Posts Tagged Forum non conveniens
Huawei v Conversant wireless. Reflexive application of patent validity jurisdiction confirmed in principle – but rejected in casu.
In  EWCA Civ 38 Huawei v Conversant Wireless (on appeal from  EWHC 808 (Pat) the Court of Appeal considered whether in the event of 2 defendants being UK based (the others domiciled in China) the UK courts may relinquish jurisdiction reflexively to honour Article 24(4) Brussels Ia’s exclusive jurisdictional rule for the validity of patents.
Neither Article 33’s lis alibi pendens or Article 34’s ‘forum non conveniens’ rule were discussed.
Huawei China and ZTE China have commenced proceedings in China against Conversant, seeking to establish invalidity and (in the case of Huawei China only) non-infringement of Conversant’s Chinese patents. Conversant have inter alia sued Huawei China and ZTE China in Germany for infringement of its German patents.
Following Owusu, jurisdiction for infringement of UK patents against UK incorporated companies must lie and remain with the English courts per Article 4 B1a. As readers will remember from my review of Ferrexpo, the English courts for some time however have noticed with relish that the CJEU in Owusu did not entertain the part of the referral which asked it whether exclusive jurisdictional rules may apply reflexively – holding thereafter in the CJEU’s stead that they might so do (in a discretionary: not a slavish fashion: Floyd J here at 115).
At 95 ff Floyd J discusses the issues after having summarised the various representations made (see a summary of the summary by John de Rohan-Truba here), with much of the discussion turning on English CPR and jurisdictional rules, and reflexive application of Article 24(4) confirmed in principle, but not applied here. Requests to refer to the CJEU were summarily dismissed.
(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11, Heading 18.104.22.168.
In  EWHC 466 (Fam) V v M, Williams J refused both an application for a stay on the basis of forum non conveniens of English proceedings in favour of proceedings in India, and an anti-suit injunction. Applicant mother is V and the respondent is the father M. They are engaged in litigation in England and in India in respect of their son. The English limb of the proceedings is the mother’s application for wardship which was issued on or about the 16 October 2018, and which includes within it application for the summary return of the child from India to England.
India is (obviously) neither a Brussels IIa party nor the 1996 Hague child Protection Convention. Brussels IIa contains a forum non-light regime (as Brussels Ia now does, too): see e.g. Child and Family Agency v J.D. Whether more general forum non is excluded following Owusu v Jackson per analogiam, has not reached the CJEU however as Williams J notes at 22 ‘the trend of authority in relation to the ‘Owusu-v-Jackson’ points towards the conclusion that the power to stay proceedings on forum non-conveniens grounds continues to exist in respect of countries which fall outside the scheme of BIIa or the 1996 Hague Child Protection Convention.’
Given that eventually he upholds jurisdiction of the English courts, the point is moot however may be at issue in further cases.
At 48 ff the various criteria for forum non were considered:
i) The burden is upon the applicant to establish that a stay of the English proceedings is appropriate.
ii) The applicant must show not only that England is not the natural or appropriate forum but also that the other country is clearly the more appropriate forum.
iii) In assessing the appropriateness of each forum, the court must discern the forum with which the case has the more real and substantial connection in terms of convenience, expense and availability of witnesses. In evaluating this limb the following will be relevant;
a) The desirability of deciding questions as to a child’s future upbringing in the state of his habitual residence and the child’s and parties’ connections with the competing forums in particular the jurisdictional foundation
b) The relative ability of each forum to determine the issues including the availability of investigating and reporting systems. In practice, judges will be reluctant to assume that facilities for a fair trial are not available in the court of another jurisdiction but this may have to give way to the evidence in any particular case.
c) The convenience and expense to the parties of attending and participating in the hearing and availability of witnesses.
d) The availability of legal representation.
e) Any earlier agreement as to where disputes should be litigated.
f) The stage any proceedings have reached in either jurisdiction and the likely date of the substantive hearing.
g) Principles of international comity, insofar as they are relevant to the particular situation in the case in question. However public interest or public policy considerations not related to the private interests of the parties and the ends of justice in the particular case have no bearing on the decision which the court has to make.
h) The prospects of success of the applications.
iv) If the court were to conclude that the other forum was clearly more appropriate, it should grant a stay unless other more potent factors were to drive the opposite result; and
v) In the exercise to be conducted above the welfare of the child is an important (possibly primary), but not a paramount, consideration.
Conclusion is that on clear balance England is the natural and appropriate forum and India is not clearly the more appropriate forum.
At 50, the anti-suit injunction was considered premature (Williams J suggests that had it been a commercial matter, it may not have been): ‘Assuming that a stay application can be made and that some form of judicial liaison can be commenced to enable this court and the Indian court to work cooperatively to solve the riddle of competing applications in our respective courts, it is in my view wholly premature to grant such an injunction. That situation might fall to be reconsidered if no progress can be made and in particular if the father embarked upon a rear-guard action to play the Indian courts to delay the resolution of matters. However we are far from that position as yet.’
