PIS v Al Rajaan. An intensive Brussels Ia and Lugano choice of court (by incorporation) and anchor defendant discussion.

The Public Institution for Social Security v Al Rajaan & Ors [2020] EWHC 2979 (Comm) engages in lengthy discussion anchor jurisdiction (A6) and choice of court (A23) under the Lugano Convention which of course, albeit with some important mutatis mutandis, echoes Brussels I and Brussels Ia.

Henshaw J summarises the key issues at 74:

i)                    whether the exclusive jurisdiction clauses (‘EJCs’) relied on were agreed between the parties and incorporated into their respective contracts, applying;

a)                  the formal validity requirements set out in Lugano Convention Article 23/Recast Brussels Regulation Article 25, and

b)                 if relevant, the laws governing the contracts i.e. Swiss or Luxembourg law;

ii)                  if so, whether the EJCs satisfy the requirements for material validity under Lugano Convention Article 23/Recast Brussels Regulation Article 25;

iii)                if so, how the EJCs are to be interpreted under their respective governing laws;

iv)                whether, and if so to what extent, the EJCs apply to claims against the applicants;

v)                  if and to the extent that the EJCs apply to only some claims against particular applicants, or apply to some but not all of the applicants, whether this court has jurisdiction over the remainder of the claims pursuant to Lugano Convention Article 6(1)/Recast Brussels Regulation Article 8(1); and

vi)                whether the court should decline jurisdiction over the claims against Pictet Asia and Pictet Bahamas (seeing as they are neither EU or Lugano States domiciled) on forum non conveniens grounds.

 

The judgment is lengthy. These are my highlights:

  • At 107 following review of CJEU authority including Refcomp and Hoszig, the finding that the issue of validity of choice of court by incorporation are to be addressed solely by reference to the requirements of what is now A25 BIa and the corresponding provision in Lugano Convention Article 23. This requires real consent which is discussed with reference ia to Profit Investment Sim at 109 ff.
  • At 127 ff Henshaw J discusses the issue obiter under Swiss cq Luxembourg law as putative leges contracti for choice of court. At 142 the judge concludes that under Swiss law, as under EU law, it is sufficient, in order to incorporate a jurisdiction agreement into the parties’ contract, that the parties have made a written agreement which incorporates by reference general terms including a jurisdiction clause. Ditto with less discussion under Luxembourg law, at 148.
  • At 187 ff: the issue of material validity under EU law. This discussion kicks off with a review of what one of the parties calls the ‘proximity requirement’: per C-214/89 Powell Duffryn (CDC, too, is discussed), the fact that choice of court (only) extends to a ‘particular legal relationship’ (reference here is also made to Etihad, at the time of the judgment this had not yet benefitted from the Court of Appeal‘s judgment). At 201 ff Justice Henshaw takes a broad view:

In principle I would agree that if a jurisdiction clause is not clear, then it may be restrictively construed, consistently with the policy expressed in the relevant EU case law of promoting certainty and avoiding parties being taken by surprise.  On the other hand, I see no reason why parties cannot make a jurisdiction clause in deliberately wide-ranging terms which covers many, or indeed all, of their present and future contractual relationships.  I do not read the Opinion of the Advocate General in Refcomp as indicating the contrary.  Refcomp was essentially concerned with whether a jurisdiction clause could be relied on against a sub-purchaser of goods, and it is notable that the CoJ referred in its judgment to “the principle of freedom of choice on which Article 23(1) is based” (§ 40).  Nor do I read Powell Duffryn as restricting the parties’ ability to choose the scope of the particular legal relationships to which a jurisdiction clause is to apply.

  • Whether the claims at issue meet the ‘proximity’ requirements is then discussed at length, under EU law and again, obiter, under Swiss and Luxembourg law, largely leading to a conclusion of lack of jurisdiction in England and Wales for many of the claims.
  • Anchor jurisdiction is discussed for some of the claims at 403 ff, leading to a classic discussion of the (CJEU Kalfelis introduced) close connection requirement, and at 418 support for the fragile Court of Appeal finding in Privatbank, that that the word “expedient” in the context of the lis alibi pendens provision in Lugano Convention Article 28 must mean “desirable” as opposed to merely practicable or possible. At 427 the issue of fragmentation of proceedings is discussed: what should the court do where a claimant is required to sue a defendant in an overseas jurisdiction under A23 Lugano in relation to some claims, but seeks to pursue in this jurisdiction (a) connected claims against the same defendant, or (b) connected claims against another defendant, in reliance on A6? Henshaw J concludes the E&W courts should not entertain the accessory claims.
  • Forum non is discussed at 480 ff, with the final conclusion being that E&W does not have jurisdiction for any of the claims.

I fully expect there is scope for appeal.

Those criticising the intensity of jurisdiction squabbles will find ammunition in this 497 para judgment.

Geert.

EU Private International Law, 3rd ed. 2021, big chunks of Chapter 2.

 

Canary Wharf Limited v European Medicines Agency. High Court holds Brexit is a seismic, but not a frustrating event. (Engages Rome I’s Article 12, and vires issues per lex loci corporationis).

Update 5 July 2019 EMA have dropped their appeal following settlement.

In [2019] EWHC 335 (Ch) Canary Wharf Limited v European Medicines Agency Smith J earlier this week held that Brexit is a seismic, but not a frustrating event under English contract law (at 241). The Agency’s lease would not be discharged by frustration upon Brexit and neither does EMA’s move to Amsterdam constitute a frustrating event. The EMA is to honour its lease obligations.

At 186 brief mention is made of the usefulness of Article 12 Rome I (which lists the isused covered by the lex contractus): Article 12 of the Rome I Regulation provides that the law applicable to a contract by virtue of the Regulation governs – among other things – the “performance” of the contract and “the various ways of extinguishing obligations”. Both are subject therefore to English law (a choice of law clause in the contract, and the premises being in England) whichever way one classifies the theory of frustration.

At 187 the discussion is however extended to the issue of supervening illegality under a foreign law that is not the applicable law. The capacity of a corporation to exercise specific rights is determined – at least in the first instance – by the constitution of the corporation, which is itself governed by the law of the place of incorporation: lex loci corporationis. This itself is discussed at 130 ff, leading to interesting views on the status of EU law in the UK post Brexit and, one infers, a finding that ‘EU law’ is the lex loci corporationis. EMA’s argument then is that under EU law it would be acting ultra vires to continue the lease outside the EU’s territory.

At 188: ‘The question, then, is whether – assuming that the EMA is right as regards the points it makes on vires – these are relevant for the purpose of frustration by way of supervening illegality. The question is whether the English law of frustration, which has regard to questions of legality where the performance of the contract would be unlawful according to the law of the place of performance, should also have regard to the law of incorporation, at least where this affects the capacity of a party to continue to perform obligations under a transaction lawfully entered into by it.’ Smith J after discussing precedent, at 189 holds that it cannot. 

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 3.