Which ‘Dubai’? Guest post on Goel v Credit Suisse. The DIFC Court of Appeal on choice of court for ‘the Courts of Dubai’.

This guest  post was written by Ahmed Alzaabi, a legal researcher based at Abu Dhabi. It is great material for comparative conflicts purposes, as it highlights issues like ‘clearly demonstrated’ choice of court, hybrid jurisdiction clauses, and lex contractus for choice of court. Geert.

Introduction

The Dubai International Financial Center Court of Appeal (DIFC CA) delivered an interesting judgment in Goel and others v Credit Suisse (Switzerland) Limited [CA-002-2021} on 26 April 2021, which addresses the DIFC Courts opt-in jurisdiction. It is the most important decision since the opt-in clauses came into force in 2011. The case deals with personal guarantees entered into by Goel and others as Guarantors, and Credit Suisse AG as Lender. A term of the guarantee agreements refers to the jurisdiction of the “Courts of Dubai”.

An ex parte application was filed before the DIFC Court of First Instance (CFI) and was dismissed by H.E. Justice Ali Al Madhani on ground that the words “Courts of Dubai” were not specific, clear and express as required by Article 5(A)(2) of the DIFC Judicial Authority Law[i] (“JAL”) to opt-in into the DIFC jurisdiction.

The application was appealed and determined by Justice Wayne Martin, who ruled that the DIFC CFI has the jurisdiction to hear and decide any substantive claim filed by the Respondent. Justice Wayne Martin issued a world-wide freezing order (WFO) against the Guarantors and the order was appealed on the basis that the jurisdiction term in the Guarantee Agreements refers to the Courts of Dubai, and not to the DIFC Courts, therefore, the DIFC Courts shall have no jurisdiction to decide on this matter. The DIFC CA dismissed the appeal and upheld the ruling of Justice Wayne Martin.

Overview of the dispute:

  • Description of the parties. Credit Suisse AG (was a DIFC Establishment), and Credit Suisse (Switzerland) LIMITED (Respondent) are both subsidiary banks wholly owned by a Credit Suisse Group (a company registered in Switzerland). Goel and others (Appellants) are shareholders and directors of GP FZC (a parent company of GP Group of companies and offices all over the world).
  • Facts. On 13 May 2016, the Appellants entered into Guarantee Agreements with the Credit Suisse AG guarantying the performance of various borrowers of GP Group under a Credit Facility Agreement. Furthermore, on September 2016, Guarantee Transfer Agreements were signed between the Credit Suisse AG and the Appellants providing for the transfer of the rights and obligations of the guarantees to benefit the Respondent. The Appellants undertook to perform their obligations toward the Respondent as if the Respondent has been a party to the original Guarantee Agreements. At the time of signing the Guarantee and Transfer Agreements, the Credit Suisse AG was a “DIFC Establishment” within the definition of DIFC JAL. Neither Appellants nor Respondent were a DIFC Establishment.

The Guarantee Agreements provide in its clause 16 that the governing law is the Law of the Emirate of Dubai and the Applicable Federal Law of the United Arab Emirates. Clause 17 of the Guarantees (enforcement provision) refers to the jurisdiction of the Courts of Dubai, and clause 17.1 entitles the lender, Credit Suisse AG, to initiate legal proceedings before any other competent court. On the other hand, clause 7 of the Guarantee Transfer Agreements[ii] refers to the applicable law and jurisdiction, which states that any contractual or non- contractual obligations of the Transfer Agreements shall be governed by the Laws of the Emirate of Dubai, and the applicable Federal Laws of the United Arab Emirates. In addition, any dispute arising out of the Transfer Agreements which relates to any provisions of the Guarantees (as transferred and amended) shall be subject to the same jurisdictional provisions of the Guarantee Agreements.

  • Proceedings. The Respondent filed an application before the DIFC CFI requesting for a world-wide freezing order (WFO) to restrain the Appellants from dealing or disposing of their assets until the determination of the Respondent’s substantive claim. The CFI dismissed the claim on the ground that it has no jurisdiction, and stated that the order sought would have been granted if the court has the jurisdiction, as the Respondent made all the grounds for making such order. The Respondent appealed that decision, and the CA allowed the appeal and upheld that the judge of CFI should have granted that order on the basis that there is a good arguable case to the extent that the court has the jurisdiction. The CA added that, the CFI judge should have leave it open to the Appellants to challenge the court’s jurisdiction. Following this decision, the WFO was issued on 13 September 2020 and served on the Appellants. The Appellants filed an application to challenge the court’s jurisdiction arguing that the court lacked jurisdiction to issue that decision, and requested to dismiss the proceedings. Justice Martin, the assigned judge to hear the Appellants’ application, dismissed the application and held that DIFC Courts had the jurisdiction to hear and determine the Respondent’s substantive claim and the WFO against the Appellants, and he published his interesting reasoning for that decision on 4 October 2020.
  • CFI Decision. It was common ground for the judge and the parties that the applicable law governing the guarantees are the laws of the Emirate of Dubai and the applicable Federal Law of the United Arab Emirates. Justice Martin referred to Article 6 of the JAL, which provides that “the Court shall apply the DIFC Laws and Regulations, except where the parties have explicitly agreed to another law to govern the dispute, provided that that law doesn’t contradict with the public policy and morals”. Accordingly, he pointed that this article clarifies that the parties may select another governing law than DIFC Laws. However, the choice made by the parties will not place the dispute outside the DIFC Courts jurisdiction.

