Choice of court and lis alibi pendens in Generali Italia v Pelagic Fisheries. Article 31’s anti-torpedo mechanism further put to the test.

In Generali Italia & Ors v Pelagic Fisheries & Anor [2020] EWHC 1228 (Comm) the claimants-insurers commenced proceedings seeking declarations that they are not liable to the Insureds. Pelagic had already commenced proceedings in Treviso, Italy on the basis of what it claims to be choice of court in favour of Italy. The first instance Italian court stayed the Treviso Proceedings (the insureds have appealed; the appeal is yet to be heard) pending a determination by the English court as to whether the Treviso Policies are subject to an exclusive English jurisdiction clause. The Italian stay order reads in relevant part:

‘the lis alibi pendens defence which has been raised requires that these proceedings are suspended in order to allow the High Court of London to rule on the exclusive English jurisdiction clause pursuant to art 31.2 of EU Reg 1215/2012. That since, in the light of what is established by the said provisions, it is irrelevant that the Italian Judicial Authority has been seised first, …. Indeed article 31 of the above mentioned regulation represents an exception to the operation of the ordinary rule of priority in matter of lis alibi pendens, in order to allow the judges chosen by the parties in contractual terms (cover notes) to be the first to rule on the validity of the clause itself (according to the law chosen by the parties). In the concerned case all the cover notes, in the special insurance conditions, contain the clause ‘English jurisdiction. Subject to English law and practice”, with consequent waiver to the general insurance conditions provided in Camogli Policy 1988 form”.’

Other parties are part of the proceedings, too – readers best refer to the facts of the case. They clarify that chunks of the proceedings bear resemblance to the kind of split stay scenario applied by the CJEU in C-406/92 The Tatry.

Foxton J refers to the good arguable case test viz Article 25 Brussels Ia of BNP Paribas v Anchorage, recently also further summarised by the Court of Appeal in Kaefer Aislamientos and further in Etihad Airways PJSC v Flöther.

The case essentially puts Article 31 BIa’s anti-torpedo mechanism to the test in related ways as the first instance judge and the Court of Appeal did in Ablynx. There is a dispute between the parties as to whether A31(2) obliges the English Court to stay proceedings unless and until there is a determination in the Treviso Proceedings that the Italian courts do not have jurisdiction. There are 3 core questions: i) Should the English Court proceed to determine whether there is an exclusive jurisdiction clause in favour of this Court, in circumstances in which Pelagic is contending in Italy that the Italian courts have jurisdiction, or should it await a ruling on jurisdiction in the Treviso Proceedings? ; ii) If it is appropriate to determine the issue, is there an English exclusive jurisdiction agreement in the Treviso Policies for the purposes of Article 25?; iii) Should the Court stay the remainder of the proceedings under Article 30?

At 65 counsel for the insureds take a similar position as Ms Lane did in Ablynx: he argues that the only issue which the High Court should consider is whether it is satisfied that there is a prima facie case that the Italian court has jurisdiction (which he says there is on the basis that the parties agreed that both the English and Italian courts would have jurisdiction) and that if it is so satisfied, it should stay the English proceedings, pending the outcome of Pelagic’s appeal in the Italian proceedings.

Foxton J however at 68 ff highlights the inadequate nature and limitations of A31(2), as also pointed out by the last para of recital 22 which accompanies it: in the face of conflicting choice of court provisions (typically, as a result of overlapping clauses in overlapping contractual relations between the parties), A31(2) loses its power and the more classic lis alibi pendens rules take over. At 70 he points to the ping-pong that threatens to ensue:

in circumstances in which the Italian court has stayed its proceedings to allow the English court to determine if it has exclusive jurisdiction, it would be particularly surprising if the English court was then bound to stay its proceedings pending a decision on jurisdiction by the Italian court. This approach, in which the dispute might become caught in the self-perpetuating politeness of an Alphonse and Gaston cartoon, is not consistent with enhancing “the effectiveness of exclusive choice-of-court agreements” and avoiding “abusive litigation tactics” which Article 31(2) is intended to achieve. It does not matter for these purposes that the decision of the Italian court granting such a stay is presently under appeal.

He holds therefore at 79 that his task is essentially to review whether there is a good arguable case that the Treviso Policies (the ones subject of the English litigation, GAVC) are subject to exclusive jurisdiction agreements in favour of the English court which satisfy the requirements of A25 BIa. At 95 he finds there is such case. At 113 ff he holds obiter he would have stayed the remainder of the claims under A30, had he held in favour of a stay under A31(2).

Fun with conflict of laws.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7, Heading 2.2.9.5.

 

SCOR v Barclays. High Court dismisses application for stay on the basis of Article 30 BIa (related actions). Leaves the Euroeco /Privatbank discussion unsettled.

In SCOR SE v Barclays [2020] EWHC 133 (Comm), claimant SCOR is a reinsurance company incorporated in France. Covéa, a shareholder of SCOR, made an unsolicited offer to acquire a controlling shareholding in SCOR. Barclays was one of Covéa’s financial advisors and prospective lenders in relation to the Offer. The English proceedings, and related French proceedings, all concern French law claims brought by SCOR against Mr Derez, who was one of its directors, Covéa, and Barclays in connection with the Offer. It is alleged by SCOR that Mr Derez disclosed to Covéa and to its advisors, including Barclays, confidential information, which he obtained in breach of duties he owed to SCOR, and that the information was misused in relation to the Offer.

