Abusive forum shopping in defamation suits. The Parliament study on SLAPPs.

Strategic Lawsuits Against Public Participation – SLAPPs (I look at them comparatively in my Monash Strategic and Public Interest Litigation Unit, LAW5478) are a well-known tool to silence critics. Based on defamation, they (or the threat with them) aim to shut down the voice of opposition. Not many find the energy, financial resources and nerves to fight a protected libel suit in court.

The EP recently published the study led by Justin Borg-Barthet and carried out by him and fellow researchers at the University of Aberdeen. At the substantive level, distinguishing between SLAPPs and genuine defamation suits is not straightforward. As Justin et al point out, there is an important private international law element to the suits, too. Clearly, a claimant will wish to sue in a claimant-friendly libel environment. Moreover, where a deep-pocketed claimant can sue in various jurisdictions simultaneously, this compounds the threat.

The Brussels and Lugano regime is particularly suited to the use of SLAPPs as a result of the CJEU case-law on Article 7(2) forum delicti. The Handlungsort /Erfolgort distinction as such already tends to add jurisdictional gateways. In more recent years this has been compounded by the additional ‘centre of interests’ gateway per CJEU e-Date and Bolagsupplysningen – even if this was recently somewhat contained by the Court in Mittelbayerischer Verlag. As I have flagged before, Brussels Ia’s DNA is not supportive of disciplining abusive forum shopping, as illustrated ia in competition law and intellectual property law cases.

For these reasons, the report (Heading 4, p.33 ff) suggests dropping the availability of Article 7(2) and sticking to Article 4 domicile jurisdiction, supplemented with (unlikely) choice of court.

The European Parliament more than the European Commission has picked up the defamation issues both for BIa and for applicable law under Rome II (from which the issue is hitherto exempt; the report reviews the applicable law issues, too). It remains to be seen whether with this report in hand, Parliament will manage to encourage the EC to pick up the baton.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.431 ff, 4.24 ff.

 

LugaNON. My brief thoughts on the European Commission’s refusal to support the UK’s accession to Lugano 2007, and a clarification of the procedure and required majorities.

Update 9 July 2021 Thank you Ekaterina Pannebakker for flagging the momentarily definitive ‘no’: the EU’s official confirmation of non-consent.

Update 8 June 2021 for the Dutch regret of the EC’s approach yet de facto acceptance of the EC position, see  here – with thanks to Taco Van Der Valk for signalling. The Dutch Government also emphasises the fact that the issue is open-ended: it can be revisited in a later stage of EU-UK relations.

This post is my tuppenny worth on the European Commission’s Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention. These are my considered but of course not my exhaustive initial thoughts. For excellent review of the legal status quo, see Andrew Dickinson’s ‘Realignment of the Planets – Brexit and European Private International Law’ in IPRax 2021/3.

The background. 

In June 2020, Michel Barnier reportedly commented ‘Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?’. This illustrated what has been clear now for quite a while: legal services contribute directly to GPD, mostly as a result of law firms’ turnover and, more recently,  via the financial performance of third-party financing. More importantly, they have an impact on the reputation of a country. Courts’ know-how, speed and general performance are a particularly relevant factor here. Therefore the legal sector acts as one factor in attracting foreign direct investment, as the rise of  international commercial courts shows.

The quote also illustrates however that the European Commission and the Member States were keenly aware of the impact of Brexit on judicial co-operation. Throughout the process, this included early EU flags that, should judicial co-operation fail to be included in the EU-UK Trade and Co-operation Agreement – TCA, it should not be assumed that the EU would support UK Lugano membership. Scholarship, too, warned of the inferiority of Lugano viz Brussels IA, and the particular weakness of Lugano States only having to take  ‘due account’ (Article 1 Protocol 2 Lugano 2007) of CJEU case-law on Lugano.

As readers will be aware, the TCA as eventually negotiated includes precious little on judicial co-operation in civil and commercial matters. A Hard Brexit in this area, therefore. Amidst the many issues that needed to be discussed in the TCA, judicial co-operation did not make the grade. This was not a big surprise. As Peter Bert signalled from the start, judicial co-operation barely featured in the negotiation mandate on the EU side, and on the UK side the Government kept largely schtum about the issue.