Justice Martin then focused on whether the Court has the jurisdiction to enter the WFO in support of the Respondent’s substantive claim. He had to determine a question of if the Respondent could establish that the claim against the Appellants passed through one or other of the “gateways” to the jurisdiction of the CFI as stipulated in Article 5 of the JAL. His finding was that the only available “gateway” is Article 5(A)(2) of the JAL, which states the following: “the Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions”. He further noted that the Respondent submitted and Appellants denied that clauses 17.1 and 17.2 of the Guarantee Agreements constitute an agreement in writing within the meaning of Article (5)(A)(2) of the JAL.

Justice Martin analysed the UAE Civil Transactions Code as a governing law applied to the contract and cited Articles 258 and 265, which address the intention of the parties to a contract. He also looked at a commentary on the Civil Transactions Code approved by the Ministry of Justice. The result of his analysis is that: “the both UAE legal system and the common law require the Court to confirm the join intention of the parties. The joint intention could be ascertained by interpreting words which the parties have used to record their agreement objectively, as they would be understood by a reasonable business person having the knowledge of the circumstances known to the parties at the time they entered into their contract”.

Justice Martin then referred to three prior decisions of DIFC Courts (Sunteck, Taalem, and IGPL), in which the CA rejected the proposition that the words “Dubai Courts” mean only non-DIFC Courts. He extracted from these three decisions the following propositions:

(a) it is not mandatory for the contract to specifically refer to the jurisdiction of the “DIFC Courts” to consider the gateway to the jurisdiction specified by Article 5(A)(2) of the JAL;

(b) the Court is to determine the question whether the joint intention of the parties meant to select the jurisdiction of DIFC Courts to hear such kind of dispute;

(c) that question could be resolved by referring to the natural and ordinary meaning of the jurisdictional words as the parties would have been mutually understood them having regard to the circumstances, the nature of the agreement and the context in which the words are used;

(d) if the Court concluded that the parties intended to refer to the DIFC jurisdiction when using the words recorded in their contract, those words will satisfy the requirements set by Article 5(A)(2) ““specific, clear and express provisions”;

(e) the words (Dubai Courts) or (Courts of Dubai) in their natural and ordinary meaning refer to all courts established in the Emirates of Dubai, including the DIFC Courts and the non-DIFC Courts;

(f) if one of the parties was a DIFC establishment at the time of signing a jurisdiction agreement, the other party would have taken into consideration and understood that the DIFC Courts, by default, would have the exclusive jurisdiction within Dubai to hear and determine any dispute arising out of that agreement. It would require a clear and express words to come to the result that the parties’ mutual intention is to exclude the jurisdiction of DIFC Courts.

Justice Martin selected the IGPL among the other two decisions, although it was an opt-out and not op-in case, but it shares common facts which are relevant to the question that the judge has to decide. The similarities with IGPL being (a) the relevant agreements were governed by the applicable Laws of UAE; (b) the words used in the jurisdiction agreements were identical (c) one of the party was a DIFC establishment at the time that the jurisdiction agreements were signed. Given those similarities, Justice Martin was bound to apply the reasoning in IGPL to conclude that clause 17.1 of the Guarantee Agreements indicates the mutual intention of the parties at the time that the agreements were signed. He highlighted that Credit Suisse AG was a DIFC Establishment at the time the guarantee agreements were signed. This constitutes a strong indication that the mutual intention of the parties was to include DIFC Courts within the meaning of the words “Courts of Dubai”. There was no indication of mutual intention of the parties to exclude DIFC Courts jurisdiction.

The judge stated the following circumstances which support the proposition that the words ‘Courts of Dubai’ should hold ordinary meaning to include DIFC Courts: “(a) the agreements are all in English language (the DIFC Courts operate in English); (b) Credit Suisse AG is a Foreign Company, incorporated in Switzerland; (c) a number of the borrowers under the Credit Facility Agreement were incorporated in foreign jurisdictions; (d) the Guarantors are all Indian nationals with Indian passports; and (e) clause 17.3 of each Guarantee expressly recognises the prospect of enforcement proceedings in foreign jurisdictions. These circumstances support the proposition that the parties have intended to refer to a court within the Emirate of Dubai which has an international characteristic as well as an onshore court of Dubai.