SCOR has commenced three sets of proceedings: On 29 January 2019, direct criminal proceedings in France. On the same day, the proceedings in England against Barclays. On On 6 February 2019, French proceedings against Monsieur Derez and Covéa. Concealment of breach of trust is the running theme in all 3 proceedings.

An application to stay the French Commercial Court proceedings, which had been made by the Claimant, had been dismissed.

Hancock J had two issues to decide under Article 30 Brussels Ia (at 6). The first was whether the French criminal proceedings, which were first in time, were related to the English Commercial Court action. The second was whether the High Court, as the Court second seised, should stay these proceedings, it being accepted that it had the power to do so under A30. The parties were agreed that, although the civil proceedings which formed part of the criminal action were an “adjunct” to the criminal part of the proceedings, they were nonetheless civil and commercial proceedings within the meaning of the Regulation.

Authority discussed includes of course CJEU C-406/92 The Tatry, however quickly attention focussd on the issue of ‘expediency’ in Article 30. Claimant pointed out that there had been a debate in the authorities as to what was meant by “expedient, with some authorities taking the line that this meant possible or capable, and others suggesting that the relevant synonym was “desirable” ‘. The Court of Appeal in Privatbank v Kolomoisky [2019] EWCA Civ 1709, which I discuss here, settled the issue in the direction of ‘desirable’. However Hancock J then discussed counsel’s reference to Euroeco Fuels (Poland) Limited and others v Sczezin and Swinoujscie Seaports and others [2019] EWCA Civ 1932 which at the time (December 2019) I called at most a ‘lukewarm’ application of Privatbank on this issue.

Hancock J leaves the discussion hanging for in his words at 15, ‘it is uncertain whether expediency in this context is to be treated as meaning desirability, or whether it is a jurisdictional requirement of the grant of a stay that the two cases can in fact be heard together: see Privatbank and cases cited therein, on the one hand, but compare the Euroeco decision on the other. I do not need to decide this question in this case, since my decision would be the same whichever test is applied, and I propose to consider the matter by reference to the test as set out in Privatbank.’

Yet at 24-25  he holds ‘on the basis the application of the test in Sarrio, as interpreted in later cases including in particular Privatbank, that the French criminal proceedings and the English proceedings are related. I move on to consider the exercise of my discretion on this basis.’ Yet ‘Of course, if the actual test is that which may be suggested by the Euroeco case, then the proceedings would not be related, and I would have no discretion to exercise.’

Here I do not follow. No proper decision is made on the authority or not of Privatbank or Euroeco (the latter suggested by counsel for the defence (fellow Bruges Stefan Zweig alumnus) to be at most per incuriam).

At 28 ff then follows a most relevant discussion of the wide nature or not of the discretion to issue a stay, once it has been established the cases are related (Hancock J at 31 deciding at that there is no presumption for a stay in favour of the applicant) deciding at 43 that there is no compelling reason for the stay, on the basis of the factors outlined there, with which I agree.

This is again a most relevant case. The relatedness or not of cases is a most, most crucial issue, including of course in an Article 33-34 context.

Geert.

(Handbook of EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.

Hutchinson v MAPFRE and Ice Mountain (Obeach) Ibiza. Spotlight on the consumer and insurance title of Brussels Ia.

Jonathan Hutchinson v MAPFRE and Ice Mountain (OBeach) Ibiza [2020] EWHC 178 (QB) like all cases involving serious accidents, cannot be written about without the greatest sympathy for claimants having suffered serious physical damage. The case concerns the horror scenario of either a fall or a dive in a pool leading to head and spinal injury. Mr Hutchinson (represented by Sarah Crowter QC) is a former Birmingham City football player who visited an Ibiza club owned by a fellow Brit – those interested in the background see here.

Defendants are the club (ICE Mountain, Spain registered) and their insurers, MAPFRE (ditto). Clearly to sue in England the case needs to involve either a protected category (consumers; insureds) or a special jurisdictional rule (contract; tort).

Andrews J is right in calling jurisdiction on the consumer title against ICE Mountain straightforward. The Pammer /Alpenhof criteria are fulfilled; that claimant’s purchase of a ticket was not the result of the directed activities is irrelevant per CJEU Emrek; (at 21 she dismisses an argument to try and distinguish Emrek on the facts, which argued that claimant had entered the pool via the VIP area to which his ‘standard’ ticket did not actually give access).

The further discussion involves the insurance title of Brussels Ia, which reads in relevant part (Article 13):

(1).   In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured. (2).   Articles 10, 11 and 12 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. (3).   If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.

The claims against Ice Mountain in tort or for breach of statutory duty are halted by Andrews J. The question here is whether the ‘parasitic’ claim under A13(3) requires the issue to ‘relate to insurance’ (recently also discussed obiter in Griffin v Varouxakis), an issue already discussed in Keefe, Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598 (referred to in Bonnie Lackey), sent to the CJEU but settled before either Opinion of judgment. The same issue is now before the CJEU as Cole and Others v IVI Madrid SL and Zurich Insurance Plc, pending in anonymised fashion before the CJEU it would seem as C-814/19, AC et al v ABC Sl (a wrongful birth case).

At any rate, the non-contractual claims against Ice Mountain were stayed until the CJEU has answered the questions referred to it by Judge Rawlings in Cole.

