be affected. He pleads that, with that concern in mind, he agreed with Mr Hawila in the course of a lengthy telephone conversation on 19 May 1986 that his right to make withdrawals in accordance with his one-third share would continue even after Mr Hawila became the majority shareholder of the Midmac Group. He pleads that as a consequence of that agreement he retained his interest in the various businesses and investments.
    21. He pleads that with effect from 1 January 1985 or thereabouts he and Mr Hawila carried on in partnership - in succession to the business formerly carried on by them together with Mr Malek - sharing profits and losses in the ratio of 2:1 in favour of Mr Hawila and covering, as it is put, 'all Midmac Group business and activities and also all non-Midmac Group businesses and investments that they were then or subsequently became engaged in' and that the partnership was governed by English law. He pleads that, as had been the case before 1985, the businesses and investments which were the subject of their partnership were (with one exception) the sum total of all business activities and investments undertaken by the two of them between 1985 and (at the earliest) the end of 1998. He pleads that 'however much one partner received or withdrew from the partnership businesses and investments, the other partner would receive or could withdraw such corresponding amount as would ensure adherence to the two-to-one ratio' and that they would each contribute to operating losses in the same ratio.
    22. In paragraph 33 Mr Racy pleads as an alternative to the partnership what he refers to as 'the General Agreement' derived from the oral agreement over the telephone on 19 May 1986 and the terms of a deed entered into on 14 April 1986. He pleads that under this agreement, which was also governed by English law, each would continue to have the right to make withdrawals from the profits and net assets of the Midmac Group and likewise contribute to Midmac Group losses in proportions corresponding to their respective shareholdings. He further pleads that under this agreement Mr Hawila agreed that he would not abuse his position as majority shareholder to deprive him of his one third entitlement and that neither would divert or conceal money or benefits relating to the Midmac Group.
    23. In paragraph 38 Mr Racy pleads in the further alternative that, as a result of the various matters there set out, he and Mr Hawila were in a fiduciary relationship to one another, in the same 2:1 sharing in the ratio of 2:1, in respect of financial benefits derived from both Midmac Group and non-Midmac Group businesses and investments. He pleads that, as a consequence, Mr Hawila came under a fiduciary obligation to him not to prevent him from withdrawing funds from Midmac Group and non-Midmac Group assets proportionate to Mr Hawila's withdrawals by reference to that ratio and, in the alternative, that any money or other property coming into Mr Hawila's hands or under his control in excess of his two-thirds share was to be held by him on constructive trust for him.
    24. Mr Racy goes on to plead that between 1985 and 1998 he and Mr Hawila acted on the terms of the Partnership and the General Agreement in a variety of ways among which was the continuous maintenance of the Partner's Accounts, (which were periodically updated by the production of six-monthly statements of account prepared by Midmac Group's internal accountants) and (by paragraph 42.4) the 'transfer of funds between different Midmac Group and non-Midmac Group business and investments ... in recognition of the Claimant's and Defendant's personal interests in and rights in relation to those assets, and frequently in disregard of corporate formalities and the contents of company accounts'.
    25. He pleads that they engaged in various parts of the world in a number of business ventures outside construction, property and financial investments, of which particulars are supplied, and that the profits and losses from those activities were shared in the ratio of 2:1. He pleads that he and Mr Hawila continued to make personal cash withdrawals from accounts held by Midmac Group companies and from other sources, that they did so in the ratio of 2:1 and that he made his withdrawals as of right and without Mr Hawila's prior authorisation. He goes on to say that they transferred monies from non-Midmac Group assets into the Midmac Group to cover the latter's operating losses and, by paragraph 57, that they transferred monies 'between Midmac Group and non-Midmac Group businesses according to the needs of the underlying businesses and [their own] personal requirements'.
    26. He pleads that he and Mr Hawila each acted in the management of the Midmac Group and non-Midmac Group business and investments, that at Mr Hawila's suggestion he moved with his family from England to Qatar in 1992 where he remained for 8 years managing the Midmac Group's core construction business in Qatar (through the medium of Midmac Contracting) while Mr Hawila remained in London. He pleads that all of his and Mr Hawila's time was spent on joint business activities, both Midmac Group and non-Midmac Group.
    27. In Part VI of the particulars of claim Mr Racy refers to a series of consultancy and related arrangements entered into between the Midmac Group and multinational companies tendering for civil engineering projects in the Middle East, notably Qatar and Saudi Arabia. He pleads that the effect of those arrangements was that if the multinational's tender for the project was successful, it would pay a consultancy fee equal to a small percentage of the overall value to it of the project. Mr Racy pleads that these consultancy agreements were invariably entered into by bearer share companies and that 'the benefit of the said consultancy agreements and beneficial ownership of the bearer share companies belonged to the Partnership and/or the Midmac Group and/or [himself] and [Mr Hawila] jointly and in any such case fell to be dealt with as between [them] in the ratio of two-to-one'.
