Tag: Lis alibi pendens

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Awendale v Pyxis. More Article 29 lis alibi pendens, with focus on ‘same cause of action’, ‘same parties’ and time limits for application.

Update 22 July 2020 the follow-up re the undertaking, discussed below, is [2020] EWHC 1978.

Awendale Resources v Pyxis Capital Management [2020] EWHC 1286 (Ch) applies Article 29 Brussels Ia’s lis alibi pendens rule.

Awendale is a company incorporated under the law of the Seychelles and Pyxis is a company incorporated under the law of Cyprus. On 7 November 2017 Infinitum Ventures Ltd, a company incorporated in the British Virgin Islands, issued proceedings in Cyprus against Mr Andreas Andreou, Awendale and Pyxis. Awendale entered an appearance and submitted to the jurisdiction of the Cypriot court. On 24 June 2019 Awendale then issued the Claim Form in the current proceedings and on 20 August 2019 Pyxis filed an acknowledgment of service stating that it intended to defend the claim. Pyxis now applies to stay the English Claim on the basis that it and the Cypriot Claim involve the same cause of action between the same parties and that Article 29 is engaged. 

At 31 Leech J lists the six issues for determination: i) The same cause of action: Are the English Claim and the Cypriot Derivative Claim “proceedings involving the same cause of action”? ii) The same parties: If so, are the English Claim and the Cypriot Derivative Claim “between the same parties”? iii) Seisin: If so, was the Cypriot court first seised? iv) The scope of Article 29: If so, is Article 29 nevertheless inapplicable because of the jurisdiction clause in relevant Loan Agreements? v) The time of application: Is the operation of Article 29 excluded because the stay application was not filed earlier and in accordance with CPR Part 11. vi) Reference to the CJEU: If Pyxis succeeds on the first four issues but fails on the fifth issue, should the Court consider referring a question to the CJEU?

Leech J first, at 32 ff gets Article 31(2)’s priority rule for choice of court (which I discussed the other day in my review of Generali Italia v Pelagic) out off the way: that is because A31(2) is without prejudice to A26 and as noted, Awendale had submitted to the Cypriot courts.

On the determination of the ‘same cause of action‘, he then refers to The Alexandros, and of course to CJEU Gubisch and The Tatry. A discussion ensues as to whether the Cypriot and English proceedings concern two sides of the same coin, which at 42 Leech J decides they do, with at 43 supporting argument from professor Briggs’ litmus test: actions have the same cause if a decision in one set of proceedings would have been a conclusive answer in the other.

The same parties condition may be a bit more exacting (‘same cause of action’ implies some flexibility), however there need not be exact identity of parties. Here, the issue to hold was whether despite seperate legal personalities, the different interests of Infinitum and Pyxis are identical and indissociable which Leech J held they are to a good arguable case standard (and obiter, at 56, to a substantive standard, too). This condition therefore requires some wire-cutting through corporate interests and true beneficiaries of claims.

At 67 ff then follows an extensive discussion of the impact of the English CPR timing rules on the application proprio motu or not of A29. Reference here was made to the Jenard Report, and a contrario to provisions in BIa (including A33). Leech J holds at 78 that a party who fails to apply to stay proceedings under Article 29 within the time limit in CPR Part 11(4) is deemed to have submitted to the jurisdiction.

Eventually Leech J decides to use his discretion to allow Pyxis to apply for a time extension so as they can apply out of time for a stay of proceedings under A29. Unlike what I first tweeted, the stay has not exactly been granted yet, therefore. But it is likely to be. Pyxis made an undertaking  to consent to any stay being lifted if the Cypriot Claim is struck out and Awendale was permitted to apply to set aside the stay if Infinitum fails to take reasonable steps to prosecute or proceed with the Cypriot Claim.

More lis alibi pendens reviews are on their way.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

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Choice of court and lis alibi pendens in Generali Italia v Pelagic Fisheries. Article 31’s anti-torpedo mechanism further put to the test.

In Generali Italia & Ors v Pelagic Fisheries & Anor [2020] EWHC 1228 (Comm) the claimants-insurers commenced proceedings seeking declarations that they are not liable to the Insureds. Pelagic had already commenced proceedings in Treviso, Italy on the basis of what it claims to be choice of court in favour of Italy. The first instance Italian court stayed the Treviso Proceedings (the insureds have appealed; the appeal is yet to be heard) pending a determination by the English court as to whether the Treviso Policies are subject to an exclusive English jurisdiction clause. The Italian stay order reads in relevant part:

‘the lis alibi pendens defence which has been raised requires that these proceedings are suspended in order to allow the High Court of London to rule on the exclusive English jurisdiction clause pursuant to art 31.2 of EU Reg 1215/2012. That since, in the light of what is established by the said provisions, it is irrelevant that the Italian Judicial Authority has been seised first, …. Indeed article 31 of the above mentioned regulation represents an exception to the operation of the ordinary rule of priority in matter of lis alibi pendens, in order to allow the judges chosen by the parties in contractual terms (cover notes) to be the first to rule on the validity of the clause itself (according to the law chosen by the parties). In the concerned case all the cover notes, in the special insurance conditions, contain the clause ‘English jurisdiction. Subject to English law and practice”, with consequent waiver to the general insurance conditions provided in Camogli Policy 1988 form”.’

Other parties are part of the proceedings, too – readers best refer to the facts of the case. They clarify that chunks of the proceedings bear resemblance to the kind of split stay scenario applied by the CJEU in C-406/92 The Tatry.

Foxton J refers to the good arguable case test viz Article 25 Brussels Ia of BNP Paribas v Anchorage, recently also further summarised by the Court of Appeal in Kaefer Aislamientos and further in Etihad Airways PJSC v Flöther.