Note the comity considerations here, reflecting on the potential judicial co-operation between India and England, advanced here given the interest of the child (less likely for purely commercial cases, one assumes).
Many thanks to Donna Williams for reporting and commenting on 1:18-cv-10798 Snöfrost AB v. Håkansson in the District Court of Massachusetts. Not all my blog posts relate to maverick cases, especially at the week-end perhaps. This one is a standard application of forum non conveniens in the US and a useful reminder of the application of the principle by US courts.
Snöfrost, a Swedish company, filed in the U.S. District Court for the District of Massachusetts against Susanne Håkansson, a Massachusetts resident, seeking to enforce an alleged share purchase agreement (“SPA”). The SPA required Håkansson to purchase shares in a Swedish company (Farstorps Gård AB) for 330 million Swedish Krona. Snöfrost alleged that Håkansson reneged on the deal “at the eleventh hour” by raising regulatory issues as an excuse.
Håkansson’s residence in the jurisdiction would have meant immediate dismissal of FNC under the Owusu rule, had this been a case before a court in the EU.
Jurisdiction dismissed: centre of gravity of the case is Sweden – Donna explains the relevant factors in her post.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.
Petrobas securities class action firmly anchored in The Netherlands. Rotterdam court applying i.a. forum non conveniens under Brussels Ia.
Many thanks to Jeffrey Kleywegt and Robert Van Vugt for re-reporting Stichting Petrobas Compensation Foundation v PetrÓleo Brasilieiro SA – PETROBRAS et al. The case, held in September (judgment in NL and in EN) relates to a Brazilian criminal investigation into alleged bribery schemes within Petrobras, which took place between 2004 and 2014. the Court had to review the jurisdictional issue only at this stage, and confirmed same for much, but not all of the claims.
The Dutch internal bank for Petrobas, Petrobas Global Finance BV and the Dutch subsidiary of Petrobas, Petrobas Oil and Gas BV are the anchor defendants. Jurisdiction against them was easily established of course under Article 4 Brussels Ia.
Issues under discussion, were
Firstly, against the Dutch defendants: Application of the new Article 34 ‘forum non conveniens’ mechanism which I have reported on before re English and Gibraltar courts. At 5.45: defendants request a stay of the proceedings on account of lis pendens, until a final decision has been given in the United States, alternatively Brazil, about claims that are virtually identical to those brought by the Foundation. They additionally argue a stay on case management grounds. However the court finds
with respect to a stay in favour of the US, that
the US courts will not judge on the merits, since there is a class settlement; and that
for the proceedings in which these courts might eventually hold on the merits (particularly in the case of claimants having opted out of the settlement), it is unclear what the further course of these proceedings will be and how long they will continue. For that reason it is also unclear if a judgment in these actions is to be expected at ‘reasonably short notice’: delay of the proceedings is a crucial factor in the Article 34 mechanism.
with respect to a stay in favour of Brasil, that Brazilian courts unlike the Dutch (see below) have ruled and will continue to rule in favour of the case having to go to arbitration, and that such awards might not even be recognisable in The Netherlands (mutatis mutandis, the Anerkennungsprognose of Article 34).
Further, against the non-EU based defendants, this of course takes place under residual Dutch rules, particularly
Firstly Article 7(1)’s anchor defendants mechanism such as it does in Shell. The court here found that exercise of jurisdiction would not be exorbitant, as claimed by Petrobas: most of the claims against the Dutch and non-Dutch defendants are so closely connected as to justify a joint hearing for reasons of efficiency, in order to prevent irreconcilable judgments from being given in the event that the cases were heard and determined separately: a clear echo of course of CJEU authority on Article 8(1). The court also rejects the suggestion that application of the anchor mechanism is abusive.
It considers these issues at 5.11 ff: relevant is inter alia that the Dutch defendants have published incorrect, incomplete, and/or misleading financial information, have on the basis of same during the fraud period issued shares, bonds or securities and in that period have deliberately and wrongly raised expectations among investors. Moreover, at 5:15: Petrobras has itself stated on its website that it has a strategic presence in the Netherlands.
Against two claims ‘involvement’ of the NL-based defendants was not upheld, and jurisdiction denied.
Further, a subsidiary jurisdictional claim for these two rejected claims on the basis of forum necessitatis (article 9 of the Duch CPR) was not upheld: Brazilian authorities are clearly cracking down on fraud and corruption (At 5.25 ff).
