The Alexandros resurfaces – Greek proceedings may turn out to be an expensive torpedo!

Update 19 September 2019  the relevant Greek Court of Appeal has refused to recognise the judgments awarding damages, on account of ordre public. Appeal with the Supreme Court and CJEU reference seem likely.

I have reported before on the lis alibi pendens issue in the Alexandros litigation. (The left-over claims as identified in my previous post were, I understand, dropped, and hence the need for ECJ referral subsided – Hill Dickinson have a good summary of the various proceedings here). The Court of Appeal on the 18th of July held on the now (following the Supreme Court’s intervention) remaining issue of declarations, damages and indemnities in respect of the owners’ proceedings in Greece seeking damages from the insurers, despite proceedings for sums due under the relevant insurance policies having been settled in England pursuant to a choice of forum clause. (Apologies for this all being a bit dense – reading my previous post helps). (Greek courts in fact rejected the claims in April).

The left-over issue essentially boils down to the question whether despite the ECJ’s prohibition of anti-suit injunctions for subject-matter falling within the Brussel I-Regulation, Member States courts are free to award damages to the party suing elsewhere in the EU in spite of a choice of court agreement between parties. The Court of Appeal held that they are. It justifiably, in my view, distinguished Turner v Grovit . In Turner v Grovit, the ECJ is concerned with mutual trust and allowing (and indeed trusting) the courts in the other Member States to make their own, proper application of the Regulation. Turner and Grovit does not uphold jurisdiction for the other court: it upholds the opportunity for that other court properly to apply the Regulation, which may or may not lead it to uphold jurisdiction.

The judgment of the Court of Appeal re-enforces the attraction of English courts as a destination of choice: parties wishing to torpedo (a prospect less likely in the Brussels I-bis Regulation) may or may not succeed in convincing alternative courts of their jurisdiction. English courts since Turner cannot issue anti-suit. However they may still hold party liable for having breached the choice of court agreement.

Geert.

Insolvency, Brussels I and Lugano: Enasarco v Lehman Brothers upholds strong defence of choice of court

In Enasarco v Lehman Brothers, the High Court was asked to stay English proceedings following jurisdictional issues of a derivative agreement between Enasarco and Lehman Brothers Finance (LBF). Swiss liquidators of LBF had already rejected a claim under the agreement, rejection which is being challenged in the Swiss courts. The derivative agreement is subject to English law and to choice of court exclusively in favour of the English courts.

Are the claims with respect to the derivative agreement so closely connected to the insolvency that they are covered by the insolvency exception to the Lugano Convention (identical to the exception in the Brussels I Regulation) consequently freeing the English courts from that Convention’s strict lis alibi pendens rule? (Similar questions were at issue recently in the Sabena recognition and enforcement issue – albeit evidently not re lis alibi pendens).

Richards J held they were – allowing the contractual issues under the derivative agreement to be settled by the English courts, and the insolvency matters by the Swiss courts.

LBF submitted that the Lugano Convention applies to the present proceedings and also to the proceedings in Switzerland whereby Enasarco challenges the rejection of its claim and, accordingly, that article 27 (lis alibi pendens) required the court to stay the English proceedings in favour of the Swiss proceedings. It was common ground that, if article 27 applies, the Swiss court was the court first seised. Alternatively, LBF submitted that the court should exercise its discretion under article 28 (re related, but not identical actions) to stay the English proceedings. In the further alternative, it submitted that the High Court should have granted a stay, on case management grounds, of the English claim pursuant to section 49(3) of the Senior Courts Act 1981 (SCA 1981). (In other words, were Lugano found not to apply).

Richards J of course referred to Gourdain and German Graphics, and found that the Swiss proceedings could not exist, nor have any relevance, outside the Swiss litigation: (at 42):

First, they are proceedings which arise, and can only arise, under Swiss insolvency law. Secondly, they form an integral part of the liquidation proceedings, designed to achieve the primary purpose of such proceedings, which is the distribution of the assets available to the liquidators among those creditors whose claims are admitted. The proceedings must take place in the court dealing with the liquidation. Thirdly, the purpose of the proceedings is not simply to establish whether the claimant has a good contractual or other claim, but to determine the amount and the ranking of the claim for the purposes of the liquidation. The ranking of claims is a matter arising exclusively under the relevant insolvency law. (…). Fourthly, the self-contained and special character of the Swiss proceedings is well illustrated by the fact that it does not give rise to res judicata as between the parties in relation to the underlying contractual dispute.