The case essentially puts Article 31 BIa’s anti-torpedo mechanism to the test in related ways as the first instance judge and the Court of Appeal did in Ablynx. There is a dispute between the parties as to whether A31(2) obliges the English Court to stay proceedings unless and until there is a determination in the Treviso Proceedings that the Italian courts do not have jurisdiction. There are 3 core questions: i) Should the English Court proceed to determine whether there is an exclusive jurisdiction clause in favour of this Court, in circumstances in which Pelagic is contending in Italy that the Italian courts have jurisdiction, or should it await a ruling on jurisdiction in the Treviso Proceedings? ; ii) If it is appropriate to determine the issue, is there an English exclusive jurisdiction agreement in the Treviso Policies for the purposes of Article 25?; iii) Should the Court stay the remainder of the proceedings under Article 30?

At 65 counsel for the insureds take a similar position as Ms Lane did in Ablynx: he argues that the only issue which the High Court should consider is whether it is satisfied that there is a prima facie case that the Italian court has jurisdiction (which he says there is on the basis that the parties agreed that both the English and Italian courts would have jurisdiction) and that if it is so satisfied, it should stay the English proceedings, pending the outcome of Pelagic’s appeal in the Italian proceedings.

Foxton J however at 68 ff highlights the inadequate nature and limitations of A31(2), as also pointed out by the last para of recital 22 which accompanies it: in the face of conflicting choice of court provisions (typically, as a result of overlapping clauses in overlapping contractual relations between the parties), A31(2) loses its power and the more classic lis alibi pendens rules take over. At 70 he points to the ping-pong that threatens to ensue:

in circumstances in which the Italian court has stayed its proceedings to allow the English court to determine if it has exclusive jurisdiction, it would be particularly surprising if the English court was then bound to stay its proceedings pending a decision on jurisdiction by the Italian court. This approach, in which the dispute might become caught in the self-perpetuating politeness of an Alphonse and Gaston cartoon, is not consistent with enhancing “the effectiveness of exclusive choice-of-court agreements” and avoiding “abusive litigation tactics” which Article 31(2) is intended to achieve. It does not matter for these purposes that the decision of the Italian court granting such a stay is presently under appeal.

He holds therefore at 79 that his task is essentially to review whether there is a good arguable case that the Treviso Policies (the ones subject of the English litigation, GAVC) are subject to exclusive jurisdiction agreements in favour of the English court which satisfy the requirements of A25 BIa. At 95 he finds there is such case. At 113 ff he holds obiter he would have stayed the remainder of the claims under A30, had he held in favour of a stay under A31(2).

Fun with conflict of laws.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7, Heading 2.2.9.5.

 

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Mastermelt v Siegfried Evionnaz highlights the continuing torpedo under Lugano, as opposed to the Brussels regime. Suggests cautious application of the Privatbank authority on reflexivity.

In Mastermelt v Siegfried Evionnaz [2020] EWHC 927 (QB), at issue is negative declaratory relief on contractual performance. 

Claimant Mastermelt is an English company specialising in the reclamation of precious metals. The defendant, Siegfried Evionnaz SA (“Siegfried”), is a Swiss company. There is a dispute between the parties over the quality of Mastermelt’s performance. Siegfried’s standard terms and conditions of contract (“STC”) include a clause stating that the governing law is Swiss law and that the Swiss courts have exclusive jurisdiction.

Relevant pending proceedings, are: very shortly after Siegfried had informed Mastermelt that it was going to issue proceedings against Mastermelt in Switzerland, Mastermelt issued the present claim in England on 5 February 2019. It seeks negative declaratory relief against Siegfried. Proceedings were subsequently issued by Siegfried against Mastermelt in the Zurich Commercial Court on 23 July 2019. Meanwhile, on 24 May 2019, Siegfried applied to the High Court in London for a declaration that it had no jurisdiction to try Mastermelt’s claim and so the Claim Form and service should be set aside, alternatively stayed. Further, on 29 January 2020 Mastermelt applied to the Swiss court (1) for a stay of those proceedings pending the UK decision, or (2) for the Swiss proceedings to be limited at that stage to a consideration of the court’s own jurisdiction there and nothing else, or (3) an extension of time for service of a response to Siegfried’s claim. By an order of 4 February 2020, the Swiss court rejected all three applications. On 7 February Mastermelt filed an appeal to the Federal Supreme Court of Switzerland which initially suspended enforcement of the Zurich Commercial Court’s decision pending the appeal. However, on 13 February Siegfried objected to any such suspension. The Supreme Court directed Mastermelt to file any response to that objection by 9 March. As far as the English courts know, that has been done but at the moment the Supreme Court has not given its decision on the suspension issue, let alone any substantive appeal, nor has there been any decision yet on the jurisdiction or otherwise of the Swiss court to hear the claim.

Siegfried argues, and has convinced the Swiss courts, that A27 Lugano needs to be applied ‘in harmony’ with A31(2) Brussels Ia: this now provides that regardless of which court was seised first, the court which was the subject of the putative exclusive jurisdiction clause, must decide the question of its jurisdiction first and the other proceedings must be stayed in the meantime. At 13 Waksman J refers to the Swiss court’s reasoning, where it takes an expansionist view of the Lugano Convention‘s protocol no2, that the Lugano States shall take ‘due account’ of each other’s courts decisions. The Swiss court suggests that in principle it should follow CJEU authority in Gasser (which introduced the torpedo mechanism by giving strict interpretation to the lis alibi pendens rule, even in case of choice of court) but that it has reasonable justification to deviate from Gasser given that the judgment has become ‘obsolete’ following A31(2) BIa.

Waksman J is first invited to accept the Swiss court’s reasoning as res iudicata, per CJEU C-456/11 Gothaer. (I did say at the time the CJEU may find its ruling in Gothaer would come back to haunt it). This he finds is a stretch of that authority but also not applicable given the limited findings of the Swiss court at any rate: ‘here the actual and only decision of the Swiss court thus far is simply to refuse to stay its own proceedings’.

He then discusses how A27 Lugano needs to be applied. A first reference is to the Court of Appeal’s most problematic view in Privatbank, to my mind, of applying Article 28 Lugano reflexively to third States. At 23-24 Waksman J distinguishes Privatbank (clearly he cannot hold it no relevant authority should he think so); then holds correctly that Gasser is not entirely obsolete following BIa; and finally at 30 that the harmonised regime per Lugano’s Protocol does not mean that one should now interpret Article 27 Lugano like 31.2 and (b) i Brussels Ia.

