Judgment was handed down on 10 June in a jurisdiction challenge in Commercial Court proceedings brought by the Libyan Investment Authority (LIA) against JP Morgan and others.

The third and fourth defendants to the claim, Walid Mohamed Ali Al-Giahmi (Mr Giahmi) and Lands Company Limited (Lands), had applied to set aside service of a claim on them out of the jurisdiction. The application was brought on the grounds that the English court lacked jurisdiction because the claims had no real prospect of success as they were time-barred and this had not been adequately brought to the attention of the judge considering the application for service out. In the alternative, Mr Giahmi and Lands applied for a stay of the claim pending the resolution of proceedings in respect of the chairmanship of the LIA the result of which, it was suggested, might have a bearing on the present proceedings.

Mr Justice Bryan concluded that service of the claim on Mr Giahmi and Lands should be set aside. This was due to the LIA’s failure to discharge its duty to the court of full and frank disclosure in its application for service out of the jurisdiction. He also held that none of the claims had a real prospect of success as they were made out of time. In addition, the claims in relation to money had and received had no real prospect of success because they did not accord with the current position on such claims in English law.

In his 56-page judgment, Mr Justice Bryan found that the LIA had made a “conscious, and therefore deliberate” decision not to draw to the attention of the judge considering its application for service out the fact that there was on the face of it a limitation defence to the claims. He also said the LIA had the burden of proving that it could not with reasonable diligence have discovered the facts necessary to bring its claim more than six years before it did. The failure to draw these matters to the attention of the court was “a substantial, indeed an egregious” breach of its duty to the court and “the degree and extent of [its] culpability was of a high order”.

The judge considered the public policy behind the duty of full and frank disclosure in without notice applications. “A failure to comply with that duty is by its very nature serious – an individual or entity has been brought into the jurisdiction without having had any opportunity to address the court as to why permission should not be granted, and as demonstrated by the present case, they are then exposed to very considerable costs upon an application to set jurisdiction aside,” he said.

He held that “an adverse costs order or the like would not begin to reflect the seriousness of the breach, nor would it reflect, or adequately further, the public policy behind the duty which is fully engaged, and clearly illustrated, by the failings in the present case”, and that consequently to set aside the order for service out was ”the only appropriate sanction”.

James Price, Ian Gatt QC and Luca del Panta of Stewarts (instructing Michael Holmes of 7KBW) acted for Lands Company Limited.