Posts Tagged Lugano
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  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 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).
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.
Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2.
In Terre Neuve SARL & Ors v Yewdale Ltd & Ors  EWHC 772 (Comm), Bryan J entertains almost the entire jurisdictional chapter of the Handbook.
The proceedings are concerned with the alleged misappropriation of a sum of €10.6 million paid by the First Claimant (“Terre Neuve”) to the First Defendant (“Yewdale”) between July 2009 and September 2012, and thereafter allegedly misapplied with the alleged participation of other Defendants. The sums were paid pursuant to a tax optimisation scheme ultimately for the benefit of the Third Claimant (“Mr. Zahut”), who beneficially owned Terre Neuve and the Second Claimant (“Largely”). The scheme was allegedly created by a Mr. Sasson (now deceased), who gave tax advice through his company, the Third Defendant (“GPF”) and controlled Yewdale (an English company) and the Second Defendant (“REDS”) (a New York company).
In this preliminary judgment, plenty of the defendants challenge jurisdiction, even if as discussed at 11 ff, following judgment by Hancock J in  EWHC 1119 (Comm), confirmed in  EWHC 1847 (Comm), the action is already proceeding in England against Yewdale (which has been found to be a valid anchor defendant per Article 4 Brussels Ia) as well as a number of the overseas defendants: both those domiciled in Switzerland, and elsewhere. Co-defendants in current case were not involved in those earlier hearings.
Firstly, GPF, third defendant, challenges jurisdiction under Article 23 Lugano, more or less but not quite the same as Article 25 BIa. At 22 ff Bryan J cuts too many corners in my view. He extends CJEU precedent on Brussels I and Ia without question to Lugano construction. He unhesitatingly adopts English law (with Fiona Trust in the authority driver’s seat and with reference to the recent Etihad case) as the lex causae for the choice of court agreement. This is as lex fori additi I assume; the actual text of the choice of court agreement is not included in the judgment lest I looked over it however one can deduct the choice points to Switzerland. He is right in holding that the answer to the contractual construction of the choice of court agreement cannot be found in either Lugano or Brussels itself.
At 44 ff he decides that Claimants’ claims do not fall within the scope of any of the jurisdiction clauses in the Written Agreements, pointing away from England.
Next, a group of co-Defendants, who the Claimants allege were involved in and/or benefited from the misappropriation, challenge the jurisdiction of the English Court on various grounds, inter alia: that the claims against them are not sufficiently closely connected to be heard with the claims against the other Defendants in this jurisdiction, pursuant to Article 6(1) Lugano, and should instead be tried in Switzerland pursuant to Article 2 Lugano; that the claims against them would be more conveniently heard in Switzerland; that bringing proceedings against them in England is an abuse of process; that they should be tried in Switzerland pursuant to Article 5 Lugano; that proceedings against them in England are a breach of their rights under Article 6 ECHR; and that various agreements contain jurisdiction clauses which prevent the English Court from hearing the case against them.
In short (note all the authority he employs has been reviewed on this blog, both CJEU (e.g. Melzer) and English) Bryan J finds the cases are clearly related under Article 6 Lugano; forum non conveniens must not be entertained; and there is no abuse of EU law (a popular part of jurisdictional challenge following Vedanta); some of the defendants have submitted; Article 5 Lugano’s forum contractus is irrelevant for it only brings additional, not exclusive jurisdiction; Article 6 ECHR is clearly not breached (practical difficulties of attending, for instance, may be solved by modern means); arbitration in New York first of all does not engage an EU court and secondly of course arbitration is exempt from Lugano.
Finally the one co-defendant domiciled in Israel is nevertheless pulled into the English jurisdictional bath by application of residual English rules (serious issue to be tried; necessary and proper party).
Quite a lot to discuss by way of preliminary jurisdictional issue…
In Islandsbanki & Ors v Stanford  EWCA Civ 480, upon appeal from Fancourt J in  EWHC 1818 (Ch), Asplin LJ discussed whether purported execution of a foreign judgment registered in the High Court pursuant to the Lugano Convention, can be execution issued in respect of the judgment debt (for the purposes of section 268(1)(b) of the Insolvency Act 1986), if the execution occurred before the period for appealing the registration of the judgment has expired and, if not, whether the defect can be cured.