A late [but that in itself does not matter: lis alibi pendens needs to be assessed ex officio (at 36)] challenge on the basis of A29-30 lis alibi pendens rules was raised and dismissed. The other proceedings are criminal proceedings in Ibiza. The argument goes (at 37) that there are ongoing criminal proceedings in Spain arising out of the accident which led to Mr Hutchinson’s injuries, and because Mr Hutchinson has failed to expressly reserve his right to bring separate civil proceedings, the Public Prosecutor is obliged to bring civil proceedings on his behalf within the ambit of those criminal proceedings. For that reason, Ice Mountain contend that the Spanish court is seised of any civil claim arising from the same facts as are under investigation in the Spanish criminal proceedings, and has been since 2016, long before these proceedings were commenced.

This line of argument fails to convince Andrews J: ‘Through no fault of his own, Mr Hutchinson has never been in a position knowingly to take any formal steps to reserve his position in Spain to commence separate civil proceedings against anyone he alleges to be legally liable for his injuries. Yet, if Ice Mountain is right, he will have been deprived of any choice in the matter of where to bring his civil claim merely because, without his knowledge or consent, a doctor in the hospital filed a report which triggered a criminal investigation into the accident, of which he was never told.’ Quite apart from this unacceptable suggestion, the criminal proceedings in Ibiza have been closed, and (at 59) ‘there is no ongoing criminal action leading to trial, to which any civil action would attach.’

For the claims against Mapfre, Mrs Justice Andrews held that the court has jurisdiction on two alternative basis:

Firstly, the provision in the contract of insurance upon which Mapfre seeks to rely as demonstrating that there is no good arguable case against it on the merits cannot be relied on, as that would substantially undermine the protection to the weaker party specifically provided for in the insurance provisions of Recast Brussels 1.

In essence, Mapfre accepts that under Spanish law, there would be a direct right of action against it as Ice Mountain’s liability insurer if it were liable to indemnify Ice Mountain under the policy, but it contends that Mr Hutchinson does not have a good arguable case that Mapfre’s policy of insurance covers Ice Mountain’s liability to him under a judgment given by an English court. The policy would, however, cover Ice Mountain’s liability to him for the same accident, based on the identical cause (or causes) of action, under a judgment given by a Spanish court. (ICE Mountain agree, therefore also acknowledging it is uninsured in respect of any claims which the English consumers who are its targeted customers might bring in the courts of their own domicile pursuant to A17-18 BIa). If this were right, this would mean a massive disincentive for the consumer to sue in his jurisdiction: at 66 (a devilish suggestion): If he wins and the uninsured defendant is not good for the money, he would be left without a remedy, whereas if he sued in Spain, the same defendant would be insured in respect of the same liability, and he would recover from the insurer up to the policy limits.

At 67: if a party who owes contractual duties to consumers ‘does insure, and a direct of action exists against the insurer under the law which governs the insurance contract, then ‘Recast Brussels I does not contemplate that he should be permitted to contract with the insurer on a basis that acts as a disincentive to consumers to exercise their rights to sue him (and his insurer) in the courts of their own domicile or which renders any rights of suit against the insurer in that jurisdiction completely worthless by using the exercise of those rights as grounds for avoiding the insurer’s obligation to indemnify him.

The Spanish law experts called upon to interpret the provisions of the territorial scope title in the insurance policy, differed as to exact meaning. However the issue was settled on the basis of EU law, with most interesting arguments (and reference ia to Assens Havn): summarising the discussion: a substantial policy clause limiting liability to awards issued by Spanish judgments, in practice would have the same third party effect as a choice of court clause which B1A does not allow (see A15: The provisions of this Section may be departed from only by an agreement… (3) Which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same member state, and which has the effect of conferring jurisdiction on the courts of that state even if the harmful event were to occur abroad, provided that such agreement is not contrary to the law of that Member State….”

At 84:

‘If a clause which has that effect can be relied on against a person such as Mr Hutchinson it would drive a coach and horses through the special rules on insurance laid down under Section 3 of Chapter II. It would provide every liability insurer (not just Spanish insurers) with the simplest means of depriving the injured party of the choice of additional jurisdictions conferred upon him by Articles 11 to 13 of Recast Brussels 1. It would be the easiest thing in the world for an insurer, as the economically strongest party, to include a standard term in the policy that he is only liable for claims that have been brought against the policyholder in the courts of the policyholder’s and/or the insurer’s own domicile.’

This part of the judgment is most interesting and shows the impact jurisdictional rules and their effet utile may have on substantive law (at the least, third party effect of same).

Alternatively, even if the analysis above is wrong, ‘on the basis of the expert evidence on Spanish law that is currently before the Court, at this stage of the proceedings the Claimant has established at the very least a plausible evidential basis for finding that the clause in question (the one which effectively limits pay-outs to judgments issued in Spain) is not binding upon him as a third party to the contract, and therefore is ineffective to prevent MAPFRE from being directly liable if his claim is otherwise well-founded on the merits. He has therefore established a good arguable case that the jurisdictional gateway under Article 13(2) of Recast Brussels 1 applies.’

Most relevant and interesting.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 Heading 2.2.11.2

 

Euroeco Fuels adds some doubt to the Privatbank ‘related actions’ findings.

On Wednesday not only did the European Commission release its proposal for green deal, the Court of Appeal also held in Euroeco Fuels (Poland) Limited and others v Sczezin and Swinoujscie Seaports and others [2019] EWCA Civ 1932. As the Green Deal is not short of commentators, I shall focus on Euroeco. It is an important follow-up to some of the issues in Privatbank, particularly in the Court of Appeal’s treatment of ‘expediency’ under Brussels Ia’s lis alibi pendens rules.

