Trappit v American Express Europe. On choice of court in NDAs, privity, and lis pendens viz provisionally closed Spanish proceedings.

Trappit SA & Ors v American Express Europe LLC & Anor [2021] EWHC 1344 (Ch) confirms an application to strike out or stay proceedings claiming infringement of intellectual property rights in a computer programme called ARPO (relevant to fare re-booking), and breach of non-contractual obligations of confidence that are said to have arisen when ARPO was made available by claimants (Panamanian and Spanish special purpose vehicles of 2 software engineers) to first Defendant AmEx (a Delaware corporation with a registered branch in England), for assessment. AmEx after inspection declined to take a licence. AmEx reorganised and second defendant GBT UK (a joint AmEx and private equity venture) acquired AmEx Europe’s travel management services business in the UK. GBT use an alternative software which claimants argue is effectively an ARPO rip-off facilitated by AmEx’ consultation of ARPO.

The application is made by the Defendants, who argue Claimants are contractually bound to litigate the claims in Spain rather than England (an A25 Brussels Ia argument), or that in light of proceedings that have already been brought and provisionally determined against the Second Claimant in Spain, the E&W  should decline jurisdiction (A29 BIa) or strike out the English proceedings as an abuse of process.

First on the issue of choice of court and privity under A25 BIa. Relevant authority discussed includes CJEU CDC and UKSC AMT Futures v Marzillier. At 6 ff the genesis of choice of court and law provisions in the NDA is mapped (drafts had been sent to and fro). As Snowden J notes at 76,

it is the parties related to Trappit SA who are the claimants, who sought the NDA before making ARPO available to AmEx Europe, and who asked for a Spanish law and jurisdiction clause. However, it is those parties who now contend that the jurisdiction clause does not bind them and that they are free to issue proceedings in England for breach of confidence and copyright infringement arising (so they say) from the unauthorised copying of the source code to ARPO. In contrast, it was the parties related to AmEx Europe who would most naturally be the defendants to any claim under the NDA and who originally proposed an English law and jurisdiction clause. But it is those parties who are now contending that the jurisdiction clause in the NDA binds all parties and requires all of the claims made in the English Proceedings to be litigated in Spain.

The eventual clause reads “18. Governing law and jurisdiction. This Agreement (including any non-contractual obligations arising out of or in connection with the same) shall be governed in all respects by the laws of Spain without regard to conflict of law principles. Any dispute or controversy arising in connection with this Agreement shall be submitted before the courts of the city of Madrid, Spain.”

At 77 the judge notes that the scope and the circumstances in which persons other than Trappit SA and AmEx Europe might become a party to the NDA are matters to be determined in accordance with Spanish law as the governing law of the NDA. This underestimates the impact of A25 itself and discussion of in particular CJEU Refcomp rather than the tort /contract discussion in CDC would have been appropriate. Snowden J relies on expert reports on Spanish law with respect to (i) the proper approach to contractual construction, and (ii) the circumstances in which third parties can be bound by contracts.

Conclusion on these report is that a narrow construction of the clause must be rejected: [94] ‘all types of claims arising from misuse of the information which the NDA envisaged would be provided by one party to the other. This would include claims based upon unauthorised copying and infringement of intellectual property rights as well as claims for breach of confidence,..’ (At 97-98 a side-argument based on A8 Rome II is dismissed).

As for the privity element, Snowden J finds there was no contractual intention for other corporate entities also to be parties entitled to enforce the agreement and there was no indication that any other company was intended to acquire rights (or be bound) under the NDA. Spanish (statutory) law on assignment, subrogation and the like does not alter this.

Conclusion [138]: ‘the jurisdiction clause in the NDA applied to all the claims in the English Proceedings, but that it only binds AmEx Europe and Trappit SA as the original signatories to the NDA. The effect of Article 25 is that the English courts therefore have no jurisdiction over the claims brought by Trappit SA against AmEx Europe in the English Proceedings.’ Proceedings against GBT on that basis may continue on a A4 BIa basis (neither of the UK Defendants were named defendants to the Spanish Proceedings, hence an A29 ff lis alibi pendens argument against them has no object).

Obiter viz AmEx Europe yet of relevance to the UK defendants, on Article 29 lis pendens, of note is first of all that the Spanish proceedings are criminal ones, with an embedded civil liability claim. The English Proceedings were issued prior to the provisional dismissal of the Spanish Proceedings but after the delivery of the Expert Report in those proceedings whose findings were part incorporated into the Spanish judge’s provisional dismissal.

The first, threshold issue on A29 is whether the Spanish courts are still seised of the Spanish Proceedings seeing as there is a provisional dismissal in the Spanish criminal proceedings. Authority discussed was Easygroup v Easy Rent a Car [2019] EWCA Civ 477 and Hutchinson v Mapfre was also referred to. A29 only applies where there are concurrent proceedings before the courts of different member states at the time when the court second seised makes its determination [147]. Following the reasoning in Hutchinson, the judge decides  that the Spanish courts are no longer seized of the case: experts are agreed that the case has been closed and archived, and that it is unlikely in the extreme that any new evidence would come to light so as to justify reopening the case after more than five years of extensive investigatory proceedings in Spain [158].

A final set of arguments by the defendants, based on issue estoppel (the Expert Report had found that there had been no plagiarism or copying of the ARPO source code by the Defendants), Henderson v Henderson abuse, and vexatious ligation (all under an ‘abuse of process‘ heading) is dismissed.

Conclusion [195]: no jurisdiction to entertain any of the claims made in the English proceedings between Trappit SA and AmEx Europe by reason of the application of A25 BIa. The case against the UK defendants may continue.

Geert.

EU Private International Law, 3rd ed. 2021, 2.296 ff (2.355 ff), 2.532 ff.

 

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