Tag: Torpedo

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Jamieson v Wurttemburgische Versicherung. On being seized for lis alibi pendens purposes, and on whether the protected categories regimes ought to gazump torpedo actions.

Jamieson v Wurttemburgische Versicherung AG & Anor [2021] EWHC 178 (QB) has been in my draft folder for a while – Master Davison refused an application for a stay on the basis of A29 Brussels I’a’s lis alibi pendens rule, holding that the issue of which court was being seized first, was properly sub judice in the German courts, as is the issue whether litigation subject to the protected categories, should rule out a stay in cases where the weaker party is being disadvantaged.

James Beeton has the background to the case here. Claimant was injured in a road traffic accident in Munich. He was working as a commodities broker for the second defendant. He was attending the Oktoberfest with clients, whom he was entertaining. He was walking from the beer hall to his hotel. He crossed a busy highway and was struck by a taxi, sustaining very severe injuries. The precise circumstances of the collision are in dispute. The taxi was insured by the first defendant, against whom the claimant has a direct right of action.

I tell students and pupils alike that too strong a hint of judicial action in pre-litigation action may trigger a torpedo suit in a court not preferred by client. That is exactly what happened in this case. In pre-action correspondence the insurers for the taxi were asked to confirm that they would not issue proceedings in another jurisdiction – to which they never replied other than by issuing proceedings in Germany for a negative declaration, i.e. a declaration that they were not liable for the accident. Those proceedings had been issued on 18 July 2017. Claimants then issued protectively in England on 10 May 2018. The to and fro in the German proceedings revealed that the correct address for the English claimant was not properly given to the German courts until after the English courts had been seized. 

Hence two substantive issues are before the German courts: when were they properly seized (a discussion in which the English courts could formally interfere using A29(2) BIa); and if they were seized first, is A29 subordinate to the protected categories’ regime: for if the German torpedo goes ahead, claimant in the English proceedings will be bereft of his right to sue in England.

The suggestion for the second issue is that either in Brussels Ia, a rule needs to be found to this effect (I do not think it is there); or in an abuse of EU law (per ia Lord Briggs in Vedanta) argument (CJEU authority on and enthusiasm for same is lukewarm at best).  Despite Master Davison clear disapproval of the insurer’s actions at what seems to be an ethical level, he rules out a stay on the basis of comity and of course CJEU C-159/02 Turner v Grovit: the English High Court must not remove a claim from the jurisdiction of the German courts on the basis of abuse of EU law before those courts.

A most interesting case on which we may yet see referral to the CJEU – by the German courts perhaps.

Geert.

EU Private International Law, 3rd ed 2021, Heading 2.2.9.4, 2.2.15.1.

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

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

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

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

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

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

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

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

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

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

Fun with conflict of laws.

Geert.

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

 

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Asymmetric clauses, exclusivity, torpedoes and lis alibi pendens: The High Court in Commerzbank v Liquimar Tankers.

Many of the issues in [2017] EWHC 161 (Comm) Commerzbank v Liquimar Tankers were also raised in Perella v Codere,  albeit there, as I reported, obiter. In current case, they were very much dicta, and they amount to the English courts viewing (properly constructed) asymmetric clauses as being exclusive. As such they fall under the new anti-torpedo provisions of Article 31(2).

Applications of defendants Liquimar Tankers (registered in Liberia but with head office in Athens) are being made in the course of proceedings in London by Commerzbank  in two separate actions in relation to the repayment of loans which the Bank extended for the building of a number of ships. There are ongoing proceedings taken by the defendants against the Bank in Piraeus, Greece concerning the same and/or related issues.

The Liquimar guarantee contained a governing law and an asymmetric jurisdiction clause, which was essentially similar in the other loan agreements. It provided:

“16 Law and Jurisdiction

16.1 This Guarantee and Indemnity shall in all respects be governed by and interpreted in accordance with English law.

16.2 For the exclusive benefit of the Lender, the Guarantor irrevocably agrees that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Guarantee and Indemnity and that any proceedings may be brought in those courts.

16.3 Nothing contained in this Clause shall limit the right of the Lender to commence any proceedings against the Guarantor in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Guarantor in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.

16.4 The Guarantor irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any jurisdiction …”.

 

Article 31(2) of the Brussels I Recast reads:

‘where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seized, any court of another Member State shall stay the proceedings until such time as the court seized on the basis of the agreement declares that it has no jurisdiction under the agreement.’