    28. Mr Racy then goes on to refer to three such consultancy agreements, one of which yielded the consultancy company $21,442,792 of which, after certain payments, a balance of $20,647,471 was paid to personal trust companies of Mr Hawila, and two others of which are said to have yielded, after various payments to Midmac Group employees, a balance of $1,039,265 which, on Mr Hawila's instructions, was transferred to one of his personal trust companies. He pleads that any monies so paid fell within the scope of the partnership and/or the General Agreement, alternatively was subject to the fiduciary relationship or otherwise belonged to Mr Hawila and himself in the ratio of 2:1.
    29. It seems reasonably clear that the matters pleaded in this part of the particulars of claim are the same as the 'consultative fees' and the allegation of a $21 million appropriation by Mr Hawila referred to in paragraph 16 of the Lebanese action.
    30. In Parts VII and VIII of the particulars of claim, Mr Racy pleads that, between 1985 and 1998 and in breach of the terms of the partnership and/or the General Agreement and/or the fiduciary duty, Mr Hawila made what are referred to as 'disproportionate net withdrawals from Midmac Group accounts' and that he persistently failed and refused to permit Mr Racy to make any withdrawals or pay himself such sums as would achieve adherence to the agreed 2:1 ratio. He pleads that between 1 January 1985 and 31 December 1998 Mr Hawila made net withdrawals of $18,685,000 while those made by himself over the same period totalled only $3,193,000. He claims that his due share of the $18,685,000 is $6,149,500 plus interest. He makes a similar claim in relation to Mr Hawila's failure to account in respect of the consultancy agreement payments. He claims $7,228,912 plus interest as his due share of the sums received by Mr Hawila under those agreements. He also claims dissolution of the partnership and ancillary relief of one kind or another.
    31. Mr Hawila has not yet served a defence in the English action. Before the time for doing so (including an agreed extension) had expired he launched the present application. He did so under CPR Part 11. In her witness statement served on his behalf by Ms Armstrong of Lovells, Mr Hawila's responses to Mr Racy's claims are summarised. First, it is denied that there was any partnership between Mr Hawila and Mr Racy over the relevant period, and certainly from 1986 onwards, and denied that Mr Hawila owed any fiduciary duties as alleged. Second, it is said that between 1984 and 1986 there was a fundamental restructuring of their business relationship with the result that when Mr Malek withdrew from the business his shares were purchased by Mr Hawila and the affairs of any pre-existing partnership, if there was one, were settled in accounts drawn up and agreed at the time. Third, it is said that between 1984 and 1986 there were lengthy negotiations for a shareholders' agreement in which both sides had independent legal advice but Mr Racy did not succeed in negotiating any rights and protections beyond those enjoyed by him as a minority shareholder in MHC with the result that any assurances or oral agreements that Mr Racy would be entitled to special rights in relation to the business are denied. Fourth, it is said that under the provisions of the deed dated 14 April 1986 Mr Hawila was entitled freely to enjoy the rights and benefits attaching to his majority shareholding and that the parties' future rights and obligations were to derive from the MHC corporate structure and not from any alleged partnership or other fiduciary relationship. Fifth, it is said that there were no rights of pre-emption over the shares in MHC or any restrictions on the parties' respective entitlements to dispose of them, that there was no new joint investment activity carried out by Mr Hawila and Mr Racy after 1986 and that the jointly owned assets, which were valued in the 1986 accounts, were largely distributed to the individual shareholders or were reinvested in the Midmac Group. Sixth, it is said that the restructuring of the business coincided with a serious and marked deterioration in the personal relationship between Mr Racy and Mr Hawila, that Mr Racy thereafter had no special role in the management of the Midmac Group, that there were no joint management decisions undertaken by the two of them alone after 1986, that Mr Hawila became the chairman and chief executive of the Midmac Group and that Mr Racy became merely one of several executives who participated in the management of the Group. Seventh, it is said that the consultancy agreements referred to in the English action were personal business projects of Mr Hawila and fell outside the proper scope of the Midmac Group business and that, even if there had been a partnership in existence, they would have fallen outside its proper scope. Eighth, it is said that the withdrawals made by Mr Hawila were not 'disproportionate' but were entirely proportionate to his role and function within the Midmac Group and were calculated in accordance with principles to which Mr Racy had himself agreed. Last, it is said that, given the considerable time which has elapsed since some of the events relied on by Mr Racy and his delay in seeking to enforce them, Mr Racy's claims face limitation and laches defences."
  17. In paragraph 32 of his judgment, the judge concluded, based on the documentary material before him relating to the two actions, that:
  18. "... there is a very considerable degree of overlap between the two in that both are concerned with the business relations between Mr Racy and Mr Hawila stretching back to January 1985 conducted, according to Mr Racy in the English action, in part through the Midmac Group and in part outside it. Many of the allegations in both actions are the same."