Claimants appeal from a decision of Nicol J declining jurisdiction to hear and determine their claims for libel and malicious falsehood. The origins of the claims are words spoken by the Second Defendant in March 2017 at a press conference in Poland and a press release said to have been issued by the Defendants, also in Poland, to the press and other media. The reach of some of those Polish media included England and Wales. The Claimants rely on what are said to be republications of the words and the press release which took place in England and Wales by means of internet articles being read there and Polish broadcasts available there, again on the internet.

Jurisdiction in England can be established on the basis of Article 7(2) BIa. CJEU C-68/93 Shevill is discussed of course, as are Joined Cases C-509/09 and C-161/10 e-Date and Martinez.

First Claimant (“EEF”) is a Polish company. It is the leaseholder of a site in the Baltic port of Szczecin in Poland. It operates an industrial scale alternative petrochemical production plant (“the EEF Plant”) which recycles used tyres into carbon and oil products. Before the English action began, the First Defendant had taken proceedings in Poland against EEF alleging that the EEF Plant was causing a nuisance because of the odours it emitted: those, I understand (the judgment is not entirely clear on this issue) are the concurrent ‘Polish proceedings’. The other claimants are the English holding company and various executives.

First Defendant company is the landlord of the EEF Plant site and the administrator of the ports of Szczecin and Swinoujscie. The other defendants are employees and executives of the first defendant.

At 22-23 are the defendants’ arguments pro a stay or even declination of jurisdiction on Article 30 BIa grounds. Nicol J held that the English and Polish proceedings are “related” for the purposes of Article 30 and decided to decline. His discussion of the various arguments is included at 35 ff of the Court of Appeal judgment.

On Article 30(3)’s condition of ‘expediency’, at 45 the Court of Appeal merely refers to the earlier decision in Privatbank, that “expedient” is more akin to “desirable” than to “practicable” or “possible”. However at 52 Bean LJ holds that ‘If the judge’s decision to decline jurisdiction is upheld or even if the English claim for libel and malicious falsehood is stayed the Claimants could, of course, start similar proceedings in Poland. But on the material before us there appears to be no real possibility of such a claim and the existing claim for nuisance brought by the Defendants being “heard and determined together”.’

This seems at most a lukewarm application of Privatbank, one that is much more practical than abstract and in my view must take some gloss off the authority of Privatbank.

Obiter the risk or irreconcilability is discussed at 53 ff, holding at 61 (with fellow Lord Justices further reserving their view on the issue) ‘the central issue in both actions will be whether the Claimants are causing or permitting harmful pollution to the atmosphere around the EEF Plant; and that to allow the libel claim to proceed to trial in England would create a risk of “irreconcilable judgments”. However, my views on that issue cannot prevail against my conclusion that there is effectively no prospect of the two actions being “heard and determined together”.’

This is an interesting case, I believe it puts one or two Privatbank considerations into perspective.

Geert.

(Handbook of EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.

 

Lis alibi pendens denied traction in Lotus v Marcassus Sport.

[2019] EWHC 3128 (Comm) Lotus v Marcassus Sport Sarl concerns the application of Articles 29-30 Brussels Ia – the lis alibi pendens rules.

Lotus, an English company, is a well-known manufacturer of cars. By a series of four written contracts entered in 2016, Lotus appointed Marcassus, a French company in the business of distributing sports cars, as a non-exclusive dealer and authorised repairer of Lotus cars in Toulouse and Bordeaux. Each of these contracts was governed by English law and provided for the non-exclusive jurisdiction of the English courts.

In September 2018 Lotus gave notice terminating one of the four agreements. It is common ground that the parties’ overall relationship thereafter terminated. Marcassus then brought proceedings in the Toulouse Commercial Court, claiming loss of profits and bonuses and seeking to enforce contractual penalties. A summons was filed with the Hussier de Justice on 21 December 2018 for onward transmission to the Foreign Process Section of the High Court for service on Lotus, summoning Lotus to appear in Toulouse on 26 March 2019. Marcassus’ claim was filed at the Toulouse Commercial Court on 7 January 2019. Lotus did indeed appear at the hearing on 26 March 2019 and has served a defence disputing the claim, but not claiming in respect of or relying on Marcassus’ non-payment of the 2018 invoices. Lotus offered to undertake not to make such a claim in the Toulouse proceedings hereafter, provided of course that these proceedings were permitted to continue. Meanwhile, on 13 March 2019, Lotus issued these proceedings claiming the amounts due under the 2018 invoices. Marcassus was served with the claim form on 24 April 2019.

Phillips J first of all (at 15 ff ) deals with the issue of which course was ‘seized’ first (compare MB v TB). Lotus contended that Marcassus’ application should fall at the first hurdle because Marcassus has not demonstrated when, if at all, the summons in the Toulouse proceedings was received by the “authority responsible for service” of that summons for the purposes of A32 Brussels Ia, and so cannot establish that the Toulouse court was seised before the English court was seised by the issue of the claim form on 13 March 2019. Marcassus’ case is that the relevant authority is the Hussier de Justice, it being accepted that he received the summons on 21 December 2018. But, in the alternative, if the relevant authority is the Foreign Process Section of the High Court (as Lotus contends), Marcassus invites the inference that it was received by that authority shortly after that date, but in any event before 13 March 2019. Marcassus points to the fact that Lotus appeared before the Toulouse court on 26 March 2019 and has taken no point on service in those proceedings.

Phillips J decides not to hold on this point given that he rejects Article 29 lis alibi pendens anyway – however he indicates he does not find Lotus’ assertion very attractive.