An unpaid Icelandic judgment debt from 2013 which together with interest, is now in excess of £1.5 million sterling equivalent. The judgment was given against Mr Stanford in the Reykjanes District Court in Iceland on 26 June 2013. A certificate was issued by the Icelandic court on 16 October 2013, pursuant to Articles 54 – 58 Lugano. IB applied to register the Icelandic judgment in England and Wales on 16 March 2016. A registration order was sealed on 23 March 2016 (the “Registration Order”).
Some of the issues in the Appeal (and before Fancourt J) concern purely English procedural rules however their effect is of course to facilitate, or obstruct, recognition and enforcement under the Lugano Convention. The confusion to a great degree results from the UK, despite Lugano’s direct effect, having implemented the Convention in the CPR rules anyway (at 24). The submission made by appellant (the Bank) before the Court is essentially that a narrow interpretation of the English CPR rules which would not allow remedying an error in the procedure, would run counter Lugano’s objective of facilitating recognition and enforcement (reference is made to the Pocar report and the recitals of Lugano itself).
Asplin LJ at 38 points to the language of Lugano itself: ‘during the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no (emphasis in the original) measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. The ordinary and natural meaning of those provisions is quite clear.’ She also at 37 points to the Convention’s objectives not being restricted to ease of enforcement: ‘the underlying policy of Articles 43(5) and 47(3) is that a fair and proportionate balance must be struck between the interests of the party which applies for a registration order having obtained a judgment in a foreign jurisdiction to which the Convention applies, and the defendant/debtor whose rights of appeal are prescribed by law and should not be undermined by allowing irreversible measures of enforcement.’
Conclusion, at 40: ‘It is for that reason that CPR 74.6(3) provides that a registration order must contain reference to the period in which an appeal against registration can be lodged and that no measures of enforcement can be taken before the end of that period and the reason why that prohibition was repeated in the Registration Order itself at paragraph 2. Accordingly, any attempt to remedy the premature issue and execution under the Writ of Control by means of an exercise of the discretion under CPR r3.10(b) or the use of CPR r3.1(2)(m) or 3.1(7) (or the inherent jurisdiction of the court, for that matter) would fundamentally undermine Article 47(3) and section 4A(3) in a way which is impermissible.’
at 62 ‘The defect in the execution in this case, if it can be called a defect, was fundamental….It was not a mere technicality or a formal defect which might be rectified pursuant to what is now Rule 12.64 of the Insolvency Rules 2016. It went to the heart of the execution process’.
Appeal dismissed following an interesting and clear application of both Lugano’s provisions and its spirit.
 EWHC 3196 (Ch) Kinsella et al v Emasan et al is not quite as extensive an analysis on choice of court as Etihad Airways v Prof Dr Lucas Flöther which I review here. Nevertheless the required ‘good arguable case’ standard is again responsible for the extensive discussion of the issue.
Issues are similar as under A25 BIa – in the case at issue it is the Lugano Convention (Article 23) that is engaged. Teverson M’s analysis is very much a factual, contractual one: the basis of Emasan’s (defendant, domiciled at Switzerland) jurisdiction challenge is that: it is domiciled in Switzerland; an alleged 2002 Agreement was an oral agreement which was not subject to any jurisdiction agreement; that alleged 2002 Agreement was not varied by 2006 and 2007 Deeds in such a way as to bring claims for breaches of its alleged terms within the ambit of the jurisdiction clauses contained in those later Deeds, but was superseded by them; there is no other basis upon which the jurisdiction of the English Courts is established in relation to claims based on the 2002 Agreement.
Whether choice of court was made for the 2002 agreement depended on whether A23 Lugano’s conditions were fulfilled that the agreement be made in writing or evidenced in writing; or in a form which accords with practices which the parties have established between themselves (the lex mercatoria gateway was not relevant at issue).
