Posts Tagged third parties

Team Y&R v Ghossoub. Choice of court and third parties.

In [2017] EWHC 2401 (Comm) Team Y&R v Ghossoub, Laurence Rabinowitz QC discussed a number of issues, most particularly anti-suit in the context of an exclusive jurisdictional clause (anti-suit not granted). He summarised the applications as follows:

‘The first application, brought by the claimants to the anti-suit claim, is for an interim injunction seeking to restrain Mr Ghossoub, the defendant to those proceedings, from pursuing related proceedings commenced by him in Hong Kong against four of those claimants until the trial of the anti-suit claim. The second application, brought by Mr Ghossoub as defendant to the anti-suit claim, seeks to set aside two orders made by the Court related to service on him of the anti-suit claim. The first, made by Phillips J dated 20 May 2015, granted permission to serve the anti-suit claim out of the jurisdiction. The second, made by HHJ Waksman QC sitting as a High Court judge dated 8 September 2016, granted permission to serve the claim form and other documents by an alternative method of service. The third application, brought by Mr Ghossoub as defendant to the defaulting shareholder claim, in effect mirrors his application in the anti-suit claim to set aside the service out and service by an alternative method orders.’

Anti-suit would be aimed at courts ex-EU hence the Brussels I antimony against them (per Gasser, among others) does not apply. Incidentally, I do not think that necessarily needs to exclude any EU /CJEU grip on the substantive issue at all: in the current, Recast Regulation, neither party needs to be domiciled in the EU for choice of court to be made in favour of a court established in the EU. This does create an EU interest in the issue of third-party impact of choice of court, and consequently on the use of anti-suit to support or reject such impact.

Now, at para 78 ff Mr Rabinowitz considers the issue of third parties. Not at issue is whether choice of court is binding upon, or may be invoked by such parties (in EU law considered eg in Refcomp, Profit Sim, Assens HavnLeventis). Rather, whether an exclusive jurisdiction clause should be understood to oblige a contractual party to bring claims relating to the contract in the chosen forum even if the claim is one against a non-contracting party. This would support the idea of ‘one-stop shopping’ which is prevalent eg in English law albeit mostly vis-a-vis the various litigious relations between two and the same parties.

One can see merit in obliging parties bound by choice of court, to bring all related claims to one and the same court. Except of course, as Mr Rabinowitz points out, third parties are quite likely to be in a position to be able to bring the case before a different court, thus putting the contractual party at a disadvantage; moreover, even if the contractual party does bring the claim to the courts at England, these may not in fact have jurisdiction: in such circumstances, insisting on third-party proceedings to be brought before the English courts becomes silly. (My words, not Mr Rabinowitz’).

Taking these and also the entire contractual context into account, the High Court holds that choice of court in the contract at issue does not extend to claims against non-contracting third parties, and dismisses anti-suit.

Take your time to read the judgment: it gives very good context to what to some might seem like a very awkward starting point.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.

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Assens Havn. Privity of choice of court in insurance contracts.

The European Court of Justice held last week in C‑368/16, Assens Havn. It confirmed privity of choice of court in the event of subrogation of the victim in the rights of the insured. The victim is not bound by choice of court between insurer and tortfeasor:

At 41: ‘The extension to victims of the constraints of agreements on jurisdiction based on the combined provisions of Articles 13 and 14 of Regulation No 44/2001 could compromise the objective pursued by Chapter II, Section 3, thereof, namely to protect the economically and legally weaker party.

That the CJEU confirms privity of contractual choice of court is no surprise: see most recently Leventis. In the case of insurance contracts the issue is slightly less obvious for unlike in the case of consumers and employees, the legal presumption of weakness often does not represent commercial reality.

Whether the subrogated party can make use of the choice of court clause in the underlying contract was not sub judice in the judgment.

Geert.

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

 

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Leventis. CJEU confirms principle of privity of choice of court under Brussels I.

Yesterday in Case C-436/16 Leventis the Court of Justice summarily confirmed the principle of privity of choice of court under the Brussels I Recast. I have looked at this issue before e.g. when I discussed Refcomp and Profit Sim. The tos and fros between the various parties in the case meant they were acquainted with each other in the courtroom and in arbitration panels. It also meant that actions, settlements etc. between one of them and a third party necessarily impacted commercially on the other.

However the Court of Justice essentially held that such a close, voluntary or not, relationship between the two parties does not mean that a jurisdiction clause in a contract between two companies can be relied upon by the representatives of one of them to dispute the jurisdiction of a court over an action for damages which aims to render them jointly and severally liable for supposedly tortious acts carried out in the performance of their duties. The Court simply noted that the referring national court had given no indication of choice of court made between the parties as to the latter issue, employing the classic (now) Article 25 set of criteria.

Of note is that unlike other cases such as Goldman Sachs v Novo Banco, there did not seem to be any kind of theory in relevant national law which would have led to imputability (or potential to call upon) choice of court to a third party under the given circumstances.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.7.

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