The lack of provision in the TCA put back into the spotlights the UK’s April 2020 application to join Lugano. Of note is as I have signalled before, that the UK could accede to Lugano, bypassing EU approval , if it were to become a fully fledged EFTA Member State (A70(1)a Lugano). That of course is not the route the UK has followed in its disentanglement from the EU. Under A72 Lugano therefore accession requires consent from the current Lugano States, consent which they ‘endeavour to give’ at the latest within one year after the invitation to do so by the Depository (i.e., Switserland). 

The flip-flop? 

It is reporting in the Financial Times which subsequently put things into a bit of a spin, whether as a result of misinformation or lobbying, I cannot say. On the day of an important meeting of the relevant Working Party, the FT first reported the EC would support Lugano Membership – contrary to what the vast majority of observers had assumed. By the afternoon a U-turn in reporting was made, suggesting additionally that a split had emerged among the Member States. That split is simply not there, or not to a sufficient degree (see below re the voting procedure).

The morning’s reporting of white smoke made the lack of EC support look like a surprise or indeed a disappointment. Clearly it could not have been the former: most of us had assumed the EC would not support the application.

That leaves the feeling of disappointment. Quite aside from one’s view on Brexit as a whole, for legal practice clearly a continuing umbilical cord between the UK and the Brussels Regime in its widest form (BIa, Rome I and II etc etc) would have been most preferable. Lugano would have been a second best. I remind readers that Lugano not only lacks a unified solid judicial oversight. It also lags behind Brussels Ia in important aspects (Lugano 2007 instead mirrors Brussels I, Regulation 44/2001).

The reasoning.

In its Communication to the EP and the Member States, as Peter Bert reports, the EC’s core reasoning is

“For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom. Consequently, the Hague Conventions should provide the framework for future cooperation between the European Union and the United Kingdom in the field of civil judicial cooperation.”

The Commission specifically refers to the example of Poland as the direction of travel (closer integration with the EU), and to Lugano being a flanking measure of the Internal Market. The 1968 Brussels Convention quite clearly shows the DNA and the narrative of market integration. The development of the EU judicial area in the meantime has moved along in the direction of the EU citisen, rather than merely corporations, as consumers of EU judicial co-operation. Yet without Lugano States being part of the much wider judicial co-operation agenda of the EU proper, it is not absurd to suggest that Lugano 2007’s narrative is more closely aligned with market  integration than it is with ever deeper integration.

At the time of Poland‘s accession to Lugano, this was indeed clearly also linked to its impending membership of the EU, as also noted by David Lock QC, relevant UK Minister at the time. For current candidates, one could think e.g. of Georgia, and the Balkan countries, as stronger candidates for Lugano membership than the UK. Clearly, however, they may bump into opposition by the non-EU Lugano States.

The victims.

The general narrative, to which I subscribe, is that it is not Business to Business contracts, and the litigation by big business cases that will be much hit by this hard Brexit in judicial co-operation. They will turn to arbitration, they will agree exclusive choice of court (covered by the 2005 Hague Convention), and if need be they will simply absorb being litigated in, or having to litigate in the EU. Likewise, many UK judgments in standard business cases will find little difficulty, if some delay, in enforcement in the EU.

Rather: SMEs (lest they too enter into exclusive choice of court agreements per Hague 2005; and they will be less likely to be able to absorb the cost of parallel litigation), consumers and employees, travellers (including in direct action versus the insurer), and claimants in corporate due diligence cases will find it much harder to have a smooth judicial process between the UK and the EU. Consumers domiciled in the EU will still be able to sue UK corporations in the EU, provided they meet the Pammer Alpenhof criteria under the relevant Section of Brussels Ia; and employees carrying out their duties here, likewise will be able to sue a UK employer in the EU. Yet with the distinct possibility of parallel UK proceedings, and subsequent difficulties in having a European judgment enforced, there will be many a freezing effect on proactive judicial action by these protected groups. Clearly and mutatis mutandis, the same categories in the UK will see a major judicial protection avenue fall away, as non-EU cq non-Lugano domiciled consumers, employees and small insureds do not enjoy the protection of the relevant Sections in BIa cq Lugano.

