Tag: Article 34

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Public Institution for Social Security (PIFFS) v Ruimy. The High Court on ‘case pending’ in Article 34 Brussels Ia (forum non light), and a disappointing obiter conflation of forum non and Article 34.

In Public Institution for Social Security v Ruimy & Anor [2023] EWHC 177 (Comm) Jacobs J rejected both a forum non conveniens argument and an (acquired Brussels Ia) Article 34 Brussels Ia argument (raised by a Luxemburg-based defendant).

My paper on the Article 34 genesis and case-law hitherto is here.

Current claims are related to earlier jurisdictional challenges, culminating in The Public Institution for Social Security v Banque Pictet & Cie SA & Ors [2022] EWCA Civ 29 which I discuss here.

PIFSS is a Kuwaiti public institution responsible for Kuwait’s social security system and pension scheme. The claims involve alleged corruption of PIFSS. Director General by international financial institutions and intermediaries in return for causing or influencing PIFSS to invest substantial funds with or through those institutions and intermediaries (or related entities).

Following the Court of Appeal’s decision in January 2022 to uphold the successful jurisdictional challenge by some of the parties (‘the Mirabaud parties’), PIFSS have commenced proceedings against three of the Mirabaud parties (Banque Mirabaud, Mr Pierre Mirabaud and Mr Fauchier-Magnan) in Switzerland. These Swiss proceedings no longer, include a claim in respect of one of the schemes, the ‘Aerium’ scheme. Instead, the claim in those proceedings concerns a large number of other schemes in which the Mirabaud parties are alleged to have participated or assisted.

The forum non arguments are discussed [43] ff and are of course only possible because the United Kingdom are no longer party to the Lugano Convention (and the Swiss proceedings initiated post Brexit). At the heart of the forum non conveniens argument of some of the defendants in current claim, incl. Ruimy, is the proposition that the Aerium Scheme claims should be heard in Switzerland alongside the other claims advanced against the Mirabaud parties. [65] ff Jacobs J holds that defendants have not shown that Switzerland was clearly or distinctly more appropriate than the English forum.

I do not discuss forum non in detail for the interest of the post lies more with the Article 34 analysis.

This is discussed briefly [118] ff with the judge unfortunately albeit obiter following defendants’ concession that failure of the forum non argument would also sink Article 34. The reasoning seems to be that Article 34’s “necessary for the proper administration of justice” test fails if the third State at issue is not shown to be  the clearly or distinctly more appropriate than the English forum. As I discuss in my paper, this is wrong, and it falls into the same trap as the first instance judge in Municipio. While considerations relevant to the forum non test may play a role in Article 34, it is wrong to conflate the two tests.

As noted this view is made obiter only for the formal reason for the judge to reject the Article 34 defence is his decision that Article 34(1)’s condition  that an action be ‘pending before a court of a third State at the time when a court in a Member State is seised of an action which is related to the action in the court of the third State’, has not been met. Per the Court of Appeal in Municipio, “The action in the third state must be pending before the third state court when the member state court becomes seised of the action” (see also Henshaw J in Viegas v Cutrale[149]).

[122] Swiss proceedings which might potentially be considered to be relating to the English proceedings came too late, they were most definitely not pending at the time of the current English claims.

The only potentially relevant “proceedings”, in the context of Article 34, are the proceedings commenced by the service of the commandements de payer, however, they are held not to qualify: [129]

I agree with PIFSS that the request and issue of the commandements de payer did not mean that proceedings were “pending before a court” of Switzerland. In short, this is because there was no document lodged with any court. Commandments de payer are issued by administrative authorities, not a court. …a commandement de payer is at most a precursor to an action in court. In the present case, there was an objection by the recipient, with the result that court proceedings were then necessary if the requesting party wanted to take matters forward. This is what happened in the present case, when PIFSS did issue civil proceedings against the Mirabaud parties in 2022. But there were no relevant court proceedings issued by PIFSS in Switzerland prior to that time.

A judgment of note.

Geert.

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Maceió victims v Braskem. Rotterdam court refuses application for Article 34 lis pendens stay.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

The (first instance) court at Rotterdam has upheld anchor jurisdiction and refused an application for an Article 34 Brussels Ia stay. The case concerns victims of earthquakes in the Brasilian Maceió region, which they argue are caused by the mining activities of Braskem. The judgment is only available in Dutch.

The Dutch anchor defendants are intra-group suppliers of ia specialty chemicals, and finance. The main target of the claim of course is the Brasilian mother holding. Whether the latter can be brought into the proceedings is not subject to Brussels Ia but rather to Dutch residual rules. However just as in e.g. Shell, the Dutch rules are applied with CJEU authority on Article 8(1) Brussels Ia firmly in mind. In much more succinct terms than the English courts in similar proceedings, the Dutch courts [6.16] finds the cases so ‘closely related’ that it is expedient to hear the cases together. It emphasises that while the respective roles and liabilities of the various undertakings concerned is likely to be very different, there is a bundle of legal and factual questions that runs jointly throughout the various claims. [6.18] it emphasises that the decision to base the European headquarters of the group, and the finance activities at Rotterdam, implies that the concern reasonably could have foreseen it would be sued here.

Equally succinctly [6.19 ff] the Court rejects the argument that the use of the Dutch corporations as anchor defendants is an abuse of process. Such abuse must be narrowly construed and  it is far from obvious that the claim against the anchors is entirely without merit.