As for the discretionary stay under English civil procedure, Richards J held against it, for the following reasons (at 56 ff):

First, the Derivative Agreement contains an exclusive jurisdiction clause, as regards states which are parties to the Lugano Convention, in favour of the English courts. (Here reference was made to the Supreme Court’s decision in The Alexandros).

Secondly, as noted by the Court of Appeal in the AWB (Geneva) case when refusing a stay of English proceedings in favour of insolvency proceedings in Canada, and also by Rimer J in UBS AG v Omni Holding AG when refusing a stay of English proceedings in favour of insolvency proceedings in Switzerland, it is likely that the Swiss court will be greatly assisted by having the judgment of the English court on the rights and liabilities of the parties under the Derivative Agreement, given that it is governed by English law.

Thirdly, the Swiss proceedings were, practically speaking, not as far advanced as to make concurrent English proceedings nugatory. (Given the governing law of the contract, for instance, the Swiss courts might well be tempted to await the outcome of the English proceedings and take relevant conclusions for their own proceedings).

Fourthly, the merits of having issues arising under the Derivative Agreement determined by the English court have in fact been recognised by the liquidators of LBF in the past.

Finally, Enasarco had not chosen to commence proceedings in Switzerland. The liquidators chose to deal with Enasarco’s claims only in the Swiss insolvency proceedings and not through further proceedings in the English courts. It was the liquidators’ choice in this respect that forced Enasarco to issue the Swiss proceedings.

 

In summary, where issues are of a mixed nature, to the degree the mix can be undone, that is what must be carried out. The case highlights once again the strong defence raised by the English courts for choice of court clauses.

Geert.

 

Swiss ‘Sabena’ judgment interprets Lugano insolvency exception. Eventual recognition not impossible.

Update 22 January 2016 An amendment to the relevant parts of the Swiss PIL code is being suggested, which would make recognition of foreign insolvency proceedings less cumbersome.

In  SAirLines AG v Masse en faillite ancillaire de Sabena SA, the Swiss Bundesgericht (Federal High Court) held that the request by the liquidators of Sabena (the former Belgian national carrier) to have a Brussels Court of appeal judgment recognised and enforced in Switserland, falls within the ‘insolvency’ exception of the Lugano Convention (2007). It cannot therefore enjoy the swift recognition procedure included in that Convention. Instead, a claim under standard Swiss private international law in my view is still possbible (although, going by the Court’s obiter, see below, not promising).

The Brussels Court of Appeal in 2011 held SAirLines AG ( the holding company of the former Swiss Air Group) responsible for the insolvency of Sabena, by the misapplication of a number of crucial investment agreements (I summarise; that however is the gist of the dispute). SAirlines AG is itself being liquidated in Switserland. The Bundesgericht relied heavily on precedent in C-111/08 Alpenblumme where the insolvency exception of the Brussels I-Regulation was held as  as applying to a judgment of a court of Member State A regarding registration of ownership of shares in a company having its registered office in Member State A, according to which the transfer of those shares was to be regarded as invalid on the ground that the court of Member State A did not recognise the powers of a liquidator from a Member State B in the context of insolvency proceedings conducted and closed in Member State B.

It also referred to Gourdain. Per Gourdain, an action is related to bankruptcy only if it derives directly from the bankruptcy and is closely linked to proceedings for realising the assets or judicial supervision. It is the closeness of the link, in the sense of the case-law resulting from Gourdain, between a court action and the insolvency proceedings that is decisive for the purposes of deciding whether the exclusion in Article 1(2)(b) of the JR is applicable.

The mere fact that the liquidator is a party to the proceedings is not sufficient to classify the proceedings as deriving directly from the insolvency and being closely linked to proceedings for realising assets.

(Incidentally, for a Lugano-bound court to rely on the ECJ’s case-law on the insolvency exception may in my view in future be less obvious, at least as far as the ECJ’s case-law post the entry into force of the insolvency Regulation is concerned: the ECJ’s judgment on the respective scope of both Regulations is now obviously subject to there being the other, closely related Regulation. The Insolvency Regulation however does not apply to Switserland whence arguably the scope of the stand-alone Lugano insolvency exception need not necessarily evolve alongside that of the Brussels I-Insolvency exception).

