Employment and Commercial Disputes: The International Aspects 9781526515803, 9781526515827, 9781526515797

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Employment and Commercial Disputes: The International Aspects

To my mother and the memory of my father

Employment and Commercial Disputes: The International Aspects Paul Nicholls QC Barrister

BLOOMSBURY PROFESSIONAL Bloomsbury Publishing Plc 50 Bedford Square, London, WC1B 3DP, UK BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc Copyright © Bloomsbury Professional 2021 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/open-governmentlicence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2020. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN: Paper: 978-1-52651-580-3 ePub: 978-1-52651-581-0 ePDF: 978-1-52651-579-7 Typeset by Evolution Design and Digital Ltd (Kent) To find out more about our authors and books visit www.bloomsburyprofessional.com. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters

Preface If, in years to come, I have grandchildren and they say to me, ‘so, old man, what did you do in the great lockdown of 2020’, I will tell them: I wrote a book. This book is in large part a product of lockdown, as a smaller number of hearings meant that I could devote far more time to it than I had anticipated and did not join Douglas Adams in enjoying the whooshing sound deadlines make as they fly past. This book owes a huge debt of gratitude to Andrew Edge of 11KBW. It was his idea and the plan was that it would be a joint effort but he was far busier and more popular than me during lockdown which meant he could not contribute to the writing. He did, however, come up with some of the case studies. Those which are either very complicated or located in far-flung parts of the world tend to be his. For that and his original plan, I am enormously grateful. Others have provided time and assistance, whether they know it or not. Thomas Raphael QC was very generous with his time and shared insightful thoughts. Ian McDonald in my chambers was a big help. Those who look after me so well in chambers, in particular Lizzy, Alex and Chris provided great assistance. Perhaps most important, my family, even if they wearied of it all from time to time, offered invaluable encouragement and kept me going and I am very grateful for their love and support. I  would also like to thank Professor David McClean CBE, QC, Emeritus Professor of law at the University of Sheffield who first sparked my interest in this subject. One thing I  had not realised until I  wrote this is the enormous volume of unseen work which goes on behind the scenes in order to produce a book. Many thanks to Andy Hill, who was persuaded that this was worth a go, to my editor Maria Skrzypiec and the tabulator, indexer and typesetters who I have not met but whose work has been key to creating the end product. As you will see, this book is split into two, the first half trying to set out the law and the second giving case studies in various areas. If readers would like to suggest additional areas for case studies, I would be very pleased to hear. I have endeavoured to state the law as at early October 2020 (including just about accommodating a late and rather complicated Supreme Court decision). It need hardly be said that I take full responsibility for errors and infelicities. Paul Nicholls November 2020

v

Contents Preface v Table of Statutes xv Table of Statutory Instruments xvii Table of EU Legislation xix Table of Cases xxiii Chapter 1 Introduction 1 An overview 1 Jurisdiction 2 The applicable law 2 Structure of the book 4 Initial strategic questions 5 Part I  Conflict of law rules Chapter 2  The UK’s departure from the EU Jurisdiction and recognition of judgments Choice of law A note on the Brussels Regulations and the Lugano Convention Table of equivalences

9 9 11 11 11

Chapter 3 Jurisdiction 93 A definition of jurisdiction 93 The importance of domicile 94 How to ascertain domicile 95 Individuals 95 Corporations 96 The relevant rules on jurisdiction 97 An outline of the rules 98 The scope of the Brussels Recast Regulation 99 The rules applied by the Brussels Regulation 101 Jurisdiction over persons domiciled in EU Member States 103 Overview 103 The general rule 103 The particular rules: the additional ‘gateways’ 104 An introduction to the Brussels Regulation ‘gateways’ 106 Article 26: submission to the jurisdiction 106 Article 7: contract and tort 107 Article 8: the addition of parties 108 vii

Contents

Articles 10–16: insurance 108 Articles 17–29: consumers 109 Articles 20–23: employment 109 Article 24: exclusive jurisdiction cases 109 Article 25: jurisdiction agreements 110 The conclusive effect of the jurisdiction rules 110 Flowcharts 111 Detailed interpretation of the particular rules 113 Article 26: entering an appearance 114 Article 7: special jurisdiction 115 Article 8: multiple defendants 127 Articles 10–16: insurance claims 133 Articles 17–19: consumer contracts 136 Articles 20–23: employment contracts 138 Article 24: exclusive jurisdiction 144 Article 25: jurisdiction clauses 148 The Hague Convention on Choice of Court Agreements 156 Jurisdiction under domestic law: persons not domiciled in Member States 156 Overview 156 When will the English court have jurisdiction? 157 Service in the jurisdiction 157 Submission to the jurisdiction 159 Permission to serve the claim out of the jurisdiction 161 The jurisdictional gateways in detail 169 Is England the appropriate forum: discretion and forum conveniens 179 Chapter 4  Challenges to jurisdiction Claims governed by the Brussels Recast Regulation Claims not governed by the Brussels Recast Regulation Forum non conveniens Cases other than those based on choice of jurisdiction Cases based on choice of jurisdiction

185 185 186 187 187 190

Chapter 5  Lis alibi pendens Stays under the Brussels Recast Regulation A summary of the relevant Articles The rules in detail Mandatory stays: Article 29 Permissive stays: Article 30 Stays in favour of courts of a non-Member State Stays under common law

195 195 196 197 197 202 204 206

Chapter 6  Choice of law Cases where effect will not be given to foreign law Incompatible with public policy Penal, revenue or public law

209 211 211 212

viii

Contents

Chapter 7  Choice of law in contract Party choice Choice of law where the parties do not make a selection General rules Specific types of contract Mandatory provisions The scope of the applicable law Capacity to contract The common law

217 220 223 223 226 228 230 234 235

Chapter 8  Choice of law in respect of non-contractual obligations 237 Scope of the Rome II Regulation 239 Freedom of choice 240 Governing law apart from choice 242 Tort/delict 242 The special rules – Articles 5–8 245 Product liability 245 Unfair competition and acts restraining fair competition 246 Environmental damage 248 Infringement of intellectual property 248 Industrial action 249 Claims against insurers 249 Multiple liability 249 The scope of the governing law 249 Negotiorum gestio 253 Culpa in contrahendo 253 Unjust enrichment 254 Domestic law 255 Chapter 9  Anti-suit injunctions 259 The nature of anti-suit injunctions 259 Types of anti-suit injunction 259 Anti-suit injunctions and the Brussels Regulation 262 Anti-suit injunctions in domestic law 263 The exercise of discretion to grant the injunction 265 Anti-suit injunctions based on a party’s right to be sued in a particular forum 268 Anti-suit injunctions, the Brussels Recast Regulation and Brexit 272 Anti-suit injunctions and arbitration 274 Anti-enforcement injunctions 275 Chapter 10  Practice and procedure 277 Introduction 277 Particular elements of procedure 281 Service out 282 Challenges to jurisdiction 282 Applications for injunctions 283 ix

Contents

Chapter 11  Interim remedies 285 Introduction 285 Freezing orders 286 Freezing orders and international claims 287 Article 35 290 Search orders 292 Chapter 12  Proof of foreign law

295

Chapter 13  Foreign judgments 297 Introduction 297 Means of enforcement of judgments 300 Conditions for recognition and enforcement 301 Common law 301 Cases where a judgment will not be enforced at common law 309 Fraud 310 Public policy 313 Enforcement under statute 315 Other statutory exceptions to the recognition of foreign judgments 318 Brussels Recast Regulation 320 Hague Convention 329 Chapter 14  Jurisdiction in the employment tribunal 331 Jurisdiction 331 The role of rule 8 331 Agents and employees of a respondent employer 338 The territorial scope of legislation 342 Part II  How applicable rules apply to employment and commercial cases Chapter 15  Team moves 351 General introduction 351 What claims might be brought? 354 Potential remedies 356 Conflict of laws 358 Jurisdiction 358 Claims against employees 359 Claims against the new employer 360 Choice of law 362 Case studies 363 Case 1 363 Case 2 367 Case 3 369 Case 4 370 Case 5 372 Case 6 373 Case 7 375 x

Contents

Chapter 16  Breach of confidence 377 When is information confidential? 377 What circumstances give rise to an obligation of confidence? 378 Contract 379 Equity 382 Statute 384 Defences 384 Remedies 385 Jurisdiction 387 EU-domiciled defendants 387 Non-EU domiciled defendants 388 Choice of law 389 Case studies 390 Case 1 390 Case 2 391 Case 3 392 Case 4 394 Case 5 394 Case 6 395 Chapter 17  Applications for anti-suit injunctions General introduction Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9 Case 10 Case 11 Case 12 Case 13 Case 14 Case 15 Case 16 Case 17 Case 18 Case 19 Case 20 Case 21 Case 22 Case 23 Case 24 Case 25

397 397 400 400 401 402 402 403 403 404 406 407 408 408 409 410 411 411 413 414 414 415 416 417 418 418 419 419 xi

Contents

Chapter 18  Breach of contract claims between employers and employees involving different jurisdictions General introduction Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9 Case 10 Case 11 Case 12 Case 13 Case 14 Case 15 Case 16 Case 17 Case 18

421 421 423 423 423 424 424 429 430 430 431 432 432 434 435 436 436 436 437 438 439

Chapter 19  Employment tribunal claims involving foreign employers and related parties General introduction Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9 Case 10 Case 11 Case 12 Case 13 Case 14 Case 15 Case 16

441 441 447 447 449 449 450 450 450 451 452 452 453 454 454 455 456 456 457

Chapter 20  Breach of fiduciary duty 459 General introduction 459 Remedies for breach 465 Jurisdiction 467 xii

Contents

Case studies Case 1 Case 2 Case 3 Case 4 Case 5

468 468 469 469 471 472

Chapter 21 Fraud General introduction Jurisdiction and choice of law Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9 Case 10 Case 11

475 475 478 479 479 482 482 483 484 485 485 487 487 488 489

Chapter 22  International sales contracts Defining ‘sale of goods’ Jurisdiction and choice of law Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6

491 491 494 499 499 500 500 501 502 503

Chapter 23  Contracts for services Liability in contract Liability in tort Categorising a case Governing law Case studies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7

505 505 506 508 511 512 512 513 514 515 515 516 517 xiii

Contents

Chapter 24  Economic torts 519 Procuring a breach of contract 519 Causing loss by unlawful means 521 Conspiracy 524 Case studies 527 Case 1 527 Case 2 528 Case 3 529 Case 4 529 Case 5 531 Index 533

xiv

Table of Statutes Administration of Justice Act 1920... 13.05, 13.58, 13.59, 13.65, 13.71, 13.87 s 9.................... 13.59, 13.60, 13.66; 17.09 (3).........................................13.63  12...........................................13.62 Arbitration Act 1996................. 3.225; 13.53 s 9.............................................9.40 Civil Jurisdiction and Judgments Act 1982.....2.03, 2.04, 2.05, 2.06; 3.10; 10.14; 13.74; 17.40; 18.63 s 15A.................... 2.05; 9.36; 17.36; 19.39  15B..............................2.05; 17.36; 19.39 (6)....................................17.36  15C................... 2.05; 9.36; 15.33; 17.36, 17.42, 17.46; 19.26, 19.39 (6)....................................9.36  15D.........................................2.05; 17.36  15E.........................................17.36 25............................. 3.240, 3.242; 10.05, 10.07; 11.01, 11.03, 11.05, 11.07, 11.17, 11.25, 11.26, 11.27; 16.64 (1).......................................3.222 (2)...............3.241; 11.04, 11.14, 11.22 (3).......................................10.06  32..........................................13.30, 13.32 (3).......................................13.31  33..........................................13.25, 13.32  34.................. 13.03, 13.07, 13.08, 13.09 41...........................................3.09 (2).......................................15.44 (6).......................................15.44 42........................................... 3.12, 3.13 42A.........................................3.13 Civil Liability (Contribution) Act 1978....................................... 8.52, 8.59 s 1(6).........................................8.52  7(3).........................................8.52 Companies Act 2006...... 18.05; 20.01, 20.03, 20.06, 20.07, 20.14, 20.32 s 171–177.................................20.03  1046.................................... 3.202; 18.05  1056.......................................18.05 1139.......................................3.201 (2)(b)..............................3.202

Contracts (Applicable Law) Act 1990.......................................7.06, 7.43 s 2.............................................7.06 Sch 1.........................................7.12 Defamation Act 2013........................ 8.76 Disability Discrimination Act 1995 s 25...........................................14.30 Employment Rights Act 1996........... 14.43, 14.44, 14.46, 14.47; 19.15, 19.32, 19.43, 19.44, 19.49 s 196............................14.48, 14.61, 14.62  203.........................................3.180; 4.21  204.........................................7.41  244.........................................14.46 Employment Tribunals Act 1996...... 14.11; 19.17 s 7........................................... 14.11, 14.12 (3)(a)....................................14.11 Equality Act 2010.....................14.30, 14.43, 14.46, 14.56 s 144.........................................4.21 European Union (Withdrawal) Act 2018 s 3.............................................2.02  6............................................. 2.02; 7.07 Sch 5.........................................2.03; 13.12 Factors Act 1889 s 1(4).........................................22.09 Fatal Accidents Act 1976.................. 3.259 Financial Services and Markets Act 2000 s 90...........................................21.17  348.........................................16.21 Foreign Judgments (Reciprocal Enforcement) Act 1933.... 13.05, 13.58, 13.64, 13.71, 13.87 s 1(3).........................................13.64  2.............................................13.65  4.............................................13.66 (2).........................................13.66 (c)....................................13.66  6.............................................13.68  8.............................................13.69  9.............................................13.70 Foreign Limitation Periods Act 1984.......................................... 10.11 Human Rights Act 1998...............6.09; 16.20 s 6.............................................13.55 xv

Table of Statutes Human Rights Act 1998 – contd. s 12...........................................16.20 Law Reform (Miscellaneous Provisions) Act 1934................. 3.259 Limited Liability Partnerships Act 2000.......................................... 3.12 Marine Insurance Act 1906............... 21.03 Misrepresentation Act 1967........21.01, 21.03 s 1, 2.........................................21.01 Private International Law (Miscellaneous Provisions) Act 1995..............................8.01, 8.73, 8.77 s 10...........................................8.73  11........................................... 8.73, 8.74  14........................................... 8.75, 8.77 (3).......................................10.01 Protection of Trading Interests Act 1980.............13.56, 13.75; 17.07, 17.67

xvi

Protection of Trading Interests Act – contd. s 5........................................... 13.71, 13.73  6.............................................13.73 Sale of Goods Act 1979............. 22.09, 22.30 s 29...........................................22.15  32...........................................22.12 Senior Courts Act 1981 s 37.................................... 9.02, 9.20, 9.40 (3).......................................11.08 Sex Discrimination Act 1975............ 14.59 Statute of Uses 1535......................... 16.17 Trade Union and Labour Relations (Consolidation) Act 1992.......... 14.62 s 236...................................... 15.19, 15.21; 18.50  285.........................................14.61 Unfair Contract Terms Act 1977 s 27(2).......................................7.41

Table of Statutory Instruments Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019, SI 2019/479................. 2.03; 9.36; 13.12 reg 26........................................17.36 Pt 6 (regs 92–95)......................13.12 reg 92........................................13.12 Civil Jurisdiction and Judgments Order 2001, SI 2001/3929...... 2.03; 3.09 Sch 1 para 2.....................................13.104 Civil Procedure Rules 1998, SI 1998/3132............ 3.14, 3.259, 3.260, 3.263, 3.268; 14.36, 14.37, 14.38; 15.26; 17.34; 18.05; 19.17; 21.19 Pt 6 (rr 6.1–6.52)..........3.04, 3.213, 3.221; 4.03; 18.05 r 6.3(1)......................................3.201 6.5(3)(b).................................18.05 6.20(6)(a)................................22.36 6.33.............................3.214; 9.16; 10.14; 18.63; 19.16 (2).................................. 18.14; 19.32 (b)(ii)........................ 3.214; 18.14 (iii).............3.214; 9.29; 17.26, 17.34; 18.21, 18.34, 18.57; 19.35; 23.10 (3)....................................13.74 6.34.......................................3.215; 10.14 6.36.........................................18.21 6.37........................... 3.216, 3.220, 3.223, 3.272; 10.15 (3)....................................3.269 PD 6B......................... 3.214, 3.216, 3.221, 3.222, 3.271, 3.280; 4.01, 4.07, 4.16; 9.14; 10.18; 14.38, 14.40; 15.33, 15.37, 15.49, 15.50, 15.70, 15.71; 16.33, 16.45, 16.46, 16.59, 16.61; 17.34; 18.05, 18.06, 18.07, 18.14, 18.20, 18.21, 18.23, 18.24, 18.44, 18.46; 19.32; 20.15, 20.23, 20.24, 20.40; 21.39; 22.16, 22.36, 22.40; 23.19; 24.22 r 10.1(3)....................................4.08 Pt 11 (r 11)....................3.207, 3.209, 4.09; 10.17, 10.18

Civil Procedure Rules 1998, SI 1998/3132 – contd. r 11(1), (3)................................3.207; 4.09 (5).......................................4.09 Pt 23 (rr 23.1–23.12)................10.15 PD 25A.....................................11.24 r 58.7.........................................3.209 Pt 74 (rr 74.1–74.50)................13.103 r 74.6.........................................13.103 Pt 81 (rr 81.1–81.14)................3.264 Civil Procedure Rules 1998 (Amendment) (EU Exit) Regulations 2019, SI 2019/521............................... 13.74 Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001, SI 2001/1171 r 11(5).......................................14.14 Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, SI 2013/1237 reg 11........................................14.03 (5)(a)...............................14.15 Sch 1 r 8.....  14.02, 14.03, 14.04, 13.10, 14.10, 14.12, 14.13, 14.14, 14.15, 14.16, 14.19, 14.20, 14.35; 19.01, 19.17 (2)(d).................................14.13 (3)(d).................................14.13 21........................................14.15 Law Applicable to Contractual Obligations and NonContractual Obligations (Amendment etc) (EU Exit) Regulations 2019, SI 2019/834................. 6.06; 7.06; 8.01, 8.11, 8.17 Law Applicable to Non-Contractual Obligations (England and Wales and Northern Ireland) Regulations 2008, SI 2008/2986............................. 8.01 Overseas Companies Regulations 2009, SI 2009/1801............ 3.202; 15.36 Working Time Regulations 1998, SI 1998/1833............................. 14.58 xvii

Table of EU Legislation CONVENTIONS Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels, 27 September 1968)..............2.03, 2.04; 3.09, 3.15, 3.17; 9.08; 11.17; 18.17 Convention on the Law Applicable to Contractual Obligations (Rome, 19 June 1980)...........6.06; 7.01, 7.03, 7.04, 7.05, 7.06, 7.11, 7.12, 7.18, 7.28, 7.29, 7.30, 7.42 Art 4..........................................7.29 (5).....................................7.29 5, 6......................................7.31 7...................................7.31, 7.39, 7.43 16........................................7.36 21........................................7.44 Sch 1......................................... 7.05, 7.43 European Convention on Human Rights (Rome, 4 November 1950) Art 6...............................4.19; 13.55, 13.93 8, 10.............. 8.10; 16.19, 16.20, 16.22 Hague Choice of Court Convention (The Hague, 30 June 2005)....... 2.07; 3.191, 3.192, 3.194; 10.05; 13.109 Art 1, 2......................................10.05 Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Lugano, 30 October 2007).................. 2.04, 2.05, 2.08, 2.10, 2.11; 3.03, 3.04, 3.14, 3.16, 3.17, 3.30; 5.42, 5.43; 9.35; 10.05, 10.14; 13.05, 13.11, 13.13, 13.57, 13.74; 17.24, 17.33, 17.39, 17.43, 17.44; 19.25 Art 59........................................3.10

DECISIONS Council Decision 2009/430/ EC of 27 November 2008 concerning the conclusion of the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters – declarations............................ 3.16 REGULATIONS Reg (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.2.03, 2.10, 2.11; 3.05, 3.07, 3.09, 3.15, 3.17, 3.23, 3.29, 3.31, 3.40, 3.65, 3.182, 3.195, 3.257, 3.261; 5.06, 5.26, 5.42, 5.43; 13.12, 13.78, 13.84, 13.103; 14.06 Art 21........................................3.43 23........................................3.29 24........................................ 3.43, 3.44 33........................................13.78 38....................................13.78, 13.102 Reg (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters...... 2.04, 2.05, 2.06, 2.08, 2.10, 2.11; 3.01, 3.04, 3.05, 3.08, 3.09, 3.10, 3.12, 3.14, 3.15, 3.16, 3.17, 3.19, 3.20, 3.22, 3.23, 3.25, 3.26, 3.28, 3.29, 3.30, 3.31, 3.37, 3.40, 3.60, 3.62, 3.65, 3.180, 3.184, 3.192, 3.240; 4.03, 4.05, 4.06; 5.26, 5.42; 8.34; 9.04, 9.08, 9.09, 9.11, 9.14, 9.16, 9.28, 9.29, 9.31, 9.32, 9.33, 9.34, 9.35, 9.36, 9.37, 9.38, 9.39; 10.01, 10.14, xix

Table of EU Legislation Reg (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters – contd. 10.15; 11.05, 11.18, 11.22; 13.05, 13.11, 13.57, 13.76, 13.77, 13.83, 13.84, 13.86, 13.97, 13.103; 14.04, 14.06, 14.17, 14.19, 14.23, 14.24, 14.31, 14.35; 15.26, 15.31, 15.48, 15.54, 15.69, 15.70; 16.26, 16.31, 16.32, 16.33, 16.51, 16.53, 16.59; 17.11, 17.24, 17.25, 17.27, 17.30, 17.32, 17.35, 17.36, 17.39, 17.43, 17.44, 17.46; 18.10, 18.16, 18.29, 18.49, 18.63; 19.07, 19.10, 19.19, 19.20, 19.26, 19.34, 19.35, 19.39; 20.14, 20.15, 20.16, 20.23, 20.33, 20.39; 21.08, 21.19, 21.37; 24.22 Recital (10)...............................3.20 Chapter II..................................3.39 Art 2..........................................3.231 4................3.34, 3.60; 4.04; 5.37, 5.40; 9.10, 9.34; 14.20; 16.55; 17.22, 17.31, 17.64, 17.65, 17.70 (1).....................................3.32 (b)................................18.25 5........................................ 14.24; 16.55 (2).....................................3.34 6..................3.118, 3.137; 14.37; 16.55 (1).....................................3.35 7................ 3.41, 3.46, 3.47, 3.66, 3.67, 3.69, 3.71, 3.73, 3.111, 3.121; 5.08, 5.37, 5.40; 14.32; 15.34, 15.55, 15.84; 16.55; 17.70; 18.02, 18.22; 20.15, 20.33; 21.07; 23.11, 23.15, 23.44; 24.33 (1)(b)........ 3.78; 22.15, 22.30; 23.15, 23.17, 23.26 (2).................... 3.79, 3.80, 3.84, 3.88; 14.29; 20.36 (5).................. 3.94, 3.97, 3.98, 3.118, 3.137; 18.19; 19.28 (7).....................................3.99 8....................... 3.41, 3.48, 3.82, 3.100, 3.103, 3.107, 3.116, 3.154; 5.08, 5.37, 5.40; 14.25, 14.28; 5.32, 15.35, 15.55, 15.64; 16.29, 16.30, 16.39, 16.54, 16.55; 17.70; 18.02, 18.25, 18.32, 18.53; 19.22; 24.30 (1)........................ 3.103, 3.112, 3.154 (2).......................3.103, 3.109, 3.112, 3.113, 3.114, 3.115, 3.116 (3).....................................3.117 9........................5.08, 5.37, 5.40; 17.70 xx

Reg (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters – contd. Art 10, 11........................ 3.41, 3.49, 3.118, 3.124, 3.128, 3.129 12..............................3.41, 3.49, 3.118, 3.123, 3.124, 3.128, 3.129 13...............................3.41, 3.49, 3.118, 3.124, 3.128, 3.129 (2)...................................3.124 14.............................. 3.41, 3.49, 3.118, 3.124, 3.127, 3.128, 3.129 15.............................. 3.41, 3.49, 3.118, 3.124, 3.128, 3.129 16...............................3.41, 3.49, 3.118, 3.124, 3.129 17.............................. 3.41, 3.54, 3.130, 3.137, 3.214; 22.24 (1)(c)...............................22.25 (2)...................................22.26 18...............................3.41, 3.54, 3.130, 3.136, 3.137; 22.26 (1)...................................3.35; 22.42 19....................3.41, 3.54, 3.130, 3.137 20....................... 3.41, 3.54, 3.55, 3.59, 3.107, 3.138, 3.140, 3.142, 3.150, 3.154; 14.22; 15.32; 16.31; 17.28, 17.38; 18.05, 18.22, 18.31, 18.38; 19.03, 19.22, 19.28; 20.15 21....................... 3.41, 3.54, 3.55, 3.69, 3.138, 3.140, 3.150, 3.152, 3.154, 3.180; 14.18, 14.20, 14.22, 14.28, 14.32, 14.33; 15.32; 16.31; 17.28, 17.38, 17.58; 18.03, 18.05, 18.17, 18.18, 18.21, 18.22, 18.31, 18.34, 18.38, 18.55, 18.59, 18.61; 19.03, 19.16, 19.20, 19.24, 19.28, 19.30, 19.32; 20.15; 23.09 (2).............3.35, 3.152; 14.33; 18.17 22....................... 3.41, 3.54, 3.55, 3.69, 3.138, 3.140, 3.147, 3.150, 3.154; 9.33; 14.22, 14.33; 15.31, 15.32, 15.48, 15.54, 15.55, 15.57, 15.63, 15.79, 15.82, 15.84; 16.31, 16.38; 17.20, 17.27, 17.28, 17.35, 17.65; 18.02, 18.22, 18.31, 18.36, 18.38, 18.43; 19.28; 20.15, 20.20, 20.27; 24.28 (2)...................................18.41 23....................... 3.41, 3.54, 3.55, 3.69, 3.138, 3.140, 3.154, 3.180; 14.22, 14.33; 15.32; 16.31; 17.28, 17.29, 17.35, 17.38; 18.22, 18.31, 18.34, 18.38; 19.28, 19.35; 20.15

Table of EU Legislation Reg (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters – contd. Art 24....................... 3.35, 3.41, 3.54, 3.58, 3.64, 3.155, 3.156, 3.157, 3.158, 3.159, 3.163, 3.164, 3.165, 3.196; 5.02, 5.37, 5.42; 20.35; 21.30 25.......................3.35, 3.41, 3.54, 3.59, 3.64, 3.116, 3.128, 3.165, 3.165, 3.166, 3.167, 3.168, 3.170, 3.172, 3.173, 3.175, 3.180, 3.181, 3.184, 3.185, 3.188, 3.190, 3.196; 4.20, 4.27, 4.28, 4.29; 5.06; 17.14; 17.70 26....................... 3.41, 3.43, 3.44, 3.54, 3.64, 3.196 27................................ 3.41, 3.54; 5.02 28........................................ 3.41, 3.54 Section 9 (Arts 29–34).............5.03 Art 29....................... 3.41, 3.54; 5.04, 5.10, 5.11, 5.13, 5.14, 5.15, 5.16, 5.20, 5.22, 5.27, 5.28, 5.31, 5.35, 5.36, 5.37; 15.79, 15.83; 16.67; 17.61 30....................... 5.05, 5.15, 5.17, 5.22, 5.27, 5.28, 5.31, 5.32, 5.33, 5.35, 5.36; 15.80, 15.82; 16.68; 18.39; 24.30 (1), (2)............................5.34 31................................ 4.29; 5.06, 5.12 (2)........................... 4.29; 5.11, 5.26 (3)...................................5.26 32.................................5.07, 5.23, 5.24 33.......................3.61; 5.08, 5.15, 5.36, 5.40, 5.42, 5.43; 15.87; 17.70 (2)...................................5.38 34....................... 3.61; 5.08, 5.40, 5.42, 5.43; 15.87, 15.89; 17.70 35...................5.09, 5.11; 11.01, 11.05, 11.17, 11.18; 16.64 36........................................13.77 39........................................13.102 45(1)...................................13.89 (c), (d)........................13.95 51........................................13.98 52........................................13.97 58........................................13.95 62............................... 3.06, 3.09; 15.44 63................................ 3.06, 3.12, 3.13 76........................................3.34 Annex I.....................................13.77

Reg (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)............. 2.09; 6.06; 7.01, 7.02, 7.03, 7.04, 7.05, 7.06, 7.08, 7.11, 7.18, 7.28, 7.29, 7.31, 7.44, 7.62, 7.64, 7.66; 8.07, 8.54, 8.59, 8.77; 9.41; 10.01, 10.03, 10.04; 10.10, 10.11; 12.04, 15.40; 16.26, 16.35; 21.01 Recital (7).................................7.08 (12)...............................7.21 Art 1..........................................7.08 (2)(a).................................7.64 2..........................................7.12 Ch II (Arts 3–18)......................7.13 Art 3..................................7.13, 7.14, 7.21, 7.34, 7.35, 7.39; 15.38; 23.22 (2)..................................... 7.19, 7.20 (3)..................................... 7.20, 7.24 (4).....................................7.18 4.....................7.25, 7.34; 16.35; 22.21; 23.22, 23.28 (1)..........................7.28; 22.18, 22.20 (b)................................23.34 (2).....................................7.28 (3).....................................7.28; 16.56 (4).....................................7.28 5..................................7.16, 7.25, 7.31, 7.32; 16.35 6......................... 7.25, 7.31, 7.34, 7.50; 16.35; 22.27 (2).....................................22.27 7.........................7.17, 7.25, 7.31, 7.35; 16.28, 16.35 (3).....................................7.35 8..................................7.25, 7.31, 7.36, 7.38; 15.38, 15.59; 16.35, 16.36 9.......................................... 7.39, 7.42 (2)..................................... 7.39, 7.40 (3)...................7.39, 7.40, 7.42; 22.22 10................................. 7.22, 7.47, 7.48 (1)...................................7.15 (2)...................7.15, 7.22, 7.23, 7.49 11........................7.22, 7.47, 7.50, 7.54 12.................... 7.47, 7.55, 7.63; 21.01, 21.09; 23.47 (1)(c)...............................7.63 13.................................7.22, 7.64, 7.65 19........................................7.26; 22.19 20........................................7.13 xxi

Table of EU Legislation Reg (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to noncontractual obligations (Rome II).........................2.09; 6.06; 8.01, 8.02, 8.07, 8.08, 8.10, 8.12, 8.13, 8.26, 8.36, 8.52, 8.59, 8.66, 8.77; 10.01, 10.03, 10.04, 10.10, 10.11; 12.04; 15.40; 16.56; 21.17, 21.24 Recital (21)............................... 8.47, 8.40 Art 1.......................................... 8.02, 8.66 (2).....................................8.09 (g)................................8.05 (3)..................................... 8.11, 8.60 2.......................................... 8.03, 8.11 (1), (3)..............................8.21 Ch II (Arts 4–9)........ 8.12, 8.13, 8.18, 8.19 Art 4......................... 8.06, 8.20, 8.25, 8.36, 8.37, 8.38, 8.43; 15.39 (1).....................................8.45 (2)..................................... 8.31, 8.47 5...................................8.30, 8.31, 8.32 6..................................8.17, 8.30, 8.36, 8.37, 8.38, 8.42 (1).....................................8.41 (2)..................................... 8.43, 8.44 (3).....................................8.44 (a).................................8.44 7.......................................... 8.30, 8.45 8.................................8.17, 8.30; 16.36 9..........................................8.47 Ch III (Arts 10–13)............8.12, 8.13, 8.18 Art 10........................................8.67; 18.27 11........................................8.61 12.............................8.64; 21.09, 21.10

xxii

Reg (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to noncontractual obligations (Rome II) – contd. Ch IV (Art 14)..........................8.12 Art 14......................8.14, 8.30, 8.46; 15.39 Ch V (Arts 15–22)....................8.12 Art 15........................................8.50; 23.47 (d)...................................8.53 16........................................8.59 17........................................8.58 18........................................8.48 20........................................8.49 21................................ 8.11, 8.57, 8.60 22................................ 8.11, 8.56, 8.60 23........................................8.28 24........................................8.19 26........................................8.60 32........................................8.02 Reg (EC) No 805/2004 of the European Parliament and of the Council of 21 April 2004 creating a European Enforcement Order for uncontested claims.................... 13.107 Art 3..........................................13.107 5..........................................13.108 DIRECTIVES Dir 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time........................................... 14.59

Table of Cases A AB flyLAL-Lithuanian Airlines v Starptautiska Lidosta “Riga” VAS (Case C-27/17) [2019] 1 WLR 669, [2018] 7 WLUK 71, [2018] IL Pr 32......................................24.21 AES Ust-Kamenogorsk Hydropower Plant LLP v AES Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, [2012] 1 WLR 920, [2012] 1 All ER (Comm) 845.................................................................................................................. 13.25; 17.09 A-G v Heinemann Publishers Australia Pty Ltd [1988] 6 WLUK 6, [1989] 2 FSR 631, 165 CLR 30.............................................................................................................6.17 A-G v Observer Ltd [1990] 1 AC 109, [1988] 3 WLR 776, [1988] 3 All ER 545.........16.17 A-G of New Zealand v Ortiz [1984] AC 1, [1983] 2 WLR 809, [1983] 2 All ER 93.....6.13 AK Investments CJSC v Kyrgyz Mobile Tel Ltd; Altimo Holdings & Investment Ltd v Kyrgyz Mobil Tel Ltd [2011]  UKPC  7, [2012] 1  WLR  1804, [2011] 4 All ER 1027...................................................................................... 3.218, 3.234, 3.236; 4.19 AMT  Futures Ltd v Marzillier, Dr Meier & Dr Gutner Rechtsanwaltsgesellschaft mbH [2017] UKSC 13, [2018] AC 439, [2017] 2 WLR 853...........3.30, 3.37, 3.66, 3.89; 8.24; 24.21, 24.34 A/S Tallinna Laevauhisus v Estonian State Steamship Line (1947) 80 Ll L Rep 99, [1946] 12 WLUK 23...............................................................................................12.02 AT Kearney FZ-LLC v Baigorri [2014] EWHC 4419 (QB), [2014] 12 WLUK 648.....15.75 Abela v Baadarani [2013] UKSC 33, [2013] 1 WLR 2043, [2013] 4 All ER 119.... 1.04, 1.09; 3.02, 3.226 Aberdeen Rly Co v Blaikie Bros (1854) 1 Macq 461, (1854) 2 Eq Rep 1281, [1854] 1 WLUK 1...............................................................................................................20.06 Abidin Daver, The see Owners of the Las Mercedes v Owners of the Abidin Daver Abouloff v Oppenheimer & Co (1882) 10 QBD 295, [1882] 11 WLUK 13......... 13.44, 13.45, 13.46, 13.48 Adams v Cape Industries plc [1990] Ch  433, [1990] 2  WLR  657, [1991] 1  All ER 929................................................................................................. 13.18, 13.19, 13.41 Advanced Industrial Technology Corpn Ltd v Bond Street Jewellers Ltd [2006] EWCA Civ 923, [2006] 7 WLUK 34..........................................................21.03 Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, [1994] 5 WLUK 206.......................................17.01, 17.11, 17.14, 17.74 Agnew v Lansforsakringsbolagen AB [2001] 1 AC 223, [2000] 2 WLR 497, [2000] 1 All ER 737............................................................................................................3.72 Airbus Industrie GIE  v Patel [1999] 1 AC  119, [1998] 2  WLR  686, [1998] 2 All ER 257....................................................................................................................17.67 Airbus SAS  v Generali Italia SpA [2019]  EWCA  Civ 805, [2019] 4 All ER  745, [2020] 1 All ER (Comm) 191.................................................................................3.40 Air Foyle Ltd v Center Capital Ltd [2002] EWHC 2535 (Comm), [2003] 2 Lloyd’s Rep 753, [2002] 12 WLUK 21................................................................................13.39 Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90, [1997] 7 WLUK 713, [1997] CLC 1508............................................................................13.23 Alexandros T, The see Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG Alfa Laval Tumba AB v Separator Spares International Ltd [2012] EWCA Civ 1569, [2013] 1 WLR 1110, [2013] 2 All ER 463.............................................................24.21 xxiii

Table of Cases Alfred Dunhill Ltd v Diffusion International de Maroquinerie de Prestige SARL [2002] 1 All ER (Comm) 950, [2001] 2 WLUK 24, [2001] CLC 949...............................21.33 Alliance Bank JSC  v Aquanta Corpn [2012]  EWCA  Civ 1588, [2013] 1  All ER (Comm) 819, [2013] 1 Lloyd’s Rep 175.................................................................3.268 Allianz SpA (formerly Riunione Adriatica di Sicurta SpA) v West Tankers Inc (Case C-185/07) [2009] 1 AC 1138, [2009] 3 WLR 696, [2009] 1 All ER (Comm) 435 3.24 Altimo Holdings & Investment Ltd v Kyrgyz Mobil Tel Ltd see AK  Investments CJSC v Kyrgyz Mobil Tel Ltd American Cyanamid Co v Ethicon Ltd [1975] AC 396, [1975] 2 WLR 316, [1975] 1 All ER 504..............................................................................3.271; 10.07; 15.70; 16.20 Amin Rasheed Shipping Corm v Kuwait Insurance Co (The Al Wahab) [1984] AC 50, [1983] 3 WLR 241, [1983] 2 All ER 884...........................1.09; 3.02, 3.226, 3.247, 3.270 AmTrust Europe Ltd v Trust Risk Group SpA [2015] EWCA Civ 437, [2016] 1 All ER (Comm) 325, [2015] 2 Lloyd’s Rep 154............................... 3.02, 3.171, 3.251, 3.282 Angelic Grace, The see Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, [1994] 5 WLUK 206................... 17.01, 17.11, 17.14, 17.74 Anton Durbeck GmbH  v Den Norske Bank ASA  [2003]  EWCA  Civ 147, [2003] QB 1160, [2003] 2 WLR 1296....................................................................3.98 Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55, [1976] 2 WLR 162, [1976] 1 All ER 79..................................................................................................11.23 Arata Potato Co Ltd v Egyptian Navigation Co (The El Amria) [1981] 2 Lloyd’s Rep 119, [1981] 5 WLUK 149, [1981] Com LR 136....................................................4.23 Arcadia Petroleum v Bosworth [2016]  EWCA  Civ 818, [2016] 8  WLUK  258, [2016] CP Rep 48...................................... 3.69, 3.142, 3.144, 3.154; 15.33, 15.57; 18.53; 20.16, 20.21, 20.26, 20.28; 24.28, 24.31 Ascherberg, Hopwood & Crew Ltd v Casa Musicale Sonzogno Di Peitro Ostali [1971] 1 WLR 173, [1971] 1 All ER 577, [1970] 11 WLUK 95........................................12.01 Aspen Underwriting v Credit Europe Bank NV [2020] UKSC 11, [2020] 2 WLR 919, [2020] 3 All ER 907............................................................3.38, 3.40, 3.119, 3.127, 3.179 Astro Venturoso Compania Naviera v Hellenic Shipyards SA (The Mariannina) [1983] 1 Lloyd’s Rep 12, [1982] 9 WLUK 119......................................................7.20 Avon Insurance plc v Swire Fraser Ltd [2000] 1  All ER (Comm) 573, [2000] 1 WLUK 420, [2000] CLC 665..............................................................................21.03

B BAT  Caribbean SA  v PHP Tobacco Carib SARL  [2017]  EWCA  Civ 1131, [2017] 7 WLUK 764, [2018] CP Rep 44............................................................................3.169 Babanaft International Co SA v Bassatne [1990] Ch 13, [1989] 2 WLR 232, [1989] 1 All ER 433............................................................................................................11.11 Bamberski v Krombach (Case C-7/98) [2001]  QB  709, [2001] 3  WLR  488, [2000] ECR I-1935.................................................................................................13.86 Banco de Bilbao v Sancha [1938] 2  KB  176, [1938] 2  All ER  253, [1938] 3 WLUK 44.............................................................................................................20.37 Banco de Vizcaya v Don Alfonso de Borbon y Austria [1935] 1  KB  140, [1934] 3 WLUK 14.............................................................................................................6.13 Banco Nacional de Comercio Exterior SNC v Empresa de Telecommunicationes de Cuba SA [2007] EWCA Civ 662, [2008] 1 WLR 1936, [2007] 2 All ER (Comm) 1093........................................................................................................................11.21 Banco Nacional de Cuba, Re; Banca Carige SpA  Cassa di Risparmio di Genova e Imperia v Banco Nacional de Cuba [2001] 1 WLR 2039, [2001] 3 All ER 923, [2001] 2 Lloyd’s Rep 147.......................................................................................3.265 Banco Santander Totta SA v Cia Carris de Ferro de Lisboa SA [2016] EWCA Civ 1267, [2017] 1 WLR 1323, [2017] 3 All ER 838...................................................7.24 Bank Mellat v HM Treasury [2019] EWCA Civ 449, [2019] 3 WLUK 252..........10.03; 12.02 xxiv

Table of Cases Bank of St Petersburg OJSC  v Arkhangelsky [2014]  EWCA  Civ 593, [2014] 1 WLR 4360, [2014] 5 WLUK 403........................................................................17.80 Banque Cantonale de Geneve v Polevent Ltd [2015]  EWHC  1968 (Comm), [2016] QB 394, [2016] 2 WLR 550........................................................................8.68 Barretts & Baird (Wholesale) Ltd v Institution of Professional Civil Servants [1987] 1 WLUK 713, [1987] IRLR 3, [1987] 1 FTLR 121...............................................24.13 Bates van Winhelhof v Clyde & Co LLP  [2012]  EWCA  Civ 1207, [2013] 1  All ER 844, [2013] ICR 883................................................................................. 14.45, 14.53 Beatty v Beatty [1924] 1 KB 807, [1924] 2 WLUK 47..................................................13.36 Belhaj v Straw [2017] UKSC 3, [2017] AC 964, [2017] 2 WLR 456............................6.19 Benincasa v Dentalkit Srl (Case C-269/95) [1997] ECR I-3767, [1997] 7 WLUK 82, [1998] All ER (EC) 135.................................................................................. 3.182, 3.184 Berliner Verkehrsbetriebe (BVG) v JP  Morgan Chase Bank NA, Frankfurt Branch (Case C-144/10) [2011] 1 WLR 2087, [2011] 2 All ER (Comm) 877, [2011] Bus LR 1061.......................................................................................................... 3.157, 3.158 Bernard Denilauer v SNC Couchet Freres (Case C-125/79) [1980] ECR 1553, [1980] 5 WLUK 213, [1981] 1 CMLR 62..........................................................................13.80 Biddell Bros v E Clemens Horst Co [1912] AC 18, [1911] 11 WLUK 10.....................22.11 Black v Yates [1992] QB 526, [1991] 3 WLR 90, [1991] 4 All ER 722.........................13.09 Blanckaert & Willems PVBA  v Trost (Case C-139/80) [1981]  ECR  819, [1981] 3 WLUK 107, [1982] 2 CMLR 1............................................................................3.95 Bleuse v MBT  Transport Ltd [2007] 12  WLUK  672, [2008]  ICR  488, [2008] IRLR 264............................................................................................. 14.58, 14.60 Blohn v Dresser [1962] 2 QB 116, [1961] 3 WLR 719, [1961] 3 All ER 1...................13.29 Boardman v Phipps [1967] 2 AC 46, [1966] 3 WLR 1009, [1966] 3 All ER 721...20.06, 20.12 Bols Distilleries BV (t/a Bols Royal Distilleries) v Superior Yacht Services Ltd [2006] UKPC 35, [2007] 1 WLR 12, [2007] 1 All ER (Comm) 461......................3.174 Bonython v Australia [1951] AC 201, 66 TLR (Pt 2) 969, [1950] 10 WLUK 77........7.58, 7.66 Bosworth v Arcadia Petroleum see Arcadia Petroleum v Bosworth Bosworth v Arcadia Petroleum (Case C-603/17) [2019] 4 WLUK 198, [2020] CEC 144, [2020] ICR 349.......................................................................................................7.38 Boys v Chaplin [1971] AC 356, [1969] 3 WLR 322, [1969] 2 All ER 1085...........3.257; 8.71; 10.01 Brabo, The see Tyne Improvement Comrs v Armement Anversois SA (The Brabo) Brevan Howard Asset Management LLP v Reuters Ltd [2017] EWCA Civ 950, [2017] 7 WLUK 158, [2017] EMLR 28.............................................................................16.22 Bristol & West Building Society v Mothew (t/a Stapley & Co) [1998] Ch 1, [1997] 2 WLR 436, [1996] 4 All ER 698................................................................... 20.05, 20.09 British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479.....................................24.05 British Midland Tool Ltd v Midland International Tooling Ltd [2003]  EWHC  466 (Ch), [2003] 3 WLUK 312, [2003] 2 BCLC 523....................................................20.08 Brogsitter v Fabrication de Montres Normandes EURL (Case C-548/12) [2014] QB 753, [2014] 2 WLR 1600, [2014] 1 All ER (Comm) 965.....................3.69 Brownlie v Four Seasons Holdings Inc see Four Seasons Holdings Inc v Brownlie Bumper Development Corpn v Comr of Police of the Metropolis [1991] 1 WLR 1362, [1991] 4 All ER 638, [1991] 2 WLUK 140............................................................12.03 Burris v Azadani [1995] 1 WLR 1372, [1995] 4 All ER 802, [1995] 7 WLUK 347......10.07 Buttes Gas & Oil Co v Hammer (No 3) [1982] AC 888, [1981] 3 WLR 787, [1981] 3 All ER 616............................................................................................................6.18

C CEF  Holdings Ltd v Mundey [2012]  EWHC  1524 (QB), [2012] 6  WLUK  50, [2012] IRLR 912............................................................................................. 15.33, 15.57 CMS  Dolphin Ltd v Simonet [2001] 5  WLUK  607, [2002]  BCC  600, [2001] 2 BCLC 704............................................................................................................15.02 xxv