Seemingly defendants tried to argue forum non conveniens however [6.23] the court points out such construction does not exist in The Netherlands and obiter it adds (like the Court of Appeal in Municipio) that practical complications in either hearing of the case or enforcement of any judgment are not a reason to dismiss jurisdiction.

Request for a stay in the procedures viz the Brasilian corporations [6.26] is rejected on (Dutch CPR) lis pendens rules for the parties in the proceedings are not the same. Article 34 is dealt with in two paras (quite a contrast with the E&W courts). The pending procedures vis-a-vis Article 34 are not, it seems, Brasilian Civil Public Actions – CPAS (these were at issue in Municipio de Mariana (of some interest is that the law firm behind the claims is the same in both cases)). Rather, pending liquidation proceedings are considered as the relevant assessment points. [6.28] obiter the court finds that the cases are most probably not related. It grounds  its decision however on a stay not being in the interest of the sound administration of justice. The court holds that the Brasilian proceedings are not likely to be concluded within a reasonable time. Defendants’ commitment at hearing to speed up the process in Brasil, are met with disbelief by the court given the defendants’ attitude in the Brasilian procedures hitherto.

[6.32] permission to appeal the interim judgment on jurisdiction is denied. This means that, like in Airbus, discussion on the private international law issues is likely only to resurface at the stage of appealing the judgment on the merits, too.

An important judgment: other than Petrobas, there are to my knowledge no continental judgments discussing Article 34 in this intensity (there are E&W judgments, as readers of the blog will know).

Geert.

See also ‘Dude, where’s my EU court? On the application of Articles 33-34 Brussels Ia’s forum non conveniens- light rules’, Journal of Private International Law, forthcoming 2022.

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Municipio de Mariana v BHP. Questions on Brussels Ia’s lis pendens rules viz third states remain. Yet overall approach to environment, human rights suits against corporations in their domicile, to be applauded.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

Municipio De Mariana & Ors v BHP Group (UK) Ltd & Anor [2022] EWCA Civ 951 (background to the case here) is the appeal against the stay (and partial strike-out), on forum non conveniens, A33-34 Brussels Ia and case-management grounds ordered by Justice Turner. The Court of Appeal has overturned all three reasons for a stay. Bar appeal with the Supreme Court (which the defendants are likely to seek) the claimants may now bring their claim in the courts of England and Wales.

For the benefit of full disclosure I should add I am instructed for claimants in the case; this post however does not speak for claimants or co-counsel in the case and is merely my academic view on the judgment.

The judgment runs to 107 pages (not excessive given the issues and facts covered). There is little point in me rehashing it all (again, reference to my previous post may be useful). 40 pages are spent describing the applicable law in Brasil and the various proceedings underway there. This is of particular importance seeing as the crux of all three defences advanced is that the proceedings are already underway in Brasil and should not be duplicated by an English procedure.

In the main:

Abuse is dealt with [170] ff, with the key points for reversal listed [179] and the CA’s own analysis detailed thereafter, summarising in [234] ff.

Of particular note here is the rebuke of Justice Turner’s finding of ‘unmanageability’ of proceedings (which the CA as such does not believe will be the case) having dominated his subsequent findings on other elements of abuse, and the use of forum non conveniens criteria for the assessment of abuse.

[182] Consideration should have been made of the question of the availability of full redress in Brazil. To those following business and human rights litigation, this will be a welcome finding. [186] Support for manageability of proceedings not having a place in the abuse assessment (other than [187] if the claimant were to have vexatiously made the proceedings unmanageable himself), was found in Mastercard v Merricks [2020] UKSC 5.

[190] discussion of what Turner J at the abuse level,  saw as complications arising out of the existence of parallel proceedings in Brazil, already indicate the direction the Court took on the forum non and A34 issue: the many differences between the English and the Brazilian proceedings.

The Article 34 Brussels Ia application is discussed [237] ff and is of particular relevance to readers of the blog.

Firstly [256] the Court of Appeal settles for now the Privatbank /Euroeco discussion on ‘expediency’ (see also ia SCOR v Barclays) in favour of the former: What is required to fulfil A34(1)(a)’s condition is that it must be desirable for the two actions to be heard and determined together in order to avoid the risk of irreconcilable judgments, irrespective of whether that is a practical possibility. (Claimants have reserved the right to contest this should the matter go before the Supreme Court).

Further [257] the test of relatedness for the purposes of A34 is held by the CA to be a broad test: [243] per Tesauro AG in C-406/92 The Tatry, whenever the judge seized of the stay request considers that the reasoning adopted by the court hearing the earlier proceedings may concern issues likely to be relevant to its own decision, the cases can be said to be related. This is opposed to the narrow approach in the House of Lords Sarrio SA v Kuwait Investment Office [1991] AC 32: there the HoL held that for there to be a risk of irreconcilable judgments the inquiry is limited to “primary” issues which are those necessary to establish the cause of action, and does not include issues which the court might or might not decide and which would not be essential to its conclusion.

On the condition ‘that the court of the third State will give a judgment capable of recognition‘, at the hearing the question was asked whether a twofold condition exists, namely (i) that a judgment was expected as a matter of fact and (ii) that the expected judgment was one which was capable of recognition and, where applicable, enforcement. The Court [260] supports the view that only the second (ii) condition applies. I do not think that is correct and I am not convinced by the Court’s travaux analysis on this point [266] – I detail this in my forthcoming paper in the JPIL. As for that second condition, the CA holds [269] that ‘the exercise at this stage is a conceptual one, looking at the type of judgment to which the third state pending action may give rise, and evaluating whether it attracts recognition, or where applicable enforceability.’