Cranston J held that the concept of ‘exclusivity’ should be autonomously interpreted under the Brussels I (Recast) regime. He did not however refer for preliminary reference to the CJEU: as such, the High Court’s finding continues to be vulnerable until we have precedent from Luxembourg. The judgment as a whole is worth a read – readers in for concise summary, please refer to Herbert Smith’s analysis.

Summing up is done in para 70, with justifiable emphasis on parties’ and the Regulation’s intentions (but as noted with considerable reference to precedent and principles of statutory interpretation): Thus with the asymmetric jurisdiction clauses in the present case, the defendants agreed to sue only in the courts of one EU Member State, England. Instead, they have enabled another court, the Greek court, to be seized of the matter. It would undermine the agreements of the parties, and foster abusive tactics, if the jurisdiction clauses in these agreements were to be treated not as exclusive, but as non-exclusive.’ 

Of note is also the discussion on the role of recitals (eg. at 69; also at 77 ff). Justice Cranston’s arguments are supported by reference to a number of recitals. Defendant in my view has a valid point in principle where they argue at 77 that ‘a recital cannot constitute a rule when it is not reflected in the words of Article 31(2).‘ (Although they were wrong on substance).

A subsidiary argument in the case also merits further attention. Defendants argue that Article 25 requires the parties to have designated the courts of a Member State to enable the law applicable to the substantive validity of a jurisdiction clause to be identified and to provide certainty as to the forum in which a putative defendant can expect to be sued. That, they submit, is not achieved by a clause which designates the courts of all other competent states, including those of non-Member States, outside the territorial competence of the EU, which could mean suits in multiple jurisdictions. Although the argument could be phrased more precisely, I do agree with it: in the absence of a nominatim lex contractus for the choice of court clause specifically, the new lex fori prorogati rule in Article 25 Brussels I Recast, combined with recital 20 (yet again the troublesome habit of EU private international law to include substantive rules in recitals only) does create a vacuum in the case of hybrid, asymmetric or even non-exclusive choice of court.

An important case. Not the last we have heard of the issues.

Geert.

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

 

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Assymetric jurisdiction clauses. Their existence and (obiter) their neutralising effect in Perella v Codere.

Apologies for late posting. I had tweeted and linked and done all sorts of other things when the judgment came out but as readers tell me, that is not quite the same as a review on this blog.

Walker J decided Peralla v Codere [2016] EWHC 1182 (Comm) at the end of July. His views on Article 25 and exclusivity in the event of asymmetric jurisdiction clauses, are very much dicta. On their neutralising effect under Article 31, he suggested obiter. Let me explain. The jurisdiction clause which Perella alleged to have been breached by Codere comprises a single sentence of a clause of their letter of engagement. That sentence states:

“[Codere] agrees for the benefit of [Perella] that the courts of England wil have non-exclusive jurisdiction to settle any dispute which may arise in connection with this engagement.”

Codere sued in Spain alleging breach of contract. Perella countersues in England. The English proceedings are very much necessitated by one or two awkward consequences of the wording of Article 31 of the Brussels I Recast. This Article was specifically included to neutralise the torpedo which the Court of Justice had armed in its Gasser judgment, C-116/02: following Gasser, lis alibi pendens applies even if there is exclusive choice of court and a court other than the court assigned in that clause, has been seized. The Brussels I Recast neutralises the torpedo but only if there is exclusive court of choice, and if the court designated by that clause has been seized.

The first consideration in the case was whether the clause was exclusive. It was pertinently not. Perella suggested the language indicates that the benefit to be conferred upon Perella is an entitlement to insist that Codere must regard itself as bound by the exclusive jurisdiction of the English courts. Walker J (at 30) rejects this justifiably: it would have been simplicity itself verbatim to indicate exclusivity. As Ken Kaar notes, the inclusion of ‘for the benefit of’ is an old, now redundant boilerplate provision in choice of court: in the original Brussels and Lugano Conventions, ‘If the agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention.’ This proviso meant there was plenty of discussion in court whether only one party had procured such benefit, lest one state in so many words that it had. The current version of the Brussels I Recast (and the 2001 version before it) and Lugano 2007 have both dropped the provision, and it would be best dropped from the boilerplate clause, too.