A distinct category of claimants that will be hit, are those which recently have enjoyed the reigning in of forum non conveniens in business and human rights cases particularly under Lugano (where Owosu’s rejection of forum non rules) and even under Brussels Ia (where A33-34 does create some obstacles). Without Lugano, forum non in these cases will once again come to the fore, although recent Court of Appeal and Supreme Court authority on duty of care may alter that fear. 

The voting procedure and future options.

Greg Callus suggests a number of future options here. I have made the following admittedly lame football comparison: If BIa is the Champions League, then Lugano is the Premier League and the Hague Judgments Convention the Ruritanian Boy Scouts football conference. That is because the 2019 Convention does not impact on forum non theories of the signatory States; is a long, long way off entry into force (albeit as noted the EC signals it might speed up the accession process); has such a huge amount of exceptions, reservations and open questions, counsel will drive an entire tank company through it; and, like all Hague instruments, lacks a harmonising court with authority over interpretation.

The Lugano Convention encourages consent within a year of notification. Absence of an answer in other words simply continues a status of lack of consent.

An important final word on the voting procedure: it is NOT the case that the final word on the current initiative lies with the Member States under qualified majority – QMV voting. An EU yes to Switserland, the depository, requires a Council Decision with QMV. However that requires a COM proposal for such decision. This, the European Commission clearly is not willing to put forward. Article 241 TFEU enables Council to request the EC to put forward a proposal for decision. Yet to amend that proposal (which would have to be the case here, seeing as the EC will not propose consent), unanimity is required.

In conclusion

I return to my Barnier quote above: ‘Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?’ Free movement of judgments simply is too big a cherry to have the UK pick it in the absence of a more overall framework for judicial co-operation in civil and commercial matters. I fear the fall-out for the categories listed above, might not be enough to make the EC and indeed enough Member States deviate from the Brexit negotiation mandate, which continues to cast a long shadow over this particular initiative.

Geert.

EU private international law, 3rd ed. 2021, Heading 1.7.

Skatteforvaltningen v Solo Capital Partners. Unfinished business on endangering Brussels Ia’s effet utile, ‘civil and commercial’ in revenue matters, enforcing foreign public law and Dicey Rule 3.

At issue in Skatteforvaltningen (The Danish Customs And Tax Administration) v Solo Capital Partners LLP & Ors [2021] EWHC 974 (Comm)  is ‘Dicey Rule 3’ which states that “English courts have no jurisdiction to entertain an action: (1) for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State; or (2) founded upon an act of state“. The assertion of such claims is an extension of a sovereign power of taxation and, per Lord Keith of Avonholm in Government of India v Taylor [1955] A.C. 491, 511: “an assertion of sovereign authority by one State within the territory of another, as distinct from a patrimonial claim by a foreign sovereign, is (treaty or convention apart) contrary to all concepts of independent sovereignties“.

By its claims, SKAT (Danish customs and excise) seeks the return of amounts it says it was wrongly induced to pay out as tax refunds.

Brussels Ia and Lugano (the latter viz a number of defendants domiciled in Lugano States) feature in the discussion because SKAT argue that [22] ‘: (i) this is a ‘civil and commercial matter’, not a ‘revenue, customs or administrative matter’, under A1(1) BIa; and (ii) it is therefore not possible to invoke Dicey Rule 3 to dismiss its claims against Brussels-Lugano defendants, because to do so would be to decline to exercise a jurisdiction conferred by the Brussels-Lugano regime otherwise than in accordance with its rules.’

If the argument were upheld, any claims falling within Dicey Rule 3 would proceed against Brussels-Lugano defendants while being dismissed against other defendants. 

Dicey Rule 3 is not a jurisdictional rule: it is a substantive rule of English law. Yet SKAT’s argument in my view essentially means that an application of Dicey Rule 3 to the matter, would deprive A1(1) BIa of its effet utile.

Logically the BIa /Lugano argument would have had to have been considered first. Baker J does the opposite (his thinking process, unlike writing up, may of course first have considered the BIa argument) and holds at 120 after thorough consideration of the authorities on Dicey Rule 3, that the rule applies: SKAT’s claims seek indirectly to enforce in E&W, Danish revenue law.