I agree most firmly. Note this has Brexit implications: one of the routes post Brexit, as readers know, is for the UK to become part of Lugano. In doing so it will surrender BIa’s forum non-light regime (Articles 33-34) in favour of Lugano which most definitely does not have a forum non-application – as well as, as is at issue here, re-arming the Italian torpedo. (Update 7 May 2020 Many thanks to Elijah Granet for pointing in the comments section to A6 of the Hague Choice of Court Convention which in future might serve towards disarming the torpedo to some degree: pursuant to Article 6 of that Convention, a court of a Contracting State other than the contractually chosen court must suspend or dismiss proceedings in that court to which an exclusive choice of court applies. There are exceptions however and in my view these could be used quite extensively: asymmetric choice of court, for instance, might well by some jurisdictions be classed as ordre public). (Update 28 May 2020 see also Aygun Mammadzada in the meantime here for similar and further comments re Lugano).

This leaves the issue of the putative choice of court agreement. England is the forum contractus per Article 5(1)a Lugano, hence will have jurisdiction less choice of court stands. Authority is well-known and recently applied in Pan Ocean, referred to here at 85. After much factual consideration it is accepted to a good arguable case standard that the parties contracted on the basis of the STC for the obligations concerned.

In conclusion therefore the action is stayed.

Quite a few relevant issues here. I for one note the cautious approach of the Court, in handling the Court of Appeal’s Privatbankauthority – following SCOR v Barclays.

Geert.

Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2.

 

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SCOR v Barclays. High Court dismisses application for stay on the basis of Article 30 BIa (related actions). Leaves the Euroeco /Privatbank discussion unsettled.

In SCOR SE v Barclays [2020] EWHC 133 (Comm), claimant SCOR is a reinsurance company incorporated in France. Covéa, a shareholder of SCOR, made an unsolicited offer to acquire a controlling shareholding in SCOR. Barclays was one of Covéa’s financial advisors and prospective lenders in relation to the Offer. The English proceedings, and related French proceedings, all concern French law claims brought by SCOR against Mr Derez, who was one of its directors, Covéa, and Barclays in connection with the Offer. It is alleged by SCOR that Mr Derez disclosed to Covéa and to its advisors, including Barclays, confidential information, which he obtained in breach of duties he owed to SCOR, and that the information was misused in relation to the Offer.

SCOR has commenced three sets of proceedings: On 29 January 2019, direct criminal proceedings in France. On the same day, the proceedings in England against Barclays. On On 6 February 2019, French proceedings against Monsieur Derez and Covéa. Concealment of breach of trust is the running theme in all 3 proceedings.

An application to stay the French Commercial Court proceedings, which had been made by the Claimant, had been dismissed.

Hancock J had two issues to decide under Article 30 Brussels Ia (at 6). The first was whether the French criminal proceedings, which were first in time, were related to the English Commercial Court action. The second was whether the High Court, as the Court second seised, should stay these proceedings, it being accepted that it had the power to do so under A30. The parties were agreed that, although the civil proceedings which formed part of the criminal action were an “adjunct” to the criminal part of the proceedings, they were nonetheless civil and commercial proceedings within the meaning of the Regulation.

Authority discussed includes of course CJEU C-406/92 The Tatry, however quickly attention focussd on the issue of ‘expediency’ in Article 30. Claimant pointed out that there had been a debate in the authorities as to what was meant by “expedient, with some authorities taking the line that this meant possible or capable, and others suggesting that the relevant synonym was “desirable” ‘. The Court of Appeal in Privatbank v Kolomoisky [2019] EWCA Civ 1709, which I discuss here, settled the issue in the direction of ‘desirable’. However Hancock J then discussed counsel’s reference to Euroeco Fuels (Poland) Limited and others v Sczezin and Swinoujscie Seaports and others [2019] EWCA Civ 1932 which at the time (December 2019) I called at most a ‘lukewarm’ application of Privatbank on this issue.

Hancock J leaves the discussion hanging for in his words at 15, ‘it is uncertain whether expediency in this context is to be treated as meaning desirability, or whether it is a jurisdictional requirement of the grant of a stay that the two cases can in fact be heard together: see Privatbank and cases cited therein, on the one hand, but compare the Euroeco decision on the other. I do not need to decide this question in this case, since my decision would be the same whichever test is applied, and I propose to consider the matter by reference to the test as set out in Privatbank.’

Yet at 24-25  he holds ‘on the basis the application of the test in Sarrio, as interpreted in later cases including in particular Privatbank, that the French criminal proceedings and the English proceedings are related. I move on to consider the exercise of my discretion on this basis.’ Yet ‘Of course, if the actual test is that which may be suggested by the Euroeco case, then the proceedings would not be related, and I would have no discretion to exercise.’

Here I do not follow. No proper decision is made on the authority or not of Privatbank or Euroeco (the latter suggested by counsel for the defence (fellow Bruges Stefan Zweig alumnus) to be at most per incuriam).

At 28 ff then follows a most relevant discussion of the wide nature or not of the discretion to issue a stay, once it has been established the cases are related (Hancock J at 31 deciding at that there is no presumption for a stay in favour of the applicant) deciding at 43 that there is no compelling reason for the stay, on the basis of the factors outlined there, with which I agree.

This is again a most relevant case. The relatedness or not of cases is a most, most crucial issue, including of course in an Article 33-34 context.

Geert.

(Handbook of EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.

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Hutchinson v MAPFRE and Ice Mountain (Obeach) Ibiza. Spotlight on the consumer and insurance title of Brussels Ia.

Jonathan Hutchinson v MAPFRE and Ice Mountain (OBeach) Ibiza [2020] EWHC 178 (QB) like all cases involving serious accidents, cannot be written about without the greatest sympathy for claimants having suffered serious physical damage. The case concerns the horror scenario of either a fall or a dive in a pool leading to head and spinal injury. Mr Hutchinson (represented by Sarah Crowter QC) is a former Birmingham City football player who visited an Ibiza club owned by a fellow Brit – those interested in the background see here.

