IGCF SPC: Submission to a Foreign Jurisdiction and Participation in Foreign Proceedings

In a Nutshell

The Privy Council (“PC”) considered the legal test for determining when a party will be held to have submitted to the jurisdiction of a foreign court by taking a step in foreign proceedings. It confirmed that the test as a matter of Cayman Islands law for an anti-suit injunction is the same as that which applies for the enforcement of a foreign judgment and reflects the position in other common law jurisdictions. That is, a party submits to a foreign court’s jurisdiction if it takes a step in the foreign proceedings that is only necessary or useful if an objection to jurisdiction has been waived or never existed. In other words, a step that is not consistent with or relevant to challenging jurisdiction or seeking a stay of the foreign proceedings will constitute a submission.

This confirms that Cayman Islands law on when a party will have submitted to the jurisdiction by taking a step in foreign proceedings is aligned with that of other leading common law jurisdictions. The guidance provided will be the first port of call when considering such questions.

Background

The parties were shareholders in KES Power Ltd (“KESP”), a Cayman Islands company that held a majority interest in the Pakistan utility company, K-Electric Limited (“KEL”). A dispute arose relating to the appointment of directors to the boards of KESP and KEL. In proceedings in Pakistan, the appellants obtained an ex parte interim injunction preventing any changes to the board of KEL. The respondent brought an application in the Pakistan proceedings challenging the jurisdiction of the Pakistan court and seeking a stay of the proceedings in favour of arbitration and an application seeking to vary the terms of the interim injunction. The respondent then obtained an anti-suit injunction from the Grand Court (the “Court”) to restrain the appellants from continuing the proceedings in Pakistan, relying on the exclusive Cayman Islands jurisdiction clause in the shareholders agreement between the parties.

Issue

In determining whether the respondent had submitted to the jurisdiction of the court in Pakistan, which would be a strong factor against the Court granting anti-suit relief, the PC had to consider whether the rule in Henry v Geoprosco International Ltd² (“Geoprosco”) is part of the law of the Cayman Islands. In Geoprosco it was held that a defendant who voluntarily appears in foreign proceedings to invite the foreign court not to exercise its jurisdiction will be deemed to have submitted to that jurisdiction. The appellants argued that by making applications in Pakistan
– particularly the application to vary the interim injunction
– the respondent had submitted to the jurisdiction of the Pakistan court.

Decision

The PC undertook a detailed review of the historical development and criticism of the Geoprosco rule, ultimately concluding that it is not part of Cayman Islands law. The PC agreed with longstanding academic and judicial criticism that Geoprosco rests on an illogical and unrealistic distinction between challenging the existence of jurisdiction and challenging the exercise of an admitted jurisdiction. If the substance of an application is to resist a foreign court taking jurisdiction, it should not matter how that application is characterised.

The PC held that Cayman Islands law reflects the approach in Rubin v Eurofinance SA³. That is, a party submits to a foreign court’s jurisdiction if it takes a step in the foreign proceedings that is only necessary or useful if an objection to jurisdiction has been waived or never existed. In other words, a step that is not consistent with or relevant to challenging jurisdiction or seeking a stay of the foreign proceedings will constitute a submission. An application to stay foreign proceedings in favour of arbitration or an exclusive jurisdiction clause will not amount to a submission. Accordingly, the same approach governs whether there has been a submission to foreign jurisdiction for the purposes of recognising and enforcing a foreign judgment in the Cayman Islands and for the grant of an anti-suit injunction by the Court.

On the facts in this case, the steps taken by the respondent in Pakistan, including applying to vary the interim injunction, were in substance part of resisting the Pakistan court’s assumption of jurisdiction, so did not amount to a submission to the jurisdiction of that court.

¹ [2025] UKPC 54
² [2025] UKPC 54 22 [1976] QB 726
³ 23 [2012] UKSC 46