On Article 29, Marcassus accepted that the proceedings, whilst between the same parties, do not presently involve the same “cause of action” however argued that the court could take into account the likely future shape of the proceedings, namely, that Marcassus would seek to set-off and counterclaim the very same claims it has brought in Toulouse. This approach however cannot fly per CJEU C-111/01 Gantner, at 31: in order to determine whether there is lis pendens in relation to two disputes, account cannot be taken of the defence submissions, whatever their nature, and in particular of defence submissions alleging set-off, on which a defendant might subsequently rely when the court is definitively seised in accordance with its national law” and the Article 29 route was duly dismissed.

On Article 30, the claims were found not to be ‘related’ on grounds of Lotus having secured an exclusion of set-off in the contract (Phillips J spent some time debating whether the contract did include such clear exclusion of set-off). This clause effectively keeps the claims on various invoices at arm’s length.

Even had Article 30’s conditions been met, the case would not have been stayed on grounds that the judge (unlike in A29 cases) has discretion whether to do so. Referring to The Alexandros T, at 44: ‘it is obvious that these proceedings should be permitted to continue so that the question of whether clause 29.2 is an effective no set-off clause is determined in this jurisdiction. That issue. (sic) which does not arise in the Toulouse proceedings (limiting the extent of “relatedness”), is an issue of the interpretation of an English law contract (establishing close proximity with this jurisdiction) and can be determined speedily in a summary judgment application (indicating that the stage proceedings have reached is not a factor against this jurisdiction). Further, the parties have expressly agreed to the jurisdiction of the English courts, albeit on a non-exclusive basis.

Application dismissed.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

Office Depot v Holdham et al. Lis alibi pendens in follow-on cartel damages suit. Delay in the Swedish proceedings crucial factor in High Court’s rejection of a stay

in [2019] EWHC 2115 (Ch) Office Depot BV et al v Holdham SA et al, the High Court in August (I had promised posting soon after the Tweet. That did not quite happen) held on issues of lis alibi pendens (and, alternatively, a stay on case management grounds) in a follow-on cartel damages suit arising from the European Commission’s cartel finding in the envelopes market. That’s right: envelopes. Cartel cases do not always involve sexy markets. But I digress (and I also confess to finding stationary quite exciting).

Sir Geoffrey Vos’ judgment deals with the fate of the Office Depot claimants’ follow-on proceedings in England against certain Bong (of Sweden) corporate defendants, after the Bong parties had commenced Swedish proceedings for negative declarations as to their liability. In March 2019 the relevant Swedish court said in effect that Article 8 Brussel I a was not engaged so that the Swedish Bong proceedings for negative declarations could only proceed against the locally domiciled Office Depot company, which was Office Depot Svenska AB, but not the non-Swedish Office Depot entities. Parties at the time of Sir Geoffrey’s decision (Swedish followers may be able to enlighten us on whether there has been a decision in the meantime; at 23 the expected date is mentioned as ‘the autumn’) were awaiting a certiorari decision by the Swedish Supreme Court.

CJEU C–406/92 The Tatry of course is discussed, as is CDC. Sir Geoffrey also discussed C-129/92 Owens Bank, in particular Lenz AG’s Opinion (the CJEU did not get to the part of the Opinion relevant to current case). Discussion between the parties, at Sir Geoffrey’s request, focused on the issue of the judge’s discretion under lis alibi pendens for related actions, rather than on whether or not the actions are related (it was more or less accepted they are; see ia at 43 ff).

At 46 ff the Court then exercises its discretion and finds against a stay, on the basis in particular of the expected length of the Swedish proceedings: at 54: ‘the grant of a stay would be contrary to justice in that it would delay unreasonably the resolution of proceedings that can only be tried in England and already relate to events many years ago‘, and at 48: ‘The stage in the Swedish proceedings is a long way behind these. It will be between one and two and a half years before jurisdiction is resolved there, two courts already having refused jurisdiction. It will be perhaps between three and five years before the substantive litigation in Sweden is resolved, if it ever gets off the ground.

Swedish courts do not tend to get used for torpedo actions. Yet the swiftness of English court proceedings yet again comes in to save the day (or indeed, scupper the stay).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1

 

National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.

Update 22 April 2020 today’s judgment discusses the merits of the case: [2020] EWHC 916 (Comm).

 

Thank you Ali Malek QC who acts for claimants (and who as I have noted, is a busy and efficient bee in international litigation land) for alerting me to a further episode of Kazakhstan v BNYM. This current jurisdictional challenge is part of a long-running saga relating to the enforcement of a Swedish arbitration award dated 19 December 2013 in favour of the “Stati parties”, the Second to Fifth Defendants, and against the Second Claimant, the Republic of Kazakhstan (“RoK”).

Many of the issues are ex-Brussels I Recast and /or Lugano Convention yet I report on them anyway for they reveal interesting issues on the relationship between foreign courts relevant to attachment (and enforcement generally), and courts with jurisdiction on the merits.

In [2017] EWHC 3512 (Comm) National Bank of Kazakhstan v Bank of New York Mellon (BNYM) which I reviewed here, Popplewell J had dismissed claims essentially designed to establish that BNYM is not obliged or entitled to freeze assets of the National Fund by reason of Belgian and Dutch court attachment orders.

Teare J has now held a few weeks back – helpfully in [2018] EWHC 3282 (Comm) also summarising the many proceedings which the blog has not always reported on. Trigger for this latest instalment of proceedings is claimants having sought to challenge a Belgian conservatory attachment before an “Attachment Judge” of the Belgian court. The Attachment Judge upheld the attachment order in a judgment dated 25 May 2018.