In an interesting Coda at 121 ff, he also considers obiter the argument that, in essence, was that in line with a long public international law history, the cross-border recovery of tax refunds wrongfully procured is seen as or assumed to be a matter of revenue law requiring to be dealt with (if at all) by supranational legal instrument. Refence here is made ia to 1925 League of Nations reports.

Justice Baker starts [132] the BIa /Lugano argument along familiar lines: need for autonomous interpretation. QRS 1 ApS et al v Frandsen [1999] EWCA Civ 1463 is English authority under the Brussels Convention, and CJEU C-49/12 Sunico (to which both the AG and the CJEU refer in C-73/19 Belgische Staat v Movic BV et al) CJEU authority.

[142] In Sunico, the CJEU considered claims brought by HMRC alleging missing trader VAT carousel frauds. The substantive claims, for damages at common law for an alleged tortious conspiracy to defraud, were pursued in E&W against defendants domiciled in Denmark. HMRC also brought ancillary  proceedings in Denmark to attach assets with a view to enforcing any damages judgment obtained in England. Those Danish proceedings were objected to on the basis that they were a ‘revenue [etc] matter’ excluded from BI.

[144] The CJEU concluded at [41]-[43], essentially, that because the claim was framed in tort and not as a claim under a tax law, the proceedings were a ‘civil and commercial matter’ and not a ‘revenue [etc] matter’ for the purpose of Article 1(1) of the Brussels Regulation, so long as “the commissioners were in the same position as a person governed by private law in their action against Sunico and the other non-residents sued in the High Court of Justice” (ibid at [43]).

At 149 Baker J concedes that the decision of the Court of Appeal in Frandsen was incorrect per Sunico, however then holds that the result would be the same: the classification of proceedings as a ‘civil and commercial matter’ or a ‘revenue [etc] matter’ for the purpose of applying the Brussels-Lugano regime does not touch the question whether Dicey Rule 3 applies so as to defeat the claim. He suggests [149] a search for the lex causae under Rome II would be largely irrelevant for per A16 Rome II Dicey Rule 3 qualifies as lois de police, and finds support for his view that despite scholarly suggestion (i.a. by prof Briggs), Frandsen must not be displaced, in The Law Debenture Trust Corporation [2017] EWHC 655 (Comm) [and in Andrew Dickinson’s reporting on same], in which the English Act of State doctrine was upheld despite Rome II’s classification of the matter as civil and commercial.

At 165 ff he, somewhat superfluously still considers the more recent CJEU authority of Buak and the aforementioned Movic, and decides at 174 that per BUAK and Movic (on the use of evidence etc.) that SKAT was neither attempting nor able to change the rules of the litigation game, either as to the substantive rules of law that would apply in determining its claims, or as regards the procedural rules applicable in the litigation, or as regards the status or effect of any of the evidence it might deploy or disclose. SKAT was not by this litigation pursuing public law proceedings, in which liabilities are determined as if this were a judicial review of SKAT’s actions, decisions or exercise of public law powers.

Yet that the matters are of a civil and commercial nature, in the end does not matter at all: [176]

To the extent that SKAT relied on the Brussels-Lugano regime as the basis for this court having jurisdiction over the Brussels-Lugano defendants that have been sued, including it may be for serving proceedings out of the jurisdiction, in my judgment it was right to do so. But its having been entitled to do so did not oust or disapply Dicey Rule 3 in respect of those defendants.

Using prof Dickinson’s words (26-27), there is a dissonance here between Brussels Ia and the applicable law. One that, I would suggest, endangers the effet utile of Brussels Ia. Dicey Rule 3’s character as a substantive rather than a jurisdictional rule, does not to my mind save that.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.28 ff.

Swiss court’s refusal of recognition under Lugano 2007 shows the difficult road ahead for UK judgments.

There is much to be said about the refusal of the courts at Zurich at the end of February, to recognise a September 2020 High Court judgment under the 2007 Lugano Convention. Rodrigo Rodriguez says it all here and I am happy to refer. The guillotine fashion in which the courts rejected application of Lugano 2007 even for a procedure that was initiated before Brexit date 1 January 2021 leaves much to be discussed. As does the question whether the demise of Lugano 2007 might not resurrect Lugano 1988 (Rodrigo points ia to the dualist nature of the UK in his discussion of same).