Table of Cases Cameron v Liverpool Victoria Insurance Co Ltd [2019]  UKSC  6, [2019] 1 WLR 1471............................................................................................................5.23 Campbell v Frisbee [2002]  EWCA  Civ 1374, [2002] 10  WLUK  340, [2003] ICR 141.......................................................................................................16.23 Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 AC 457, [2004] 2 WLR 1232................................................................................8.10; 16.04, 16.19, 16.26 Canada Trust v Stolzenberg (No 2) [1998] 1 WLR 547, [1998] 1 All ER 318, [1997] 10 WLUK 543.................................. 3.40, 3.171, 3.225, 3.253; 4.07; 18.16, 18.20; 23.10 Canadian Aero Services v O’Malley (1973) 40 DLR (3d) 371......................................20.01 Capelloni & Aquilini v Pelkmans (Case C-119/84) [1985]  ECR  3147, [1985] 10 WLUK 36, [1986] 1 CMLR 388........................................................................13.102 Carl Zeiss Stifting v Rayner & Keeler Ltd [1967] 1 AC  853, [1966] 3 WLR  125, [1966] 2 All ER 536........................................................................................13.06; 20.37 Car Trim GmbH v KeySafety Systems Srl (Case C-381/08) [2010] 2 All ER (Comm) 770, [2010] Bus LR 1648, [2010] ECR I-1255.................................................3.78; 22.02 Cartel Damage Claims (CDC) Hydrogen Peroxide SA  v Akzo Nobel NV (Case C-352/13) [2015] QB 906.......................................................................................3.106 Carver v Saudi Arabian Airlines [1999] 3  All ER  61, [1999] 3  WLUK  322, [1999] IRLR 370.....................................................................................................14.62 Castanho v Brown & Root (UK) Ltd [1981] AC 557, [1980] 3 WLR 991, [1981] 1 All ER 143....................................................................................................................10.07 Castrique v Imrie (1869-70) LR 4 HL 414, [1870] 4 WLUK 1......................................13.39 Catalyst Investment Group Ltd v Lewisohn [2009] EWHC 1964 (Ch), [2010] Ch 218, [2010] 2 WLR 839..................................................................................................3.166 Ceska Podnikatelska Pojistovna as, Vienna Insurance Group v Bilas (Case C-111/09) [2010] 5 WLUK 479, [2010] Lloyd’s Rep IR 734..................................................3.64 Cherney v Deripaska [2008] EWHC 1530 (Comm), [2009] 1 All ER (Comm) 333, [2008] ~ 7 WLUK 92 aff’d [2009] EWCA Civ 849, [2010] 2 All ER (Comm) 456, [2009] 7 WLUK 858.......................................................................................4.19 Chevron International Oil Co Ltd v A/S Sea Team (The TS Havprins) [1983] 2 Lloyd’s Rep 356, [1983] 5 WLUK 63, [1983] Com LR 172...............................................3.246 City & Country Properties Ltd v Kamail [2006] EWCA Civ 1879, [2007] 1 WLR 1219, [2006] 7 WLUK 636...............................................................................................3.200 Clarke v Fennoscandia Ltd (No  3) [2007]  UKHL  56, 2008  SC (HL) 122, 2008 SLT 33............................................................................................................13.06 Clyde & Co v Bates van Winkelhof [2011] EWHC 668 (QB), [2011] 3 WLUK 692, [2011] IRLR 467.....................................................................................................4.21 Coco v AN  Clark (Engineers) Ltd [1968] 7  WLUK  2, [1968]  FSR  415, [1969] RPC 41....................................................................................  16.04, 16.06, 16.17 Cohn, Re [1945] Ch 5, [1944] 6 WLUK 25....................................................................6.04 Colt Industries v Sarlie (No 2) [1966] 1 WLR 1287, [1966] 3 All ER 85, [1966] 2 Lloyd’s Rep 163.............................................................................................. 13.14, 13.36 Compagnie d’Armement Maritime SA  v Compagnie Tunisienne de Navigation SA [1971] AC 572, [1970] 3 WLR 389, [1970] 3 All ER 71.................................7.21 Connelly v RTZ Corpn plc (No 2) [1998] AC 854, [1997] 3 WLR 373, [1997] 4 All ER 335................................................................................................................ 4.14, 4.18 Cooper v Cooper (1888) 13 App Cas 88, (1888) 15 R (HL) 21, [1888] 2 WLUK 81....7.64 Corman-Collins SA v La Maison du Whisky SA (Case C-9/12) [2014] QB 431, [2014] 2 WLR 494, [2014] 1 All ER (Comm) 882......................................................... 3.07, 3.33 Coreck Maritime GmbH v Handelsveem BV (Case C-387/98) [2000] ECR I-9337, [2000] 11 WLUK 234, [2001] CLC 550.............................................. 3.163, 3.166, 3.188 Coty Germany GmbH  v First Note Perfumes NV (Case C-360/12) [2014] Bus LR 1294, [2014] 6 WLUK 128, [2015] CEC 511..................................................3.85 Cox v Ergo Versicherung AG [2012] EWCA Civ 1001, [2012] 7 WLUK 572; aff’d [2014] UKSC 22, [2014] AC 1379, [2014] 2 WLR 948......................... 3.120; 7.27, 7.63; 8.77; 10.01

xxvi

Table of Cases Coys of Kensington Automobiles Ltd v Tiziana Pugliese [2011] EWHC 655 (QB), [2011] 2 All ER (Comm) 664, [2011] 3 WLUK 658..............................................3.175 Cream Holdings Ltd v Banerjee [2004]  UKHL  44, [2005] 1  AC  253, [2004] 3 WLR 918..............................................................................................................16.20 Creditsights v Dhunna [2014]  EWCA  Civ 1238, [2014] 9  WLUK  453, [2015] ICR 105............................................................................................... 14.45, 14.55 Credit Suisse Fides Trust SA v Cuoghi [1998] QB 818, [1997] 3 WLR 871, [1998] 1 WLR 474..................................................................... 3.240, 3.243; 11.13, 11.17, 11.26 Cristiano Committeri v Club Mediterranee SA  [2016]  EWHC  1510 (QB), [2016] 6 WLUK 724...........................................................................................................7.09 Crofts v Veta plc see Lawson v Serco Ltd Crucial Music Corpn (formerly Onemusic Corpn) v Klondyke Management AG (formerly Point Classics AG) [2007] EWHC 1782 (Ch), [2008] 1 All ER (Comm) 642, [2008] Bus LR 327..........................................................................................21.35 Cuban Atlantic Sugar Sales Corpn v Compania de Vapores San Electerio Limitada (The St Elefterio)[1960] 1 QB 187, [1960] 2 WLR 26, [1960] 1 All ER 141........22.37, 22.38 Curtis v Lockheed Martin UK  Holdings [2008]  EWHC  260 (Comm), [2008] 2 WLUK 496, [2008] 1 CLC 219...........................................................................5.47 Custom Made Commercial Ltd v Stawa Metalbau GmbH (Case C-288/92) [1994] ECR I-2913, [1994] 6 WLUK 341, [1994] IL Pr 516..........................  3.74; 23.15 Customer Systems plc v Ranson [2012]  EWCA  Civ 841, [2012] 6  WLUK  617, [2012] IRLR 769.......................................  8.04; 15.08; 20.01, 20.05, 20.14, 20.17, 20.20 Cyprus Popular Bank Public Co Ltd Vgenopoulos [2018] EWCA Civ 1, [2018] QB 886, [2018] 2 WLR 1330.................................................................................... 13.104, 13.106 D DSV Silo und Verwaltungsgesellschaft mbH v Owners of the Sennar (The Sennar) No 2) [1985] 1 WLR 490, [1985] 2 All ER 104, [1985] 1 Lloyd’s Rep 521....4.23; 13.06 Dadourian Group International Inc v Simms [2006]  EWCA  Civ 399, [2006] 1 WLR 2499, [2006] 3 All ER 48...........................................................................11.16 Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil SA (formerly Ace Segurado SA) [2020] EWHC 1223 (Comm), [2020] 2 Lloyd’s Rep 137, [2020] 5 WLUK 231...17.74 Da Silva Martins v Dekra Claims Services Portugal SA (Case C-149/18) [2019] 1 WLUK 313, [2019] RTR 16, [2019] IL Pr 11.....................................................8.59 De Bloos sprl v Bouyer SA (Case C-14/76) [1976] ECR 1497, [1976] 10 WLUK 16, [1977] 1 CMLR 60...............................................................................................3.74, 3.95 Dell Emerging Markets (EMEA) Ltd v Systems Equipment Telecommunications Services SAL [2020] EWHC 561 (Comm), [2020] 3 WLUK 211.........................17.78 Derby & Co v Weldon (No  1) [1990] Ch  48, [1989] 2  WLR  276, [1989] 1  All ER 469............................................................................................................ 11.09, 11.16 Derry v Peek (1889) 14 App Cas 337, (1889) 5 TLR 625, [1889] 7 WLUK 3..............21.03 Desert Sun Loan Corpn v Hill [1996] 2 All ER 847, [1996] 2 WLUK 239, [1996] 5 Bank LR 98.............................................................................................................13.21 Deutsche Bank AG v Sebastian Holdings Inc [2016] EWHC 3222 (Comm), [2017] 1 WLR 1842, [2016] 12 WLUK 434......................................................................3.264 De Wolf v Harry Cox BV (Case 42/76) [1976] ECR 1759, [1976] 11 WLUK 186, [1977] 2 CMLR 43..................................................................................................13.103 Diageo Brands BV v Simiramida-04 EOOD (Case C-681/13) [2016] Ch 147, [2015] 3 WLR 1632, [2015] 7 WLUK 572........................................................................13.97 Dimskai Shipping Co v International Transport Workers’ Federation (The Evia Luck) (No 2) [1992] 2 AC 152, [1991] 3 WLR 875, [1991] 4 All ER 871................... 7.23, 7.48 Distillers Co (Biochemicals) Ltd v Thompson (Laura Anne) [1971] AC 458, [1971] 2 WLR 441, [1971] 1 All ER 694..................................................................... 3.261; 8.72 Domicrest v Swiss Banking Corpn [1999] QB 548, [1999] 2 WLR 364, [1998] 3 All ER 577........................................................ 3.93; 8.23; 21.13, 21.14, 21.15, 21.28, 21.34 xxvii

Table of Cases Donohue v Armco Inc [2001] UKHL 64, [2002] 1 All ER 749, [2002] 1 Lloyd’s Rep 425..............................3.185, 3.256; 4.25, 4.27; 17.01, 17.04, 17.35, 17.52; 21.21; 24.26 Dresser UK  Ltd v Falcongate Freight Management Ltd (The Duke of Yare) [1992] QB 502, [1992] 2 WLR 319, [1992] 2 All ER 450.....................................5.23 Drouot Assurances SA v Consolidated Metallurgical Industries (CMI Industrial Sites) (Case C-351/96) [1999] QB 497, [1999] 2 WLR 163, [1998] ECR I-3075...........5.18 Duarte v Black & Decker Corpn [2007] EWHC 2720 (QB), [2008] 1 All ER (Comm) 401, [2007] 11 WLUK 604..............................6.10; 7.35, 7.44; 8.60; 15.38; 18.08, 18.45 Dubai Bank v Abbas [1997] 10  WLUK  247, [1998] Lloyd’s Rep Bank 230, [1997] IL Pr 308......................................................................................................15.44 Dumez France SA v Hessiche Landesbank (Case C-220/88) [1990] ECR I-49, [1990] 1 WLUK 518, [1990] IL Pr 299........................................................................3.84; 15.34 Duncombe v Secretary of State for Children, Schools & Families [2011] UKSC 36, [2011] 4 All ER 1020, [2011] ICR 1312................................... 14.45, 14.51; 19.12, 19.47 Dyson Technology Ltd v Pellerey [2015] EWHC 3000 (Ch), [2015] 10 WLUK 617...16.25 E EMI Records Ltd v Modern Music Karl-Ulrich Walterbach GmbH [1992] QB 115, [1991] 3 WLR 663, [1992] 1 All ER 616...............................................................13.80 EON  Czech Holding AG  v Dedouch (Case C-560/16) [2018] 4  WLR  94, [2018] 3 WLUK 130, [2019] CEC 587..............................................................................3.159 eDate Advertising GmbH v X (Case C-509/09) [2012] QB 654, [2012] 3 WLR 227, [2011] ECR I-10269...............................................................................................3.86 Effer SpA v Kantner (Case C-38/81) [1982] ECR 825, [1982] 3 WLUK 52, [1984] 2 CMLR 667...........................................................................................................3.71 Eider, The [1893] P 119, [1893] 3 WLUK 2.......................................................... 22.13; 23.15 El Amria, The see Arata Potato Co Ltd v Egyptian Navigation Co (The El Amria) Elefanten Schuh GmbH  v Jacqmain (Case C-150/80) [1981]  ECR  1671, [1981] 6 WLUK 204, [1982] 3 CMLR 1........................................................................ 3.64, 3.65 Eleftheria, The see Owners of Cargo Lately Laden on Board the Eleftheria v Owners of the Eleftheria Elek v Bar-Tur [2013] EWCA Civ 1774, [2013] 12 WLUK 647...................................3.217 El Majdoub v CarsOnTheWeb.Deutschland GmbH (Case C-322/14) [2015] 1 WLR 3986, [2016] 1 All ER (Comm) 197, [2015] 5 WLUK 617............... 3.170, 3.176 Emanuel v Symon [1908] 1 KB 302, [1907] 11 WLUK 45...........................................13.33 Enka Insaat Ve Sanayi AS  v OOO  Insurance Co Chubb [2020]  UKSC  38, [2020] 1 WLR 4 117, [2020] 10 WLUK 70...........................................7.66; 17.55, 17.72; 22.17 Entores LD v Miles Far East Corpn [1955] 2 QB 327, [1955] 3 WLR 48, [1955] 2 All ER 493....................................................................................................................3.246 Ergo Insurance SE  v If P  & C  Insurance AS (Case C-359/14 & 475/14) [2016] 1 WLUK 386, [2016] RTR 14, [2017] CEC 3....................................................7.08; 8.03 Erich Gasser GmbH v MISAT Srl (Case C-116/02) [2005] QB 1, [2004] 3 WLR 1070, [2005] 1 All ER (Comm) 538.............................................................................3.30; 5.26 Essar Shipping Ltd v Bank of China Ltd [2015]  EWHC  3266 (Comm), [2016] 1 Lloyd’s Rep 427, [2015] 11 WLUK 341................................................................17.76 Estasis Salotti di Colzani Aimo e Gianmario Colzani v Rüwa Polstereimaschinen GmbH (Case C-24/76) [1976]  ECR  1831, [1976] 12  WLUK  98, [1977] 1 CMLR 345...........................................................................................................3.167 Etablissements Somafer SA  v Saar-Ferngas AG (Case 33/78) [1978]  ECR  2183, [1978] 11 WLUK 153, [1979] 1 CMLR 490..........................................................3.96 Etihad Airways PJSC v Flöther [2019] EWHC 3107 (Comm), [2020] QB 793, [2020] 2 WLR 333........................................................................................................ 3.40, 3.251 Evans Marshall & Co v Bertola SA (No 1) [1973] 1 WLR 349, [1973] 1 All ER 992, [1973] 1 Lloyd’s Rep 453.......................................................................................3.256 Evening Standard Co Ltd v Henderson [1986] 11  WLUK  77, [1987]  ICR  588, [1987] IRLR 64.......................................................................................................18.50 xxviii

Table of Cases Evia Luck, The see Dimskai Shipping Co v International Transport Workers’ Federation (The Evia Luck) (No 2) F FBTO  Schadeverzekeringen NV  v Odenbreit (Case C-463/06) [2008] 2  All ER (Comm) 733, [2007] ECR I-11321, [2008] IL Pr 12..............................................3.124 FS  Cairo (Nile Plaza) LLC  v Brownlie [2020]  EWCA  Civ 996, [2020] 7 WLUK 417..................................................................................................... 3.259; 8.26 FSS Travel & Leisure Sustes Ltd v Johnson [1997] 11 WLUK 333, [1998] IRLR 382, [1999] ITCLR 218..................................................................................................16.16 Faccenda Chicken v Fowler [1987] Ch  117, [1986] 3  WLR  288, [1986] 1  All ER 617............................................................................................................ 16.12, 16.13 Federal Republic of Nigeria v Royal Dutch Shell plc [2020] EWHC 1315 (Comm), [2020] 5 WLUK 309........................................................................................... 5.16, 5.35 Ferrexpo AG v Gilson Investments Ltd [2012] EWHC 721 (Comm), [2012] 1 Lloyd’s Rep 588, [2012] 4 WLUK 41........................................................ 3.163, 3.188; 4.19; 5.42 Financial Times v Bishop (UKEAT/0147/03) [2003] 11 WLUK 702............................14.15 Fiona Trust & Holding Corpn v Privalov [2007]  UKHL  40, [2007] 4 All ER  951, [2008] 1 Lloyd’s Rep 254.........................................................3.251, 3.252; 21.21; 23.48 Flightright GmbH v Air Nostrum Lineas Aereas del Mediterraneo SA (Case C-274/16) [2018] QB 1268, [2018] 3 WLR 989, [2018] 1 Lloyd’s Rep 626...........................3.70 flyLAL-Lithuanian Airlines AS v Starptautkiska Lidosta Riga VAS (Case C-302/13) [2014] 10 WLUK 721, [2014] 5 CMLR 27, [2015] CEC 337............... 3.20; 13.85, 13.93 Folien Fischer AG v Ritrama SpA (Case C-133/1) [2013] QB 523, [2013] 2 WLR 373, [2014] 1 All ER (Comm) 569.................................................................................3.83 Forse v Secarma Ltd [2019]  EWCA  Civ 215, [2019] 2  WLUK  566, [2019] IRLR 587.....................................................................................................16.25 Fourie v Le Roux [2007] UKHL 1, [2007] 1 WLR 320, [2007] 1 All ER 1087.....10.07, 10.20 Four Seasons Holdings Inc v Brownlie [2017] UKSC 80, [2018] 1 WLR 192, [2018] 2 All ER 91.............................................................. 3.225, 3.227, 3.259, 3.260; 4.07; 8.26 Freeport plc v Arnoldsson (Case C-98/06) [2008]  QB  634, [2008] 2  WLR  853, [2007] ECR I-8319.................................................................................................3.103 Fried Krupp AG, Re [1917] 2 Ch 188, [1917] 5 WLUK 23...........................................7.46 G GAF Corpn v Amchem Products Inc [1975] 1 Lloyd’s Rep 601, [1975] 3 WLUK 10..3.232 GD Searle & Co Ltd v Celltech Ltd [1981] 3 WLUK 85, [1982] FSR 92.....................15.08 GIE Reunion v Zurich Espana see Groupement d’Interet Economique (GIE) Reunion Europeene v Zurch Espana (Case C-77/04) Gambazzi v DaimlerChrysler Canada Inc (Case C-394/07) [2010]  QB  388, [2010] 3 WLR 1, [2009] 1 Lloyd’s Rep 647..............................................................13.91, 13.97 Gantner Electronic GmbH  v Basch Exploitatie Maatschappij BV (Case C-111/01) [2003] ECR I-4207, [2003] 5 WLUK 230, [2003] IL Pr 37............................... 5.19, 5.21 Garret v Taylor (1620) Cro Jac 567, 79 ER 485, [1619 1 WLUK 1...............................24.09 Gazprom OAO, proceedings against (Case C-536/13) [2015] 1 WLR  4937, [2015] 2 All ER (Comm) 1023, [2015] 1 Lloyd’s Rep 610................................................3.24 General Billposting v Atkinson [1909] AC 118, [1908] 12 WLUK 77..........................16.23 Glaxosmithkline v Rouard (Case C-462/06) [2008] ECR I-3965, [2008] 5 WLUK 536, [2008] ICR 1375..................................................................................3.107, 3.154; 15.32 Glencore International AG  v Shell International Trading & Shiping Co Ltd [1999] 2 All ER (Comm) 922, [1999] 2 Lloyd’s Rep 692, [2000] CLC 104.....................5.22 Global Multimedia International v ARA Media Services [2006] EWHC 3612 (Ch), [2007] 1 All ER (Comm) 1160, [2006] 7 WLUK 613............................3.207, 3.209; 4.09 Golden Endurance Shipping SA v RMA Watanya SA [2016] EWHC 2110 (Comm), [2017] 1 All ER (Comm) 438, [2016] 8 WLUK 207..............................................13.26 xxix

Table of Cases Goldman Sachs International v Novo Banco SA [2018] UKSC 34, [2018] 1 WLR 3683, [2018] 4 All ER 1026...................................................................................... 3.225, 3.227 Gothaer Allgemeine Versicherung AG  v Samskip GmbH (Case C-456/11) [2013] QB 548, [2013] 2 WLR 520, [2012] 11 WLUK 461..................................13.81 Government of the United States v Montgomery (No  2) [2004]  UKHL  37, [2004] 1 WLR 2241, [2004] 4 All ER 289.........................................................................13.55 Granarolo SpA v Ambrosi Emmi France SA (Case C-196/15) [2016] 7 WLUK 358, [2017] CEC 473, [2016] IL Pr 32...........................................................................7.08 Gray v Hurley [2019] EWCA Civ 2222, [2019] 12 WLUK 130, [2020] 1 FLR 864.....17.22, 17.31, 17.65 Greece v Nikifordis (Case C-135/15) [2016] 10  WLUK  386, [2017]  CEC  658, [2017] ICR 147...................................................................................................7.39, 7.42 Groupement d’Interet Economique (GIE) Reunion Europenne v Zurich Espana (Case C-77/04) [2006] 1  All ER (Comm) 488, [2005]  ECR  I-4509, [2005] 5 WLUK 640...................................................................................................3.112, 3.114 Gruber v BayWa AG (Case C-464/01) [2006]  QB  204, [2006] 2  WLR  205, [2005] ECR I-439...........................................................................................3.130; 22.24 Gubish Maschinenfabrik KG  v Palumbo (Case 144/86) [1987]  ECR  4861, [1987] 12 WLUK 82, [1989] ECC 420.......................................................................... 5.10, 5.19 Guiard v De Clermont & Donner [1914] 3 KB 145, [1914] 4 WLUK 56......................13.24 Gunn v Diaz [2017] EWHC 157 (QB), [2017] 2 All ER (Comm) 129, [2017] Lloyd’s Rep IR 139..............................................................................................................3.268 H HRH  Maharanee Seethadevi Gaekwar of Baroda v Wildenstein [1972] 2  QB  283, [1972] 2 WLR 1077, [1972] 2 All ER 689.............................................................3.199 HRH Prince of Wales v Associated Newspapers Ltd [2006] EWCA Civ 1776, [2008] Ch 57, [2007] 3 WLR 222......................................................................................16.22 Hacker v Euro-Relais GmbH (Case C-280/90) [1992]  ECR  I-1111, [1992] 2 WLUK 331, [1992] IL Pr 515..............................................................................21.30 Haiti v Duvalier (Mareva Injunction) (No 2) [1990] 1 QB 202, [1989] 2 WLR 261, [1989] 1 All ER 456............................................ 3.242; 11.12, 11.18, 11.19, 11.25; 16.64 Hall v Woolston Hall Leisure Ltd [2001] 1  WLR  225, [2000] 4  All ER  787, [2000] IRLR 578.....................................................................................................14.30 Handelswkerij GJ  Bier NV  v SA  Mines de Potasse d’Alsace (Case 21/76) [1978] QB 708, [1977] 3 WLR 479, [1976] ECR 1735...........................3.82, 3.84, 3.91, 3.257, 3.259; 8.45 Harding v Wealands [2006] UKHL 32, [2007] 2 AC 1, [2006] 3 WLR 83...... 7.63, 7.67; 8.52, 8.77; 10.01 Harris v Taylor [1915] 2 KB 580, [1915] 3 WLUK 38.......................................... 13.24, 13.25 Harrods (Buenos Aires) Ltd (No 2), Re [1992] Ch 72, [1991] 3 WLR 397, [1991] 4 All ER 348....................................................................................................................13.75 Hassett v South Eastern Health Board (Case C-372/07) [2008] ECR I-7403, [2008] 10 WLUK 33, [2009] IL Pr 28................................................................................3.157 Hayward (decs’d), Re [1997] Ch 45, [1996] 3 WLR 674, [1997] 1 All ER 32..............3.160 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, [1963] 3 WLR 101, [1963] 2 All ER 575.............................................................................21.05; 23.04, 23.05 Hellenic Republic v Nikiforidis see Greece v Nikifordis (Case C-135/15) Henderson v Henderson [1843-60] All ER Rep 378, 67 ER 313, (1843) 3 Hare 100....13.49, 13.50 Henderson v Merrett Syndicates Ltd (No 1) [1995] 2 AC 145, [1994] 3 WLR 761, [1994] 3 All ER 506.............................................................................23.05, 23.07, 23.17 Hendrickman v Magenta Druck & Verlag GmbH (Case C-78/95) [1997]  QB  426, [1997] 2 WLR 349, [1996] ECR I-4943.................................................................13.89 Henry v Geoprosco International Ltd [1976] QB 726, [1975] 3 WLR 620, [1975] 2 All ER 702.............................................................................................................13.24, 13.25 xxx

Table of Cases High Comr for Pakistan in the UK v Prince Muffakham Jah [2019] EWHC 2551 (Ch), [2020] Ch 421, [2020] 2 WLR 699.........................................................................7.64 Hobohm v Benedikt Kampik & Co KG (Case C-297/14) [2016]  QB  616, [2016] 2 WLR 940, [2015] 12 WLUK 760........................................................................3.134 Hoddinott v Persimmon Homes (Wessex) Ltd [2007]  EWCA  Civ 1203, [2008] 1 WLR 806, [2007] 11 WLUK 513........................................................................10.17 Hoffman v Krieg (Case 145/86) [1988]  ECR  645, [1988] 2  WLUK  48, [1990]  IL Pr 4......................................................................................................... 13.101, 13.104 Hollandia, Re see Owners of Cargo on Board the Morviken v Owners of the Hollandia Holterman Ferho Exploitatie BV  v Spies von Bullesheim (Case C-47/14) [2015] 9 WLUK 209, [2016] CEC 456, [2016] ICR 90.....................................................3.69 Homawoo v GMF  Assurances SA (Case C-412/10) [2011]  ECR  I-11603, [2011] 11 WLUK 471, [2012] IL Pr 2................................................................................8.02 Höszig Kft v Alstom Power Thermal (Case C-222/15) [2016] 7  WLUK  162, [2016] IL Pr 36........................................................................................................3.170 Hough v P  & O  Containers Ltd [1999]  QB  834, [1998] 3 WLR  851, [1998] 2 All ER 978....................................................................................................................3.116 House of Spring Gardens Ltd v Waite (No 2) [1991] 1 QB 241, [1990] 3 WLR 347, [1990] 2 All ER 990................................................................................................13.48 Hunter v Chief Constable of the West Midlands Police [1982]  AC  529, [1981] 3 WLR 906, [1981] 3 All ER 727...........................................................................13.46 Huntingdon v Attrill [1893] AC 150, [1892] 2 WLUK 61.............................................6.12 Hurley v Mustoe [1982] 12 WLUK 37, [1983] ICR 422................................................14.30

I ICICI  Bank UK plc v Diminico NV  [2014]  EWHC  3124 (Comm), [2014] 8 WLUK 390, [2014] 2 CLC 647.......................................................... 5.09; 11.22; 16.64 IFE Fund SA v Goldman Sachs International [2006] EWHC 2887 (Comm), [2007] 1 Lloyd’s Rep 264, [2006] 11 WLUK 491................................................................21.03 India v India Steamship Co Ltd (The Indian Endurance & The Indian Grace) (No 1) [1993] AC 410, [1993] 2 WLR 461, [1993] 1 All ER 998.............................. 13.07, 13.08 India v Taylor [1955] AC 491, [1955] 2 WLR 303, [1955] 1 All ER 292......................6.15 Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443, [1972] 2 AlL ER 162, [1971] 3 WLUK 139......................................................................... 20.06, 20.10 Industrial Diamond Supplies v Luigi Riva (Case 43/77) [1977]  ECR  2175, [1977] 11 WLUK 160, [1978] 1 CMLR 349......................................................................13.98 Industrie Tessilli Italiana Como v Dunlop AG (Case 12/76) [1976] ECR 1473, [1976] 10 WLUK 22, [1977] 1 CMLR 26..........................................................................3.74 Initial Services Ltd v Putterill [1968] 1 QB 396, [1967] 3 WLR 1032, [1967] 3 All ER 145....................................................................................................................16.22 Innovia Films Ltd v Frito-Lay North America Inc [2012] EWHC 790 (Pat), [2012] 3 WLUK 1015, [2012] RPC 24..............................................................................3.232 In Plus Group Ltd v Pyke [2002]  EWCA  Civ 370, [2002] 3  WLUK  644, [2002] 2 BCLC 201............................................................................................................20.06 Integral Petroleum SA v SCU-Finanz AG [2015] EWCA Civ 144, [2016] 1 All ER (Comm) 217, [2015] 1 Lloyd’s Rep 545.................................................................7.52 Intercontainer Interfrigo SC (ICF) v Balkenende Osthuizen BV (Case C-133/08) [2010] QB 411, [2010] 3 WLR 24, [2010] 1 AlL ER (Comm) 613................... 7.28, 7.29 Interdesco SA  v Nullifire Ltd [1992] 1 Lloyd’s Rep 180, [1991] 4  WLUK  285, [1992] IL Pr 97........................................................................................................13.87 Investec Trust (Guernsey) Ltd v Glenalla Properties Ltd [2018]  UKPC  7, [2019] AC 271, [2018] 2 WLR 1465......................................................................6.03 Iran v Barakat Galleries Ltd [2007]  EWCA  Civ 1374, [2009]  QB  22, [2008] 3 WLR 486.......................................................................................................... 6.14, 6.16 xxxi

Table of Cases Israel Discount Bank of New York v Hadjipateras [1984] 1 WLR 137, [1983] 3 All ER 129, [1983] 2 Lloyd’s Rep 490.........................................................................13.36 Item Software (UK) Ltd v Fassihi [2004]  EWCA  Civ 1244, [2004] 9 WLUK  369, [2005] ICR 450.......................................................................................................20.08 J JIH  v News Group Newspapers Ltd [2011]  EWCA  Civ 42, [2011] 1  WLR  1645, [2011] 2 All ER 324................................................................................................10.20 JP Morgan Europe Ltd v Primacom AG [2005] EWHC 508 (Comm), [2005] 2 All ER (Comm) 764, [2005] 2 Lloyd’s Rep 665............................................................. 5.11, 5.28 JSC BTA Bank v Ablyazov [2018] UKSC 19, [2020] AC 727, [2018] 2 WLR 1125....24.14, 24.16, 24.17, 24.18, 24.20 JSC  Commercial Bank Privatbank v Kolomoisky [2019]  EWCA  Civ 1708, [2020] 2 WLR 993, [2020] 2 All ER 319.......................................... 3.103; 5.33, 5.35, 5.42, 5.43 JSC VTB Bank v Skurikhin [2014] EWHC 271 (Comm), [2014] 2 WLUK 459...........13.52 Jackson v Ghost Ltd [2003] 9 WLUK 25, [2003] IRLR 824............14.04, 14.14; 19.08, 19.17 Jacobs, Marcus & Co v Credit Lyonnais (1884) 12 QBD 589, [1884] 2 WLUK 83......7.58 Jakob Handte & Co GmbH  v Traitements Mecano-Chimiques des Surfaces SA (TMCS) (Case C-26/91) [1992]  ECR  I-3967, [1992] 6  WLUK  258, [1993]  IL Pr 5................................................................................................................. 3.69; 7.09 James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, [1970] 2 WLR 728, [1970] 1 All ER 796......................................7.66 Jeffrey v British Council [2018]  EWCA  Civ 2253, , [2018] 10  WLUK  265, [2019] IRLR 123........................................................................14.45, 14.46, 14.56, 14.57 Jet Holdings Inc v Patel [1990] 1  QB  335, [1988] 3  WLR  295, [1989] 2  All ER 648....................................................................................................................13.45 Joint Stock Co Aeroflot – Russian Airlines v Berezeovsky [2014]  EWCA  Civ 20, [2014] 1 WLUK 253, [2014] 1 CLC 53..................................................................13.64 K Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, [2019] 1 WLR 3514, [2019] 3 All ER 979............................................... 3.226, 3.227 Kainz v Panthewerke AG (Case C-43/13) [2015] QB 34, [2014] 3 WLR 1292, [2014] 1 All ER (Comm) 433.............................................................................................3.93 Kalfelis v Bankhaus Schröder (Case 189/87) (27 September 1988)...............3.67, 3.80, 3.103 Kaufman v Gerson [1904] 1 KB 591, [1904] 2 WLUK 92............................................6.10 Keech v Sandford (1726) Sel Cas Ch 61, 25 ER 223, [1726] 10 WLUK 11..................20.06 Keefe v Mapfre Mutualidad Compania de Seguros y Reaseguros SA; Hoteles Pinero Canarias SL  v Keefe [2015]  EWCA  Civ 598, [2016] 1  WLR  905, [2015] 6 WLUK 515................................................................................................... 3.124, 3.125 Kleinwort Benson v Glasgow City Council (No  2) [1999] 1  AC  153, [1997] 3 WLR 923, [1997] 4 All ER 641...........................................................................3.72 Klöckner Holdings GmbH  v Klöckner Beteiligungs GmbH [2005]  EWHC  1453 (Comm), [2005] 7 WLUK 215...............................................................................5.46 Kolassa v Barclays Bank plc (Case C-375/13) [2016] 1 All ER (Comm) 733, [2015] 1 WLUK 615, [2015] CEC 753...................................................................... 21.15, 21.28 Kongress Agentur Hagen GmbH v Zeehage BV (Case C-365/88) [1990] ECR I-1845, [1990] 5 WLUK 163, [1991] IL Pr 3..................................................  3.108, 3.111, 3.113 Konstanjevec v F  & S  Leasing GmbH (Case C-185/15) [2017] 4  WLR  7, [2016] 10 WLUK 245, [2016] IL Pr 38..............................................................................3.117 Koza v Akcil [2019] UKSC 40, [2019] 1 WLR 4830, [2020] 3 All ER 97.............. 3.58, 3.157 Kronhofer v Maier (Case C-168/02) [2004] 2 All ER (Comm) 759, [2005] 1 Lloyd’s Rep 284, [2004] ECR I-6009...................................................... 3.87; 21.15, 21.16; 23.18 Kuwait Airways Corpn v Iraqi Airways Co (No 6) [2002] UKHL 19, [2002] 2 AC 883, [2002] 2 WLR 1353............................................................................................ 6.11, 6.19 xxxii

Table of Cases L LIC  Telecommunications SARL  v VTB  Capital plc [2018]  EWHC  169 (Comm), [2018] 2 WLUK 158...............................................................................................21.09 La Banque Internationale de Commerce de Petrograd v Goukassow [1923] 2 KB 682, (1923) 16 Ll L Rep 126, [1923] 6 WLUK 47.........................................................10.02 Lancashire Fires Ltd v SA Lyons & Co Ltd [1996] 4 WLUK 288, [1997] IRLR 113, [1996] FSR 629............................................................................................... 16.13, 16.15 Lansing Linde v Kerr [1991] 1 WLR 251, [1991] 1 All ER 418, [1991] ICR 428.........16.14, 16.25 Laughton & Hawley v Bapp Industrial Supplies Ltd [1986] 3 WLUK 3[1986] IRLR 245...................................................................................15.02 Lawlor v Sandvik Mining & Construction Mobile Crushers & Screens Ltd [2013] EWCA Civ 365, [2013] 2 Lloyd’s Rep 98, [2013] 4 WLUK 450.........7.21; 23.20 Lawrence David Ltd v Ashton [1991] 1  All ER  385, [1988] 7  WLUK  27, [1989] ICR 123............................................................................................... 10.20; 16.24 Lawson v Serco Ltd; Crofts v Veta [2006]  UKHL  3, [2006] 1  All ER  823, [2006] ICR 250.................................................... 1.10; 14.05, 14.14, 14.15, 14.44, 14.45, 14.47, 14.57, 14.61; 19.11, 19.42, 19.43 Lazar v Allianz SpA (Case C-350/14) [2016] 1 WLR  835, [2015] 12 WLUK  326, [2016] RTR 7...................................................................................................... 8.25, 8.27 Leathertex Divisione Sintetici SpA v Bodotext BVBA (Case C-420/97) [1999] 2 All ER (Comm) 769, [1999] ECR I-6746, [1999] 10 WLUK 79.................................22.34 Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd [1988] QB 448, [1988] 2 WLR 735, [1988] 1 AlL ER 513..............................................................13.52 Lion Laboratories Ltd v Evans [1985]  QB  526, [1984] 3  WLR  539, [1984] 2 All ER 417....................................................................................................................16.22 Lloyd’s Register of Shipping v Societe Campenon Bernard (Case C-439/93) [1995] ECR I-961, [1995] 4 WLUK 105, [1995] CLC 1157.................................3.97 Löber v Barclays Bank plc (Case C-304/17) [2019] 4 WLR 5, [2018] 9 WLUK 98, [2019] CEC 97........................................................................................................21.15 London Borough of Lewisham v Malcolm [2008]  UKHL  43, [2008] 1  AC  1399, [2008] 3 WLR 194..................................................................................................14.30 London Helicopters Ltd v Heliportugal LDA-INAC [2006] EWHC 108 (QB), [2006] 1 All ER (Comm) 595, [2006] 2 WLUK 196.........................................................21.26 Lonmar Global Risks Ltd v West [2010] EWHC 2878 (QB), [2010] 11 WLUK 318, [2011] IRLR 138.....................................................................................................15.08 Lonrho Ltd v Shell Petroleum Co Ltd (No  2) [1982] AC  173, [1981] 3  WLR  33, [1981] 2 All ER 456................................................................................................24.12 Lonrho plc v Fayed (No  1) [1992] 1  AC  448, [1991] 3  WLR  188, [1991] 3  All ER 303............................................................................................................ 24.16, 24.18 L’Oreal SA  v Bellure NV  [2007]  EWCA  Civ 968, [2007] 10  WLUK  212, [2008] RPC 9..........................................................................................................8.40 Lumley v Gye (1853) 2 El & Bl 216, 118 ER 749, [1853] 1 WLUK 79........................24.04 Lungowe v Vedanta Resources plc [2019]  UKSC  20, [2019] 2 WLR  1051, [2019] 3 All ER 1013................................................................... 3.106, 3.280, 3.281, 3.282; 4.16 Lupofresh Ltd v Sapporo Breweries Ltd [2013]  EWCA  Civ 948, [2014] 1 All ER (Comm) 484, [2013] 2 Lloyd’s Rep 444..................................................7.23, 7.49; 22.17 M MAD  Atelier International BV  v Manès [2020]  EWHC  1014 (Comm), [2020] 3 WLR 631, [2020] 4 WLUK 277...................................................................13.06, 13.35 Macalpine v Macalpine [1958] P 35, [1957] 3 WLR 698, [1957] 3 All ER 134............13.54 Macartney (No 2), Re [1921] 1 Ch 522, [1921] 2 WLUK 15.........................................13.52 Mackender v Feldia AG  [1967] 2  QB  590, [1967] 2  WLR  119, [1966] 3  All ER 847................................................................................................... 3.256, 3.276; 4.22 xxxiii

Table of Cases Macmillan v Bishopsgate Investment Trust plc (No  3) [1996] 1 WLR  387, [1996] 1 All ER 585, [1995] 11 WLUK 33.................................................................... 6.03, 6.04 Macquarie Global Infrastructure Funds 2 Sarl (in liquidation) v Rodino Gonzalez [2020] EWHC 2123 (Comm), [2020] 7 WLUK 387..............................................5.26 MacShannon v Rockware Glass Ltd [1978] AC 795, [1978] 2 WLR 362, [1978] 1 All ER 625....................................................................................................................4.14 Madoff Securities International v Raven [2011] EWHC 3102 (Comm), [2012] 2 All ER (Comm) 634, [2011] 11 WLUK 726........................................................ 3.102, 3.104 Mahamdia v Algeria (Case C-154/11) [2012] 7 WLUK 661, [2014] All ER (EC) 96, [2013] ICR 1.....................................................................................................3.95, 3.150 Mainschiffahrts-Genossenschaft EG v Les Gravieres Rhenanes Sarl (Case C-106/95) [1997] QB 731, [1997] 3 WLR 179, [1997] ECR I-911.........................................3.168 Manchester Courage, The [1973] 1 Lloyd’s Rep 386, [1973] 3 WLUK 6.....................3.235 Marc Rich & Co ASG  v Societa Italiana Impianti PA (Case C-190/89) [1992] 1 Lloyd’s Rep 342, [1991] ECR I-3855, [1991] 7 WLUK 341............................. 3.23, 3.24 Marc Rich & Co v Societa Italiani Impianti pA (The Atlantic Emperor) (No 2) [1992] 1 Lloyd’s Rep 624, [1991] 12 WLUK 203, [1992] IL Pr 544................................13.25 Mareva Cia Naviera SA  v International Bilcarriers SA (The Mareva) [1980] 1 All ER 213, [1975] 2 Lloyd’s Rep 509, [1975] 6 WLUK 104......................................11.08 Marubeni Hong Kong & South China Ltd v Mongolia [2002] 2 All ER (Comm) 873, [2002] 8 WLUK 19.................................................................................................3.276 Marinari v Lloyds Bank plc (Case C-364/93) [1996]  QB  217, [1996] 2 WLR  159, [1995] ECR I-2719.................................................................................. 3.84, 3.88, 3.259 Maronier v Larmer [2002] EWCA Civ 774, [2003] QB 620, [2002] 3 WLR 1060.......13.92 Masdar (UK) Ltd v Commission of the European Communities (Case C-47/07P) [2008] ECR I-9761, [2008] 12 WLUK 447, [2009] 2 CMLR 1.............................8.67 Massey v Heynes & Co (1888) 21 QBD 330, [1888] 7 WLUK 27................................3.235 Mazur Media Ltd v Mazur Media GmbH [2004]  EWHC  1566 (Ch), [2004] 1 WLR 2966, [2005] 1 Lloyd’s Rep 41..................................................................3.81 Medway Packaging Ltd v Meurer Machinen GmbH & Co KG [1990] 2 Lloyd’s Rep 112, [1990] 5 WLUK 44.........................................................................................3.74 Meeth v Glacetal (Case C-23/78) [1978]  ECR  2133, [1978] 11 WLUK  70, [1979] 1 CMLR 520...........................................................................................................3.171 Melzer v MF Global (Case C-228/11) [2013] QB 1112, [2013] 3 WLR 883................3.82 Mercedes Benz AG  v Leiduck [1996]  AC  284, [1995] 3  WLR  718, [1995] 3  All ER 929....................................................................................................................3.233 Meroni v Recoletos Ltd (Case C-559/14) [2017] QB 85, [2016] 3 WLR 949, [2016] 5 WLUK 574...........................................................................................................13.91 Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391, [1989] 3 WLR 563, [1989] 3 All ER 14......................................................... 3.257, 3.259, 3.260, 3.261, 3.262, 3.268; 8.72; 23.34 Midas IT Services v Opus Portfolio Ltd (unreported, 21 December 1999)....................16.25 Midland Bank plc v Cox McQueen (a firm) [1999] 1 WLUK 654, [1999] Lloyd’s Rep Bank 78, [1999] 1 FLR 1002..................................................................................23.03 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384, [1978] 3 WLR 167, [1978] 3 All ER 571................................................................................................23.02 Midtown Acquisitions LP  v Essar Global Fund Ltd [2017]  EWHC  519 (Comm), [2017] 1 WLR 3083, [2017] 3 WLUK 435.............................................................13.47 Millar v Bassey [1993] 7 WLUK 121, [1994] EMLR 44.......................................15.13; 24.07, 24.13 Ministry of Defence v Wallis [2011]  EWCA  Civ 231, [2011] 3  WLUK  224, [2011] ICR 617.......................................................................................................14.59 Mohammed v Bank of Kuwait & the Middle East KSC [1996] 1 WLR 1483, [1996] 5 WLUK 313, [1996] CLC 1835............................................................................4.12 Molton Street Capital LLP v Shooters Hill Capital Partners LLP [2015] EWHC 3419 (Comm), [2015] 11 WLUK 693.............................................................................7.28 xxxiv

Table of Cases Morgan Stanley & Co International plc v China Haisheng Juice Holdings Co Ltd [2009] EWHC 2409 (Comm), [2010] 2 All ER (Comm) 514, [2010] 1 Lloyd’s Rep 265...................................................................................................................21.10 Morin v Bonhams & Brooks Ltd [2003]  EWHC  467 (Comm), [2004] 1  All ER (Comm) 880, [2004] 1 Lloyd’s Rep 702.................................................................21.24 Motorola Credit Corpn v Uzan [2003] EWCA Civ 752, [2004] 1 WLR 113, [2003] 6 WLUK 291.................................................................. 3.243, 3.244; 11.14, 11.15, 11.22 Mulox v Geels (Case C-125/92) [1993]  ECR  I-4075, [1993] 7  WLUK  143, [1994] IRLR 422.....................................................................................................18.17 Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258, [1983] 3 WLR 492, [1983] 2 All ER 563................................3.236 Murad v Al Saraj [2005]  EWCA  Civ 959, [2005] 7  WLUK  945, [2005]  WTLR 1573.............................................................................. 20.04, 20.11, 20.12, 20.14 Murthy v Sivajothi [1999] 1 WLR 467, [1999] 1 All ER 721, [1998] 10 WLUK 589...13.22 N NML  Capital Ltd v Argentina [2011]  UKSC  31, [2011] 2  AC  495, [2011] 3 WLR 273........................................................................................... 3.223, 3.230, 3.268 Narajj v Shelbourne [2011] EWHC 3298 (QB), [2011] 12 WLUK 526, [2011] All ER (D) 111 (Dec)..........................................................................................................10.08 National Homes Loan Corpn v Giffen Couch & Archer [1998] 1 WLR 207, [1997] 3 All ER 808, [1997] 6 WLUK 299........................................................................22.02 National Navigation Co v Endesa Generacion SA (The Wadi Sudr) [2009] EWCA Civ 1397, [2010] 2 All ER (Comm) 1243, [2010] 1 Lloyd’s Rep 193.................. 13.83, 13.88 New Cap Reinsurance Corpn Ltd (in liquidation), Re; New Cap Reinsurance Corpn Ltd (in liquidation) v Grant [2011]  EWCA  Civ 971, [2012] Ch  538, [2012] 2 WLR 1095............................................................................................................13.66 Newtherapeutics Ltd v Katz [1991] Ch  226, [1990] 3  WLR  1183, [1991] 2  All ER 151................................................................................................. 20.33, 20.35, 20.39 Niblett Ltd v Confectioners’ Materials Co Ltd [1921] 3 KB 387, [1921] 4 WLUK 87.22.06 Nogueira v Crewlink Ireland Ltd (Case C-168/16) [2017] 9  WLUK  229, [2018] ICR 344............................................................................................... 3.145; 18.18 Normaco Ltd & Norilsk Nickel v Lundman [1998] 12 WLUK 336, [1999] CPLR 326, [1999] IL Pr 381......................................................................................................13.80 Norway’s Application (Nos 1 & 2), Re [1990] 1 AC 723, [1989] 2 WLR 458, [1989] 1 All ER 745............................................................................................................6.15 Nouvion v Freeman (1889) 15 App Cas 1, [1889] 11 WLUK 62...................................13.35 Novoship (UK) Ltd v Mikhaylyuk [2014] EWCA Civ 908, [2015] QB 499, [2015] 2 WLR 526..............................................................................................................20.13 O OBG Ltd v Allan [1993] 7 WLUK 121, [1994] EMLR 44...............15.13; 24.03, 24.08, 24.12, 24.17, 24.20, 24.36 OBG Ltd v Allan [2007] UKHL 1, [2008] 1 AC 1, [2007] 2 WLR 920.........................24.10 OJSC TNK-BP  Holding v Lazurenko [2012]  EWHC  2781 (Ch), [2012] 10 WLUK 439........................................................................................ 7.60; 10.04; 15.40 OT Africa Lines Ltd v Magic Sportswear Corpn [2005] EWCA Civ 710, [2006] 1 All ER (Comm) 32, [2005] 2 Lloyd’s Rep 170.............................................................17.16 ÖFAB Östergötlands Fastigheter AB v Koot (Case C-147/12) [2015] QB 20, [2014] 3 WLR 1278, [2013] 2 All ER (Comm) 969....................................................... 3.83, 3.92 Okura & Co Ltd v Forsbacka Jernverks Aktiebolag [1914] 1  KB  715, [1914] 1 WLUK 40.............................................................................................................3.203 Oldendorff v Liberia Corpn (No 2) [1996] 1 Lloyd’s Rep 380, [1995] 11 WLUK 229, [1996] CLC 482......................................................................................................7.21 xxxv