  • DIFC CA Decision. The Appellants challenged the CFI decision after the permission of appeal has been granted and provided that the CFI does not have jurisdiction to determine the substantive claim against the Appellants including the WTO application. The appeal was unsuccessful. The CA upheld that the jurisdiction clause used in the contract was a solid agreement to opt-in to the DIFC Courts’ jurisdiction in accordance with article 5 (A)(2) of the JAL. The CA added that when the term “the courts of Dubai” is used in an agreement, it has an ordinary meaning that refers to all courts incorporated within the Emirate of Dubai, including DIFC’s and non-DIFC’s Courts. Furthermore, the CA confirmed that the intention of the parties when they signed the agreement with a DIFC Establishment did not change the obligations on the Appellants when the Guarantee Transfer Agreements are signed in favour of a non DIFC Establishment. The CA then looked at the question of whether the clarity of the term “the courts of Dubai” is enough for the purposes of the gateway to jurisdiction within Article 5(A) (2) of the JAL.  The CA added that if as a matter of contractual construction, the parties had intended to agree that the DIFC Courts should have jurisdiction over their disputes, it would be a triumph of form over substance to hold that they failed because they did not use the term “DIFC Courts. On that note, the CA ruled that the parties’ contract was “specific, clear and express” enough to opt-in to the jurisdiction of the DIFC Court.

The CA highlighted in its conclusion that the construction of terms such as “courts of Dubai” will rely upon their context. Moreover, the transactions’ history matter in this case is significant to the constructional conclusion.

  • Conclusion. This case points out that the parties wishing to include or exclude DIFC jurisdiction should use a clear and express language in their contract to minimise jurisdictional disputes risk and avoid any ambiguity.

Royal Carribean v Browitt. On agency, consumer consent and choice of court Down Under.

Royal Caribbean Cruises Ltd v Browitt [2021] FCA 653 is a great addition to the comparative conflicts binder, particularly from the angle of ‘consent’ in business to consumer contracts. It also engages a classic tripartite relation between the consumer, signing a contract with a travel agent, whose GTCS in turn incorporate the GTCS of the carrier.

The case follows on from the December 2019 volcanic eruption at Whakaari.  (Mrs Browitt), for herself and as representative of the deceased estates of her late husband Paul and late daughter Krystal, and Stephanie (Ms Browitt), a daughter who survived the eruption with horrific injuries, are suing Royal Caribbean Cruises Ltd (RCCL), a Liberian registered company headquartered and operating in Miami, Florida, in the courts at Miami. There are applicable law and procedural advantages (incl discovery and trial (both on culpability and level of damages) by jury).

RCL Cruises Ltd (RCL) and RCCL apply for anti-suit in the FCA arguing that the Browitts were passengers on the Ovation of the Seas pursuant to a contract of carriage between the Browitts and RCL as the disponent owner and operator of the vessel. They seek a declaration that it was a term of the contract, signed at Flight Centre in Victoria, Australia, that any disputes between the parties would be subject to the exclusive jurisdiction of the courts of New South Wales.

The list of issues to be determined is long but I repeat it here anyways for they highlight the complexity of issues following a routine purchase of a cruise:

(1)    Was Flight Centre the agent of Mrs Browitt, RCL or both?

(2)    Were the RCL AU terms, including the exclusive jurisdiction clause, incorporated into the contract of carriage by: (a)    reference in the Flight Centre terms and conditions signed by Mrs Browitt on 14 February 2019? (b)    the text of a Royal Caribbean brochure? (c)    links on the RCL AU website? (d)    links in emails? (e)    links in the electronic guestbook?

(3)    As to the construction of the RCL AU terms: (a)    is RCL entitled to invoke the exclusive jurisdiction clause to restrain the Florida proceedings? (b)    is RCCL entitled to rely on the exclusive jurisdiction clause? (c)    did the purchase of insurance exclude the operation of the terms (cl 1)? (The respondents later dropped reliance on the purchase of insurance as excluding the operation of the exclusive jurisdiction clause, so this issue fell away.) (d)    does the contract of carriage apply to shore excursions (cl 25)? If not, does the exclusive jurisdiction clause nonetheless operate to restrain the Florida proceedings? (e)    does the exclusive jurisdiction clause permit a proceeding to be brought in the Federal Court of Australia sitting in New South Wales, and if not, what consequence follows from the commencement of this proceeding (cl 1, cl 37/38)? (f)    does the exclusive jurisdiction clause cover the Florida proceeding?

(4)    Is RCCL entitled to relief on the basis of the RCL AU terms?

(5)    Is the Florida proceeding vexatious and oppressive such that RCL and RCCL are entitled to an anti-suit injunction?

The judge held that although the Browitts were bound by the RCL AU terms, the Florida proceeding is not in breach of the exclusive jurisdiction agreement in those terms because RCCL is not a party to the agreement and RCCL does not enjoy the benefit of it. Also, there is no basis for the alternative case that the Florida proceeding is in any event vexatious and oppressive such as to justify an order restraining Mrs Browitt and Ms Browitt from pursuing it.