In the case at hand, it might indeed be difficult to argue that the Belgian liquidators’ action while having an impact on the insolvency and the division of the assets, does not directly derive from the bankruptcy and would have existed even without such insolvency occurring.

The judgment does not mean that recognition and enforcement of the judgment is now totally out of the question (even the official court’s press release suggests as much in its title). Rather the Bundesgericht has simply held on the applicability of the Lugano Convention. As far as my legal German reaches (that may be an important caveat hence I would like to hear from Swiss, German or Austrian lawyers) the judgment does not prejudice enforceability under general Swiss private international law. (Although, with the same caveat, the language at para 10 of the judgment does not sound promising:

‘ Das belgische Urteil fällt aus den dargelegten Gründen nicht in den sachlichen Anwendungsbereich des Lugano-Übereinkommens. Dass das Urteil unter diesen Umständen nach den Regeln des IPRG anzuerkennen wäre, wird nicht geltend gemacht und ist aufgrund der insolvenzrechtlichen Natur der Streitsache auch nicht ersichtlich (vgl. BGE 139 III 236 E. 5.3). Bei dieser Sachlage kommt eine Anerkennung und Vollstreckbarerklärung von vornherein nicht in Frage, und es erübrigt sich, darüber zu befinden, ob die Anerkennungsvoraussetzungen gemäss dem LugÜ gegeben wären und ob die Beschwerdegegnerin überhaupt ein genügendes Rechtsschutzinteresse an einer selbstständigen Anerkennungsfeststellung und Vollstreckbarerklärung gemäss Art. 33 Abs. 2 und Art. 38 Abs. 1 LugÜ hätte, wie die Vorinstanz annahm, die Beschwerdeführerinnen hingegen bestreiten.).

 

To be continued, therefore?

Geert.

Pike & Doyle (Mumbai terror) at the High Court: forum non conveniens and the need for distinguishing Rome II and Brussels I

In Pike & Doyle v the Indian Hotels Company Limited, the High Court upheld its jurisdiction in the case of two (surviving but injured) victims of the Mumbai terror attacks. The UK Human Rights Blog has a posting on the forum non conveniens side of the case. I would like to point to some interesting observations in the judgment on the impact of the interpretation of the special jurisdictional rule for tort under the Jurisdiction Regulation (Brussels I).

The First Claimant suffers continuing pain and loss of amenity and substantial economic losses caused by his injuries. The Second Claimant sustained loss of earnings in England and Wales and has a continuing loss in the form of counselling. On that basis both Claimants have therefore suffered indirect or secondary damage as a result of the Defendants’ alleged negligence in Mumbai. The Claimants’ submission is that this is sufficient to found jurisdiction. The Defendants challenge this.

In support of their claim, defendant relied essentially on the impact which EU law suo arguendo has  on the interpretation of the relevant English rules of procedure: as summarised by Stewart J (at 12):

The Defendants’ submission is as follows:
(i) Before 1 January 1987 RSC order 11 rule 1(1)(h) required a plaintiff to establish that the action was “founded on a Tort committed within the jurisdiction”. The test was “where in substance did the cause of action arise?” (Distillers Co Ltd v Thompson [reference omitted]).
(ii) On 1 January 1987 the rule changed such that the new RSC order 11 rule 1(1)(f) became “the claim is founded on a Tort and the damage was sustained, or resulted from an act committed, within the jurisdiction.” The change was made to give effect to Article 5(3) of the Brussels Convention and the decision of the European Court in Handelskwekerij G.J. Bier B.V. v Mines Potasse d’Alsace S.A. [reference omitted]
[references to further precedent omitted]
(iii) The European Rules do not allow indirect secondary damage to found jurisdiction.
Dumez France v Hessische Landesbank [reference omitted]). Marinari v Lloyds Bank plc [reference omitted]). [references to further precedent omitted]
(iv) This is all accepted and is in line with the original Bier case where the European Court held that where an act occurred in one Member State and the damage occurred in another, the Claimant could sue the Defendant in the Courts of either state. (…)
(v) Given the above, the Court should apply normal principles of interpretation to the rule namely: delegated legislation is construed in the same way as an Act, the starting point is to ascertain the legislative intention and the person seeking to understand that intention must do so in the light of the enactment and its purpose. The interpretation must be an informed one [references omitted]
(vi) Therefore since the pre 1987 law would not have allowed indirect secondary damage to found jurisdiction and since the purpose of the change was to align the RSC (subsequently CPR) with the European rules which do not allow such a founding of jurisdiction, the rules should be interpreted consistently with the European cases.