Table of Cases Oppenheimer v Cattermole (Inspector of Taxes) [1976] AC 249, [1975] 2 WLR 347, [1975] 1 All ER 538............................................................................................6.11, 6.19 Orams v Apostolides [2010] EWCA Civ 9, [2011] QB 519, [2011] 2 WLR 324..........13.89 Overseas Union Insurance Ltd v New Hampshire Insurance Co [1992]  QB  434, [1992] 2 WLR 586, [1992] 2 All ER 138.............................................. 5.14; 13.97; 18.65 Owens Bank Ltd v Bracco [1992] 2  AC  443, [1992] 2  WLR  621, [1992] 2  All ER 193................................................................................................. 13.14, 13.45, 13.46 Owens Bank Ltd v Bracco (Case C-129/92) [1994]  QB  509, [1994] 2  WLR  759, [1994] 1 All ER 336................................................................................................13.82 Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44, [1994] 7 WLUK 57....13.46, 13.48 Owners of Cargo Lately Laden on Board the Eleftheria v Owners of the Eleftheria [1970] P 94, [1969] 2 WLR 1073, [1969] 2 All ER 641..................................... 4.23, 4.25 Owners of Cargo Lately Laden on Board the Tatry v Owners of the Maciej Rataj (Case C-406/92) [1999] QB 515, [1999] 2 WLR 181, [1995] 1 Lloyd’s Rep 302....... 5.17, 5.20 Owners of Cargo on Board the Morviken v Owners of the Hollandia [1983] 1 AC 565, [1982] 3 WLR 1111, [1982] 3 All ER 1141...........................................................7.41 Owners of the Las Mercedes v Owners of the Abidin Daver [1984] AC 398, [1984] 2 WLR 196, [1984] 1 All ER 470...........................................................................4.19 Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (Case C-281/02) [2005] QB 801, [2005] 2 WLR 942, [2005] 2 AlL ER (Comm) 577........................ 3.28, 3.60, 3.173; 4.03 P Painer v Standard Verlags GmbH (Case C-145/10) [2011] 12  WLUK  47, [2011] ECR I-12553...............................................................................................3.105 Pammer v Reederei Karl Schlüter (Case C-585/08 & C-144/09) [2011] 2  All ER (Comm) 888, [2012] Bus LR 972, [2010] ECR I-12527.................... 3.133; 22.25, 22.42 Parkasho v Singh [1968] P 233, [1067] 2 WLR 946, [1967] 1 All ER 737....................12.03 Partenreederei M/S  Tilly Russ v Haven & Vervoebedrijf Nova (Case 71/83) [1985] QB 931, [1985] 3 WLR 179, [1984] ECR 2417.........................................3.178 Pasley v Freeman (1789) 3 Term Rep 51, 100 ER 450, [1789] 1 WLUK 1...................21.03 Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85, [2007] 2 WLR 102...............................13.40 Pellegrini v Italy (Application 30882/96) [2001] 7 WLUK 526, (2002) 35 EHRR 2....13.55 Pemberton v Hughes [1899] 1 Ch 781, [1899] 2 WLUK 57....................... 13.41, 13.42, 13.54 Petereit v Babcock International Holdings Ltd [1990] 1  WLR  350, [1990] 2  All ER 135, [1989] 11 WLUK 363....................................................................... 13.98, 13.99 Petter v EMC  Europe [2015]  EWCA  Civ 828, [2015] 7  WLUK  833, [2015] IRLR 847................................................ 3.140, 3.190, 3.255; 17.04, 17.20, 17.31, 17.35, 17.36, 17.37, 17.44; 18.14; 19.34, 19.35 Phillips v Eyre (1870-71) LR 6 QB 1, [1870] 6 WLUK 115..........................................8.71 Pinckney v KDG  Mediatech AG (Case C-170/12) [2013] Bus LR  1313, [2013] 10 WLUK 113, [2014] FSR 18...............................................................................3.90 Plaza BV  v Law Debenture Trust Corpn plc [2015]  EWHC  43 (Ch), [2015] 1 WLUK 230...............................................................................3.164, 3.173, 3.189; 5.42 Powell v OMV Exploration & Production Ltd [2013] 7 WLUK 717, [2014] ICR 63, [2014] IRLR 80................................................... 3.146; 14.20; 18.12, 18.29; 19.18, 19.31 Prince Albert v Strange (1849) 1 Mac & G 25, 41 ER 1171, [1849] 2 WLUK 25.........16.07 Printers & Finishers Ltd v Holloway (No 2) [1965] 1 WLR 1, [1964] 3 All ER 731, [1964] 11 WLUK 13...............................................................................................16.16 Prinz Adalbert (No 2), The[1917] AC 586, [1917] 7 WLUK 5......................................22.11 Profit Investment Sim SpA v Ossi (Case C-366/13) [2016] 1 WLR 3832, [2016] 2 All ER (Comm) 621, [2016] 4 WLUK 406.............................. 3.71, 3.72, 3.80, 3.167; 18.22 Q QBE  Management Services (UK) Ltd v Dymoke [2012]  EWHC  80 (QB), [2012] 1 WLUK 616, [2012] IRLR 458............................................... 15.06, 15.07, 15.08, 15.11 xxxvi

Table of Cases R R (on the application of Hottak) v Secretary of State for Foreign & Commonwealth Affairs [2016] EWCA Civ 438, [2016] 1 WLR 3791, [2016] ICR 975..................14.54 R  & C  Comrs v Sunico ApS (Case C-49/12) [2014]  QB  391, [2014] 2 WLR  335, [2013] 2 All ER (Comm) 1117...............................................................................3.21 R  & C  Comrs v Total Network SL  [2008]  UKHL  19, [2008] 1 AC  1174, [2008] 2 WLR 711..............................................................................................................24.20 RBRG Trading (UK) Ltd v Sinocore International Co Ltd [2018] EWCA Civ 838, [2019] 1 All ER (Comm) 810, [2018] 2 Lloyd’s Rep 133................................7.44; 13.53 RCA Corpn v Pollard [1983] Ch 135, [1982] 3 WLR 1007, [1982] 3 All ER 771........24.11 Rahmatullah v Ministry of Defence [2017]  UKSC  1, [2017]  AC  649, [2017] 2 WLR 287..............................................................................................................6.19 Raiffesen Zentralbank Österreich AG  v Five Star Trading LLC (The Mount I) [2001] EWCA Civ 68, [2001] QB 825, [2001] 2 WLR 1344.................................6.03 Raiffesen Zentralbank Österreich AG v Royal Bank of Scotland plc [2010] EWHC 1392 (Comm), [2011] 1 Lloyd’s Rep 123, [2010] 6 WLUK 199....................................21.03 Ralli Brothers v Compania Naviera Sota y Anzar [1920] 2 KB 287, [1920] 2 Ll L Rep 550, [1920] 3 WLUK 175...............................................................7.42, 7.56, 7.68; 22.22 Ranson v Customer Systems plc see Customer Systems plc v Ranson Raulin v Fischer [1911] 2 KB 93, [1911] 2 WLUK 7....................................................13.37 Ravat v Halliburton Manufacturing & Services Ltd [2012]  UKSC  1, [2012] 2 All ER 905, [2012] ICR 389..................................... 14.45, 14.52, 14.57; 19.13, 19.45, 19.52 Red Sea Insurance Co Ltd v Bouygues SA  [1995] 1 AC  190, [1994] 3 WLR  926, [1994] 3 All ER 749................................................................................................8.71 Regal (Hastings) Ltd v Gulliver [1967] 2  AC  134, [1942] 1  All ER  378, [1942] 2 WLUK 25.............................................................................................................20.06 Reichert v Dresdner Bank (Case C-115/88) [1990] ECR I-27, [1990] 1 WLUK 504, [1990] IL Pr 105......................................................................................................3.156 Reichold Norway ASA v Goldman Sachs International [2000] 1 WLR 173, [2000] 2 All ER 679, [1999] 2 All ER (Comm) 174..........................................................5.45 Reisch Montage AG  v Kiesel Baumaschinen Handels GmbH (Case C-103/05) [2006] ECR I-6827, [2006] 7 WLUK 334, [2007] IL Pr 10...................................3.102 Robb v Green [1895] 2 QB 315, [1895] 7 WLUK 40....................................................16.12 Roberts v Soldiers, Sailors, Airmen & Families Association – Forces Help [2020] EWCA Civ 926, [2020] 7 WLUK 266, [2020] PIQR P20..........................8.52 Robey & Co v Snaefell Mining Co Ltd (1887) 20 QBD 152, [1887] 12 WLUK 45......22.14 Rochester Resources Ltd v Lebedev [2014]  EWHC  2185 (Comm), [2014] 7 WLUK 56.............................................................................................................10.09 Roger Bullivant Ltd v Ellis [1986] 5  WLUK  225, [1987]  ICR  464, [1987]  IRLR 491.........................................................................................................16.05, 16.25 Royal Boskalis Westminster NV  v Mountain [1999]  QB  674, [1998] 2 WLR  538, [1997] 2 All ER 929................................................................................................7.45 Rubin v Eurofinance SA [2012] UKSC 46, [2013] 1 AC 236, [2012] 3 WLR 1019......11.26; 13.17, 13.21, 13.23, 13.34 Rutten v Cross Medical (Case C-383/95) [1997]  ECR  I-57, [1997] 1  WLUK  85, [1997] ICR 715.........................................................................3.144; 18.17, 18.59; 19.41 S SAS  Institute Inc v World Programming Ltd [2020]  EWCA  Civ 599, [2020] 5 WLUK 92..................................................................................................... 13.72; 17.07 SMAY Investments v Sachdev [2003] EWHC 474 (Ch), [2003] 1 WLR 1973, [2003] 3 WLUK 427...................................................................................................3.207, 3.208 SOVAG – Schwarzmeer und Ostee Versicherungs-Aktiengesellschaft v If Vahinkovakuutusyhtio Oy (Case C-521/14) [2016] QB 780, [2016] 3 WLR 136, [2016] 1 WLUK 342...............................................................................................3.115 xxxvii

Table of Cases SSL International plc v TTK LIG Ltd [2011] EWCA Civ 1170, [2012] 1 WLR 1842, [2012] 1 All ER (Comm) 429.................................................................................3.203 St Pierre v South American Stores (Garth & Chaves) Ltd [1936] 1 KB 382, [1935] 12 WLUK 42, [1937] 1 All ER 206........................................................................10.08 Saab v Saudi American Bank [1999] 1 WLR 1861, [1999] 4 All ER 321, [1999] 2 All ER (Comm) 353......................................................................................................3.203 Salt v Stratstone Specialist Ltd (t/a Stratstone Cadillac Newcastle) [2015] EWCA Civ 745, [2015] 7 WLUK 500, [2015] 2 CLC 269........................................................21.02 Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 (Note), [1948] 1 WLUK 12, (1948) 65 RPC 203........................................... 16.07, 16.11 Salzgitter Mannesmann Handel GmbH v SC Laminourul SA (Case C-157/12) [2014] 1 WLR 904, [2013] 9 WLUK 536, [2014] CEC 500..............................................13.96 Samengo-Turner v JH Marsh & McLennan (Services) Ltd [2007] EWCA Civ 723, [2007] 2 All ER (Comm) 813, [2008] ICR 18 3.140, 3.143, 3.147, 3.150, 3.190, 3.255; 17.20, 17.27, 17.31, 17.35, 17.36,17.38, 17.44, 17.64; 19.34, 19.35 Sanicentral GmbH  v Rene Collin (Case 25/79) [1979]  ECR  3423, [1979] 11 WLUK 124, [1980] 2 CMLR 164......................................................................3.180 Sarrio SA  v Kuwait Investment Authority [1999] 1  AC  32, [1997] 3  WLR  1143, [1997] 4 All ER 929................................................................................................5.32 Sar Schotte v Parfums Rothschild (Case 218/86) [1987]  ECR  4905, [1987] 12 WLUK 95, [1989] ECC 431..............................................................................3.95 Schrems v Facebook Ireland Ltd (Case C-498/16) [2018] 1  WLR  4343, [2018] 1 WLUK 376, [2018] CEC 1111............................................................................3.131 Scottish & Newcastle International Ltd v Othon Ghalanos Ltd [2008]  UKHL  11, [2008] 2 All ER 768, [2008] 1 Lloyd’s Rep 462.....................................3.73; 22.12, 22.30 Seaconsar (Far East) Bank Ltd v Bank Markazi Jomhouri Islami Iran (Service Outside Jurisdiction) [1994] 1 AC 438, [1993] 3 WLR 756, [1993] 4 All ER 456..............3.217, 3.218, 3.271 Seager v Copydex Ltd (No  1) [1967] 1  WLR  923, [1967] 2 AlL ER  415, [1967] 4 WLUK 42..................................................................................................... 16.05, 16.07 Sectrack NV v Satamatics Ltd [2007] EWHC 3003 (Comm), [2007] 12 WLUK 558...16.25 Sennar, The see DSV Silo und Verwaltungsgesellschaft mbH v Owners of the Sennar (The Sennar) No 2) Service Temps Inc v MacLeod [2013]  CSOH  162, [2014]  SLT  375, [2013] 10 WLUK 278.........................................................................................................13.72 Sfeir & Co v National Insurance Co of New Zealand [1964] 1 Lloyd’s Rep 330, [1964] 3 WLUK 109...........................................................................................................13.61 Sharab v Prince Al-Waleed Bin Tala Bin Abdal Aziz Al-Saud [2009] EWCA Civ 353, [2009] 2 Lloyd’s Rep 160, [2009] 4 WLUK 568....................................................22.38 Shearson Lehman Hutton v TVB Treithandgesellschaft fur Vermogensverwaltung und Beteiligungen mbH (Case C-89/91) [1993]  ECR  I-139, [1993] 1 WLUK  807, [1993] IL Pr 199................................................................................................ 3.95; 20.36 Shepherds Investments Ltd v Walters [2006] EWHC 836 (Ch), [2006] 4 WLUK 358, [2007] IRLR 110.....................................................................................................20.01 Shevill v Presse Alliance SA (Case C-68/93) [1995] 2 AC 18, [1995] 2 WLR 499, [1995] ECR I-415............................................................ 3.86; 16.71; 21.13, 21.14, 21.30 Showlag v Mansour [1995] 1 AC 431, [1994] 2 WLR 615, [1994] 2 All ER 129.........13.51 Simpson v Intralinks Ltd [2012] 6 WLUK 294, [2012] IL Pr 34, [2012] ICR 1343......14.06, 14.16, 14.18; 19.16 Singh v Rajah of Faridkote [1894] AC 670, [1894] 7 WLUK 144......................... 13.18, 13.29 Smania v Standard Chartered Bank [2014] 12  WLUK  200, [2015]  ICR  436, [2015] IRLR 271.....................................................................................................14.56 Smith v Eric S  Bush (a firm) [1990] 1 AC  831, [1989] 2 WLR  790, [1989] 2 All ER 514....................................................................................................................23.04 Societe Cooperative Sidmetal v Titan International Ltd [1966] 1  QB  828, [1965] 3 WLR 847, [1965] 3 All ER 494...........................................................................13.34 xxxviii

Table of Cases Societe Financiere et Industrielle du Peloux v Axa Belgium (Case C-112/03) [2006] QB 251, [2006] 2 WLR 228, [2005] 2 All ER (Comm) 419.......................3.177 Societe Nationale Industrielle Aerospatiale (SNIA) v Lee Kui JAK [1987] AC 871, [1987] 3 WLR 59, [1987] 3 All ER 510.................................................................17.67 Solo Kleinmotoren GmbH  v Emilio Boch (Case C-414/92) [1994]  ECR  I-2237, [1994] 6 WLUK 25, [1994] IL Pr 457....................................................................13.95 Source Ltd v TUV Rheinland Holding AG [1998] QB 54, [1997] 3 WLR 365, [1997] 3 WLUK 369............................................................................................ 3.75, 3.81; 22.32 Speed Investments Ltd v Formula One Holdings (No  2) [2004]  EWCA  Civ 1512, [2005] 1 WLR 1936, [2004] 11 WLUK 391...........................................................3.158 Sphere Drake Insurance plc v Gunes Sigorta Anonim Sirketi [1988] 1 Lloyd’s Rep 139, [1987] 5 WLUK 93................................................................................. 3.210, 3.220 Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987]  AC  460, [1986] 3 WLR 972, [1986] 3 All ER 843................................. 3.272, 3.273, 3.277, 3.278, 3.282; 4.11, 4.14, 4.24; 15.37; 18.06 Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG [2013] UKSC 70, [2014] 1 All ER 590, [2014] 1 Lloyd’s Rep 223............................... 5.16, 5.19, 5.25, 5.29 Stewart v Trafalgar House Steamship Co Ltd [2013] CSOH 37, 2013 SLT 834, [2013] 3 WLUK 80.............................................................................................................3.106 Stichting Shell Pensioenfonds v Krys [2014]  UKPC  41, [2015]  AC  616, [2015] 2 WLR 289...................................................................................................... 17.03, 17.50 Strategic Technologies Pte Ltd v Procurement Bureau of the Republic of China Ministry of National Defence [2020]  EWHC  362 (QB), [2020] 1 WLR  3388, [2020] 2 WLUK 257...............................................................................................13.25 Sun Valley Foods Ltd v Vincent [1999] 12 WLUK 653, [2000] FSR 825......................16.25 Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576, [1959] 3 WLR 214, [1959] 3 All ER 182................................................................................................22.11

T TS Havprins, The see Chevron International Oil Co Ltd v A/S Sea Team (The TS Havprins) Takhar v Gracefields Developments Ltd [2019]  UKSC  13, [2020] AC  450, [2019] 2 WLR 984..............................................................................................................13.46 Tasarruf Mevduati Sigorta Fonu v Demirel [2007]  EWCA  Civ 799, [2007] 1 WLR 2508, [2007] 4 All ER 1014.......................................................................3.263 Taser International Inc v SC Gate 4 Business SRL (Case C-175/15) [2016] QB 887, [2016] 3 WLR 683, [2017] 1 All ER (Comm) 289..................................3.45, 3.64, 3.187 Tatry, The see Owners of Cargo Lately Laden on Board the Tatry v Owners of the Maciej Rataj (Case C-406/92) Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd (No  1) [1959] 1  WLUK  21, [1960] RPC 128, (1959) 174 EG 1033...................................................................16.07 Theodohos, The [1977] 2 Lloyd’s Rep 428, [1977] 5 WLUK 114.................................3.203 Thoday v Thoday [1964] P 181, [1964] 2 WLR 371, [1964] 1 All ER 341...................13.06 Timis v Osipov [2018] EWCA Civ 2321, [2018] 10 WLUK 337, [2019] ICR 655.......14.21; 19.03, 19.28 Tjaskemolen (now named Visvliet), The (No  2) [1997] 2 Lloyd’s Rep 476, [1996] 11 WLUK 32, [1997] CLC 521..............................................................................13.80 Trade Agency Ltd v Seramico Investments Ltd (Case C-619/10) (6  September 2012)............................................................................................................... 13.90, 13.94 Trendtex Trading Corpn v Credit Suisse [1982] AC 679, [1981] 3 WLR 766, [1981] 3 All ER 520............................................................................................................4.15 Trust Risk Group SpA v Am Trust Europe see AmTrust Europe Ltd v Trust Risk Group SpA Tullett Prebon plc v BGC Brokers LP [2010] EWHC 484 (QB), [2010] 3 WLUK 502, [2010] IRLR 648...................................................................................15.03, 15.05, 15.38 Turner v Grovit (Case C-159/02) [2005] 1 AC 101, [2004] 3 WLR 1193, [2004] 2 All ER (Comm) 381............................................................. 17.11, 17.18, 17.58, 17.64; 18.63 xxxix

Table of Cases Tyne Improvement Comrs v Armement Anversois SA (The Brabo) [1949] AC 326, [1949] 1 All ER 294, (1948-49) 82 Ll L Rep 251..................................................3.234 U UBS AG v HSH Nordbank AG [2009] EWCA Civ 585, [2010] 1 All ER (Comm) 727, [2009] 2 Lloyd’s Rep 272.......................................................................................21.21 UBS (Wealth Management UK) Ltd v Vestra Wealth LLP [2008] EWHC 1974 (QB), [2008] 8 WLUK 25, [2008] IRLR 965.....................................15.05, 15.18, 15.19, 15.20 United Discount Co Ltd v Zoller (Costs) [2001] EWCA Civ 1755, [2002] 1 WLR 1517, [2002] 1 All ER 693................................................................................................4.27 United States of America v Inkley [1989] QB 255, [1988] 3 WLR 304, [1988] 3 All ER 144....................................................................................................................13.37 Universal General Insurance Co (UGIC) v Group Josi Reinsurance Co SA (Case C-412/98) [2001] QB 68, [2000] 3 WLR 1625, [2000] 2 All ER (Comm) 467.....3.119 Universal Music International Holdings v Schilling (Case C-12/15) [2016] QB 967, [2016] 3 WLR 1139, [2016] 6 WLUK 401................................... 3.88; 8.24; 21.37; 23.41 Universal Thermosensors Ltd v Hibben [1992] 1 WLR  840, [1992] 3 All ER  257, [1992] 1 WLUK 663...............................................................................................11.24 University of Nottingham v Fishel [2000] 2  WLUK  952, [2000]  ICR  1462. [2000] IRLR 471.....................................................................................................20.02 V VTB Capital plc v Nutritek International Corpn [2013] UKSC 5, [2013] 2 AC 337, [2013] 2 WLR 398..................................................................................................3.278 Vadala v Lawes (1890) 25 QBD 310, [1890] 4 WLUK 24.......................... 13.45, 13.46, 13.48 Van Uden Maritime BV (t/a Van Uden Africa Line) v Kommanditgesellschaft in Firma Deco-Line (Case C-391/95) [1999] QB 1225, [1999] 2 WLR 1181, [1999] 1 All ER (Comm) 385......................................................5.09; 11.17, 11.18, 11.20, 11.22 Verein für Konsumenteninformation v Amazon EU  Sarl (Case C-191/15) [2017] QB 252, [2017] 2 WLR 19, [2016] 7 WLUK 797......................................8.41 Vervaeke v Smith [1983] 1 AC 145, [1982] 2 WLR 855, [1982] 2 All ER 144.............6.09; 7.44; 13.49 Vidal-Hall v Google Inc [2015]  EWCA  Civ 311, [2016]  QB  1003, [2015] 3 WLR 409..............................................................................................................8.05 Vienna Insurance v Bilas see Ceska Podnikatelska Pojistovna as, Vienna Insurance Group v Bilas (Case C-111/09) Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd; Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK  Ltd [2013]  UKSC  46, [2014] AC  160, [2013] 3 WLR 299..............................................................................................................13.49 Virgo Fidelis Senior School v Boyle [2004] 1  WLUK  470, [2004]  ICR  1210, [2004] IRLR 268.....................................................................................................14.30 Vizcaya Partners Ltd v Picard [2016]  UKPC  5, [2016] 3 All ER  181, [2016] Bus LR 413....................................................................................................................13.29 Vogel v R & A Kohnstamm Ltd [1973] QB 133, [1971] 3 WLR 537, [1971] 2 All ER 1428..................................................................................................................13.33 W WPP Holdings Italy Srl v Benatti [2007] EWCA Civ 263, [2007] 1 WLR 2316, [2007] 2 All ER (Comm) 525..................................................................................... 3.139; 18.16 Webb v Webb (Case C-294/92) [1994]  QB  696, [1994] 3 WLR  801, [1994] 3 All ER 911....................................................................................................................3.156 Weber v Universal Ogden Services Ltd (Case C-37/00) [2002]  QB  1189, [2002] 3 WLR 931, [2002] ECR I-2013.............................................................................3.180 xl

Table of Cases Weber v Weber (Case C-438/12) [2015] Ch  140, [2015] 2  WLR  213, [2014] 4 WLUK 167...........................................................................................................5.13 Wellesley Partners LLP  v Withers LLP  [2015]  EWCA  Civ 1146, [2016] Ch  529, [2016] 2 WLR 1351................................................................................................23.07 Williams & Glyn’s Bank plc v Astro Dinamico Compania Naviera SA  [1984] 1 WLR 438..............................................................................................................3.207 Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368, [1986] 2 WLR 24, [1986] 1 All ER 129.............................................................................6.13 Williams v Cartwright [1895] 1 QB 142, [1894] 11 WLUK 137........................... 3.234, 3.235 Wilson v Maynard Shipping Consultants AB  [1978]  QB  665, [1978] 2 WLR  466, [1978] ICR 376.......................................................................................................14.62 Winans v A-G (No 1) [1904] AC 287, [1904] 5 WLUK 23............................................3.11 Wood Floor Solutions Andreas Domberger GmbH v Silva Trade SA (Case C-19/09) [2010] 1 WLR 1900, [2010] Bus LR 1050, [2010] 2 Lloyd’s Rep 114..................3.78 Worcester City & County Banking Co v Firbank, Pauling & Co [1894] 1 QB 784, [1894] 3 WLUK 33.................................................................................................3.200 Y Yukos International UK BV  v Merinson [2019]  EWCA  Civ 830, [2020]  QB  336, [2019] 3 WLR 877............................................................................................ 3.28, 3.151 Z Zuid-Chemie v Philippo’s Mineralenfabrik NV/SA (Case C-189/08) [2010] 2 All ER (Comm) 265, [2010] Bus LR 1026, [2009] ECR I-6917........................................3.91 Zwebner v Mortgage Corpn plc [1998] 6  WLUK  323, [1998]  PNLR  769, [1998] EG 104 (CS)................................................................................................23.03

xli

CHAPTER 1

Introduction

AN OVERVIEW 1.01 The purpose of this book is to look at the international element in employment and commercial litigation. An international element may arise in many situations. It may be that a party is based abroad, giving rise to questions about which courts have jurisdiction over that party. Or that a transaction originates – or an event occurs – abroad, giving rise to the questions both of jurisdiction and of what law governs the case. Thus it will be necessary to address two questions: (i) in what situations will the English court (or tribunal) have jurisdiction? and (ii) what law will it apply in cases which have an international aspect? 1.02 There will also be questions about the recognition of foreign judgments. In what circumstances will a party be able to have a judgment that has been obtained abroad recognised in the UK? This can be of central importance. If a party has significant assets in this jurisdiction, there will be little advantage in spending time and expending costs in securing a judgment abroad if that judgment cannot then be enforced in England and Wales. Thus, a key question before starting litigation elsewhere will be, what are the prospects that a judgment obtained in another country can be enforced in this one? 1.03 There are also tactical questions to be addressed, about how one may seek to persuade a court to accept or decline jurisdiction, and whether steps can be taken to challenge jurisdiction, such as, for example, applying to set aside the grant of permission to serve out of this jurisdiction or by way of anti-suit injunctions. 1.04 Of course, in the commercial sphere, parties have long been used to dealing with international jurisdiction and choice of law issues, because of the frequency with which contracts operate between jurisdictions and parties contract with counter-parties in other jurisdictions or using contracts that select a system of law which may not be connected with the parties or the transaction. In Abela v Baadarani1, Lord Sumption said that ‘litigation between residents of different states is a routine incident of modern commercial life’. Note the reference to ‘commercial life’. That observation does not necessarily apply to all types of litigation between all types of party. But in the employment sphere, too, there are an increasing number of cases in which there are international issues 1 [2013] UKSC 44, [2013] 1 WLR 2043.

1

1.05  Introduction

that need to be addressed. This may be because the person either bringing a claim or against whom a claim is sought to be made is based abroad, but in numerous types of case – in particular those concerning international competition – events which employers seek to restrain or in respect of which they may seek damages or other relief take place either abroad or in more than one jurisdiction (often simultaneously). These situations present legal questions, such as what is the rule to be applied and where does that lead? But there are also tactical questions – how can parties, whether claimants or defendants, make use of the rules to their best tactical advantage? In the employment context, some of the issues which arise are less familiar, in that they are less litigated than in the commercial sphere. That applies in particular to claims before the employment tribunal, considered separately in Chapter 14, where there is a dearth of case law relating to these questions.

Jurisdiction 1.05 Whenever there is an international element in a case brought in the domestic courts, there will be two principal questions. The first is whether, having regard to the identity of the parties and the nature of the subject matter, it is appropriate that the case be litigated in England and Wales at all. Does the English court have jurisdiction to enable the case to be litigated here, or should it be argued abroad in another forum which is more appropriate to determine the claim? The English court does not arrogate to itself the power to decide every case which a party wishes to bring before it. Instead, English law, consistent with that of other countries, imposes limits on the circumstances in which a court may decide cases. In many cases, the rules will be of universal application across European countries, since they presently derive from EU law which has laid down rules applicable to all EU states. As will be shown – at least at the time of writing – it is proposed that these EU-inspired rules of jurisdiction will continue to apply once the UK is outside the EU. Whether that proposal can be achieved is a different matter, and is addressed in Chapter 2, which considers the UK’s departure from the EU.

The applicable law 1.06 The second question is which system of law should apply to the case. An English court might take the parochial approach of saying of every case that, because the parties are before the English court, then English law should apply. But the court does not do that. Instead it uses rules to identify which law should be applied and then decides the case by reference to that law. The ascertainment of the content of that law is regarded in English courts as a question of fact and will often be the subject of expert evidence. In this context, too, many of the rules for deciding the applicable law are determined by the application of EU regulation and the current indication is that those rules will continue to apply even after the UK is outside the EU. (The old rules are also dealt with, just in case.) 2

An overview 1.10

1.07 In deciding what law to apply, the court has to decide how to characterise the case: what type of case is it? The answer to that question (which is considered in Chapter 6) directs attention to the choice of law rule and thus to the identification of the applicable law. The issue of characterisation is often understated but it is fundamental because it directs the court to a particular set of rules identified by the process of characterising the case – working out what type of claim it is and, in consequence, which choice of law rule applies. How to characterise the case is said to be a matter for domestic law, but in the context of EU instruments the approach to characterisation – what is meant by a tort, for example – is determined by cases decided under that law. 1.08 There are at least two reasons why these self-denying ordinances – limiting jurisdiction to cases where it is appropriate to hear the case, and not always applying domestic law but instead deciding what system of law should govern the case – exist. One is to give effect to the expectations of the parties. So if, for example, the parties to a contract have chosen that their agreement will be heard before a particular court which is not the English court, or be governed by a particular law which is not English law, it is difficult to see why a court should – unless there is good reason – confound those expectations by hearing a case which the parties have agreed should be heard elsewhere, or by not applying a law which the parties have chosen. 1.09 The other reason is the rather elusive concept of comity. That means respecting the autonomy of other states and their citizens. So, for example, if it is the courts of other countries who should hear a case, respect for those courts means that the English court should decline to hear the case. This notion of comity is of particular importance in cases where a party seeks an injunction to restrain proceedings abroad. An often important factor to be considered is the extent to which the English judge granting such an injunction might be seen to interfere in proceedings before, and thus the scope of the authority of, a foreign court. There is also a related issue of respect for the citizens of other countries and in consequence not adopting too enthusiastic an approach to exerting authority over them. Numerous English cases have said that for the domestic court to exert authority – to take jurisdiction – over someone who is not a national of this country is ‘exorbitant’ practice and so should be undertaken with caution (eg Amin Rasheed v Kuwait Insurance2). Despite the more recent expression of doubt as to this terminology (as, for example, Lord Sumption in Abela), at least in the context of international commercial disputes, there will be many areas of law – and perhaps employment is a strong example – where this cautious approach is appropriate. 1.10 In some cases statute intervenes and may arguably override both party choice and, partly in consequence, international comity. For example, s  204 of the Employment Rights Act 1996 says that the Act applies regardless of the governing law: parties may not contract out of the protection of the statute by choosing a law other than English law to govern their relationship. That does not 2 [1984] AC 50.

3

1.11  Introduction

mean that the Act applies to all employment in the world, of course. Whether it does or not depends on the territorial scope of the legislation, decided by cases such as Lawson v Serco Ltd3, which is considered in Chapter 14 on employment tribunals. But if an employment falls within the scope of the legislation, the legislation will apply even if parties have chosen another law to govern their relationship and even if some other state might think that it had authority to deal with employment disputes between the instant parties. There is a separate, and sometimes difficult, question whether an employee may be able to bring a claim before the domestic tribunals. The answer to this will turn both on issues of jurisdiction and the scope of the relevant law. 1.11 As indicated, many rules both of jurisdiction and choice of law have their origin in European law, so it may be fair to say that they have the idea of comity – or at least consistency – built into them. Despite the UK’s departure from the EU, the present intention appears to be that many of those provisions will continue to be effective in UK law. If the UK Government is able to achieve its aims – and it may or may not be able to do so – the UK’s departure from the EU will not, in the context of jurisdiction and choice of law, lead to a return to older common law principles. Thus it can be said that the continued application of these principles is a strong example of international comity – the adoption of rules designed to ensure consistency of approach. 1.12 It is perhaps optimistic to say this, but the hope is that the application of conflict of law rules across states ought to lead to courts reaching the same conclusion in matters of jurisdiction and applicable law no matter where a person litigates. If a person begins a claim in England or elsewhere, the hope would be that any court would come up with the same answers if asked which court has jurisdiction and which law applies. That certainly ought to happen between European nations, because the purpose of the adoption of uniform rules across Europe is that the same answers should be given to the same questions, meaning that states respect each other’s authority.

STRUCTURE OF THE BOOK 1.13 The approach of this book will be first to identify the rules applicable to issues of jurisdiction and choice of law and thus to set the overall framework. Related issues, such as challenges to jurisdiction and attempts to prevent litigation in other fora by means of, for example, anti-suit injunctions, will also be dealt with. The rules going to the recognition and enforcement in England of judgments of foreign courts will then be set out. The final section of the book deals with how the rules and principles governing jurisdiction and choice of law apply in particular types of case in the commercial and employment spheres, by giving examples of cases and suggesting how the jurisdiction and choice of law rules would apply in each. In this final section, an attempt is also made to identify 3 [2006] UKHL 3, [2006] ICR 250.

4

Initial strategic questions 1.18

tactical considerations and to suggest how parties may be able to make use of their rules to their own advantage in different types of case. 1.14 The book will thus deal with the following matters: (1) jurisdiction; (2) challenges to jurisdiction; (3) lis pendens; (4) choice of law; (5) anti-suit injunctions; (6) practice and procedure in the High Court; (7) recognition and enforcement of judgments; (8) the law relating to statutory claims in the employment tribunal; (9) the application of jurisdiction and choice of law rules to different types of case. 1.15 Each of the chapters dealing with particular types of case (ie Chapters 15–24) has a similar overall structure: first, the rules are identified so that the reader can quickly find out, for example, what the jurisdiction rules are in a breach of contract case. The rules are then expanded on and developed, in order to provide the reader with detail of how the rules have been explained and how they apply in particular cases. The aim is that the reader will, by using these sections, be able to work out how the rules apply to any particular case under consideration, in varying levels of detail depending on the depth of knowledge required. 1.16 For this first edition, the types of cases that are used as examples are the author’s personal selection. If this approach proves helpful, readers are invited to identify other types of case that might be suitable for use in examples and case studies, so that they can appear in any future edition.

INITIAL STRATEGIC QUESTIONS 1.17 There are many cases where no international element arises and parties may be most pleased when that is the case. But there are plenty of situations in which it may be necessary and helpful to address the international element, as it is capable of opening up strategic opportunities and may inform a party’s approach to a case. 1.18 One can consider several examples. Imagine the case of a team move taking place in a foreign country. The claimant is a UK-based company which sees its workforce being stripped out, it says unlawfully. It wants to prevent further losses. It may be that the persons involved are based in other countries. It may 5

1.19  Introduction

be that the company is seeing its staff being poached in numerous jurisdictions simultaneously. It may be that remedies in other jurisdictions are not helpful or that there would be difficulty in pursuing claims in several jurisdictions at the same time. Hence the question may be how the claimant can bring the case before the domestic court in order to secure what it considers to be the most advantageous remedy. Thus if, for example, it is possible to identify a person who is subject to the jurisdiction of the English court, that may enable a remedy to be sought. It may also be possible, by exploiting the jurisdiction rules in respect of different types of case – breach of contract, tort, for example, depending how the case is characterised, or those relating to multiple defendants, to bring non-UK parties before the courts. One of the things the chapters on particular types of case seek to do is to explain how these cases fall to be characterised and, on that basis, to identify the jurisdiction rules and the law which will be applied in each case. 1.19 To take another example: an employee works for a UK based company but most of the decisions, including as to the employee’s dismissal, were taken in another country by nationals of that country. The employee can sue the employer here with no difficulty but wishes also to bring proceedings against other companies and/or individuals who were the real decision makers and whom the employee wishes to sue as agents of the employer. Can the employee bring those individuals before the tribunal? May there be a tactical advantage to doing so because this will place greater pressure on the respondent to settle? 1.20 The reference to tactics is important. There will be many cases in which, by expanding litigation beyond a bare spat between two domestic parties and potentially bringing in other participants from other jurisdictions – who might have hoped to be apart from and not involved in the dispute – a claimant can apply substantial pressure on defendants to settle. It is important to acknowledge that such a strategy may also bring with it additional cost and, sometimes, difficulty. But there are plenty of cases in which the commercial judgment will be that, by bringing in other participants, the prospects of securing a satisfactory outcome are enhanced. 1.21 Much of what has been said relates to jurisdiction. But choice of law brings with it its own challenges. There are plenty of examples in which the law governing a contract or a tort does not provide the remedy or full remedy which a party wishes to achieve. This creates a challenge for a claimant: is it possible to circumvent limits which otherwise affect the governing law? 1.22 Another key question is the enforcement of judgments. It may be that the circumstances of a particular case mean that a claimant needs, for reasons of jurisdiction, to proceed in a foreign jurisdiction. It may also be that a person against whom the claimant would wish to enforce a judgment is based in the UK. A  key question, therefore, before commencing the claim, will be whether the judgment of the other jurisdiction will be recognised and enforced in the UK.

6

Part I

Conflict of law rules

CHAPTER 2

The UK’s departure from the EU 2.01 The following chapters consider the rules as to jurisdiction, recognition of judgments and choice of law. Much of this law presently derives from EU provisions, giving rise to questions about what will happen when the UK is no longer a member of the EU. That means that this book, like all others published since 2016, can discharge its near-statutory obligation to mention Brexit. How will the rules presently governed by EU law apply when the UK is outside the EU? It is necessary to consider jurisdiction and choice of law rules separately.

JURISDICTION AND RECOGNITION OF JUDGMENTS 2.02 The original proposal for EU law was that it would be adopted into English law and so would subsist as part of English law for as long as the UK found it helpful to apply that law and decided not to change it. This flows from the European Union (Withdrawal) Act 2018, s 3. Section 6 of that Act provides that an English court is not bound by principles laid down by or decisions of the Court of Justice of the European Union (CJEU), and an English court may not, after the end of the Implementation Period (see para 2.03 for more detail), refer any matter to the CJEU. 2.03 However, it is key to recognise that this is not the case in relation to the EU law that deals with jurisdiction, the Brussels Regulation (for more detail on this see para 2.09 ff). This Regulation will no longer have effect in the UK. That can already be seen because references to the Brussels Regulation (and its predecessor, the Brussels Convention, which the UK originally enacted) have already been prospectively removed from statutory provisions dealing with jurisdiction, such as the Civil Jurisdiction and Judgments Act 1982 and the Civil Jurisdiction and Judgments Order 20011 (which gave effect to the Regulation). Under the Civil Jurisdiction and Judgments (Amendment) (EU  Exit) Regulations 20192, dealing with ‘retained direct EU legislation’, references to the current and former versions of the Brussels Regulation are revoked. The key reason for this is that the Brussels Regulation requires reciprocity and, in light of the UK’s departure from the EU, that reciprocity can no longer exist. Hence, the EU law dealing with jurisdiction contained in the Brussels Regulation will no longer have effect in the UK. The 2019 Regulations refer to the changes being made ‘on exit day’, which was 31 January 2020. However, Schedule 5 to the European Withdrawal 1 SI 2001/3929. 2 SI 2019/479.

9

2.04  The UK’s departure from the EU

Agreement Act 2020 says that statutory instruments which provide that they will come into force on exit day are instead to be read as coming into force at the end of the Implementation Period (‘IP completion day’), which is the day the UK in fact leaves the EU, presently intended to be 31 December 2020. 2.04 What is to take its place instead? The Government’s preferred answer to that, which emerges from its document ‘The Future Relationship with the EU’3, is that the UK will become party to the Lugano Convention 2007. The Lugano Convention is an agreement between the EU and Iceland, Norway and Switzerland, and deals with jurisdiction and recognition of judgments. Its terms are basically the same as those in a previous iteration of the Brussels Regulation (the 2001 Brussels Regulation 44/20014) as opposed to the current Brussels Regulation (the so-called Brussels Recast Regulation 1215/20125 – which is referred to throughout this book as ‘Brussels Recast Regulation’). The Lugano Convention reflects that earlier version of the Regulation. That means that, if the UK could become a signatory to the Lugano Convention, the jurisdiction rules with which the UK has been familiar since the introduction of the Brussels Convention via the 1982 Act would remain in force and, save in minor respects, there would be no real change when compared with the existing position. However, there are some provisions of the Brussels Recast Regulation that are new, and which did not appear in the 2001 Brussels Regulation, so the adoption of the Lugano Convention rules would mean that some aspects of the Brussels Recast Regulation would not be carried forward. Iceland, Norway and Switzerland have given their consent for the UK to become a signatory to the Lugano Convention. The EU has not yet done so. If it does not give its consent, the UK will not be able to become a party to the Lugano Convention. 2.05 If the UK does not sign the Lugano Convention, this means that neither the Lugano rules (equivalent to the 2001 Brussels Regulation) nor the Brussels Recast Regulation would be in force in the UK after IP completion day. There are two other sources of law. One is the Civil Jurisdiction and Judgments Act 1982, which has been amended to include certain jurisdiction rules which copy the Brussels Recast Regulation in respect of particular types of case. Thus ss 15A–15D of the 1982 Act apply, as a matter of English statute, jurisdiction rules for consumer contracts and employment contracts which are lifted from the equivalent provisions of the Brussels Recast Regulation. Indeed, they even cross refer to the Brussels Recast Regulation. So in this way, in those areas, the same rules apply as would have applied had the Brussels Recast Regulation remained in force. 2.06 It is possible, perhaps, that the 1982 Act could be further amended in order to give effect to, say, Brussels Recast Regulation rules on contract or tort in the same way as for consumer and employment cases as a matter of domestic 3 February 2020. 4 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 5 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

10

Table of equivalences 2.11

law. In that event, the equivalent of the Brussels rules would appear as primary legislation. 2.07 Otherwise, the Hague Convention on Choice of Court Agreements 2005, which survives in the UK despite it no longer being a member of the EU, will apply, along with the common law rules. 2.08 When jurisdiction is dealt with in the following chapters, the text addresses both the Brussels Recast Regulation – which will still be relevant until the UK’s departure from the EU (and in respect of cases commenced before IP completion day) and if the UK signs Lugano – and the common law. Similarly, when the enforcement of judgments is discussed, both domestic law and the effect of the Brussels Recast Regulation are examined.

CHOICE OF LAW 2.09 On a happier note, the EU provisions dealing with choice of law in contract and tort – the Rome I6 and Rome II7 Regulations – are retained law. The only point to make is that they apply according to their current terms, so if they are amended in future, those amendments would not take effect in the UK. But that at least means that the difficulties present in relation to jurisdiction do not arise in respect of choice of law.

A NOTE ON THE BRUSSELS REGULATIONS AND THE LUGANO CONVENTION 2.10 The text of this book refers in general to articles of the Brussels Recast Regulation. Where necessary, mention will also be made to articles from the Brussels 2001 Regulation. The Lugano Convention contains provisions which correspond to articles from the Brussels 2001 Regulation. Rather than clutter up the text that follows with multiple statutory references, the following table of equivalences has been produced. This will enable readers to identify provisions from all three pieces of EU legislation, as necessary.

TABLE OF EQUIVALENCES 2.11 The following Table shows provisions from the Brussels 2001 Regulation, the Brussels Recast Regulation and the Lugano Convention 2007. Shaded cells

6 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I). 7 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II).

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are used to show provisions that are completely new to the Brussels Recast Regulation. Brussels I Regulation Consolidated Version (2015) Chapter I  Scope and definitions

Recast Brussels I Regulation Official Journal

Article 1

Article 1

Article 1

1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters or to the liability of the State for acts and omissions in the exercise of State authority (acta iure imperii).

1. This Convention shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

2. The Regulation shall not apply to:

2. This Regulation shall not 2. The Convention shall not apply to: apply to:

Title I  Scope

(a) the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession;

(a) the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship or out of a relationship deemed by the law applicable to such relationship to have comparable effects to marriage;

(a) the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession;

(b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

(b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

(b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;

(c) social security;

(c) social security;

(c) social security;

(d) arbitration.

(d) arbitration;

(d) arbitration.

[CF Article 5.2]

(e) maintenance obligations arising from a family relationship, parentage, marriage or affinity; (f) wills and succession, including maintenance obligations arising by reason of death.

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2007 Lugano Convention Official Journal

[CF Article 5.2]

Table of equivalences 2.11

Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal 3. In this Convention, the term ‘State bound by this Convention’ shall mean any State that is a Contracting Party to this Convention or a Member State of the European Community. It may also mean the European Community.

3. In this Regulation, the term ‘Member State’ shall mean Member States with the exception of Denmark.

Article 2 For the purposes of this Regulation: [See also Article 25 Convention and Article 32 Regulation Brussels]

(a) ‘judgment’ means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court.