‘Necessity for the proper administration of justice’ is dealt with [273] ff (although it confusingly includes discussion of more than just this ultimate A33-34 condition), starting with the discussion whether a stay was available or could be justified on a “consolidation” basis (effectively, an allocation of jurisdiction [275], or on a “wait and see” basis [temporary case-management: wait and see whether and to what extent the outcome of the case ex-EU affects the action in the member state]. [277] Underhill LJ takes a holistic approach: Does waiting for the outcome [of the Brazilian proceedings held to be related] give rise to advantages which sufficiently outweigh any disadvantages such that a stay is necessary? [279] The CA takes a broad approach to the issues that might be considered, including issues classic to a forum non conveniens analysis. I believe that is right, with the important caveat that A34 must not effectively be conflated with forum non (which is what the first instance judge had effectively done) (compare Ness).

[282] the Court takes a formalistic (and correct) view on the ‘related proceedings’ and their being ‘pending’:

for the purposes of the article 34 application, the nature and extent of overlap which falls to be considered when addressing whether and to what extent there is a risk of irreconcilable judgments, and in considering whether that risk weighs in favour of a stay being necessary for the proper administration of justice, is limited by reference to that which might be decided in the [pending Brazilian proceedings].

In particular, an advantage eg in winding-up proceedings viz the defendants or related undertakings, which could be obtained down the line from the outcome of the related proceedings, would not be caught by the comparative overlap and the likelihood of relatedness therefore is seriously reduced ([283] contrary to Turner J’s finding that that the list of areas in which potentially irreconcilable judgments are liable to arise was “almost endless”).

[291] ff the CA makes its own assessment of the ‘proper administration of justice’ requirement given the judge’s core mistakes (particularly, his abuse conflation and the consideration given to future proceedings which are not pending).

[298] The CA holds that the continuation of the claim against BHP Australia (for which later in the judgment it finds that this is not barred on forum non grounds) in and of itself argues against an A34 stay (and that relevant parts of Lord Briggs’ speech in Vedanta do not change that).

Obiter [300] ff it lists other factors against a stay: [302] there is a real possibility that final resolution of the related BRA proceedings,  if they resume at all, is well over a decade away; [303] ‘For there to be a further delay of years, and quite possibly over a decade, before [E&W proceedings] could resume would cause very substantial prejudice to the claimants in obtaining relief, and would be inimical to the efficient administration of justice as a result of all the well-known problems which delay brings to the process’; [304] ff there are many disadvantages to the BRA proceedings including that these will not address the liability of the defendants in the E&W proceedings; [308] the degree of overlap between the proceedings is limited.

The forum non application is highly relevant given the English courts’ preponderant reliance on it, outside the BIa context, following UKSC Brownlie. Of note here is ia [345] the unrealistic prospect of the alternatives being suggested – I will leave the further forum non analysis to blogs less focused on European conflict of laws.

Rejection of a case-management stay is done succinctly, with Underhill LJ noting ia [374] that such stay would be incompatible with A34 and A4 BIa.

All in all I do not agree with each of the Court’s findings on tenets of A34, however in general the Court’s application reflects the correct approach to the Article, which very much makes a stay the exception.

Geert.

See also Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules

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Bourlakova v Bourlakov. An ‘everything including the kitchen sink’ jurisdictional challenge, with the Article 34 forum non light issues held obiter.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

‘Soonish’ was pretty accurate – I have been busy teaching LAW5478 at Monash. In Bourlakova v Bourlakov [2022] EWHC 1269 (Ch),  Trower J held ia against a stay of English proceedings on Article 34 Brussels Ia grounds. My paper on Article 33-34 is in the editorial stages at the Journal of Private International Law and the case will be included in its overview of the case-law so far. That case-law is predominantly English, perhaps a reflection of how (wrongly) English courts are convinced into thinking the Article 33-34 defence is another form of a forum non convenience objection to jurisdiction.

As in many of the cases (including Municipio de Mariana in which a Court of Appeal judgment ought to be delivered around June /July), the judge has to consider a mixed forum non conveniens (for the non-EU based defendants) and Article 33-34 (for the EU domicileds) defence. On top of that, there are applications for a  case-management  stay, and objections to valid service in Latvia. In other words, the classic ‘everything including the kitchen sink’ jurisdictional defence, leading to a judgment of over 400 paras long!

Jurisdiction in the case as far as Brussels Ia i concerned, is a combination of Article 4 and 8(1) – the Lugano Convention also has a calling.

Claimants are Mrs Loudmila Bourlakova and two companies of which she is the ultimate beneficiary, one of which (Hermitage One Limited (“H1”)) is incorporated in the Isle of Man and the second of which (Greenbay Invest Holdings Limited (“Greenbay”)) is incorporated in the Seychelles.  First defendant is Oleg Bourlakov, who died on 21 June 2021, which was after the commencement of these proceedings but before the applications to challenge jurisdiction had been made. The major part of his and his family’s wealth derived from the acquisition and subsequent sale of Novoroscement OJSC, a major Russian cement producer, which was sold for US$1.45 billion in 2007. Both Bourlakovi are or were Ukrainian, Russian and Canadian nationals. At the material time they were both domiciled in Monaco, although during the course of their marriage they had lived in a number of other jurisdictions including Canada.

