Athena Capital. Court of Appeal sets aside case-management stay under Brussels Ia, emphasises Brussels statutory purpose and A6 ECHR.

In Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See [2022] EWCA Civ 1051, the Court of Appeal has overturned the High Court’s judgment ordering a stay in a case involving alleged property fraud. I reviewed the first instance judgment here. The judge held the E&W courts did have jurisdiction over the claims but stayed them

because he took the view that the respondent had adopted a neutral position as to whether the appellants were under any liability and because the real dispute was not between the parties to this action but between the appellants and the prosecuting authorities responsible for the conduct of criminal proceedings against the fourth appellant in the Vatican City State.

(Males LJ [1]).

Many of the High Court judgment’s’ findings were not on appeal (such as the erroneous dropping of renvoi in the A25 BIa choice of court analysis).

The Court of Appeal spends a while summarising the earlier judgment, to arrive [54] at the crucial juncture between the Brussels Ia Regulation and case-management stays, with reference to its very recent decisions in Municipio and Nokia and to Article 6 ECHR right of access to courts [59]. Para 59 is crucial and I repeat it here in full

There is, as it seems to me, no reason to doubt that it is only in rare and compelling cases that it will be in the interests of justice to grant a stay on case management grounds in order to await the outcome of proceedings abroad. After all, the usual function of a court is to decide cases and not to decline to do so, and access to justice is a fundamental principle under both the common law and Article 6 ECHR. The court will therefore need a powerful reason to depart from its usual course and such cases will by their nature be exceptional. In my judgment all of the guidance in the cases which I have cited is valuable and instructive, but the single test remains whether in the particular circumstances it is in the interests of justice for a case management stay to be granted. There is not a separate test in “parallel proceedings” cases. Rather, considerations such as the existence of an exclusive English jurisdiction clause and the danger of circumventing a statutory scheme for the allocation of jurisdiction (such as the Judgments Regulation) will be weighty and often decisive factors pointing to where the interests of justice lie.

Males LJ therefore, like others before him, does not rule out a case-management stay even for proceedings covered by Brussels Ia yet puts (among others) that Regulation’s statutory purpose, and the need not to allow it to be circumvented, at the centre ground of the decision on a stay.

[60] ff a succinct background is given to the happiness, or not, of English courts entertaining negative declarations. [74] is the Court of Appeal’s core argument for lifting the stay:

I consider that the judge’s conclusion on what he described as the Secretariat’s “central argument” was mistaken. The Secretariat was not neutral. It follows that the basis on which the judge concluded that, at present, the grant of declarations would serve no useful purpose and therefore exercised his discretion to grant a case management stay was fundamentally flawed. Indeed the circumstances in which he envisaged that the declarations might serve a useful purpose and that the stay might be lifted, that is to say if the Secretariat adopted a partisan position in the criminal proceedings in the Vatican, already existed.

The judge had essentially decided that claimants, given the jurisdictional (for reasons of immunity) unavailability of the real defendants, had picked an ‘innocent bystander’ against whom to seek the negative declaration, the Secretariat, yet the Court of Appeal now finds that the Secretariat is not a neutral bystander at all. There is a real ‘dispute between the appellants and the Secretariat as to whether the appellants are under any civil liability to the Secretariat, for example to pay compensation, as a result of entering into the Transaction.’ [75]

[77] it is conceded that the lifting of the stay means there will be related proceedings going on in E&E, and the Vatican. But that is not found to be a reason to stay the English proceedings.

Geert.

 

 

 

Athena Capital Fund v Secretariat of State for the Holy See. Thank Heavens for jurisdictional mercies (here inter alia involving lex fori prorogati and agency for choice of court).

Athena Capital Fund Sicav-Fis SCA & Ors v Secretariat of State for the Holy See [2021] EWHC 3166 (Comm) features as defendant the Secretariat of State of the Holy See  (not the Holy See itself), and relates to a fraud and embezzlement claim of property in Chelsea, London.

Defendant says that from the perspective of Claimants, the purpose and intention of bringing these proceedings is to try to influence the criminal process in Italy, and/or the publicity emanating from the criminal process.

For its jurisdictional challenge, defendant argues [81] i) The claim was not a “civil and commercial matter” within the meaning of A1(1) BIa; ii) one of the claimants was not a party to the relevant Sale and Purchase Agreement (SPA) and could not rely upon it [this was summarily dealt with [88] by suggesting an amendment of claim] and, more forcefully, (iii) Defendant was not a party to the SPA for the purposes of A25 BIa.

Salzedo J justifiably in my view held [84] that

whether the claim is a civil or commercial matter does not turn on the subjective intentions of the claimant as to the ultimate effect that a claim might have on its interests, but on an objective reading of the claim itself and the relief that it seeks from the court. On that basis, it is a claim for declarations against the Defendant concerning the Defendant’s entry into commercial transactions with the Claimants.

and that the transaction was not entered into by the Defendant in the purported exercise of public powers: [86]

The Transaction was one that any private person could have entered into if it had the requisite funds. Nothing that was essential to the Transaction required sovereign powers to enter it and nothing that the Defendant did or purported to do was in the exercise of public authority.

As for the defendant not being a party to the SPA, the context here is whether a party involved in the signing accepted the SPA and its choice of court as an agent of the defendant. The judge, confirming the parties’ consensus, points out that that agency issue befalls to be addressed by English law. It is not said why that is the case however it is of course the result of the amended A25 – as others before it, however, the court does not complete the lex fori prorogati analysis with the recital 20 in fine mandated renvoi. On the agency issue the judge holds there is a good arguable case that the relevant agent did bind the defendant.

Next [103] ff follows a CPR-heavy discussion on the amendment of the claim form, seeing as the claimants erroneously assumed [120] that BIa was not engaged as the Vatican is not party to Brussels Ia. At [123] the conclusion is that the claim form may be amended and that defendants’ time spent in dealing with the service out issues under the common law (a wasted exercise as BIa applied), may be met in the costs order.

Once the A25 point rejected, there would have been a most narrow window for any kind of stay, yet the defendants try anyways, with [129] a series of abuse and case management arguments. One particularly poignant one is that the proceedings would interfere with a criminal proceeding. After discussion the judge [159] dismisses the idea on the facts, seeing as none of the declarations sought would involve any assertion as to what does or does not amount to criminality as a matter of the law of the Vatican State.

[163] ff discusses the abuse of process issue which the defendants, I understand, presented more or less as being integrated into the criminal procedure element, discussed above. That was wise, for abuse of process, while entertained among others in Vedanta, is arguably noli sequitur in a BIa claim. [Support for the alternative view here was sought [172ff] in Messier-Dowty v Sabena SA[2000] 1 WLR 2040]

The case-management stay proper is discussed 192 ff with reference ia to Municipio, and Mad Atelier. The judge in current case is very aware of not re-introducing through the back door what CJEU Owusu shut the front door on. He summarily discussed the possibility anyway, only to reject it. He does however eventually order a stay on the grounds that the current claim cannot usefully be pursued as long as the defendant is in a bind about the outcome of the criminal proceedings in Italy, and because the real adversary of the Claimants in relation to the Transaction is not the Defendant, but other organs of the Holy See or the Vatican State itself – the chances of those ever appearing in a civil proceeding in E&W are extremely slim. The claims were therefore held not to serve any useful purpose and where stayed on that basis, and for as long as a material change in circumstances might alter the finding of uselessness.

An interesting case.

Geert.

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