Defendants are the club (ICE Mountain, Spain registered) and their insurers, MAPFRE (ditto). Clearly to sue in England the case needs to involve either a protected category (consumers; insureds) or a special jurisdictional rule (contract; tort).

Andrews J is right in calling jurisdiction on the consumer title against ICE Mountain straightforward. The Pammer /Alpenhof criteria are fulfilled; that claimant’s purchase of a ticket was not the result of the directed activities is irrelevant per CJEU Emrek; (at 21 she dismisses an argument to try and distinguish Emrek on the facts, which argued that claimant had entered the pool via the VIP area to which his ‘standard’ ticket did not actually give access).

The further discussion involves the insurance title of Brussels Ia, which reads in relevant part (Article 13):

(1).   In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured. (2).   Articles 10, 11 and 12 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. (3).   If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.

The claims against Ice Mountain in tort or for breach of statutory duty are halted by Andrews J. The question here is whether the ‘parasitic’ claim under A13(3) requires the issue to ‘relate to insurance’ (recently also discussed obiter in Griffin v Varouxakis), an issue already discussed in Keefe, Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598 (referred to in Bonnie Lackey), sent to the CJEU but settled before either Opinion of judgment. The same issue is now before the CJEU as Cole and Others v IVI Madrid SL and Zurich Insurance Plc, pending in anonymised fashion before the CJEU it would seem as C-814/19, AC et al v ABC Sl (a wrongful birth case).

At any rate, the non-contractual claims against Ice Mountain were stayed until the CJEU has answered the questions referred to it by Judge Rawlings in Cole.

A late [but that in itself does not matter: lis alibi pendens needs to be assessed ex officio (at 36)] challenge on the basis of A29-30 lis alibi pendens rules was raised and dismissed. The other proceedings are criminal proceedings in Ibiza. The argument goes (at 37) that there are ongoing criminal proceedings in Spain arising out of the accident which led to Mr Hutchinson’s injuries, and because Mr Hutchinson has failed to expressly reserve his right to bring separate civil proceedings, the Public Prosecutor is obliged to bring civil proceedings on his behalf within the ambit of those criminal proceedings. For that reason, Ice Mountain contend that the Spanish court is seised of any civil claim arising from the same facts as are under investigation in the Spanish criminal proceedings, and has been since 2016, long before these proceedings were commenced.

This line of argument fails to convince Andrews J: ‘Through no fault of his own, Mr Hutchinson has never been in a position knowingly to take any formal steps to reserve his position in Spain to commence separate civil proceedings against anyone he alleges to be legally liable for his injuries. Yet, if Ice Mountain is right, he will have been deprived of any choice in the matter of where to bring his civil claim merely because, without his knowledge or consent, a doctor in the hospital filed a report which triggered a criminal investigation into the accident, of which he was never told.’ Quite apart from this unacceptable suggestion, the criminal proceedings in Ibiza have been closed, and (at 59) ‘there is no ongoing criminal action leading to trial, to which any civil action would attach.’

For the claims against Mapfre, Mrs Justice Andrews held that the court has jurisdiction on two alternative basis:

Firstly, the provision in the contract of insurance upon which Mapfre seeks to rely as demonstrating that there is no good arguable case against it on the merits cannot be relied on, as that would substantially undermine the protection to the weaker party specifically provided for in the insurance provisions of Recast Brussels 1.

In essence, Mapfre accepts that under Spanish law, there would be a direct right of action against it as Ice Mountain’s liability insurer if it were liable to indemnify Ice Mountain under the policy, but it contends that Mr Hutchinson does not have a good arguable case that Mapfre’s policy of insurance covers Ice Mountain’s liability to him under a judgment given by an English court. The policy would, however, cover Ice Mountain’s liability to him for the same accident, based on the identical cause (or causes) of action, under a judgment given by a Spanish court. (ICE Mountain agree, therefore also acknowledging it is uninsured in respect of any claims which the English consumers who are its targeted customers might bring in the courts of their own domicile pursuant to A17-18 BIa). If this were right, this would mean a massive disincentive for the consumer to sue in his jurisdiction: at 66 (a devilish suggestion): If he wins and the uninsured defendant is not good for the money, he would be left without a remedy, whereas if he sued in Spain, the same defendant would be insured in respect of the same liability, and he would recover from the insurer up to the policy limits.

At 67: if a party who owes contractual duties to consumers ‘does insure, and a direct of action exists against the insurer under the law which governs the insurance contract, then ‘Recast Brussels I does not contemplate that he should be permitted to contract with the insurer on a basis that acts as a disincentive to consumers to exercise their rights to sue him (and his insurer) in the courts of their own domicile or which renders any rights of suit against the insurer in that jurisdiction completely worthless by using the exercise of those rights as grounds for avoiding the insurer’s obligation to indemnify him.‘

The Spanish law experts called upon to interpret the provisions of the territorial scope title in the insurance policy, differed as to exact meaning. However the issue was settled on the basis of EU law, with most interesting arguments (and reference ia to Assens Havn): summarising the discussion: a substantial policy clause limiting liability to awards issued by Spanish judgments, in practice would have the same third party effect as a choice of court clause which B1A does not allow (see A15: The provisions of this Section may be departed from only by an agreement… (3) Which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same member state, and which has the effect of conferring jurisdiction on the courts of that state even if the harmful event were to occur abroad, provided that such agreement is not contrary to the law of that Member State….”

At 84:

‘If a clause which has that effect can be relied on against a person such as Mr Hutchinson it would drive a coach and horses through the special rules on insurance laid down under Section 3 of Chapter II. It would provide every liability insurer (not just Spanish insurers) with the simplest means of depriving the injured party of the choice of additional jurisdictions conferred upon him by Articles 11 to 13 of Recast Brussels 1. It would be the easiest thing in the world for an insurer, as the economically strongest party, to include a standard term in the policy that he is only liable for claims that have been brought against the policyholder in the courts of the policyholder’s and/or the insurer’s own domicile.’