  19. In saying that, the judge no doubt had in mind a document to which he refers expressly in paragraph 57 of his judgment which leading counsel, Mr Browne-Wilkinson, had handed in during the hearing before the judge. The document is headed "The reasons why it is reasonable and appropriate for the claimant to pursue the Lebanese proceedings". The document refers to the English action and the Lebanese action in the following terms:
  20. "Both cases are part of an exercise in which Mr Racy is seeking to unravel a 30-year business relationship with Mr Hawila which, although conducted largely through the medium of corporate vehicles, was essentially one in which they agreed to share both the financial benefits of, and liabilities arising from, world-wide businesses, investments and assets in specific personal shares, latterly ... in the ratio 2:1."

    The document continues in the same vein.

  21. The judge went on to record the submission of Mr Browne-Wilkinson that the claims made in the two actions and the factual matters to be investigated were significantly different, that submission being made despite the contents of the document to which I have just referred.
  22. In paragraph 34 of his judgment the judge concluded that although the claim in the Lebanese action appeared to be confined to SARL (that is to say, the relief sought being the winding up of SARL and the appointment of a liquidator), it was reasonably clear that the investigation of that claim would inevitably involve a consideration of many of the issues pleaded at length in the English action. He went on to point out (in paragraph 34) that at the forefront of Mr Racy's claim in the Lebanese action was the allegation that he and Mr Hawila were "the only and effective partners in SARL"; and that that allegation in turn inevitably raised issues (which had been pleaded at length by Mr Racy in the English action) as to the basis on which the Midmac Group (of which MHC was the holding company) was run and whether Mr Racy could rely on the dispute between himself and Mr Hawila as a ground for winding up not MHC (which appeared to the judge to be the more logical relief) but its subsidiary SARL. He further pointed out that that was one of the grounds on which Mr Hawila was challenging the jurisdiction of the Lebanese courts.
  23. In paragraph 37 of his judgment the judge said this:
  24. "37. An examination of their respective roles and attendant rights and duties towards one another as the only and effective partners in SARL will also lead to an examination of the nature of the dispute between them which Mr Racy pleads has led to a paralysis of SARL's activities. Mr Racy himself pleads in paragraph 15 of the Lebanese action that the dispute has arisen because of what he says was Mr Hawila's illegal appropriation of SARL's assets. That opens up the question, pleaded at length in the English action, over the legality of Mr Hawila's cash withdrawals."
  25. The judge then turned to the second ground on which Mr Racy sought the winding up of SARL, namely the alleged loss by SARL of three-quarters of its capital. He pointed out that that brought into play once again Mr Racy's claim in the Lebanese action that Mr Hawila had made excessive withdrawals to the tune of some $12.3 million, which were in breach of an agreement between him and Mr Racy. The judge concluded that this allegation was clearly linked to similar allegations in the English action.
  26. In paragraph 40 of his judgment the judge concluded that in the light of what he described as "this undeniably substantial overlap in issues" in the two actions, there was, on the face of it, much force in Mr Hawila's complaint of vexation and oppression. Turning to the relief sought by Mr Hawila (as set out in paragraph 41 of the judgment, quoted earlier) the judge continued:
  27. "42. Mr Hawila does not seek on his application a discontinuance of either the English or Lebanese action. He recognises that there are triable issues which arise in the English action that do not arise and cannot be tried in the Lebanese action so that it is appropriate, if the Lebanese action is to proceed, that there is merely a stay of the English action leaving it open, once the Lebanese action has been determined, to lift the stay and enable the English action to proceed. Equally, he accepts that there may be issues which arise in the Lebanese action which could not be dealt with in the English action so that, if Mr Racy were to elect to proceed first with the English action, he would not insist that the Lebanese action be discontinued: he will be content that it is merely stayed.
    43. It will be evident from this that Mr Hawila, although he resists the relief claimed in both proceedings and asserts that he has defences to all of the matters alleged against him, accepts that, to the extent that they may raise different issues, both proceedings should be allowed to go to trial. He merely wishes to ensure that both do not go forward for trial at the same time. It is, in short, merely a matter of priority: which should proceed first? He is content that Mr Racy should choose the order in which the two actions should go forward. He does not seek an anti-suit injunction to restrain Mr Racy from proceeding with his Lebanese action. He accepts that, given the relief sought in that action (the winding-up of SARL over which the English court has no jurisdiction), it is not open to him to obtain such an injunction. He merely asks the court in this jurisdiction to step in if Mr Racy declines to elect which action should go first.