Every one of the written agreements made to give effect to claimant’s entitlement under the original, oral 2002 Agreement included a jurisdiction clause recognising the jurisdiction of the English Courts. A great deal of emphasis was placed on witness statements. At 101 Master Teverson holds that the agreement on jurisdiction under the 2002 agreement can properly in the circumstances of this case be regarded as evidenced by the jurisdiction clauses in the 2006 and 2007 Deeds.
(Handbook of) European Private international law, 2nd ed. 2016, Ch.2, Heading 2.2.9
PrivatBank v Kolomoisky and Boholiubov. The Court of Appeal reverses the High Court ia on abuse of the anchor mechanism. Further consideration, too, of the reflexive effect of Article 28’s lis alibi pendens, and of Article 34.
Update 18 May 2020 early April the Supreme Court ruled that it would not hear the case – which therefore stands as (complicated) authority.
The Court of Appeal in  EWCA Civ 1708 has reversed  EWHC 3308 (Ch) PrivatBank v Kolomoisky and Boholiubov et al which I reviewed here. When I tweeted the outcome on the day of release I said it would take a little while for a post to appear, which indeed it has. Do please refer to my earlier post for otherwise the comments below will be gobbledygook.
As a reminder: the High Court had set aside a worldwide freezing order (‘WFO’) granted earlier at the request of Ukraine’s PrivatBank, against Ihor Kolomoisky and Hennadiy Boholiubov – its two former main shareholders.
Fancourt J’s judgment implied in essence first of all, the Lugano Convention’s anchor defendant mechanism, concluding that ‘any artificial fulfilment (or apparent fulfilment) of the express requirements of Article 6.1 is impermissible, and this includes a case where the sole object of the claim against the anchor defendant is to remove the foreign defendant from the jurisdiction of domicile. Bringing a hopeless claim is one example of such abuse, but the abuse may be otherwise established by clear evidence. In principle, the fact that there is a good arguable case against the anchor defendant should not prevent a co-defendant from establishing abuse on some other ground, including that the “sole object” of the claim is to provide jurisdiction against a foreign domiciled co-defendant.‘
The English Defendants serving as anchor, were not considered legitimate targets in their own right and hence the ‘sole object’ objection was met.
The Court of Appeal in majority (Lord Newey at 270 ff dissenting) disagreed and puts particular emphasis on the non-acceptance by Parliament and Council at the time of adoption of Brussels I, of an EC proposal verbatim to include a sole object test like was done in Article (then) 6(2) (it also refers to drafters and rapporteur Jenard making a bit of a muddle of the stand-alone nature, or not, of the sole object test). Following extensive consideration of authority it decides there is no stand-alone sole object test in (now) Article 8(1) Brussels I (or rather, its Lugano equivalent) but rather that this test is implied in the Article’s condition of connectivity: at 110: ‘we accept Lord Pannick’s analysis that, as shown by the references to Kalfelis and Réunion,..that the vice in using article 6(1) to remove a foreign defendant from the courts of the state of his domicile was met by a close connection condition.’
Obiter it held at 112 ff that even if the sole object test does exist, it was not met in casu, holding at 147 that the ability to obtain disclosure from the English Defendants provided a real reason for bringing these proceedings against them.
Fancourt J had also added obiter that had he accepted jurisdiction against the Switzerland-based defendants on the basis of the anchor mechanism, he would have granted a stay in those proceedings, applying the lis alibi pendens rule of Lugano reflexively, despite the absence of an Article 34 mechanism in Lugano. The Court of Appeal clearly had to discuss this given that it did accept jurisdiction against the Switserland-based defendants, and held that the High Court was right in deciding in principle for reflexive application, at 178: ‘This approach does not subvert the Convention but, on the contrary, is in line with its purposes, to achieve certainty in relation to jurisdiction and to avoid the risk of inconsistent judgments.’
That is a finding which stretches the mutual trust principle far beyond Brussels /Lugano parties and in my view is far from clear.