Whether correct or not in the specific case at issue, the judgment does show the clear bumpy ride ahead for UK judgments across the continent, following the Hard Brexit in judicial co-operation.

Geert.

EU Private International Law, 3rd ed., 2021, Chapter 1, Heading 1.7.

 

Gategroup: A seminal and questionable judgment on gatekeeping viz restructuring ‘Plans’ under the Lugano Convention, Insolvency Regulation.

Update 7 May 2021 in follow-up judgment [[2021] EWHC 775 (Ch)], the judge calls the case one of ‘good forum shopping’ per Codere, points to expert evidence on Swiss Law (by professor Rodrigo Rodriguez, seemingly supporting the suggestion Lugano’s insolvency exception applies [24]; Rodrigo did point to an issue with third party effect, which led to an amendment of the Plan) and Luxembourg law (by Philippe Hoss), both essentially confirming enforceability in Switserland and Luxembourg.

Zacaroli J this morning held in Gategroup Guarantee Ltd, Re [2021] EWHC 304 (Ch) on whether ‘part 26A’ English restructuring ‘Plans’ (see my review of ia Deep Ocean) are within the scope of the Lugano Convention’s insolvency exception (Lugano rather than Brussels Ia was engaged).

He held they are (hence: excluded from Lugano), leading to neutralisation of an exclusive choice of court agreement in the relevant bonds, and making the courts of England and Wales have jurisdiction despite this choice of court.

Oddly Kaupthing was not referred to. Neither was Enasarco.

The judge relied unconvincingly in my view on the dovetail discussion (most recently discussed by me viz Alpine Bau) under the Brussels IA Recast and the EU Insolvency Regulation (‘EIA’)- neither of course applicable to the UK anymore, as indeed is the case for the Lugano Convention.

All in all this is a case in which the  reasoning has a potentially long term impact. The claim form in this case was issued on 30 December 2020. As such, by reason of Regulation 92(1), (2)(d) and (3) of the Civil Jurisdiction and Judgment (Amendment) (EU Exit) Regulations 2019, the Lugano Convention continues to apply.

The Plan Company was incorporated on 8 December 2020 as a wholly owned subsidiary of gategroup Holding AG (the ‘Parent’, a company incorporated in Switzerland. At [55] , if Lugano applies to applications under Part 26A, then the Plan Company accepts that by reason of A23(1) Lugano and the exclusive jurisdiction clause in favour of the courts of Zurich in the Bonds, this court has no jurisdiction. That acceptance is made notwithstanding that the Deed Poll contains a non-exclusive jurisdiction clause in favour of the courts of England. The Plan Company acknowledges that since the purpose of the Plan is to effect amendments to the terms of the Bonds, the exclusive jurisdiction clause in the Bonds is engaged.

The usual modus operandi of assuming application of Brussels Ia arguendo (see viz schemes of arrangement most recently KCA Deutag and viz Plans Deep Ocean and Virgin) did not fly here for as noted the Plan Company accepts that the exclusive jurisdiction clause in favour of the Zurich courts is a complete bar to this court assuming jurisdiction if the Lugano Convention applies (in the preceding cases the point need not be decided, since jurisdiction under BIa could be established arguendo as in none of them was there adversarial argument on the point).

At 70 Justice Zacaroli introduces effectively an amicus curiae by Kirkland & Ellis, opposing the view that the insolvency exception applies.

At 73 ff a first point is considered: Part 26A Plans have not been notified under the EIA Annex. This refers to the so-called dovetailing between Brussels Ia, Lugano and the EIR. The suggestion is that if a procedure is not listed in Annex A EIR, it is conclusively not an insolvency proceeding and “that is the end of the matter” because the dovetailing principle leads inexorably to the conclusion that it falls within the Recast (‘and thus within the Lugano Convention’  [73]). At 82 the judge incidentally is under the impression that the older, heavier procedure of amendment by (EP and Council) Regulation applies – which it no longer does since the EIR 2015.

I have since long submitted that there is no such dovetail. It is also clear that there cannot be identity of interpretation between the Lugano Convention’s insolvency exception and the Brussels regime given that non-EU Lugano States are not part of the EIR. The judge confirms as much at 81 and at 91 ff  and, in a first approach, revisits the principles of modified universalism and the origin of the insolvency exception in particular in the Jenard report. He holds at 103 that the ratio behind the insolvency exception in the Rapport Jenard is the same as the ratio behind Plans, hence that the exception applies.