RoK seeks a declaration that the debts or assets held by BNYM(London) and said to be subject to the attachment order are in fact held by BNYM(L) solely for the National Bank of Kazakhstan (“NBK”), the First Claimant. They therefore submit that the attachment order has no subject-matter, because there are no assets to attach. The Claimants contend that this question was referred to this court by the Belgian court.

A provision of Belgian law cited by the Attachment Judge, article 1456(2) of the Belgian Judicial Code, provides as follows: “If the third-party debtor disputes the debt claimed by the creditor, the case is brought before the competent trial judge or, as the case may be, the case is referred to the competent trial judge by the enforcement court.” Further proceedings are now pending in Belgium, in which the Stati parties seek to convert the ‘conservatory’ attachment order into an ‘executory’ attachment order. In those proceedings, the Stati parties have raised a number of arguments in support of their contention that the GCA assets are properly held for RoK (rather than merely NBK). These include Belgian-law arguments relating (inter alia) to piercing of legal personality, sham trusts, and “abuse of law”.

The crucial consideration discussed by Teare J in current proceeding is that the Stati parties submit that there is no “serious issue to be tried” (hence no jurisdiction) as between the Claimants and the Second to Fourth Defendants, (i.a.) because “the declarations sought […] will not affect the Belgian Court’s decision” since that Court “faces a number of Belgian law arguments unrelated to the GCA with regard to the ROK debt question”.

There was a dispute between Belgian law experts as to precisely what had been remitted by the Attachment Judge to the High Court and it is worth repeating each assertion in full: at 28-29

‘The evidence of Mr Brijs (the Stati parties’ Belgian law expert [GAVC fellow Leuven Class of 1993] ) is that “a pure question of English contractual law will not resolve the core dispute” because “a Belgian enforcement court would still have to evaluate – amongst other things – the arguments raised by the Stati parties under Belgian attachment law” such as piercing legal personality, sham trusts, and abuse of law. Further, “the Belgian Enforcement court did not decide the arguments – not because the judge “envisaged” that these arguments should be resolved by an English Court or because the Belgian Enforcement Court found that it could not decide them (when in fact it can) – but solely because the Belgian Enforcement Court considered that it did not need to decide them… It is difficult to conceive why an English court should decide on e.g. matters that concern Belgian public policy, or on the question whether there is a sham trust structure to the prejudice of the creditors and what the sanction/effect thereof is on the Belgian attachment.”

The evidence of Mr Nuyts (the Claimants’ Belgian law expert [GAVC colleague and learned friend extraordinaire ) is that “[t]here is nothing in the Belgian judgment to show that the Belgian Court envisaged the English court deciding only some of the issues, and not the arguments raised by the Stati parties such as piercing of legal personality, sham trust, and abuse of law. These arguments had been raised at length by the Stati parties in written submissions in the Belgian proceedings, and the Belgian Court has distinctly decided not to address any of these arguments, leaving them to be decided by the English Court… The Belgian Judgment holds in general that the “challenge” relating to “the debt of the third party” must be referred to the English court… [and] that it is for the English court to decide in general “whether or not a debt exists from BNYM towards Kazakhstan”.”

It is Mr Nuyts’ evidence that convinced Tear J. At 31 ‘In this case, however [GAVC despite Meester Brijs’ correct statement that there are circumstances in which the enforcement court is competent to decide on the merits], the enforcement court has clearly decided that the English court is the competent court to decide the merits.’ At 35 the relevant passages of the Belgian Court are copied:

“The seized-debtor is entitled to challenge the declaration from the garnishee before the attachment judge. However, this challenge relates to the debt of the third party and must be referred to that trial court in the proceedings on the merits, under article 1456, 2nd para. BJC. The competent trial court is, as stated by Kazakhstan itself, the English court who must apply its own national substantive law. […] Both requests relate to the subject-matter of the attachment, notably whether or not a debt exists from BNYM towards Kazakhstan. Kazakhstan disputes the existence of such debt. The attachment judge cannot and may not settle such dispute, but only the judge on the merits. The judge on the merits is, as already mentioned above, the English court who must apply its own national law.”

That finding on the scope of referral to the English courts, also plays a role in the assessment of abuse: at 46: ‘I do not consider that it is an abuse of process for the Claimants to raise in these proceedings issues not argued before Popplewell J or the Court of Appeal in the earlier English proceedings. First, those proceedings served a different purpose, namely, the determination of BNYM(L)’s contractual entitlement to freeze the GCA assets and in particular the scope of clause 16(i). Second, it appears that the Claimants did in fact seek to raise the wider issue, or something like it, before Popplewell J. but were not permitted to because the Stati parties were not before the court. Third, it would be odd, to say the least, for this court to hold that these proceedings were an abuse of process in circumstances where the issues raised by the proceedings had been referred to it by the Belgian court. It cannot, I think, be in the public interest to frustrate the order of the Belgian court. On the contrary, comity and the public interest point to these proceedings serving a legitimate and proper purpose.’

