CA Indosuez v Afriquia. On Lugano claims and service out, and on jurisdiction for third party claims when the main claim has settled.

CA Indosuez (Switzerland) SA & Anor v Afriquia Gaz SA & Anor [2022] EWHC 2871 (Comm) is largely a case of statutory construction (here: of the amended Civil Procedure Rules – CPR).

It transpires from current judgment that similar issues were discussed (yet eventually did not need determination) in Naftiran Intertrade Company (Nico) Limited and Anor v G.L. Greenland Limited and Anor [2022] EWHC 896 (Comm) (unpublished).

I do not often copy /paste big chunks of judgment let alone the facts parts of them, however here I feel it is quite necessary: [1] ff, in summary:

Gulf Petroleum FZC, the First Part 20 Defendant (“GP”) had trade finance facilities with CA Indosuez (Switzerland) SA (the Claimant: “CAIS”) and with UBS Switzerland AG (the Second Part 20 Defendant: “UBS”).

Afriquia Gaz SA and Maghreb Gaz SA, the Defendants and Part 20 Claimants (“AG” and “MG”), purchased a cargo of butane from GP.  GP assigned to CAIS the debt represented by the purchase price.  GP issued its invoices to AG and MG on 23 July 2020 and CAIS sent notices of assignment on 27 and 28 July 2020.

However on 19 August 2020 AG and MG paid, by SWIFT, the sums due to GP’s account with UBS. The funds were received into one of GP’s accounts with UBS and then transferred to what appears to have been its loan or overdraft account.

GP instructed UBS to transfer the sums received to CAIS. UBS refused. It claimed to have been entitled to set off those sums against GP’s liabilities to it.

By Rule 20.1 of the Civil Procedure Rules, the purpose of Part 20 of the CPR is “to enable counterclaims and other additional claims to be managed in the most convenient and effective manner”. CAIS commenced this claim against AG and MG for the purchase price, a claim in debt. AG and MG denied liability but added (Part 20) claims against GP and UBS for the sums received, and in unjust enrichment and for liability as constructive trustee. Following the exchange of expert reports on Swiss law, AG and MG have accepted that their claim against UBS based on an alleged constructive trust must fail, and that the claim in unjust enrichment will only arise in certain circumstances.

GP is incorporated in the UAE.  The sale contract with AG and MG contained an exclusive jurisdiction agreement in favour of the High Court in London. The Part 20 Claim Form was issued with the following indorsement:

“[AG and MG] are permitted to serve the [Part 20] Claim on [GP] pursuant to CPR r.6.33(2)(b)(v) and Article 25 of the Judgments Regulation because [GP] is a party to an agreement … conferring exclusive jurisdiction within Article 25 of the Judgments Regulation.  [AG and MG] are permitted to serve the [Part 20] Claim on [UBS] out of the jurisdiction pursuant to CPR r.6.33(1)(b)(i) and Article 6(3) of the Lugano Convention.

The reference to Article 6(3) was a mistake for Article 6(2).

The Part 20 Claim Form against GP and UBS was issued on 30 December 2020, before the end of the Brexit transition period. UBS declined to instruct solicitors to accept service in England. AG and MG meanwhile on 20 January 2021 obtained an order from Cockerill J extending the validity of the Part 20 Claim Form. The Part 20 Claim Form was served or purportedly served on UBS, out of the jurisdiction, on 9 March 2021.

Crucially, the Court’s permission for service out of the jurisdiction on UBS was not sought. Counsel for claimant informed the Court that those representing AG and MG considered at the time that no permission would be needed, on the basis that jurisdiction under the Lugano Convention, which existed at the date of issue of the Claim Form, was preserved. Counsel also contented that even if permission to serve out was required and had been sought, it would inevitably have been granted, as questions of appropriate forum (considered in an application for permission to serve out) were not relevant in the context of the Lugano Convention. 

UBS acknowledged service on 26 March 2021, indicating an intention to contest jurisdiction.  Current judgment focuses on that contestation.

Under the European Union Withdrawal Act 2018, implementing the EU Withdrawal Treaty, an implementation period came to an end at 23:00 GMT on 31 December 2020 (a day after the claim form that initiated current litigation was issued; also known as “IP completion day”). During the implementation period, obligations stemming from international agreements to which the EU was party continued to apply. Until IP completion day therefore the Lugano Convention applied to it by reason of the EU’s membership of the Convention. That clearly is no longer the case.

Essentially, E&W CPR was amended to include transitional provisions in relation to service out of the jurisdiction, which specifically maintain the pre-existing position that permission is not required for a claim form issued prior to withdrawal where jurisdiction is based on Brussels Ia. However, there is no equivalent saving for claim forms where jurisdiction exists under the Lugano Convention.

Knowles J [25] on the issue of permission, reaches the same conclusion as Ms Dias QC in Naftiran (above): namely that the widened A6.33(3) CPR rule applies to include Lugano Convention claims. That rule now reads

“6.33(3) The claimant may serve the claim form on a defendant out of the United Kingdom where each claim made against the defendant to be served and included in the claim form is a claim which the court has power to determine other than under [the Convention on Choice of Court Agreements concluded on 30th June 2005 at the Hague], notwithstanding that (a) the person against whom the claim is made is not within the jurisdiction; or (b) the facts giving rise to the claim did not occur within the jurisdiction.”

Having decided the issue of permission, the judge still had to decide whether Lugano conveys jurisdiction in this case. A 6(2) Lugano provides that a person domiciled in the state bound by the Convention may be sued “as a third party in an action on a warranty or guarantee, or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case;”

A core issue in current case is that the main claim is settled [12]; can the third party proceedings still continue in the main claim’s forum? The judge refers to CJEU C-365/88 Kongress Agentur (a Lugano case) and [44] holds that there is sufficiency of connection between the claims for jurisdiction to be established; that there is no authority for defendants’ proposition that only ‘exceptional circumstances’ may justify third-party proceedings to continue when the main claim is settled, and that in essence [41] sufficiency of connection between the third party claims and the main claim suffice for the former to continue in the latter’s jurisdictional home.

