PREVIOUS FINDINGS OF FOREIGN LAW CAN BE BINDING: THE ACT, THE NOTICES AND A CASE

We have looked at the decision in   Kazakhstan Kagazy Plc & Ors v Zhunus & Ors [2017] EWHC 3374 (Comm) Mr Justice Picken in the context of the Foreign Limitation Periods Act.  There was a brief description of a little used part of the CPR which is worth looking at, if only for its rarity.

SECTION 4 (2) OF THE CIVIL EVIDENCE ACT 1972

Where foreign law is in issue in domestic courts this has to be proven. Section 4(1) allows this to be done by expert evidence. Section 4(2) provides a mechanism where a party can rely on a previous finding by the domestic courts as evidence of what

(2)Where any question as to the law of any country or territory outside the United Kingdom, or of any part of the United Kingdom other than England and Wales, with respect to any matter has been determined (whether before or after the passing of this Act) in any such proceedings as are mentioned in subsection (4) below, then in any civil proceedings (not being proceedings before a court which can take judicial notice of the law of that country, territory or part with respect to that matter)—

(a)any finding made or decision given on that question in the first-mentioned proceedings shall, if reported or recorded in citable form, be admissible in evidence for the purpose of proving the law of that country, territory or part with respect to that matter; and

(b)if that finding or decision, as so reported or recorded, is adduced for that purpose, the law of that country, territory or part with respect to that matter shall be taken to be in accordance with that finding or decision unless the contrary is proved:

Provided that paragraph (b) above shall not apply in the case of a finding or decision which conflicts with another finding or decision on the same question adduced by virtue of this subsection in the same proceedings.

(3)Except with the leave of the court, a party to any civil proceedings shall not be permitted to adduce any such finding or decision as is mentioned in subsection (2) above by virtue of that subsection unless he has in accordance with rules of court given to every other party to the proceedings notice that he intends to do so.”

CPR 33.7

The requirements to comply with Section 4(2) are at CPR 33.7.

Evidence of finding on question of foreign law

“(1) This rule sets out the procedure which must be followed by a party who intends to put in evidence a finding on a question of foreign law by virtue of section 4(2) of the Civil Evidence Act 19723.

(2) He must give any other party notice of his intention.

(3) He must give the notice –

(a) if there are to be witness statements, not later than the latest date for serving them; or

(b) otherwise, not less than 21 days before the hearing at which he proposes to put the finding in evidence.

(4) The notice must –

(a) specify the question on which the finding was made; and

(b) enclose a copy of a document where it is reported or recorded.”

HOW THIS WAS APPLIED IN THIS CASE

Picken J considered this in the Kazakhstan case where the claimants served a notice under CPR 33.7.

545.          Lastly on this topic, there is JSC BTA Bank v Mukhtar Ablyazov & Others [2013] EWHC 510 (Comm) to consider since, somewhat unusually, the Claimants have served notice pursuant to CPR 33.7 (and section 4 of the Civil Evidence Act 1972) of an intention to rely on a finding made by Teare J in that case at [241] that, under Kazakh law, the discretion to extend the limitation period pursuant to Article 185 extends to companies. Specifically, having heard expert evidence from two Kazakh law experts one of whom was Mr Vataev, Teare J stated as follows:

“In case, contrary to my view, the Bank was aware or ought to have been aware that its rights had been violated more than a year before the Granton action was commenced, I should consider the final point raised by the Bank. It is common ground that in Kazakh law the court has a discretion to extend the limitation where there is a ‘valid reason’ for doing so. This is not stated in any code but has been stated by the Supreme Court. Mr. Norbury submitted that this did not apply to employers who were companies rather than natural persons. He based this submission on Article 185 of the Civil Code which gives a similar discretion but which Professor Maggs said did not apply to companies. I preferred Mr. Vataev’s opinion that Article 185 also applied to companies. A purposive construction leads to the conclusion that a company can rely upon the discretion just as a natural person can. In any event there was no evidence that the Supreme Court restricted its ruling to employers who were natural persons.”