Finally, a cursory look a the forum conveniens issue is warranted: at 58-61:

  1. Mr Sprange, for the Stati parties, submitted that “England is not a proper forum for a claim against the Second to Fourth Defendants, where that claim seeks (on the Claimants’ case) to conclusively determine issues of the validity of a Belgian executory attachment, which are properly the subject of Belgian attachment law for a Belgian attachment judge to decide”.
  2. Mr Malek, for the Claimants, submitted that the real dispute is not about “the validity of a Belgian executory attachment”, but rather “whether there is an obligation owed by BNYM London to RoK capable of forming the subject-matter of a Belgian attachment.” Further, he submitted that the effect of the Belgian Attachment Judge’s decision was to determine that England was the appropriate forum. Mr Malek relied upon this decision as giving rise to “an estoppel of a particular, autonomous, EU kind”; in the alternative, he submitted that it was a strong factor to be weighed in the analysis of the appropriate forum. Finally, Mr Malek submitted that the only realistic alternative to the jurisdiction of the English court would be the Belgian court, and that “the Belgian court is materially worse placed than this Court because it would be investigating matters by reference to an English-law governed contract, the GCA (so far as issues of Kazakh law, or facts in relation to the relationship between NBK and RoK, are concerned, the Belgian court enjoys no advantage over this Court).”
  3. I am unable to accept Mr. Sprange’s submission. This court will not be asked to determine the validity of the conservatory attachment order made in Belgium. Rather, it will be asked to determine what, if any, assets constitute the subject-matter of that order. The Belgian Attachment Judge plainly considered that a dispute concerning the content of the attachment – which, on its terms, constitutes only such assets (if any) as are held by BNYM(L) for RoK under the GCA – is a question for this court.
  4. The fact that the Belgian court has referred the dispute to this court is a cogent reason, indeed a compelling reason, for concluding that this court is a proper forum for determining the dispute. It would not be in accordance with comity to send the dispute back to Belgium. There is no need to consider Mr. Malek’s further submissions.

I quite like Ali Malek QC’s idea of “an estoppel of a particular, autonomous, EU kind”; linked to considerations of mutual trust, one assumes.

Finally, one of the defendants is based in Gribraltar and against it, (now) Article 8(2) Brussels I Recast applies, re third party proceedings. There is little to none CJEU authority. At 68 ‘I consider that the wording of article [8](2) is wide enough to encompass a situation in which a person is a proper party to a dispute between other parties to which he has a “close connection”, so long as that dispute has not been “instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case” and at 69 ‘This is a case in which “the efficacious conduct of proceedings” demands the presence of Terra Raf in this jurisdiction. I therefore find the requirements of article [8](2) to be satisfied.’

Teare J’s findings on this point also mean he need not consider (now) Article 7(5)’s jurisdiction for activities arising our of branch activity on which as I noted, I also have my doubts.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.

MB v TB. When is a court ‘seized’ under EU civil procedure /private international law?

When is a court ‘seized’ under EU civil procedure /private international law? The question is highly relevant in light of the application of the lis alibi pendens principle: the court seized second in principle has to cede to the court seized first. Williams J in [2018] EWHC 2035 (Fam) MB v TB notes the limited attempt at harmonisation under EU law and hence the need for the lex fori to complete the procedural jigsaw.

On 8 July 2016 MB (the wife) issued a divorce petition seeking a divorce from TB (the husband). On 16 August 2016 the husband issued a divorce petition against the wife out of the Munich Family Court. On the 22 August 2016 the husband filed an acknowledgement of service to the wife’s petition asserting that the German court was first seized because it was ‘not accepted England is first seized, owing to failures to comply with art. 16 and 19 of Council Regulation (EC 2201/2003) and relevant articles of the EC Service Regulation (EC 1393/2007).

At issue were two considerations: whether seizure of the English courts had been effected; and whether the wife’s issuing of the petition on 8 July 2016 is an abuse of process on the basis that the wife did not at that time consider the marriage to have irretrievably broken down but was issuing a petition simply to secure the English jurisdiction in the event that a divorce was needed? This latter element amounts to disciplining a form of fraus, on which I have reported before – eg here that there is very little EU law.

In Regulation ‘Brussels IIa’ (2201/2003) – concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, as in the other Regulations, ‘seising of a Court’ is defined as:

  1. A court shall be deemed to be seised: 

(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the applicant has not subsequently failed to take the steps he was required to take to have service effected on the respondent;

or

(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the applicant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

These ‘steps required’ are not further defined under EU law and hence rest with national law. Under relevant English law, Williams J held that the husband was aware of the wife’s petition before it was validly served on him, and that this was enough for the English courts to have been validly seized.

Geert.

National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.

In [2017] EWHC 3512 (Comm)  National Bank of Kazakhstan v Bank of New York Mellon, Article 7(5) makes a rarish appearance, as does (less rarely) Article 30. Popplewell J summarises the main facts as follows.

‘The Second Claimant is the Republic of Kazakhstan (“ROK”). The First Claimant is the National Bank of Kazakhstan (“NBK”). The Defendant is a bank incorporated in Belgium with a branch in, amongst other places, London. Through its London branch it provides banking and custody services to NBK in respect of the National Fund of Kazakhstan (“the National Fund”), pursuant to a Global Custody Agreement dated 24th December 2001, (“the GCA”). The National Fund has been the target of proceedings brought by Mr. Anatolie Stati and others, (“the Stati Parties”), who are seeking to enforce a Swedish arbitration award against ROK for a sum, including interest and costs, in excess of US$ 500 million. The Stati Parties obtained attachment orders from the Dutch court and the Belgian court, which were served on the Defendant (“BNYM”). BNYM, after taking legal advice, decided to freeze all the assets comprising the National Fund, which it holds under the GCA, on the basis that it was bound to comply with the Belgian and Dutch orders, breach of which would expose it to the risk of civil liability for the amount of the Stati Parties’ claims and criminal liability in Belgium and the Netherlands.’