This part of the judgment is most interesting and shows the impact jurisdictional rules and their effet utile may have on substantive law (at the least, third party effect of same).

Alternatively, even if the analysis above is wrong, ‘on the basis of the expert evidence on Spanish law that is currently before the Court, at this stage of the proceedings the Claimant has established at the very least a plausible evidential basis for finding that the clause in question (the one which effectively limits pay-outs to judgments issued in Spain) is not binding upon him as a third party to the contract, and therefore is ineffective to prevent MAPFRE from being directly liable if his claim is otherwise well-founded on the merits. He has therefore established a good arguable case that the jurisdictional gateway under Article 13(2) of Recast Brussels 1 applies.’

Most relevant and interesting.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 Heading 2.2.11.2

 

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Euroeco Fuels adds some doubt to the Privatbank ‘related actions’ findings.

On Wednesday not only did the European Commission release its proposal for green deal, the Court of Appeal also held in Euroeco Fuels (Poland) Limited and others v Sczezin and Swinoujscie Seaports and others [2019] EWCA Civ 1932. As the Green Deal is not short of commentators, I shall focus on Euroeco. It is an important follow-up to some of the issues in Privatbank, particularly in the Court of Appeal’s treatment of ‘expediency’ under Brussels Ia’s lis alibi pendens rules.

Claimants appeal from a decision of Nicol J declining jurisdiction to hear and determine their claims for libel and malicious falsehood. The origins of the claims are words spoken by the Second Defendant in March 2017 at a press conference in Poland and a press release said to have been issued by the Defendants, also in Poland, to the press and other media. The reach of some of those Polish media included England and Wales. The Claimants rely on what are said to be republications of the words and the press release which took place in England and Wales by means of internet articles being read there and Polish broadcasts available there, again on the internet.

Jurisdiction in England can be established on the basis of Article 7(2) BIa. CJEU C-68/93 Shevill is discussed of course, as are Joined Cases C-509/09 and C-161/10 e-Date and Martinez.

First Claimant (“EEF”) is a Polish company. It is the leaseholder of a site in the Baltic port of Szczecin in Poland. It operates an industrial scale alternative petrochemical production plant (“the EEF Plant”) which recycles used tyres into carbon and oil products. Before the English action began, the First Defendant had taken proceedings in Poland against EEF alleging that the EEF Plant was causing a nuisance because of the odours it emitted: those, I understand (the judgment is not entirely clear on this issue) are the concurrent ‘Polish proceedings’. The other claimants are the English holding company and various executives.

First Defendant company is the landlord of the EEF Plant site and the administrator of the ports of Szczecin and Swinoujscie. The other defendants are employees and executives of the first defendant.

At 22-23 are the defendants’ arguments pro a stay or even declination of jurisdiction on Article 30 BIa grounds. Nicol J held that the English and Polish proceedings are “related” for the purposes of Article 30 and decided to decline. His discussion of the various arguments is included at 35 ff of the Court of Appeal judgment.

On Article 30(3)’s condition of ‘expediency’, at 45 the Court of Appeal merely refers to the earlier decision in Privatbank, that “expedient” is more akin to “desirable” than to “practicable” or “possible”. However at 52 Bean LJ holds that ‘If the judge’s decision to decline jurisdiction is upheld or even if the English claim for libel and malicious falsehood is stayed the Claimants could, of course, start similar proceedings in Poland. But on the material before us there appears to be no real possibility of such a claim and the existing claim for nuisance brought by the Defendants being “heard and determined together”.’

This seems at most a lukewarm application of Privatbank, one that is much more practical than abstract and in my view must take some gloss off the authority of Privatbank.

Obiter the risk or irreconcilability is discussed at 53 ff, holding at 61 (with fellow Lord Justices further reserving their view on the issue) ‘the central issue in both actions will be whether the Claimants are causing or permitting harmful pollution to the atmosphere around the EEF Plant; and that to allow the libel claim to proceed to trial in England would create a risk of “irreconcilable judgments”. However, my views on that issue cannot prevail against my conclusion that there is effectively no prospect of the two actions being “heard and determined together”.’

This is an interesting case, I believe it puts one or two Privatbank considerations into perspective.

Geert.

(Handbook of EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.

 

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Lis alibi pendens denied traction in Lotus v Marcassus Sport.

[2019] EWHC 3128 (Comm) Lotus v Marcassus Sport Sarl concerns the application of Articles 29-30 Brussels Ia – the lis alibi pendens rules.

Lotus, an English company, is a well-known manufacturer of cars. By a series of four written contracts entered in 2016, Lotus appointed Marcassus, a French company in the business of distributing sports cars, as a non-exclusive dealer and authorised repairer of Lotus cars in Toulouse and Bordeaux. Each of these contracts was governed by English law and provided for the non-exclusive jurisdiction of the English courts.

In September 2018 Lotus gave notice terminating one of the four agreements. It is common ground that the parties’ overall relationship thereafter terminated. Marcassus then brought proceedings in the Toulouse Commercial Court, claiming loss of profits and bonuses and seeking to enforce contractual penalties. A summons was filed with the Hussier de Justice on 21 December 2018 for onward transmission to the Foreign Process Section of the High Court for service on Lotus, summoning Lotus to appear in Toulouse on 26 March 2019. Marcassus’ claim was filed at the Toulouse Commercial Court on 7 January 2019. Lotus did indeed appear at the hearing on 26 March 2019 and has served a defence disputing the claim, but not claiming in respect of or relying on Marcassus’ non-payment of the 2018 invoices. Lotus offered to undertake not to make such a claim in the Toulouse proceedings hereafter, provided of course that these proceedings were permitted to continue. Meanwhile, on 13 March 2019, Lotus issued these proceedings claiming the amounts due under the 2018 invoices. Marcassus was served with the claim form on 24 April 2019.