Claimants allege that, since late 2017, there had been an irretrievable breakdown in marital relations. Divorce proceedings were initiated by Mrs Bourlakova in Monaco in 2018. It was common ground in the Monaco divorce proceedings that the law governing the matrimonial property regime is Ukrainian law and the Ukrainian concept of community property applied to the marriage. The Monegasque courts remained seised of the divorce proceedings at the time of Mr Bourlakov’s death.

Second to fourth defendants were all involved in the provision of fiduciary corporate services and advice to Mr Bourlakov, together with companies and foundations owned or controlled by him. Domicile for these is England, Cyprus or Switzerland. Fifth defendant, domiciled in Israel, somehow got caught up in the proceedings through a family trust, and is pursuing alternative litigation in England. Sixth defendant is a German qualified lawyer domiciled in Latvia, other defendants (family members ) are domiciled at Estonia or (companies) Panama.

The essence of the allegations is that Mr Bourlakov and his advisers conspired to reduce the share of the ex-wife in the matrimonial estate.  Mr Bourlakov and Mrs Bourlakova have never lived in England and the alleged partnership at the heart of the dispute is unrelated to England, did not operate here and is not governed by English law. None of the underlying assets which the claimants believe form part of Mr Bourlakov’s estate are located in England (or even held through English companies). Neither though, does Monaco (the alternative forum suggested in the jurisdictional objection) feature in the factual matrix.  One of the defendants is domiciled in England and one or two relevant meetings were held in England.

Divorce proceedings were commenced in Monaco and Mr Bourlakov and his advisers filed criminal proceedings there against Mrs Bourlakova on the basis of alleged breach of trust, concealment and money-laundering.  As is often the case in continental European proceedings, a civil claim there was lodged with an investigating judge, which will eventually lead to a court required to rule on the civil claim as well as the criminal one. Mr Bourlakov’s compaint has led to nought however Mrs Bourlakova’s counterclaim is still pending there in some, disputed form, as are Mr Bourlakov’s estate proceedings.

There is an extraordinarily complex web of issues to be held under English and EU jurisdictional rules but I shall limit this post to the Article 34 stay application – which was held obiter.

The judge [292] firstly notes, as noted obiter (for the A34 defence was raised too late), with reference ia to CJEU Aertssen,  that the defendants had not properly established that the Monaco criminal proceedings, viewed from the pont of Monegasque criminal procedure, were an “action pending before the court of a third state” for the purposes of A34 at the time the current proceedings were commenced.

[294] ff also discuss, equally obiter, whether any related third state action must fall within the scope of BIa for A34 to apply at all. [298] ff in that respect refer to two cases in which it was accepted that the court must be satisfied that the proceedings pending in the foreign jurisdiction, as well as the English proceedings, fall within the scope of BIa. However, in neither [BB Energy (Gulf) DMCC v Al Amoudi, WWRT Ltd v Tyshchenko, both engaged with the insolvency exclusion of BIa] was there a judicial decision on the point.

[312] Trower J also notes that A34 ‘accepts more risk of an irreconcilable judgment than article 30’, despite the reference in the recitals to flexibility. ‘Related’ actions are also discussed with reference to Viegas, and the judge [330] ff suggests he would not have ordered a stay on five further grounds, some of them related it seems to the ‘sound administration of justice’ requirement (and cited, too, for the refusal of a case management stay).

A complex web of findings and claims, with the A34 discussion showing that much is still outstanding on its application. I do not yet know whether permission to appeal has been sought and if so, on what grounds.

Geert.

European Private International, 3rd ed. 2021, Heading 2.2.15.3.2, para 2.539 ff

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James Finlay business and human rights suit potentially puts forum non conveniens and its Brussels’ cousin to the test.

Update 28 December 2022 an application to vary the August order on grounds of comity has failed: [2022] ScotCS CSOH_94.

Update 3 September 2022 In [2022] CSOH 57 on 22 August Lord Braid granted an anti-suit injunction , ordering James Finlay to continue its own attempts at obtaining an anti-suit injunction in the Kenyan courts, aimed at halting the Scots collective proceedings. Lord  Braid referred ia [17] to the seminal Turner v Grovit case, of Brussels Convention fame. [42] James Finlay are found, in seeking and obtaining the Kenyan orders to have been vexatious and oppressive of the group members, whom its conduct was calculated to harass.

Update 3 February 2022 thank you Russell Hopkins for alerting us to the judgment of Lord Weir [2022] CSOH 1, [29] that the suit meets with Scottish collective action /group proceedings rules. Forum non conveniens arguments will be heard later.

I posted the Tweet below in October,  and am posting mostly to report that I do not as yet have more to go by. The suit is against James Finlay and follows in the footsteps of one brought in 2017, pre-Brexit therefore.  The 2017 action per CJEU Owusu v Jackson cannot be subject to a forum non conveniens challenge, and I am as yet not aware of an Article 33-34 Brussels IA ‘forum non light’ defence. This new, 2021 action has already been said to be met with a forum non challenge. It will be interesting to see first of all whether the forum non challenge in the latest suit will be impacted by the unavailability in principle of forum non in the 2017 suit; additionally, whether defendants are aiming to have the 2017 suit thrown out on the basis of A33-34 BIa (so far I have not seen indications that they will).

As I point out in the Tweet, had the UK been allowed to join Lugano, forum non would not be available to this newest suit.

Geert.

EU Private International Law, 3rd ed. 2021, Chapter 7.

