Madoff Securities International Ltd v Raven & Ors

Madoff Securities International Ltd v Raven & Ors

The court held that it had no jurisdiction over the BLMIS claim against the Kohn defendants under Article 6(1) of the Judgments Regulation because BLMIS was not suing the English-domiciled anchor defendants, and Article 6(1) must be interpreted restrictively. However, MSIL established a serious issue to be tried...

Source-derived case information.

Parties
Claimant: Madoff Securities International Limited; Claimant: Irving H Picard (Trustee for the SIPA liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff); Defendant: Stephen Ernest John Raven and Others; Defendant: Sonja Kohn (Ninth Defendant) and Thirteenth Defendant
Jurisdiction
England and Wales
Judgment Date
25 November 2011
Procedural Posture
Commercial Claim / Interlocutory Applications (jurisdiction Challenge and Injunctions)
Outcome
Jurisdiction over BLMIS claim declined; proprietary and freezing injunctions granted to MSIL against the Kohn defendants.
Legal Topics
Jurisdiction Under Council Regulation (ec) 44/2001, Proprietary Injunction, Freezing Injunction, Knowing Receipt, Constructive Trust, Breach of Fiduciary Duty, Ratification by Shareholders, Public Policy Exceptions, Risk of Dissipation
Company Law Civil Procedure Equity and Trusts Jurisdiction Under Council Regulation (ec) 44/2001 Proprietary Injunction Freezing Injunction Knowing Receipt Constructive Trust +4 more

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Parties

Madoff Securities International Limited

Claimant

Irving H Picard (Trustee for the SIPA liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff)

Claimant

Stephen Ernest John Raven and Others

Defendant

Sonja Kohn (Ninth Defendant) and Thirteenth Defendant

Defendant

Procedural Posture

Commercial Claim / Interlocutory Applications (jurisdiction Challenge and Injunctions)

Legal Issues

  1. 1 Whether the English court has jurisdiction over the BLMIS claim against the Kohn defendants under Article 6(1) of the Judgments Regulation
  2. 2 Whether MSIL is entitled to proprietary and/or freezing injunctions against the Kohn defendants
  3. 3 Whether the directors of MSIL breached fiduciary duties in making payments to the Kohn defendants

Ratio Decidendi

The court held that it had no jurisdiction over the BLMIS claim against the Kohn defendants under Article 6(1) of the Judgments Regulation because BLMIS was not suing the English-domiciled anchor defendants, and Article 6(1) must be interpreted restrictively. However, MSIL established a serious issue to be tried against its directors and the Kohn defendants for knowing receipt and constructive trust, as shareholder ratification does not excuse dishonest or non-bona fide transactions. There was a sufficient risk of dissipation of assets by the Kohn defendants to justify proprietary and freezing injunctions.

Court Disposition

Jurisdiction over BLMIS claim declined; proprietary and freezing injunctions granted to MSIL against the Kohn defendants.

Orders

  • No jurisdiction over BLMIS claim against Kohn defendants under Article 6(1) of the Judgments Regulation.
  • MSIL entitled to proprietary injunction and related relief against the ninth and thirteenth defendants (Kohn defendants), subject to further submissions on form.