 

Stewart J disagreed and precedent did before him. Absent the European context – for defendant is not domiciled in the EU and the Brussels I-Regulation does not otherwise apply, there is no reason to assume that the relevant English rules cannot be applied taking into account indirect damage as a jurisdictional basis for the English courts: Tugendhat J had already held so with reference to the preparatory works of the relevant change to the Rules of Procedure. He effectively found that Parliament did not fully assimilate the rules relating to non party states with those relating to states which are a party; it effectively wanted their to be a wedge between the application of the jurisdictional rule for tort in and outside the Brussels-I context.

Neither, Stewart J held, can Rome II come to the defendants’ rescue. This was an attempt by defendants to recycle the limitation to Article 5(3) of the Brussels I Regulation. No reference to this was made in the judgment however a prima facie forceful recital in the Rome II Regulation is recital 7: The substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) and the instruments dealing with the law applicable to contractual obligations.

Since Rome II harmonises applicable law for tort even if the national court upholds jurisdiction on the basis of its residuary jurisdictional rules (such as here, given that Brussels I does not apply), this bridge between the various Regulations might resurrect the relevance of the Dumez France and Marinari limitations to the judgment in Bier.

Stewart J however was not swayed and referred to Sir Robert Nelson in Stilyanou:

  • Brussels 1 relates to a different subject matter, namely jurisdiction, and has to be construed as a separate regulation, albeit consistently with the other regulations forming part of the compatible set of measures.
  • Rome II does not abolish the discretion which has to be exercised under the CPR in relation to non Member States.
  • Article 2 on its face is wide enough to include any damage direct or indirect which the regulation as a whole covers. Article 4(1) expressly excludes indirect damage which would otherwise be included by virtue of Article 2. There is no reason why “damage” under the CPR should be interpreted as in a specific Article such as Article 4 which defines the applicable law, rather than interpreted as a general article such as Article 2 which applies to the regulation as a whole (apart from Article 4).
  • Inconsistencies in the meaning of damage may exist as the tests are different under Brussels 1, Rome II and CPR. The latter includes the exercise of the discretion and hence consideration of forum conveniens to ensure the proper place for the trial is selected, whereas Brussels 1 and Rome II do not.
  • Rome II does not concern jurisdiction and does not override CPR 9(a). Where Brussels I does not apply, the issue of jurisdiction will be governed by a country’s own rules ie. in England and Wales the CPR

Neither Stewart J nor Sir Robert refer to recital  7 Rome II however their arguments in my view are supported post their findings by the ECJ judgment in Kainz.

A very interesting case for many aspects of conflicts law.

Geert.

 

 

EU to become party to The Hague Choice of Court Convention. Not necessarily a good idea.

Update 21 May 2018. Denmark has now also acceded. Update 2 October 2015. The Convention entered into force on 1 October. Update 5/12/2014: Approval is now final (p.16) and (update 10/12) has been published in OJUpdate 16/10/2014:

////

The European Commission has adopted its proposal for a Council decision on the approval, on behalf of the EU, of the Hague Convention of 30 June 2005 on Choice of Court Agreements. The Convention, which has not yet entered into force (but will be, once the EU ratifies), contains three basic rules that give effect to choice of court agreements (from the Convention’s website):

1.The chosen court must in principle hear the case (Art.5);
2. Any court not chosen must in principle decline to hear the case (Art.6); and
3. Any judgment rendered by the chosen court must be recognised and enforced in other Contracting States, except where a ground for refusal applies (Arts 8 and 9).

The Commission does propose that the EU make a declaration, excluding the application of the Convention to insurance contracts (unlike the recast Brussels I Regulation’s provisions re consumers and employees, insurers not domiciled in the EU continue to fall outside the Regulation), in spite of objections.