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The Brazilian orange juice cartel: successful claimants on among others Article 34 Brussels Ia ‘forum non light’, with lingering doubts on A4 ‘domicile’..

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

Viegas & Ors v Cutrale & Ors [2021] EWHC 2956 (Comm) (05 November 2021) concerns an alleged cartel between several Brazilian companies which produce orange juice, including Sucocítrico Cutrale: 3rd defendant. The other two defendants, Mr Cutrale Sr and Mr Cutrale Jr,  are natural persons Claimants are orange farmers who are all domiciled in Brazil.  The claim relates to alleged antitrust infringements committed in Brazil and said to have restricted competition in markets in Brazil, causing harm to the Claimants there.

Claimants claim to be entitled to maintain proceedings in England and Wales on the bases that:

i)                   although Sucocítrico Cutrale is a Brazilian company, it has its central administration in London and is therefore domiciled in the UK pursuant to A63(1)(b) Brussels Ia;

ii)                 alternatively, the Claimants were entitled to serve Sucocítrico Cutrale, pursuant to CPR 6.3(c)/6.9(2) at a “place within the jurisdiction where [it] carries on its activities; or any place of business of the company within the jurisdiction”.

iii)               Cutrale Snr is domiciled in England; and

iv)               Cutrale Jnr is domiciled in Switzerland and the claims against him are so closely connected with the claims against Sucocítrico Cutrale and Cutrale Snr that it is expedient to hear and determine them together so as to avoid the risk of irreconcilable judgments, pursuant to Article 6 Lugano Convention.

The Defendants’ position is in outline as follows:

Sucocítrico Cutrale

i)                   Sucocítrico Cutrale has its “central administration” in Brazil and is therefore not domiciled in the UK for the purpose of A63(1)(b) BIa.  There is therefore no right to bring proceedings against the company in England under Article 4(1). The court must apply common law principles to determine jurisdiction.

ii)                 Alternatively, the claims against Sucocítrico Cutrale should be stayed under A33 and/or 34 BIa because of ongoing proceedings in Brazil concerning the alleged cartel.

iii)               The Claimants were not entitled to serve Sucocítrico Cutrale at an address within the jurisdiction, and so the company has not been validly served.

iv)               Alternatively, applying common law forum non conveniens principles, Brazil is the proper place for the claims against Sucocítrico Cutrale and the court should not exercise jurisdiction against it.  The claims against Sucocítrico Cutrale should be stayed even if (contrary to the Defendants’ primary case) Cutrale Snr is domiciled in England. Cutrale Snr has confirmed that he would submit to the jurisdiction of the Brazilian court. The risk of inconsistent judgments in England and Brazil therefore carries little weight because it would be caused by the Claimants’ unnecessary pursuit of litigation in England. In such circumstances, the court may stay the claims against the foreign defendant notwithstanding the presence of a UK domiciled anchor defendant (reference is made to Vedanta Resources plc v Lungowe [2020] AC 1045 . I flagged the ‘submission to foreign jurisdiction’ issue in my review of Vedanta).

Cutrale Snr

v)                  Cutrale Snr is not domiciled in the UK. There is therefore no right to bring proceedings against him under A4(1) BIa.

vi)               Further or alternatively, the court should stay the claims against Cutrale Snr pursuant to A34 BIa because of the ongoing proceedings in Brazil.

vii)             Although Cutrale Snr was served in the jurisdiction, applying common law forum non conveniens principles Brazil is the proper place for the claim.  Accordingly, the court should decline jurisdiction.

Cutrale Jnr

viii)           If neither Sucocítrico Cutrale nor Cutrale Snr is English domiciled there is no basis to assume jurisdiction against Cutrale Jnr.

ix)               If Cutrale Snr is English domiciled but the claims against Sucocítrico Cutrale are to proceed in Brazil, the criteria under A6 Lugano are not met because it would be more expedient for the claims against Cutrale Jnr to be heard in Brazil alongside the claims against Sucocítrico Cutrale.

x)                  Further or alternatively, the court should stay the claims pursuant to a reflexive application of A28 Lugano Convention because of the ongoing proceedings in Brazil.

Henshaw J held that the court lacks jurisdiction over Sucocítrico Cutrale however that it does have jurisdiction over Cutrale Snr and Cutrale Jnr and  that there is no proper basis on which to stay the claims against them.

Domicile of Sucocítrico Cutrale (‘SuCu’)

A63 BIa determines corporate domicile as the place where the corporation has its (a) statutory seat; (b) central administration; or (c) principal place of business. Claimants suggest place of central administration as being in London. Anglo American came to my mind as indeed it did to counsel and judge in current case. At 31 ff a concise look into the travaux is offered as are references to CJEU case-law under freedom of establishment (including Uberseering). I would be cautious however with too much emphasis on those cases, which are judged in quite a different context to the one in a jurisdictional assessment.

SuCu are in in essence a family-run business [55]. This is also emphasised in the witness statement of Cutrale Sr himself. SuCu refer extensively to its internal by-laws and the role in same for the ‘Executive Board’ which is made up of professionals. However there is also a, by-laws sanctioned, Family Board (in which Cutrale Sr until recently had a 99% stake). The Executive Board, by defendant’s own admission [55], runs the company on a day to day basis. The Family Board seemingly meets at various places worldwide, and the role of London in the family Board’s direction is not small, given that Cutrale Sr has secretarial assistance for his business interests there, and that his daughter (who also sits on the Family Board) conducts all her business interests there [57].