Having held that the clause was not exclusive, the Court could have stopped there. Obiter however Walker J offered his view on whether Article 31(2)’s protection extends to asymmetric choice of court clauses – the notion of which I have reported on before. Walker J (at 18) suggests that it does. The party invoking Article 31(2) pointing to an exclusive forum which the counterparty who is suing elsewhere, had committed itself to, need not be itself subject to a symmetric duty only to sue in that court. The point has not been argued before the CJEU yet, but I agree that the High Court’s position is the correct one, with the important caveat of course that such clause needs to be valid in accordance with the lex fori prorogati. This also means that asymmetric clauses where such lex cannot be identified, would have trouble disarming the recalcitrant party’s torpedo.

Well, we are going to miss this type of judgment following Brexit. Better make conflict of laws part of the continuing relations with the UK.

Geert.

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

 

 

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Choice of court (in tender file) under Brussels I. CJEU confirms Szpunar AG in Hőszig /Hoszig – keeps schtum on Brussels I Recast.

The CJEU has confirmed the views of Szpunar AG in C-222/15 Hőszig /Hoszig, without (much as expected) entertaining the lex fori prorogati rule of the Brussels I Recast.

Can choice of court made in underlying documentation in the context of a tender, for which Hőszig entered a winning bid, be considered valid under Article 23 of the Brussels I Regulation (now: Article 25 Brussels I Recast)? Yes, the Court said, with explicit reference to the AG. Crucial point in the consideration is whether per Case 24/76 Colzani an explicit reference to the choice has been made, reference which can be controlled by a party applying normal diligence and where it is established that the general conditions containing the jurisdiction clause was actually communicated to the other contracting party (at 40 in Hoszig). This was so in the case at issue. The court points out that Article 23 (and now Article 25) includes mostly formal requirements (expression of consent, see the references in my posting on the AG’s Opinion) and only one substantial requirement (choice of court needs to relate to an identified legal relationship between the parties). The remainder of discussion on the substantive requirements with respect to the choice of court agreement, is subject to the lex causae of that separate choice of court agreement (exactly why the current Regulation now includes the lex fori prorogati rule; Szpunar AG’s discussion of this clause however was not required to settle the issue and therefore the Court does not look into it).

‘(T)he Paris Courts [have exclusive and final jurisdiction]’ is sufficient for the CJEU to determine the choice of court with precision: it is perfectly acceptable that it will subsequently be French civil procedure laws that will determine precisely which court will have jurisdiction.

A sensible judgment following clear Opinion of the Advocate General, together further completing the choice of court provisions of Brussels I.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9 Heading 2.2.9.4. Chapter 3, Heading 3.2.2 .

 

 

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Once again: Choice of court (this time in tender docs) under Brussels I. Szpunar AG takes the sensible route in Hőszig /Hoszig.

In C-222/15 Hőszig /Hoszig, Advocate General Szpunar opined using the sensible route, on the application of Article 23 of Regulation 44/2001 . His excursus though on Article 25 of the Brussels I Recast and the new lex fori prorogati rule is the part of his judgment which I read with most interest.

First things first: can choice of court made in underlying documentation in the context of a tender, for which Hőszig entered a winning bid, be considered valid under Article 23 of the Brussels I Regulation (now: Article 25 Brussels I Recast). Pursuant to Clause 23.1 of these ‘general conditions of purchase’, headed ‘applicable law and settlement of disputes’, ‘[t]he Order shall be governed by and interpreted in accordance with French law. The application of the United Nations Convention on the International Sale of Goods dated April 11, 1980 is excluded. Any dispute arising out of or in connection with the validity, construction, performance or termination of the Order, which the parties are unable to settle amicably shall be finally and exclusively settled by the courts of Paris, including in the case of a summary procedure, injunctions or conservatory measure.’

Hőszig tried to sue instead in what it considered to be the place of performance of the contract, per Article 5(1) (now 7(1) in the Recast). Its torpedo of the choice of court included in the general conditions of purchase, was based on recourse to Article 10(2) Rome I, which holds that the putative law of the contract does not apply to consider a party’s consent if it would not be reasonable to do so. In such case the law of the habitual residence of said party applies. Here this would lead to Hungarian law rather than French law and Hungarian law, it is argued, would not accept such incorporation of general terms and conditions. Szpunar AG however simply refers to the fact that choice of court agreements are excluded from the Rome I Regulation. Recourse to Article 10(2) is barred by that exclusion.

What needs to be considered under Article 23 Brussels I is whether parties have reached consensus, ‘clearly and precisely demonstrated’, the AG suggests. This wording is typically associated with choice of law under Rome I however I would support its use in the context of the Brussels I (and Recast) Regulation, too, for that is what the Court’s case-law on the Article amounts to. Applying Case 24/76 Colzani mutatis mutandis, and taking into account that express reference to the general terms and conditions in documents exchanged between the parties prior to the tender being awarded, the AG concludes that agreement had been reached.