    44. When Mr McQuater first opened the matter to me, his client's stance struck me as entirely reasonable and one which it was quite open to the court to accommodate. Notwithstanding lengthy argument from Mr Browne-Wilkinson to the effect that there are all sorts of reasons why it would not be appropriate, I remain of precisely the same view."
  28. In paragraph 45 of his judgment, the judge turned to Mr Browne-Wilkinson's submission that the principles explained by Lord Goff in The Spiliada [1986] AC 460 are applicable in the instant case, and that the application of those principles leads inevitably to the dismissal of Mr Hawila's application. Mr Browne-Wilkinson had submitted that this is not a case in which there is some other available forum for the relief sought in the English action since the personal claims which form the subject of the English action could not be litigated in the Lebanese action, just as the English court had no jurisdiction to wind up SARL. Accordingly, Mr Browne-Wilkinson had submitted that there is no basis for granting a stay of the English action since Spiliada establishes that where an action is commenced as of right in England it should only be stayed if there is some other forum available for the trial of the issues raised in the English action.
  29. The judge then turned to two authorities relied on by Mr McQuater, Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65 ("ANZ") and Reichhold Norway ASA v Goldman Sachs International [2000] 1 WLR 173 CA ("Reichhold").
  30. In ANZ the plaintiff started proceedings against the defendant in England, in which the defendant counterclaimed. The plaintiff then started proceedings in Queensland against the defendant and others, raising the same issues and seeking the same remedies as in the English action. The plaintiff applied to stay the counterclaim, offering to stay his own claim in the English action so that the issues could be litigated in Queensland. In the course of his judgment, Sir Nicholas Browne-Wilkinson V-C concluded that where a plaintiff commences proceedings in England and in another jurisdiction which raise similar issues, the court will put the plaintiff to his election which action to pursue, but on the basis that if the plaintiff elects in favour of the foreign jurisdiction the English action "must go"; that is to say it must not merely be stayed but discontinued. In the result the Vice-Chancellor accepted the plaintiff's submission that Queensland was the appropriate forum. He accordingly gave the plaintiff leave to discontinue the English action and he stayed the counterclaim.
  31. The judge agreed with Mr Browne-Wilkinson that there was a significant difference between ANZ and the instant case, in that in ANZ, in contrast to the instant case, there was an alternative forum (Queensland) in which all the claims in the action in England could be tried, whereas (as the judge put it in paragraph 49 of his judgment in the instant case) "Beirut is not an appropriate forum for the trial of many of the issues arising in the English action". On the other hand, whilst accepting that the Lebanese action would dispose of "relatively few" of the issues in the English action, the judge observed that since there was (as he put in paragraph 50 of the judgment) "no identity of issues or of remedies sought in the two actions", there was no question of, nor was Mr Hawila seeking, discontinuance or dismissal of the English action. That does seem to me a crucial distinction between ANZ and the instant case.
  32. In Reichhold, the defendant successfully applied for an order staying an action brought against it seeking damages for negligent misstatement allegedly made to the second plaintiff arising out of the defendant's conduct while acting for the vendor on a sale to the first plaintiff of a subsidiary of the vendor. The stay was granted pending an arbitration in Norway between the plaintiffs and the vendor. There were factual differences between Reichhold and the instant case, as the judge expressly recognised in paragraph 53 of his judgment. The judge at first instance in the Reichhold case (Moore-Bick J) observed that in such a case the court had a particular interest not only because there might be undesirable consequences if concurrent proceedings were pursued, but also because the outcome of one set of proceedings might have an important effect on the conduct of the other. He concluded that the court's case management powers enabled the court, in such circumstances, to manage and prioritise the actions proceeding before it. His judgment was upheld in the Court of Appeal on the basis that there were no grounds for interfering with the judge's exercise of his discretion. In the concluding paragraphs of his judgment in the Court of Appeal, Lord Bingham of Cornhill CJ said this at page 186:
  33. "I for my part recognise fully the risks to which Mr Carr draws attention, but I have no doubt that judges (not least commercial judges) will be alive to these risks. It will very soon become clear that stays are only granted in cases of this kind in rare and compelling circumstances. Should the upholding of the judge's order lead to the making of unmeritorious applications, then I am confident that judges will know how to react.
    It remains to consider the judge's exercise of his discretion here. I have endeavoured to summarise his judgment fully, without quoting all of it verbatim. It is in my judgment evident that he assessed and evaluated the factors which he was called upon to consider. Although it was suggested in Reichhold's skeleton argument that the judge misdirected himself in approaching the various factors which he had to consider, I for my part am persuaded that he left nothing out of account, took account of nothing of which he should not have taken account, and gave a fair and judicious summary of all the matters properly to be considered. I find no misdirection of the law. This was, therefore, a decision within the discretion of the judge, not vitiated by misdirection or manifest error. I would dismiss this appeal."