In a second (presumably subsidiary) approach, the judge queries whether proceedings under Part 26A comply with the abstract requirements for an ‘insolvency’ procedure under of A1(1) EIR and finds at 133 that they do. I am really not convinced by the relevance of that analysis. He includes at 134 ff an argument that the Dutch ‘WHOA’ (Wet homologatie onderhands akkoord) proceedings are to be included in Annex A. Again I am not convinced that serves much purpose. Member States populate the Annex and a Member State proposal for inclusion is not checked against A1(1) EIR.

Conclusion on the jurisdictional issue at 137: ‘proceedings under Part 26A are within the bankruptcy exclusion in the Lugano Convention. This court accordingly has jurisdiction notwithstanding the exclusive jurisdiction clause in the Bonds.’

A most relevant judgment, on which the issues are not at all clear. Expect appeal lest the restructuring timing has made this nugatory – settling these issues would most certainly be welcome.

Geert.

EU private international law, 3rd ed. 2021, paras 2.73 ff (2.81 ff in particular) and 5.35 ff.

Wright v Granath. Lis alibi pendens in defamation. The Court of Appeal on Norwegian harpoons and ‘same cause of action’ under Lugano..

Wright v Granath [2021] EWCA Civ 28 is not the only litigation involving Mr Wright, defamation and bitcoin gossip: see my review of Wright v Ver [2020] EWCA Civ 672 (judgment to which Popplewell LJ refers for connections between Mr Wright and the UK) here. The judgment appealed here is Wright v Granath [2020] EWHC 51 (QB). Jurisdictional grounds evidently include the CJEU case-law right up to Bolagsupplysningen.

The title of this post is courtesy of Greg Callus, one of counsel for the claimant.

Defendant, Magnus Granath, is a citizen of Norway, resident in Oslo. He has tweeted on various technology issues, including cryptocurrencies, and has an interest in Bitcoin and its development. He believes that Dr Wright’s claim to be Satoshi Nakamoto (the developer of bitcoin) is false, a statement that was also tweeted at the since deleted @Hodlonaut account. By 15 May 2019 Dr Wright’s advisers thought they had identified Mr Granath as the owner of the @Hodlonaut account, and sent a further letter via Facebook and LinkedIn seeking confirmation. The letter was served by hand on Mr Granath on 20 May 2019. Meanwhile on the previous day, 19 May 2019, Mr Granath issued proceedings in the Oslo District Court seeking in effect a declaration of non-liability aka NDR: Negative Declaratory Relief: a classic (and as Popplewell LJ justifiably suggests, CJEU-blessed) flip side of the coin action to avoid jurisdiction of the English courts. 

It is common ground that the Norwegian court was first seised. Jurisdiction was accepted by the Norwegian courts right through to the Supreme Court (talk about speedy proceedings: within a year the jurisdictional issue was considered at first instance, appeal and SC) on the basis that the relief sought was “global” in the sense that it was not limited to any harm or loss suffered in Norway, and that A5(3) Lugano was applicable because the “harmful event” occurred in Norway, that being where Mr Granath lived and published the tweets (locus delicti commissi).

CJEU Gubish Machinenfabrik and The Tatry clarify for the English version of Brussels I hence also of Lugano (assuming the requirement of parrallel interpretation of the lis alibi pendens rule) what was already clearer in other language versions:  A27 Lugano requires three identities: identity of parties; identity of object or ‘ subject-matter ’; and identity of cause.

In the establishment of identity of cause of action, the ‘ cause of action’ comprises the facts and the rule of law relied on as the basis of the action (CJEU Gubbisch). 