In Anglo American, the CA held

 ‘the correct interpretation of “central administration” in Article 60(1)(b), when applied to a company, is that it is the place where the company concerned, through its relevant organs according to its own constitutional provisions, takes the decisions that are essential for that company’s operations. That is, to my mind, the same thing as saying it is the place where the company, through its relevant organs, conducts its entrepreneurial management; for that management must involve making decisions that are essential for that company’s operation’

[75] ff the judge does not see London as that place where the entrepreneurial management takes place. This is to some degree a factual appraisal however I I am minded to see quite strong arguments in favour of London. I do not think for instance that BIa’s DNA of predictability for the defendant knowing where it might be sued, carries too much weight here seeing as the complex structure and the diverse effective location of the Family Board’s meetings is of its own making. By failing clearly to implement one centre of entrepreneurial management, visible to outsiders, the defendant in my view brings the risk of positive conflicts of jurisdiction upon itself.  All the more so in my view in cases where, such as here, the accusation is involvement in a cartel, which is unlikely to have happened with the firm controller of the Family Board having been kept in the dark.

Alternative serving under CPR 6.9.(2) [“Any place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction.”] is also dismissed: [104] ff.

[112] ff the judge discusses the domicile of Cutrale Sr which, per A62(1) BIa is to be determined under English law. This [129] ff is held to be England.

Cutrale Jr being undisputably domiciled in Switserland, the question arises whether the claim against him may be anchored upon the claim against his father, per A6(2) Lugano. The judge is reminded of his own judgment in PIS v Al Rajaan. Defendants submit that if the claims against Sucocítrico Cutrale must be pursued in Brazil, it is more expedient for the claims against Cutrale Jnr to be pursued in that jurisdiction, even if the Claimants are entitled to sue Cutrale Snr as of right in England. However [142] the judge agrees with Claimants’ point that somewhat different policy considerations arise when considering the risk of inconsistent judgments within the EU (or between Lugano States), compared to the position vis-à-vis so-called ‘third States’, and that the latter context does not involve the same particular impetus to remove obstacles to the single market and observe the principle of ‘mutual trust’ between the courts of different Member States.

Whilst the claims against Cutrale Jnr are of course connected with those against Sucocitrico, they are also bound to involve important issues in common with the claims against Cutrale Snr which (subject to the issue of an A34 stay, see below) are to be pursued in England  [143].

[144] In conclusion the expediency threshold under A6 Lugano is held to have been reached.

Next, a stay of the proceedings against Cutrale Snr under A34 BIa is rejected [147] ff. Much of the A34 authority, all of which I have discussed on the blog, is flagged. The judge observes the tension between Kolomoisky and EuroEco Fuels (Poland) as to whether the power to stay depends on there being a procedural means by which the two actions could, in fact, be tried together. At [163] the judge thankfully notes the important distinction between A33-34 and A29-30, despite citing A29-30 authority with some emphasis:

I would observe, however, in disagreement with the Defendants, that despite the similarity of language it may well make a difference whether a stay is sought (a) under Article 28 as such or (b) under Article 34 or under Article 28 as applied reflexively vis a vis proceedings in a third country (see § 238 below).  The observation quoted above that there might be a presumption in favour of a stay seems considerably easier to justify in a case where the intra-EU internal market considerations referred to in § 142 above apply than where the overseas proceedings are in a non-Member State.  On the contrary, a presumption of a stay in favour of a third country state of proceedings prima facie brought as a right against a defendant in his place of domicile may well be hard to square with the fundamental principles underlying the Brussels and Lugano regimes.

At [221], too, and in an in my view important and marked departure from Justice Turner in Municipio, Henshaw J here holds that

whilst recital 24 indicates that the court should consider all the circumstances of the case, it does not follow that the court can grant a stay pursuant to Article 34 which is in substance no more than a forum non conveniens stay.  It follows that the factors listed in § 213.iv) above are relevant only insofar as they support the granting of a stay based on the Favero and Costa claims as related claims.

This puts the horse back before the cart.

At [164] ff the ‘rival’ Brasil claims are discussed, [197] of which only two predate the current E&W claim against Cutrale Sr and a conclusion [210] that these are related in a broad sense to the present claims, but that degree of relationship would be insufficient to make it expedient to stay the present claims by reference to them.

[213] ff the various arguments that a stay would be in the ‘interest of justice’ are rejected: these include in particular [216] suggestions of consolidation or joint case management, whilst theoretically possible, are unrealistic in practice (reference is made ia to the fact that none of the current Brazilian claims have been consolidated); [217] neither rival claim is likely to reach a conclusion in the reasonably foreseeable future: on the contrary, both have been mired in procedural disputes for many years.

Similar arguments are made obiter when considering an A33-34 stay against Sucocitrico (in the event the A4 analysis, above, were to be wrong): [241] ff.

At 237, the possibility of a stay of the proceedings against Cutrale Jr, under a reflexive application of A28 Lugano is rejected with mere reference to the reasons listed viz the A34 stay. The judge has to follow the Court of Appeal’s finding in Kolomoisky, that reflexive application of A28 Lugano is possible. Clearly, I submit, it is not and this will be an important point to clarify when and if the UK accede to Lugano.

The judge concludes [249] ff by obiter upholding a forum non stay. His arguments here are interesting among others for they lead to a different result than the A33-34 application – which serves to confirm the very different nature of both mechanisms.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.15.3.