[See also Articles 25 and 32 Conventions]

For the purposes of Chapter III, ‘judgment’ includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter. It does not include a provisional, including protective, measure which is ordered by such a court or tribunal without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement;

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Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal (b) ‘court settlement’ means a settlement which has been approved by a court of a Member State or concluded before a court of a Member State in the course of proceedings; (c) ‘authentic instrument’ means a document which has been formally drawn up or registered as an authentic instrument in the Member State of origin and the authenticity of which: (i) relates to the signature and the content of the instrument; and (ii) has been established by a public authority or other authority empowered for that purpose; (d) ‘Member State of origin’ means the Member State in which, as the case may be, the judgment has been given, the court settlement has been approved or concluded, or the authentic instrument has been formally drawn up or registered; (e) ‘Member State addressed’ means the Member State in which the recognition of the judgment is invoked or in which the enforcement of the judgment, the court settlement or the authentic instrument is sought;

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2007 Lugano Convention Official Journal

Table of equivalences 2.11

Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

(f) ‘court of origin’ means the court which has given the judgment the recognition of which is invoked or the enforcement of which is sought. Article 3 For the purposes of this Regulation, ‘court’ includes the following authorities to the extent that they have jurisdiction in matters falling within the scope of this Regulation: (a) in Hungary, in summary proceedings concerning orders to pay (fizetési meghagyásos eljárás), the notary (közjegyző); [See also Article 62]

(b) in Sweden, in summary proceedings concerning orders to pay (betalningsföreläggande) and assistance (handräckning), the Enforcement Authority (Kronofog­ demyndigheten).

Chapter II  Jurisdiction Section 1 General provisions

Title II  Jurisdiction

Article 2

Article 4

Article 2

1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

1. Subject to the provisions of this Convention, persons domiciled in a State bound by this Convention shall, whatever their nationality, be sued in the courts of that State.

2. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

2. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that Member State.

2. Persons who are not nationals of the State bound by this Convention in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

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Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

Article 3

Article 5

Article 3

1. Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter.

1. Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter.

1. Persons domiciled in a State bound by this Convention may be sued in the courts of another State bound by this Convention only by virtue of the rules set out in Sections 2 to 7 of this Title.

2. In particular the rules of national jurisdiction set out in Annex I shall not be applicable as against them.

2. In particular, the rules of national jurisdiction of which the Member States are to notify the Commission pursuant to point (a) of Article 76(1) shall not be applicable as against the persons referred to in paragraph 1.

2. In particular the rules of national jurisdiction set out in Annex I shall not be applicable as against them.

Article 4

Article 6

Article 4

1. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State.

1. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Article 18(1), Article 21(2) and Articles 24 and 25, be determined by the law of that Member State.

1. If the defendant is not domiciled in a State bound by this Convention, the jurisdiction of the courts of each State bound by this Convention shall, subject to the provisions of Articles 22 and 23, be determined by the law of that State.

2. As against such a defendant, any person domiciled in a Member State may, whatever his nationality, avail himself in that State of the rules of jurisdiction there in force, and in particular those specified in Annex I, in the same way as the nationals of that State.

2. As against such a defendant, any person domiciled in a Member State may, whatever his nationality, avail himself in that Member State of the rules of jurisdiction there in force, and in particular those of which the Member States are to notify the Commission pursuant to point (a) of Article 76(1), in the same way as nationals of that Member State.

2. As against such a defendant, any person domiciled in a State bound by this Convention may, whatever his nationality, avail himself in that State of the rules of jurisdiction there in force, and in particular those specified in Annex I, in the same way as the nationals of that State.

Section 2 Special jurisdiction Article 5

Article 7

Article 5

A person domiciled in a Member State may, in another Member State, be sued:

A person domiciled in a Member State may be sued in another Member State:

A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued:

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Table of equivalences 2.11

Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

1.

(1)

1.

(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

— in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

— in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

— in the case of the sale of goods, the place in a State bound by this Convention where, under the contract, the goods were delivered or should have been delivered;

— in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

— in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided;

— in the case of the provision of services, the place in a State bound by this Convention where, under the contract, the services were provided or should have been provided.

(c) if subparagraph (b) does not apply then subparagraph (a) applies; 2. in matters relating to maintenance, in the courts for the place where the maintenance creditor is domiciled or habitually resident or, if the matter is ancillary to proceedings concerning the status of a person, in the court which, according to its own law, has jurisdiction to entertain those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties;

(c) if point (b) does not apply then point (a) applies;

(c) if (b) does not apply then subparagraph (a) applies;

[CF Article 2.3 e) Regulation 2. in matters relating to maintenance: Brussels I bis: (a) in the courts for 2. This Regulation shall not the place where the apply to: maintenance creditor is e) maintenance obligations domiciled or habitually arising from a family resident; or relationship, parentage, (b) in the court which, marriage or affinity.] according to its own law, has jurisdiction to entertain proceedings concerning the status of a person if the matter relating to maintenance is ancillary to those proceedings, unless that

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Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal jurisdiction is based solely on the nationality of one of the parties; or (c) in the court which, according to its own law, has jurisdiction to entertain proceedings concerning parental responsibility, if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties;

3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

4. as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;

(3) as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;

4. as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;

(4) as regards a civil claim for the recovery, based on ownership, of a cultural object as defined in point 1 of Article 1 of Directive 93/7/ EEC initiated by the person claiming the right to recover such an object, in the courts for the place where the cultural object is situated at the time when the court is seised; 5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

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(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;

5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

Table of equivalences 2.11

Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

6. as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled;

(6) as regards a dispute brought against a settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled;

6. as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the State bound by this Convention in which the trust is domiciled;

7. as regards a dispute concerning the payment of remuneration claimed in respect of the salvage of a cargo or freight, in the court under the authority of which the cargo or freight in question:

(7) as regards a dispute concerning the payment of remuneration claimed in respect of the salvage of a cargo or freight, in the court under the authority of which the cargo or freight in question:

7. as regards a dispute concerning the payment of remuneration claimed in respect of the salvage of a cargo or freight, in the court under the authority of which the cargo or freight in question:

(a) has been arrested to secure such payment, or

(a) has been arrested to secure such payment; or

(a) has been arrested to secure such payment; or

(b) could have been so arrested, but bail or other security has been given;

(b) could have been so arrested, but bail or other security has been given;

(b) could have been so arrested, but bail or other security has been given;

provided that this provision shall apply only if it is claimed that the defendant has an interest in the cargo or freight or had such an interest at the time of salvage.

provided that this provision shall apply only if it is claimed that the defendant has an interest in the cargo or freight or had such an interest at the time of salvage.

provided that this provision shall apply only if it is claimed that the defendant has an interest in the cargo or freight or had such an interest at the time of salvage.

Article 6

Article 8

Article 6

A person domiciled in a Member State may also be sued:

A person domiciled in a State bound by this Convention may also be sued: 1. where he is one of a (1) where he is one of a number of defendants, in the number of defendants, in the courts for the place where courts for the place where any one of them is domiciled, any one of them is domiciled, provided the claims are provided the claims are so closely connected that so closely connected that it is expedient to hear and it is expedient to hear and determine them together to determine them together to avoid the risk of irreconcilable avoid the risk of irreconcilable judgments resulting from judgments resulting from separate proceedings; separate proceedings;

1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims 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;

A person domiciled in a Member State may also be sued:

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2.11  The UK’s departure from the EU

Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

2. 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; 3. on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending;

(2) 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;

2. 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;

(3) on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending;

3. on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending;

4. in matters relating to a contract, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property, in the court of the Member State in which the property is situated.

(4) in matters relating to a contract, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property, in the court of the Member State in which the property is situated.

4. in matters relating to a contract, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property, in the court of the State bound by this Convention in which the property is situated.

Article 7

Article 9

Article 7

Where by virtue of this Regulation a court of a Member State has jurisdiction in actions relating to liability from the use or operation of a ship, that court, or any other court substituted for this purpose by the internal law of that Member State, shall also have jurisdiction over claims for limitation of such liability.

Where by virtue of this Regulation a court of a Member State has jurisdiction in actions relating to liability from the use or operation of a ship, that court, or any other court substituted for this purpose by the internal law of that Member State, shall also have jurisdiction over claims for limitation of such liability.

Where by virtue of this Convention a court of a State bound by this Convention has jurisdiction in actions relating to liability from the use or operation of a ship, that court, or any other court substituted for this purpose by the internal law of that State, shall also have jurisdiction over claims for limitation of such liability.

Section 3 Jurisdiction in matters relating to insurance Article 8

Article 10

Article 8

In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5.

In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to Article 6 and point 5 of Article 7.

In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to Articles 4 and 5(5).

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2007 Lugano Convention Official Journal

Article 9

Article 11

Article 9

1. An insurer domiciled in a Member State may be sued:

1. An insurer domiciled in a Member State may be sued:

1. An insurer domiciled in a State bound by this Convention may be sued:

(a) in the courts of the Member State where he is domiciled, or

(a) in the courts of the Member State in which he is domiciled;

(a) in the courts of the State where he is domiciled; or

(b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the plaintiff is domiciled,

(b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the claimant is domiciled; or

(b) in another State bound by this Convention, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the plaintiff is domiciled; or

(c) if he is a co-insurer, in the courts of a Member State in which proceedings are brought against the leading insurer.

(c) if he is a co-insurer, in the courts of a Member State in which proceedings are brought against the leading insurer.

2. An insurer who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.

2. An insurer who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.

Article 10 In respect of liability insurance or insurance of immovable property, the insurer may in addition be sued in the courts for the place where the harmful event occurred. The same applies if movable and immovable property are covered by the same insurance policy and both are adversely affected by the same contingency.

Article 12 In respect of liability insurance or insurance of immovable property, the insurer may in addition be sued in the courts for the place where the harmful event occurred. The same applies if movable and immovable property are covered by the same insurance policy and both are adversely affected by the same contingency.

(c) if he is a co-insurer, in the courts of a State bound by this Convention in which proceedings are brought against the leading insurer. 2. An insurer who is not domiciled in a State bound by this Convention but has a branch, agency or other establishment in one of the States bound by this Convention shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State. Article 10 In respect of liability insurance or insurance of immovable property, the insurer may in addition be sued in the courts for the place where the harmful event occurred. The same applies if movable and immovable property are covered by the same insurance policy and both are adversely affected by the same contingency.

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Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

Article 11

Article 13

Article 11

1. In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured.

1. In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured.

Article 12 1. Without prejudice to Article 11(3), an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary.

1. In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured. 2. Articles 10, 11 and 12 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. 3. If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them. Article 14 1. Without prejudice to Article 13(3), an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

2. Articles 8, 9 and 10 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. 3. If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.

2. Articles 8, 9 and 10 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. 3. If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them. Article 12 1. Without prejudice to Article 11(3), an insurer may bring proceedings only in the courts of the State bound by this Convention in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary. 2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

Article 13

Article 15

Article 13

The provisions of this Section may be departed from only by an agreement:

The provisions of this Section may be departed from only by an agreement:

The provisions of this Section may be departed from only by an agreement:

1. which is entered into after the dispute has arisen, or

(1) which is entered into after the dispute has arisen;

1. which is entered into after the dispute has arisen; or

2. which allows the policyholder, the insured or a beneficiary to bring proceedings in courts other than those indicated in this Section, or

(2) which allows the policyholder, the insured or a beneficiary to bring proceedings in courts other than those indicated in this Section;

2. which allows the policyholder, the insured or a beneficiary to bring proceedings in courts other than those indicated in this Section; or

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3. which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which has the effect of conferring jurisdiction on the courts of that State even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State, or

(3) which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which has the effect of conferring jurisdiction on the courts of that Member State even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that Member State;

3. which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same State bound by this Convention, and which has the effect of conferring jurisdiction on the courts of that State even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State; or

4. which is concluded with a policyholder who is not domiciled in a Member State, except in so far as the insurance is compulsory or relates to immovable property in a Member State, or

(4) which is concluded with a policyholder who is not domiciled in a Member State, except in so far as the insurance is compulsory or relates to immovable property in a Member State; or

4. which is concluded with a policyholder who is not domiciled in a State bound by this Convention, except insofar as the insurance is compulsory or relates to immovable property in a State bound by this Convention; or

5. which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 14.

(5) which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 16.

5. which relates to a contract of insurance insofar as it covers one or more of the risks set out in Article 14.

Article 14

Article 16

Article 14

The following are the risks referred to in Article 13(5):

The following are the risks referred to in point 5 of Article 15:

The following are the risks referred to in Article 13(5):

1.

(1) any loss of or damage to: 1.

any loss of or damage to:

any loss of or damage to:

(a) seagoing ships, installations situated offshore or on the high seas, or aircraft, arising from perils which relate to their use for commercial purposes;

(a) seagoing ships, installations situated offshore or on the high seas, or aircraft, arising from perils which relate to their use for commercial purposes;

(a) seagoing ships, installations situated offshore or on the high seas, or aircraft, arising from perils which relate to their use for commercial purposes;

(b) goods in transit other than passengers’ baggage where the transit consists of or includes carriage by such ships or aircraft;

(b) goods in transit other than passengers’ baggage where the transit consists of or includes carriage by such ships or aircraft;

(b) goods in transit, other than passengers’ baggage, where the transit consists of or includes carriage by such ships or aircraft;

2. any liability, other than for bodily injury to passengers or loss of or damage to their baggage:

(2) any liability, other than for bodily injury to passengers or loss of or damage to their baggage:

2. any liability, other than for bodily injury to passengers or loss of or damage to their baggage:

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(a) arising out of the use or operation of ships, installations or aircraft as referred to in point 1(a) in so far as, in respect of the latter, the law of the Member State in which such aircraft are registered does not prohibit agreements on jurisdiction regarding insurance of such risks;

(a) arising out of the use or operation of ships, installations or aircraft as referred to in point 1(a) in so far as, in respect of the latter, the law of the Member State in which such aircraft are registered does not prohibit agreements on jurisdiction regarding insurance of such risks;

(a) arising out of the use or operation of ships, installations or aircraft as referred to in point 1(a) insofar as, in respect of the latter, the law of the State bound by this Convention in which such aircraft are registered does not prohibit agreements on jurisdiction regarding insurance of such risks;

(b) for loss or damage caused by goods in transit as described in point 1(b);

(b) for loss or damage caused by goods in transit as described in point 1(b);

(b) for loss or damage caused by goods in transit as described in point 1(b);

3. any financial loss connected with the use or operation of ships, installations or aircraft as referred to in point 1(a), in particular loss of freight or charter-hire;

(3) any financial loss connected with the use or operation of ships, installations or aircraft as referred to in point 1(a), in particular loss of freight or charter-hire;

3. any financial loss connected with the use or operation of ships, installations or aircraft as referred to in point 1(a), in particular loss of freight or charter-hire;

4. any risk or interest connected with any of those referred to in points 1 to 3;

(4) any risk or interest connected with any of those referred to in points 1 to 3;

4. any risk or interest connected with any of those referred to in points 1 to 3;

5. notwithstanding points 1 to 4, all ‘large risks’ as defined in Council Directive 73/239/EEC(7), as amended by Council Directives 88/357/ EEC(8) and 90/618/EEC(9), as they may be amended.

(5) notwithstanding points 1 to 4, all ‘large risks’ as defined in Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).

5. notwithstanding points 1 to 4, all large risks.

Section 4 Jurisdiction over consumer contracts Article 15

Article 17

Article 15

1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if:

1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 6 and point 5 of Article 7, if:

1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Articles 4 and 5(5), if:

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(a) it is a contract for the sale of goods on instalment credit terms; or

(a) it is a contract for the sale of goods on instalment credit terms;

(a) it is a contract for the sale of goods on instalment credit terms; or

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the State bound by this Convention of the consumer’s domicile or, by any means, directs such activities to that State or to several States including that State, and the contract falls within the scope of such activities.

2. Where a consumer enters into a contract with a party who is not domiciled in the Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

2. Where a consumer enters into a contract with a party who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.

2. Where a consumer enters into a contract with a party who is not domiciled in the State bound by this Convention but has a branch, agency or other establishment in one of the States bound by this Convention, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

3. This Section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.

3. This Section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.

3. This section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.

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Article 16

Article 18

Article 16

1. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled.

1. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled.

1. A consumer may bring proceedings against the other party to a contract either in the courts of the State bound by this Convention in which that party is domiciled or in the courts for the place where the consumer is domiciled.

2. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled.

2. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled.

2. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the State bound by this Convention in which the consumer is domiciled.

3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

Article 17

Article 19

Article 17

The provisions of this Section may be departed from only by an agreement:

The provisions of this Section may be departed from only by an agreement:

The provisions of this Section may be departed from only by an agreement:

1. which is entered into after the dispute has arisen; or

(1) which is entered into after the dispute has arisen;

1. which is entered into after the dispute has arisen; or

2. which allows the consumer to bring proceedings in courts other than those indicated in this Section; or

(2) which allows the consumer to bring proceedings in courts other than those indicated in this Section; or

2. which allows the consumer to bring proceedings in courts other than those indicated in this Section; or

3. which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which confers jurisdiction on the courts of that Member State, provided that such an agreement is not contrary to the law of that Member State.

(3) which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same Member State, and which confers jurisdiction on the courts of that Member State, provided that such an agreement is not contrary to the law of that Member State.

3. which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same State bound by this Convention, and which confers jurisdiction on the courts of that State, provided that such an agreement is not contrary to the law of that State.

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Section 5 Jurisdiction over individual contracts of employment Article 18

Article 20

Article 18

1. In matters relating to individual contracts of employment, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5.

1. In matters relating to individual contracts of employment, jurisdiction shall be determined by this Section, without prejudice to Article 6, point 5 of Article 7 and, in the case of proceedings brought against an employer, point 1 of Article 8.

1. In matters relating to individual contracts of employment, jurisdiction shall be determined by this Section, without prejudice to Articles 4 and 5(5).

2. Where an employee enters into an individual contract of employment with an employer who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States, the employer shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.

2. Where an employee enters into an individual contract of employment with an employer who is not domiciled in a Member State but has a branch, agency or other establishment in one of the Member States, the employer shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.

2. Where an employee enters into an individual contract of employment with an employer who is not domiciled in a State bound by this Convention but has a branch, agency or other establishment in one of the States bound by this Convention, the employer shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

Article 19

Article 21

Article 19

An employer domiciled in a Member State may be sued:

1. An employer domiciled in a Member State may be sued:

An employer domiciled in a State bound by this Convention may be sued:

1. in the courts of the Member State where he is domiciled; or

1. in the courts of the State (a) in the courts of the Member State in which where he is domiciled; or he is domiciled; or

2.

(b) in another Member State:

in another Member State: (a) in the courts for the place where the employee habitually carries out his work or in the courts for the last place where he did so, or

(i) in the courts for the place where or from where the employee habitually carries out his work or in the courts for the last place where he did so; or

2. in another State bound by this Convention: (a) in the courts for the place where the employee habitually carries out his work or in the courts for the last place where he did so; or

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Brussels I Regulation Consolidated Version (2015) (b) if the employee does not or did not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is or was situated.

Recast Brussels I Regulation Official Journal (ii) if the employee does not or did not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is or was situated.

2007 Lugano Convention Official Journal (b) if the employee does not or did not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is or was situated.

2. An employer not domiciled in a Member State may be sued in a court of a Member State in accordance with point (b) of paragraph 1. Article 20

Article 22

Article 20

1. An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled.

1. An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled.

1. An employer may bring proceedings only in the courts of the State bound by this Convention in which the employee is domiciled.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

Article 21

Article 23

Article 21

The provisions of this Section may be departed from only by an agreement on jurisdiction:

The provisions of this Section may be departed from only by an agreement:

The provisions of this Section may be departed from only by an agreement on jurisdiction:

1. which is entered into after the dispute has arisen; or

(1) which is entered into after the dispute has arisen; or

1. which is entered into after the dispute has arisen; or

2. which allows the employee to bring proceedings in courts other than those indicated in this Section.

(2) which allows the employee to bring proceedings in courts other than those indicated in this Section.

2. which allows the employee to bring proceedings in courts other than those indicated in this Section.

Article 22

Article 24

Article 22

The following courts shall have exclusive jurisdiction, regardless of domicile:

The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties:

The following courts shall have exclusive jurisdiction, regardless of domicile:

Section 6 Exclusive jurisdiction

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1. in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated.

(1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated.

1. in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the State bound by this Convention in which the property is situated.

However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the Member State in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same Member State;

However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the Member State in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same Member State;

However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the State bound by this Convention in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same State bound by this Convention;

2. in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law;

(2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law;

2. in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the State bound by this Convention in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law;

3. in proceedings which have as their object the validity of entries in public registers, the courts of the Member State in which the register is kept;

(3) in proceedings which have as their object the validity of entries in public registers, the courts of the Member State in which the register is kept;

3. in proceedings which have as their object the validity of entries in public registers, the courts of the State bound by this Convention in which the register is kept;

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4. in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place.

(4) in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place.

4. in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the State bound by this Convention in which the deposit or registration has been applied for, has taken place or is, under the terms of a Community instrument or an international convention, deemed to have taken place.

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State;

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State;

Without prejudice to the jurisdiction of the European Patent Office under the Convention on the grant of European patents, signed at Munich on 5 October 1973, the courts of each State bound by this Convention shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State irrespective of whether the issue is raised by way of an action or as a defence;

5. in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced.

(5) in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced.

5. in proceedings concerned with the enforcement of judgments, the courts of the State bound by this Convention in which the judgment has been or is to be enforced.

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Section 7 Prorogation of jurisdiction Article 23

Article 25

Article 23

1. If the parties, one or more of whom is domiciled in a Member State, 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. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

1. If 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. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:

1. If the parties, one or more of whom is domiciled in a State bound by this Convention, have agreed that a court or the courts of a State bound by this Convention 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. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing; or

(a) in writing or evidenced in writing;

(a) in writing or evidenced in writing; or

(b) in a form which accords with practices which the parties have established between themselves; or

(b) in a form which accords with practices which the parties have established between themselves; or

(b) in a form which accords with practices which the parties have established between themselves; or

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.

2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.

2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.

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3. Where such an agreement is concluded by parties, none of whom is domiciled in a Member State, the courts of other Member States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction.

[Cf Article 25.1: If the parties, regardless of their domicile, …

3. Where such an agreement is concluded by parties, none of whom is domiciled in a State bound by this Convention, the courts of other States bound by this Convention shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction.

4. The court or courts of a Member State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved.

3. The court or courts of a Member State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between those persons or their rights or obligations under the trust are involved.

4. The court or courts of a State bound by this Convention on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved.

5. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 13, 17 or 21, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22.

4. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 15, 19 or 23, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 24.

5. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to the provisions of Articles 13, 17 or 21, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22.

5. An agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid.

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Article 24 Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.

Article 26 1. Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 24. 2. In matters referred to in Sections 3, 4 or 5 where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee is the defendant, the court shall, before assuming jurisdiction under paragraph 1, ensure that the defendant is informed of his right to contest the jurisdiction of the court and of the consequences of entering or not entering an appearance.

Article 24 Apart from jurisdiction derived from other provisions of this Convention, a court of a State bound by this Convention before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.

Section 8 Examination as to jurisdiction and admissibility Article 25 Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction. Article 26 1. Where a defendant domiciled in one Member State is sued in a court of another Member State and does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Regulation.

Article 27 Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 24, it shall declare of its own motion that it has no jurisdiction. Article 28 1. Where a defendant domiciled in one Member State is sued in a court of another Member State and does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Regulation.

Article 25 Where a court of a State bound by this Convention is seised of a claim which is principally concerned with a matter over which the courts of another State bound by this Convention have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction. Article 26 1. Where a defendant domiciled in one State bound by this Convention is sued in a court of another State bound by this Convention and does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Convention.

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2. The court shall stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end.

2. The court shall stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end.

2. The court shall stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end.

3. Article 19 of Council Regulation (EC) No 1348/2000 of 29 May 2000 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters shall apply instead of the provisions of paragraph 2 if the document instituting the proceedings or an equivalent document had to be transmitted from one Member State to another pursuant to this Regulation.

3. Article 19 of Regulation (EC) No 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) shall apply instead of paragraph 2 of this Article if the document instituting the proceedings or an equivalent document had to be transmitted from one Member State to another pursuant to that Regulation.

3. Instead of the provisions of paragraph 2, Article 15 of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial matters shall apply if the document instituting the proceedings or an equivalent document had to be transmitted pursuant to that Convention.

4. Where the provisions of Regulation (EC) No 1348/2000 are not applicable, Article 15 of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters shall apply if the document instituting the proceedings or an equivalent document had to be transmitted pursuant to that Convention.

4. Where Regulation (EC) No 1393/2007 is not applicable, Article 15 of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters shall apply if the document instituting the proceedings or an equivalent document had to be transmitted abroad pursuant to that Convention.

4. Member States of the European Community bound by Council Regulation (EC) No 1348/2000 of 29 May 2000 or by the Agreement between the European Community and the Kingdom of Denmark on the service of judicial and extrajudicial documents in civil or commercial matters, signed at Brussels on 19 October 2005, shall apply in their mutual relations the provision in Article 19 of that Regulation if the document instituting the proceedings or an equivalent document had to be transmitted pursuant to that Regulation or that Agreement.

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Section 9 Lis pendens – related actions Article 27

Article 29

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 seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

1. Without prejudice to Article 31(2), 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 seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

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

2. In cases referred to in paragraph 1, upon request by a court seised of the dispute, any other court seised shall without delay inform the former court of the date when it was seised in accordance with Article 32. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.

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

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

Article 28

Article 30

Article 28

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

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

1. Where related actions are pending in the courts of different States bound by this Convention, any court other than the court first seised may stay its proceedings.

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

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

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

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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.

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.

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.

Article 29

Article 31

Article 29

Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.

1. Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.

Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.

[Cf Article 27]

2. Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement. 3. Where the court designated in the agreement has established jurisdiction in accordance with the agreement, any court of another Member State shall decline jurisdiction in favour of that court. 4. Paragraphs 2 and 3 shall not apply to matters referred to in Sections 3, 4 or 5 where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee is the claimant and the agreement is not valid under a provision contained within those Sections.

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Article 30

Article 32

Article 30

For the purposes of this Section, a court shall be deemed to be seised:

1. For the purposes of this Section, a court shall be deemed to be seised:

For the purposes of this Section, a court shall be deemed to be seised:

1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or

(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the claimant has not subsequently failed to take the steps he was required to take to have service effected on the defendant; or

1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant; or

2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the claimant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

2. if the document has to be served before being lodged with the court at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

The authority responsible for service referred to in point (b) shall be the first authority receiving the documents to be served. 2. The court, or the authority responsible for service, referred to in paragraph 1, shall note, respectively, the date of the lodging of the document instituting the proceedings or the equivalent document, or the date of receipt of the documents to be served.

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Recast Brussels I Regulation Official Journal Article 33 1. Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and proceedings are pending before a court of a third State at the time when a court in a Member State is seised of an action involving the same cause of action and between the same parties as the proceedings in the court of the third State, the court of the Member State may stay the proceedings if: (a) it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and (b) the court of the Member State is satisfied that a stay is necessary for the proper administration of justice. 2. The court of the Member State may continue the proceedings at any time if: (a) the proceedings in the court of the third State are themselves stayed or discontinued; (b) it appears to the court of the Member State that the proceedings in the court of the third State are unlikely to be concluded within a reasonable time; or (c) the continuation of the proceedings is required for the proper administration of justice.

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2007 Lugano Convention Official Journal

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3. The court of the Member State shall dismiss the proceedings if the proceedings in the court of the third State are concluded and have resulted in a judgment capable of recognition and, where applicable, of enforcement in that Member State. 4. The court of the Member State shall apply this Article on the application of one of the parties or, where possible under national law, of its own motion. Article 34 1. Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and an action is pending before a court of a third State at the time when a court in a Member State is seised of an action which is related to the action in the court of the third State, the court of the Member State may stay the proceedings if: (a) it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings; (b) it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and (c) the court of the Member State is satisfied that a stay is necessary for the proper administration of justice.

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Recast Brussels I Regulation Official Journal 2. The court of the Member State may continue the proceedings at any time if: (a) it appears to the court of the Member State that there is no longer a risk of irreconcilable judgments; (b) the proceedings in the court of the third State are themselves stayed or discontinued; (c) it appears to the court of the Member State that the proceedings in the court of the third State are unlikely to be concluded within a reasonable time; or (d) the continuation of the proceedings is required for the proper administration of justice. 3. The court of the Member State may dismiss the proceedings if the proceedings in the court of the third State are concluded and have resulted in a judgment capable of recognition and, where applicable, of enforcement in that Member State. 4. The court of the Member State shall apply this Article on the application of one of the parties or, where possible under national law, of its own motion.

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2007 Lugano Convention Official Journal

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Brussels I Regulation Recast Brussels I Consolidated Version Regulation (2015) Official Journal Section 10 Provisional, including protective, measures

2007 Lugano Convention Official Journal

Article 31

Article 35

Article 31

Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.

Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that Member State, even if the courts of another Member State have jurisdiction as to the substance of the matter.

Application may be made to the courts of a State bound by this Convention for such provisional, including protective, measures as may be available under the law of that State, even if, under this Convention, the courts of another State bound by this Convention have jurisdiction as to the substance of the matter.

Chapter III  Recognition and enforcement

Title III  Recognition and enforcement

Article 32

[See also Article 2, a:

Article 32

For the purposes of this Regulation, ‘judgment’ means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court.

For the purposes of this Regulation: (a) ‘judgment’ means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court. For the purposes of Chapter III, ‘judgment’ includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter. It does not include a provisional, including protective, measure which is ordered by such a court or tribunal without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement;]

For the purposes of this Convention, ‘judgment’ means any judgment given by a court or tribunal of a State bound by this Convention, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court.

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Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

Article 33

Article 36

Article 33

1. A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required.

1. A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required.

1. A judgment given in a State bound by this Convention shall be recognised in the other States bound by this Convention without any special procedure being required.

2. Any interested party who raises the recognition of a judgment as the principal issue in a dispute may, in accordance with the procedures provided for in Sections 2 and 3 of this Chapter, apply for a decision that the judgment be recognised.

2. Any interested party may, in accordance with the procedure provided for in Subsection 2 of Section 3, apply for a decision that there are no grounds for refusal of recognition as referred to in Article 45.

2. Any interested party who raises the recognition of a judgment as the principal issue in a dispute may, in accordance with the procedures provided for in Sections 2 and 3 of this Title, apply for a decision that the judgment be recognised.

3. If the outcome of proceedings in a court of a Member State depends on the determination of an incidental question of recognition that court shall have jurisdiction over that question.

3. If the outcome of proceedings in a court of a Member State depends on the determination of an incidental question of refusal of recognition, that court shall have jurisdiction over that question.

3. If the outcome of proceedings in a court of a State bound by this Convention depends on the determination of an incidental question of recognition that court shall have jurisdiction over that question.

Article 34

[See also Article 45

Article 34

A judgment shall not be recognised:

1. On the application of any interested party, the recognition of a judgment shall be refused:

A judgment shall not be recognised:

1. if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought;

(a) if such recognition is manifestly contrary to public policy (ordre public) in the Member State addressed;

1. if such recognition is manifestly contrary to public policy in the State in which recognition is sought;

2. where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;

(b) where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless

2. where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;

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the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; 3. if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought;

(c) if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed;

3. if it is irreconcilable with a judgment given in a dispute between the same parties in the State in which recognition is sought;

4. if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.

(d) if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed; (…)]

4. if it is irreconcilable with an earlier judgment given in another State bound by this Convention or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the State addressed.

Article 35

[Cf Article 45

Article 35

1. Moreover, a judgment shall not be recognised if it conflicts with Sections 3, 4 or 6 of Chapter II, or in a case provided for in Article 72.

1. On the application of any interested party, the recognition of a judgment shall be refused: (e) if the judgment conflicts with: (i) Sections 3, 4 or 5 of Chapter II where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant; or (ii) Section 6 of Chapter II.

1. Moreover, a judgment shall not be recognised if it conflicts with Sections 3, 4 or 6 of Title II, or in a case provided for in Article 68. A judgment may furthermore be refused recognition in any case provided for in Article 64(3) or 67(4).

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Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

2. In its examination of the grounds of jurisdiction referred to in the foregoing paragraph, the court or authority applied to shall be bound by the findings of fact on which the court of the Member State of origin based its jurisdiction.

2. In its examination of the grounds of jurisdiction referred to in point (e) of paragraph 1, the court to which the application was submitted shall be bound by the findings of fact on which the court of origin based its jurisdiction.

2. In its examination of the grounds of jurisdiction referred to in the foregoing paragraph, the court or authority applied to shall be bound by the findings of fact on which the court of the State of origin based its jurisdiction.

3. Subject to paragraph 1, the jurisdiction of the court of the Member State of origin may not be reviewed. The test of public policy referred to in point 1 of Article 34 may not be applied to the rules relating to jurisdiction.

3. Without prejudice to point (e) of paragraph 1, the jurisdiction of the court of origin may not be reviewed. The test of public policy referred to in point (a) of paragraph 1 may not be applied to the rules relating to jurisdiction.

3. Subject to the provisions of paragraph 1, the jurisdiction of the court of the State of origin may not be reviewed. The test of public policy referred to in Article 34(1) may not be applied to the rules relating to jurisdiction.

4. The application for refusal of recognition shall be made in accordance with the procedures provided for in Subsection 2 and, where appropriate, Section 4.] Article 36

[See also Article 52

Under no circumstances may a foreign judgment be reviewed as to its substance.

Under no circumstances may a Under no circumstances foreign judgment be reviewed may a judgment given in a Member State be reviewed as as to its substance. to its substance in the Member State addressed.]

[Cf Article 53]

Article 37 1. A party who wishes to invoke in a Member State a judgment given in another Member State shall produce: (a) a copy of the judgment which satisfies the conditions necessary to establish its authenticity; and (b) the certificate issued pursuant to Article 53.

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Article 36

[Cf Article 53]

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[See also Article 55.2]

2. The court or authority before which a judgment given in another Member State is invoked may, where necessary, require the party invoking it to provide, in accordance with Article 57, a translation or a transliteration of the contents of the certificate referred to in point (b) of paragraph 1. The court or authority may require the party to provide a translation of the judgment instead of a translation of the contents of the certificate if it is unable to proceed without such a translation.

[See also Article 55.2]

Article 37

Article 38

Article 37

1. A court of a Member State in which recognition is sought of a judgment given in another Member State may stay the proceedings if an ordinary appeal against the judgment has been lodged.

The court or authority before which a judgment given in another Member State is invoked may suspend the proceedings, in whole or in part, if: (a) the judgment is challenged in the Member State of origin; or

1. A court of a State bound by this Convention in which recognition is sought of a judgment given in another State bound by this Convention may stay the proceedings if an ordinary appeal against the judgment has been lodged.

2. A court of a State bound by this Convention in which recognition is sought of a judgment given in Ireland or the United Kingdom may stay the proceedings if enforcement is suspended in the State of origin, by reason of an appeal.

2. A court of a Member State in which recognition is sought of a judgment given in Ireland or the United Kingdom may stay the proceedings if enforcement is suspended in the State of origin, by reason of an appeal. (b) an application has been submitted for a decision that there are no grounds for refusal of recognition as referred to in Article 45 or for a decision that the recognition is to be refused on the basis of one of those grounds.

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Article 38

Article 39

Article 38

1. A judgment given in a Member State and enforceable in that State shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there.

A judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member States without any declaration of enforceability being required.

1. A judgment given in a State bound by this Convention and enforceable in that State shall be enforced in another State bound by this Convention when, on the application of any interested party, it has been declared enforceable there.

2. However, in the United Kingdom, such a judgment shall be enforced in England and Wales, in Scotland, or in Northern Ireland when, on the application of any interested party, it has been registered for enforcement in that part of the United Kingdom.

2. However, in the United Kingdom, such a judgment shall be enforced in England and Wales, in Scotland, or in Northern Ireland when, on the application of any interested party, it has been registered for enforcement in that part of the United Kingdom.

Article 39

Article 39

1. The application shall be submitted to the court or competent authority indicated in the list in Annex II.

1. The application shall be submitted to the court or competent authority indicated in the list in Annex II.

2. The local jurisdiction shall be determined by reference to the place of domicile of the party against whom enforcement is sought, or to the place of enforcement.

2. The local jurisdiction shall be determined by reference to the place of domicile of the party against whom enforcement is sought, or to the place of enforcement.

Article 40

Article 40

Article 40

1. The procedure for making the application shall be governed by the law of the Member State in which enforcement is sought.

An enforceable judgment shall carry with it by operation of law the power to proceed to any protective measures which exist under the law of the Member State addressed.

1. The procedure for making the application shall be governed by the law of the State in which enforcement is sought.

2. The applicant must give an address for service of process within the area of jurisdiction of the court applied to. However, if the law of the Member State in which enforcement is sought does not provide for the furnishing of such an address, the applicant shall appoint a representative ad litem.

46

2. The applicant must give an address for service of process within the area of jurisdiction of the court applied to. However, if the law of the State in which enforcement is sought does not provide for the furnishing of such an address, the applicant shall appoint a representative ad litem.

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2007 Lugano Convention Official Journal 3. The documents referred to in Article 53 shall be attached to the application.

3. The documents referred to in Article 53 shall be attached to the application. Article 41

Article 41

Article 41

The judgment shall be declared enforceable immediately on completion of the formalities in Article 53 without any review under Articles 34 and 35. The party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application.

1. Subject to the provisions of this Section, the procedure for the enforcement of judgments given in another Member State shall be governed by the law of the Member State addressed. A judgment given in a Member State which is enforceable in the Member State addressed shall be enforced there under the same conditions as a judgment given in the Member State addressed.

The judgment shall be declared enforceable immediately on completion of the formalities in Article 53 without any review under Articles 34 and 35. The party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application.

2. Notwithstanding paragraph 1, the grounds for refusal or of suspension of enforcement under the law of the Member State addressed shall apply in so far as they are not incompatible with the grounds referred to in Article 45. 3. The party seeking the enforcement of a judgment given in another Member State shall not be required to have a postal address in the Member State addressed. Nor shall that party be required to have an authorised representative in the Member State addressed unless such a representative is mandatory irrespective of the nationality or the domicile of the parties. Article 42

Article 42

Article 42

1. The decision on the application for a declaration of enforceability shall forthwith be brought to the notice of the applicant in accordance with the procedure laid down by the law of the Member State in which enforcement is sought.

1. For the purposes of enforcement in a Member State of a judgment given in another Member State, the applicant shall provide the competent enforcement authority with:

1. The decision on the application for a declaration of enforceability shall forthwith be brought to the notice of the applicant in accordance with the procedure laid down by the law of the State in which enforcement is sought.

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(a) a copy of the judgment which satisfies the conditions necessary to establish its authenticity; and (b) the certificate issued pursuant to Article 53, certifying that the judgment is enforceable and containing an extract of the judgment as well as, where appropriate, relevant information on the recoverable costs of the proceedings and the calculation of interest. 2. The declaration of enforceability shall be served on the party against whom enforcement is sought, accompanied by the judgment, if not already served on that party.

2. For the purposes of enforcement in a Member State of a judgment given in another Member State ordering a provisional, including a protective, measure, the applicant shall provide the competent enforcement authority with: (a) a copy of the judgment which satisfies the conditions necessary to establish its authenticity; (b) the certificate issued pursuant to Article 53, containing a description of the measure and certifying that: (i) the court has jurisdiction as to the substance of the matter; (ii) the judgment is enforceable in the Member State of origin; and (c) where the measure was ordered without the defendant being summoned to appear, proof of service of the judgment.

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2. The declaration of enforceability shall be served on the party against whom enforcement is sought, accompanied by the judgment, if not already served on that party.

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3. The competent enforcement authority may, where necessary, require the applicant to provide, in accordance with Article 57, a translation or a transliteration of the contents of the certificate. 4. The competent enforcement authority may require the applicant to provide a translation of the judgment only if it is unable to proceed without such a translation. Article 43

Article 43

Article 43

1. The decision on the application for a declaration of enforceability may be appealed against by either party.

1. Where enforcement is sought of a judgment given in another Member State, the certificate issued pursuant to Article 53 shall be served on the person against whom the enforcement is sought prior to the first enforcement measure. The certificate shall be accompanied by the judgment, if not already served on that person.

1. The decision on the application for a declaration of enforceability may be appealed against by either party.

2. The appeal is to be lodged with the court indicated in the list in Annex III.

2. Where the person against whom enforcement is sought is domiciled in a Member State other than the Member State of origin, he may request a translation of the judgment in order to contest the enforcement if the judgment is not written in or accompanied by a translation into either of the following languages: (a) a language which he understands; or (b) the official language of the Member State in which he is domiciled or, where there are several official languages in that Member State, the official language or one of the official languages of the place where he is domiciled.

2. The appeal is to be lodged with the court indicated in the list in Annex III.

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Where a translation of the judgment is requested under the first subparagraph, no measures of enforcement may be taken other than protective measures until that translation has been provided to the person against whom enforcement is sought. This paragraph shall not apply if the judgment has already been served on the person against whom enforcement is sought in one of the languages referred to in the first subparagraph or is accompanied by a translation into one of those languages. 3. The appeal shall be dealt with in accordance with the rules governing procedure in contradictory matters.

3. This Article shall not apply to the enforcement of a protective measure in a judgment or where the person seeking enforcement proceeds to protective measures in accordance with Article 40.

3. The appeal shall be dealt with in accordance with the rules governing procedure in contradictory matters.

4. If the party against whom enforcement is sought fails to appear before the appellate court in proceedings concerning an appeal brought by the applicant, Article 26(2) to (4) shall apply even where the party against whom enforcement is sought is not domiciled in any of the Member States.

4. If the party against whom enforcement is sought fails to appear before the appellate court in proceedings concerning an appeal brought by the applicant, Article 26(2) to (4) shall apply even where the party against whom enforcement is sought is not domiciled in any of the States bound by this Convention.

5. An appeal against the declaration of enforceability is to be lodged within one month of service thereof. If the party against whom enforcement is sought is domiciled in a Member State other than that in which the declaration of enforceability was given, the time for appealing shall be two months and shall run from the date of service, either on him in person or at his residence. No extension of time may be granted on account of distance.

5. An appeal against the declaration of enforceability is to be lodged within one month of service thereof. If the party against whom enforcement is sought is domiciled in a State bound by this Convention other than that in which the declaration of enforceability was given, the time for appealing shall be two months and shall run from the date of service, either on him in person or at his residence. No extension of time may be granted on account of distance.

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Article 44

Article 44 1. In the event of an application for refusal of enforcement of a judgment pursuant to Subsection 2 of Section 3, the court in the Member State addressed may, on the application of the person against whom enforcement is sought: (a) limit the enforcement proceedings to protective measures; (b) make enforcement conditional on the provision of such security as it shall determine; or (c) suspend, either wholly or in part, the enforcement proceedings.

Article 44

The judgment given on the appeal may be contested only by the appeal referred to in Annex IV.

2. The competent authority in the Member State addressed shall, on the application of the person against whom enforcement is sought, suspend the enforcement proceedings where the enforceability of the judgment is suspended in the Member State of origin.

The judgment given on the appeal may be contested only by the appeal referred to in Annex IV.

Article 45

Article 45

1. The court with which an appeal is lodged under Article 43 or Article 44 shall refuse or revoke a declaration of enforceability only on one of the grounds specified in Articles 34 and 35. It shall give its decision without delay.

1. The court with which an appeal is lodged under Article 43 or Article 44 shall refuse or revoke a declaration of enforceability only on one of the grounds specified in Articles 34 and 35. It shall give its decision without delay.

2. Under no circumstances may the foreign judgment be reviewed as to its substance.

2. Under no circumstances may the foreign judgment be reviewed as to its substance.

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Article 46

Article 46

1. The court with which an appeal is lodged under Article 43 or Article 44 may, on the application of the party against whom enforcement is sought, stay the proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired; in the latter case, the court may specify the time within which such an appeal is to be lodged.

1. The court with which an appeal is lodged under Article 43 or Article 44 may, on the application of the party against whom enforcement is sought, stay the proceedings if an ordinary appeal has been lodged against the judgment in the State of origin or if the time for such an appeal has not yet expired; in the latter case, the court may specify the time within which such an appeal is to be lodged.

2. Where the judgment was given in Ireland or the United Kingdom, any form of appeal available in the Member State of origin shall be treated as an ordinary appeal for the purposes of paragraph 1.

2. Where the judgment was given in Ireland or the United Kingdom, any form of appeal available in the State of origin shall be treated as an ordinary appeal for the purposes of paragraph 1.

3. The court may also make enforcement conditional on the provision of such security as it shall determine.

3. The court may also make enforcement conditional on the provision of such security as it shall determine.

[See also Article 47]

Article 47

[Cf Article 44.1 a)

Article 47

1. When a judgment must be recognised in accordance with this Regulation, nothing shall prevent the applicant from availing himself of provisional, including protective, measures in accordance with the law of the Member State requested without a declaration of enforceability under Article 41 being required.

In the event of an application for refusal of enforcement of a judgment pursuant to Subsection 2 of Section 3, the court in the Member State addressed may, on the application of the person against whom enforcement is sought: (a) limit the enforcement proceedings to protective measures]

1. When a judgment must be recognised in accordance with this Convention, nothing shall prevent the applicant from availing himself of provisional, including protective, measures in accordance with the law of the State requested without a declaration of enforceability under Article 41 being required.

2. The declaration of enforceability shall carry with it the power to proceed to any protective measures.

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2. The declaration of enforceability shall carry with it the power to proceed to any protective measures.

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Brussels I Regulation Consolidated Version (2015) 3. 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 measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. [See also Article 43 and Annex III] [See also Article 44 and Annex IV] Article 48 1. Where a foreign judgment has been given in respect of several matters and the declaration of enforceability cannot be given for all of them, the court or competent authority shall give it for one or more of them. 2. An applicant may request a declaration of enforceability limited to parts of a judgment. Article 49 A foreign judgment which orders a periodic payment by way of a penalty shall be enforceable in the Member State in which enforcement is sought only if the amount of the payment has been finally determined by the courts of the Member State of origin. Article 50 An applicant who, in the Member State of origin has benefited from complete or partial legal aid or exemption from costs or expenses, shall be entitled, in the procedure provided for in this Section, to benefit from the most favourable legal aid or the most extensive exemption from costs or expenses provided for by the law of the Member State addressed.

Recast Brussels I Regulation Official Journal

[See also Article 55 A judgment given in a Member State which orders a payment by way of a penalty shall be enforceable in the Member State addressed only if the amount of the payment has been finally determined by the court of origin.]

2007 Lugano Convention Official Journal 3. 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 measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. [See also Article 43 and Annex III] [See also Article 44 and Annex IV] Article 48 1. Where a foreign judgment has been given in respect of several matters and the declaration of enforceability cannot be given for all of them, the court or competent authority shall give it for one or more of them. 2. An applicant may request a declaration of enforceability limited to parts of a judgment. Article 49 A foreign judgment which orders a periodic payment by way of a penalty shall be enforceable in the State in which enforcement is sought only if the amount of the payment has been finally determined by the courts of the State of origin. Article 50 1. An applicant who in the State of origin has benefited from complete or partial legal aid or exemption from costs or expenses shall be entitled, in the procedure provided for in this Section, to benefit from the most favourable legal aid or the most extensive exemption from costs or expenses provided for by the law of the State addressed.