Terms and conditions were available on relevant websites and brochures, shown to and browsed by Mrs Browitt but not for the purposes of terms and conditions. Rather, as one would expect, for details of the journey, vessels etc. Unlike a quote, the eventual invoice included as part of the document three pages of booking terms and conditions. Some of those were highlighted in the copy made available to Mrs Browitt  Mrs Browitt could have read the GTCS but there was no inidcation she had or had been specifically pointed to them. Nothing in either version of the invoice, i.e., that which was printed for and signed by Mrs Browitt and that which was emailed by the agency, identifies which of RCCL and RCL was offering the cruise or operating the vessel.

The judgment, which I would invite readers to consult, eventually boils down to limitations of ‘agency’, privity of contract, and clear determination of contractual clauses. It does not decide for the Browitts on the basis of a particular concern for the weaker party in a classic B2C transaction, rather on the need for parties clearly to think through their spaghetti bowl of overlapping arrangements and GTCs when hoping to rely on them in court.

Geert.

C – A Child. The Family Court rejects reflexive application of the Maintenance regulation’s lis pendens rules.

C (A Child) [2021] EWFC 32 involves an application brought by a mother (M) against the father (F) in relation to their daughter (C). M was born in Russia and is a citizen of Finland. Her mother and step-father live in France, where C was born in August 2014. F was born in Sweden and is resident in Monaco. Does the English court have jurisdiction to hear M’s application?

F had made his own, clearly pre-emptive application (ia involving a denial of fatherhood – later corrected by the DNA testing) in Monaco about a week earlier than M’s. That application is translated at [3] and it unfortunately illustrates the quasi inevitably acrimonious nature of these kinds of applications. In March 2021 the courts at Monaco declared they had jurisdiction for the father’s parentage and subsidiary maintenance claim. The father incidentally in late December 2020 also issued pre-emptive proceedings in Grasse, France, with a view to establish an EU court being seized prior to Brexit date.

F cites a wide variety of CJEU authority re the maintenance regulation’s forum shopping potential which eventually fails, inter alia for [47] it is the maintenance creditor, not the debtor, which the EU system aims to protect (reference also to Villiers v Villiers).

At 15 ff counsel for F argues reflexive effect of the Maintenance Regulation’s lis pendens rule, referring pro inspiratio to Ferrexpo. Munby J adroitly describes the theory of reflexive effect as being one of domestic, i.e. English law, not EU law. He rejects reflexive effect of the lis pendens rules, mostly [57] because of the very different nature of maintenance obligations. (For similar reasons he distinguishes [58] the Court of Appeal’s reflexive effect of the Lugano lis pendens rules in Privatbank – which in my view was wrongly decided).

Argument rejected therefore for reflexive effect of the EU Maintenance Regulation 4/2009.  Habitual residence of M was found to be in E&W, amongst an acrimonious parties’ to and fro on abusive forum shopping and maintenance tourism.

An interesting judgment.

Geert.

 

Windhorst v Levy. The High Court on the narrow window to refuse a Member State judgment under Brussels Ia, which subsequently got caught up in insolvency.

Windhorst v Levy [2021] EWHC 1168 (QB) has been in my in-tray a little while. The court was asked to consider whether registration of a German judgment under Brussels Ia should be set aside when the judgment debt in question was subsequently included within a binding insolvency plan, which is to be recognized in E&W pursuant to the European Insolvency Regulation  – EIR 1346/2000 (not materially different on this point to the EIR 2015). Precedent referred to includes Percival v Moto Novu LLC.

Appellant argues the registration order should be set aside as the initial 2003  judgment is no longer enforceable, having been waived as part of a binding insolvency plan, which came into effect by order of a German court on 31 August 2007 (“the Insolvency Plan”), and which this court is bound to recognize under the Insolvency Regulation.

In CJEU C-267/97 Coursier v Fortis Bank SA (held before the adoption of the EIR) it was held that enforceability of a judgment in the state of origin is a precondition for its enforcement in the state in which enforcement is sought. However that judgment then at length discussed what ‘enforceability’ means, leading to the Court holding that it refers solely to the enforceability, in formal terms, of foreign decisions and not to the circumstances in which such decisions may in practice be executed in the State of origin. This does not require proof of practical enforceability. The CJEU left  it to ‘the court of the State in which enforcement is sought, in appeal proceedings brought under [(now) Brussels Ia], to determine, in accordance with its domestic law including the rules of private international law, the legal effects of a decision given in the State of origin in relation to a court-supervised liquidation.’

The respondent contends that, applying the test laid down in Coursier v Fortis, the 2003 Judgment plainly remains enforceable in formal terms under German law.

The judge, at 52 ff, refers ia to CJEU Prism Investments and Salzgitter to emphasise the very narrow window for refusal of recognition, and holds [56] that the German judgment clearly is still formally enforceable in Germany (where enforcement is nota bene only temporarily stayed pending appeal proceedings). The effects of the German insolvency plan, under German law, are not such that the 2003 judgment has become unenforceable [58].

The request for a stay of execution is also denied, seeing as the appellant chose not to pursue a means available to it under German law and before the German courts, to seek a stay (it would have required it to put down the equivalent sum as court security).

Geert.

EU Private International Law, 3rd ed. 2021, 2.560 ff, 5.141 ff.