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Mixing the blank rounds with the live bullets. The Court of Appeal (obiter) on Article 33 Brussels Ia, forum non conveniens light, in Ness Global Services.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

In Perform Content Services Ltd v Ness Global Services Ltd [2021] EWCA Civ 981 the Court of Appeal yesterday dismissed the appeal against the High Court judgment which I discussed here.

Two grounds of appeal were at play [34]:

(1) The Court was wrong as a matter of law to interpret Article 33 to mean that jurisdiction was not “based on” domicile by reason of a non-exclusive English court jurisdiction clause that conferred prorogated jurisdiction on the English Court pursuant to Article 25;

(2) The Court was wrong to conclude that a stay was not necessary for the proper administration of justice within the meaning of Article 33(1)(b). The court wrongly failed to place any or any sufficient weight on the fact that the NJ and English proceedings were mirror image proceedings giving rise to the risk of irreconcilable judgments, the core purpose of Article 33 and a core feature of the concept of the administration of justice under the Article. The court wrongly took account of the non-exclusive English court jurisdiction clause and/or an English governing law clause and/or wrongly took account of its assessment that the centre of gravity was Slovakia and/or failed to place any or any sufficient weight on the material connections between the parties and the United States and/or wrongly placed significant reliance on connections between the parties, the dispute and the UK.

On the first issue Flaux C refers ia to UCP and to Citicorp (the latter had not been referred to by the first instance judge, I suggested it could have been), to hold that choice of court under A25 BIa being exclusive or not has no relevance. Like the first instance judge, he rules that A33-34 cannot apply if choice of court has been made in favour of an EU court, exclusive or not.

He then deals obiter, like the judge had done, with the issue whether an A33-34 stay would have been in the interest of the sound administration of justice. He emphasises [66] the wide catchment area of ‘all the circumstances of the case’ per recital 24, and suggests this must potentially also include the connections which the case has with the EU Member State and indeed the specific court (per the choice of court clause) concerned.

On that he is right. But he is wrong in my view to support Turner J’s analysis at [67] in Municipio, without any nuance.

Turner J and Flaux C are both right that, the fact itself that the factors which a judge considers in holding that the proper administration of justice does not require a stay, might theoretically have also been relevant in a common law forum non conveniens exercise, does not invalidate the judge’s approach under A33-34. However the problem with the judge’s A33-34 analysis in Municipio is,

Firstly, that it is a case of the tail wagging the dog. The proper administration of justice analysis, exclusively populated by forum non criteria indeed with full reference to that forum non analysis, was put to the front without proper engagement with the substantive conditions for A33-34 to apply at all.

Further, the DNA of A33-34 as I have reported before ( I am preparing an overview for publication), is much, much different from the forum non DNA. By cutting and pasting of the criteria indeed by cross-reference to the forum non criteria without further ado, the A33-34 analysis is irreparably broken. It becomes a case of mixing the blank rounds with the live bullets.

It is worth emphasising that the limited A33-34  analysis are obiter findings only.

Geert.

European Private International Law, 3rd ed. 2021, 2.539 ff.

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Brussels IA arbitration exception claxon. Recognition of Spanish Prestige judgment in England & Wales. Res judicata issues concerning arbitration referred to the CJEU. Ordre public exceptions re Human Rights not upheld.

[pre-script: the case at the CJEU is known under number C-700/20]. Update 4 March 2022 Butcher J’s judgment referred to below eventually was given a neutral citation number, The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain [2020] EWHC 1920.

The London Steam-Ship Mutual Insurance Association Ltd v The Kingdom of Spain (M/T PRESTIGE) [2021] EWHC 1247 (Comm) has been in my blog in-tray for a little while: I had thought of using it for exam purposes but have now decided against that.

The case is the appeal against Cook J’s registration of the Spanish judgment in the Prestige disaster.  I have reported thrice before on the wider litigation – please use tag ‘Prestige’ in the search box.

References in the judgment are to Brussels I (44/2001), not its successor, Brussels Ia (1215/2012) however the  relevant provisions have not materially changed. Application is for recognition and enforcement of the Spanish Judgment to be refused,  and the Registration Order to be set aside for one or both of two main reasons, namely: (1) that the Spanish Judgment is irreconcilable with a 2013 Hamblen J order, upheld on Appeal,  enforcing the  relevant Spanish award (A34(3) BI), and (2) that recognition would entail a manifest breach of English public policy in respect of (a) the rule of res judicata and/or (b) human and fundamental rights (A34(1) BI).

Butcher J referred the first issue to the CJEU on 18 December 2020 – just before the Brexit deadline. I have not been able to obtain a copy of that judgment – the judge merely refers to it in current one. The CJEU reference, now known as Case C-700/20, is quite exciting for anyone interested in the relationship between arbitration and the Brussels regime. Questions referred, are

1) Given the nature of the issues which the national court is required to determine in deciding whether to enter judgment in the terms of an award under Section 66 of the Arbitration Act 1996, is a judgment granted pursuant to that provision capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of EC Regulation No 44/2001?

(2) Given that a judgment entered in the terms of an award, such as a judgment under Section 66 of the Arbitration Act 1996, is a judgment falling outside the material scope of Regulation No 44/2001 by reason of the Article 1(2)(d) arbitration exception, is such a judgment capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of the Regulation?