Finally and again for these two remaining claims, are the Netherlands the place where the harmful event occurred (Handlungsort) and /or the place where the damage occurred (Erfolgsort)? Not so, the court held: at 5.22: the Foundation has not stated enough with regard to the involvement of the Dutch defendants in those claims, for the harmful event to be localised in the Netherlands with some sufficient force. As for locus damni and with echos of Universal Music: at 5.24: that the place where the damage has occurred is situated in the Netherlands, cannot be drawn from the mere circumstance that purely financial damage has directly occurred in the Dutch bank accounts of the (allegedly) affected investors – other arguments (see at 5.24) made by the Foundation did not convince.
Finally, an argument was made that the Petrobas arbitration clause contained in its articles of association, rule out recourse to the courts in ordinary. Here, an interesting discussion took place on the relevant language version to be consulted: the Court went for the English one, seeing as this is a text which is intended to be consulted by persons all over the world (at 5.33). The English version of article 58 of the articles of association however is insufficiently clear and specific: there is no designated forum to rule on any disputes covered by the clause. Both under Dutch and Brazilian law, the Court held, giving up the constitutional right of gaining access to the independent national court requires that the clause clearly states that arbitration has been agreed. That clarity is absent: the version consulted by the court read
“Art. 58 -It shall be resolved by means of arbitration [italics added, district court], obeying the rules provided by the Market Arbitration Chamber, the disputes or controversies that involve the Company, its shareholders, the administrators and members of the Fiscal Council, for the purposes of the application of the provision contained in Law n° 6.404, of 1976, in this Articles of Association, in the rules issued by the National Monetary Council, by the Central Bank of Brazil and by the Brazilian
Securities and Exchange Commission, as well as in the other rules applicable to the functioning of the capital market in general, besides the ones contained in the agreements eventually executed by Petrobras with the stock exchange or over-the-counter market entity, accredited by the Brazilian Securities and Exchange Commission, aiming at the adoption of standards of corporate governance established by these entities, and of the respective rules of differentiated practices of corporate governance, as the case may be.”
A very relevant and well argued case – no doubt subject to appeal.
(Handbook of) EU private international law, 2nd ed.2016, Chapter 2, almost in its entirety.
Ashley v Jimenez: Jurisdiction upheld despite choice of court ex-EU. No locus damni, locus delicti commissi or trust jurisdiction viz EU defendant.
In  EWHC 17 (Ch) Ashley et anon v Jimenez et anon service out of jurisdiction was granted against a Dubai-based defendant, despite choice of court pro the UEA. That clause was found by Marsh CM not to apply to the agreement at issue. Jurisdiction was found on residual English PIL, which are of less relevance to this post. Forum non conveniens was rejected.
Service out of jurisdiction was however denied against the Cyprus-based (corporate) defendant in the case. Claimants had argued jurisdiction on the basis of Brussels I Recast Articles 7(2) (tort) or (6) (trust). Note Marsh CM using the acronym BRR: Brussels Recast Regulation. As I noted earlier in the week Brussels Ia is now more likely to win the day.
Claimants (“Mr Ashley” and “St James”) allege that £3 million has been misappropriated by the defendants (“Mr Jimenez” and “South Horizon”). In summary the claimants say that: (1) Mr Ashley and Mr Jimenez orally agreed in early 2008 that upon payment of the euro equivalent of £3 million, Mr Ashley would acquire, via a shareholding in Les Bordes (Cyprus) Limited, a holding of approximately 5% in the ownership of a golf course in France called Les Bordes and that the shares would be registered in the name of St James. (2) On 13 May 2008, Mr Ashley instructed his bank to transfer the requisite sum to the bank account specified by Mr Jimenez and the transfer was made. In breach of the agreement, the shares were never registered in the name of St James. (3) The agreement and/or the payment were induced by fraudulent misrepresentations made by Mr Jimenez. The claimants say that Mr Jimenez knew South Horizon did not hold the shares and was not in a position to transfer, or procure transfer, upon payment of the agreed sum and that, in representing that South Horizon held the shares, or could procure transfer, Mr Jimenez acted dishonestly. (4) In the alternative, the payment of £3 million gave rise to a Quistclose trust (on that notion, see below) because the payment was made for an agreed purpose that only permitted use of the money for securing transfer of the shares.
(At 82) qualifying strands relevant to the jurisdictional issues, are (1) representations were made by Mr Jimenez to Mr Ashley to induce him to invest in Les Bordes which he relied on; (2) an oral contract was made between Mr Jimenez and Mr Ashley in early 2008 under which Mr Ashley invested £3 million in Les Bordes; and (3) the creation of a Quistclose trust relating to the investment. Note a Quistclose trust goes back to Barclays Bank Ltd v Quistclose Investments Ltd  UKHL 4, and is a trust created where a creditor has lent money to a debtor for a particular purpose. Should the debtor use the money for any other purpose, it is held on trust for the creditor.