Winslet & Ors v Gisel. Textbook application of De Bloos and looking over the fence to determine forum contractus.

Winslet & Ors v Gisel, The Estate of [2021] EWHC 1308 (Comm) is a brilliant example to teach the ‘looking over the fence’ method for determining forum contractus under Article 7(1), for contracts that do not fall within the default categories and whence the CJEU De Bloos place of performance bumps into the limits of harmonisation following CJEU Tessili v Dunlop. Confused?: the judgment certainly helps.

Claimants, domiciled at England, seek to recover from the estate of a late friend, a considerable sum by way of repayment of principal in respect of a number of interest-free loans between friends (the borrower domiciled at France).

At [16] Butcher J holds (despite considering the broad interpretation of ‘services’ by the AG in Corman-Collins /Maison du Whiskey) ‘In my judgment, the simple provision of money to a friend, which is not undertaken as part of a business of lending money, probably does not qualify as the provision of a service’ (per A7(2), GAVC – reference is made to C-533/07 Falco Privatstiftung v Weller-Lindhorst [29]: “The concept of services implies, at the least, that the party who provides the service carries out a particular activity in return for remuneration.”

The answer to the question ‘what is the place of performance of the obligation to repay’ therefore leads to Rome I per CJEU Tessili v Dunlop and to Article 4(2) Rome I. [26]

‘In the context of banking services, it is, at least ordinarily, the lender that renders characteristic performance of a loan agreement in providing the principal sum to the borrower’ (reference to CJEU Kareda). [27] ‘The question of which party renders the characteristic performance of a loan agreement outside the sphere of financial services has been viewed as rather less clear cut.’ [32] ‘pursuant to the contracts of loan which are in issue, claimants loaned money in return for a promise to repay.’ They, it is held, rendered characteristic performance under the Loans.

As a result, the Loans are governed by English law, as England is the place where each claimant has his or its habitual residence, and English law therefore determines the place of performance, which it does at the creditor’s place of residence or business (contrary it would seem to the position under French law.

Superbly clear analysis.

Geert.

EU private international law, 3rd ed. 2021, 2.401 ff.

ID v LU. A voluntarily appearing defendant cannot serve as anchor for another under the English residual rules (as indeed under BIa).

In ID v LU & Anor [2021] EWHC 1851 (Comm) Pelling J discusses a challenge to jurisdiction in which each of the parties are Ukrainian nationals. Brussels Ia applies but is only engaged viz one of the defendants. Claimant and second defendant are both domiciled and resident in Ukraine. The first defendant is a Ukrainian national who is and was at all material times domiciled in an otherwise unidentified EU Member State.

Claimant alleges that the second defendant approached him requesting that he move his corporate banking business to the second defendant, a Bank. Following discussions, the claimant agreed to do so and considerable funds  were placed with The Bank. The claimant’s case is that he agreed to do so only after the second defendant agreed that he would undertake personal responsibility for all monies that the companies placed with The Bank. The claimant alleges that it was expressly agreed by the claimant and second defendant that this oral agreement was governed by English law.

There was more tro and fro however I focus here on the jurisdictional challenge. With reference to Article 4 BIa and the most recent authority of Vedanta, the judge holds that in principle the defendant with EU domicile has a right to refuse to be sued other than in his place of domicile. However that defendant acknowledged service, indicating an intention to defend the claim but not to contest jurisdiction. This leads the judge to conclude, after some discussion, that there is A26 BIa submission (aka voluntary appearance).

Next follows an important discussion on the circumstances in which a defendant who voluntarily submits, may serve as an anchor defendant under the English residual rules.  It would certainly not be possible under Brussels Ia. The relevant rule in the practice directions (this is ‘Gateway 3’) reads

“3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –… 3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and  – a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

Second defendant argues claimant is not entitled to rely on Gateway 3 because the first defendant is not a defendant who is to be treated as being a person on whom the claim form has been or will be served because the court has jurisdiction over the first defendant only because he has voluntarily submitted to the jurisdiction of the English Court. The overall nature of the discussions on this issue essentially discuss the need to avoid abuse. Of note in this respect is the judge finding [41] that there is ‘no evidence that suggests that there was any agreement reached between the claimant and the first defendant by which the first defendant agreed to submit to the jurisdiction of the court prior to the issue of the Claim Form in these proceedings or for that matter afterwards.’