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Article 51 No security, bond or deposit, however described, shall be required of a party who in one Member State applies for enforcement of a judgment given in another Member State on the ground that he is a foreign national or that he is not domiciled or resident in the State in which enforcement is sought. Article 52

Recast Brussels I Regulation Official Journal

[See also Article 56 No security, bond or deposit, however described, shall be required of a party who in one Member State applies for the enforcement of a judgment given in another Member State on the ground that he is a foreign national or that he is not domiciled or resident in the Member State addressed.

2007 Lugano Convention Official Journal 2. However, an applicant who requests the enforcement of a decision given by an administrative authority in Denmark, in Iceland or in Norway in respect of maintenance may, in the State addressed, claim the benefits referred to in paragraph 1 if he presents a statement from the Danish, Icelandic, or Norwegian Ministry of Justice to the effect that he fulfils the economic requirements to qualify for the grant of complete or partial legal aid or exemption from costs or expenses. Article 51 No security, bond or deposit, however described, shall be required of a party who in one State bound by this Convention, applies for enforcement of a judgment given in another State bound by this Convention on the ground that he is a foreign national or that he is not domiciled or resident in the State in which enforcement is sought. Article 52 In proceedings for the issue of a declaration of enforceability, no charge, duty or fee calculated by reference to the value of the matter at issue may be levied in the State in which enforcement is sought.

In proceedings for the issue of a declaration of enforceability, no charge, duty or fee calculated by reference to the value of the matter at issue may be levied in the Member State in which enforcement is sought.

Section 3 Refusal of recognition and enforcement Subsection 1 Refusal of recognition [See also Articles 34 and 35]

Article 45 1. On the application of any interested party, the recognition of a judgment shall be refused:

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[See also Articles 34 and 35]

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(a) if such recognition is manifestly contrary to public policy (ordre public) in the Member State addressed; (b) where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; (c) if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed; (d) if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed; or

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Recast Brussels I Regulation Official Journal (e) if the judgment conflicts with: (i) Sections 3, 4 or 5 of Chapter II where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant; or (ii) Section 6 of Chapter II. 2. In its examination of the grounds of jurisdiction referred to in point (e) of paragraph 1, the court to which the application was submitted shall be bound by the findings of fact on which the court of origin based its jurisdiction. 3. Without prejudice to point (e) of paragraph 1, the jurisdiction of the court of origin may not be reviewed. The test of public policy referred to in point (a) of paragraph 1 may not be applied to the rules relating to jurisdiction. 4. The application for refusal of recognition shall be made in accordance with the procedures provided for in Subsection 2 and, where appropriate, Section 4.

Subsection 2 Refusal of enforcement Article 46 On the application of the person against whom enforcement is sought, the enforcement of a judgment shall be refused where one of the grounds referred to in Article 45 is found to exist.

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2007 Lugano Convention Official Journal

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Article 47 1. The application for refusal of enforcement shall be submitted to the court which the Member State concerned has communicated to the Commission pursuant to point (a) of Article 75 as the court to which the application is to be submitted. 2. The procedure for refusal of enforcement shall, in so far as it is not covered by this Regulation, be governed by the law of the Member State addressed. 3. The applicant shall provide the court with a copy of the judgment and, where necessary, a translation or transliteration of it. The court may dispense with the production of the documents referred to in the first subparagraph if it already possesses them or if it considers it unreasonable to require the applicant to provide them. In the latter case, the court may require the other party to provide those documents. 4. The party seeking the refusal of enforcement of a judgment given in another Member State shall not be required to have a postal address in the Member State addressed. Nor shall that party be required to have an authorised representative in the Member State addressed unless such a representative is mandatory irrespective of the nationality or the domicile of the parties. Article 48 The court shall decide on the application for refusal of enforcement without delay.

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[See also Article 43]

Article 49

[See also Article 43]

1. The decision on the application for refusal of enforcement may be appealed against by either party. 2. The appeal is to be lodged with the court which the Member State concerned has communicated to the Commission pursuant to point (b) of Article 75 as the court with which such an appeal is to be lodged. [See also Article 44]

Article 50

[See also Article 44]

The decision given on the appeal may only be contested by an appeal where the courts with which any further appeal is to be lodged have been communicated by the Member State concerned to the Commission pursuant to point (c) of Article 75. [See also Article 46]

Article 51 1. The court to which an application for refusal of enforcement is submitted or the court which hears an appeal lodged under Article 49 or Article 50 may stay the proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired. In the latter case, the court may specify the time within which such an appeal is to be lodged. 2. Where the judgment was given in Ireland, Cyprus or the United Kingdom, any form of appeal available in the Member State of origin shall be treated as an ordinary appeal for the purposes of paragraph 1.

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[See also Article 46]

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2007 Lugano Convention Official Journal

[See also Article 36]

Article 52

[See also Article 36]

Section 3 Common provisions

Under no circumstances may a judgment given in a Member State be reviewed as to its substance in the Member State addressed. Article 53

[Cf Article 37]

Article 53

1. A party seeking recognition or applying for a declaration of enforceability shall produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity.

1. A party seeking recognition or applying for a declaration of enforceability shall produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity.

2. A party applying for a declaration of enforceability shall also produce the certificate referred to in Article 54, without prejudice to Article 55.

2. A party applying for a declaration of enforceability shall also produce the certificate referred to in Article 54, without prejudice to Article 55.

[See also Article 54]

Article 53 The court of origin shall, at the request of any interested party, issue the certificate using the form set out in Annex I. Article 54 1. If a judgment contains a measure or an order which is not known in the law of the Member State addressed, that measure or order shall, to the extent possible, be adapted to a measure or an order known in the law of that Member State which has equivalent effects attached to it and which pursues similar aims and interests. Such adaptation shall not result in effects going beyond those provided for in the law of the Member State of origin. 2. Any party may challenge the adaptation of the measure or order before a court.

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3. If necessary, the party invoking the judgment or seeking its enforcement may be required to provide a translation or a transliteration of the judgment. [See also Article 49]

Article 55

[See also Article 49]

A judgment given in a Member State which orders a payment by way of a penalty shall be enforceable in the Member State addressed only if the amount of the payment has been finally determined by the court of origin. [See also Article 51]

Article 56

[See also Article 51]

No security, bond or deposit, however described, shall be required of a party who in one Member State applies for the enforcement of a judgment given in another Member State on the ground that he is a foreign national or that he is not domiciled or resident in the Member State addressed. [Cf Article 53.2]

[Cf Article 42.1]

[Cf Article 53.2]

Article 54

[Article 53

Article 54

The court or competent authority of a Member State where a judgment was given shall issue, at the request of any interested party, a certificate using the standard form in Annex V to this Regulation.

The court of origin shall, at the request of any interested party, issue the certificate using the form set out in Annex I.]

The court or competent authority of a State bound by this Convention where a judgment was given shall issue, at the request of any interested party, a certificate using the standard form in Annex V to this Convention.

Article 55

Article 55

1. If the certificate referred to in Article 54 is not produced, the court or competent authority may specify a time for its production or accept an equivalent document or, if it considers that it has sufficient information before it, dispense with its production.

1. If the certificate referred to in Article 54 is not produced, the court or competent authority may specify a time for its production or accept an equivalent document or, if it considers that it has sufficient information before it, dispense with its production. [Cf Article 37.2

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2. If the court or competent authority so requires, a translation of the documents shall be produced. The translation shall be certified by a person qualified to do so in one of the Member States.

The court or authority before which a judgment given in another Member State is invoked may, where necessary, require the party invoking it to provide, in accordance with Article 57, a translation or a transliteration of the contents of the certificate referred to in point (b) of paragraph 1. The court or authority may require the party to provide a translation of the judgment instead of a translation of the contents of the certificate if it is unable to proceed without such a translation.]

2. If the court or competent authority so requires, a translation of the documents shall be produced. The translation shall be certified by a person qualified to do so in one of the States bound by this Convention.

Article 57 1. When a translation or a transliteration is required under this Regulation, such translation or transliteration shall be into the official language of the Member State concerned or, where there are several official languages in that Member State, into the official language or one of the official languages of court proceedings of the place where a judgment given in another Member State is invoked or an application is made, in accordance with the law of that Member State. 2. For the purposes of the forms referred to in Articles 53 and 60, translations or transliterations may also be into any other official language or languages of the institutions of the Union that the Member State concerned has indicated it can accept. 3. Any translation made under this Regulation shall be done by a person qualified to do translations in one of the Member States.

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Article 56

[Article 61

Article 56

No legalisation or other similar formality shall be required in respect of the documents referred to in Article 53 or Article 55(2), or in respect of a document appointing a representative ad litem.

No legalisation or other similar formality shall be required for documents issued in a Member State in the context of this Regulation.]

No legalisation or other similar formality shall be required in respect of the documents referred to in Article 53 or Article 55(2), or in respect of a document appointing a representative ad litem.

Chapter IV  Authentic instruments and court settlements

Title IV  Authentic instruments and court settlements

Article 57

Article 58

Article 57

1. A document which has been formally drawn up or registered as an authentic instrument and is enforceable in one Member State shall, in another Member State, be declared enforceable there, on application made in accordance with the procedures provided for in Articles 38, et seq. The court with which an appeal is lodged under Article 43 or Article 44 shall refuse or revoke a declaration of enforceability only if enforcement of the instrument is manifestly contrary to public policy in the Member State addressed.

1. An authentic instrument which is enforceable in the Member State of origin shall be enforceable in the other Member States without any declaration of enforceability being required. Enforcement of the authentic instrument may be refused only if such enforcement is manifestly contrary to public policy (ordre public) in the Member State addressed. The provisions of Section 2, Subsection 2 of Section 3, and Section 4 of Chapter III shall apply as appropriate to authentic instruments.

1. A document which has been formally drawn up or registered as an authentic instrument and is enforceable in one State bound by this Convention shall, in another State bound by this Convention, be declared enforceable there, on application made in accordance with the procedures provided for in Article 38, et seq. The court with which an appeal is lodged under Article 43 or Article 44 shall refuse or revoke a declaration of enforceability only if enforcement of the instrument is manifestly contrary to public policy in the State addressed.

2. Arrangements relating to maintenance obligations concluded with administrative authorities or authenticated by them shall also be regarded as authentic instruments within the meaning of paragraph 1.

[See also Article 2 (c)]

2. Arrangements relating to maintenance obligations concluded with administrative authorities or authenticated by them shall also be regarded as authentic instruments within the meaning of paragraph 1.

3. The instrument produced must satisfy the conditions necessary to establish its authenticity in the Member State of origin.

2. The authentic instrument produced must satisfy the conditions necessary to establish its authenticity in the Member State of origin.

3. The instrument produced must satisfy the conditions necessary to establish its authenticity in the State of origin.

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[Article 60 4. Section 3 of Chapter III shall apply as appropriate. The competent authority of a Member State where an authentic instrument was drawn up or registered shall issue, at the request of any interested party, a certificate using the standard form in Annex VI to this Regulation.

The competent authority or court of the Member State of origin shall, at the request of any interested party, issue the certificate using the form set out in Annex II containing a summary of the enforceable obligation recorded in the authentic instrument or of the agreement between the parties recorded in the court settlement.]

4. Section 3 of Title III shall apply as appropriate. The competent authority of a State bound by this Convention where an authentic instrument was drawn up or registered shall issue, at the request of any interested party, a certificate using the standard form in Annex VI to this Convention.

Article 58

Article 59

Article 58

A settlement which has been approved by a court in the course of proceedings and is enforceable in the Member State in which it was concluded shall be enforceable in the State addressed under the same conditions as authentic instruments.

A court settlement which is enforceable in the Member State of origin shall be enforced in the other Member States under the same conditions as authentic instruments.

A settlement which has been approved by a court in the course of proceedings and is enforceable in the State bound by this Convention in which it was concluded shall be enforceable in the State addressed under the same conditions as authentic instruments.

Article 60 The court or competent authority of a Member State where a court settlement was approved shall issue, at the request of any interested party, a certificate using the standard form in Annex V to this Regulation.

The competent authority or court of the Member State of origin shall, at the request of any interested party, issue the certificate using the form set out in Annex II containing a summary of the enforceable obligation recorded in the authentic instrument or of the agreement between the parties recorded in the court settlement.

The court or competent authority of a State bound by this Convention where a court settlement was approved shall issue, at the request of any interested party, a certificate using the standard form in Annex V to this Convention.

Chapter V  General provisions

Chapter V  General provisions

Title V  General provisions

[See also Article 56]

Article 61

[See also Article 56]

No legalisation or other similar formality shall be required for documents issued in a Member State in the context of this Regulation.

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Article 59

Article 62

Article 59

1. In order to determine whether a party is domiciled in the Member State whose courts are seised of a matter, the court shall apply its internal law.

1. In order to determine whether a party is domiciled in the Member State whose courts are seised of a matter, the court shall apply its internal law.

1. In order to determine whether a party is domiciled in the State bound by this Convention whose courts are seised of a matter, the court shall apply its internal law.

2. If a party is not domiciled in the Member State whose courts are seised of the matter, then, in order to determine whether the party is domiciled in another Member State, the court shall apply the law of that Member State.

2. If a party is not domiciled in the Member State whose courts are seised of the matter, then, in order to determine whether the party is domiciled in another Member State, the court shall apply the law of that Member State.

2. If a party is not domiciled in the State whose courts are seised of the matter, then, in order to determine whether the party is domiciled in another State bound by this Convention, the court shall apply the law of that State.

Article 60

Article 63

Article 60

1. For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its:

1. For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its:

1. For the purposes of this Convention, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its:

(a) statutory seat, or

(a) statutory seat;

(a) statutory seat; or

(b) central administration, or

(b) central administration; or

(b) central administration; or

(c) principal place of business.

(c) principal place of business.

(c) principal place of business.

2. For the purposes of the United Kingdom and Ireland ‘statutory seat’ means the registered office or, where there is no such office anywhere, the place of incorporation or, where there is no such place anywhere, the place under the law of which the formation took place.

2. For the purposes of Ireland, Cyprus and the United Kingdom, ‘statutory seat’ means the registered office or, where there is no such office anywhere, the place of incorporation or, where there is no such place anywhere, the place under the law of which the formation took place.

2. For the purposes of the United Kingdom and Ireland ‘statutory seat’ means the registered office or, where there is no such office anywhere, the place of incorporation or, where there is no such place anywhere, the place under the law of which the formation took place.

3. In order to determine whether a trust is domiciled in the Member State whose courts are seised of the matter, the court shall apply its rules of private international law.

3. In order to determine whether a trust is domiciled in the Member State whose courts are seised of the matter, the court shall apply its rules of private international law.

3. In order to determine whether a trust is domiciled in the State bound by this Convention whose courts are seised of the matter, the court shall apply its rules of private international law.

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Article 61

Article 64

Article 61

Without prejudice to any more favourable provisions of national laws, persons domiciled in a Member State who are being prosecuted in the criminal courts of another Member State of which they are not nationals for an offence which was not intentionally committed may be defended by persons qualified to do so, even if they do not appear in person. However, the court seised of the matter may order appearance in person; in the case of failure to appear, a judgment given in the civil action without the person concerned having had the opportunity to arrange for his defence need not be recognised or enforced in the other Member States.

Without prejudice to any more favourable provisions of national laws, persons domiciled in a Member State who are being prosecuted in the criminal courts of another Member State of which they are not nationals for an offence which was not intentionally committed may be defended by persons qualified to do so, even if they do not appear in person. However, the court seised of the matter may order appearance in person; in the case of failure to appear, a judgment given in the civil action without the person concerned having had the opportunity to arrange for his defence need not be recognised or enforced in the other Member States.

Without prejudice to any more favourable provisions of national laws, persons domiciled in a State bound by this Convention who are being prosecuted in the criminal courts of another State bound by this Convention of which they are not nationals for an offence which was not intentionally committed may be defended by persons qualified to do so, even if they do not appear in person. However, the court seised of the matter may order appearance in person; in the case of failure to appear, a judgment given in the civil action without the person concerned having had the opportunity to arrange for his defence need not be recognised or enforced in the other States bound by this Convention.

Article 62

[Article 3

Article 62

In Sweden, in summary proceedings concerning orders to pay (betalningsföreläggande) and assistance (handräckning), the expression ‘court’ includes the ‘Swedish enforcement service’ (kronofogdemyndighet).

For the purposes of this Regulation, ‘court’ includes the following authorities to the extent that they have jurisdiction in matters falling within the scope of this Regulation: (a) in Hungary, in summary proceedings concerning orders to pay (fizetési meghagyásos eljárás), the notary (közjegyző); (b) in Sweden, in summary proceedings concerning orders to pay (betalnings­ föreläggande) and assistance (handräckning), the Enforcement Authority (Kronofog­ demyndigheten)].

For the purposes of this Convention, the expression ‘court’ shall include any authorities designated by a State bound by this Convention as having jurisdiction in the matters falling within the scope of this Convention.

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Brussels I Regulation Consolidated Version (2015) Article 63 1. A person domiciled in the territory of the Grand Duchy of Luxembourg and sued in the court of another Member State pursuant to Article 5(1) may refuse to submit to the jurisdiction of that court if the final place of delivery of the goods or provision of the services is in Luxembourg. 2. Where, under paragraph 1, the final place of delivery of the goods or provision of the services is in Luxembourg, any agreement conferring jurisdiction must, in order to be valid, be accepted in writing or evidenced in writing within the meaning of Article 23(1)(a). 3. The provisions of this Article shall not apply to contracts for the provision of financial services. 4. The provisions of this Article shall apply for a period of six years from entry into force of this Regulation. Article 64 1. In proceedings involving a dispute between the master and a member of the crew of a seagoing ship registered in Greece or in Portugal, concerning remuneration or other conditions of service, a court in a Member State shall establish whether the diplomatic or consular officer responsible for the ship has been notified of the dispute. It may act as soon as that officer has been notified. 2. The provisions of this Article shall apply for a period of six years from entry into force of this Regulation.

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Article 65

Article 65

[See also Article II Protocol I]

1. The jurisdiction specified in Article 6(2), and Article 11 in actions on a warranty of guarantee or in any other third party proceedings may not be resorted to in Germany and Austria. Any person domiciled in another Member State may be sued in the courts: (a) of Germany, pursuant to Articles 68 and 72 to 74 of the Code of Civil Procedure (Zivilprozess­ ordnung) concerning third-party notices, (b) of Austria, pursuant to Article 21 of the Code of Civil Procedure (Zivilprozess­ordnung) concerning third-party notices. 2. Judgments given in other Member States by virtue of Article 6(2), or Article 11 shall be recognised and enforced in Germany and Austria in accordance with Chapter III. Any effects which judgments given in these States may have on third parties by application of the provisions in paragraph 1 shall also be recognised in the other Member States.

1. The jurisdiction specified in point 2 of Article 8 and Article 13 in actions on a warranty or guarantee or in any other third-party proceedings may be resorted to in the Member States included in the list established by the Commission pursuant to point (b) of Article 76(1) and Article 76(2) only in so far as permitted under national law. A person domiciled in another Member State may be invited to join the proceedings before the courts of those Member States pursuant to the rules on third-party notice referred to in that list.

2. Judgments given in a Member State by virtue of point 2 of Article 8 or Article 13 shall be recognised and enforced in accordance with Chapter III in any other Member State. Any effects which judgments given in the Member States included in the list referred to in paragraph 1 may have, in accordance with the law of those Member States, on third parties by application of paragraph 1 shall be recognised in all Member States. 3. The Member States included in the list referred to in paragraph 1 shall, within the framework of the European Judicial Network in civil and commercial matters established by Council Decision 2001/470/ EC (‘the European Judicial Network’) provide information on how to determine, in accordance with their national law, the effects of the judgments referred to in the second sentence of paragraph 2.

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Recast Brussels I Regulation Official Journal

Article 66 1. This Regulation shall apply only to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after the entry into force thereof.

Article 66 1. This Regulation shall apply only to legal proceedings instituted, to authentic instruments formally drawn up or registered and to court settlements approved or concluded on or after 10 January 2015.

2. However, if the proceedings in the Member State of origin were instituted before the entry into force of this Regulation, judgments given after that date shall be recognised and enforced in accordance with Chapter III, (a) if the proceedings in the Member State of origin were instituted after the entry into force of the Brussels or the Lugano Convention both in the Member State or origin and in the Member State addressed; (b) in all other cases, if jurisdiction was founded upon rules which accorded with those provided for either in Chapter II or in a convention concluded between the Member State of origin and the Member State addressed which was in force when the proceedings were instituted.

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2007 Lugano Convention Official Journal Title VI  Transitional provisions Article 63 1. This Convention shall apply only to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after its entry into force in the State of origin and, where recognition or enforcement of a judgment or authentic instruments is sought, in the State addressed. 2. However, if the proceedings in the State of origin were instituted before the entry into force of this Convention, judgments given after that date shall be recognised and enforced in accordance with Title III: (a) if the proceedings in the State of origin were instituted after the entry into force of the Lugano Convention of 16 September 1988 both in the State of origin and in the State addressed; (b) in all other cases, if jurisdiction was founded upon rules which accorded with those provided for either in Title II or in a convention concluded between the State of origin and the State addressed which was in force when the proceedings were instituted.

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2. Notwithstanding Article 80, Regulation (EC) No 44/2001 shall continue to apply to judgments given in legal proceedings instituted, to authentic instruments formally drawn up or registered and to court settlements approved or concluded before 10 January 2015 which fall within the scope of that Regulation.

Chapter VII  Relations with other instruments

Title VII  Relationship to Council Regulation (EC) No 44/2001 and other instruments

Article 67 This Regulation shall not prejudice the application of provisions governing jurisdiction and the recognition and enforcement of judgments in specific matters which are contained in Community instruments or in national legislation harmonised pursuant to such instruments.

Article 64 1. This Convention shall not prejudice the application by the Member States of the European Community of the Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, as well as any amendments thereof, of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, signed at Brussels on 27 September 1968, and of the Protocol on interpretation of that Convention by the Court of Justice of the European Communities, signed at Luxembourg on 3 June 1971, as amended by the Conventions of Accession to the said Convention and the said Protocol by the States acceding to the European Communities, as well as of the Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed at Brussels on 19 October 2005.

Article 67 This Regulation shall not prejudice the application of provisions governing jurisdiction and the recognition and enforcement of judgments in specific matters which are contained in instruments of the Union or in national legislation harmonised pursuant to such instruments.

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2007 Lugano Convention Official Journal 2. However, this Convention shall in any event be applied: (a) in matters of jurisdiction, where the defendant is domiciled in the territory of a State where this Convention but not an instrument referred to in paragraph 1 of this Article applies, or where Articles 22 or 23 of this Convention confer jurisdiction on the courts of such a State; (b) in relation to lis pendens or to related actions as provided for in Articles 27 and 28, when proceedings are instituted in a State where the Convention but not an instrument referred to in paragraph 1 of this Article applies and in a State where this Convention as well as an instrument referred to in paragraph 1 of this Article apply; (c) in matters of recognition and enforcement, where either the State of origin or the State addressed is not applying an instrument referred to in paragraph 1 of this Article. 3. In addition to the grounds provided for in Title III, recognition or enforcement may be refused if the ground of jurisdiction on which the judgment has been based differs from that resulting from this Convention and recognition or enforcement is sought against a party who is domiciled in a State where this Convention but not an instrument referred to in paragraph 1 of this Article applies, unless the judgment may otherwise be recognised or enforced under any rule of law in the State addressed.

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Article 68 1. This Regulation shall, as between the Member States, supersede the Brussels Convention, except as regards the territories of the Member States which fall within the territorial scope of that Convention and which are excluded from this Regulation pursuant to Article 299 of the Treaty.

Article 68 1. This Regulation shall, as between the Member States, supersede the 1968 Brussels Convention, except as regards the territories of the Member States which fall within the territorial scope of that Convention and which are excluded from this Regulation pursuant to Article 355 of the TFEU.

Article 65 Subject to the provisions of Articles 63(2), 66 and 67, this Convention shall, as between the States bound by this Convention, supersede the conventions concluded between two or more of them that cover the same matters as those to which this Convention applies. In particular, the conventions mentioned in Annex VII shall be superseded.

2. In so far as this Regulation replaces the provisions of the Brussels Convention between Member States, any reference to the Convention shall be understood as a reference to this Regulation.

2. In so far as this Regulation replaces the provisions of the 1968 Brussels Convention between the Member States, any reference to that Convention shall be understood as a reference to this Regulation.

Article 69

Article 69

Subject to Article 66(2) and Article 70, this Regulation shall, as between Member States, supersede the following conventions and treaty concluded between two or more of them:

Subject to Articles 70 and 71, this Regulation shall, as between the Member States, supersede the conventions that cover the same matters as those to which this Regulation applies. In particular, the conventions included in the list established by the Commission pursuant to point (c) of Article 76(1) and Article 76(2) shall be superseded.

– the Convention between Belgium and France on Jurisdiction and the Validity and Enforcement of Judgments, Arbitration Awards and Authentic Instruments, signed at Paris on 8 July 1899,

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– the Convention between the Netherlands and Italy on the Recognition and Enforcement of Judgments in Civil and Commercial Matters, signed at Rome on 17 April 1959, – the Convention between Germany and Austria on the Reciprocal Recognition and Enforcement of Judgments, Settlements and Authentic Instruments in Civil and Commercial Matters, signed at Vienna on 6 June 1959, – the Convention between Belgium and Austria on the Reciprocal Recognition and Enforcement of Judgments, Arbitral Awards and Authentic Instruments in Civil and Commercial Matters, signed at Vienna on 16 June 1959, – the Convention between Greece and Germany for the Reciprocal Recognition and Enforcement of Judgments, Settlements and Authentic Instruments in Civil and Commercial Matters, signed in Athens on 4 November 1961, – the Convention between Belgium and Italy on the Recognition and Enforcement of Judgments and other Enforceable Instruments in Civil and Commercial Matters, signed at Rome on 6 April 1962,

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Brussels I Regulation Consolidated Version (2015) – the Convention between the Netherlands and Germany on the Mutual Recognition and Enforcement of Judgments and Other Enforceable Instruments in Civil and Commercial Matters, signed at The Hague on 30 August 1962, – the Convention between the Netherlands and Austria on the Reciprocal Recognition and Enforcement of Judgments and Authentic Instruments in Civil and Commercial Matters, signed at The Hague on 6 February 1963, – the Convention between France and Austria on the Recognition and Enforcement of Judgments and Authentic Instruments in Civil and Commercial Matters, signed at Vienna on 15 July 1966, – the Convention between Spain and France on the Recognition and Enforcement of Judgment Arbitration Awards in Civil and Commercial Matters, signed at Paris on 28 May 1969, – the Convention between Luxembourg and Austria on the Recognition and Enforcement of Judgments and Authentic Instruments in Civil and Commercial Matters, signed at Luxembourg on 29 July 1971,

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– the Convention between Italy and Austria on the Recognition and Enforcement of Judgments in Civil and Commercial Matters, of Judicial Settlements and of Authentic Instruments, signed at Rome on 16 November 1971, – the Convention between Spain and Italy regarding Legal Aid and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, signed at Madrid on 22 May 1973, – the Convention between Finland, Iceland, Norway, Sweden and Denmark on the Recognition and Enforcement of Judgments in Civil Matters, signed at Copenhagen on 11 October 1977, – the Convention between Austria and Sweden on the Recognition and Enforcement of Judgments in Civil Matters, signed at Stockholm on 16 September 1982, – the Convention between Spain and the Federal Republic of Germany on the Recognition and Enforcement of Judgments, Settlements and Enforceable Authentic Instruments in Civil and Commercial Matters, signed at Bonn on 14 November 1983,

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– the Convention between Austria and Spain on the Recognition and Enforcement of Judgments, Settlements and Enforceable Authentic Instruments in Civil and Commercial Matters, signed at Vienna on 17 February 1984, – the Convention between Finland and Austria on the Recognition and Enforcement of Judgments in Civil Matters, signed at Vienna on 17 November 1986, and – the Treaty between Belgium, the Netherlands and Luxembourg in Jurisdiction, Bankruptcy, and the Validity and Enforcement of Judgments, Arbitration Awards and Authentic Instruments, signed at Brussels on 24 November 1961, in so far as it is in force.

Article 70

Article 70

Article 66

1. The Treaty and the Conventions referred to in Article 69 shall continue to have effect in relation to matters to which this Regulation does not apply.

1. The conventions referred to in Article 69 shall continue to have effect in relation to matters to which this Regulation does not apply.

1. The conventions referred to in Article 65 shall continue to have effect in relation to matters to which this Convention does not apply.

2. They shall continue to have effect in respect of judgments given and documents formally drawn up or registered as authentic instruments before the entry into force of this Regulation.

2. They shall continue to have effect in respect of judgments given, authentic instruments formally drawn up or registered and court settlements approved or concluded before the date of entry into force of Regulation (EC) No 44/2001.

2. They shall continue to have effect in respect of judgments given and documents formally drawn up or registered as authentic instruments before the entry into force of this Convention.

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Article 71

Article 71

Article 67

1. This Regulation shall not affect any conventions to which the Member States are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. 2. With a view to its uniform interpretation, paragraph 1 shall be applied in the following manner:

1. This Regulation shall not affect any conventions to which the Member States are parties and which, in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. 2. With a view to its uniform interpretation, paragraph 1 shall be applied in the following manner:

1. This Convention shall not affect any conventions by which the Contracting Parties and/or the States bound by this Convention are bound and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. Without prejudice to obligations resulting from other agreements between certain Contracting Parties, this Convention shall not prevent Contracting Parties from entering into such conventions. 2. This Convention shall not prevent a court of a State bound by this Convention and by a convention on a particular matter from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in another State bound by this Convention which is not a party to that convention. The court hearing the action shall, in any event, apply Article 26 of this Convention.

(a) this Regulation shall not prevent a court of a Member State, which is a party to a convention on a particular matter, from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in another Member State which is not a party to that convention. The court hearing the action shall, in any event, apply Article 26 of this Regulation;

(a) this Regulation shall not prevent a court of a Member State which is party to a convention on a particular matter from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in another Member State which is not party to that convention. The court hearing the action shall, in any event, apply Article 28 of this Regulation;

(b) judgments given in a Member State by a court in the exercise of jurisdiction provided for in a convention on a particular matter shall be recognised and enforced in the other Member States in accordance with this Regulation.

(b) judgments given in a Member State by a court in the exercise of jurisdiction provided for in a convention on a particular matter shall be recognised and enforced in the other Member States in accordance with this Regulation.

3. Judgments given in a State bound by this Convention by a court in the exercise of jurisdiction provided for in a convention on a particular matter shall be recognised and enforced in the other States bound by this Convention in accordance with Title III of this Convention.

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2007 Lugano Convention Official Journal 4. In addition to the grounds provided for in Title III, recognition or enforcement may be refused if the State addressed is not bound by the convention on a particular matter and the person against whom recognition or enforcement is sought is domiciled in that State, or, if the State addressed is a Member State of the European Community and in respect of conventions which would have to be concluded by the European Community, in any of its Member States, unless the judgment may otherwise be recognised or enforced under any rule of law in the State addressed. 5. Where a convention on a particular matter to which both the State of origin and the State addressed are parties lays down conditions for the recognition or enforcement of judgments, those conditions shall apply. In any event, the provisions of this Convention which concern the procedures for recognition and enforcement of judgments may be applied.

Where a convention on a particular matter to which both the Member State of origin and the Member State addressed are parties lays down conditions for the recognition or enforcement of judgments, those conditions shall apply. In any event, the provisions of this Regulation which concern the procedure for recognition and enforcement of judgments may be applied.

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Where a convention on a particular matter to which both the Member State of origin and the Member State addressed are parties lays down conditions for the recognition or enforcement of judgments, those conditions shall apply. In any event, the provisions of this Regulation on recognition and enforcement of judgments may be applied.

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Article 71a 1. For the purposes of this Regulation, a court common to several Member States as specified in paragraph 2 (a ‘common court’) shall be deemed to be a court of a Member State when, pursuant to the instrument establishing it, such a common court exercises jurisdiction in matters falling within the scope of this Regulation. 2. For the purposes of this Regulation, each of the following courts shall be a common court: (a) the Unified Patent Court established by the Agreement on a Unified Patent Court signed on 19 February 2013 (the ‘UPC Agreement’); and (b) the Benelux Court of Justice established by the Treaty of 31 March 1965 concerning the establishment and statute of a Benelux Court of Justice (the ‘Benelux Court of Justice Treaty’). Article 71b The jurisdiction of a common court shall be determined as follows: (1) a common court shall have jurisdiction where, under this Regulation, the courts of a Member State party to the instrument establishing the common court would have jurisdiction in a matter governed by that instrument;

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Recast Brussels I Regulation Official Journal (2) where the defendant is not domiciled in a Member State, and this Regulation does not otherwise confer jurisdiction over him, Chapter II shall apply as appropriate regardless of the defendant’s domicile. Application may be made to a common court for provisional, including protective, measures even if the courts of a third State have jurisdiction as to the substance of the matter; (3) where a common court has jurisdiction over a defendant under point 2 in a dispute relating to an infringement of a European patent giving rise to damage within the Union, that court may also exercise jurisdiction in relation to damage arising outside the Union from such an infringement. Such jurisdiction may only be established if property belonging to the defendant is located in any Member State party to the instrument establishing the common court and the dispute has a sufficient connection with any such Member State. Article 71c 1. Articles 29 to 32 shall apply where proceedings are brought in a common court and in a court of a Member State not party to the instrument establishing the common court. 2. Articles 29 to 32 shall apply where, during the transitional period referred to in Article 83 of the UPC Agreement, proceedings are brought in the Unified Patent Court and in a court of a Member State party to the UPC Agreement.

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Article 71d This Regulation shall apply to the recognition and enforcement of: (a) judgments given by a common court which are to be recognised and enforced in a Member State not party to the instrument establishing the common court; and (b) judgments given by the courts of a Member State not party to the instrument establishing the common court which are to be recognised and enforced in a Member State party to that instrument. However, where recognition and enforcement of a judgment given by a common court is sought in a Member State party to the instrument establishing the common court, any rules of that instrument on recognition and enforcement shall apply instead of the rules of this Regulation.

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Article 72

Article 72

Article 68

This Regulation shall not affect agreements by which Member States undertook, prior to the entry into force of this Regulation pursuant to Article 59 of the Brussels Convention, not to recognise judgments given, in particular in other Contracting States to that Convention, against defendants domiciled or habitually resident in a third country where, in cases provided for in Article 4 of that Convention, the judgment could only be founded on a ground of jurisdiction specified in the second paragraph of Article 3 of that Convention.

This Regulation shall not affect agreements by which Member States, prior to the entry into force of Regulation (EC) No 44/2001, undertook pursuant to Article 59 of the 1968 Brussels Convention not to recognise judgments given, in particular in other Contracting States to that Convention, against defendants domiciled or habitually resident in a third State where, in cases provided for in Article 4 of that Convention, the judgment could only be founded on a ground of jurisdiction specified in the second paragraph of Article 3 of that Convention.

1. This Convention shall not affect agreements by which States bound by this Convention undertook, prior to the entry into force of this Convention, not to recognise judgments given in other States bound by this Convention against defendants domiciled or habitually resident in a third State where, in cases provided for in Article 4, the judgment could only be founded on a ground of jurisdiction as specified in Article 3(2). Without prejudice to obligations resulting from other agreements between certain Contracting Parties, this Convention shall not prevent Contracting Parties from entering into such conventions. 2. However, a Contracting Party may not assume an obligation towards a third State not to recognise a judgment given in another State bound by this Convention by a court basing its jurisdiction on the presence within that State of property belonging to the defendant, or the seizure by the plaintiff of property situated there: (a) if the action is brought to assert or declare proprietary or possessory rights in that property, seeks to obtain authority to dispose of it, or arises from another issue relating to such property; or (b) if the property constitutes the security for a debt which is the subject-matter of the action.

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Article 73 1. This Regulation shall not affect the application of the 2007 Lugano Convention. 2. This Regulation shall not affect the application of the 1958 New York Convention. 3. This Regulation shall not affect the application of bilateral conventions and agreements between a third State and a Member State concluded before the date of entry into force of Regulation (EC) No 44/2001 which concern matters governed by this Regulation.

Chapter VIII  Final provisions

Title VIII  Final provisions

Article 73

[Article 79

Article 69

No later than five years after the entry into force of this Regulation, the Commission shall present to the European Parliament, the Council and the Economic and Social Committee a report on the application of this Regulation. The report shall be accompanied, if need be, by proposals for adaptations to this Regulation.

By 11 January 2022 the Commission shall present a report to the European Parliament, to the Council and to the European Economic and Social Committee on the application of this Regulation. That report shall include an evaluation of the possible need for a further extension of the rules on jurisdiction to defendants not domiciled in a Member State, taking into account the operation of this Regulation and possible developments at international level. Where appropriate, the report shall be accompanied by a proposal for amendment of this Regulation.]

1. The Convention shall be open for signature by the European Community, Denmark, and States which, at the time of the opening for signature, are Members of the European Free Trade Association. 2. This Convention shall be subject to ratification by the Signatories. The instruments of ratification shall be deposited with the Swiss Federal Council, which shall act as Depositary of this Convention. 3. At the time of the ratification, the Contracting Parties may submit declarations in accordance with Articles I, II and III of Protocol 1. 4. The Convention shall enter into force on the first day of the sixth month following the date on which the European Community and a Member of the European Free Trade Association deposit their instruments of ratification.

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2007 Lugano Convention Official Journal 5. The Convention shall enter into force in relation to any other Party on the first day of the third month following the deposit of its instrument of ratification. 6. Without prejudice to Article 3(3) of Protocol 2, this Convention shall replace the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters done at Lugano on 16 September 1988 as of the date of its entry into force in accordance with paragraphs 4 and 5 above. Any reference to the 1988 Lugano Convention in other instruments shall be understood as a reference to this Convention. 7. Insofar as the relations between the Member States of the European Community and the non-European territories referred to in Article 70(1)(b) are concerned, this Convention shall replace the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, signed at Brussels on 27 September 1968, and of the Protocol on interpretation of that Convention by the Court of Justice of the European Communities, signed at Luxembourg on 3 June 1971, as amended by the Conventions of Accession to the said Convention and the said Protocol by the States acceding to the European Communities, as of the date of the entry into force of this Convention with respect to these territories in accordance with Article 73(2). Article 70 1. After entering into force this Convention shall be open for accession by:

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Article 74

[Article 75

Article 71

1. The Member States shall notify the Commission of the texts amending the lists set out in Annexes I to IV. The Commission shall adapt the Annexes concerned accordingly.

By 10 January 2014, the Member States shall communicate to the Commission: (a) the courts to which the application for refusal of enforcement is to be submitted pursuant to Article 47(1); (b) the courts with which an appeal against the decision on the application for refusal of enforcement is to be lodged pursuant to Article 49(2);

1. Any State referred to in Article 70(1)(a) and (b) wishing to become a Contracting Party to this Convention: (a) shall communicate the information required for the application of this Convention; (b) may submit declarations in accordance with Articles I and III of Protocol 1.

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2. The updating or technical adjustment of the forms, specimens of which appear in Annexes V and VI, shall be adopted in accordance with the advisory procedure referred to in Article 75(2).

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(c) the courts with which any further appeal is to be lodged pursuant to Article 50; and Article 76 1. The Member States shall notify the Commission of: (a) the rules of jurisdiction referred to in Articles 5(2) and 6(2);]

2. The Depositary shall transmit any information received pursuant to paragraph 1 to the other Contracting Parties prior to the deposit of the instrument of accession by the State concerned.

[Article 77 The Commission shall be empowered to adopt delegated acts in accordance with Article 78 concerning the amendment of Annexes I and II.]

Article 75 1. The Commission shall be assisted by a committee. 2. Where reference is made to this paragraph, Articles 3 and 7 of Decision 1999/468/EC shall apply. 3. The Committee shall adopt its rules of procedure. Article 72 1. Any State referred to in Article 70(1)(c) wishing to become a Contracting Party to this Convention: (a) shall communicate the information required for the application of this Convention; (b) may submit declarations in accordance with Articles I and III of Protocol 1; and (c) shall provide the Depositary with information on, in particular: (1) their judicial system, including information on the appointment and independence of judges;

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2007 Lugano Convention Official Journal (2) their internal law concerning civil procedure and enforcement of judgments; and (3) their private international law relating to civil procedure. 2. The Depositary shall transmit any information received pursuant to paragraph 1 to the other Contracting Parties prior to inviting the State concerned to accede in accordance with paragraph 3 of this Article. 3. Without prejudice to paragraph 4, the Depositary shall invite the State concerned to accede only if it has obtained the unanimous agreement of the Contracting Parties. The Contracting Parties shall endeavour to give their consent at the latest within one year after the invitation by the Depositary. 4. The Convention shall enter into force only in relations between the acceding State and the Contracting Parties which have not made any objections to the accession before the first day of the third month following the deposit of the instrument of accession. Article 73 1. The instruments of accession shall be deposited with the Depositary. 2. In respect of an acceding State referred to in Article 70, the Convention shall enter into force on the first day of the third month following the deposit of its instrument of accession. As of that moment, the acceding State shall be considered a Contracting Party to the Convention.

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Article 74

Article 74

The Member States shall provide, within the framework of the European Judicial Network and with a view to making the information available to the public, a description of national rules and procedures concerning enforcement, including authorities competent for enforcement, and information on any limitations on enforcement, in particular debtor protection rules and limitation or prescription periods.

1. This Convention is concluded for an unlimited period. 2. Any Contracting Party may, at any time, denounce the Convention by sending a notification to the Depositary.

The Member States shall keep this information permanently updated. Article 75 [See also Article 74.1]

By 10 January 2014, the Member States shall communicate to the Commission: (a) the courts to which the application for refusal of enforcement is to be submitted pursuant to Article 47(1); (b) the courts with which an appeal against the decision on the application for refusal of enforcement is to be lodged pursuant to Article 49(2); (c) the courts with which any further appeal is to be lodged pursuant to Article 50; and

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3. The denunciation shall take effect at the end of the calendar year following the expiry of a period of six months from the date of receipt by the Depositary of the notification of denunciation.

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Recast Brussels I Regulation Official Journal (d) the languages accepted for translations of the forms as referred to in Article 57(2). The Commission shall make the information publicly available through any appropriate means, in particular through the European Judicial Network. Article 76 1. The Member States shall notify the Commission of: (a) the rules of jurisdiction referred to in Articles 5(2) and 6(2); (b) the rules on third-party notice referred to in Article 65; and (c) the conventions referred to in Article 69. 2. The Commission shall, on the basis of the notifications by the Member States referred to in paragraph 1, establish the corresponding lists. 3. The Member States shall notify the Commission of any subsequent amendments required to be made to those lists. The Commission shall amend those lists accordingly. 4. The Commission shall publish the lists and any subsequent amendments made to them in the Official Journal of the European Union. 5. The Commission shall make all information notified pursuant to paragraphs 1 and 3 publicly available through any other appropriate means, in particular through the European Judicial Network.

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Article 75 The following are annexed to this Convention: – a Protocol 1, on certain questions of jurisdiction, procedure and enforcement, – a Protocol 2, on the uniform interpretation of this Convention and on the Standing Committee, – a Protocol 3, on the application of Article 67 of this Convention,

– Annexes I through IV and Annex VII, with information related to the application of this Convention, – Annexes V and VI, containing the certificates referred to in Articles 54, 58 and 57 of this Convention, – Annex VIII, containing the authentic languages referred to in Article 79 of this Convention, and – Annex IX, concerning the application of Article II of Protocol 1. These Protocols and Annexes shall form an integral part of this Convention.

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2007 Lugano Convention Official Journal Article 76 Without prejudice to Article 77, any Contracting Party may request the revision of this Convention. To that end, the Depositary shall convene the Standing Committee as laid down in Article 4 of Protocol 2.

Article 77

Article 77

The Commission shall be empowered to adopt delegated acts in accordance with Article 78 concerning the amendment of Annexes I and II.

1. The Contracting Parties shall communicate to the Depositary the text of any provisions of the laws which amend the lists set out in Annexes I through IV as well as any deletions in or additions to the list set out in Annex VII and the date of their entry into force. Such communication shall be made within reasonable time before the entry into force and be accompanied by a translation into English and French. The Depositary shall adapt the Annexes concerned accordingly, after having consulted the Standing Committee in accordance with Article 4 of Protocol 2. For that purpose, the Contracting Parties shall provide a translation of the adaptations into their languages. 2. Any amendment of Annexes V through VI and VIII through IX to this Convention shall be adopted by the Standing Committee in accordance with Article 4 of Protocol 2.

[Cf Article 74.2]

Article 78 1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article. 2. The power to adopt delegated acts referred to in Article 77 shall be conferred on the Commission for an indeterminate period of time from 9 January 2013.

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3. The delegation of power referred to in Article 77 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 4. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. 5. A delegated act adopted pursuant to Article 77 shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council. [See also Article 73]

Article 79 By 11 January 2022 the Commission shall present a report to the European Parliament, to the Council and to the European Economic and Social Committee on the application of this Regulation. That report shall include an evaluation of the possible need for a further extension of the rules on jurisdiction

Article 78 1. The Depositary shall notify the Contracting Parties of: (a) the deposit of each instrument of ratification or accession; (b) the dates of entry into force of this Convention in respect of the Contracting Parties; (c) any declaration received pursuant to Articles I to IV of Protocol 1; (d) any communication made pursuant to Article 74(2), Article 77(1) and paragraph 4 of Protocol 3. 2. The notifications will be accompanied by translations into English and French.

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Brussels I Regulation Consolidated Version (2015)

Recast Brussels I Regulation Official Journal

2007 Lugano Convention Official Journal

to defendants not domiciled in a Member State, taking into account the operation of this Regulation and possible developments at international level. Where appropriate, the report shall be accompanied by a proposal for amendment of this Regulation. Article 80 This Regulation shall repeal Regulation (EC) No 44/2001. References to the repealed Regulation shall be construed as references to this Regulation and shall be read in accordance with the correlation table set out in Annex III. Article 76

Article 81

This Regulation shall enter into force on l March 2002. This Regulation is binding in its entirety and directly applicable in the Member States in accordance with the Treaty establishing the European Community.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from 10 January 2015, with the exception of Articles 75 and 76, which shall apply from 10 January 2014. This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties.

Annex I

[See also Article 76.1 (a)]

Article 79 This Convention, drawn up in a single original in the languages listed in Annex VIII, all texts being equally authentic, shall be deposited in the Swiss Federal Archives. The Swiss Federal Council shall transmit a certified copy to each Contracting Party.