Now, is the expression ‘courts of Paris’ sufficiently precise? Szpunar AG suggests it is and I would concur, albeit that the last word on  that is probably not yet said. The Advocate General refers to Capotorti AG in Case 23/78 Meeth, who had advised that a clause worded such as here, refers by implication to the system of rules of territorial jurisdiction (typically on the basis of a combination of value and subject-matter) to determine precisely at which court proceedings must be instituted. The Court itself did not at all elaborate in the eventual judgment. Szpunar AG suggests it must have taken Capororti’s suggestion for granted. Therefore (at 44 of the Opinion) it is French procedural law which governs the question of precisely which Paris court is competent.

This leaves open the question, though (which I understand is not sub judice here) whether parties can employ choice of court to trump national rules of civil procedure. What if they agree that the courts of say province X in Member State A are preferable to settle the issue, e.g. because of perceived know-how, even if national civil procedure would ordinarily assign the case to province Y? Not an issue which to my knowledge has been settled by EU case-law.

By way of sign-off, the Advocate General then reviews whether the new text, Regulation 1215/2012, has in any way altered or added to the discussion on choice of court agreements. Readers will be aware (via this blog or the Handbook or otherwise) that the new Regulation refers to the lex fori prorogati to determine the validity of the choice of court agreement:  ‘[i]f the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State’ (emphasis added by Szpunar AG).

Under Brussels I, various options were defended. Szpunar AG refers to Slynn AG having defended lex fori prorogati in Case 150/80 Elefanten Schuh,  and Szpunar AH himself suggest (at 47 in fine) lex fori additi under the former Brussels I Regulation (44/2001).

The AG is most certainly correct in my view that the lex fori prorogati is not meant to cover all aspects of the validity of the agreement. In my Handbook I distinguish between the expression of consent (harmonised by Article 25), and the formation of consent (not touched upon by Brussels I and now subject to the lex fori prorogati). He then suggests that the insertion of lex fori prorogati was meant to align the Brussels I (Recast) with the 2005 Hague Convention on Choice of Court Agreements, to which the EU have now acceded. I do not recall any such reference in the travaux preparatoires of Regulation 1215/2012 – however it has been a while since I consulted them extensively and the AG presumably has.

The Court of course will be much more succinct than its AG.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9 Heading 2.2.9.4. Chapter 3, Heading 3.2.2 .

 

 

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Be careful what you ask for! Barclays v ENPAM: the High Court again employs Article 27/28 to neutralise Italian torpedo.

Barclays v ENPAM has been travelling in my briefcase for some time – apologies. Reminiscent of the Supreme Court’s decision in the Alexandros, and the High Court in Nomura , Blair J in October 2015 employed national courts’ room under Article 27/28 of the Brussels I Regulation (the lis alibi pendens and related actions rules) to refuse a stay of English proceedings in favour of proceedings in (of course) Italy. Litigation like this will be somewhat less likely now that the Brussels I Recast applies. As readers will be aware, the current version of the Regulation has means to protect choice of court agreements against unwilling partners (see however below).

Claimant, Barclays Bank PLC, is an English bank. The defendant, Ente Nazionale di Previdenza ed Assistenza dei Medici e Degli Odontoiatri (“ENPAM”) is an Italian pension fund. A dispute has arisen between them as to a transaction entered into by way of a Conditional Asset Exchange Letter from ENPAM to Barclays dated 21 September 2007 by which ENPAM exchanged fund assets for securities which were in the form of credit-linked notes called the “Ferras CDO securities”. ENPAM’s claim is that it incurred a major loss in the transaction, and that it is entitled in law to look to Barclays to make that loss good.

On 18 May 2015, Barclays issued a summary judgment application on the basis that there is no defence to its claim that the Milan proceedings fall within contractual provisions giving exclusive jurisdiction to the English courts. ENPAM began proceedings against Barclays and others in Milan on 23 June 2014. Barclays says that this was in breach of provisions in the contractual documentation giving exclusive jurisdiction to the English courts. It issued the proceedings reviewed here seeking a declaration to that effect and other relief on 15 September 2014. On 20 April 2015, ENPAM applied pursuant to Article 27 or Article 28 of the Brussels I Regulation for an order that the English court should not exercise its jurisdiction in these proceedings on the basis that Milan court was first seised.