Nevertheless the judge holds that the current authorities in particular the Court of Appeal in the Benarty [1983] 1 Lloyds Rep 361, continue to not permit a claimant to rely on an anchor defendant who has voluntarily submitted to the jurisdiction when he could not otherwise have been served in accordance with the CPR. Obiter he holds that while there is a real issue to be tried against the second defendant, the contract gateway for jurisdiction (which would require English law to be the lex contractus) is not engaged. No clearly demonstrated will exists for English law to be lex voluntatis per Rome I [76] and [80]

There is no plausible evidential basis to submit that that the governing law identified by either Article 4(2), 4(3), or 4(4) [of Rome 1] would be English law. The Tripartite Agreement was, if made: (a) agreed between three Ukrainians who reside (or resided) in Ukraine and/or [The EU Member State]; (b) agreed in, variously, [The EU Member State], Ukraine, and France; (c) premised on a further agreement said to have been agreed in Ukraine, between two Ukrainians, in respect of deposits made by Ukrainians into a Ukrainian bank; (d) to be performed outside England. No party has provided any evidence of any connection between themselves, or the Tripartite Agreement, and England”

Neither does the tort gateway help [83]:

There is no evidence that at any stage any of the contact that took place leading to what the claimant contends to be the inducement of a breach by the first defendant of the Tripartite Agreement took place otherwise than in either Ukraine or The EU Member State.

At [86] ff England is, equally obiter, held to be forum non conveniens.

Lack of jurisdiction against the second defendant is confirmed. One imagines there might be ground of appeal given the change to the practice directions’ formulation after the Benarty and the need to clear up this principled issue.

Geert.

Lakatamia Shipping. On (in)direct damage, applicable law (A4(3) Rome II) and conspiracy.

Lakatamia Shipping Co Ltd v Su & Ors [2021] EWHC 1907 (Comm)  discusses i.a. [840 ff; this is a lengthy judgment] the applicable law in the case of conspiracy. Lakatamia advance two claims against the Defendants, the first re dissipation of two assets (net sale proceeds of two Monegasque villas – the Monaco conspiracy and a private jet – the Aeroplane conspiracy)  in breach of a World Wide Freezing Order (“WFO”)  and secondly re intentional violation of rights in a judgment debt.

Lakatamia’s case as claimants is that English law applies to the claims regarding both conspiracies, whilst Madam Su’s case is that Monaco law applies to the claim regarding the Monaco Sale Proceeds and that an unspecified law (but not English law) applies to the Aeroplane Conspiracy.

None of the specific categories of torts in the Rome II Regulation are said to apply, bringing the focus therefore on the general rule of Article 4(1), with firstly its insistence that only direct damage determines lex causae, not indirect damage.

At 843 Bryan J, like claimants, focuses on the judgment:

the focus being on the freezing order and judgment, with the damage to Lakatamia being suffered in England as that is the situs of the Judgment Debt arising out of the Underlying Proceeding in England, policed by the… Freezing Order, and that is where the Judgment Debt stands to be paid, and where Lakatamia suffers damage if it is not paid or the ability for it to be paid is impaired – put another way England is the country where the Judgment Debt should have been paid, and the damage has accordingly occurred here.

To support the point, at 845 ff English and CJEU authority (much of it also reviewed on this blog) under A7(2)BIa is discussed albeit the judge correctly cautions ‘Authorities on the Brussels Regulation are “likely to be useful” but are not of direct application’. Core reference is Pan Oceanic,

(6)  There is a difference between a case in which the claimant complains that he has lost his money or goods (as in the Marinari case [1996] QB 217 or the Domicrest case [1999] QB 548 ) and a case in which the claimant complains that he has not received money or goods which he should have received. In the former case the harm may be regarded as occurring in the place where the money or goods were lost, although the loss may be said to have been consequentially felt in the claimant’s domicile. In the latter case the harm lies in the non-receipt of the money or goods at the place where they ought to have been received, and the damage to him is likely to have occurred in the place where he should have received them: the Dolphin case [2010] 1 All ER (Comm) 473 , para 60 and the Réunion Européenne case [2000] QB 690 , paras 35-36. (emphasis in the original).

I am not entirely convinced. While it is true that the conspiracy clearly impacts on the receipts, this is the consequence of actual behaviour by defendants elsewhere, with actual impact of that behaviour in that same place abroad. I do not think it is inconceivable to qualify the damage in England as ricochet hence indirect damage. The discussion here leads to CJEU Lazar which, it would seem, was not discussed in the proceedings.

At 860 at any rate, the judge lists his reasons for picking English law as the ‘proper law of the tort’ per A4(3) Rome II. This may be a more solid decision than the A4(1) decision.

Geert.

EU Private International Law, 3rd ed. 2021, para 4.30, para 4.39 ff.

Emerald Pasture. The High Court on on actions ‘related to’ insolvency (Gourdain; vis attractiva concursus) and jurisdiction for E&W courts post Brexit.

In Emerald Pasture Designated Activity Company & Ors v Cassini SAS & Anor [2021] EWHC 2010 (Ch) there is an interesting split between pre and post Brexit applicable EU rules, with BIa not engaged yet the EU insolvency rules firmly in the picture.

Claimants Emerald are lenders, and first defendant Cassini is the borrower, under a senior facilities agreement dated 28 March 2019 (the SFA). The SFA is governed by English law and has an exclusive jurisdiction clause in favour of the English courts. Cassini is subject a French ‘Sauvegarde’) opened on 22 September 2020. This is a form of debtor-in-possession safeguard proceeding for a company in financial difficulties that wishes to propose a restructuring plan to its creditors. Sauvegarde is included in the proceedings that are subject to the Recast European Insolvency Regulation 2015/848. Parties are seemingly in agreement that the EIR 2015 continues to apply in the UK in respect of the Sauvegarde, because it was commenced prior to 31 December 2020, Brexit date.