However, having accepted lis alibi pendens reflexively in principle, the Court of Appeal nevertheless held it should not do so in casu, at 200 as I also discuss below: ‘the fact that consolidation was not possible was an important factor militating against the grant of a stay, when it came to the exercise of discretion as to whether to do so’.
Finally, stay against the English defendants was granted by the High Court on the basis of A34 BIa, for reasons discussed in my earlier post. On this too, the Court of Appeal disagreed.
Firstly, on the issue of ‘related’ actions: At 183: ‘The Bank argues that the actions are not “related” in the sense that it is expedient to hear and determine them together, because consolidation of the Bank’s claim with Mr Kolomoisky’s claim in the defamation proceedings would not be possible. It is submitted that unless the two actions can be consolidated and actually heard together, it is not “expedient” to hear and determine them together. In other words, the Bank submits that expediency in this context means practicability.’ The Court of Appeal disagreed: At 191: ‘The word “expedient” is more akin to “desirable”, as Rix J put it, that the actions “should” be heard together, than to “practicable” or “possible”, that the actions “can” be heard together. We also consider that there is force in Ms Tolaney’s point that, if what had been intended was that actions would only be “related” if they could be consolidated in one jurisdiction, then the Convention would have made express reference to the requirement of consolidation, as was the case in article 30(2) of the Recast Brussels Regulation.’
Further, on the finding of ‘sound administration of justice’: at 211: ‘the unavailability in the Ukrainian court of consolidation of the Bank’s current claim with Mr Kolomoisky’s defamation claim remains a compelling reason for refusing to grant a stay. In particular, the fact that the Bank’s claim would have to be brought before the Ukrainian commercial court rather than before the Pechersky District Court in which the defamation proceedings are being heard means that if a stay were granted, the risk of inconsistent findings in these different courts would remain. Furthermore, we accept Lord Pannick’s overall submission that, standing back in this case, it would be entirely inappropriate to stay an English fraud claim in favour of Ukrainian defamation claims, in circumstances where the fraud claim involves what the judge found was fraud and money laundering on an “epic scale” ‘
Finally, at 213, ‘that the English claim against Mr Kolomoisky and Mr Bogolyubov and the English Defendants should be allowed to proceed, it inevitably follows that the BVI Defendants are necessary or proper parties to that claim and that the judge was wrong to conclude that the proceedings against the BVI Defendants should be set aside or stayed.’
One or two issues in this appeal deserve to go up to the CJEU. I have further analysis in a forthcoming paper on A34.
(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 126.96.36.199
BVC v EWF. The High Court on personality rights, internet and centre of interests in echoes of Bolagsupplysningen and e-Date. Suggests court with full jurisdiction is required for orders restraining further publication.
In BVC v EWF  EWHC 2506 (QB) claimant applied for summary judgment in a claim for misuse of private information and harassment. The privacy claim arises from internet publication, on a website created by the defendant, of his account of his relationship with claimant. The harassment claim arises from a series of email communications from the defendant to claimant over a period of some two years, and from publication of the website itself.
An ex parte injunction had been granted earlier. The Defendant was restrained from contacting or harassing claimant, from publishing the website or any of its contents to the world at large, and from publishing any of the information set out in a confidential schedule, or any information which was liable to or might identify the claimant as a party to the proceedings or as the subject of the confidential information
In current proceedings defendant (a UK national) submits he is domiciled in Switserland. This triggers the Lugano Convention.
Parkes J clearly had to consider Article 5(3) Lugano’s special jurisdictional rule for tort (the BIa equivalent of course is now Article 7(2), hence also applying e-Date and Bolagsupplysningen. Steyn DJ had earlier rejected defendant’s arguments. At 33: ‘She held, in short, that the Claimant had a good arguable case that this jurisdiction was the state in which he had the centre of his interests, and that in any event a real and substantial tort (namely misuse of private information) had been committed within the jurisdiction. She also ordered that the steps already taken to bring the Claim Form and orders of 27 June and 4 July 2018 to the Defendant’s attention (namely, service by email) constituted good service on him, notwithstanding that he claimed he was domiciled in Switzerland at the date of receipt of the documents, not (as had been believed) in this jurisdiction.’