As indicated in the opening words of this passage, Teare J was here dealing with an issue which did not, strictly speaking, need to be determined. This is because in the previous paragraph Teare J had reached the conclusion that the claimant bank in that case was neither aware, nor should it have been aware, that its rights were violated more than a year before the relevant action was commenced. It is, in fact, worth setting out what Teare J had to say on that issue at [240] because, although clearly highly fact-specific, a number of the considerations which he regarded as relevant to the ‘awareness’ issue were clearly regarded by him as reasons why time should be extended:

“Notwithstanding the absence of direct evidence from the Bank I cannot turn a blind eye to the realities of the situation of the Bank between February and June 2009 and to the inherent probabilities. Upon nationalisation the new management of the Bank had a considerable task. The AFN had requested the nationalisation because the old management had not made the substantial provisions of US$3.58 billion demanded by the AFN against its loan portfolio. The Bank’s auditors reported in May 2009 that the Bank’s liabilities exceeded its assets by US$6.2 billion. In these circumstances it is, it seems to me, more likely than not the Bank’s new management concentrated on the survival of the Bank in the early months of 2009 rather than upon possible claims against Mr. Ablyazov and Mr. Zharimbetov (who had fled to England) arising out of the operation of the loan portfolio. Although KPMG had investigated the loan portfolio prior to the arrival of PWC it seems likely, as stated by Mr. Kenyon, that such efforts were directed towards the restructuring of the Bank. The number of loan projects was about 300 which had generated some 3,700 loans. Any attempt to discover what claims there were against the former management would have been, and no doubt was, a very considerable and detailed exercise. I consider it more likely than not that by mid-June 2009 the Bank was not aware of the violation its rights in respect of the Later Loans and could not reasonably have been expected to be. The fact that the AFN had found many loans to be potential problem accounts including the Later Loans is evidence that losses may be sustained on them, not that losses had been sustained or that the Bank’s rights had been violated. It was hardly unreasonable for the new management to concentrate on the survival of the Bank rather than on investigating potential claims between February and June 2009. Nor does knowledge that the police were bringing charges against Mr. Zharimbetov in March 2009 establish an awareness on the part of the Bank that its rights had been violated in respect of the Later Loans. That would require a very detailed knowledge of the police investigations. Whilst it is probable that there was some contact between the new management and the police it is also probable that the new management concentrated on the Bank’s survival and left the police to carry out their own investigations.

Drawing on these various matters when explaining why he considered it appropriate that time be extended, Teare J stated as follows at [242]:

“I consider that there is a valid reason to extend the limitation period (which would otherwise expire on an unidentified date between February and 17 June 2010) until 17 June 2010 when the Granton action was commenced. That valid reason was that it was reasonable to delay the commencement of proceedings against Mr. Zharimbetov until (a) PWC had had an opportunity to carry out a systematic investigation of the loan portfolio with a view to identifying claims against the former management (b) the management had had an opportunity to consider the results of PWC’s investigations and (c) legal advice had been obtained with regard to such claims. Such delay was reasonable having regard to the magnitude of the sums involved and the complexity of the investigation required to establish the frauds alleged by the Bank.”

546.          As will become apparent when I come on shortly to address whether it would be appropriate to disapply the limitation periods in the present case pursuant to the Foreign Limitation Periods Act 1984, Mr Howe’s submissions on that question are not dissimilar to the matters identified by Teare J as justifying an extension of time in the BTA Bank case. What matters, for present purposes, however, is that it is quite clear that what Teare J had to say concerning Article 185’s applicability to companies was obiter. First, Teare J was dealing with the operation of a one-year limitation period applicable under Article 172 of the Labour Code (see [219]), and even then only in circumstances where he had actually decided that that one-year limitation period was inapplicable given that breaches of Articles 62 and 63 of the JSC Law were alleged (see [230] and [231]). Secondly, as made clear by Teare J in [241] itself the discretion exercisable under Kazakh law to extend the limitation period where there is a “valid reason” is “not stated in any code but has been stated by the Supreme Court”. Accordingly, Article 185 had no application and was only raised before Teare J by way of analogy. Thirdly, no doubt for this very reason, Teare J did not need to analyse Article 185’s wording or consider any of the Kazakh decisions concerning the applicability of the provision to legal entities (as opposed to natural persons). In the circumstances, I struggle to see how it can be the case that Teare J made any relevant determination for the purposes of section 4 of the 1972 Act. I agree with Mr Twigger also that, even if Teare J should be taken as having made a determination, since the effect of section 4(2)(b) is only that the Kazakh law “shall be taken to be in accordance with that finding or decision unless the contrary is proved”, it is open to me to reach a contrary conclusion based on the evidence which is before me, both in the form of the expert evidence and the various Kazakh law decisions which I have had the benefit of looking at. In short, I am not bound by Teare J’s decision in the BTA Bank case and, accordingly, see no reason to change the conclusion which I have, for the reasons explained, reached in relation to the applicability of Article 185.