  34. I would also note that in the course of his judgment in that case Lord Bingham referred to observations made by Moore-Bick J at first instance in relation to considerations of case management. Lord Bingham quoted a passage from the judgment of Moore-Bick J at page 179 of the report in the Court of Appeal as follows:
  35. "In such circumstances the parties to the individual actions no longer enjoy the unfettered right (if indeed they ever did) to determine how the proceedings should be conducted; it is recognised that the court is entitled to impose on them procedures which it considers appropriate in the light of the nature and content of the litigation as a whole."
  36. The judge in the instant case regarded Reichhold as significant, in that it illustrates the readiness of the court, in the interests of sensible case management, to subject the plaintiff's claim to a temporary stay even though (a) the plaintiff has every right to pursue its claim against the defendant in this jurisdiction, (b) there is no suggestion of any kind of vexation or oppression to the defendant in its doing so, and (c) the defendant against whom the plaintiffs' claim was brought was not a party to the Norwegian arbitration proceedings.
  37. The judge continued as follows in paragraphs 58 and 59 of his judgment.
  38. "58. It is evident from what I hope is a fair summary of that document that the points raised are intimately bound up with the wider dispute ventilated in the English action and merely go to emphasise the extent to which the Lebanese action overlaps, although is by no means co-extensive with, the English action. Point (4) makes clear that the remedy sought in the Lebanese action - SARL's winding-up and the appointment of a liquidator - is essentially 'in aid' of those wider claims. Mr Hawila challenges the suggestion in points (3) and (5) that he is manipulating SARL without regard to Mr Racy's position not least when the only matters relied upon by Mr Racy are matters which Mr Hawila has himself raised in defence of the Lebanese action and which on their face (I will not trouble to set them out) do not lend much if any support for the suggested manipulation of which Mr Racy complains. For example, one of them is the action purportedly resolved upon at a general meeting of SARL, to confirm Mr Racy (along with Mr Hawila) as one of SARL's managers.
    59. I emphasise, as I have made clear more than once, that Mr Hawila does not suggest that Mr Racy should not be able to pursue both actions, merely that he should not have to defend both actions at the same time. I therefore look to see, in conformity with the approach outlined in McHenry and Peruvian Guano (and endorsed in Aerospatiale), what it is about the two actions which might provide good reasons for Mr Racy wishing to pursue both of them simultaneously."
  39. The judge then turned to consider Mr Racy's reasons for wishing to pursue both actions at the same time in paragraphs 57 to 60 of his judgment. He said this:
  40. "57. In a document produced in the course of the hearing Mr Browne-Wilkinson and Mr de la Rosa set out why it is reasonable and appropriate for Mr Racy to pursue the Lebanese action. The following reasons were advanced: (1) SARL and the other corporate vehicles through which Mr Racy alleges he and Mr Hawila conducted their business relationship 'cannot simply be left in abeyance while Mr Hawila has effective control over them and exercises that control in a manner inconsistent with the partnership agreement'; (2) the Lebanese action concerns one such corporate venture (SARL) over which the English court does not have jurisdiction but the Lebanese court does; (3) Mr Hawila is, it is alleged, continuing to exercise control over SARL 'without regard to Mr Racy's position as the partner ultimately entitled to one-third of the benefit or one-third of the loss attributable to its business';
    (4) Mr Racy is entitled to pursue his Lebanese remedies 'which are effectively in aid of his personal claim against Mr Hawila'; (5) the liquidation of SARL would remove it from Mr Hawila's control and 'close off one means by which he [Mr Hawila] could continue to appropriate to himself monies which Mr Racy is entitled to share'; and (6) if a liquidator is appointed and takes proceedings against Mr Hawila, any sums recovered from him would become part of the assets to which Mr Racy has a claim 'based on his alleged entitlement to a one-third share of world-wide Group and non-Group assets'.
    58. It is evident from what I hope is a fair summary of that document that the points raised are intimately bound up with the wider dispute ventilated in the English action and merely go to emphasise the extent to which the Lebanese action overlaps, although is by no means co-extensive with, the English action. Point (4) makes clear that the remedy sought in the Lebanese action - SARL's winding-up and the appointment of a liquidator - is essentially 'in aid' of those wider claims. Mr Hawila challenges the suggestion in points (3) and (5) that he is manipulating SARL without regard to Mr Racy's position not least when the only matters relied upon by Mr Racy are matters which Mr Hawila has himself raised in defence of the Lebanese action and which on their face (I will not trouble to set them out) do not lend much if any support for the suggested manipulation of which Mr Racy complains. For example, one of them is the action purportedly resolved upon at a general meeting of SARL, to confirm Mr Racy (along with Mr Hawila) as one of SARL's managers.