The downside of the complete exclusion of insurance contracts, from the point of view of European insurers, is that choice of court clauses they have negotiated with non-European policyholders would not be recognised and enforced in third States which are Contracting Parties to the Convention. From the perspective of the European policyholders, these would lose the advantage of having the decisions of EU courtsʼ (chosen by the parties) recognised and enforced outside the Union under the Convention – the EC is however more concerned about the position of the European insureds (as opposed to the insurers): if the Convention were to be concluded without excluding insurance contracts, there would be a lack of parallelism with the protective policy established in the Brussels I Regulation which allows the insured party to sue an EU insurer (or a EU branch of third State insurer) in his own place of domicile irrespective of any other jurisdiction available under a choice of court agreement. not all Member States agree with the Commission hence one will have to wait and see how this issue will be decided.

At any rate and more generally, were the EU to accede, this does of course put into question the relationship between the Brussels I Regulation, the Convention, and the Lugano Convention. The EC notes that Brussels I does not “govern the enforcement in the Union of choice of court agreements in favor of third State courts”. (Ignoring, incidentally, the judgment in Gothaer, which does achieve the same result in specific circumstances).

This would, in the EC’s view, rather be achieved by the Convention. The amendments to the Brussels I regulation introduced with the recast of 2012 “have strengthened party autonomy” and now “ensure that the approach to choice of court agreements for intra-EU situations is consistent with the one that would apply to extra-EU situations under the Convention, once approved by the Union”.

A ‘disconnection clause’ set out in Article 26(6) provides that the Convention shall not affect the application of the regulation “where none of the parties is resident in a Contracting State that is not a Member State” of the Union and “as concerns the recognition or enforcement of judgments as between Member States”.  “(T)he Convention affects the application of the Brussels I regulation if at least one of the parties is resident in a Contracting State to the Convention”, and shall “prevail over the jurisdiction rules of the regulation except if both parties are EU residents or come from third states, not Contracting Parties to the Convention”.

As regards the recognition and enforcement of judgments, the Regulation “will prevail where the court that  made the judgment and the court in which recognition and enforcement is sought are both located in the Union”.

Hence in summary, according to the proposal, the Convention will “reduce the scope of application of the Brussels I regulation”, but “this reduction of scope is acceptable in the light of the increase in the respect for party autonomy at international level and increased legal certainty for EU companies engaged in trade with third State parties”.

Hum. I am not convinced. The above signals a fairly complex regime of scope of application of Convention cq Regulation. The Regulation continues to differ from the Convention. (E.g. in not requiring written agreement for choice of court). Neither does it clearly (in contrast with the recast Regulation) settle applicable law to determine validity of the clause: is it lex fori prorogati?). In my view it adds a layer of complexity rather than removing some.

Geert.

Rolex v Blomqvist. ECJ confirms irrelevance of ‘focus and target’ or ‘direction’ in intellectual property cases.

After its withholding of mere accessibility of a site as a jurisdictional trigger for copyright infringement in Pinckney, the ECJ has now accepted that the mere acquisition of a good by a person domiciled in an EU Member State, suffices to trigger the application of the EU Customs Regulation’s provisions on counterfeit and pirated goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that State.

In Case C-98/13 Martin Blomqvist v Rolex Mr Blomqvist, a resident of Denmark, ordered a watch described as a Rolex from a Chinese on-line shop. The order was placed and paid for through the English website of the seller. The seller sent the watch from Hong Kong by post. The parcel was inspected by the customs authorities on arrival in Denmark. They suspended the customs clearance of the watch, suspecting that it was a counterfeit version of the original Rolex watch and that there had been a breach of copyright over the model concerned. In accordance with the procedure laid down by the customs regulation, Rolex then requested the continued suspension of customs clearance, having established that the watch was in fact counterfeit, and asked Mr Blomqvist to consent to the destruction of the watch by the customs authorities. Mr Blomqvist refused to consent to the destruction of the watch, contending that he had purchased it legally. Is there in the present case any distribution to the public, within the meaning of the copyright directive, and any use in the course of trade, within the meaning of the trade mark directive and the trade mark regulation?

The ECJ re-iterated earlier case-law (in particular L’Oreal /E-bay) that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in the EU. However proof that the goods are intended to be put on sale in the European Union, is being provided, inter alia, where it turns out that the goods have been sold to a customer in the European Union, such as clearly in the case at issue.