Cassini contest jurisdiction, arguing that the claim derives from and is closely linked to the Sauvegarde and thus falls within A6(1) EIR, the so-called vis attractiva concursus which reads

“The courts of the Member State within the territory of which insolvency proceedings have been opened in accordance with Article 3 shall have jurisdiction for any action which derives directly from the insolvency proceedings and is closely linked with them, such as avoidance actions.”

This Article is the result of CJEU case-law such as Gourdain , Seagon , German Graphics , F -Tex.

Zacaroli J unfortunately repeats the suggested dovetail between BIa and the EIR, referring to CJEU Nickel & Goeldner.

As the judge notes [24] the application of A6(1) has not been made easier by the CJEU blurring the distinction between the conditions – with reference to Bobek AG in NK v BNP Paribas Fortis NV (on the Peeters /Gatzen suit).

Emerald argue that the question is whether the action itself derives from the insolvency proceeding. They contend that since the action is for declaratory relief in respect of a contract, its source is the common rules of civil and commercial law. Cassini focus on the issue raised by the action. They contend that since the only matter in issue in the action is whether the rights to information under the SFA are overridden by the Sauvegarde – and the principles of French insolvency law that govern the Sauvegarde – the real matter in issue concerns the effects of the insolvency proceedings so that the action falls within A6(1).

The judge [45] after discussion and assessment of the authorities (incl   ING Bank NV v Banco Santander SA ) discussed by both parties, decides against vis attractiva concursus. He holds that the legal basis for the declarations sought remains the SFA, and thus the rules of civil and commercial law, notwithstanding that the only issue which the court would be required to determine is the impact of French insolvency law on the obligations under the SFA. The question which the declarations are designed to answer, it is held, is the enforceability of the contractual rights.

On that basis, the exclusive choice of court clause grants E&W courts jurisdiction, under English common law (as it would have done under BIa, given the judge’s finding on vis attractiva).

If the claim goes ahead (one images appeal may be sought), the French insolvency proceedings will not have lost their relevance. Cassini argue on that issue [12 ff] that since the characteristic performance of the SFA is the loan of funds, which has already occurred, the SFA is not a “current contract” and as a result of French law, is no longer enforceable. Only the underlying debt subsists, they argue, which must be paid by way of dividends in the French insolvency proceedings. That argument, one assumes, will bump into further obstacles.

Geert.

EU Private International Law, 3rd ed, 2021, para 5.76 ff.

 

Volvo Trucks. The CJEU unconvincingly on locus damni in follow-on damages suit for competition law infringement.

The CJEU held yesterday in C-30/20 Volvo Trucks. I reviewed Richard de la Tour AG’s Opinion here.

After having noted the limitation of the questions referred to locus damni [30]  (excluding therefore the as yet unsettled locus delicti commissi issues) the CJEU confirms first of all [33] that Article 7(2) clearly assigns both international and territorial jurisdiction. The latter of course subject to the judicial organisation of the Member State concerned. If locus damni x has no court then clearly the Regulation simply assigns jurisdiction to the legal district of which x is part. However the Court does not rule out [36] per CJEU Sanders and Huber that a specialised court may be established nationally for competition law cases.

The Court then [39] applies C‑343/19 Volkswagen (where goods are purchased which, following manipulation by their producer, are of lower value, the court having jurisdiction over an action for compensation for damage corresponding to the additional costs paid by the purchaser is that of the place where the goods are purchased) pro inspiratio: place of purchase of the goods at artificially inflated prices will be locus damni, irrespective of whether the goods it issue were purchased directly or indirectly from the defendants, with immediate transfer of ownership or at the end of a leasing contract [40].

The Court then somewhat puzzlingly adds [40] that ‘that approach implies that the purchaser that has been harmed exclusively purchased goods affected by the collusive arrangements in question within the jurisdiction of a single court. Otherwise, it would not be possible to identify a single place of occurrence of damage with regard to the purchaser harmed.’

Surely it must mean that if purchases occurred in several places, Mozaik jurisdiction will ensue rather than just one locus damni (as opposed to the alternative reading that locus damni jurisdiction in such case will not apply at all). However the Court then also confirms [41 ff] its maverick CDC approach of the buyer’s registered office as the locus damni in the case of purchases made in several places.

Here I am now lost and the simply use of vocabulary such as ‘solely’, ‘additionally’ or ‘among others’ would have helped me here. Are we now to assume that the place of purchase of the goods is locus damni only if there is only one place of purchase, not if there are several such places (leaving a lot of room for Article 7(2) engineering both by cartelists and buyers); and that, conversely, place of registered office as locus damni only applies in the event of several places of purchase, therefore cancelling out the classic (much derided) Article 7(2) Mozaik per Shevill and Bier – but only in the event of competition law infringement? This, too, would lead to possibility of forum engineering via qualification in the claim formulation.