    59. I emphasise, as I have made clear more than once, that Mr Hawila does not suggest that Mr Racy should not be able to pursue both actions, merely that he should not have to defend both actions at the same time. I therefore look to see, in conformity with the approach outlined in McHenry and Peruvian Guano (and endorsed in Aerospatiale), what it is about the two actions which might provide good reasons for Mr Racy wishing to pursue both of them simultaneously.
    60. I am unable to see that there are good reasons. It might be different if, for example, Mr Racy could demonstrate a need to obtain interim relief in the Lebanese action to preserve SARL's assets while bringing the English action to trial but no such relief is sought. Apart from the exchange of responses to Mr Racy's originating summons and the court's decision to conduct some form of preliminary hearing this coming October, nothing much seems to have happened in that action since it started just over sixteen months ago apart from the exchange of 'responses'. It is not even clear when the Lebanese action will come on for an effective hearing. The only interim application in the English action, apart from Mr Hawila's application currently before me, appears to have been Mr Racy's attempt to obtain a world wide freezing order against Mr Hawila. He was initially successful in obtaining such an order when he made a without notice application to Patten J on 24 April last. But the order was subsequently set aside when the matter came on for hearing on notice before Lewison J on 6 May. It is not apparent from the judgment of Lewison J that Mr Racy was suggesting that Mr Hawila was continuing to deal with any of the assets of the alleged partnership inconsistently with Mr Racy's rights. Because if he had been and there were credible evidence to support such a suggestion I would have expected Mr Racy to have applied for appropriate injunctive relief to restrain Mr Hawila from continuing with such conduct. But that has not happened."
  41. In paragraph 61 and 62 of his judgment the judge addressed and rejected a number of other reasons advanced by Mr Browne-Wilkinson as to why Mr Racy should be allowed to pursue both actions simultaneously. In this connection the judge referred to an offer which Mr Racy had made to agree to a stay of the Lebanese action provided that Mr Hawila was willing (which he was not) to undertake to do nothing in the meantime which might prejudice Mr Racy. Mr Browne-Wilkinson had relied on this offer as a further reason why Mr Hawila's application should be refused. The judge said that he regarded most of these as overstated and without any real substance. Mr Browne-Wilkinson also relied on the fact that in the Lebanese action Mr Hawila was challenging the jurisdiction of the Lebanese courts. As to that, the judge observed, plainly correctly in my judgment, that if the jurisdictional challenge succeeded the stay of the English action would be lifted sooner than if the Lebanese action were to go to trial.
  42. The judge went on to accept Mr McQuater's submission that if both actions were to proceed concurrently there was a risk of double recovery against Mr Hawila; once by Mr Racy in the English action, and once by the liquidator (if appointed in the Lebanese action).
  43. As to Mr Browne-Wilkinson's submission that if Mr Racy were compelled to proceed with the Lebanese action he might be faced with findings which were binding on him in the English action, the judge said this in paragraph 65 of his judgment:
  44. "65 . The short answer to this and to many of the other points raised on Mr Racy's behalf is that it is for Mr Racy to decide which action to pursue first. Common sense would suggest that he pursue the English action which, so far as I can see, covers the whole spectrum of their dispute and can be brought on for trial within a year or so (the parties having agreed what directions should be sought to ensure that this may happen) in contrast to the Lebanese action, which does not appear to give him any advantage beyond what he will obtain if he is successful in his English action and the date for the trial of which is in any event wholly at large. Indeed, Mr Racy's Lebanese lawyer states that 'Mr Racy stands to make no money at all in Lebanon even if a liquidator is appointed because he only has a negligible shareholding in the Company [ie SARI] (albeit that it allows him to initiate the liquidation proceedings).' But if Mr Racy elects to pursue his Lebanese action and issues are determined in it which are binding on the parties to the English action, that is all to the good: it will (or should) shorten the trial and therefore reduce the costs of the English action."
  45. As to Mr Browne-Wilkinson's submission that the relief sought by Mr Hawila would inevitably lead to delay, the judge commented (in paragraph 66 of his judgment) that "delay is not something which seems to have exercised the parties much in the past".
  46. Finally, the judge rejected the suggestion (not pursued on this appeal) that Article 6 of the European Convention on Human Rights is engaged in the instant case.
  47. Accordingly, the judge acceded to Mr Hawila's application, and gave Mr Racy 21 days in which to elect which action to pursue first.
  48. Stripped of hyperbole, Mr Racy grounds of appeal boil down to the following.
  49. His first ground of appeal is that the judge failed to apply the principles of forum non conveniens as explained by Lord Goff in The Spiliada; adopting instead an unfettered discretion based on concepts of vexation, oppression and case management which is not supported by the authorities.
  50. Secondly, it is contended that the judge failed to distinguish between an overlap of claims and an overlap of factual issues, and thereby ignored (or failed to attach proper weight to) the fact that the claims in the two actions were entirely different.
  51. Thirdly, it is contended that the judge's judgment "endangers the future of international litigation in this country".