That sales to the EU have taken place is enough. Proof that EU consumers were actually targeted is not required – at least not with a view to triggering intellectual property protection (cf consumer protection under i.a. the jurisdiction Regulation).

In the view of the EU of course this is not an ‘extraterritorial’ application of EU law: the territorial link is firmly established through the customer’s domicile.

Geert.

Christmas crums part II – ÖFAB confirms narrow scope of the insolvency exception and clarifies ‘place where the harmful event occurred’ in case of tort by omission

Ok, I cheat. Judgment of the ECJ in ÖFAB is in fact a left-over of my summer queue. Contractual claims for payment against a Swedish company (Copperhill) had been assigned to Invest, equally domiciled in Sweden. Invest brought an action against a former director and former major shareholder, both domiciled in The Netherlands. Invest sought to have both held liable for the debts of the company, because they had allegedly allowed that company to continue to carry on business even though it was undercapitalised and was forced to go into liquidation.

Firstly the Court had to decide whether the action falls within the ‘insolvency’ exception of Article 1(2)(b) of the Regulation, which provides that it does not to apply to ‘bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’. The ECJ held that the exception did not apply, for – per previous case-law – it has to be interpreted narrowly. Only actions which derive directly from insolvency proceedings and are closely connected with them are covered by the exception. Here, the actions in the main proceedings do not constitute insolvency proceedings but were brought after Copperhill had been subject to a company reconstruction order (a near-automatic consequence of Swedish company law, I understand, in the event of limited companies having insufficient capital). In any event, the Court held, those actions do not concern the exclusive prerogative of the liquidator to be exercised in the interests of the general body of creditors, but of rights which an individual creditor is free to exercise in its own interests.

Next up was the qualification of the action as one in tort under Article 5(3) of the Brussels-I Regulation, and if so, the determination of the locus delicti commissi. The underlying debt was a result of work carried out under contract, however the action was based on the former company director and shareholder allegedly not properly having carried out their monitoring duties. Consequently the Court held in favour of the application of Article 5(3)’s special jurisdictional rule for tort.

That leaves the determination of the locus delicti commissi. What was at stake, the Court suggested, was not the financial situation or the carrying-on of the business of that company per se, but rather the conclusion to be drawn as regards a possible failure of monitoring by the member of the board of directors and the shareholder.

Turning to the locus delicti commissi, the Court refers to the place where the activities of the company took place: ‘ It is clear from the documents submitted to the Court that, in the period in which the disputed facts took place, Copperhill’s seat was in the municipality of Åre within the jurisdiction of the Östersunds tingsrǎtt, where, in the same period, it carried on its business and built a hotel. In those circumstances, it appears that the activities carried out and the financial situation related to those activities is connected to that place. In any event, the information on the financial situation and activities of that company necessary to fulfill the management obligations by the member of the board of directors and the shareholder should have been available there. The same is true for the information concerning the alleged failure to comply with those obligations. It is for the referring court to ascertain the accuracy of that information.‘ (at 54).

In other words, in a tort caused by omission (rather than by positive action by the alleged tortfeasor), the Court turns to the place where the tortfeasor’s action ought to have taken place, so as to avoid the very omission that led to the action in tort. For it is that place which answers best to the very raison d’être of the special jurisdictional rules of Article 5: ‘In matters of tort, delict or quasi-delict, the courts of the place where the harmful event occurred or may occur are usually the most appropriate for deciding the case, in particular on grounds of proximity and ease of taking evidence‘   (at 50, with reference ex multis to Folien Fischer).

A very useful judgment. Geert.

 

Christmas Crums part I – The ECJ holds on ‘contracts’ in Corman-Collins

One or two interesting developments have been held up in my end of year queue. I shall report on them over the next week and a half or so. First up: judgment of the ECJ in Corman-Collins Case 9/12 – I reported on the Opinion of the AG here. The Court, like the AG, holds in favour of ‘services’: such is the diverse nature of the various obligations in the contractual relationship.

Given its confirmation of the contract falling under Article 5(1)(b), first indent, of the Brussels I-Regulation, the Court did not answer the final, subsidiary, question, which questioned the amount of European harmonisation of ‘place of performance of the obligation in question’ under Article 5(1)(a). As I flagged earlier, the AG had suggested the ECJ confirm its deference to national law on this issue, per Tessili Dunlop.

Geert.

