Posts Tagged Direct damage
ED&F Man Capital Markets v Come Harvest Holding et al. Court of Appeal confirms Tolenado DJ’s forum analysis of Vedanta. Leaves Rome II issue undiscussed.
In  EWCA Civ 2073 the Court of Appeal on Tuesday confirmed the High Court’s analysis of Vedanta. I discuss the High Court’s finding at length here. Best simply to refer to that post – readers of the CA judgment shall read Faux LJ confirming the implications of Vedanta. Note also the discussion on the limited impact of the Singaporean pre-action (particularly disclosure) proceedings: precisely because they were pre-action and not intended to at that stage launch a multiplicity of proceedings.
The Rome II argument was left untouched for appellant conceded that failure on the Vedanta point would sink the appeal.
(Handbook of) European private international law, second ed. 2016, Chapter 8, Headings 18.104.22.168., 8.3.2; Chapter 4, Heading 4.4.
ED&F Man Capital Markets v Come Harvest Holding et al. First application of the UKSC Vedanta ruling and applicable law issues under Rome II Articles 4 and 10.
In  EWHC 1661 (Comm) ED&F Man Capital Markets v Come Harvest Holding et al claimant, MCM, entered into a Master Commodities Sale and Purchase Agreements with two Hong Kong companies, Come Harvest and Mega Wealth. The Master Agreements contained English exclusive jurisdiction agreements. Subsequent agreements were then entered into for the sale and purchase of nickel. The dispute between the parties turned on whether payments had been made by MCM to Come Harvest and Mega Wealth based on forged warehouse receipts. Those receipts had been issued by a warehouse operator, Access World, to the initial order, in most cases, of a Singaporean company, Straits.
In May 2017, MCM commenced pre-action disclosure proceedings in Singapore against Straits and in December 2017 it commenced English proceedings against Come Harvest and Mega Wealth. In September 2018 MCM sought to join Straits to the English proceedings and obtained an order granting permission to serve Straits out of the jurisdiction in Singapore. Straits challenged the jurisdiction of the English court.
There is sometimes an advantage to not immediately follow-up a Tweet with a blog post: the two preceding paras are the summary of the factual and procedural background by Herbert Smith.
Of particular note is the discussion at 43 ff on the impact of the UKSC’s Vedanta ruling: particularly, the ‘multiplicity’ issue which in my review of Vedanta, I discuss at 5. At 45:
Straits contended that MCM should not be able to rely as a “trump card” on the multiplicity point and the risk of irreconcilable judgments so as to create a single forum for all claims against all parties in England, in circumstances where that outcome was the result of choices which MCM had made along the way. Straits claims that MCM exercised a choice at the outset to commence the OS 533 action against Straits in Singapore and thereby intended that any substantive proceedings would be brought there too. Straits says that MCM should be held to this choice which it says exerted and continues to exert a “gravitational pull” towards Singapore. Straits also says that MCM could have attempted to engineer a single composite forum for all claims against all parties in Singapore by requesting that Come Harvest and Mega Wealth did not insist on their rights under the English court exclusive jurisdiction clauses in the Master Agreements or by commencing proceedings against those parties in Singapore in breach of the exclusive jurisdiction clauses and then contending that strong reasons existed as to why no anti-suit injunction should be imposed against the continuation of those proceedings.
At 46 Teledano DJ dismisses the suggestion.
In Vedanta, and leaving aside the substantial justice issue, the claimants had a straightforward choice between Zambia and England for all claims against all parties. The dispute was overwhelmingly Zambian in focus and nature. Yet the claimants chose to pursue their claims in England. In the present case, MCM has never had a straightforward choice of this kind that would have enabled it to sue all parties in Singapore (or some other jurisdiction apart from England). MCM has at all material times been bound by the exclusive jurisdiction clauses in the Master Agreements to sue Come Harvest and Mega Wealth in England. There is no evidence to suggest that, had either of these parties been approached, they would have been willing to give up their rights under those exclusive jurisdiction clauses. Nor do I accept that the concept of choice as referred to by the Supreme Court can be stretched so as to require a party to act in breach of contractual promises as to jurisdiction and then to fall on the mercy of the Court so as to avoid the grant of an anti-suit injunction. MCM is entitled to say that it had no choice but to sue Come Harvest and Mega Wealth in England. Having done so, there is real force in the submission made by MCM that England is the proper place for all claims against all parties because it is the only jurisdiction where a single composite forum can be achieved.
Turning then at 59 ff to applicable law, the issue is particularly how to define ‘direct damage’ (Article 4 Rome II) in the case of unlawful means conspiracy. Straits contends that the direct damage occurred where MCM was unable to obtain the metal it had purchased. That would be at the warehouses in Singapore, Malaysia and South Korea. By contrast, MCM contends that the direct damage occurred in England. This was the place from which MCM paid out funds to purchase the metal and it is also the place in which MCM received the Receipts that it alleges were forged. Teledano DJ at 62:
The key to ascertaining where the direct damage occurred in the present case is to keep in mind that, under the Master Agreements, MCM was only required to make payment upon receipt of the Receipts. MCM suffered direct damage when it made payment upon receipt of what are alleged to have been forged Receipts. Both the payment out, and the obtaining of the Receipts, occurred in England. If the Receipts were forged, the warehouse operators will not have been required to hand over metal from the warehouses upon presentation of the Receipts. However, it seems to me that this is a consequence of the damage that on MCM’s case it had already suffered rather than the direct damage itself.
English law, therefore, applies, as it does (at 70 ff) to the knowing receipt and equitable proprietary claims (see discussion re Article 4 cq 10 (unjust enrichment) Rome II, at 70 ff).
(Handbook of) European private international law, second ed. 2016, Chapter 8, Headings 22.214.171.124., 8.3.2; Chapter 4, Heading 4.4.
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.