  52. Fourthly, it is contended that the judge failed to take proper account of the fact that in the Lebanese action Mr Hawila is challenging the jurisdiction, and that the judge should have required Mr Hawila, as a term of the grant of relief, to abandon that challenge.
  53. Fifthly, it is contended that the judge failed to take account of the fact that Mr Racy had offered a stay of the Lebanese action in return for "a minimal undertaking" by Mr Hawila to the English court.
  54. Sixthly, it is contended that the judge's findings of fact were perverse in that (a) he found (in paragraph 40 of the judgment) that there was a "substantial overlap of issues", whilst acknowledging (in paragraph 50) that the Lebanese action would dispose of "relatively few" of the issues in the English action; and (b) that there is no overlap whatsoever of issues in terms of legal issues.
  55. Seventhly and lastly, it is contended that the judge's decision has prejudiced Mr Racy, in that he has been forced to agree a stay of the Lebanese action without any safeguards, and has been ordered to pay an enormous amount of costs.
  56. In his submissions in support of this appeal Mr Nasir submits in his written skeleton argument that the judge misunderstood the true position when he concluded that there was a substantial overlap of issues between the two actions. He submits that the trial of the Lebanese action will not involve an investigation as to who controls MHC/SARL. He concedes that Mr Hawila has unfettered control over MHC, and that the "overall partnership" between Mr Racy and Mr Hawila is concerned with the sharing of profits and losses. He further submits that there is no overlap in relation to Mr Hawila's withdrawals (alleged in the English action to be excessive) or in relation to consultancy agreements and consultancy fees. In all, he submits that some 60% of the claim in relation to consultancy fees has no overlap with the Lebanese action. He further points out that (as the judge accepted in paragraph 50 of his judgment) the two actions claim different relief.
  57. As to the Spiliada, Mr Nasir submits that the principle explained by Lord Goff in that case applies in the instant case. The principle is clearly applicable, he submits, where there are "related proceedings" in another jurisdiction. Such, he submits, is the position in the instant case, notwithstanding the differences between the two actions which he has himself emphasised.
  58. He submits that to describe Mr Hawila's application as being an application for a "temporary stay" is disingenuous. He submits that in practice the stay may well be indefinite.
  59. Accordingly, he submits that the judge's judgment was per incuriam.
  60. Turning to the authorities cited by Mr McQuater, Mr Nasir suggests that ANZ was also decided per incuriam, in that it failed to follow Spiliada. As to Reichhold, Mr Nasir submits that the case is distinguishable on the facts since all parties in that case had contemplated that an arbitration in Norway was the appropriate route for resolving the issues between them and that if damages were to be awarded in the Norwegian arbitration that would in effect put an end to the English claim. He further points out that in Reichhold it was clear that the arbitration proceedings would be completed in about a year.
  61. As to the suggestion that the judge's decision in the instant case endangers the pursuit of commercial litigation in this country, Mr Nasir submits that if the decision stands it will be open to defendants in English proceedings to apply to derail the proceedings on grounds merely of inconvenience, where proceedings are on foot elsewhere.
  62. Next, Mr Nasir relies on Mr Hawila's challenge to the jurisdiction in the Lebanese action. He suggests that the judge's decision allows Mr Hawila to have his cake and eat it, in that Mr Hawila has engineered a situation in which he can delay the Lebanese action indefinitely in circumstances where, if his challenge succeeds, nothing would have been decided anywhere. He submits that it is no answer to say that he was free to pursue the English action: the true position is that he was forced to do so.
  63. As to the judge's references to vexation and oppression, Mr Nasir submits that the judge failed to give any, or any proper, weight to Mr Racy's offer, which, he submits, was an extremely generous one.
  64. Concluding his written argument, Mr Nasir submits that the judgment is clearly wrong on a number of grounds, both factual and legal. Mr Racy has been forced to stay the Lebanese action pending the conclusion of the English action, thereby possibly prejudicing their future conduct permanently. Further, he has had to face an order for costs, and an interim payment of £75,000.
  65. Mr Nasir has elaborated on those written submissions in his oral submissions this morning. He has made four points, which he describes as central.
  66. First, he submits that the approach taken by the judge was to compare the Lebanese action and the English action, as to which he concluded that there was a substantial overlap of factual issues (a conclusion which Mr Nasir challenges), and then, according to Mr Nasir, the judge jumped to the conclusion that this was a situation which was prima facie vexatious and oppressive. He then placed upon the claimant the burden of showing good reasons why the two actions should proceed simultaneously.
  67. Secondly, Mr Nasir submits that the test of vexatious or oppressive conduct is the wrong test where, in a case such as this, different remedies are pursued in the two jurisdictions. He accepts that the court has a discretion based upon case management principles, but he submits that such a discretion should only be exercised in rare and exceptional circumstances (see the observation of Lord Bingham in Reichhold, which I quoted earlier).