Annex I

Annex II

[See also Article 75 (a)]

Annex II

Annex III

[See also Article 75 (b)]

Annex III

Annex IV

[See also Article 75 (c)]

Annex IV

Annex V

Annex I et II

Annex V

Annex VI

Annex II

Annex VI

Annex III Protocol II Protocol III

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CHAPTER 3

Jurisdiction

A DEFINITION OF JURISDICTION 3.01 What is meant by jurisdiction? It is a recognition of the truth that no court can claim to exert its authority over any individual unless there is something which enables the court to have such authority or which confers that authority. Thus there must be a basis on which the court can claim the right to adjudicate a dispute between parties. As discussed below, under the rules of jurisdiction derived from EU law now contained in the Brussels Recast Regulation1, the focus is usually on the position of the defendant. But the notion that there are limits on the power of a court to adjudicate is reflected not only in the fact that the Brussels Recast Regulation prescribes when a court has jurisdiction, but emerges also from the common law. A number of cases at the highest level held that even if there was a formal basis under the domestic governing rules upon which a case could be brought before the domestic courts, the court could decline jurisdiction if England and Wales were forum non conveniens – not the most appropriate forum to hear the case or that there is some other forum which is clearly or distinctly more appropriate. This, then, is an example of the existence of limits on jurisdiction. 3.02 The claiming of jurisdiction by the English court over foreign-based defendants outside the EU regime has often been referred to as ‘exorbitant jurisdiction’: see Amin Rasheed Shipping Corpn v Kuwait Insurance2, Cherney v Deripaska3, and AmTrust Europe Ltd v Trust Risk Group SpA4. Lord Sumption cast doubt on this description in Abela v Baadarani5, observing that in many cases the basis on which jurisdiction was taken over such defendants was contractual submission to the jurisdiction. But Lord Sumption’s focus was on commercial parties, who were accustomed to engaging internationally and for whom, therefore, the potential for litigation in other jurisdictions was to be expected. In addition, as he indicated, in many such cases, parties would agree to submit to a certain jurisdiction. There are many examples of types of case and types of party for whom this will not be a fair assumption. Moreover, the point remains a good one that a court which claims jurisdiction over a person is asserting sovereignty 1 2 3 4 5

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. [1984] AC 50 at 64G. [2008] EWHC 1530 (Comm). [2015] EWCA Civ 437, [2015] 2 Lloyd’s Rep 154. [2013] UKSC 44, [2013] 1 WLR 2043.

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3.03  Jurisdiction

over that person and, where the person is not of that state, this can give the impression of being a broad claim of right. It is intrinsic in the notion of a claim to have the jurisdiction to determine a case that it can be seen as the assertion of power by a country – a claim of right which must be subject to certain limitations and would be expected, not least by those based abroad, to be appropriately circumscribed. This explains the importance of Lord Sumption’s focus on submission – an agreement to the fact that a court will have jurisdiction (often by a contract clause conferring jurisdiction). He also emphasised the importance of the forum conveniens principle. The language of an exorbitant jurisdiction is still used, however: see Am Trust Europe Ltd v Trust Risk Group SpA6. What this does mean, whether the word exorbitant is fair or not, is that all courts have to demonstrate the basis upon which they are entitled to pass judgment on an individual defendant.

THE IMPORTANCE OF DOMICILE 3.03 As things presently stand, and will remain if the UK signs the Lugano Convention, for the purposes of jurisdiction, a key question is where a defendant is domiciled. The detail of how domicile is ascertained is set out at para 3.08 ff, but in essence the key issue is where is a person based such that the person’s base may be relied on to justify the assertion of authority or jurisdiction by a court over that person. In a sense this is tied in with the notion of exorbitant jurisdiction. A court has the power to decide cases involving those domiciled in the state for the very reason that, as a consequence of their domicile there, parties are to be treated as being subject to the authority of that state. (As discussed at para 3.199 ff, the English court has traditionally been much more far-reaching in its claims of jurisdiction, but the core basis is the same, that by reason of their connection with a place, parties are to be taken to be subject to the authority of a state in the form of its courts.) 3.04 The reason the concept of domicile is so key is that, as will be seen, different sets of rules apply depending where a defendant is domiciled. Put briefly, jurisdiction over a defendant domiciled in an EU state is governed by rules derived from EU law, ie (principally) the Brussels Recast Regulation, or its equivalent amongst EFTA states, the Lugano Convention. There are also, as will be seen, limited situations in which the Regulation provides for jurisdiction over those not domiciled in Member States: see para 3.29. Jurisdiction over persons not so domiciled is, for the most part, governed by domestic law, including the Civil Procedure Rules 1998 (CPR) Part 6. 3.05 The Brussels Recast Regulation applies to all Member States of the EU. It is supplemented by the Lugano Convention, which essentially replicates its terms (or, more accurately, the terms of its immediate predecessor, the 2001 Brussels Regulation, 44/2001) for the purpose of jurisdiction issues concerning Iceland, 6

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[2015] 2 Lloyd’s Rep 154 at para 41.

How to ascertain domicile 3.09

Norway and Switzerland, countries which are members of EFTA but not the EU. As noted at para  2.03, the UK has, consequent on its departure from the EU, repealed the Brussels Recast Regulation and references to it, save where, in the context of consumer and employment contracts, the rules are repeated in primary legislation. The UK’s intention is to sign the Lugano Convention and, if that is achieved, the rules contained in the 2001 Brussels Regulation will apply. 3.06 It follows that a key question will be how does one ascertain where a person is domiciled. In answering that question, the English court will apply English law (Brussels Recast Regulation, Article 62, save that Article 63 sets out rules to determine where companies or associations are domiciled). This leads to the theoretical possibility that, at least so far as individuals are concerned, different courts might not give the same answer if asked where a person is domiciled. 3.07 The significance of domicile is shown by Corman-Collins SA v La Maison du Whisky SA7. In that case, a Belgian-domiciled company sued a Frenchdomiciled company in Belgium, relying on Belgian legislation which conferred jurisdiction on the Belgian courts. The European Court held that that legislation could not oust the provisions of the Brussels Regulation, including those conferring jurisdiction based on an individual’s domicile, holding that those provisions ‘must in principle be applied and prevail over national rules of jurisdiction’8. Thus the Belgian rule of jurisdiction was of no effect.

HOW TO ASCERTAIN DOMICILE 3.08 It is necessary to consider separately the domicile of individuals and that of corporations. The latter is the subject of a rule in the Brussels Recast Regulation.

Individuals 3.09 So far as individuals are concerned, Article  62 of the Brussels Recast Regulation provides that to determine domicile a court seised applies its internal law. As a matter of English law, an individual is domiciled in a place if the person is resident in that place and the circumstances of the person’s residence indicate a substantial connection with that place. That definition was originally contained in s 41 of the Civil Jurisdiction and Judgments Act 1982. (That Act was passed to give effect in English law to the Brussels Convention of 1968, the original EU, or at that stage European Community, legislation on jurisdiction.) That provision remains in force, but for the omission of references to the Brussels Convention and its articles. Section 41A deals in the same terms with domicile for the purposes of the Lugano Convention. That is repealed from ‘IP completion day’ (31 December 2020), perhaps reflecting the fact that the EU’s assent will 7 8

C-9/12 [2014] QB 431. Ibid, at 454, para 22.

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3.10  Jurisdiction

be required for the UK to become a signatory. The same test appeared in the Civil Jurisdiction and Judgments Order 20019, which applied for the purposes of the 2001 Brussels Regulation. On the back of the UK’s departure from the EU, that statutory instrument itself, and indeed all references to both Brussels Regulations, are to be revoked and removed from UK legislation, including the Civil Jurisdiction and Judgments Act, from IP completion day. 3.10 As explained at para 2.04, the UK government has indicated its intention to sign the Lugano Convention, the agreement signed by the EFTA countries – Iceland, Norway and Switzerland – with the EU. Its content is basically the same as the 2001 version of the Brussels Regulation. Hence rules for the ascertainment of domicile would need to comply with that Convention. Article 59 of the Lugano Convention provides that domicile is to be determined by states’ internal law, so it will be necessary – if the UK becomes bound by that Convention – to have a statutory definition which will no doubt look remarkably like the one contained in the Civil Jurisdiction and Judgments Act 1982. That has yet to be enacted but it can be expected that the substantive law will not change from the 1982 Act. 3.11 The definition of domicile which was brought in to coincide with the adoption of the Brussels Convention is narrower than the common law definition, which focused on a person’s permanent home: see Winans v Attorney-General10. The ‘substantial connection’ test is easier to satisfy so as to establish domicile. This is, of course, fact specific but relevant matters could include where the person has a home, especially a permanent home, where the person works and where the person’s children attend school. As indicated, it is assumed that, despite recent legislative changes, in due course a definition of domicile for the purposes of the Lugano Convention will appear in legislation and will reflect the legislative test formerly in place.

Corporations 3.12 The domicile of companies, or other non-natural persons, is governed by the Brussels Recast Regulation so as to have a uniform rule. By Article 63, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its ‘statutory seat’, central administration or principal place of business. In the UK, a corporation’s ‘statutory seat’ means that it is incorporated in the UK and has its registered office or some other official office in the UK or if its central management is exercised in the UK11. Hence companies with registered offices in any part of the UK or incorporated under UK law will be domiciled in the UK. The same would be true of limited liability partnerships registered under the Limited Liability Partnerships Act 2000. The concept of ‘associations of natural persons’ includes partnerships. 9 SI 2001/3929. 10 [1904] AC 287. 11 Civil Jurisdiction and Judgments Act 1982, s 42.

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The relevant rules on jurisdiction 3.16

3.13 Section 42 of the Civil Jurisdiction and Judgments Act 1982 deals with the domicile of corporations and states they are domiciled in the UK where their seat is in the UK, as will be the case when they are incorporated under the laws of the UK or have their central management and control in the UK. That section, with minor amendments, will remain in force once the UK has left the EU and Article 63 of the Brussels Recast Regulation will no longer be in force. A new s 42A of the 1982 Act deals with domicile of corporations for the purposes of consumer and employment cases. The section states that a corporation is domiciled in the UK if: (i) its registered office is in the UK; or (ii) it was incorporated in the UK; or (iii) it was formed under UK law; or (iv) it has its central administration or its principal place of business in the UK.

THE RELEVANT RULES ON JURISDICTION 3.14 As indicated, there are different rules depending on where a defendant is domiciled. In essence, that main difference depends on whether a person is domiciled in a Member State of the EU, such that the Brussels Recast Regulation and equivalent provisions (including the Lugano Convention) will apply, or whether the person is domiciled outside an EU Member State, such that the rules of common law and the CPR will apply. 3.15 The Brussels Regulation in its current form is Regulation 1215/2012. This is an updated – or recast – version of the earlier Regulation 44/2001. The latest iteration of the Regulation is referred to throughout this book as the Brussels Recast Regulation. The earlier 2001 Regulation replaced the Brussels Convention of 1968. Many of the cases were decided under the Convention or the 2001 Regulation but they will for the most part be equally relevant to the 2012 Brussels Recast Regulation. The Brussels Recast Regulation does bring in some changes, which are identified where relevant. 3.16 As mentioned at para 2.04, the government’s proposal is that the UK sign the Lugano Convention. That means it is necessary to say a few words about the Convention12. It is a document to which the EU and Iceland, Norway and Switzerland are presently parties. The UK government proposes to sign up to what is essentially EU legislation, but because the signatories are not EU members but rather EFTA members, this can be presented as not being EU law at all. The content of the Lugano Convention is basically the same as the 2001 version of the Brussels Regulation. It has not been updated to reflect the Brussels Recast Regulation, but it would come as no surprise if the Convention were to be

12

OJ L 339/3.

97

3.17  Jurisdiction

updated were the UK to become a signatory to it, so as to reflect the latest version of the Brussels Regulation. 3.17 If the UK government succeeds in its aim of becoming a signatory to the Lugano Convention, a happy consequence is that what is set out in the remainder of this chapter will have ongoing relevance. Because all the cases were decided under the Brussels Convention 1968 or one or other version of the Brussels Regulation, and because the core provisions of the Brussels Recast Regulation are the same as the previous version (albeit with altered numbering in some places) the text that follows will refer to the Brussels Recast Regulation, rather than to the Lugano Convention. It is, for the most part, possible to read across from the Brussels Recast Regulation to the Convention, and readers may find the table of equivalences at para  2.10 useful. There are some instances where the Brussels Recast Regulation differs from the 2001 Brussels Regulation (and hence from the Lugano Convention). Because the UK proposes to sign up to the Lugano Convention, and assuming that it is successful in this, the relevant law in the UK after IP completion day will be that contained in the 2001 Brussels Regulation rather than the more recent Brussels Recast Regulation. For that reason, the provisions of the Brussels Recast Regulation which did not appear in the 2001 Brussels Regulation are indicated in the following text, where relevant.

AN OUTLINE OF THE RULES 3.18 An overview of the rules is given as a starting point, before getting into the detail. As to that, the structure of what follows will be first to identify the rules so that the reader in a hurry can find out what they are. The chapter then subsequently develops an explanation of the rules, to allow the reader to conduct a more detailed analysis depending on the particular case. A flow chart is also provided, for those who prefer a more visual approach. 3.19 The focus of jurisdiction rules is on defendants: the question is where can a defendant be sued. Often the concern is to ensure that defendants, particularly defendants perceived as being in weaker positions, such as employees and consumers, are not disadvantaged by rules which could require them to appear too readily before foreign courts. But, as explained below, that will not always be the case. What it does mean is that the domicile and nationality of the claimant does not matter. So, for example, an employer in X Land, a country renowned for the aggression of its litigators, would be able to sue in England an employee domiciled in the UK because of the general rule that UK-domiciled employees should be sued in the state of their domicile. But under the Brussels Recast Regulation the employer would only be able to sue the UK-domiciled employee in England (or Scotland). The Brussels Recast Regulation would not permit that employer to be able to sue the employee in X  Land. Indeed, for reasons explained in Chapter 9, if the employer did sue the employee in X Land, that might well lead to an application in England for an anti-suit injunction to restrain the employer from suing there and – as things stand – the likely the granting of such injunction. 98

An outline of the rules 3.22

The employee, assumed for the purposes of the example to habitually work in England, would be able to sue in England. The rules under the Brussels Recast Regulation and the common law are dealt with separately.

The scope of the Brussels Recast Regulation 3.20 The starting point is that the Brussels Recast Regulation applies to civil and commercial matters. It has been held that ‘civil and commercial matters’ is an independent concept which is not subject to national law. This includes ‘all the main civil and commercial matters apart from certain well-defined matters’: recital 10 to the Brussels Recast Regulation. Those exceptions must be strictly interpreted, meaning that civil and commercial matters are widely defined: see flyLAL-Lithuanian Airlines AS v Starptautkiska Lidosta Riga VAS13. 3.21 There are a number of matters to which the Brussels Recast Regulation does not apply, including the status or legal capacity of persons, bankruptcy, social security and wills. It does not apply to administrative matters or to the liability of the state in the exercise of state authority. But it would apply to contracts entered into by governmental bodies, as those would be a purely commercial matter. That said, cases which can sometimes cause problems are those involving public authorities. Where a public authority is acting in accordance with a statutory obligation or power, there may be doubt whether the claim is civil or commercial. An example of the issues in the debate can be seen in Revenue and Customs Comrs v Sunico ApS14. In that case, HMRC brought proceedings against an alleged VAT carousel – a fraud enabling the avoidance of VAT. HMRC brought claims for damages to recover sums which had not been – but which it said should have been – paid in respect of VAT. It was alleged that HMRC had been fraudulently deprived of VAT in the UK and it sued a number of defendants, including some established in Denmark. This was a tort claim. The European Court said that actions by public authorities against private parties could count as civil and commercial matters but that it would be otherwise where the public authority was acting in the scope of its public powers. It said that the case was not based on UK VAT law but on an alleged conspiracy. The authorities were not seeking to enforce a tax demand, as they would in the exercise of their public powers, but were instead seeking damages through normal legal channels. For that reason, the relationship with the defendant was not based on public law. The fact that the damages claimed reflected the VAT that would have been payable did not mean that HMRC was exercising public authority. 3.22 Perhaps the most important omission from the Brussels Recast Regulation is arbitration. Thus, if a case concerns arbitration, the Regulation will have no application. For example, in the case of contracts which contain arbitration 13 14

C-302/13 [2014] 5 CMLR 27. C-49/12 [2014] QB 391.

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3.23  Jurisdiction

agreements – which will, of course, fix the seat of the arbitration – the terms of those agreements, rather than the Regulation, will determine jurisdiction. 3.23 In Marc Rich & Co ASG v Societa Italiana Impianti PA15 a dispute arose between a Swiss company and an Italian company. The contract between them was said by the Swiss company to contain an arbitration clause. The Italian company sued in the courts in Italy. The Swiss company refused to participate and launched an arbitration in London. The Italian company was served out of the jurisdiction but, alleging that the issue was whether there was an arbitration clause, said that this question should be resolved in the Italian court on the basis that the Brussels Regulation applied and it was domiciled in Italy. The court rejected that argument. If the subject matter of the dispute concerned an arbitration, it fell outside the Regulation. It did not matter whether the subject matter was preliminary to an arbitration, such as the appointment of an arbitrator, or – as in the instant case – whether there was a binding arbitration agreement. 3.24 Rather more difficult is the case of Allianz SpA v West Tankers Inc16. In that case an English court granted an anti-suit injunction to restrain proceedings in Italy because of an arbitration clause. The European Court of Justice said that proceedings which led to an anti-suit injunction could not come within the Brussels Regulation. However, and perhaps this is an indication of the European Court’s hostility to anti-suit injunctions, it was said that such an order could not be made because it was for the Italian court to determine its own jurisdiction. The Court then said that where an underlying claim, such as for damages, fell within the Regulations, then so, too, did a preliminary question concerning the applicability of an arbitration clause. That is not easy to reconcile with Marc Rich. But, as indicated, perhaps the real focus is the concern that the courts of one country had decided that the courts of another could not have jurisdiction. It might be said that the claim in Italy was a claim for damages for breach of contract, and that was a civil or commercial matter. It was then for the Italian court to say that there was an arbitration clause in the contract and on that basis it should decline jurisdiction because the matter did not fall within the scope of the Regulation. It seems also to follow that, had the claim had been based on a dispute as to whether there was an arbitration clause, it would have fallen outside the Regulation. It is interesting to wonder whether in that case there would have been such strong opposition to an anti-suit injunction. In Proceedings concerning Gazprom OAO17, an arbitral tribunal ordered a party to cease court proceedings in Lithuania against the other party to the arbitration. The Lithuanian court held that the arbitration agreement did not apply. The issue in the case was whether an arbitral award – here in the form of an anti-suit injunction – should be recognised. The European Court held that the enforcement of the arbitral award was a matter for national law and did not depend on the Brussels Regulation; the Brussels Regulation did not govern the enforcement of an arbitral award. (That case also supported the interpretation of Allianz SpA above, namely that a 15 C-190/89. 16 C-185/07 [2009] 1 AC 1138. 17 C-536/13 [2015] 1 WLR 4937.

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An outline of the rules 3.28

court in one Member State could not determine whether the court of another had jurisdiction.) 3.25 What this restriction ought to mean is that, for example, if there is a dispute about whether there was an arbitration agreement at all, that would be determined outside the Brussels Recast Regulation: a party alleging a breach of an arbitration agreement would not rely on the Regulation to establish jurisdiction to bring the claim. Disputes as to the appointment of arbitrators would fall outside the Regulation. The jurisdiction of arbitrators would not be determined by the Regulation. It would not apply for the purposes of the enforcement of arbitration awards, which would be governed by the domestic law of each Member State.

The rules applied by the Brussels Regulation 3.26 The starting point under the Brussels Recast Regulation is the general rule that defendants should be sued in the state of their domicile. There are exceptions, which operate as bases enabling defendants to be sued in other states, meaning that a defendant could be brought before a state other than the state of that party’s domicile. This might be because of an agreement to submit to a particular jurisdiction, or because the particular nature of the case – breach of contract or tort, say – means that the claim can be heard in other jurisdictions. However, it has been repeatedly emphasised that these exceptions should be narrowly construed because they are a departure from and an additional basis for jurisdiction beyond domicile. That said, where they apply, they are still bases upon which other (EU-based) courts may exercise jurisdiction. 3.27 The existence of these other rules does mean that, if a party is able to bring a case within them, then it remains open to the claimant to engage in some (permissible) forum shopping. The claimant may be able to require a defendant to appear in a court other than of the defendant’s domicile with the obvious potential for securing a tactical advantage if the case can be said to fall within one of the categories of case which enables a person to be sued other than in the state of a defendant’s domicile. 3.28 Another issue arises under the Brussels Recast Regulation. In contrast to the position under domestic law, there is no scope to challenge a party who proceeds in a jurisdiction for which the Regulation provides by arguing that the forum is not an appropriate one having regard to the facts of the case. A party cannot invite the court to stay the claim on the basis that the court before which the claimant is proceeding is forum non conveniens. This flows from Owusu v Jackson, mentioned at paras 3.60 and 4.03. This means that once the party is able to commence claims in a particular state, a defendant can only challenge the claim by persuading the court that the Regulation does not enable the claim to be brought in that jurisdiction. As Gross LJ observed in Yukos International UK

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3.29  Jurisdiction

BV  v Merinson18 the provisions of the Brussels Regulation, in whatever form, differ markedly from the common law because the Regulation applies fixed rules, in contrast to the flexibility and discretion available under the common law, of which the forum conveniens rule was an example. 3.29 It was said above that the Regulation applies to those domiciled in EU Member States and that is mostly true. However, there are certain provisions which enable those not domiciled in an EU Member State to be sued in such a state. These cases are dealt with under the headings of the particular type of case. So far as the parameters of this book are concerned, there are five instances: (i) one, which applies to all types of claim save for insurance, consumer and employment claims, is the case where parties of whatever domicile have agreed that a Member State will have jurisdiction. In relation to the three exceptions mentioned, parties may select a state to hear claims but subject to limiting conditions which define the available forum. Note, however, that it is only under the Brussels Recast Regulation that parties – regardless of domicile – may rely on a chosen court. Under the 2001 Regulation the equivalent provision dealing with jurisdiction clauses – Article 23 – applied only where one or more of the parties to the jurisdiction agreement was domiciled in a Member State; (ii) second, there are some cases, for example those relating to real property, where a court has exclusive jurisdiction because of the subject matter of the claim and regardless of the domicile of the defendant; (iii) third, in relation to those three types of claim – insurance, consumer and employment – where a party enters into a contract with a branch, agency or establishment based in a Member State of an entity not domiciled in a Member State, then that overseas entity is treated as being domiciled in the Member State where the branch, agency or establishment is located in cases where the claim arises out of the operation of the branch etc; (iv) fourth, in consumer contract cases, the consumer may bring proceedings in the courts of the place where the consumer is domiciled regardless where the other party is domiciled; (v) fifth, in employment cases, an employee may bring a claim against an employer (but only an employer, not any other party) in the courts of the place where the employee habitually works or, in the absence of such a place, the courts of the place where the business which engaged the employee is situated. 18

102

[2019] EWCA Civ 830, [2020] QB 336 at para 1.

Jurisdiction over persons domiciled in EU Member States 3.32

JURISDICTION OVER PERSONS DOMICILED IN EU MEMBER STATES Overview 3.30 The rules governing those domiciled in EU Member States are contained in the Brussels Recast Regulation. (The text refers to ‘persons domiciled in the EU’: this is shorthand for those domiciled in states which are signatories to the Brussels Recast Regulation or the Lugano Convention, and so includes non-EU domiciled defendants such as those domiciled in Iceland, Norway and Switzerland and, imminently, the UK. The reference to those domiciled ‘in the EU’ is therefore not strictly accurate but as long as it is understood to be a shorthand code for that longer list of states, it makes for easier reading.) The aim of the Brussels Recast Regulation is said to be to promote legal certainty by allowing persons to foresee with sufficient certainty which courts will have jurisdiction to deal with cases brought against them, and to avoid the risk of parallel proceedings in multiple jurisdictions: see Gasser (Erich) GmbH v Misat Srl19. The principle is helpfully summarised in the UK Supreme Court decision of AMT Futures Ltd v Marzillier20. 3.31 As indicated, except for certain cases, such as those involving real property and also a specific and important exception for consumers, employees and other specific cases, the Brussels Regulation does not apply to defendants who are not domiciled in Member States. Thus the rule that persons be sued in the state of their domicile – referred to below as the general rule – applies only to those domiciled in Member States. The special rules applicable to, for example, contract and tort, apply only to defendants domiciled in Member States. Subject to the exceptions identified below, cases involving defendants not domiciled in EU Member States are governed by domestic law (as to which, see para 3.195 ff). The general rule 3.32 Article 4(1) of the Brussels Recast Regulation contains the general rule or starting point (which may be departed from in accordance with the provisions of other articles), namely that those domiciled in Member States should be sued in the state of their domicile. It provides: Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Thus one can see the general and easily applied rules: those domiciled in England shall be sued in England. But the first words are important, as they show that there are other cases under the Regulation where defendants may – and in some cases must – be sued in other jurisdictions. 19 20

C-116/02 [2005] QB 1 at paras 41 and 72. [2017] UKSC 13, [2018] AC 439 at para 11.

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3.33  Jurisdiction

3.33 The domicile rule is clear and of general application. It means that national jurisdiction rules which confer jurisdiction on courts, even against those who are not domiciled in the state, must give way to the rule based on domicile. So, picking out an example referred to above, in Corman-Collins SA v La Maison du Whisky SA21, a Belgian jurisdiction rule which said that distributors who were party to a distribution agreement covering Belgian territory could sue any supplier in Belgium could not be relied upon against a French supplier defendant. Thus, unless there is some other specific rule which applies – and, as explained at para 3.37, these rules are to be applied in a limited way – persons should be sued in the country where they are domiciled. Hence litigation against them will be in what may be regarded as their home country. 3.34 One consequence of this is that, in relation to defendants domiciled in Member States, it overrides traditional English rules which could have conferred jurisdiction on rather narrow grounds simply based on presence. Thus, as discussed at para 3.199 in relation to English domestic law, if a defendant domiciled in, say, Germany, were present in England even if only for a short time but so as to enable that person to be served with a claim form in England, that would have conferred jurisdiction on the English court under the common law. That is no longer the case for EU-domiciled defendants who, because of Article  4 of the Brussels Recast Regulation, enjoy much greater protection and certainty as to where they may be sued. Article 5(2) specifically provides that domestic jurisdiction rules are not applicable against persons domiciled in Member States. Just to be certain, states were obliged by Article 76 to identify those jurisdiction rules, so as to ensure that they were not being applied. 3.35 Jurisdiction over those not domiciled in Member States (see para 3.195 ff on the rules of jurisdiction outside the Brussels Regulation) will be determined by English law. This is shown by Article 6(1), which provides: If a defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Article 18(1), Article 21(2) and Articles 24 and 25 be determined by the law of that Member State.

3.36 As the article provides, there are some exceptions. It will be seen that there are cases where those not domiciled in a Member State will either be deemed so to be domiciled in such a state or, despite their domicile in a state other than a Member State, jurisdiction is nonetheless determined by the Regulation and may confer jurisdiction on the courts of a Member State. The particular rules: the additional ‘gateways’ 3.37 The general rule that persons be sued in their place of domicile is important and central to the Brussels regime. It has been observed that

21

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C-9/12 [2014] QB 431.

Jurisdiction over persons domiciled in EU Member States 3.40

the derogations from the general rule which confers jurisdiction on the courts of the defendant’s domicile … must be restrictively interpreted in order to achieve the aims of the [Brussels Regulation].

This was said domestically (but by reference to European Court of Justice cases) in AMT Futures22. 3.38 The derogations are justified because they reflect a close connection between the dispute and the courts of a state other than that in which the defendant is domiciled. In Aspen Underwriting v Credit Europe Bank NV23 the Supreme Court said that: It is only in well-defined circumstances that jurisdiction based on domicile is replaced by a different connecting factor based on the subject matter of the dispute or the autonomy of the parties.

Lord Hodge referred to the European Court of Justice having repeatedly held that the provisions for the extension of jurisdiction were to be narrowly construed, thus limiting the extent to which one could depart from a rule of jurisdiction based on domicile. 3.39 Nonetheless it is important that there are several categories of case in which a person domiciled in one Member State may be sued in another. These categories are set out in the remaining articles of the Brussels Recast Regulation, Chapter II. They materially expand the circumstances in which a person may be sued other than in the state of that person’s domicile. 3.40 In respect of domestic law it has been held that, in deciding whether a matter falls within one of the bases for claiming jurisdiction (so as to permit service out), the claimant has to have a good arguable case for saying that it is so: see Canada Trust v Stolzenberg24. The European cases do not appear to have set out the test for deciding whether a case falls within the particular rules conferring jurisdiction but domestic cases have held that the same test is to be applied for deciding whether a case ‘comes within the relevant Brussels Recast jurisdictional gateways’: see Aspen Underwriting Ltd v Credit Europe Bank NV25. (The matter was not in dispute in the Supreme Court.) Jacobs J took the same approach, holding that the test was a good arguable case in the sense that the claimant had the better of the argument in Etihad Airways PJSC v Flöther26. The judge addressed a suggestion that had been made, to the effect that a more stringent test should be applied in Brussels Regulation cases, but rejected it: thus one has the same test under domestic law and the Regulation: a person claiming that jurisdiction may be founded on one of the particular rules under the Brussels Regulation will have

22 23 24 25 26

[2017] UKSC 13, [2018] AC 439 at para 13. [2020] UKSC 11, [2020] 2 WLR 919 at para 20. [1998] 1 WLR 547. [2019] 1 Lloyd’s Rep 221, CA. [2019] EWHC 3107 (Comm), [2020] 2 WLR 333.

105

3.41  Jurisdiction

to have a good arguable case for saying that the rule should apply, citing Airbus SAS v Generali Italia SpA27. 3.41 These additional rules are first set out and then expanded on below. The rules in question govern: (i) submission to the jurisdiction: Article 26; (ii) contract and tort: Article 7; (iii) the addition of parties: Article 8; (iv) insurance: Articles 10–16; (v) consumers: Articles 17–29; (vi) employment: Articles 20–23; (vii) exclusive jurisdiction cases: Article 24; and (viii) jurisdiction agreements: Article 25.

An introduction to the Brussels Regulation ‘gateways’ 3.42 In this section the relevant jurisdictional provisions are outlined, before being developed more fully below. Article 26: submission to the jurisdiction 3.43 Article 26 of the Brussels Recast Regulation provides that if a defendant submits to the jurisdiction of the court, then the court has jurisdiction. There is no submission when a person appears only in order to contest jurisdiction. Consumers, employees and policyholders, insureds and beneficiaries under contracts of insurance must, under the Brussels Recast Regulation (but not under the equivalent provision of the 2001 Brussels Regulation, Article 24) be informed of their right to contest jurisdiction. 3.44 Unlike other provisions, Article 26 does not refer to defendants domiciled in Member States. It may be that the provision is simply directed to courts of Member States, telling them that they have jurisdiction, whoever the defendant and whatever the domicile of that defendant, when that person submits. Article 26 does not apply when Article 24 – the exclusive jurisdiction rules – applies. 3.45 It has been held that a court may have jurisdiction where a party submits to its jurisdiction – in this way creating a jurisdiction which would otherwise not have existed – even if there is a contractual choice of jurisdiction clause in favour of another Member State: Taser International Inc v SC Gate 4 Business SRL28. To that extent, submission supersedes a prior contractual choice of jurisdiction. 27 28

106

[2019] EWCA Civ 805, [2019] 4 All ER 745. C-175/15 [2016] QB 887.

Jurisdiction over persons domiciled in EU Member States 3.47

This makes sense. A person may have agreed with another party to proceed in a certain court. If the other party departs from the agreement by suing in a court other than that which had been selected, it is open to the party against whom the claim is brought to agree to be sued in that court by submitting. If that is the case, the party who agrees to submit loses the right to rely on the contractual choice. Once a party has submitted to the jurisdiction, and assuming that the case is not one in which the exclusive jurisdiction provisions apply, the court to which the defendant has submitted must declare itself to have jurisdiction: see Taser29.

Article 7: contract and tort 3.46 Article 7 of the Brussels Recast Regulation provides that persons domiciled in a Member State may be sued in another Member State in certain circumstances, set out in the rule. The following list does not deal with everything in Article 7, only with the type of claim that may be relevant to commercial or employment litigation. 3.47 Note that all this rule does is to confer jurisdiction on other Member States. It does not confer jurisdiction on non-Member States. What that means is that if the case falls within Article 7, and there is no Member State which has jurisdiction under that provision, then the defendant (being, as must be the case for the article to apply, someone domiciled in a Member State and assuming neither a jurisdiction clause nor submission) must be sued in the Member State in which that person is domiciled. The article covers the following categories: (i) in matters relating to a contract, the courts for the place of performance of the obligation in question have jurisdiction. The article then gives specific instances, which are referred to at para 3.68; (ii) in matters relating to tort, the courts for the place where the harmful event occurs or may occur have jurisdiction. That has been held to mean both the place where the event causing harm is done and the place where harm is inflicted; (iii) where there is a dispute regarding the operation of a branch, agency or other establishment, the courts for the place where the branch, agency or other establishment is situated; (iv) in disputes concerning payment of remuneration in respect of the salvage of a cargo or freight, the place where the cargo or freight has been or could have been arrested but only where the defendant has an interest in the cargo or freight at the time of the salvage. 29

Ibid, at para 33.

107

3.48  Jurisdiction

Article 8: the addition of parties 3.48 Article 8 of the Brussels Recast Regulation is a potentially important provision. It covers the case where there are multiple defendants who are domiciled in Member States. Thus a person domiciled in a Member State may also be sued: where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims 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.

This is a freestanding basis for jurisdiction separate from the nature of the claim and based only on the factor of multiple defendants. This may also tie in with the situation where more than one court could be seised of a claim, which is considered in Chapter 5. But note that this article applies where the additional defendant sought to be added is domiciled in a Member State. Articles 10–16: insurance 3.49 Articles  10–16 deal with insurance. The rules applicable to insurance claims broadly reflect and apply other provisions within the Regulation which are of general application (such as in relation to contract and tort). They provide that insurers may be sued in the state of their domicile, in the state where a policyholder, insured or beneficiary is domiciled in claims brought by such persons and, when the insurer is a co-insurer, in the state of domicile of the lead insurer. 3.50 Where an insurer who is not domiciled in a Member State has a branch, agency or establishment in a Member State and a claim arises out of the operation of that entity, the insurer is deemed domiciled in the Member State. 3.51 In the case of liability insurance, the insurer may be sued in the courts of the place where the harmful event occurred or may be joined to any action brought against the insured. In the case of insurance of immovable property, the insurer may be sued in the courts of the place where the harmful event occurred. 3.52 Insurers may sue the policyholder, insured or beneficiary only in the state where that defendant is domiciled, save that the insurer may counterclaim in any court where it is sued. 3.53 There are limited powers to contract out of these provisions, which include the requirement that the contract be entered into after the dispute has arisen or confer on the insured (etc) the right to bring proceedings in a wider range of courts or, where insured and insurer are domiciled in the same Member State, confers jurisdiction on that Member State, regardless where the events leading to the claim occurred. 108

Jurisdiction over persons domiciled in EU Member States 3.58

Articles 17–29: consumers 3.54 Articles  17–19 deal with consumer contracts. Consumers may, against parties domiciled in Member States, sue in the place of the other party’s domicile or that of their own domicile. Where the other party is not domiciled in a Member State but has a branch, agency or establishment in a Member State and the dispute arises out of that entity, the other party is deemed domiciled in that Member State. Proceedings may be brought against the consumer only in the state of the consumer’s domicile, save that a counterclaim may be brought in any court where proceedings are pending. There are again limited rights to contract out. The agreement must be entered into after the dispute has arisen or allow the consumer to bring proceedings in courts other than those for which the consumer section of the Regulation provides or, where both parties are domiciled in the same state, confer jurisdiction on that state. Articles 20–23: employment 3.55 Articles 20–23 deal with individual contracts of employment. Employers domiciled in a Member State may be sued: (a) in the state of their domicile; or (b) in another Member State where the employee’s work was habitually carried out or, if the employee did not habitually work in one country, the place where the employing business was situated. 3.56 As to employers not domiciled in Member States, they may be sued in accordance with (b) above. Where a non-domiciled employer has a branch, agency or establishment in a Member State and the dispute arises out of the operations of that entity, the employer is deemed domiciled in that state. 3.57 Employees may be sued only in the state of their domicile, save for the employer’s right to bring a counterclaim in the court where it is sued. Contracting out is only permitted after the dispute has arisen or insofar as it allows the employee to sue in other courts beyond those identified by the employment section of the Regulation. Article 24: exclusive jurisdiction cases 3.58 Article  24 confers exclusive jurisdiction in some cases, of principal relevance being the case of proceedings concerning immovable property and concerning the constitution of companies and the validity of decisions of their organs, which must be brought in the courts of the place where the property is

109

3.59  Jurisdiction

situated. As Lord Sales observed in Koza Ltd v Akcil30, Article  24 comprises situations where ‘reasons exist to recognise an especially strong and fixed connection between the subject matter of the dispute and the courts of a particular member state’. As he also observed, the principle of exclusive jurisdiction ‘cuts across and takes priority over other principles underlying the Recast Regulation’ including domicile. Article 25: jurisdiction agreements 3.59 There is another relevant basis on which, apart from the other rules as to jurisdiction, a court may take jurisdiction over a case. That is the situation in which the parties have agreed that the courts of a particular state are to have jurisdiction. This is reflected by Article 25, which requires that an agreement to submit to the jurisdiction of a particular court must be in writing. As mentioned above, there are different and more restrictive rules in cases involving consumer and employment contracts which, in essence, permit contracting out of the jurisdiction rules – which could include by selecting the courts of a particular state as having jurisdiction – but only after the dispute has arisen or to the extent that they allow the consumer or employee to sue in a wider range of courts. The conclusive effect of the jurisdiction rules 3.60 If the Regulation confers jurisdiction on the English court, that court cannot decline jurisdiction. Domestic law developed the concept of forum conveniens or forum non conveniens which meant that the English court, even if it could claim jurisdiction, would not do so unless it was the most appropriate forum to hear the case and, if it was not, it would decline jurisdiction in favour of the court which was more appropriate. Thus, if there was another forum also having jurisdiction which was better placed to hear the dispute, the English court could decline jurisdiction by applying the forum conveniens principle. However, the European Court held that that concept had no application to the case where jurisdiction was conferred by the Regulations. The leading case is Owusu v Jackson31. There, a UK-domiciled claimant sued a UK-domiciled defendant in England for injuries suffered in Jamaica as a result of the use of a holiday villa in that country. The English court had jurisdiction because of the defendant’s domicile under what is now Article  4. The defendant asked the court to stay the proceedings on forum conveniens grounds on the basis that Jamaica was a more convenient forum as the events occurred there and the evidence was there. The question arose whether the court had power to decline jurisdiction, in that case in favour of a non-contracting state. The European Court held that there was no such power because the provisions of the Brussels Regulation were mandatory and could be departed from only in accordance with other provisions of the Regulation. The Regulation had not provided for a forum non conveniens exception, and to permit

30 [2019] UKSC 40, [2019] 1 WLR 4830 at para 24. 31 [2005] QB 801.

110

Jurisdiction over persons domiciled in EU Member States 3.62

states to apply such a principle would defeat the requirements of legal certainty and affect the uniform application of the rules of jurisdiction. 3.61 Articles  33 and 34 contain provisions which, in limited circumstances, permit an EU court to stay proceedings in favour of a non-EU state. It might be argued that this is a principle similar to forum non conveniens, but whether that is correct or not, this is a stay permitted by the Regulation itself. Flowcharts 3.62 Below are flowcharts showing the place where defendants can be sued in the High Court.

Yes

Does the case concern rights in rem over property, the constitution of companies etc, the validity of records in public registers or patents, trade-marks or designs?

Jurisdiction determined by Article 24 Yes

No

Has the defendant entered an appearance before the court other than to contest jurisdiction?

No Court has jurisdiction

Yes

The Brussels Regulation applies

Is the Defendant domiciled in an EU Member State? No

Common law and CPR applies (save for (i) cases against employers domiciled abroad (including not in a Member State) or (ii) cases involving employment, consumer or insurance contracts where a party domiciled outside the EU has a branch, agency or establishment within the EU and the claim arises from the operation of that branch, agency or establishment)

That divergence then leads to separate flowcharts depending on whether the Brussels Recast Regulation applies, or whether the case is governed by domestic law. The position under the Brussels Recast Regulation is set out below, and there is a separate flowchart for domestic cases at para 3.229. 111

3.62  Jurisdiction

Yes

Is the Defendant sued in the state of that person's domicile?

The court has jurisdiction

No

The court may have jurisdiction if another rule of the Brussels Regulation applies.

Consider the following rules: Have the parties agreed, in a case other than one concerning employment, a consumer contract or an insurance contract, which court has jurisdiction?

Yes

The court so chosen has jurisdiction

No

Consider further rules Yes

Is the claim for breach of contract?

The court of the place for the performance of the obligation in question has jurisdiction Yes

Is the claim in tort?

No Consider further rules No

The court for the place where damage has occurred or may occur have jurisdiction.

Consider further rules

Does the defendant have a branch or agency in a place and does the claim arise from the operations of that branch or agency? Yes

The courts of that place have jurisdiction

No

Consider further rules

Is the defendant one of a number, one of whom is domiciled in a member state? Yes

112

The court has jurisdiction over all defendants domiciled in member states, even those not domiciled in the state in which the principal or lead defendant is domiciled

No

Consider further rules

Jurisdiction over persons domiciled in EU Member States 3.63

Does the case involve a matter relating to insurance?

Yes

Insurer may be sued in the state of its domicile or in the state of the domicile of the insured / policyholder / beneficiary. Insurer not domiciled in a Member State but with a branch etc. in such a state may be sued in that state in respect of matters arising from the operation of the branch. Liability insurers may be sued where the damage occurs or be party to a claim by injured party against insured. Insurers may only sue in place of insured / policyholder or beneficiary domicile. Contracting out only where agreed after the dispute has arisen or to allow insured (etc.) to sue in a wider range of places.

Yes

No

Consider further rules

Does the case relate to a contract concluded by a consumer?

Consumer may sue in the place of the other party's domicile or consumer's domicile. Where a counterparty not domiciled in a Member State has a branch etc. in a Member State, that counterparty may be sued in that state in respect of matters arising from the operations of the branch. Consumers may only be sued in the state of their domicile. Contracting out only where agreed after the dispute has arisen or to allow insured (etc) to sue in a wider range of places.

No

Consider further rules

Does the case relate to individual contracts of employment? Yes

Employee may sue in state of employer's domicile or in place where employee habitually works. Employers domiciled outside Member States may be sued where employee habitually works. Employee may only be sued in state of domicile, other than by counterclaim. Contracting out only where agreed after the dispute has arisen or to allow insured (etc) to sue in a wider range of places.

Detailed interpretation of the particular rules 3.63 Having set out the rules, it is next necessary to consider in more detail how they are interpreted. 113

3.64  Jurisdiction

Article 26: entering an appearance 3.64 This is surely the easiest case. A claimant starts a case in a particular court and, rather than engaging in a debate about that court’s jurisdiction, a defendant submits to the jurisdiction in the sense of participating in the proceedings. That is to say that the defendant takes steps, such as serving a defence, which are not limited to contesting the jurisdiction of the court. In such a case, the court has jurisdiction save for cases covered by Article 24 (exclusive jurisdiction). Voluntary submission will even trump a choice of jurisdiction clause. In Elefanten Schuh v Jacqmain32, a company was sued by an employee. It contested the substance of the claim but then subsequently challenged the jurisdiction of the court by reference to a choice of jurisdiction clause. The Court observed that Article 25 on choice of jurisdiction was not identified as an exception to the operation of Article 26. That article therefore applied to confer jurisdiction based on entering an appearance even if the parties had agreed a choice of jurisdiction clause. Another relevant case is Taser International Inc v SC Gate 4 Business SRL33, in which a contract contained a choice of jurisdiction clause in favour of US courts. A US claimant sued Romanian defendants in Romania. The defendants appeared without contesting jurisdiction. The court later raised the jurisdiction issue of its own motion. The European Court held that submission was the ‘tacit acceptance’ of the jurisdiction of the court, and the existence of a jurisdiction clause was not an exception to the rule that jurisdiction could be conferred by submission. Entering an appearance will confer jurisdiction even if other rules (for example in employment, consumer or insurance cases) might mean that the court would otherwise not have jurisdiction: see Vienna Insurance v Bilas34. 3.65 There is no submission, of course, where a party appears before the court only to challenge jurisdiction. Weaker parties – employees, consumers and insureds, policyholders and beneficiaries under contracts of insurance – have to be informed of their right to contest jurisdiction and of the consequences of entering and not entering an appearance. (The reference to the need for the weaker party to be informed is new in the Brussels Recast Regulation. It did not appear in the earlier version, the 2001 Brussels Regulation.) But a party (having been informed of those rights where Brussels Recast applies) who, for example, lodges a defence to a claim will probably (unless local rules require a defendant to do more) be held to have submitted to the jurisdiction and the court needs no more than that to proceed. The Elefanten Schuh case would have been decided differently had the defendant only contested jurisdiction. However, because in its first appearance it engaged with the substance of the case, it had not limited itself to contesting jurisdiction. It was held that the defendant had submitted. However, the same case did indicate that in some jurisdictions it might be necessary to engage with the substance of the case as well as to contest jurisdiction in order to avoid being prevented from dealing with the substance if a jurisdictional 32 33 34

114

[1982] 3 CMLR 1. C-175/15 [2016] QB 887. C-111/09, an insurance case.

Jurisdiction over persons domiciled in EU Member States 3.68

challenge fails. In the English court it is unlikely that that would be the consequence of failing to engage with the merits. This does mean that prospective defendants need to be careful. They must ensure that any appearance is expressly limited to contesting jurisdiction. Often that requires a clear statement that (no matter how much it disagrees with the claim against it) the defendant is not engaging with the merits of the dispute. Article 7: special jurisdiction 3.66 Before turning to the rules, it has been said that provisions which derogate from the rule that defendants should be sued in the place of their domicile should be restrictively interpreted. The basis for conferring jurisdiction is a close link between the dispute and the Member State identified. This means that extravagant application of these jurisdictional rules is discouraged: see, for example AMT Futures v Marzillier35. The point is that the places chosen as having jurisdiction must be foreseeable: the requirements of legal certainty mean that people should be able to know where they may be sued. The additional bases for jurisdiction are premised on the notion that there is a particularly close connecting factor between the dispute and the courts of a place other than the defendant’s domicile so as to justify a departure from the domicile rule. 3.67 The application of the jurisdiction rules also means that in a case based on several causes of action, the court may only be able to deal with one or some of them because the rule confers jurisdiction on the court only in respect of particular causes of action. So, for example, in Kalfelis v Bankhause Schröder36 it was held that where a party had causes of action in tort and on other bases and the court had jurisdiction over the tort claim, it did not have jurisdiction to deal with the other causes of action37. This may be of great practical relevance where a party does have several causes of action. If Article 7 will confer jurisdiction in respect of one claim only, a claimant may be better placed bringing all claims in the state where the defendant is domiciled. Contract 3.68 The general rule in contract is that the courts of the place for the performance of the ‘obligation in question’ have jurisdiction. The rule for jurisdiction in contract disputes does not apply to consumer contracts or claims arising from insurance or employment contracts because they are governed by their own rules. Thus it is what might generically be called commercial contracts that are governed by this rule. As set out above, jurisdiction is conferred on the place of performance of the obligation in question.