Defendant (praised nb by Parkes J for his ‘brief but enlightening written submissions’) however continues to challenge the jurisdiction, jumping at the chance to bring it up again when claimant referred to his centre of interests in his PoC (Particulars of Claim), and employing the distinction which the CPR makes between challenges to existence and exercise of jurisdiction (notwithstanding authority (see at 39) that despite the distinction claims viz the two need to be brought concurrently).
He essentially (at 43) posits the court reconsider
‘whether Article 7(2) RJR is ‘to be interpreted as meaning that a natural person who alleges that his personality rights have been infringed by the publication of information concerning him on the internet may have his centre of interests in a Member of State where he is not habitually resident, where he has no ongoing professional connections or employment, no home, no income and no immediate family’. In his letter to the court of 18 June 2019, the Defendant puts it this way: ‘… with no permission to appeal the judgment of Karen Steyn QC, if the court continues to accept the Claimant’s centre of interests is in England and Wales despite very clear evidence to the contrary then it is necessary to refer the question of interpretation to the ECJ pursuant to Article 267 of the TFEU’.
At 44 Parkes J dismisses the suggestion of preliminary review to Luxembourg. That route is ‘not designed to provide a route of appeal against judicial evaluation of evidence of fact.’ In conclusion, re-opening of the discussion on jurisdiction is rejected, referring finally to Lord Green in Kaefer:”it would not be right to adjourn the jurisdiction dispute to the full trial on the merits since this would defeat the purpose of jurisdiction being determined early and definitively to create legal certainty and to avoid the risk that the parties devote time and cost to preparing and fighting the merits only to be told that the court lacked jurisdiction“.
Arguments on submission to the jurisdiction where not entertained: whether service of a defence, and the making of an application to strike out qualify as ‘submission’ becomes otiose when that jurisdiction has already been unsuccessfully challenged.
Then follows extensive discussion of the factual substance of the matter, which is less relevant for the purposes of this blog. Hence fast forward to 150 ff where the issue of jurisdiction to issue an injunction prohibiting re-publication of the material is discussed (in case: re-offering of the website on WordPress or elsewhere). At 158 ff this leads to a re-discussion of Bolagsupplysningen where the Court held that where a claimant seeks an injunction to rectify or remove damaging material from the internet, he can only do so only in a State with full jurisdiction. Parkes J at 160 suggests this is only in the state where the defendant is domiciled (the general rule, as stated by Art 2(1) Lugano and Art 4(1) RJR), or (by virtue of the special jurisdiction: Art 5(3) Lugano and Art 7(2) RJR) in the state where he has his centre of interests, and not before the courts of each member state in which the information is accessible.
I believe Parkes J on that point omits locus delicti commissi. At the time of my review of Bolagsupplysningen I suggested the judgment was bound to create a need for further clarification: Shevill and e-Date confirm full jurisdiction for the courts of the domicile of the defendant, and of the locus delicti commissi, and of the centre of interests of the complainant. These evidently do not necessarily coincide. With more than one court having such full jurisdiction positive conflicts might arise.
Of more importance here is that Parkes J (obiter) at 163 suggests that the requirement of full jurisdiction, also applies to orders restraining any further publication and not just as the Grand Chamber held limited by the facts in Bolagsupplysningen, to orders for rectification and removal. In doing so he follows the in my view correct suggestion made by Dr Tobias Lutzi (‘Shevill is dead, long live Shevill!’, L.Q.R. 2018, 134 (Apr), 208-213) viz divisible cq indivisible remedies – update 28 September 2019 although the issue is not free of discussion. Graham Smith for instance suggests the potential for geo-blocking as a valid argument to grant jurisdiction for restraining further publication on an Article 7(2) locus damni basis.
Note also the cross-reference to Saïd v L’Express on the limitation of Bolagsupplysningen to injunctive relief: for damages, the full mosaic implications remain.
Conclusion: Claimant is entitled to summary judgment for a final injunction to restrain further misuse of his private information
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.