(3) On the hypothesis that Article 34(3) of Regulation No 44/2001 does not apply, if recognition and enforcement of a judgment of another Member State would be contrary to domestic public policy on the grounds that it would violate the principle of res judicata by reason of a prior domestic arbitration award or a prior judgment entered in the terms of the award granted by the court of the Member State in which recognition is sought, is it permissible to rely on Article 34(1) of Regulation No 44/2001 as a ground of refusing recognition or enforcement or do Articles 34(3) and (4) of the Regulation provide the exhaustive grounds by which res judicata and/or irreconcilability can prevent recognition and enforcement of a Regulation judgment?

These are exciting questions both on the arbitration exception and on the res judicata refusal for recognition and enforcement. They bring into focus the aftermath of CJEU West Tankers in which the status of the High Court confirmation of the English award was also an issue.

The Club’s argument that recognition would be contrary to English public policy because the Spanish Judgment involved a breach of human and fundamental rights was not referred to the CJEU. Discussion  here involves ia CJEU Diageo. Suggested breaches, are A 14(5) ICCPR; breach of fundamental rights in the Master being convicted on the basis of new factual findings made by the Supreme Court; inequality of arms; and; A1P1.

There is little point in rehashing the analysis made by Butcher J: conclusion at any rate is that all grounds fail.

That CJEU case is one to look out for!

Geert.

EU Private International Law, 3rd ed 2021, 2.84 ff, 2.590 ff.

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WWWRT v Tyshchenko. Interesting if contestable engagement with Brussels IA’s Article 34’s forum non-light regime.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

In WWRT Ltd v Tyshchenko & Anor [2021] EWHC 939 (Ch) and following an earlier Worldwide Freezing Order, Bacon J engages with Article 34 Brussels Ia’s forum non conveniens ‘light’ regime.

The proceedings are brought by WWRT ltd against Mr Serhiy Tyshchenko and his ex-wife, Mrs Olena Tyshchenko. The claim is founded on an allegation that the Defendants carried out an extensive fraud on the Ukrainian bank, JSC Fortuna Bank during which time the bank was (it is claimed) ultimately owned by Mr Tyshchenko. The bank was subsequently declared insolvent and was liquidated, in the course of which a package of its assets, including the disputed loans, was sold to Ukrainian company Star Investment One LLC.  Star in turn sold those rights and assets to WWRT in March 2020. WWRT’s case is that following those two assignments it has now acquired the rights to bring the claim relied upon in the present proceedings, which is one in tort under Article 1166 of the Ukrainian Civil Code.

In current proceedings, defendants contest jurisdiction, on the basis of 3 alternative grounds:

Firstly, the principle of ‘modified universalism’ (which I have discussed ia here) which should ground a stay under common law so as to prevent WWRT from bypassing the Ukrainian insolvency proceedings. The suggestion is that CJEU Owusu did not deal with a potential stay to allow the judge in one EU Member State to stay proceedings so as to support insolvency proceedings in another Member State. Bacon J held [57], in my view justifiably, that even if indeed the CJEU in Owusu did not specifically deal with this issue, its reasoning (particularly the insistence on predictability and legal certainty) extends to the current scenario. Insolvency proceedings may well (and indeed clearly) fall outside BIa’s scope, however the claim at issue is one in tort, which falls squarely within it. At 62 ff he discusses obiter that even if such stay would have been theoretically possible, he would not have exercised his discretion to grant it.

Secondly, at 89 ff, a stay by analogy with A34 BIa. It is seemingly common ground between the parties and the judge that the bankruptcy exclusion in A1 BIa precludes the express application of A34 if the pending action in the third State is in the nature of bankruptcy or insolvency proceedings. Support is found in Baker J’s views in BB Energy. This is not a settled issue. Neither is much discussion, pro or contra, of the in my view unjustifiable finding of reflexive application of A28 Lugano in JSC Commercial Bank v Kolomoisky [2019] EWCA Civ 1708. The more sound rejection of an A34 stay in the case at issue  in my view lies in the judge’s obiter finding at 95 that the proceedings in E&W are not ‘related’ to those in the Ukraine.

Thirdly, a more straightforward argument of lack of domicile of one of the defendants in the UK, hence room for a forum non conveniens stay. This argument was in fact dealt with first, at 38 ff, with Bacon J  holding on the basis of a pattern of settled residence that domicile was in fact established. At 98 ff he holds obiter that even if A4 hence BIa had not been engaged, he would not have allowed a stay on forum non grounds.

In conclusion, the freezing orders were continued.

Geert.

EU Private International Law, 3rd ed 2021, para 2.539 ff

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Suing ‘Norsk Hydro’ in The Netherlands. No engagement it seems of Article 33-34 BIa ‘forum non conveniens light’.

A quick note on the suit in The Netherlands against “Norsk Hydro” of Norway, for alleged pollution caused by aluminium production in Brasil. No court decisions or orders are available as yet hence I write simply to log the case. I have put Norsk Hydro in inverted commas for the suit really is against Norsk Hydro subsidiaries incorporated in The Netherlands, who are said to control the Brazilian entities. The jurisdictional basis therefore is A4 BIa. As far as the reporting on the case  indicates, there seems little likelihood of A33-34 BIa’s forum non conveniens light making an appearance seeing as no Brazilian proceedings are reported to be underway which could sink the Dutch proceedings like the High Court did in Municipio de Mariana. That is not to say of course that the defendants might not discover some.

Geert.

EU Private International Law., 3rd ed. 2021, Heading 7.3.1.

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