Irreconcilable judgments of the same State of Origin – The ECJ in Salzgitter Mannesmann

Case C-157/12 Salzgitter Mannesmann, concerned proceedings between Salzgitter Mannesmann Handel GmbH (‘Salzgitter’) and SC Laminorul SA (‘Laminorul’) concerning an application for a declaration of enforceability in Germany of a judgment given by a Romanian court by which Salzgitter was ordered to pay EUR 188 330 to Laminorul.  That judgment was at odds with an earlier judgment of that very same court, declaring the action as inadmissible. Salzgitter had not been properly represented in the second proceedings (there was discussion in the legality of representation). Appeals failed, and the Courts at Düsseldorf found themselves being asked to enforce a judgment which is incompatible with another judgment by that same State.

Does Article 34 of the Regulation apply? It provides that ‘A judgment shall not be recognised: …

(3)      if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought;

(4)      if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.

The ECJ held against the application of Article 34(4) on the familiar grounds of predictability and mutual trust. Courts in the Member States in which recognition and enforcement is sought, have very limited grounds for refusal. One of the core limitations is to ensure that the Member State of recognition does not perform a de novo review of the case. The ECJ essentially argues that, were Article 34(4) to apply to judgments of the same Member State of origin, the recognition and enforcement procedure would essentially amount to a further appeal in the underlying case. Salzgitter having exhausted all internal procedures to seek to have the judgment overturned, now has to face the music in Germany.

There is course one further option: the German court could find the Romanian proceedings manifestly contrary to German public order. Per Trade Agency this is a measure of last resort and of strict application- not one firmly contemplated by the court at Düsseldorf, so it would seem.

Geert.

 

Nomura v Banco Monte dei Paschi di Siena . Exclusive court of choice clause counts against use of court’s room under ‘related actions’

In a case on this point reminiscent of the Supreme Court’s subsequent decision in the Alexandros, the High Court held in Nomura v Banco Monte dei Paschi di Siena (BMPS) [2013] EWHC 3187 (Comm) against a grant of a stay of the English proceedings in favour of proceedings in Italy. The stay would have been granted on the basis of Article 28’s proviso for ‘related’ actions, in particular Article 28(1): ‘where related actions are pending in the courts of different Member States, any court other than the court first seized may stay its proceedings.’

A ‘mandate’ agreement exists between parties, which includes a non-exclusive jurisdiction clause in favour of the English courts. The ISDA Master agreement (this is different from the mandate agreement) is subject to English law and as such (see para 16 of the judgment) contains an exclusive choice of court clause. BMPS fired the first shot in litigation, in Italy. The Italian claims are a mixture of contractual liability, liability in tort, and liability ensuing from a criminal offence. BMPS essentially claim that its former senior management colluded with Nomura in covering op losses incurred on financial operations with Nomura. Nomura started proceedings in England with a view to establishing that the agreements at issue are valid and binding. Parties agree that the Italian court was first seized.

As further explained inter alia in my posting on the Alexandros, Article 28 gives the court much more leeway than Article 27’s lis alibi pendens rules. The High Court made full use of this flexibility, inter alia in finding that in reviewing whether actions are ‘related’ within the meaning of Article 28, account must be taken not just of the claims of plaintiff but also the defence raised by defendant. This is in contrast with the ECJ’s position on Article 27 in C-111/01 Gantner Electronic: in deciding identity of action under Article 27, account should be taken only of the claims of the respective applicants, to the exclusion of the defence submissions raised by a defendant.

Eder J held that the two proceedings were not likely to lead to irreconcilable judgments. Nomura’s claims in England are contractual. BMPS’ claims are based mostly on tort (para 26). It should not be excluded that the findings in one court will influence the other. Proximity or convenience does not plead in favour of Italy. Finally and importantly, the High Court found that ‘the case against the grant of a stay is strongly fortified because of the existence of the exclusive jurisdiction clause in the (  ) Master Agreement. (   ) the Court should, so far as possible, give effect to the parties’ bargain and be very slow indeed to exercise a discretion in a manner the effect of which would be to destroy such bargain‘.

The High Court justifiably did not entertain parties’ arguments on the basis of the new Jurisdiction Regulation, which enters into force in January 2015 and includes a new rule, granting better protection to choice of court agreements (priority for the court assigned to have a first go at establishing its jurisdiction).

Geert.