Coming then to the decision, Popplewell J dissented, with Singh LJ and Moylan LJ allowing the appeal. At 41 ff Popplewell J discusses the cause of action criterion, with the core at 48-49: he identifies two core differences between the English and the Norwegian claims: 

there are two differences between the English and Norwegian Claims whose significance requires examination. The first is that the Norwegian Claim identifies negligence as a necessary ingredient of liability under Norwegian law, and asserts the absence of negligence on Mr Granath’s part. This gives rise to the possibility that Mr Granath could succeed in Norway on a basis that would not be inconsistent with liability to Dr Wright in England under English law: if the Norwegian Court were to hold that the tweet was untrue because Dr Wright is Satoshi Nakamoto, and there was no defence of lawfulness by way of public interest or freedom of expression, but that Mr Granath was entitled to his declaration on the grounds that although the tweet was wrong it was not negligently so, Dr Wright would have established all the ingredients of an English law defamation claim. However the consequence of the Court now declining jurisdiction under article 27 would be to preclude him from pursuing that English law claim or obtaining the relief it would provide.

The second difference between the claims is that were Mr Granath to fail in full in Norway, the relief available there to Dr Wright by way of counterclaim would not be co-extensive with that available in a successful English law claim. It would not include a s.12 statement; and it might not include an injunction. I say “might not” because it was in dispute as to whether that was so. Dr Wright sought to adduce expert evidence of Norwegian law before the Judge below, but permission was refused on the grounds that it came too late, with the result that there was no relevant evidence of Norwegian law or practice before the Court. Mr Tomlinson asserted that an injunction must be available in Norway as an effective remedy guaranteed by the EU Charter, but later confirmed that Norway was not a signatory to the Charter and not bound by it. He submitted in the alternative that such relief would be available as part of Dr Wright’s article 8 rights under the European Convention on Human Rights, but that is not self-evident to me and the point was not explored in argument. I shall assume for the purposes of my analysis that an injunction is not available in Norway because for the reasons explained below I do not regard any such unavailability as precluding the application of article 27.

At 51 ff, Popplewell J’s important take-aways from Gubisch, are that  when considering objet, the search is not for complete identity, but for identity on a question “which lies at the heart of” the two actions. Same does not mean same. The two claims need not be “entirely identical” (at 55). And at 56 that there can be the necessary identity of cause without complete identity of legal issues in the two sets of proceedings. Here too same does not mean same.

Further precedent is considered extensively (much of it discussed on the blog) leading to summary of the principles at 90 and application in fact at 93 ff: Popplewell J would have held that the claims have the same cause and the same objet and that A27 Lugano requires the EN claim to be dismissed.

At 99 ff he dismisses the argument,  which was encouraged (wrongly in my view, as readers know) by Vedanta and EuroEco, that the application of A27 to Mozaic claims as here, be an abuse of EU law. There is no authority to suggest that A27 is inapplicable to defamation claims, and no sound reason for restricting its applicability, and on this Singh LJ and Moylan LJ agree.

Of note is that Popplewell LJ is spot on at 101 where he says

in any tort claim in which article 5(3) confers a choice of jurisdiction on the claimant for a global claim, the choice is equally conferred on a defendant by way of an NDR claim; in each case the option is circumscribed by the simple and automatic mechanism (per Gantner paragraph 30) in article 27 of who starts first. That is not an abuse of the regime established by the Convention, but rather its implementation.

Singh LJ and Moylan LJ allowed the appeal, however: Moylan LJ for the majority summarises at 160 ff, largely on the basis of the same authority as that discussed by Popplewell (with The Alexandros at the core). At 168:

Although I agree with Popplewell LJ when he says, at paragraph 81, that irreconcilability may be a helpful tool in evaluating whether the article 27 test is met, the potential for conflicting decisions will not determine whether the causes of action are the same.

I should like to refer to the litmus test proposed by Adrian Briggs and applied eg in Awendale: whether a decision in one set of proceedings would have been a conclusive answer in the other. If it would, then there is identity of cause of action.

The appeal is allowed, the case may continue in E&W – clearly irreconcilability at the recognition stage might still be an issue.

Should the UK be successful in its Lugano accession attempt, this case will be crucial authority post The Alexandros. In the alternative, it will be among the last echoes of Lugano in the E&W courts.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.15.1.

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.

 

Seven swans a-swimming. The Hard Brexit for judicial co-operation in civil matters.

Update 13 April 2021 see Matthias Lehmann’s reporting on yesterday’s rollercoaster news re the EC’s position viz the UK’s accession to Lugano.

Update 10 February 2021 see Steve Peers’ reporting on the UK’s formal confirmation of non-extension of the Brussels Convention and Rome 1980 Convention.