Effectively therefore the London Branch of a Belgian domiciled bank, has frozen claimant’s assets which it holds in London (although the exact situs is disputed), on the basis that it wishes to prevent exposure to BE and NL criminal proceedings.

Parties arguments on jurisdiction are included at 41 and 42 of the judgment. Core to the Brussels I Recast jurisdictional discussions is Article 7(5) which provides

“A person domiciled in a Member State may be sued in another Member State: […]

(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;’

Beyond Case 33/78 Somafer, to which the High Court refers, there is little CJEU precedent – C‑27/17 flyLAL is currently underway. Popplewell J at 53 refers to Lord Phillips’ paraphrasing of Somafer in [2003] EWCA Civ 147  as a requirement of ‘sufficient nexus’ between the dispute and the branch as to render it natural to describe the dispute as one which has arisen out of the activities of the branch.

At 54 he holds there is such nexus in the case at issue, particularly given the management of the frozen assets by the London branch, and the very action by that branch to freeze them. This is quite a wide interpretation of Article 7(5) and not one which I believe is necessarily supported by the exceptional nature of Article 7.

As to whether the English and Belgian proceedings are ‘related’, providing an opportunity for the English proceedings to be halted under Article 30 of the Recast (lis alibi pendens), the High Court refers at 57 ff to C-406/95 The Tatry to hold that there is no risk of conflicting decisions in this case: the argument specifically being that even if the issues addressed are the same, they are addressed in the respective (English, Dutch, Belgian) proceedings under different applicable laws (in each case the lex fori on sovereign immunity). I do not find that very convincing. The risk of irreconcilable outcome is the issue; not irreconcilability or not of reasoning. In the same para 60 in fine in fact Popplewell J advances what I think is a stronger argument: that the issue whether the National Fund was used or intended to be used for commercial purposes, requires to be determined or addressed in the English proceedings, with the result that there is no risk of conflict.

Article 30 not being engaged for that reason, obiter then follows an interesting discussion on whether there can be lis alibi pendens if the court originally seized had no jurisdiction under the Regulation: here: because the Belgian and Dutch proceedings are arbitration proceedings.

Does Article 30 apply to Regulation claims where there was a related action in a Member State in which the related action did not itself come within the Regulation? Referring to the new Article 34 lis alibi pendens rule for proceedings pending ex-EU, ex absurdum, would there not be an odd lacuna if Article 34 required a stay where there were related non-Regulation foreign proceedings in a third party State and the position were not to be the same for equivalent foreign proceedings in a Member State? I do not believe there would be such lacuna: the Article 34 rule applies to concurrent proceedings which are in fact in-Regulation, except international comity requires the EU to cede to foreign proceedings with a strong (typically exclusive) jurisdictional call. For intra-EU proceedings, the comity argument holds no sway – mutual trust does.

Like Poplewell J however I reserve final judgment on that issue for another occasion.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.

On ‘civil and commercial’, lis alibi pendens and torpedoing one’s own action: the CJEU in Aertssen.

C-523/14 Aertssen is not a corner piece of the Brussels I jigsaw. Rather, a necessary if unexciting piece of the puzzle’s main body. Aertssen NV, of Belgium, had a gripe with VSB Machineverhuur BV and others, of the Netherlands. Aertssen alleged fraud in VSB’s dealings with the company. It employed a well-known feature of Belgian (and French, among others) civil procedure, which is to file complaint with the investigating magistrate. This launches a criminal investigation, to which civil proceedings are attached.

Aertssen’s subsequent action of attachment of VSB’s accounts in The Netherlands, risked being stalled by the Dutch courts’ insistence that the group launch new legal action in The Netherlands. Aertssen obliged pro forma with this initiation of new proceedings, subsequently to aim to torpedo them. Aertssen would rather the Belgian courts continue with their own, criminal investigation and that action in The Netherlands, other than action in attachment, be put on hold, at least until the Belgian proceedings be finalised.

In essence therefore, the case before the CJEU needs to determine whether the Aertssen action in Belgium is of a ‘civil and commercial’ nature, and if it is, whether the actions in Belgium and The Netherlands meet the requirements of the lis alibi pendens rule of Article 27 (old) of the Brussels I-Regulation. The CJEU replied in the affirmative to both.

Precedent for the ‘civil and commercial’ issue, other than the usual suspects, was available per Sonntag, Case C-172/91, where the Court held that civil matters within the meaning of the first sentence of the first paragraph of Article 1 of the Brussels Convention, cover an action for compensation for damage brought before a criminal court. In Aertssen, The CJEU used the term ‘private law relationship’ to describe the legal relationship between the parties concerned. Even though, other than in Sonntag where the criminal proceedings were launched by the State prosecutor, Aertssen itself had triggered the criminal investigation, its ultimate aim is to obtain monetary compensation.

The subsequent question was whether per Article 27, lis pendens exists. Reference is best made to the judgment itself for the application of the The Tatry criteria (Case C-406/92): the two cases pending need to involve the same parties, pursuing the same cause of action (the facts and the rule of law relied on) and with the same object (meaning the end the action has in view). The CJEU held among others that the question whether the parties are the same cannot depend on the position of one or other of the parties in the two proceedings.

The remainder of the judgment deals with the meaning of the term ‘court first seized’ in Article 30 of the Regulation, and the relevance of national rules of civil procedure in same.

It is not often that a party aims to torpedo its own proceedings and the procedural intricacies of the case are rather complex. However the CJEU keeps a level head, with in the end transparent results.

Geert.