Phillips J first of all (at 15 ff ) deals with the issue of which course was ‘seized’ first (compare MB v TB). Lotus contended that Marcassus’ application should fall at the first hurdle because Marcassus has not demonstrated when, if at all, the summons in the Toulouse proceedings was received by the “authority responsible for service” of that summons for the purposes of A32 Brussels Ia, and so cannot establish that the Toulouse court was seised before the English court was seised by the issue of the claim form on 13 March 2019. Marcassus’ case is that the relevant authority is the Hussier de Justice, it being accepted that he received the summons on 21 December 2018. But, in the alternative, if the relevant authority is the Foreign Process Section of the High Court (as Lotus contends), Marcassus invites the inference that it was received by that authority shortly after that date, but in any event before 13 March 2019. Marcassus points to the fact that Lotus appeared before the Toulouse court on 26 March 2019 and has taken no point on service in those proceedings.

Phillips J decides not to hold on this point given that he rejects Article 29 lis alibi pendens anyway – however he indicates he does not find Lotus’ assertion very attractive.

On Article 29, Marcassus accepted that the proceedings, whilst between the same parties, do not presently involve the same “cause of action” however argued that the court could take into account the likely future shape of the proceedings, namely, that Marcassus would seek to set-off and counterclaim the very same claims it has brought in Toulouse. This approach however cannot fly per CJEU C-111/01 Gantner, at 31: in order to determine whether there is lis pendens in relation to two disputes, account cannot be taken of the defence submissions, whatever their nature, and in particular of defence submissions alleging set-off, on which a defendant might subsequently rely when the court is definitively seised in accordance with its national law” and the Article 29 route was duly dismissed.

On Article 30, the claims were found not to be ‘related’ on grounds of Lotus having secured an exclusion of set-off in the contract (Phillips J spent some time debating whether the contract did include such clear exclusion of set-off). This clause effectively keeps the claims on various invoices at arm’s length.

Even had Article 30’s conditions been met, the case would not have been stayed on grounds that the judge (unlike in A29 cases) has discretion whether to do so. Referring to The Alexandros T, at 44: ‘it is obvious that these proceedings should be permitted to continue so that the question of whether clause 29.2 is an effective no set-off clause is determined in this jurisdiction. That issue. (sic) which does not arise in the Toulouse proceedings (limiting the extent of “relatedness”), is an issue of the interpretation of an English law contract (establishing close proximity with this jurisdiction) and can be determined speedily in a summary judgment application (indicating that the stage proceedings have reached is not a factor against this jurisdiction). Further, the parties have expressly agreed to the jurisdiction of the English courts, albeit on a non-exclusive basis.

Application dismissed.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

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Fasten your seatbelts. Etihad v Flöther (Air Berlin) puts limits of EU law in applying Article 25 in the spotlight. On ‘particular legal relationship’ in choice of court, and asymmetric jurisdiction clauses in applications for stay.

Update 18 December 2020 appeal today was dismissed: [2020] EWCA Civ 1707. I shall have a short post on that soon.

[2019] EWHC 3107 (Comm) Etihad v Air Berlin (officially: Etihad Airways v Prof Dr Lucas Flöther, who is the insolvency practitioner for Air Berlin) raises the issues of whether the relevant dispute arises in connection with the “particular legal relationship” between the parties, as required by Article 25 Brussels Ia, and the question whether so-called “asymmetric” jurisdiction clauses fall within Article 31 of Brussels Recast, an issue which I reviewed at the time of Commerzbank v Liquimar. (This in the very week that Michiel Poesen and I received copy of Mary Footer’s edited volume on optional choice of court, with our Chapter on Belgium).

Those reading this post and the judgment had better hold on – for this is more than just a quick safety briefing – the required ‘good arguable case’ standard is responsible for the extensive discussion of the issues, perhaps not entirely in line with the instruction for conciseness per the Supreme Court in Vedanta.

Etihad acquired a 2.99% stake in Air Berlin in August 2011 and, in December 2011, increased its shareholding to 29.21% pursuant to an agreement governed by English law and contained an exclusive jurisdiction clause in favour of the English courts. Between 28 and 30 April 2017, Etihad entered into a number of agreements for the purposes of providing Air Berlin with financial support. One of these was a facility agreement which contains the discussed jurisdiction clause:

33.1 JURISDICTION 

33.1.1 The courts of England have exclusive jurisdiction to settle any disputes arising out of or in connection with this Agreement (including a dispute relating to non-contractual obligations arising from or in connection with this Agreement, or a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute“).

33.2.2 The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

33.1.3 This Clause 33 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.

In a letter dated 28 April 2017 from Mr James Hogan, the then President and CEO of Etihad Aviation Group PJSC, to the directors of Air Berlin (the “Comfort Letter”), which provided as follows: 

“For the purposes of the finalisation of the financial statements of Air Berlin plc for the year ended 31 December 2016, having had sight of your forecasts for the two years ending 31 December 2018, we confirm our intention to continue to provide the necessary support to Air Berlin to enable it to meet its financial obligations as they fall due for payment for the foreseeable future and in any event for 18 months from the date of this letter. Our commitment is evidenced by our historic support through loans and obtaining financing for Air Berlin”.

In German proceedings, started first, Air Berlin advances two alternative claims against Etihad under German Law: i) A claim for breach of the Comfort Letter on the basis that the Comfort Letter is legally binding. ii) Alternatively, if the Comfort Letter is not legally binding, a pre contractual claim in culpa in contrahendo, on the basis that Etihad used its negotiating power during the negotiations between the parties to avoid providing a clearly binding statement whilst, at the same time, inspiring the trust of Air Berlin that it would adhere to the commitment in the Comfort Letter.

Clearly Air Berlin considers the comfort letter a separate ‘agreement’ or ‘contract’ to which the widely formulated choice of court and law provisions of the Facility Agreement do not apply.