On Article 7(2), the High Court held that a breach of trust is properly seen as a tortious claim for the purposes of Brussels Ia. As for locus delicti commissi, the Court notes the question of where the harmful event occurred is less straightforward. Claimants rely on the Cypriot defendant, South Horizon, having paid away the investment money it received in breach of the relevant trust. That event took place in Cyprus where the bank account is based. There might be an obligation to restore the money in England, yet that does not make England the locus delicti commissi: at 128: ‘It seems to me, however, that the claimants in this case are seeking to conflate the remedy they seek with the tortious act which was paying away the investment. The obligation to make good the loss is the result of the wrong, not a separate wrong.‘
The High Court does not properly consider the locus damni strand of the claim against South Horizon. Given the test following from Universal Music, England’s qualification as locus damni given the location of the bank accounts is not straightforward yet not entirely mad, either. The Court did consider England to be the locus damni in its application of English residual rules for the claim between Ashley and Jimenez (who is domiciled in Dubai): at 101: ‘the dealings between Mr Ashley and Mr Jimenez concerning an investment of £3 million in Les Bordes took place in England in the early part of 2008. Loss was sustained in England because the payment was made by Mr Ashley from an account held in England’ (reference made to VTB capital).
On (a rare application of) Article 7(6): are any of the claims relating to the Quistclose trust claims brought against “… the trustee … of a trust … created orally and evidenced in writing” and which is domiciled in England and Wales?: Marsh CM at 129-130:
‘Article 7(6) does not assist the claimants. They need to show that there is (a) a dispute brought against a trustee of a trust (b) the trust was created orally and was evidenced in writing and (c) the claim is made in the place where the trust is domiciled. The difficulty for the claimants concerns the manner in which the trust came into being. As I have indicated previously, although the oral agreement between Mr Ashley and Mr Jimenez gives rise to the circumstances in which the Quistclose trust could come into being, there was (i) no express agreement that the investment would be held on trust and (ii) South Horizon was not a party to the agreement. The trust came into being only upon the payment being made by Mr Ashley to South Horizon at which point, and assuming South Horizon was fixed with knowledge of the agreement, the investment was held upon a restricted basis.
I also have real difficulty with the notion of the Quistclose trust having a domicile in England. It seems to me more likely that the domicile is the place of receipt of the money, because that is where the trust came into being, rather than the place from which the funds were despatched.’
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199.
My reporting on  EWHC 965 (Comm) Republic of Angola v Perfectbit et al is a bit overdue – the case came to my attention again recently in the context of a non-EU brief and I am grateful to Allen & Overy having reported it at the time: please refer to their summary for an overview of the issues and decision (concise summary reads ‘Despite an exclusive jurisdiction clause in favour of the Angolan courts, the High Court was satisfied that England was the appropriate forum to hear a claim by the Republic of Angola and Angola’s central bank against several English and non-EU defendants.’).
In short, the EU’s anchor defendants mechanism (Brussel I Recast, Article 8(1) cannot be used to establish jurisdiction against a non-EU defendant: residual conflicts rules apply. However Bryan J at 124 re-emphasises the extended effect of Owusu in cases such as these at issue:
‘The passages I have quoted were quoted by the Court of Appeal in Lungowe v Vedanta Resources plc  EWCA Civ 1528;  BCC 787 at paragraphs  and  with approval. Simon LJ (with whom Jackson and Asplin LJJ agreed) at paragraph  also referred to the following observations made by the editors of Dicey and Morris:
“113. At paragraph 12-033, the editors of Dicey note the classic exposition of Lord Goff’s forum non conveniens test in the Spiliada case, but add: Lord Goff could not have foreseen, however, the subsequent distortion which would be brought about by the decision of the European Court in Owusu v Jackson. The direct effect of that case is that where proceedings in a civil or commercial matter are brought against a defendant who is domiciled in the United Kingdom, the court has no power to stay those proceedings on the ground of forum non conveniens. Its indirect effect is felt in a case in which there are multiple defendants, some of whom are not domiciled in a Member State and to whom the plea of forum non conveniens remains open: it is inevitable that the ability of those co-defendants to obtain a stay (or to resist service out of the jurisdiction) by pointing to the courts of a non-Member State which would otherwise represent the forum conveniens, will be reduced, for to grant jurisdictional relief to some but not to others will fragment what ought to be conducted as a single trial … There is no doubt, however, that the Owusu factor will have made things worse for a defendant who wishes to rely on the principle of forum non conveniens when a co-defendant cannot.” ‘
In short, against non-EU defendants whose case is anchored with an EU (England and Wales) defendant, forum non conveniens remains open but has become more unlikely. One issue perhaps under-considered by the English courts is Brussels Recast Article 34’s juncto recital 24 impact of exclusive choice of court in favour of a third State (neutralising Owusu for those specific circumstances) – not powerful enough perhaps in the case of a multitude of defendants.
Case goes to trial.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.4 (International impact of the Brussels I Recast Regulation), Heading 188.8.131.52.2.