I fear we are not yet at the end of this particular road.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.12.2.8.

 

Eastern Pacific Chartering v Pola Maritime. How an application for lis pendens awakens the Brussels Convention (as between the UK and Gibraltar).

Eastern Pacific Chartering Inc v Pola Maritime Ltd [2021] EWHC 1707 (Comm) is a highly unusual case which shows that dormant Conventions can be awoken from their slumber.  I merely dabble in EU external relations law, I am no expert in it. The application of that law in the context of private international law is an issue I have tasked one or two students with – let’s just say they find it challenging.

On the specific issue at hand, parties agree that consequential to the Civil Jurisdiction and Judgments Act 1982 (Gibraltar) Order 1997, matters of jurisdiction between the E&W Courts and the Supreme Court of Gibraltar are governed by the Brussels Convention 1968 and that this remains the case notwithstanding Brexit. That core issue of external relations law pre and post Brexit is therefore not sub judice. One imagines that had it been, it could have led to extensive to and fro, among others within the context of the UK having revoked the 1968 Convention per the jurisdiction and Judgments Exit Regulations SI 2019/479, and of the Withdrawal Agreement.

In July 2020, claimant had a ship arrested in Gibraltar, with the purpose to serve as security for claims under a charterparty between both, claims that were to be brought in London, consistently with an exclusive jurisdiction clause in the charterparty. Roberston DJ classifies that action as one for provisional measures under Article 24 Convention (35 of the Brussels Ia Regulation).  The legality of that arrest (which ended upon claimant releasing it) continues to be disputed (ia viz the actual ownership of the ship).

Claimant (not domiciled in a 1968 Convention Contracting State) now sues  in E&W (pursuant to the choice of court) Defendant (domiciled at Cyprus) for outstanding monies. In current proceedings it applies to dismiss and strike out that part of the Defendant’s counterclaim at the E&W courts which seeks to advance claims in tort based on the alleged wrongful Gibraltar arrest.  In essence claimant submits that the High Court court has no jurisdiction to try the Defendant’s tort claims and should decline jurisdiction in favour of the Supreme Court of Gibraltar.

After a swipe [18 ff] at both parties having engaged, without court approval, experts on Gibraltarian law (which, she holds, bear no relevance for the jurisdictional issues anyways), Roberston DJ proceeds to discuss the lis pendens issue.

Defendant’s primary case is that, on the facts of this case, Article 17 Convention (A25 BIa) applies to confer jurisdiction, because the exclusive jurisdiction clause is broad enough to cover the tort claims. The Defendant’s fallback position is that, if that is wrong, the Court nevertheless has jurisdiction in respect of its counterclaims, not on the basis of A5(3) Convention (the Claimant (defendant on the counterclaim) not being domiciled in a Convention State) either because that necessarily follows from the Claimant’s decision to litigate its own claims here, or because Claimant has taken steps since service of the Defence and Counterclaim which waived any right to object to jurisdiction in respect of the counterclaims.

The discussion revolves around the contractual and statutory interpretation of the action radius of choice of court. This also involves the classic issue of tort claims between contractual parties (compare Wikingerhof) with the judge opting for the one stop shop approach (distinguishing ia Ryanair Ltd v Esso Italiana Srl [2015] 1 All ER (Comm) 152): 42: ‘there is a clear causal connection [between the contractual and tort claims, GAVC], which seems to be sufficient for the purposes of a clause worded “in connection with“.’ In conclusion: [52]: ‘whether damages are recoverable for an allegedly wrongful arrest made in seeking security for claims under the charter, ..is a claim “in connection with” the charter’ hence the E&W courts have jurisdiction. [39]: this ‘allows a single accounting, as regards the overall financial position of the parties as a result of the legal relationship created between them by the charter, and their dispute about what rights and obligations properly flow from that legal relationship.’

Obiter jurisdiction on the alternative grounds, under English residual rules, is also accepted (with the interesting note of the absence, in the Convention, of a gateway for counterclaims, in contrast with Brussels I and Brussels Ia).

Coming then to lis pendens under Article 21 Convention, this is dismissed. [70] The arrest claim plainly does not involve either the same cause of action or the same object as the Defendant’s tort claims seeking to recover damages for wrongful arrest, which are advanced solely by way of counterclaim in E&W. The factual and legal foundation for that counterclaim needs, on any view, to travel substantially beyond the matters the Claimant relies on for its own cause of action and the object of the counterclaim is to recover damages.

Neither [73] is an acknowledgment of service in the Gibraltar arrest proceedings does not amount to a submission to that jurisdiction which would preclude the Defendant from raising its distinct tort claims in E&W.

A stay on ‘related proceedings’ (Article 22 Convention) is also rejected for the reasons listed at [83]. Core reference here is Research in Motion v Visto [2007] EWHC 900 (Ch).

Geert.

EU Private International Law, 3rd ed. 2021, Chapter 1 Heading 1.7, Chapter 2 para 2.375, 2.469.