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English Judge Declines Jurisdiction to Consider Iranian Commercial Dispute

The reputation of the English courts for dispensing justice predictably and fairly has made them enduringly popular with the international business community. As one case showed, however, they will only consider disputes which have a sufficient link to this country and which could not be better resolved elsewhere.

Passport stampsA businessman of dual British/Iranian nationality lodged proceedings in London claiming that almost £3.5 million, plus interest, was due to him from an Iranian national and an Iranian company which he controlled. The claim related to a loan and various services that the claimant was said to have provided in connection with an infrastructure project in Iran.

The claimant obtained an asset freezing order against the individual defendant and was granted permission by a judge to serve it on him outside the jurisdiction. The defendants responded by applying for a declaration that the courts of England and Wales had no jurisdiction to make that order.

In upholding that application, the High Court found that, despite weaknesses in his case, the claimant had a more than fanciful prospect of succeeding in his claim. However, the various dealings that gave rise to the claim had overwhelmingly taken place in Iran. The claimant owned a property in Tehran, where his wife lived, and the defendants were clearly more closely connected to Iran than England.

The Court rejected arguments that, by reason of his dual nationality, perceived shortcomings in the Iranian legal system and the individual defendant’s wealth and powerful connections in his homeland, the claimant could not expect to receive a fair hearing of his claim in Iran. An Iranian court would in a number of respects be in a better position to rule upon the matters in dispute than an English one.

In finding that Iran, rather than England, was the natural forum for the resolution of the dispute, the Court was influenced by the claimant’s failure to make full and frank disclosure of information when applying for the freezing order. He had also failed to establish that there was a real risk of assets being dissipated by the defendants. The freezing order was set aside and over £2 million that the individual defendant had been required to pay into court as security was released to him.



 
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