  68. Thirdly, he turns to the question: What is the appropriate test to apply? He submits that the first consideration is whether there are different claims or different relief being sought in the two different jurisdictions. He accepts (although this was not something which I think was accepted before the judge) that this is not a forum non conveniens case. He submits that Reichhold was a very much stronger case than this, pointing out the factual differences in this case, to some of which I have referred. He warns us against a situation in which defendants are encouraged to apply for a stay of English proceedings where considerations of inconvenience can be raised. He submits, in effect, that this will open the floodgates to a large number of such applications.
  69. Fourthly, as I indicated earlier, he challenges the judge's conclusion that there was no substantial overlap of the factual issues. He has elaborated upon that by reference to various factual aspects of the two proceedings. He submits in conclusion that if there is a discretion to be exercised it must be confined within a narrow compass, as indicated by Lord Bingham in Reichhold. He submits that the judge's judgment (if it stands) is harsh, unfair and unjust. He submits that the judge speculated incorrectly in relation to the Lebanese proceedings, and that Mr Racy was in effect forced to discontinue those proceedings, at cost to himself and in circumstances where it may be that he is unable to revive them.
  70. Mr Nasir submits that there were good reasons for proceeding in Lebanon, which the judge in his judgment dismissed without examination or consideration.
  71. In my judgment the judge was plainly right to conclude that the two actions, that is to say the English action and the Lebanese action, are closely interconnected, in terms of the factual disputes which underlie them, for the reasons which he gave. So much, indeed, was admitted (indeed averred) by Mr Browne-Wilkinson in the course of the hearing before the judge. I have already quoted from the document which was handed in during the hearing and to which the judge made express reference in paragraph 57 of his judgment.
  72. The judge also rightly appreciated that although the factual background to the two actions overlaps to a substantial extent, the nature of the claims made in law, and the relief sought, are different. The judge recites Mr Hawila's acceptance of this in paragraphs 42, 43 and 46 of the judgment: and in paragraph 50 the judge himself accepts this. He further recognises that both actions must go to trial. He makes it clear that no anti-suit injunction is being sought in the instant case. When the judge uses the word "issues" in paragraph 50 he is plainly talking not of factual disputes but of legal claims.
  73. Thus, as the judge rightly recognised, and as Mr Nasir has accepted in the course of his oral submissions this morning, this is not a forum non conveniens case. There is no appropriate alternative forum for the claims made in the English action, any more than the English court would be an appropriate forum for the claims made in the Lebanese action. Hence no anti-suit injunction is sought. So the Spiliada principles are not applicable. There is no question here of a stay being granted so that the issues can be litigated in some other appropriate forum. The starting-point in the instant case is that there is no other appropriate forum.
  74. In paragraph 54 of his judgment the judge rightly recognised the real question which fell for decision in the terms which I quoted earlier in this judgment. The real question here then is should these actions be allowed to proceed simultaneously and, if not, which should proceed first, and what mechanism should be produced in order to produce a sensible and just result?
  75. That being so, the issue becomes essentially one of case management, as it was in Reichhold. I do not accept Mr Nasir's submission that this case goes any further than Reichhold. This is simply another case in which the judge concluded that justice and the efficient management of the case required that Mr Racy be put to his election as to which of the two actions to pursue first.
  76. He was, in my judgment, plainly right to take the view that it would be oppressive to Mr Hawila to have to face both actions simultaneously. The solution which the judge adopted of putting Mr Racy to his election as to which action to proceed with first is plainly a solution which was open to him in the exercise of his wide discretion in the interests of case management.
  77. As to the offer by Mr Racy, on which Mr Nasir relies, this was not a case in which Mr Hawila could be regarded as being unreasonable in not accepting it, for the reasons which Mr McQuater has set out in his written skeleton argument. It is accordingly not a factor of any significant weight.
  78. In my judgment the judge did not misdirect himself as to the applicable principles, nor did he take into account irrelevant factors or fail to take into account relevant factors. Nor was his decision manifestly wrong. Indeed, in my judgment, it was manifestly right.
  79. I would only refer in conclusion once again to the observations of Lord Bingham at the conclusion of his judgment in Reichhold where he said:
  80. "Should the upholding of a judge's order lead to the making of unmeritorious applications, then I am confident that judges will know how to react."
  81. In my judgment in the instant case it was the stance taken by Mr Racy in opposing Mr Hawila's application which was unmeritorious, and the judge reacted to it entirely correctly. I would dismiss this appeal.
  82. LORD JUSTICE MAY: I agree.
  83. LORD JUSTICE THORPE: I also agree.
  84. ORDER: Appeal dismissed, with costs; interim payment of £25,000, balance to be assessed.


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