Posts Tagged Anchor defendants
My reporting on  EWHC 965 (Comm) Republic of Angola v Perfectbit et al is a bit overdue – the case came to my attention again recently in the context of a non-EU brief and I am grateful to Allen & Overy having reported it at the time: please refer to their summary for an overview of the issues and decision (concise summary reads ‘Despite an exclusive jurisdiction clause in favour of the Angolan courts, the High Court was satisfied that England was the appropriate forum to hear a claim by the Republic of Angola and Angola’s central bank against several English and non-EU defendants.’).
In short, the EU’s anchor defendants mechanism (Brussel I Recast, Article 8(1) cannot be used to establish jurisdiction against a non-EU defendant: residual conflicts rules apply. However Bryan J at 124 re-emphasises the extended effect of Owusu in cases such as these at issue:
‘The passages I have quoted were quoted by the Court of Appeal in Lungowe v Vedanta Resources plc  EWCA Civ 1528;  BCC 787 at paragraphs  and  with approval. Simon LJ (with whom Jackson and Asplin LJJ agreed) at paragraph  also referred to the following observations made by the editors of Dicey and Morris:
“113. At paragraph 12-033, the editors of Dicey note the classic exposition of Lord Goff’s forum non conveniens test in the Spiliada case, but add: Lord Goff could not have foreseen, however, the subsequent distortion which would be brought about by the decision of the European Court in Owusu v Jackson. The direct effect of that case is that where proceedings in a civil or commercial matter are brought against a defendant who is domiciled in the United Kingdom, the court has no power to stay those proceedings on the ground of forum non conveniens. Its indirect effect is felt in a case in which there are multiple defendants, some of whom are not domiciled in a Member State and to whom the plea of forum non conveniens remains open: it is inevitable that the ability of those co-defendants to obtain a stay (or to resist service out of the jurisdiction) by pointing to the courts of a non-Member State which would otherwise represent the forum conveniens, will be reduced, for to grant jurisdictional relief to some but not to others will fragment what ought to be conducted as a single trial … There is no doubt, however, that the Owusu factor will have made things worse for a defendant who wishes to rely on the principle of forum non conveniens when a co-defendant cannot.” ‘
In short, against non-EU defendants whose case is anchored with an EU (England and Wales) defendant, forum non conveniens remains open but has become more unlikely. One issue perhaps under-considered by the English courts is Brussels Recast Article 34’s juncto recital 24 impact of exclusive choice of court in favour of a third State (neutralising Owusu for those specific circumstances) – not powerful enough perhaps in the case of a multitude of defendants.
Case goes to trial.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.4 (International impact of the Brussels I Recast Regulation), Heading 18.104.22.168.2.
Jong v HSBC. Unilateral jurisdiction clauses, anchor defendants viz parties ex-EU and evading Owusu.
Postscript 30 October 2015: the Court of Appeal confirmed (rejecting appeal) on 22 October 2015.
Often, progress is assisted by assimilation hence I shall not repeat the excellent review of  EWHC 4165 (Ch) Jong v HSBC by Andy McGregor and Daniel Hemming. (It will be posted here soon, I imagine). Nor indeed will I simply regurgitate how Purle J eloquently dealt with the various jurisdictional issues in the case. Let me instead highlight the main issues:
Plaintiff, Ms Jong, has a contractual dispute with HSBC Monaco SA concerning the proper execution of foreign exchange orders. That the law of Monaco applies does not seem under dispute. HSBC Monaco’s standard terms and conditions, which may or may not apply, contain inter alia a classic unilateral jurisdiction clause: “Any litigation between the client and the bank shall be submitted to the exclusive jurisdiction of the competent Monaco courts at the offices of the bank location where the account is open. Nevertheless the bank reserves the right to take action at the place of the client’s residence or in any other court which would have been competent in the absence of the preceding election of jurisdiction“.
The bank so far has not exercised the clause. (No proceedings are as yet pending in Monaco). Monaco evidently is not covered by the Brussels I Regulation (nor indeed by the Lugano Convention).
Co-defendants are the HSBC Holding and HSBC Private Bank. Ms Jong did have contact with these over the alleged level of service. Perhaps unusually, Ms Jong (or rather, her lawyers) decided to issue proceedings against HSBC Monaco first. The English co-defendants were only added later, quite clearly in an effort to support the exercise of jurisdiction over HSBC Monaco.