35 36 37

[2018] AC 439 at para 13. Case 189/97. At paras 19–20.

115

3.69  Jurisdiction

3.69 There has been some litigation about what is meant by ‘matters relating to a contract’ so as to determine that the rule is applicable. The European Court has held that the phrase has an autonomous meaning which is not affected by the way in which the case would be characterised by the domestic law of states. The essence is that the claim derives from an agreement freely entered into, even if a party might advance what appears to be a non-contractual cause of action: see Jakob Handte & Co GmbH v Traitements Mecano-Chimiques des Surfaces38. In that case, a manufacturer of some equipment was sued not by a party who bought it from the manufacturer but by a party who had bought it from the buyer. The question arose whether the claim against the ultimate manufacturer related to contract in circumstances where the sub-buyer had no contractual relationship with the manufacturer. It was held that this was not a matter relating to contract because of the lack of an undertaking freely entered into by the manufacturer in favour of the sub-purchaser. The same principle was restated in Brogsitter v Fabrication de Montres Normandes39. In that case, a vendor of watches contracted with a watchmaker to provide movements for luxury watches. The watchmaker also marketed products in his own name. The purchaser said that this was a breach of contract but it was also regarded under local law as unfair competition and a tort. The European Court held that ‘matters relating to contract’ had to have an independent meaning40. A case would relate to a contract where it involved an allegation of breach of contract41 and where the interpretation of the contract was indispensable to the claim42. The Court of Appeal reviewed Brogsitter, albeit in a different context, and said that the question was whether it was indispensable to consider the contract to resolve the claim or whether there was a ‘material nexus’ between the conduct complained of and the contract: see Bosworth v Arcadia43. The European Court took a similarly broad approach in Holterman Ferho Exploitatie BV v Spies von Bullesheim44, a case in which a managing director, employed by a company under a contract of employment, was sued for poor performance which was said to be in breach of his obligations under company law. The Court’s principal conclusion was that, because this was an employment case, the provisions dealing with employment – Articles 20–23 – precluded reliance on the pure contract provisions. But had those provisions been relevant, the allegation that the managing director had acted in breach of requirements imposed by company law would have been a matter ‘relating to contract’ for the purposes of Article 7. The parties had freely entered into a contract under which the individual had agreed to manage the company in return for pay. Therefore a claim that he had failed in his obligation to manage the company related to his (contractual) obligation to perform his duties and so was a matter related to a contract45.

38 [1992] ECR I-3967. 39 C-548/12 [2014] QB 753. 40 Ibid, at para 18. 41 Ibid, at para 24. 42 Ibid, at para 25. 43 [2016] EWCA Civ 818, para 66. 44 C 47/14 [2016] ICR 90. 45 Ibid, at paras 52–54.

116

Jurisdiction over persons domiciled in EU Member States 3.73

3.70 Flightright GmbH v Air Nostrum46 concerned a case in which passengers did not have direct contractual relations with an airline on which they were due to fly. It was held that the contract rules did not require the conclusion of a contract but did depend on an obligation freely undertaken. Relying on provisions of a regulation specifically dealing with air operators, it was held that this dispute was related to contract. 3.71 A claim may relate to a contract even if the defendant denies that there was a contract at all, as in Profit Investment Sim SpA v Ossi47. The obvious reason for this is that, for the purposes of jurisdiction, the court will not take as definitive one party’s allegations. As the Court said in Ossi, it is not sufficient for one of the parties to say that the contract does not exist and on that basis say that Article 7 has no application48. It may be possible, however, that there could be the determination of the preliminary question whether there was a contract and this would affect the question whether the court had jurisdiction under the contract rule. In Effer v Kantner49, it was held that a court could examine matters which were a pre-condition to jurisdiction. Hence one could have a preliminary hearing, for jurisdictional purposes, to decide whether this was – or was sufficiently arguable as being – a contract case. 3.72 Sometimes a matter might be thought to relate to a contract in the sense that the claim ultimately derives from contract but the true nature of the claim is not one relating to contract. An example was thought to be Kleinwort Benson v Glasgow City Council50, in which a bank sought to recover in restitution sums paid under a contract which it was agreed was void. A majority of the House of Lords held that such a restitutionary claim was not a matter relating to contract because it was not based on any contractual obligation. Indeed because there was no valid contract, the claim was outside the realm of contract and thus did not relate to contract. However, in Profit Investment Sim SpA v Ossi51, the European Court took a different view and held that actions seeking the annulment of a contract and the restitution of sums paid but not due on the basis of that contract did constitute matters relating to a contract52. It has been held that a claim to set aside a contract for non-disclosure does relate to a contract: see Agnew v Lansforsakringsbolagen AB53. But there the question was whether there were binding contractual obligations. 3.73 Jurisdiction is conferred on the courts for the place for performance of the obligation in question. What does that mean? The answer divides into two. The first part of the answer focuses on the particular type of contract. Thus the article makes specific provision in the case of contracts for the sale of goods and the 46 [2018] QB 1268. 47 C-366/13 [2016] 1 WLR 3832. 48 Ibid, at para 54. 49 [1984] 2 CMLR 667. 50 [1999] 1 AC 153. 51 C-366/13 [2016] 1 WLR 3832. 52 Ibid, at para 58. 53 [2001] 1 AC 223.

117

3.74  Jurisdiction

provision of services. Article 7 provides that the place where the goods were to have been delivered or the services to be provided is the place where the obligation in question was to be performed in respect of such contracts. So, for example, where a buyer ordered cider to be shipped to it in Cyprus from Liverpool or Felixstowe, it was held that the goods were delivered by being shipped and that, as that happened in England, the English court had jurisdiction over a contractual dispute: see Scottish & Newcastle International Ltd v Othon Ghalanos Ltd54. 3.74 The second part of the answer focuses on contracts generally – outside the specific situations. In other cases, the place for performance of the obligation in question is the place where the obligation which is the subject of the claim was to be performed: see De Bloos sprl v Bouyer SA55. It is thus a question of identifying where the obligation which is in issue in the proceedings was to be performed. Having identified what is the obligation in question, the next issue is where that obligation was to be performed. It will be necessary to revert to the law governing the contract in order to work out where the place of performance is, although it seems that it should be for the forum to identify the obligation which is the subject of the claim since the claim is brought before the particular forum: see Industrie Tessili Italiana Como v Dunlop AG56. That may be the place where payment was required, where non-payment was the issue in the case: see Custom Made Commercial Ltd v Stawa Metallbau GmbH57. In the event that a claim is based on failure to perform several obligations, it may be necessary to identify the principal obligation. Where the obligations were to be performed in multiple places, the relevant place will be that where the obligation was principally to be performed or, if no such place can be identified, it may be that several courts have jurisdiction. So, for example, in Medway Packaging Ltd v Meurer Machinen GmbH58, a company was obliged to supply only the claimant’s goods (and not others’) in both England and Germany. It was held that this enabled the English court to have jurisdiction on the basis that the contract (and the obligation in question) was as much performable in England as in Germany. 3.75 By contrast, in Source Ltd v TUV  Rheinland Holding AG59 an English company engaged a German company to inspect goods in China and report to the English company as to their quality, on the basis of which the English company would pay the Chinese manufacturer. The English company sued in England, alleging that the reports received by them were negligent and so in breach of contract. It was held that the principal obligation was to inspect the goods. Since that was done in China, the place for performance was not England (even though reports were received here) and so the English court had no jurisdiction. 3.76 Difficulties may arise if a contract is to be performed in several places at the same time. One might have said that the courts for any place where the 54 [2008] UKHL 11, [2008] 1 Lloyd’s Rep 462. 55 [1976] ECR 1497, [1977] 1 CMLR 60 at para 15. 56 [1976] ECR 1473, [1977] 1 CMLR 26. 57 C-288/92. 58 [1990] 2 Lloyd’s Rep 112. 59 [1998] QB 54.

118

Jurisdiction over persons domiciled in EU Member States 3.78

contract was to be performed, at least to more than a de minimis extent, would have jurisdiction. But the European Court has not taken that route. In Saey Home & Garden NV/SA v Lusavouga-Maquinas e Acessorios Industrais SA60 (in fact a supply of services case) it was held that where the contract was to be performed in several places, the place for performance of the obligation in question was to be regarded as the place for the main provision of services in accordance with the terms of the contract. In the absence of a contract provision identifying the main place, it would be the place where in fact the main services were provided. 3.77 A further example of the problems which may arise when either a case is based on a number of obligations, none of which can be characterised as principal, or where duties are to be performed in a number of states at the same time is Leathertex Divisione Sintetici SpA v Bodetex BVBA61. In that case there were two claims concerning commission payable in respect of services provided in Belgium and the Netherlands. One was a claim for arrears of commission which had been payable in Italy. The other was a claim for compensation in lieu of notice monies after the unpaid provider terminated the contract. That claim arose in Belgium. But both claims arose from the same contract. The Belgian court asked the European Court whether it had jurisdiction over both claims. The Court characterised the question as whether the same court had jurisdiction to hear the whole of an action founded on two obligations of equal rank arising from the same contract even though one obligation was to be performed in the state of the court and the other in another contracting state. The Court accepted that the two obligations were ‘of equal rank’ – neither was categorised as the principal obligation. In those circumstances, the European Court held that the Belgian court did not have jurisdiction to hear both claims. It pointed out that the disadvantage of jurisdiction being split could be addressed by suing in the courts of the place where the defendant was domiciled. 3.78 In cases concerning sale of goods or the provision of services, consistent with Article 7(1)(b) one looks first to the contract terms to see where the goods or services were required to be provided. If there is no term, then the place is where the goods (or services) were physically transferred or should have been physically transferred: see Car Trim GmbH v KeySafety Systems Srl62. Matters are less clear if goods were to be delivered to several locations. In such cases one seeks to find the main place of delivery, by reference to the terms of the contract if there are any, or the place where goods or services were principally provided. If there is no one such place, the final fall back is the place where the provider is domiciled. Much of the concern of the court was with certainty and predictability: see Wood Floor Solutions Andreas Domberger GmbH v Silva Trade SA63.

60 C-64/17 [2018] 4 WLR 95. 61 C-420/97 [1999] ECR I-6747, [1999] 2 All ER (Comm) 769. 62 [2010] ECR I-1255. 63 C-19/09 [2010] ECR I-2121.

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3.79  Jurisdiction

Tort 3.79 By Article 7(2), in tort cases jurisdiction is conferred on ‘the place where the harmful event has occurred or may occur’. As discussed at para 3.82, a very wide interpretation has been given to the meaning of this phrase so as to cover both the place where the act is done which leads to the harmful event and the place where damage occurs. 3.80 As with the situation in respect of contract, a first question which arises is ‘what is a matter relating to tort, delict or quasi-delict’? Here, too, it need hardly be said, the European Court has said that the meaning of matters relating to tort is an autonomous, independent one in order to avoid the risk that different courts could reach different conclusions in respect of the same question. The autonomous meaning of tort is liability otherwise than for breach of contract: Kalfelis v Bankhaus Schröder Münchmeyer Hengst & Co64. This appears to be very broad and could include, for example, a claim in restitution (save to the extent that such a claim is related to a contract, per Profit Investment Sim SpA v Ossi) or one founded on breach of statutory duty. It does not matter, in other words, how domestic law would characterise a claim and whether it would treat a claim as arising in tort. For the purposes of jurisdiction, it is enough that there is a civil claim which is not contractual. That is why, for example, what would be regarded in English law as a breach of an equitable duty would be likely to fall within Article 7(2) for jurisdiction purposes. But here, too, there is scope for a range of possibilities. A claim based on a breach of an equitable duty of confidence would be likely to be regarded as tortious. But where the parties were in a contract which gave rise to duties of confidentiality, the fact that a claimant also alleged breach of the equitable duty would be unlikely to affect the characterisation of the claim as contractual. 3.81 Consistent with this, in English law there are examples of cases in which claimants have been able to bring the same claim alleging breach of contract and negligence. It has been held that, for the purposes of jurisdiction, such cases are contractual: see Source Ltd v TUV Rheinland Holding65 and Mazur Media Ltd v Mazur Media GmbH66. 3.82 Where, then, is the place where the harmful event occurs? The European Court has generously held that the courts of the place both where the harmful consequences of an act occur and the place where the wrongful act is done have jurisdiction. This formulation enables the claimant to select either place in which to sue. Thus in Handelswekerij GJ  Bier NV  v SA  Mines de Potasse d’Alsace67, where a French defendant discharged toxic product into the Rhine which damaged crops in Holland, it was held that a claim could be brought in Holland because the jurisdictional test was ‘intended to cover both the place where the damage occurred and the place of the event giving rise to it’. This in 64 Case 189/87 [1988] ECR 5565. 65 [1998] QB 54. 66 [2004] EWHC 1566 (Ch), [2004] 1 WLR 2966. 67 Case 21/76 [1978] QB 708.

120

Jurisdiction over persons domiciled in EU Member States 3.84

part reflects the principle that liability in tort can only arise on the basis that there is a causal connection between the damage and the event giving rise to it68. As both are constituent elements of the tort, for jurisdiction purposes, one may rely on either. This was repeated in Melzer v MF Global69, where it was said that that jurisdictional test was based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred or may occur – defined in both ways – on grounds of proximity and ease of taking evidence. (That was an interesting and difficult case, however, as the defendant which was sued in Germany was a London-based company which traded only in London but had acted at the behest of a German company. The German company was not sued; the London company was sued for assisting the German company, which was presumably believed to have acted unlawfully but which was not even a defendant. It was unclear whether damage had been suffered in the place where the claimant sued, so the focus was solely on where the wrongful act was alleged to have been committed. The European Court held that where only one of several presumed perpetrators of an unlawful act was sued before the courts of a country in which it had not acted, the relevant connecting factor based on the commission of the unlawful act was absent, so that party could not be sued there. The Court said that jurisdiction could not be claimed over the party who had not acted within the jurisdiction on the basis that another person who had not been sued had acted unlawfully within that jurisdiction. That makes sense because in that context the defendant actually sued had not done anything in the place where proceedings had been commenced. Had the claimant sued the German defendant – presumably on the basis of domicile – it might have sought to add the English defendant under Article 8.) 3.83 The reason for relying on these twin meanings of ‘the place where the harmful event occurs’ is that both are suitable places to have jurisdiction because there is ‘a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred’ having regard to proximity and the ease of taking evidence: see Folien Fischer AG v Ritrama SpA70. It is said that each of the places – where damage occurs and where the event occurs – may have a ‘significant connecting factor from the point of view of jurisdiction’: see Öfab, Östergötlands Fastigheter AB v Koot71. 3.84 An important and potentially limiting rule is that damage for the purposes of the Mines de Potasse case means the damage which is a direct consequence of the wrong, and nor more remote or indirect damage. Thus in Dumez France SA v Hessiche Landesbank72, a bank’s withdrawal of financial support from a German subsidiary caused loss for it and a French parent, but the parent could not rely on its own more remote loss to justify bringing a claim in France. It was held that the relevant damage was that which was suffered by the German subsidiary and that the parent’s indirect financial loss was not such as to establish damage for 68 69 70 71 72

Ibid, at para 16. C-228/11 [2013] QB 1112. C-133/11 [2013] QB 523 at para 57. C-147/12 [2015] QB 20 at paras 50–51. C-220/88 [1990] ECR I-49.

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3.85  Jurisdiction

the purposes of a tort claim. There was a similar outcome in Marinari v Lloyds Bank plc73. There, an Italian-domiciled claimant lodged promissory notes with a bank in England. The bank thought the notes were dubious and referred them to the police, who arrested the claimant. He later sought to sue in Italy for damage consequent on the arrest, including damage to his reputation which he said was suffered in Italy. The European Court held that the place where damage occurred could not encompass any place where adverse consequences of an event were felt and did not include the place where a claimant suffered financial loss consequent on the initial alleged wrong. In this case, the claimant was claiming financial damage consequent on the initial damage suffered by him in another Member State. Damage of that nature was not such as to fall within Article 7(2). 3.85 Reliance on the place where damage occurs may be advantageous for claimants. It has been suggested that where there are several defendants who commit tortious acts in different states, a court before which one of the defendants appears may not claim jurisdiction on the basis of the event giving rise to the damage in respect of the torts committed by all the defendants. But if the damage occurs in a place, then the court would have jurisdiction over all defendants. This was the analysis in Coty Germany GmbH v First Note Perfumes NV74. 3.86 However, it may sometimes be hard to say where damage occurs. In a defamation case, is harm inflicted where the defamatory comment is made, where the claimant lives or has a reputation, in the place where most people read the comment, or in every place where they do so? The House of Lords referred that question to the European Court in Shevill v Presse Alliance75. It said that the place of the event giving rise to the damage – where the wrong occurred – could be the place where the publisher was established, meaning that the courts in the state where the publisher was established had jurisdiction. That would generally coincide with the defendant publisher’s domicile. But the place where damage occurred would also be every place where the statement was published and the claimant was known. Therefore each of the states where the statement was published would also have jurisdiction. However, there was a key difference. The courts of the place where the publisher was established would be able to award the claimant all loss flowing from the publication. The courts of each state in which the defamatory comment was published could only award damages for loss in that jurisdiction. This may lead to the unfortunate outcome that the claimant has to bring separate actions in each place where harm is suffered to recover damages for loss in that place. This is highlighted in particular when one thinks that the claimant could pursue the alternative jurisdictional course of suing in the place where the wrong was committed and then presumably recover damages for loss suffered everywhere. However, the claimant can, of course, sue in the courts of the place where the publisher is established – domiciled – and then claim all losses. An alternative solution may derive from eDate Advertising GmbH v X76, a case about infringement of personality rights. In that case it was held that the 73 [1996] QB 217. 74 C-360/12 [2014] Bus LR 1294. 75 [1995] 2 AC 18. 76 C-509/09 [2012] QB 654.

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Jurisdiction over persons domiciled in EU Member States 3.89

place where damage occurred was where the centre of the claimant’s interests was based. That is fine as far as it goes, but the problem is that it deals only with a particular type of case and not the broader range of cases where a person suffers loss in multiple jurisdictions. 3.87 Another example is negligent advice cases. Imagine the person who receives negligent advice sent from country A to country B, who then instructs a third party in country C to act on that advice by, for example, buying an asset. Where does the harm occur? Is it where the advice is received? Is it where it is acted on? Or is it in the place where the asset does not have the value that was anticipated? The European Court gave an answer in Kronhofer v Maier77, where a claimant in Austria received poor advice from Germany and in reliance on that advice paid money from an Austrian account to a German account in order to buy worthless investments in Germany. It was said that the loss occurred in Germany as the asset was in Germany and the funds to purchase it were ultimately paid from Germany. 3.88 In Universal Music International Holdings v Schilling78 a Dutch company brought a negligence claim against Czech solicitors in connection with their work on the acquisition by the Dutch company of a company in the Czech Republic. It was alleged that the solicitors’ actions meant that the claimant ended up paying five times what it should have paid for the target company. The claimant sued in The Netherlands, claiming to have suffered damage there, where it was established. The European Court emphasised that Article 7(2) is based on a ‘particularly close connecting factor between the dispute and the place where the harmful event occurred or may occur’. It repeated that that place could be both the place where damage occurs and the place where the event giving rise to damage occurs, so giving the claimant an option where to sue. In that case, the harmful events occurred in the Czech Republic. The loss of assets reflected the higher purchase price that had to be paid and that was paid in the Czech Republic. It was not enough that, in order to meet its obligations, the claimant had to transfer funds from an account in The Netherlands. Importantly, citing Marinari, the Court said that: the term ‘place where the harmful event occurred’ may not be construed so extensively as to encompass any place where the adverse consequences of an event, which has already caused damage actually arising elsewhere, can be felt.

A claimant’s domicile and the place where its assets were concentrated were not enough to give rise to damage in that place. 3.89 In AMT Futures Ltd v Marzillier79, a brokerage business sued a German law firm in London, alleging that the lawyers had induced the broker’s clients to commence proceedings against it in Germany in breach of contractual terms conferring jurisdiction on the English courts. The cause of action was therefore 77 78 79

C-168/02 [2004] ECR I-6009. C-12/15 [2016] QB 967. [2017] UKSC 13, [2018] AC 439.

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3.90  Jurisdiction

inducement of the clients to act in breach of contract. The broker said that it had suffered harm in England because it had been deprived of the benefit of the jurisdiction clause which would have required proceedings to be brought in England. There was no doubt that the tortious act was done in Germany – the claims the lawyer had induced had been brought there under the inducement of the defendant – so the question was where damage had occurred. The Supreme Court held that that place was Germany because that was where proceedings were started which, because of the choice of jurisdiction clause, should not have been. AMT suggested that it suffered harm in England because it was deprived of its right, as it had intended, to focus its business in London. But this was held to be consequential on the direct harm of proceedings being commenced in Germany. 3.90 In Pinckney v KDG  Mediatech80, a French songwriter claimed that an Austrian company had breached his copyright by producing CDs which were marketed by UK companies and made available over the Internet. He sued in France. It was accepted that France was not the place where the wrongful act was done but it was said to be the place where damage was suffered. It was held that damage could be suffered in a place other than that in which the work was copied if it was sold via the Internet which was accessible elsewhere. It was held that there was no requirement that it be shown that the activity be directed to any particular state. As long as the state in which a person was sued protected copyright, then damage would occur in that state (even if also in others) so as to give that state jurisdiction. However, that was subject to an important limitation: rather as in the libel example, the court could only grant a remedy in respect of damage caused in that state. 3.91 Turning to the limb of Mines de Potasse based on the commission of the wrongful act, there is a necessity to have some consistency in deciding what characterises the wrongful act in order to avoid the risk of different states characterising the wrong in different ways. In Shevill, for example, the wrong was committed both in the place where the publisher of a newspaper producing a defamatory article was established and in the place where the article was published. In Zuid-Chemie BV  v Philippo’s Mineralenfabrik NV81, a Dutch company ordered fertiliser from another Dutch company, which used one ingredient ultimately supplied by a Belgian company. That ingredient was defective. The Dutch manufacturer sued the Belgian supplier of the ingredient. Because the fertiliser was manufactured (using the defective Belgian ingredient) in The Netherlands, that was the place where the harmful event occurred. 3.92 In a case where a director was accused of misconduct in relation to a company’s affairs which caused the company to go into liquidation, it was held, first, that this was a matter relating to tort, largely because it was not a matter relating to contract and, second, that the place where the tort was committed was where the company had its operations: see Öfab, Östergötlands Fastigheter AB v 80 81

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C-170/12 [2014] FSR 18. [2010] Bus LR 1026.

Jurisdiction over persons domiciled in EU Member States 3.95

Koot82. It is probably fair to say that the Court did not distinguish whether this was on the basis of the place of damage or the place where the wrongful act was committed. 3.93 It may be said that the European Court tends to look for the act or omission at the beginning of the causal chain rather than look to later consequences: see Domicrest v Swiss Banking Corpn83. In that case it was held that in a misrepresentation claim, the harmful event occurred where the statement was made rather than where it was received. As an example, in Kainz v Pantherwerke AG84, a case concerning a defective bicycle, it was held that the place where the tortious event occurred was where the cycle was manufactured – the beginning of the chain – rather than where it was purchased. Operation of a branch or agency 3.94 Where an EU-domiciled corporation has a branch, agency or other establishment and the claim arises from the operations of that branch, agency or other establishment, the courts of the place where the branch etc is situated have jurisdiction: see Article 7(5). The application of this rule involves two questions: (i) what is a branch or agency? and (ii) when will the claim arise from the operation of the branch or agency? 3.95 As to the first question, what is a branch, agency or other establishment depends on autonomous EU concepts and not national law, so that the same answer would be given by all courts. The essence of a branch or agency is that it is ‘subject to the direction and control of the parent body’. The concept of an ‘establishment’ is based on the same essential characteristics. The requirement of control by the parent was established by De Bloos v Bouyer85. The Advocate General said that the concept of branch etc had to be strictly construed and that it would apply where the branch ‘operates as though it were a department of the undertaking’86. He held that a branch would be characterised by the ‘absence of its own legal personality’. In that case, a person granted exclusive sales rights, who was not subject to such control, was therefore not a branch, agency etc. It has been held that ‘the agency or other establishment must actually be a kind of decentralised office with essentially the same ability to conduct business as the principal undertaking …’: see Blanckaert and Willems v Trost87. The question is whether the alleged branch would appear to third parties to be ‘an easily discernible extension of the parent body’88. A body would not be subject to control by the parent when it is ‘free to organise [its] own work and hours of work … without being subject to instructions from the parent body in that regard’89. The essence of the branch or agency is that it is a continuation of the 82 83 84 85 86 87 88 89

C-147/12 [2015] QB 20. [1999] QB 548 at 566. C-45/13 [2015] QB 34. Case C-14/76 [1977] 1 CMLR 60 at para 20. Ibid, at 79. [1982] 2 CMLR 1 at 8–9. Ibid, at 14, para 12. Ibid, at 14.

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3.96  Jurisdiction

parent body – the parent body acting in another state through an arm of itself. This will be the case where the entity said to be a branch is the ‘commercial extension’ of the entity established in another state (see Shearson Lehman Hutton v TVB90) or the ‘outward manifestation’ of the parent as a consequence of which third parties may contract with the branch as a means of contracting with the parent91. The essence of a branch is thus that it is an outlet with which third parties may contract so they do not have to deal with the parent body: see Mahamdia v People’s Democratic Republic of Algeria92. The Shearson Lehman case held that the power to enter contracts on behalf of the parent was a sine qua non to being a branch etc. In Sar Schotte v Parfums Rothschild93, the Advocate General said that a branch was ‘an outpost of the main business’94, a place where third parties can, via the branch, deal with the owner of the main business95. 3.96 It has also been said that the branch etc must have the ‘appearance of permanency such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties’, the point being that third parties can deal with the branch rather than with the parent itself: see Somafer SA v Saar-Ferngas AG96. In considering whether a case arises from the operation of the branch etc, the Somafer case says that this includes the contractual and non-contractual operations of the entity concerning its management and including matters such as its buildings or the engagement of staff to work there. 3.97 There is no further requirement that the activity in which the branch engages must be carried out in the same state as the place where the branch is situated. Jurisdiction flows, in relation to matters concerning the branch, from its location. So, for example, in Lloyd’s Register of Shipping v Soc Campenon Bernard97, a French branch of a UK-domiciled entity was to provide services in Spain. A dispute arose out of the provision of those services. Article 7(5) allowed the French branch to be sued in France because the case arose from the operations of that branch; it did not matter that those operations were carried out elsewhere. 3.98 In Anton Durbeck GmbH v Den Norske Bank ASA98, a claim was brought in England against the London branch of a Norwegian bank which had made a loan to a ship owner. The basis of the claim was that the London branch gave instructions for a ship to be arrested following a default in repaying the loan. That caused the loss of the ship’s cargo and the cargo owners sued the London branch for unlawful interference with contract. The bank argued that it should be sued in Norway, its place of domicile. The Court of Appeal said that for Article 7(5) to 90 91 92 93 94 95 96 97 98

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C-89/91 [1993] I L Pr 199 at 207. Ibid, at 208. C-154/11 [2013] ICR 1 at para 48. Case 218/86 [1989] ECC 431. Ibid, at 434. Ibid, at 436. [1979] 1 CMLR 490 at para 12. C-439/93 [1995] ECR I-961. [2003] EWCA Civ 147, [2003] QB 1160.

Jurisdiction over persons domiciled in EU Member States 3.102

apply ‘there must be such a nexus between the branch and the dispute to render it natural to describe the dispute as one which has arisen out of the activities of the branch’99. It was held that the focus of Article 7(5) was on where the branch was situated, regardless where its activities took place. Article 7(5) was different from other provisions of Article 7 that are based on particular causes of action. Rather that article focused on the appropriateness of bringing a claim where a branch was situated: it in effect provides jurisdiction based on the domicile of the branch. In that case, everything which led to the claim had taken place in London and been done by the London branch. On that basis, London had jurisdiction. Salvage or cargo 3.99 Where there is an issue about payment of remuneration in respect of the salvage of cargo or freight, the court with jurisdiction is the court in which the cargo or freight in question has been or could have been arrested to secure payment. But this will only apply if the defendant had an interest in the cargo or freight at the time of salvage. This is the effect of Article 7(7). There does not appear to be any case law about this provision. Article 8: multiple defendants 3.100 Article 8 permits a court to claim jurisdiction over other EU-domiciled defendants where one defendant (often, even if sometimes misleadingly, referred to as the ‘anchor’ defendant) is domiciled in England. This is misleading in the sense that the anchor defendant does not need to be the principal defendant in the case. Thus so far as the English court is concerned, if one defendant is domiciled in England such that the court has jurisdiction over that defendant on the basis of domicile, it may also claim jurisdiction over other EU-domiciled defendants if the claims against those other defendants are so closely connected with the claim against the English defendant that it is expedient to hear the claims together to avoid the risk of inconsistent judgments, such as might occur if the (in this example) non-English defendants were sued in their own country of domicile. 3.101 One should note the limit of the rule: it applies only where one defendant is domiciled in a state such that jurisdiction is derived from domicile. Other grounds for jurisdiction over one defendant, such as those applying to contract or tort, are not sufficient to enable co-defendants to be sued. The article then applies only to other defendants who are domiciled in Member States, so this provision could not be used to claim jurisdiction over non-EU domiciled additional defendants. (The CPR contains provisions for such defendants and is dealt with as part of considering domestic jurisdiction rules: see para 3.234.) 3.102 Subject to those points, in this way it is possible for a claimant itself to identify what it might regard as a lead or anchor defendant domiciled in a particular place (even if, as indicated, it would not be right to describe that defendant as the 99

Ibid, at para 40.

127

3.103  Jurisdiction

lead player in the case) and then use a claim against that defendant to enable the claimant to sue other defendants domiciled in other Member State jurisdictions. This is a potentially powerful weapon – it might even be described as allowing forum shopping – because the claimant who can point to one defendant in one jurisdiction can then bring claims against other defendants over whom, but for the identification of that first defendant, the court would not have jurisdiction. All that is required is that the cases against all the defendants be so closely connected that it is expedient to hear them together to avoid the risk of irreconcilable judgments. It does not matter that the claim against the ‘lead’ defendant is weak. Article 8 is purely a jurisdictional rule. Thus in Reisch Montage AG v Kiesel Baumaschinen Handels GmbH100 a claim was brought in Austria against a debtor domiciled in Austria and a German-domiciled guarantor. The claim against the debtor was bound to fail because it was insolvent, so no judgment could be issued against it. On that basis, the German guarantor said it should not be sued in Austria. The European Court held that the guarantor could be sued and that national rules dealing with insolvent defendants could not oust a jurisdictional rule. In Madoff Securities International v Raven101, Flaux J held that it was not necessary to go beyond a serious issue to be tried against the anchor defendant so that the claim against that defendant was not entirely spurious. 3.103 That said, the European Court did hold in Kalfelis v Bankhaus Schröder102 that the provision did not apply where a claim was brought with the sole aim of ousting the jurisdiction of the courts of the state in which other defendants were domiciled. However, in Freeport v Arnoldsson103, the Court held that Article 8 applied when claims were connected at the time the proceedings were instituted such that it was expedient to hear them together, but that there was no further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the courts of the place where one of the defendants was domiciled. The fact that the claims were closely linked was enough to confer jurisdiction and avoided the risk of misuse of rules of jurisdiction104. In JSC  Commercial Bank Privatbank v Kolomoisky105, the Court of Appeal held that it was enough that the claims were so closely connected as to give rise to the risk of irreconcilable judgments and that it was enough that there was a sustainable claim against the anchor defendant even if the sole aim in suing the anchor defendant was to enable another defendant to be sued. Thus the defendant joined by the application of Article 8 could not resist joinder by arguing that the only reason for the claim against the anchor defendant to be brought was to sue the joined defendant. The court noted that Article 8(2) (dealing with third party claims) contained an express reference to the case where the sole reason for joining the additional party in a third party claim was to remove that party from the court competent to hear the case, but there was no equivalent provision under Article 8(1). Hence the court rejected the argument that there should be added 100 101 102 103 104 105

128

C-103/05 [2006] ECR I-6827. [2011] EWHC 3102 (Comm). C-189/87 [1989] ECC 407. C-98/06 [2008] QB 634. Ibid, at para 54. [2019] EWCA Civ 1708, [2020] 2 WLR 993.

Jurisdiction over persons domiciled in EU Member States 3.106

to Article 8(1) an additional limitation on jurisdiction to say that no jurisdiction was available when the reason for the claim against the anchor defendant was so as to sue the additional defendant. 3.104 But it is necessary that it is the same claimant who sues the anchor defendant domiciled in a certain jurisdiction and the other defendants sought to be added by Article  8. It is not enough that some other claimant has sued the lead defendant. So in Madoff Securities106, the question was whether certain Austrian defendants could be sued in England by a particular company, referred to as BLMIS. The same defendants were sued in the same proceedings by another company, MSIL. It was accepted that the court had jurisdiction over the claim by MSIL because it had sued some UK-domiciled defendants and the claim against the Austrian defendants was closely connected to that claim. But the Austrian defendants said that the court had no jurisdiction over the claim by BLMIS because that claimant had not sued UK-domiciled defendants. Flaux J held that there was no jurisdiction and that one claimant could not, in order to found jurisdiction, ‘piggy back’ on a claim by another claimant (even in a consolidated action) and could not rely on the fact that some other claimant had sued UK-domiciled defendants so as to allow the claimant who had not done so to bring in other, non-UK domiciled defendants107. 3.105 The provision applies where claims are so closely connected that it is expedient to hear them together to avoid the risk of irreconcilable judgments. This is an exercise in judgment. There is no requirement that the claims against all defendants have an identical legal basis: see Painer v Standard Verlags GmbH108. 3.106 Once a defendant has been joined on the basis that an anchor defendant is within the jurisdiction of the court, the claim against the joined defendant may continue even if the claim against the defendant who initially founded the court’s jurisdiction is discontinued: Stewart v Trafalgar House Steamship Co Ltd109. It has been said the courts should be astute to the case where defendants are sued solely for the purpose of conferring jurisdiction over other defendants: Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV110. This concern was designed to address the situation in which the law was abused. But the force of this point appears to be undermined by the JSC  Commercial Bank case, where it was said that the concern was limited to the case where a party artificially presented a case for jurisdiction such as by concealing a settlement with the anchor defendant or proceeding against a fictitious defendant. In Lungowe v Vedanta Resources111, Lord Briggs said that it would only be the case of fraud or of collusion between the claimant and the anchor defendant which would engage the principle that jurisdiction might be declined on the basis that the anchor defendant was sued solely to bring in other defendants. He held that 106 [2011] EWHC 3102 (Comm). 107 Ibid, at para 62. 108 C-145/10. 109 [2013] CSOH 37. 110 C-352/13 [2015] QB 906 at paras 26–29. 111 [2019] UKSC 20, [2019] 2 WLR 1051.

129

3.107  Jurisdiction

the notion of abuse of EU law – of making use of jurisdiction rules for allegedly illegitimate purposes – was to be restrictively interpreted. 3.107 It is also important to note that Article 8 is not always available. So, for example, Article  20, dealing with employment, provides that it is subject to Article 8, but only in respect of proceedings brought against an employer. Hence Article 8 is not an additional means by which employees can be brought before the court on the basis that there is some other English-domiciled defendant who can be used as the lead defendant in such cases: see Glaxosmithkline v Rouard112. In insurance and consumer cases, there is no statement that the relevant provisions are subject to Article  8, but there are other provisions to which those articles are stated to be subject. 3.108 Linked to the ability to bring in other defendants is the right to bring third party claims. Thus where a defendant is sued in England (on any basis of jurisdiction, not just domicile: see Kongress Agentur Hagen GmbH v Zeehage BV113), then that defendant may in England bring a third party claim against an EU-domiciled third party. 3.109 Article 8(2) provides that a person domiciled in a Member State may be sued as a third party in the court in which the main claim is being determined: in an action on a warranty or guarantee or in any other third party proceedings … unless [the third party proceedings] were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case.

3.110 If one has, for example, a breach of contract claim in England against a UK-domiciled defendant, the English court could hear a third party claim brought by the party said to be in breach of contract against, for example, a party who is said to have been responsible for causing that breach. Thus, an English seller sued for non-delivery might, by a third party action, sue a supplier from another Member State who failed to provide parts necessary for the seller to produce the final product. The claim against the third country supplier by the English seller could proceed in the English court on the back of the claim brought by the buyer in England against the English seller. This would be the case where the third party was domiciled in some other Member State. 3.111 It is important to add that the jurisdiction of the court in the main claim does not have to be based on the defendant’s domicile. If the court has jurisdiction, for example under Article 7, then a third party claim may also be brought before the same court: see Kongress Agentur Hagen GmbH v Zeehaghe BV. 3.112 There is, however, an exception in the case of third party proceedings where the original proceedings – the initial claim – ‘were instituted solely with the object of removing [the third party] from the jurisdiction of the court which 112 C-462/06 [2008] ICR 1375. 113 C-365/88 [1990] ECR I-1845 at paras 11–12.

130

Jurisdiction over persons domiciled in EU Member States 3.115

would be competent in his case’. (This is the express reference to the institution of proceedings for that purpose which the Court of Appeal in JSC Commercial Bank noted was present in Article 8(2) but not Article 8(1).) In many cases of third party claims brought in the court where the defendant is sued, the effect could be that the third party was not sued in a court which would have jurisdiction – such as the court of the third party’s domicile. As will be seen, the purpose of that provision is to avoid abuse by the selection of a forum. It may be easier to say where this is not the object of the original claim which leads to the third party proceedings. That will not be the object of the proceedings if there is a connection between the two sets of proceedings – the initial claim and the third party claim – as would be the case, for example, where a defendant seeks an indemnity from a third party if it is liable to a claimant. In Groupement d’Interet Economique (GIE) Reunion Europeenne v Zurich Espana114 it was held that where a French insured sued a French insurer in France and that insurer sought a contribution from another insurer, a Spanish entity, before the French court, Article 8(2) could be relied on against the Spanish insurer. The third party claim was not brought so as to remove that insurer from the court which would otherwise have been competent to exercise jurisdiction over it. The Court said that Article 8(2) ‘does not require the existence of any connection other than that which is sufficient to establish that the choice of form does not amount to an abuse’. 3.113 In the Kongress Agentur case115, the European Court said that whilst Article 8(2) provided a basis for jurisdiction, national courts could apply their own procedural rules to decide whether the action was admissible ‘provided that the effectiveness of the Brussels Convention in that regard is not prejudiced’. Quite what that means in practice is less clear. 3.114 In GIE Reunion v Zurich Espana116, one insurer which was the defendant to a claim sought to join another insurer for the purposes of seeking a contribution or indemnity in respect of the underlying claim. In rejecting the suggestion that the second insurer had been added so as to avoid jurisdiction of the court which would otherwise have heard the claim, the Court held that there was an inherent connection between a claim brought by an insured against the insurer and a claim by that insurer to an indemnity from another insurer. This is a very useful, practical test: if there is such an ‘inherent connection’ between the main claim and the third party claim, the exception in Article 8(2) will not apply and the third party may be brought before the court dealing with the main claim. 3.115 In Sovag v If117, an insured sued an insurer, whilst another insurer – which had paid compensation to the victim of an accident – also sued the same insurer in the same proceedings. So here one had a claim against a defendant brought by a third party. The Court held that Article 8(2) was not limited to claims against third parties. This claim was held to be allowed by Article 8(2). The court held 114 115 116 117

C-77/04 [2006] 1 All ER (Comm) 488. C-365/88 [1990] ECR I-1845. [2006] 1 All ER (Comm) 488. C-521/14 [2016] QB 780.

131

3.116  Jurisdiction

that the issue was a close linking or close connection between the main claim and the third party’s claim. 3.116 In Hough v P&O Containers Ltd118, Rix J, focusing on the word ‘solely’ in Article 8(2), said that the test for when proceedings would be instituted for the purposes of removing the third party from the court which would otherwise be competent was a narrow one, designed to catch the case where the claimant and defendant collude to bring a claim against the third party otherwise than in the court which would normally have jurisdiction, or where the defendant is sued without good reason in the hope that the third party will be joined. That which had to be instituted ‘solely’ for that purposes was the original claim. But if there was good reason to sue the defendant, it could not be said that those proceedings were started solely to deprive the third party of jurisdictional protections. The same case held that if the defendant and third party have agreed a choice of jurisdiction for disputes between them, effect will be given to that choice; that, as the judge put it, Article  25 dealing with jurisdiction clauses takes priority over Article  8(2). The case, described by the judge as setting a ‘transnational legal problem which reads like a moot’, is a good example of how third party claims work and should work. The claimant was a New Zealand-domiciled employee who sued his English employer for damages as a result of working for the English business in Germany. The employer, being domiciled in England, was sued in England. The employer sought to bring a third party claim against the German entity where the employee had been working, alleging it was at fault. The German third party invoked a contract between it and the English employer which contained a jurisdiction clause in favour of Hamburg. The judge described Article 8(2) as the ‘threshold question’ because otherwise, even apart from the jurisdiction clause, the German third party would fall to be sued in Germany, where it was domiciled. It was not enough for a defendant to say that it was being sued other than in the state in which it was domiciled; that alone would not involve a breach of Article 8(2). If there was a good reason to sue the person in the place where the claimant brought proceedings, then that claim could not be said to be brought with the sole purpose of removing the defendant from the court which would have had jurisdiction. Thus, in that case the proceedings were not commenced with the sole purpose of taking the defendant away from the court which would have had jurisdiction and that disposed of the Article 8 objection. However, the claim did fall within the jurisdiction clause. Article 25 prevailed over Article 8 because the former was mandatory (the court shall have jurisdiction), whereas the latter was only permissive. 3.117 Article 8(3) allows a person domiciled in a Member State to be sued in a counterclaim arising from the same facts that give rise to the original claim. As to what counts as a counterclaim, the European Court in Kostanjevec v F&S Leasing GmbH119 held that a counterclaim was a separate claim seeking a judgment against a claimant which could be proceeded with even if the claimant’s claim

118 [1999] QB 834. 119 C-185/15 [2017] 4 WLR 7.

132

Jurisdiction over persons domiciled in EU Member States 3.121

was dismissed120. The counterclaim had to seek a separate judgment rather than being a mere defence to a claim. Articles 10–16: insurance claims 3.118 Articles 10–16 contain numerous provisions relating to insurance claims – matters relating to insurance. They expand the places in which insurers may be sued, to include the place where a policyholder is domiciled and also, in the case of liability insurance, the courts for the place in which the harmful event occurred (an invocation of the tort rule). This is said to be without prejudice to Article 6 – defendants not domiciled in Member States – and Article 7(5) – the case of branches, agencies or other establishments. 3.119 It has been held that ‘matters relating to insurance’ does not include reinsurance: see Universal General Insurance Co v Group Josi Reinsurance Co SA121. But otherwise that concept has been widely construed. In Aspen Underwriting v Credit Europe Bank NV122, an insurer paid out in response to a claim under a settlement agreement in relation to a ship which had sunk. The payee was a bank, which had provided finance for the ship. A later trial determined that the owners and managers of the vessel had scuttled it and on that basis the insurer sought to avoid the settlement agreement on the grounds of misrepresentation or to seek restitution. The question arose whether that claim was a matter ‘relating to insurance’. The Supreme Court held that it was, emphasising that the wording was ‘matters relating to insurance’ and not ‘matters relating to an insurance contract’. Moreover the insurance provisions do not just apply to parties to an insurance contract but also to beneficiaries of insurance. Thus a claim concerning a settlement agreement consequent on an insurance claim was a matter relating to insurance. 3.120 Insurers may be sued in the courts of the Member State in which they are domiciled, unsurprisingly. But where a claim is brought by a policyholder, an insured or a beneficiary, the insurer may also be sued in the state of the claimant’s domicile. It appears that the policyholder is the person who originally took out the policy and the insured is the person who benefits from the insurance (often they will be the same, of course). A beneficiary appears to be someone else who benefits from the insurance. That appears to be the basis on which the widow of a man who had died in Germany was able to sue the German insurer in England, the state of the claimant’s domicile, in Cox v Ergo Versicherung AG123. 3.121 Because of Article  7, where an insurer has a branch etc and a dispute arises out of the operation of the branch, the insurer may be sued in the courts for the place where the branch is situated. Co-insurers may be sued in the courts of the Member State in which a lead insurer is sued. 120 121 122 123

Ibid, at para 32. C-412/98 [2001] QB 68. [2020] UKSC 11, [2020] 2 WLR 919. [2014] UKSC 22, [2014] AC 1379.

133

3.122  Jurisdiction

3.122 There is also a provision dealing with insurers not domiciled in a Member State which have a branch, agency or establishment in a Member State and where disputes arise from the operation of the branch, agency or establishment. The rules referred to above in the context of branches, agencies and establishments will be relevant to this provision: see para 3.94 ff. 3.123 There are then provisions which govern particular types of insurance. Under Article 12, in the case of liability insurance and the insurance of immovable property, the insurer may be sued in the courts of the place where the harmful event occurred. As applied to liability insurance, at least, that is similar to the rule which applies in tort cases. 3.124 Article 13, also applying to liability insurance, says that insurers may be joined in proceedings brought by an injured party against the insured person; an express statement in the insurance context of the right to claim against a third party, namely the insurer. But this only applies where such direct actions are permitted by the law of the place where the proceedings are commenced. An example of how this may work is FBTO Schadeverzekeringen NV v Odenbreit124. In that case, a person domiciled in Germany was injured in a road traffic accident in The Netherlands by a party insured by an insurer domiciled in The Netherlands. He brought a direct claim against the insurer in Germany. In Germany, actions against an insurer were regarded as being covered by the law of tort and not matters relating to insurance, with the consequence that Articles 10–16 would not be applicable. The European Court held that it did not matter how the claim was characterised under national law and that the injured party was entitled to sue the insurer as long as such claims were permitted by national law. The insurer argued that the claim could only be brought in the place where the insured or policy holder was domiciled. The Court rejected that, holding that the effect of Article 13(2) was to expand the list of parties who could sue the insurer beyond insureds etc so as to include the injured party and therefore enable the injured party to sue in the place of that person’s domicile, subject only to the requirement that that form of claim is permitted by national law in the place where the claim proceeds – the lex fori, including its rules of private international law: see Keefe v Mapfre Mutualidad Cia de Seguros y Reaseguros SA125. 3.125 Where an injured party is permitted to bring a direct action against the insurer, the policyholder or insured may be joined to an action if the law governing direct actions permits that. This could be a situation in which an insurer is sued in one state and the policyholder is joined to that action, even if the state in which the insurer is sued is not the state of the policyholder’s domicile. An example is Keefe (above) where an injured party sued initially a Spanish-domiciled insurer and then, by amendment, its Spanish-domiciled insured in England following an accident in Spain for which he said the insured was liable. He proceeded in England expressly because he thought his chances of recovering compensation there were higher than in Spain. (This was on the basis that the quantification of 124 C-463/06 [2008] 2 All ER (Comm) 733. 125 [2015] EWCA Civ 598, [2016] 1 WLR 905 at para 35.