In the English proceedings, Etihad seeks the following declarations:

a) The claims made and declarations sought in the German Proceedings are subject to the exclusive jurisdiction of the English court within Article 25 of the Judgments Regulation, because, on its true construction, they are within the scope of the exclusive jurisdiction clause contained in the 2017 €350m Facility Agreement (the one with the jurisdiction clause discussed above);

b) The claims made and declarations sought in the German Proceedings are governed by English Law on the true construction of the governing law clause in the Facility Agreement, an implied agreement between the same parties and/or the application of Rome I and/or Rome II;

c) The Claimant is not liable for breach of the Comfort Letter, as alleged in the German Proceedings, because that letter, on its true construction, did not create a legally binding promise to provide financial support to Air Berlin;

d) The Claimant is not liable on the basis of culpa in contrahendo, as alleged in the German Proceedings, because the facts and matters relied on in the German Proceedings do not give rise to a cause of action known to English law; and

e) Further, and in any event, the Claimant is not liable to the Defendant as alleged by the Defendant in the German Proceedings.

On Article 25 the list of authority was of course very long. On Article 31, reference was made for background in particular to Commerzbank AG v Liquimar Tankers Management Inc. in which Cranston J supported as I discussed at the time, the cover of asymmetric choice of court by Article 31.

On Article 25, the

I. first point to discuss

was whether the choice of court agreement in the facilities agreement extended to the comfort letter. Etihad puts forward adopting the broad, purposive and commercial approach to interpreting such clauses which it suggests has been mandated by the English authorities, concluding the dispute arises out of or in connection with that agreement. Air Berlin emphasises that application of the standard of proof must take into account the EU law requirement that an exclusive jurisdiction clause under Article 25 must be “clearly and precisely” demonstrated.

At 56 ff Jacobs J first reiterates the jurisdiction clause relied upon, contained in the Facility Agreement, which is expressly governed by English law. Clause 32 of that agreement provides: “This Agreement and all non-contractual obligations arising from or connected with it are governed by English law”. The question of whether, as a matter of contractual interpretation, the clause conferring jurisdiction extends to claims in respect of the Comfort Letter and the related claims advanced in the German proceedings is to be determined by reference to English law. This may surprise uninitiated readers first reading Article 25 and relevant recitals, however to those with conflicts insight it will be well known that Article 25 merely scratches on the surface of the contractual depth of choice of court. 

At 69 he sums up the principles (with reference to Fiona Trust), discusses them at length, and summarises at 102:

(i) the width of the jurisdiction clause in the Facility Agreement, (ii) the fact that the Comfort Letter was part of the overall support package where all relevant agreements between Etihad and Air Berlin were governed by English law with English jurisdiction clauses, (iii) the close connection between the Comfort Letter and the Facility Agreement in terms of the genesis of the Comfort Letter, (iv) Etihad’s good arguable case that the Comfort Letter did not create contractually binding obligations and was ancillary to the Facility Agreement, (v) the absence of any competing jurisdiction clause in any of the agreements within the support package, and the existence of English law and jurisdiction clauses in the relevant agreements as part of that package, and (vi) the reasonable foreseeability of disputes which required consideration of the Comfort Letter in conjunction with the Facility Agreement – all lead to the conclusion that the parties intended disputes arising in relation to the Comfort Letter to fall within the jurisdiction clause of the Facility Agreement.

Conclusion on this issue, at 109: ‘interpreting the jurisdiction agreement in the Facility Agreement as a matter of English law, there is a good arguable case that (i) the jurisdiction clause in the Facility Agreement is applicable to the Comfort Letter and any non-contractual claim in connection therewith, and (ii) the claim commenced by Air Berlin in Germany falls within the scope of that clause.’

On Article 25, the

I. second point to discuss at 110 ff was the requirement in Article 25 for the dispute to arise “in connection with a particular legal relationship” – a condition which Etihad must meet separately from the above conclusion that as a matter of English law, the claims made in Germany fell within the scope of the jurisdiction agreement in the Facility Agreement. Arguments here to some extent overlap with the strength or otherwise of the connection between the Facility Agreement and the Comfort Letter, discussed above. Reference here clearly was made to Airbus and the CJEU in Powell Duffryn. In the latter the CJEU held ‘”This requirement aims to limit the effect of an agreement conferring jurisdiction to disputes originating from the legal relationship in connection with which the agreement was concluded. It seeks to prevent a party from being surprised by the referral to a specified court of all disputes which arise in the relationships which it has with the other party and which may originate in relationships other than that in connection with which the agreement conferring jurisdiction was concluded”. The principles of Powel Duffryn were also followed in the equally seminal CDC case.

At 134 ff Jacobs J dismisses the argument that the way in which a particular claim is formulated in the foreign proceedings is determinative of the issue of whether the dispute arises in relation to a particular relationship. Rather: ‘it is obviously necessary to look at the nature of the claim made in those foreign proceedings. It is clear that what is then required is for the court to consider the substance of the claim that is made.’ At 136 ff he lists the arguments leading him to the conclusion that there is ‘no doubt that the dispute concerning the Comfort Letter can fairly (and certainly to a good arguable case standard) be said to originate from [the borrower /lender] relationship.’

 

The final issue to consider then was Article 31(2): “2. Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement.”

The issue is therefore whether the jurisdiction clause in the present case is a clause which “confers exclusive jurisdiction” within the meaning of Article 31(2). A related question is whether the English court can properly be described as being “seised on the basis of” such exclusive jurisdiction agreement within the meaning of Article 31 (2). Air Berlin says “no” to both questions (on the first, purely on the basis of the clause being asymmetric), and Etihad says “yes”.

Reference is made to Codere, Commerzbank, leading to a firm finding that the clause is exclusive in casu, for it is (in prof Fentimann’s words) ‘exclusive against a counterparty’ and in Louise Mellett’s words (ICLQ, referenced in the judgment)

‘”In an asymmetric agreement, the borrower has promised not to sue anywhere other than the chosen jurisdiction. The question of whether the other party did or did not agree to do the same does not arise when the bank is seeking to enforce the agreement and should be irrelevant. Thus, the point is not so much that “considered as a whole” [asymmetric agreements] are agreements conferring exclusive jurisdiction, as the judge put it in Commerzbank. Rather, each obligation can be considered on its own; the clause includes a promise by the borrower not to sue in any jurisdiction and that promise is capable of being protected by Article 31(2). Each different obligation necessarily falls to be considered separately and the fact that the bank is not under a similar obligation is neither here nor there.”

