AdActive Media v Ingrouille. On the complications of recognition and enforcement outside the Brussels regime.

As I seem to be in pedagogic blog mode today, a note on AdActive Media Inc v Ingrouille [2021] EWCA Civ 313. The case shows the complications that arise in recognition and enforcement proceedings outside of the Brussels regime. The proceedings were initiated prior to the end of the Brexit transition period however seeing as they involve a judgment from outside the EU, Brussels Ia was never engaged. Even had BIa been engaged, an interesting discussion would have ensued, I am sure, as to the impact of the arbitration exclusion on the case at issue.

The consultancy agreement between the parties (AdActive Media are incorporated in Delaware, Mr Ingrouille is resident in the UK) is by its express terms governed by the law of the State of California. It contains three provisions dealing with jurisdiction, two of which confer jurisdiction on US District and State Courts in California and the other provides for arbitration. The provision for arbitration expressly excludes claims by the company under two clauses, one of which (clause 7) contains covenants against the misuse and unauthorised disclosure of confidential information. Alleged breaches of clause 7 featured prominently in the claims made in the US proceedings. The relationship between these provisions and their effect is one of the issues arising on this appeal. The company argued before the judge who was asked to confirm recognition, that they were irreconcilable, and that the arbitration clause was ineffective. Alternatively, it argued that as the US proceedings included claims in respect of the misuse and unauthorised disclosure of confidential information, they were properly brought in the US Court.

Under the common law of recognition and enforcement, if the US proceedings were properly brought in the US Court in accordance with the terms of the consultancy agreement, that court is recognised as having jurisdiction over the claim against Mr Ingrouille and its judgment will prima facie be enforceable in England. However the lack of the Brussels’ regime mutual trust and harmonisation of jurisdictional rules means the English court will second-guess US jurisdiction under section 32 of the England and Wales Civil Jurisdiction and Judgments Act 1982 (I have copied the relevant extract below).

What follows are 50-odd paras of discussion of the scope of clause 7, reference to Fiona Trust and Enka, and a conclusion by Richards LJ that the judgment entered against Mr Ingrouille in the US proceedings cannot be enforced in England, by reason of the application of section 32(1) of the 1982 Act. Summary judgment was entered in favour of Mr Ingrouille.

Geert.

S32:

“(1) Subject to the following provisions of this section, a judgment given by a court of an overseas country in any proceedings shall not be recognised or enforced in the United Kingdom if –

(a) the bringing of those proceedings in that court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of that country; and

(b) those proceedings were not brought in that court by, or with the agreement of, the person against whom the judgment was given; and

(c) that person did not counterclaim in the proceedings or otherwise submit to the jurisdiction of that court.

(2) Subsection (1) does not apply, where the agreement referred to in paragraph (a) of that subsection was illegal, void or unenforceable or was incapable of being performed for reasons not attributable to the fault of the party bringing the proceedings in which the judgment was given.

(3) In determining whether a judgment given by a court of an overseas country should be recognised or enforced in the United Kingdom, a court in the United Kingdom shall not be bound by any decision of the overseas court relating to any of the matters mentioned in subsection (1) or (2).”

 

 

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