Update 5 January 2020 This CMS summary usefully points out that there is embryonic judicial co-operation on intellectual property rights (see p155 ff of the agreement, Section 2: Civil and administrative enforcement).

31 December 2020, the Seventh day of Christmas, delivered a hard Brexit in the area of judicial co-operation in civil matters – the core subject area of this blog. The moment the draft  Trade and Cooperation Agreement between the EU and the UK broke, a few of us poured over the text to find any deal on the issue – in vain. Peter Bert has reporting and analysis here and here; Ralf Michaels summarised here (he also links to our Twitter reactions, which readers might find of use) and Marta Requejo Isidro links further to official documents here.

The UK’s application to join Lugano is still out there (the EU have an effective veto), however as things stand it seems unlikely the EU will agree.

Andrew Dickinson summarises the many things on the UK’s to do list here. As was clear to many of us, Sylvester 2020 was never going to be an end to, rather the start of interesting times in the sector.

Geert.

EU Private International Law, 3rd ed. 2021, 1.36 ff.

Stephenson Harwood v MPV (and Kagan). On interpleader (‘stakeholder’) actions and when engagement with the merits of the case leads to submission under Lugano.

In Stephenson Harwood LLP v Medien Patentverwaltung AG & Ors [2020] EWHC 1889 (Ch), proceedings were triggered by funding arrangements and alleged success fee entitlements following patent infringement proceedings. MPV is Swiss-based.

The action is an ‘interpleader’ one, now called a ‘stakeholder’ action: as Lenon DJ at 34 described, it is a ‘means by which a court (at the request of claimant, who typically holds property on behalf of one of the parties, GAVC) compels competing claimants to the subject matter of the application to put forward their claims and have them adjudicated on, thereby enabling the stakeholder to drop out of the picture.’

In the English residual private international law, stakeholder actions ground jurisdiction on the basis of the defendant’s property being present there. This is the kind of assets- based jurisdiction which the EC, but not the other Institutions, had wanted to introduce in Brussels Ia. As a result of the Brussels Convention’s Article 3 (materially the same as Article 3 Lugano), these actions became part of residual rules which could no longer be invoked against EU /Lugano States based defendants.  In the Schlosser report on the UK’s accession to the Brussels Convention, to which the judge refers at 40, it was said

“Interpleader actions (England and Wales) … are no longer permissible in the United Kingdom in respect of persons domiciled in another Member State of the Community, in so far as the international jurisdiction of the English or Scottish courts does not result from other provisions of the 1968 Convention. This applies for example, to actions brought by an auctioneer to establish whether ownership of an article sent to him for disposal belongs to his customer or a third party claiming the article.”

An alternative jurisdictional gateway therefore needs to be found. The discussion turned to submission (aka voluntary appearance) and CJEU C-150/80 Elefanten Schuh GmbH v Pierre Jacqmain. In particular, MPV completed the acknowledgment of service form indicating that it intended to contest Stephenson Harwood’s claim, did not tick the box saying that it intended to dispute jurisdiction and set out its own claim for payment of the Monies which it intended to pursue in the stakeholder application and stating its intention to exchange evidence. It then served and filed two witness statements in support of that claim addressing the merits and rebutting Mr Kagan’s claim. As the judge notes at 49,

MPV’s case that it has not submitted to the jurisdiction depends on the Court accepting the premise that it is open to MPV to distinguish for jurisdictional purpose between Stephenson Harwood’s claim (in relation to which MPV has raised no jurisdictional dispute) and Mr Kagan’s claim made as part of the stakeholder proceedings (in relation to which MPV does dispute jurisdiction). It is on this basis that MPV simultaneously asks the Court to order payment of the Monies to itself, as a disposal of the stakeholder application, while disputing the jurisdiction of the Court to determine Mr Kagan’s claim to the Monies.

However Lenon DJ holds that appearance was entered, as Mr Kagan’s claim is part and parcel of the stakeholder application and cannot be separately rejected at the level of jurisdiction. The level of engagement with the claim amounts to voluntary appearance viz both parties. At 53 obiter discussion of other gateways is pondered but not further entertained for lack of proper discussion by the parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1,

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.