The Brussels I-Regulation’s rules on anchor defendants (Article 6; now Article 8 in the recast. Note that the recast does not apply to the case at issue) do not apply to non-EU defendants: whether or not these can be drawn into the procedural bath with the EU defendants, depends therefore on residual national conflicts law. Purle J takes parties and readers through the relevant case-law and holds that while there may be objections to Monaco as a jurisdiction, none of them carries enough weight to override the exclusive choice of court clause.
Of particular note is that Purle J considers (at 26), again with reference to precedent, whether the case against the English defendants may potentially be stayed in favour of having them joined to proceedings in Monaco. (In that precedent, it was suggested that the clear rejection of forum non conveniens in Owusu, may not stand in the way of a stay on ‘sensible case management’ grounds, rather than forum non conveniens grounds). Purle J justifiably hesitates (‘the court must be careful not to evade the impact of Owusu v Jackson through the back door’), before dismissing the suggestion given that no case is as yet pending in Monaco. It is noteworthy that the latter would, incidentally, be a condition for the (strictly choreographed) lis alibi pendens rule of the Brussels I recast to apply (Article 33). I would certainly argue that Owusu and the ECJ’s reasoning behind it, would exclude such recourse to a de facto forum non conveniens rule.
The scope of ‘civil and commercial’ in the Brussels I Regulation (compensation for expropriation under the Nazi regime), and application of joinder to non-EU based defendants: the ECJ in Sapir
The ECJ yesterday issued its ruling in Case C-645/11 Sapir. The issues under consideration were the application of the Brussels I Regulation to proceedings brought by a State (Berlin) against a group of defendants, some of whom were based outside the EU, some inside the EU but not in Germany, and only a limited number in Germany. The request for preliminary review has been made in proceedings between, on the one hand, Land Berlin and, on the other, Ms Sapir, Mr Busse, Ms Birgansky, Mr Rumney, Mr Ben-Zadok, Ms Brown and five other persons, concerning the repayment of an amount overpaid in error following an administrative procedure designed to provide compensation in respect of the loss of real property during persecution under the Nazi regime.
Jurisdiction against the non-German based defendants could only theoretically be established on the basis of Article 6(1) of the Regulation, which allows for plaintiff to identify an anchor defendant in one Member State, and drag other defendants not based there into those proceedings:
‘A person domiciled in a Member State may also be sued:
1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; (…)
The first issue under consideration was the nature of the proceedings. There was a whiff of ‘public law’ surrounding the procedure, given its core foundation in administrative law procedures and the involvement of a public authority. However the ECJ, and Trstenjak AG with it, considered these not to be material to the nature of the proceedings: the request for repayment of part of the sum was made on the basis of a provision in German law (unjust enrichment) which was generally available and in which neither the public nature of plaintiff nor the substantial grounds on the basis of which compensation was granted, played any role: the basis and the detailed rules governing the bringing of the action were unrelated to the authority acting ius imperii.
The second issue concerned the defendants’ substantial argument against the claim of unjust enrichment: they argued that they are entitled to an amount which exceeds a share of the proceeds of sale as the amount realised through that sale failed to reach the market value of the property and that those additional compensation claims preclude the applicant’s claim of unjust enrichment. The AG suggested a ‘close connection’ (and thus a possibility to invoke Article 6(1)), as the additional compensation claims lodged fit in perfectly with the identical situation of law and fact in the actions, which the ECJ requires for the application of Article 6(1). Identical legal basis is not required (in particular, one of the defendants, the lawyer representing a large part of the group, was being pursued on the basis of pure tort, rather than unjust enrichment). Only the German laws in question (the Vermögensgesetz and the Investitionsvorranggesetz) can provide the defendants with the legal basis to justify the excess amount they received, which also requires an assessment, for all of the defendants, in relation to the same factual and legal situation.
The third issue concerned the application of Article 6(1) to non-EU residents: this, the Court held, was not the case. Article 6(1) clearly refers expressly to defendants domiciled in the EU. In order to sue a co-defendant before the courts of a Member State on the basis of Article 6(1) , it is necessary that that person should be domiciled in another Member State.
In Case C-51/97 Réunion européenne, the ECJ had similarly (given the need to apply special jurisdictional rules restrictively) held that Article 6(1) cannot be applied to bring an action before the Court of a Member State against a defendant, domiciled in a different Member State, who could only be sued in that Member State by virtue of a joinder with a suit against a party not domiciled in any of the Member States.
The judgment in Sapic is not revolutionary, but useful.