There are echoes here of potential for abuse per CJEU CDC, however that route was seemingly not pursued and on the facts would seem challenging to substantiate.


Nagel v PDC. Permission for service out withdrawn on forum non and disclosure issues.

W Nagel (a firm) v Pluczenik& Ors [2022] EWHC 1714 (Comm) concerns litigation in the diamond sector. It is an appeal against permission for service out which triggers various jurisdictional considerations, including forum non, as well as disclosure and ‘clean hands’ concerns.

The judgment is a good illustration of claim and counterclaim serving jurisdictional purposes.

Defendants are a Belgium-domiciled diamond manufacturer (PDC) and its equally Belgium-based managing director Mr Pluczenik . Claimant Nagel is a UK based diamond broker. Nagel is defendant in Belgian proceedings brought in May 2015 by defendants in the E&W proceedings, who used a Belgian-based anchor defendant to sue the English claimant in Belgium (A8(1) Brussels Ia); Nagel are also defendant in a September 2015 Belgian claim brought by the same claimants and since consolidated by the Belgian courts. Nagel itself issued a claim against PDC in the English High Court in March 2015, did not serve it, but sent a letter before action which indicated that it intended to bring proceedings in England.

In June 2015, as direct reaction to the Belgian Claim, Nagel amended the English Claim to seek negative declaratory relief to the effect that it was not liable in respect of a number of contractual duties.

In July 2017 Popplewell J found for Nagel, including in respect of the negative declaratory relief: W Nagel (A Firm) v Pluczenik Diamond Company NV [2017] EWHC 1750 (Comm). His judgment was confirmed by the Court of Appeal: [2018] EWCA Civ 2640, payments were made and the E&W proceedings ended.

Come forward third defendant in the current E&W proceedings, Ms Shine, who was the CEO of a subsidiary of De Beers – De Beers Trading Company. She has never worked for either of the Claimant or the First or Second Defendants, but she gave a statement to the Belgian court in 2017, supporting PDC. Her statement was provoked it seems by the outcome of the E&W proceedings which did not match her recollection. Nagel originally objected to jurisdiction solely on the ground of lis pendens (A29-30 BIa).

In July 2020 (one can see that in this case the speed of Belgian proceedings is nothing like in the case I reported yesterday) the Belgian claimants put forward their arguments on jurisdiction based on Antwerp being forum contractus per A7(1) BIA (they argued centre of gravity or characteristic performance was in Antwerp) [20].

In an interim, February 2021 interim judgment the Belgian court held it had jurisdiction on the basis of A7 forum contractus. It considered the lis pendens issue noting that it could no longer apply now that the English Claim was concluded. It then concluded that it had jurisdiction to determine the dispute. The Court noted that “the defendants apparently do not (or no longer) dispute” that the services were performed in Antwerp. 

Nagel then dropped the jurisdictional arguments and at hearings 7 May 2021 onwards went for res judicata, arguing …the English judgment has the status of res judicata with regard to the present proceedings, so that the court on the basis of Article 23 and 25 Judicial Code [the Belgian CPR, GAVC] is currently prohibited from again deciding on the claim…” [30]. End of May 2021 Nagel then commenced the present claim in the Commercial Court. The claim alleges that the Belgian Claim constitutes a tortious abuse of process and forms part of an unlawful means conspiracy between the Defendants. Ms Shine is the Third Defendant. It is said that the provision of the Shine Statement and its (lack of) merits justify an inference that she was involved in the abuse of process and the conspiracy [31].

In September 2021 Moulder J gave permission for service out (required post Brexit) on the basis that the claim met limb (a) of the tort gateway viz “damage was sustained, or will be sustained, within the jurisdiction” (Nagel trades from England, paid sums to Belgian lawyers from a bank account in England and has consequently suffered loss here; she also UKSC Brownlie for the damage gateway). She refused permission on two other gateways – necessary and proper party and tort committed within the jurisdiction. It is alleged by defendants that Moulder J was not given any indication of the Belgian interim judgment.

The Belgian Claim is now scheduled for trial in January 2023.

[64] Cockerill J holds that the Belgian findings on jurisdiction and the existence of a judgment which dealt in terms with jurisdiction should on any view have been put before Moulder J and [65] that this breach of duty of disclosure was deliberate. She also holds [70] that the picture sketched of the Belgian proceedings being ‘in limbo’ was plainly wrong: they were definitely active, and that it had been wrongfully suggested that the Belgian judge was not going to deal with the res judicata issue. On that basis, she would have set aside permission for service out [75] however this point turns out to be obiter for the reason for reversal of the order is that E&W are not the appropriate forum [76] ff. Relevant factors being that (i) the jurisdiction of the Belgian Courts appears to have been established by PDC and accepted by Nagel (at least on a prima facie basis), (ii) the Belgian claim is progressing and (iii) there is scope for determination of a res judicata issue (which replicates the issues sought to be brought here) and (iv) a determination of the res judicata issue is (and was) likely to be determined relatively soon.

Moreover, Belgium clearly is an appropriate forum [79] the Belgian Claim is one brought by a Belgian company (PDC), arising out of services provided in Belgium (as the Belgian Court has held), alleging fraud on the Belgian Court. (The serious issue to be tried discussion leads to an analysis of Article 4 Rome II as retained EU law).

A good illustration as I mentioned of claim, counterclaim, and of course the clean hands principle.


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