The High Court refused. Reference is best made to the judgment itself, for it is very well drafted. Read together with e.g. the aforementioned Alexandros and Nomura judgments, it gives one a complete view of the approach of the English courts viz lis pendens under the Regulation. (E.g. Blair J has excellent overview of the principles of Article 27 (Article 29 in the Recast) under para 68).

Discussion of what exactly Barclays could recover from the English cq Italian proceedings, was an important consideration of whether these two proceedings were each other’s mirror image. (see e.g. para 82 ff). This is quite an important consideration for litigators. Statements of claims are an important input in the lis pendens analysis. Be careful therefore what you ask for. Restraint in the statement of claims might well serve you very well when opposed with recalcitrant opposing parties, wishing to torpedo your proceedings. (Let’s face it: the likelihood of such opposition is quite high in a litigious context).

Finally, it is often assumed that precedent value of the case discussed here and other cases with it, has diminished drastically following the Brussels I Recast. It instructs all courts not named in a choice of court agreement, to step back from jurisdiction in favour of the court named (Article 31(2)). Yet what is and what is not caught by a choice of court agreement (starting with the issue of non-contractual liability between the parties) depends very much on its wording and interpretation. Article 31(2) is not the be all and end all of litigation between contracting parties.

Geert.

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The Alexandros resurfaces – Greek proceedings may turn out to be an expensive torpedo!

Update 19 September 2019  the relevant Greek Court of Appeal has refused to recognise the judgments awarding damages, on account of ordre public. Appeal with the Supreme Court and CJEU reference seem likely.

I have reported before on the lis alibi pendens issue in the Alexandros litigation. (The left-over claims as identified in my previous post were, I understand, dropped, and hence the need for ECJ referral subsided – Hill Dickinson have a good summary of the various proceedings here). The Court of Appeal on the 18th of July held on the now (following the Supreme Court’s intervention) remaining issue of declarations, damages and indemnities in respect of the owners’ proceedings in Greece seeking damages from the insurers, despite proceedings for sums due under the relevant insurance policies having been settled in England pursuant to a choice of forum clause. (Apologies for this all being a bit dense – reading my previous post helps). (Greek courts in fact rejected the claims in April).

The left-over issue essentially boils down to the question whether despite the ECJ’s prohibition of anti-suit injunctions for subject-matter falling within the Brussel I-Regulation, Member States courts are free to award damages to the party suing elsewhere in the EU in spite of a choice of court agreement between parties. The Court of Appeal held that they are. It justifiably, in my view, distinguished Turner v Grovit . In Turner v Grovit, the ECJ is concerned with mutual trust and allowing (and indeed trusting) the courts in the other Member States to make their own, proper application of the Regulation. Turner and Grovit does not uphold jurisdiction for the other court: it upholds the opportunity for that other court properly to apply the Regulation, which may or may not lead it to uphold jurisdiction.

The judgment of the Court of Appeal re-enforces the attraction of English courts as a destination of choice: parties wishing to torpedo (a prospect less likely in the Brussels I-bis Regulation) may or may not succeed in convincing alternative courts of their jurisdiction. English courts since Turner cannot issue anti-suit. However they may still hold party liable for having breached the choice of court agreement.

Geert.

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The Supreme Court considers ‘sharp practice’ vs torpedoes in The Alexandros

In the case of the Alexandros T, the UK Supreme Court had to consider the impact on UK proceedings, opened in response to proceedings in Greece, in a dispute in which the insurers of the ship were under the impression that things had been settled following earlier proceedings in England.

On 3 May 2006 the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth, with considerable loss of life. Her owners were Starlight Shipping Company (“Starlight”). They made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of the assured, namely Starlight. The insurers also said that Starlight had failed properly to report and repair damage to the vessel. Suits and countersuits followed, in England, on the basis of an exclusive jurisdictional clause in the insurance agreements. On 13 December 2007, the 2006 proceedings had been settled between Starlight and the LMI (as well as various underwriters) for 100% of the claim, but without interest and costs, in full and final satisfaction of the claim.

In April 2011, nine sets of Greek proceedings, in materially identical form, were issued by Starlight and by a range of other interested parties, against the LMI and the underwriters. The claims are for compensation for loss of hire and loss of opportunity by Starlight and for pecuniary compensation due to moral damage. All the claims rely upon breaches of the Greek Civil and Criminal Code, not, as before, on the contractual arrangements. Since the issue of the Greek proceedings, the insurers have taken further steps and brought further proceedings in England. The insurers sought to enforce the settlement agreements. Starlight at al subsequently  sought a stay of the English proceedings under Article 27 or 28 of the Brussels I Regulation. The High Court refused. The Court of Appeal granted. The Supreme Court had to untie the knot.