(Further scholarship discussed includes Dickinson and Lein, and Ahmed; the Hague Convention is also discussed obiter, with reference to Clearlake and update 28 November 2019 as Sarah McKibbin notes Jacobs J suggesting obiter ‘Like Cranston J and Merrett, I consider that there are good arguments that the rules in the Hague Convention are engaged by an asymmetric clause.’ [217].

Reference to the CJEU on the Article 31 issue, requested by Air Berlin, is dismissed, something which may have to be reconsidered by the Court of Appeal. But even on the Article 25 discussion (I am thinking in particular of the relevance or not of the formulation of the claim), more CJEU authority in my view would be welcome.

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Ch.2, Heading 2.2.9, Heading 2.2.9.4.1, Heading 2.2.9.5.

 

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Skarb Państwa v Stephan Riel (qq insolvency trustee Alpine Bau).

Salzburg-based Alpine Bau had been carrying out a considerable amount of roadwork engineering for the Polish State. The courts at Vienna started insolvency proceedings in 2013, appointing Mr Riel as what is now called the ‘insolvency practitioner’. Austria is the centre of main interests, the Austrian procedure the main proceedings. A little later a secondary proceeding is opened in Poland. Skarb Państwa, the Polish finance ministry or treasury, seeks in those proceedings the payment of debt it claims is outstanding vis-a-vis the Polish State. It also seizes the Austrian courts in a separate proceeding, asking it to confirm the existence of debt owed to it (the amount almost exactly the amount it specified in the Polish secondary proceedings) and at the same time a stay in its pronouncement until the Polish courts have ruled on the fate of the claim in Poland. Essentially therefore the Austrian action is a conservatory action, a hedging of the treasury’s bets.

An interesting angle is that in the Austrian proceedings the Treasury claims application of the Brussels Ia Regulation, particularly its Article 29 lis alibi pendens rule. The Austrian courts reject the existence of the debt and they do not entertain the lis alibi pendens request (the request for a stay).

The first question in C-47/18 (judgment 18 September) was whether Brussels Ia or the Insolvency Regulation are engaged. The CJEU (at 33) emphasises the need for both avoidance of overlap and of non-cover by either (‘doivent être interprétés de façon à éviter tout chevauchement entre les règles de droit que ces textes énoncent et tout vide juridique’), in the relation between the two Regulations: the infamous dovetail which as I have flagged in earlier posts, the Court in my view does not get entirely right. References are to Valach, Wiemer & Trachte, Feniks, Nickel & Goeldner). Here, the Treasury bases its action on Article 110 of the Austrian insolvency act (allowing, and urging first-tier creditors (such as, inevitably, Inland Revenue) to have their claims properly registered so as to ensure the priority in the picking order against the other creditors). The claim therefore is subject to the Insolvency Regulation 1346/2000.

The Court subsequently and unsurprisingly holds that Brussels Ia’s lis alibi pendens rule cannot somehow apply deus ex machina. At 43: insolvency is excluded from the Regulation; this exclusion is all or nothing: if the Regulation does not apply, none of it applies, including its procedural rules. These have, in BIa context, the clear purpose of ruling out as much as possible procedures pending in more than one Member State on the same issue. The Insolvency Regulation, by contrast, allows for concurrent proceedings, albeit primary and secondary ones, and (in Article 31 of the old Regulation; tightened in the current version 2015/848) encourages co-operation and exchange of information to avoid irreconcilable judgments.

(The further question asked refers to debt documentation requirements).

Geert.

Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

 

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Office Depot v Holdham et al. Lis alibi pendens in follow-on cartel damages suit. Delay in the Swedish proceedings crucial factor in High Court’s rejection of a stay

in [2019] EWHC 2115 (Ch) Office Depot BV et al v Holdham SA et al, the High Court in August (I had promised posting soon after the Tweet. That did not quite happen) held on issues of lis alibi pendens (and, alternatively, a stay on case management grounds) in a follow-on cartel damages suit arising from the European Commission’s cartel finding in the envelopes market. That’s right: envelopes. Cartel cases do not always involve sexy markets. But I digress (and I also confess to finding stationary quite exciting).

Sir Geoffrey Vos’ judgment deals with the fate of the Office Depot claimants’ follow-on proceedings in England against certain Bong (of Sweden) corporate defendants, after the Bong parties had commenced Swedish proceedings for negative declarations as to their liability. In March 2019 the relevant Swedish court said in effect that Article 8 Brussel I a was not engaged so that the Swedish Bong proceedings for negative declarations could only proceed against the locally domiciled Office Depot company, which was Office Depot Svenska AB, but not the non-Swedish Office Depot entities. Parties at the time of Sir Geoffrey’s decision (Swedish followers may be able to enlighten us on whether there has been a decision in the meantime; at 23 the expected date is mentioned as ‘the autumn’) were awaiting a certiorari decision by the Swedish Supreme Court.

CJEU C–406/92 The Tatry of course is discussed, as is CDC. Sir Geoffrey also discussed C-129/92 Owens Bank, in particular Lenz AG’s Opinion (the CJEU did not get to the part of the Opinion relevant to current case). Discussion between the parties, at Sir Geoffrey’s request, focused on the issue of the judge’s discretion under lis alibi pendens for related actions, rather than on whether or not the actions are related (it was more or less accepted they are; see ia at 43 ff).

At 46 ff the Court then exercises its discretion and finds against a stay, on the basis in particular of the expected length of the Swedish proceedings: at 54: ‘the grant of a stay would be contrary to justice in that it would delay unreasonably the resolution of proceedings that can only be tried in England and already relate to events many years ago‘, and at 48: ‘The stage in the Swedish proceedings is a long way behind these. It will be between one and two and a half years before jurisdiction is resolved there, two courts already having refused jurisdiction. It will be perhaps between three and five years before the substantive litigation in Sweden is resolved, if it ever gets off the ground.‘

Swedish courts do not tend to get used for torpedo actions. Yet the swiftness of English court proceedings yet again comes in to save the day (or indeed, scupper the stay).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1