The Brussels I Regulation (the Jurisdiction Regulation or ‘JR’) is quite strict on lis alibi pendens, as has been repeatedly emphasised on this blog. The ECJ, too, insists on a guillotine approach of lis alibi pendens, provided of course the conditions for its application are met. The lis alibi pendens rule of Article 27 JR obliges a Court to stay proceedings if another Member State court has already been seized in the same matter, and to trust the proper application by the latter of the jurisdictional grounds of the Regulation. Article 27 JR has given malevolent parties a means to obstruct proceedings, by seizing a court in a Member State with no or desperate grounds for jurisdiction, banking on the tardiness of its judicial proceedings to gain time and ‘torpedo’ the case of the bona fide party.

Article 27

1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seized shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seized is established.

2. Where the jurisdiction of the court first seized is established, any court other than the court first seized shall decline jurisdiction in favour of that court.

Article 28

1. Where related actions are pending in the courts of different Member States, any court other than the court first seized may stay its proceedings.

2. Where these actions are pending at first instance, any court other than the court first seized may also, on the application of one of the parties, decline jurisdiction if the court first seized has jurisdiction over the actions in question and its law permits the consolidation thereof.

3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

The rule is (fairly) simple and clear: where the same action, between the same parties is brought before the courts of two Member States, Article 27 obliges the court seized second, to at least freeze its jurisdiction. The conditions for Article 27 to apply are that the case involves the same action, between the same parties. The ECJ has clarified in Gubish Machinenfabrik and in The Tatry what was already clearer in other language versions namely that Article 27 requires three identities: identify of parties; identify of object or ‘subject-matter’; and identity of cause. The English version and the German version mention ‘same parties’ and ‘same cause of action’ only: they do not expressly distinguish between the concepts of “object” and “cause” of action. The ECJ held in Gubish that ‘(T)he “cause of action” comprises the facts and the rule of law relied on as the basis of the action.’ , and added in Gantner Electronic that  in this respect account should be taken only of the claims of the respective applicants, to the exclusion of the defence submissions raised by a defendant.

Article 28, then, applies to actions which do not conform to the Article 27 conditions, e.g. for actions between different parties, however where the actions are so related that separate proceedings would risk irreconcilable judgments. The purpose of that provision is to avoid the risk of conflicting judgments and thus to facilitate the proper administration of justice in the Union – it gives much more flexibility to the courts of the Member States as to whether to apply the provision or not.

In the case of the Alexandros, the application of these two Articles led to extensive to and fro by counsel with Lord Clarke (at 51 ff) stating that the principles of Article 27 JR ‘require a comparison of the claims made in each jurisdiction and, in particular, consideration of whether the different claims have le même objet et la même cause without regard to the defences being advanced (…)  As I see it, Article 27 involves a comparison between the causes of action in the different sets of proceedings, not (as in Article 28) the proceedings themselves. (…) the analysis cannot involve a broad comparison between what each party ultimately hopes to achieve. The analysis simply involves a comparison between the claims in order to see whether they have the same cause and the same object.‘ He then suggested that Article 27 has no impact on the proceedings at issue – the English proceedings should not be stayed and in Lord Clarke’s view the matter is acte claire: no reference to the ECJ needed.

Lord Mance disagreed with this approach, essentially suggesting that both actions seek a declaration of non-liability and are therefore at least for some of them, the same action within the meaning of Article 27. Lest parties drop those claims (they have been given two weeks to do so), this question will be referred to the ECJ.

As for the application of Article 28, Lord Clarke suggest that the English Court should not exercise the possibility of a stay, inter alia in light of the exclusive choice of court clause previously agreed between the parties: ‘ I can see no reason why, in exercising that discretion under Article 28, the court second seised should not take into account the fact that the parties had previously agreed (or arguably agreed) an exclusive jurisdiction clause in favour of that court. On the contrary, depending upon the circumstances of the particular case, that seems to me to be likely to be a powerful factor in support of refusal of a stay.’ (at 95) On this, Lord Mance did not disagree, neither did he suggest referral to the ECJ.

The interpretation of Article 27 is therefore quite likely to end up at the ECJ: it is difficult to conceive that parties will drop those claims rather than retain the possibility of the ECJ siding with them.

The judgment to my knowledge is the first to examine Articles 27 and 28 JR at quite such length and with quite such expert counsel.

Geert.

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