134

Jurisdiction over persons domiciled in EU Member States 3.128

loss was said to be a matter for the law of the forum, ie English law.) He was able to proceed in England because he was domiciled there. The issue in the case was the claim against the insured. The insured had been added as a defendant because there was a limit to the insurer’s liability under the policy. The claim against the insured was therefore to recover loss above that limit. 3.126 It was held in that case that the law by which one assessed whether policyholders could be added to the claim was the law governing the underlying cause of action, identified by English rules of private international law, and not the lex fori126. In that case, that was Spanish law which did permit policyholders to be added to direct claims against insurers. It was also held that where the relevant law permitted those insured to be added as defendants, the English court was bound to give effect to that127. 3.127 In general, but subject to the rule about policyholders being added as parties in direct claims by injured persons against insurers, an insurer may only bring proceedings against the policyholder or insured in the state of that person’s domicile: see Article 14. In Aspen Underwriting it was argued that the right for a defendant to be sued in the state of that party’s domicile was subject to a requirement that it be shown that the defendant was the ‘weaker party’. Reliance was placed on reference to the weaker party in the recitals. But the Supreme Court rejected that contention, holding that Article 14 applied to all defendants in matters relating to insurance. Such a defendant will often be the weaker party, but a defendant does not lose the right to rely on Article 14 simply by reason of its stronger position. It was held that there was no ‘weaker party exception’ which removed a policyholder, insured or beneficiary from the protection of Article 14. The fact that the defendant fell into one of those categories was enough to secure its protection and entitlement to be sued in the state of its domicile even where, as in that case, the defendant was a bank. Since the bank was Dutch, the English court did not have jurisdiction over it. 3.128 There are provisions about contracting out. In contrast to the general rule contained in Article 25 enabling parties to select courts which have jurisdiction to deal with their disputes, Article 15 provides that, in the context of insurance, an agreement may depart from the jurisdiction rules only where such agreement is entered into after the dispute has arisen, or which covers any of the following situations, namely that it: (i) enables the policyholder or insured to sue in a wider range of courts than those permitted by Articles 10–14; or (ii) in the case of an insurer and insured domiciled in the same Member State, confers jurisdiction on that state, even if the harmful event occurred abroad, as long as that agreement is not contrary to the law of that state;

126 Ibid, at para 39. 127 Ibid, at para 55.

135

3.129  Jurisdiction

(iii) is concluded with a policyholder who is not domiciled in a Member State except in respect of compulsory insurance or insurance for immovable property in a Member State. 3.129 There is also an exception allowing jurisdiction agreements which fall within Article  16, meaning that effect can be given to those agreements even if they do not satisfy any of the conditions referred to above. Article 16 covers insurance for loss and damage to ships or aircraft for commercial purposes or to goods in transit other than passengers’ bags; liability other than for injury to passengers or the loss of their bags arising from the use of ships or aircraft or loss and damage to goods in transit; financial loss connected with the use or operation of ships of aircraft and what are referred to as ‘large risks’ (per Directive 2009/138). As can be seen, the effect of this is to enable those concerned with commercial, rather than consumer, insurance to be able to rely on jurisdiction clauses, whenever they are agreed. Thus, consistent with its other provisions, the main concern of Articles 10–16 is to protect the party felt to be weaker, that is to say, the insured. But where the insured, for example a shipowner, is felt to be in a comparable position to an insurer, the need for protection is no longer present. Articles 17–19: consumer contracts 3.130 Articles  17–19 contain lengthy provisions dealing with consumer contracts. As one might expect, their principal aim is to protect the ex hypothesi weaker party. The heading is ‘consumer contracts’ but the definition in Article 17 is wider: the consumer is someone who contracts outside a trade or profession. There may sometimes be questions as to whether a person counts as a consumer. For example, in Gruber v BayWa AG128, an Austrian farmer bought tiles to re-roof a farmhouse which was used partly as a home and partly as a farm. He claimed the tiles were defective and sued in Austria, relying on Article  18. The Court held that the concept of consumer had to be strictly construed, partly because it was unusual to allow a claimant to sue in the courts of that party’s own domicile. Hence the contract had to be concluded ‘for the purpose of a use other than a trade or professional one’129. This meant that a contract concluded partly for personal purposes and partly for trade purposes could not fall within Articles 17–19 unless the trade element was ‘so slight as to be marginal’ and so had a negligible role130. Insofar as a contract was entered into for trade purposes, the party was deemed to be on an equal footing with the counterparty. 3.131 Another example of the limits on who is a consumer is Schrems v Facebook131. In that case, the person claiming to be a consumer sued Facebook in the state of his domicile, Austria, alleging breach of data protection laws. He was an accomplished litigator, publishing books and giving lectures on his 128 129 130 131

136

C-464/01 [2006] QB 204. Ibid, at para 37. Ibid, at para 39. C-498/16 [2018] 1 WLR 4343.

Jurisdiction over persons domiciled in EU Member States 3.133

proceedings as well as seeking to crowdfund his actions and forming a non-profit business to uphold the right to data protection. The Court held that these activities did not deprive him of the status of a consumer. However, he could not bring an action on behalf of others who claimed to be consumers, as that protection inured only in his personal capacity. 3.132 Such consumers must be domiciled in Member States for the rules to apply. The articles are then said to apply to a variety of contracts, including sale of goods on instalment credit terms, loans repayable by instalments and then, much more widely, contracts concluded with persons who pursue commercial or professional activities in the state of the consumer’s domicile or who direct activities to states, including that state. The articles do not, however, apply to contracts for transport unless they are for transport and accommodation. 3.133 As to activities being directed to the consumer in the state of the consumer’s domicile, this may require careful examination. The idea of activities being directed at states no doubt captures the case where someone advertises and offers products remotely, including over the Internet. The key is the location of the recipient of these approaches and whether the trader evinces an intention to contract with such persons. The issue arose in Pammer v Reederei Karl Schlüter132. That involved two cases, one of which concerned an Austrian-domiciled claimant who booked, via the Internet, a voyage by freighter with a German company via a German intermediary. He refused to travel because he said the condition of the vessel did not match the description on the intermediary’s website and so sued in the Austrian court to recover the sums he had paid. An issue for the court was whether a trader who presented material on a website was directing that material to the Member State of a consumer’s domicile. The court noted that the requirement in previous legislation that a specific invitation be directed to a consumer had been removed and replaced with the idea of the trader directing activities. It was held that it was not enough that a trader had a website that was accessible in a Member State. It was necessary that the trader had manifested an intention to establish commercial relations with consumers from one or more Member States including that of the domicile of the consumer in question. There had to be evidence to show that the trader was envisaging doing business with such consumers. As to that, it was not enough to include an email address or telephone number on the website. There had to be clear evidence that the trader was offering services in particular states or soliciting custom from those states. This might be shown by the international nature of the products or services being issued, the use of an international telephone number, that a website address was not country specific. Overall, the issue was whether it was apparent from the trader’s website that it was envisaging doing business with consumers domiciled in one or more Member States in the sense that it was minded to conclude a contract with them.

132 C-585/08 and C-144/09 [2012] Bus LR 972.

137

3.134  Jurisdiction

3.134 In Hobohm v Benedikt Kampik133, German claimants bought an apartment in Spain, which was being built by a German developer. There was no doubt that that project had been marketed in and so directed to Germany. Problems then arose, and the buyers entered into a separate arrangement with an intermediary, resident in Spain, to complete the task. That agreement was reached in Spain. The question was whether that agreement was to be treated as having been directed to the buyers in Germany so as to enable the buyers to sue in Germany because of its connection with the original transaction. The European Court held that it was enough that there was a close link between the later agreement and the earlier one, which had undoubtedly been directed to Germany; the fact of the economic link between the two was sufficient. 3.135 Against the background of the type of contracts which fall within the ‘consumer contracts’ part of the Regulation, the jurisdiction rules are as set out below. 3.136 By Article  18, the consumer may bring proceedings either in the place where the other party is domiciled or the place where the consumer is domiciled, regardless of the place where the other party is domiciled. That is presumably intended also to catch non-EU domiciled defendants. The consumer may only be sued in the place of the consumer’s domicile. None of this affects a party’s ability to bring a counterclaim in whichever the court the matter proceeds in. Where the other party to the contract who is not domiciled in a Member State has a branch or agency in a Member State then the other party is deemed domiciled in that Member State. 3.137 Article 19 contains restrictions on contracting out. Agreements to depart from the provisions of Articles 17–19 are only enforceable if they are entered into after the dispute arises or allow the consumer to bring a claim in a wider range of courts, or where both parties are domiciled or habitually resident in the same Member State and where the agreement confers jurisdiction on the courts of that Member State (as long as such agreement is not contrary to the law of that state). The consumer jurisdiction provisions are without prejudice to Article 6 (defendants not domiciled in Member States) and Article 7(5) (branches and agencies and disputes arising from them). Articles 20–23: employment contracts 3.138 The provisions in relation to employment contracts are designed to expand the jurisdictions in which employers can be sued but to limit those in which employees can be sued. The key provisions are contained in Articles 20–23 of the Brussels Recast Regulation. 133 C-297/14 [2016] QB 616.

138

Jurisdiction over persons domiciled in EU Member States 3.141

3.139 The starting point is to consider what is a contract of employment for these purposes. This may be capable of giving rise to difficult questions when one bears in mind, for example, provisions of domestic statute which refer to employees and to workers and the numerous cases on employee (and worker) status. In WPP Holdings Italy v Benatti134 an Italian incorporated company and its UK-domiciled parent sued an Italian-domiciled individual who had been engaged under a consultancy agreement, alleging breach of contractual and fiduciary duties. In a case which also involved numerous other issues, the Court of Appeal decided that the question was whether there was a good arguable case that the contract was an employment contract. The court below had applied the criteria of provision of services for payment; control by the counterparty; and integration into the organisational framework of the counterparty. The Court of Appeal appeared to accept these criteria but said they were not ‘hard-edged’ and could not be mechanistically applied; it was an evaluative exercise. 3.140 However, Article 20 does not just refer to employment contracts. It applies to ‘matters relating to individual contracts of employment’. By reference to that language, the Court of Appeal in Samengo-Turner v JH Marsh and McLennan (Services) Ltd135 held that a claim based on an ‘incentive award’ designed to provide an employee with the opportunity to earn a bonus, but where the scheme had been granted not by the employer but by its holding company, was a matter relating to an individual contract of employment. This meant that the rules of Articles 20–23 applied to the incentive award arrangements and the employees could not be sued other than in their state of domicile. On that basis, as explained more fully at para  9.28 ff, in dealing with anti-suit injunctions, the employee secured an anti-suit injunction to restrain proceedings in New York. It was enough that the terms of the incentive award referred to individuals remaining with companies in the group and that payment of the award was based on the individual’s continuing employment. They were entitled to a bonus because of the work they did for a group company. Thus these agreements for payment of additional bonuses were part of (or at least related to) the individuals’ contracts of employment. To like effect is the decision in Petter v EMC Europe136. 3.141 In Alfa Laval Tumba AB v Separator Spares International Ltd137, a claim was brought against an employee alleging breach of copyright and misuse of confidential information. These were advanced as claims in tort. The employee claimed that these matters related to his contract of employment so he could only be sued in the state of his domicile. The Court of Appeal agreed. It said that the allegations could have been advanced as breaches of the employee’s contract of employment and the fact that the claims were advanced in tort did not mean that they were not related to the employee’s employment.

134 135 136 137

[2007] EWCA Civ 263, [2007] 1 WLR 2316. [2007] EWCA Civ 723, [2008] ICR 18. [2015] EWCA Civ 828, [2015] IRLR 847. [2012] EWCA Civ 1569, [2013] 1 WLR 1110.

139

3.142  Jurisdiction

3.142 An arguably different approach was taken in Bosworth v Arcadia Petroleum138, for reasons which indicate that parties may, by the way they formulate their claims, be able to limit the application of Articles  20–23. In that case, persons treated as employees domiciled in Switzerland were sued for conspiracy and breach of fiduciary duty in respect of what was alleged to be a fraud. The employees said that these claims related to their employment and so could only be brought in Switzerland and not in England where the employer had commenced its action. The Court of Appeal asked whether there was a ‘material nexus’ between the contracts of employment and the conduct complained of139. The Court rejected a test based on whether a claim could have been pleaded as a breach of contract with the consequence that, if it could, then the claim related to a contract of employment. The Court said that that was too mechanistic and of potentially unacceptable width. Instead the ‘material nexus’ test was applied. That meant considering whether regarding the case as pleaded as one of breach of contract was indispensable to resolve the dispute. Applying that test, it was said that the complaint formulated in tort was that the individuals were acting outside rather than in breach of their contracts and that those contracts formed a very small part of the background, even though the claims could have been pleaded as breach of contract. This meant that the claims formulated in tort fell outside Article  20, as would claims of breach of fiduciary duty. The Supreme Court later referred that case to the CJEU on the question whether there was an individual contract of employment at all where the person said to be employed was able to determine the terms of the contract and had control over the day-to-day operations of the business, including his own role. The European Court held140 that the meaning of a contract of employment did not depend on national law but had to be given an independent interpretation. As to that, an employee was someone who performed services for and under the direction of another in return for payment. Thus an employment relationship implied a hierarchical relationship between the worker and the employer, a relationship of subordination. In that case, the individuals were CEO and chief financial officer, employed under contracts drafted by themselves. They exercised control over by whom, where and on what terms they were employed. In those circumstances, there was no relationship of subordination and so no contract of employment with the consequence that the articles dealing with contracts of employment could not be relevant. Since there was no contract of employment, there could be no matter related to a contract of employment for the purposes of jurisdiction. 3.143 This seems to be an extreme case on the facts because of the lack of any control over the individuals. Yet if one just focuses for a moment on the Court of Appeal’s analysis of whether the claim would have related to the contract of employment (had there been one), there is clearly some tension between Bosworth and Alfa Laval, and, for that matter Samengo-Turner and Petter, which seem to have adopted much broader and more flexible approaches. That tension is yet to be resolved. 138 [2016] EWCA Civ 818. 139 Ibid, at para 67. 140 At C-603/17 [2020] ICR 349.

140

Jurisdiction over persons domiciled in EU Member States 3.146

3.144 Turning to consider claims which may be brought by employees in the English court, an employee may sue an employer in England if the employer is domiciled in England – adding nothing to Article 4 – but also if England is the place where the employee habitually works or was the place where the employee last worked or, if the employee had no place of habitual work, if the business which engaged the employee was situated in England. The Court does prefer to identify a place of habitual work if possible. For example, in Rutten v Cross Medical141, where the employee worked in Holland, the UK, Belgium, Germany and the US, it was held that the place where the employee habitually worked was the place ‘where the employee has the effective centre of his working activities and where, or from which, he in fact performs the essential part of his duties vis-à-vis the employer’142. The rationale for this was that this was the place where it was least expensive for the employee to commence proceedings. In that case, that was the place where the employee carried out most of his work and had an office. Overall one can see that a range of connections with England, falling far short of the employer’s domicile and in many cases based on the employee’s own circumstances, may justify the English court having jurisdiction. 3.145 Nogueira v Crewlink Ireland Ltd143 considered the place where air crew habitually worked. In that case, air crew of a range of nationalities were employed under contracts that had Irish choice of law and jurisdiction clauses, and whose ‘home base’ was a Belgian airport. The air crew sued in Belgium. Having held that the jurisdiction clause could not be relied upon, the Court held that where there was no effective centre of professional activity, one must identify the court best placed to decide the case so as to protect the employee, and that would be the place with which the dispute has its most significant link and that would be where the employee ‘actually performs the essential part of his duties’144. That would be the place where it was least expensive for the employee to proceed. It was not to be equated with the ‘home base’ but that did not mean that that concept was irrelevant, and it was a factor which would play a significant role in deciding where the employees habitually worked. That meant that the home base could be supplanted if other factors showed a closer link with another place. 3.146 A good example of the application of the habitual work test is Powell v OMV Exploration & Production Ltd145. In that case, the employer was domiciled in Austria. The employee sought to rely on his habitual place of work, but since most of his work was done in Dubai he could not show that England was where he habitually worked. The fact that he did some work in the UK, when on leave from his duties in Dubai, was not enough to make any part of the UK the place where he habitually worked. It followed that the employment tribunal had no jurisdiction. The consequence in that case was that neither the employer’s 141 [1997] ICR 715. 142 Ibid, at para 23. 143 C-168/16 [2018] ICR 344. 144 Ibid, at para 58. 145 [2014] ICR 63.

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domicile nor the place where the employee habitually worked enabled him to pursue a claim in this jurisdiction with the consequence that, at least as far as England was concerned, he could not bring a claim. This is an important reminder that sometimes the result of a jurisdiction decision may be that a party is not able to bring a claim at all in what would be regarded as that party’s home court. 3.147 In contrast, the employee may only be sued in England if domiciled here. More accurately, by Article 22 of the Brussels Recast Regulation, an employer may only bring proceedings in the courts of the Member State where the employee is domiciled. In Samengo-Turner, it was argued by the company that, even if the incentive award was a matter relating to employment, since the party trying to enforce the non-compete terms in that agreement was not the employing company but its holding company, that claim was not a claim by the employer, with the consequence that Article 22 had no application. Whilst describing that submission as ‘formidable’, because the employer was not the holding company which ran the incentive scheme but a subsidiary, the Court of Appeal held that since the claim had been held to be one related to employment, it followed that the party bringing that claim was to be treated for the purposes of Article 22 as the employer. Hence a claim by the company which ran the incentive arrangements had to be brought in the place where the employee was domiciled. 3.148 None of the limits on where an employee may be sued affect the power of either party to bring a counterclaim. Thus an employee not domiciled in England could sue an employer in England who was also not domiciled there, because England was the place where the employee habitually worked. The employer could then bring a counterclaim against the employee even though the employee was not domiciled in England. 3.149 One important point to recognise is that these provisions trump, for example, the rules relating to contracts. Where what is in issue is an employment contract, it is the employment provisions and not the contract provisions that govern. It can be said, perhaps, that the provisions governing contract in effect state the place where the obligation typical of the contract is to be performed, and that is where the employee habitually works. 3.150 Also, the rules about contracting out applicable to other types of case have no effect. An agreement to confer jurisdiction on a particular court is effective only when entered into after the dispute has arisen or where it expands the jurisdictions in which the employee may sue. So in Samengo-Turner an exclusive choice of jurisdiction clause (in favour of New York) in the incentive agreement entered into during the employee’s employment was of no effect and could not compel the employee to submit to the jurisdiction of New York. Where a jurisdiction clause is agreed before the dispute arises, it may be enforced to the extent that it permits the employee to sue in jurisdictions additional to those for which the Regulation provides but not insofar as it excludes those jurisdictions. The agreement must extend the employee’s possibility of choosing between several courts with jurisdiction and in this way add to the courts in which the employee could sue, but without preventing the employee suing in the courts referred to 142

Jurisdiction over persons domiciled in EU Member States 3.153

in Article 21: see Mahamdia v People’s Democratic Republic of Algeria146. That gives rise to an interesting question. If, in Samengo-Turner, the clause had said that the employee submitted to the courts of New York but that the employee could sue in New York or London or additional courts, would that mean that the company running the incentive agreement could have sued in New York? The answer ought to be ‘yes’, because a jurisdiction agreement departing from Article 22 can be valid if it enables the employee to sue in other jurisdictions. It does not say that it is valid ‘to the extent that’ it permits the employee to do so. Thus the argument is that if the clause allows the employee to sue in other jurisdictions: (a) that is a valid means of contracting out of Articles 20–22; and (b) on that basis, the terms of the agreement – all of them, even those imposing a jurisdiction on the employee – should be enforced. 3.151 The meaning of ‘after the dispute has arisen’ was considered in Yukos International UK BV  v Merinson147. In that case, an employee based in The Netherlands was dismissed and thereafter entered a settlement agreement which conferred jurisdiction on the Dutch courts. The employer then sued the employee in England (the state of the employee’s domicile) and the employee relied on the jurisdiction clause to resist the claim there. It was held that the settlement agreement was related to the employee’s contract of employment because it settled alleged breaches of that contract; there was a material nexus between that agreement and the contract. As to whether the agreement had been entered after the dispute had arisen, it was held that a dispute has arisen if the parties have disagreed on a point and legal proceedings in relation to it were imminent or contemplated. Parties can only have disagreed if there has been communication between them as to the subject matter of the dispute. In that case, the dispute before the court had not arisen at the time of the settlement agreement, with the consequence that the choice of jurisdiction clause was not effective. 3.152 Most of the provisions about employment in Article 21 relate to employers and employees in Member States. But the article also contains two provisions relating to employers who are not domiciled in a Member State. The first is that, by Article 21(2), employers not domiciled in a Member State may be sued in the courts of the place where the employee habitually works or last worked or, if there is no such place, the courts of the place where the employer is situated. The last possibility is unlikely to be of great assistance to an employee of an employer not domiciled in a Member State, but the ability to sue a non-EU domiciled employer in the place where the employee habitually works is potentially of great value. 3.153 The second rule relevant to non-EU domiciled employers is that if they have a branch agency or other establishment in a Member State and the dispute arises out of the operation of the branch, agency or establishment, then the employer is deemed domiciled in the EU state in which the branch, agency or other establishment is situated. So one might have a US employer with a branch 146 C-154/11 [2013] ICR 1 at paras 62–63. 147 [2019] EWCA Civ 830, [2020] QB 336.

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in England. Where the employee’s claim derives from the actions of the English branch then the US employer is deemed domiciled in England (para  3.94 ff explains what those terms mean). 3.154 The provisions dealing with employment are a self-contained code in the sense that they are the only rules applicable to employment cases and recourse cannot be had to other provisions which may be said to be inconsistent with them. The point has already been made that the general contract rules have no application in the case of employment contracts. But other provisions also may be disapplied. Thus in Glaxosmithkline v Rouard148, an employee claimed to be employed by two employers – a French-domiciled entity and an Englishdomiciled entity. He sought to sue both entities in France relying on the domicile of the French company and seeking to bring the English company before the French court by relying on what is now Article 8, which permits claims against co-defendants when they are closely connected. The European Court held that he could not do so, saying that the rules for employment claims were governed by Articles 20–23 and could not be amended or supplemented by other jurisdiction rules unless they were specifically referred to. In fact, the relevant provisions have been amended since Rouard and Article 20 says it is without prejudice to Article 8(1) – which is the provision about joining defendants in closely connected claims – but only in cases against employers. Therefore Article 8 cannot be relied on to bring before the English court other EU-domiciled employees on the basis that one employee or another party is sued here. If one had a case in which a number of employees were alleged to have acted in breach of contract in the same way, where one employee was domiciled in England and another in France and another in Germany, the employer could not sue the English employee in England and then rely on Article 8 to sue the French and German employees in that same jurisdiction too. However, at this point, Bosworth v Arcadia becomes relevant. If the employer could plead a case, for example in conspiracy, so that the basis for the claim was tort and not employment, then it would be possible to rely on Article 8 against other defendants who were to be regarded as joint tortfeasors. That said, other than cases where the claimant can rely on careful and deliberate formulation of claims so they do not look like employment cases, the general point from Rouard remains valid – employment claims are governed by the provisions of Articles 20–23 and, save to the extent specifically identified, one does not look outside those provisions. Article 24: exclusive jurisdiction 3.155 Article  24 contains a number of types of case in which certain courts have exclusive jurisdiction regardless of domicile. This means that even if the defendant is not domiciled in a Member State, these rules will apply. They are as follows: (i) proceedings concerning rights in rem in immovable property or tenancies of immovable property; 148 C-462/06 [2008] ICR 1375.

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(ii) proceedings concerning the validity of the constitution of companies or the nullity or dissolution of companies or legal persons or associations or the validity of their decisions; (iii) proceedings concerning the validity of entries in public registers; (iv) proceedings concerning the registration or validity of patents, trade marks or designs; (v) in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced. All these provisions, like other departures from the rule that persons be sued in the states of their domicile, are to be given a restrictive interpretation. Proceedings concerning rights in rem in immovable property 3.156 Jurisdiction over rights in immovable property is given to the courts in which the property is situated. In order for this rule to apply, the action must be based on a right in rem – a claim to property – and not a right in personam. Thus in Webb v Webb149, where the claimant’s case was that the defendant held certain land on trust for the claimant, that was not a claim based on a right in rem. The claimant was not asserting a right against the property but a right concerning property against another individual. In Reichert v Dresdner Bank150 it was said that Article 24 covered claims concerning the extent, scale, ownership or possession or other rights in rem in immovable property. Therefore, that case – in which a mortgagee bank challenged the disposal by parents of real property to their child, alleging it to be a fraud on the mortgagee – did not fall within Article 24. The court noted that Article 24 should not be construed too widely because that would prevent parties choosing a forum and would be likely to identify a forum which was not the domicile of either party. Proceedings concerning the constitution of companies 3.157 In relation to point (ii) in para 3.155, the court with jurisdiction is that where the company or other person has its seat, determined by the court said to have jurisdiction applying its own rules of private international law. An example of the cases falling under this heading is Hassett v South Eastern Health Board151. The claimants were doctors in Ireland who sought an indemnity from their medical defence union in respect of sums for which they might be liable to their health boards. They brought a claim in Ireland. The issue turned on the defence union’s articles of association and the validity of its decisions in that context. The defence union said that the courts of the state where it was incorporated should have sole jurisdiction. The Court held that it could not be right to say that every case involving a decision by, for example, a company had to be brought in the state of that company’s seat because if that were right all claims against 149 C-294/92 [1994] QB 696. 150 C-115/88 [1990] IL Pr 105. 151 C-372/07 [2009] IL Pr 28.

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companies would have to be brought in that place. The exception to the general rule that a person be sued in the state of its domicile had to be construed narrowly. A  broad interpretation of the exclusive jurisdiction in relation to companies would defeat that principle. Thus it seems that it will only be cases which might be said to go to the internal aspect of corporate decision-making, and whether those decisions were correctly made having regard to the organs of the company, that fall within Article 24, rather than challenges which are concerned with the substance of the decision reached. This is shown by Berliner Verkehrsbetriebe v JP Morgan Chase Bank152. There a US bank agreed a swap transaction with a German public transport authority, BVG, providing public transport in Berlin. The bank sued in London on the swap contract on the basis of a choice of jurisdiction clause but BVG said that court should decline jurisdiction on the basis of Article 24. Meanwhile BVG sued in Germany asking for declarations that the decision to enter the swaps contract was ultra vires its powers. The European Court addressed the question whether a contention that a contract was not binding because the decision by the company was invalid according to its founding documents was one which fell within Article 24. The Court held that this was a special rule which should be strictly construed. The Court repeated the point in Hassett that if all disputes relating to the decisions of a company were to fall within Article 24 then all claims involving a company would be governed by that article. Where there was a contractual dispute, issues concerning matters such as the capacity to contract were ‘ancillary’. Those matters might have to be decided as part of the – wider – contractual dispute but the fact that such a point might be taken did not justify taking the whole case out of the jurisdiction of the court which was empowered to hear the contractual dispute. The Court’s final ruling was succinct and helpful: Article 24 could not be relied on in a case where a party said a contract could not be relied on because of a decision of its organs which led to the conclusion of the contract. The truth is, of course, that such a point could be relied on by way of defence to the contractual claim. But to say that because that point existed, therefore the court with jurisdiction should be that determined by Article 24 would be to re-characterise the dispute completely. It is only claims which fall within Article 24 that will be subject to its terms. A party cannot say that another claim which does not fall within the article should be treated as doing so because of the existence of a claim falling within Article 24. Thus in Koza Ltd v Akçil153, there were two claims. One was a claim that a notice convening a meeting of an English-incorporated company to consider the removal of directors was unlawful because it did not comply with s 303 of the Companies Act 2006. It was accepted that this claim concerned the constitution of the company and so fell to be heard in England under Article 24. But there was also a separate claim concerning the authority of those who had called the meeting. The High Court and Court of Appeal held that the claim concerning authority was so closely linked to the claim concerning the legality of the notice that both fell within Article 24. The Supreme Court disagreed. It held that Article 24 applied when there was ‘an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular member 152 C-144/10 [2011] 1 WLR 2087. 153 [2019] UKSC 40, [2019] 1 WLR 4830.

146

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state’. Where it applied, Article 24 ‘cuts across and takes priority over the other principles underlying the Recast Regulation’ including suing in the state of a defendant’s domicile154. The scope of Article  24 had to be highly predictable. Its scope was deliberately narrow and should not be expanded beyond its proper extent, as would be the case if one undertook an evaluative judgment about that with which the proceedings were principally concerned. Thus, it was not legitimate to treat an aspect of the case as being concerned with the company’s constitution if, taken alone, it was not. Nor could such a claim be so treated because it was advanced alongside another case which did fall within Article 24. Here there were distinct claims and so separate jurisdiction rules applied to each. 3.158 An example of a case falling on the other side of the line is Speed Investments v Formula One Holdings155. The issue in that case was the appointment of two directors by a party which was said to lack the power to make the appointment. The Court of Appeal held that Article 24 applied because the case was about the composition of the board of a company. In contrast to cases such as BVG, the issue of corporate power did not arise as a sub-issue in proceedings concerned with a different cause of action. The whole case was about the legality of the actions of a company having regard to its powers. 3.159 Another example is EON Czech Holding AG v Dedouch156, concerning a challenge to the consideration to be paid to minority shareholders who were to be removed following a compulsory transfer of shares. It was held that this did concern the validity of a decision of an organ of the company so as to fall within Article 24. Proceedings concerning the validity of entries in public registers 3.160 In relation to entries in public registers, jurisdiction is conferred on the courts of the Member State in which the register is kept. Thus in Re Hayward Dec’d157 it was held (obiter) that a challenge to the accuracy of the register of land in Minorca fell to be decided in Spain. Proceedings concerning patents, trade marks, etc 3.161 As to point (iv) in para 3.155, in essence in intellectual property matters, jurisdiction is conferred on the place where the patent, trade mark or design is deposited or registered. Proceedings concerning the enforcement of judgments 3.162 Where one is concerned with the enforcement of judgments, the court with jurisdiction is that in the state where the judgment has been or is to be enforced. 154 155 156 157

Ibid, at paras 24–25. [2004] EWCA Civ 1512, [2005] 1 WLR 1936. C-560/16 [2018] 4 WLR 94. [1997] Ch 45.

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Application in non-Member States 3.163 The focus of Article  24 is on the courts of EU  Member States, and it confers exclusive jurisdiction on such courts. But what of the case where, for example, the claim concerns land located in a third state or the validity of the organs of a company incorporated under the laws of a third state? It has been held that the provisions of Article 24 can be applied in favour of non-Member States by the application of the principle known as reflexive effect. This means that rules which on their face apply only in favour of the courts of Member States can be treated as applying for the benefit of non-member states. This principle was alluded to by the European Court in Coreck Maritime GmbH v Handelsveem BV158, a case about a choice of jurisdiction, and – by reference to that and other cases – applied by the Commercial Court in Ferrexpo AG v Gilson Investments Ltd159. That case concerned ownership of shares in a Ukrainian company. It was held that the issues in that case concerned the validity of certain corporate resolutions and so fell within the ambit of Article 24. That article had reflexive application – it could be applied in respect of non-EU parties – and on that basis the court had a discretion to stay a claim in favour of the courts of the Ukraine. 3.164 In Plaza BV v Law Debenture Trust Corpn plc160, Proudman J said that ‘reflexive application is a term of art in the field of conflicts of law, allowing the court to apply by analogy provisions of European law by treating nonmember states as if they were Member States’. That was said in the context of a choice of jurisdiction clause, but the principle could be equally applicable in an Article 24 case. Article 25: jurisdiction clauses 3.165 Putting to one side the specific provisions about jurisdiction clauses in cases involving consumer contracts and employment contracts (considered above), Article 25 provides that a court will have jurisdiction when the parties have agreed that the courts of a Member State should have jurisdiction. However, jurisdiction agreements may not oust the jurisdiction of the court which would have exclusive jurisdiction under Article 24. 3.166 In the event that the jurisdiction clause selects a court which is not the court of a contracting state, Article 25 does not in terms apply but it is for the court before which the jurisdiction clause arises to assess its validity by its own conflict of law rules. This was said in the Coreck Maritime case and appears to be an application of the reflexive effect principle referred to above. That effect may be given to a jurisdiction clause in favour of a non-EU state, not under Article 25 but under the court’s own conflict principles, was acknowledged in Catalyst Investment Group Ltd v Lewinsohn161. 158 C-387/98. 159 [2012] EWHC 721 (Comm). 160 [2015] EWHC 43 (Ch). 161 [2010] Ch 218 at para 91.

148

Jurisdiction over persons domiciled in EU Member States 3.169

3.167 The agreement for the purposes of Article 25 must be in writing or in a form which the parties have established between themselves or in a form which accords with a usage in a particular trade or commerce. As to the requirement for writing, the inclusion of a jurisdiction clause among the general conditions of sale printed in the back of a contract does not meet the requirement for agreement in writing unless the contract itself contains an express reference to those conditions: see Estasis Salotti di Colzani Aimo e Gianmario Colzani snc v Rüwa Polstereimaschinen GmbH162. Thus in Profit Investment Sim SpA v Ossi163, where a jurisdiction clause appeared in a prospectus published by a party, there would not be agreement in writing as to it unless the contract signed by the parties referred to the clause or the prospectus. 3.168 An agreement in a form established by the parties could include the failure of one party to react to a commercial letter sent by the other containing a jurisdiction clause, or the practice of a party of paying invoices which contained such a clause without objection, as long as this was an established practice in a particular field of commerce of which parties were or ought to be aware: see Mainschiffahrts-Genossenschaft EG v Les Gravieres Rhenanes SARL164. It is very common, of course, for all sorts of contracts to contain choice of jurisdiction clauses. Article  25 means that courts will give effect to those agreements: the court so chosen will have jurisdiction – exclusive jurisdiction unless the parties agree otherwise – save in the case where the agreement is null and void under the law of the chosen Member State. As explained at para 9.04 below, the case where a party seeks to sue another contrary to the terms of a jurisdiction clause provides the strongest basis for anti-suit relief. 3.169 As to what counts as an exclusive jurisdiction clause, the Court of Appeal in BAT Caribbean SA v PHP Tobacco Carib SARL165 held that: (i) what was required was an agreement which clearly and precisely demonstrated the parties’ consensus; (ii) it was such consensus in fact, rather than a legally binding agreement, which was key; (iii) the requirement of an agreement conferring jurisdiction was an independent EU law concept; and (iv) there could be a written agreement even if the agreement was not contained in one document. That case concerned a claim that correspondence passing between the parties contained an agreement as to jurisdiction but the Court held that there was nothing which clearly and precisely conferred jurisdiction on the English court. This case appears to accept that an exchange of correspondence could be sufficient for an 162 C-24/76 [1977] 1 CMLR 345 at para 9. 163 C-366/13 [2016] 1 WLR 3832. 164 [1997] QB 731. 165 [2017] EWCA Civ 1131 at para 28.

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agreement in writing, but on the facts there was a lack of clear consensus as to jurisdiction. 3.170 Terms may also be in writing if they are accepted by clicking a box on a website where those terms are also accessible in writing on the website: see El Majdoub v Cars on the Web.Deutschland GmbH166. They will also be in writing where a contract signed by the parties refers to general conditions which contain a choice of jurisdiction clause: see Höszig Kft v Alstom Power Thermal167. But where there was a verbal contract and the general terms that included the jurisdiction clause were mentioned only on invoices, this was held not to be in writing as required by Article 25. There might also be a question in such cases whether that form of reference to the jurisdiction agreement was in accordance with a practice established between the parties. 3.171 It is possible for the parties to choose more than one court to have jurisdiction, as in Meeth v Glacetal168, where it was held that a contract under which, if party A sued party B, the French courts would have jurisdiction and if party B sued party A the German courts would have jurisdiction, was valid. Complications may arise where there are several contracts between the parties which have different jurisdiction clauses. In Trust Risk Group SpA  v AmTrust Europe Ltd169 there were contractual arrangements between parties which included a ‘Framework Agreement’ that provided for arbitration in Milan and ‘Terms of Business Agreement’ which conferred jurisdiction on the English court. In order to decide which jurisdiction clause applied it was necessary to identify under which contract the dispute arose. There may also be a question whether one contract has superseded another. But that is a question of contractual construction which will turn on the Canada Trust question of whether there is a good arguable case. 3.172 Article 25 of the Brussels Recast Regulation provides that it applies to parties ‘regardless of their domicile’. Thus even if parties not domiciled in the EU choose the courts of a Member State, effect will have to be given to that choice. This is a change from the 2001 Brussels Regulation, which provided that the choice of jurisdiction clause applied only if one or more of the parties was domiciled in a Member State. This means that the scope of the Recast Regulation is materially wider than the previous iteration of the Regulation. It would mean that, for example, two US-domiciled parties who had chosen the jurisdiction of the courts of a Member State would fall within Article 25. One consequence of this is that a domestic court would not have discretion to depart from that choice. This issue is addressed at para 3.185. 3.173 Article 25 only applies where the court chosen is that of a Member State. Thus, for example, if EU-domiciled parties chose the jurisdiction of courts of a non-Member State, Article 25 would not in terms apply. The effect would be that 166 C-322/14 [2015] 1 WLR 3986. 167 C-222/15. 168 [1979] 1 CMLR 520. 169 [2015] EWCA Civ 437, [2015] 2 Lloyd’s Rep 154.

150

Jurisdiction over persons domiciled in EU Member States 3.175

domestic principles would apply. This would include the principle of reflexive effect – applying the provisions of the Regulation to non-Member States. In Plaza BV  v The Law Debenture Trust Corpn plc170, a deed of settlement contained a clause by which parties submitted to the courts of Western Australia. An English-domiciled defendant who was sued in England sought a stay of the English proceedings, relying on the Western Australian choice of jurisdiction clause. The defendant could not, because of Owusu v Jackson, rely on forum conveniens arguments to say that the claim should proceed in Western Australia and not England. Had the parties chosen a Member State as their jurisdiction, Article 25 would have meant that the court should stay the claim in favour of the chosen jurisdiction. It was argued that Article 25 should be given reflexive effect in favour of the parties’ choice of the courts of Western Australia. Rose J held that Owusu did not prevent the court giving reflexive effect to a choice of jurisdiction clause in favour of a country that was not a Member State. Article 25 was a mandatory exception to Article 4 and the same applied to the choice of the courts of a non-Member State. 3.174 In Bols Distilleries BV v Superior Yacht Services Ltd171, the Privy Council, by reference to various CJEU decisions, said that it had to be ‘clearly and precisely demonstrated’ that parties had agreed to a jurisdiction clause. This may be seen as an application of the rule common to all departures from the rule that persons be sued in the state of their domicile that such departures must be narrowly construed. The point was made that a jurisdiction clause in a standard form contract might be overlooked by a party. Therefore there had to be actual consent to the clause. From the point of view of an English contract lawyer, this is pretty radical stuff, suggesting, it appears, that if a party signs some standard form but cannot be shown to have consented to the particular clause then it may have no effect. In fact, the Bols case did not go that far, as there was a dispute whether any contract had been agreed at all. Moreover, the approach of the Privy Council could be seen to sidestep this problem because it applied the good arguable case test to considering whether the parties had agreed that clause. In the event, there was an insufficient case that there was a concluded contract covering all points at all. Thus there were not sufficient grounds for holding that there was any binding contract – including, but not limited to, a contract dealing with jurisdiction – because whilst some terms had been agreed, many fundamental matters remained to be resolved. 3.175 In Coys of Kensington Automobiles Ltd v Tiziana Pugliese172, another case concerning standard terms, Ramsey J  said that where a jurisdiction clause is included amongst general conditions the requirements of Article 25 will be met ‘only if the contract contains an express reference to those general conditions’. Note that this refers to the conditions, not the choice of jurisdiction clause. Indeed the judge said that there was no need for an express reference to the jurisdiction clause. Moreover, as long as there is such a reference, it does not matter that the 170 [2015] EWHC 43 (Ch). 171 [2006] UKPC 35, [2007] 1 WLR 12. 172 [2011] EWHC 655 (QB) at para 30.

151

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other party does not have a copy of the terms in his or her possession. This more detailed approach can allay the concerns of the English contract lawyer. 3.176 In El Majdoub v Cars on the Web.Deutschland GmbH173, an individual bought a car from a German vendor. The vendor’s terms and conditions, contained on its website, provided for the Belgian courts to have jurisdiction. The issue was whether the purchaser was bound by terms which he had to accept by clicking the relevant box on the website. It was held that the clicking of the box did constitute an agreement to those terms. 3.177 However, it has been held that a third party beneficiary of an insurance policy domiciled in a state other than that of the policyholder and insurer is not bound by a choice of jurisdiction clause in the absence of that party expressly subscribing to the clause: see Societe financiere et industrielle du Peloux v Axa Belgium174. 3.178 But where there is a contract containing a jurisdiction clause to which the party to the contract freely agreed, the person who is the successor to that party (for example an assignee under English law) would be bound by the clause. See Partenreederei M/S Tilly Russ v Haven & Vervoebedrijf Nova175, a case concerning the subsequent holder of a bill of lading issued to a shipper. It was held that as long as the holder of the bill of lading was regarded in domestic law as succeeding to the shipper’s rights, then the jurisdiction clause bound the successive holder of the bill. 3.179 In Aspen Underwriting v Credit Europe Bank NV176, an insurer insured a vessel under a policy with an English choice of jurisdiction clause. It then entered a settlement agreement with the insured (the owners and managers of the vessel) which involved making a payment for the loss of the vessel. The settlement agreement contained a similar choice of jurisdiction clause. The ultimate beneficiary of the settlement agreement was a bank which had financed the vessel and was assignee of the insurance policy. When it was discovered that the vessel had been deliberately sunk, the insurer sought to avoid the settlement agreement and brought an action against, amongst others, the bank in England. The insurers relied on the jurisdiction clause in the insurance policy. It was held that the bank was not bound by the jurisdiction clause. A  jurisdiction clause would only be effective where there was an actual consensus between the parties to the clause. A choice of jurisdiction clause in an insurance policy between an insurer and an insured did not bind a third party, even if that third party would be the ultimate beneficiary of the policy because the third party had not subscribed to that clause. As the bank was neither a party to the insurance contract nor an assignee of the contract (as opposed to having the right to receive the payment) it had not consented to the jurisdiction clause. 173 C-322/14 [2015] 1 WLR 3986. 174 C-112/03 [2006] QB 251. 175 [1985] QB 931. 176 [2020] UKSC 11, [2020] 2 WLR 919.

152

Jurisdiction over persons domiciled in EU Member States 3.182

3.180 There may be a question whether a particular dispute is covered by a choice of jurisdiction clause. That should be decided by applying the law governing the contract containing the clause. One interesting aspect of this rule is that it has been held that Article 25 cannot be overridden by national law. In the UK, for example, s 203 of the Employment Rights Act 1996 prohibits contracting out of the right to bring a claim before an employment tribunal (unless strict conditions are met in a compromise agreement). Perhaps surprisingly, the European Court held that such statutory provisions could not override Article 25. In Sanicentral GmbH  v Rene Collin177, an employee who lived in France and was employed by a German employer to work in Germany entered a contract which provided for the jurisdiction of the German courts. Having been dismissed, the employee sued in the French tribunal and the question arose whether it had jurisdiction. French law was to the effect that clauses excluding the jurisdiction of the French tribunal were of no effect. The Court held that choice of jurisdiction clauses were effective under Article 25 even if they would be void as a matter of national law. Whilst this might appear a surprising decision, it was cited in Weber v Universal Ogden178 as authority for the proposition that ‘national procedural laws are set aside in matters governed by the [Recast] Regulation’. Assuming it is correct, the principle remains valid. However, choice of jurisdiction in an employment case can now only be relied on if agreement is reached after the dispute has arisen179. Thus, there would be no incompatibility between national law of the type described and the Recast Regulation in relation to jurisdiction clauses in employment contracts. But there could still be a conflict in the case of jurisdiction clauses agreed after the dispute has arisen. Under s 203 such clauses could only be valid if they met the requirements of statutory settlement agreements. But would Article 23 mean that, as long as it was satisfied, other domestic provisions could not invalidate the clause? 3.181 There may be a question whether a party has agreed to the terms of a contract containing a jurisdiction clause at all. Logically, this question should be resolved by applying the putative governing law: the law which would govern if there were a contract. However, there may be this difficulty. If a contract is, for example, induced by misrepresentation, that might be analysed as a tort, in which case the tort choice of law rules should apply. Moreover, Article  25 provides that the jurisdiction clause does not have effect if the agreement containing the jurisdiction clause is null and void under the law of the chosen Member State. That would not be the putative governing law but the law of the chosen jurisdiction, which might have no connection with the contract. This may give rise to the question whether the law of the chosen Member State includes its conflict of law rules. 3.182 However, in Benincasa v DentalkitSrl180, an individual who had entered a contract sought to have the contract declared void and on that basis to avoid a contractual choice of jurisdiction clause. In that case, the Court drew a distinction 177 [1980] 2 CMLR 164. 178 C 37/00 [2002] QB 1189. 179 See Brussels Recast Regulation, Article 21. 180 C-269/95.

153

3.183  Jurisdiction

between a jurisdiction clause and ‘the substantive provisions of the main contract’. It held that the substantive provisions were regulated by the law governing the contract but that the jurisdiction clause was governed by the provisions of the Brussels Regulation. The court chosen by a jurisdiction clause would have to decide whether it had jurisdiction ‘without having to consider the substance of the case’. It was said that legal certainty would be frustrated if a party could say that the whole contract fell to be avoided on grounds derived from the applicable substantive law. 3.183 This leads to the odd conclusion that if what appears to be a contract has a jurisdiction clause, effect is to be given to it, even if one party says there was no contract. This is difficult to reconcile with the fact that Article 25 uses contractual concepts – ‘if the parties have agreed’. Surely one must first ascertain – and this is a contractual question – whether there was such agreement. 3.184 A possible resolution of this is that the present version of Article 25 now specifically provides that the jurisdiction clause has no effect if the agreement is null and void. That provision did not appear in the Brussels Convention, which was the provision in force at the time of Benincasa. Hence, that decision may have been superseded by the Brussels Recast Regulation. 3.185 Where Article  25 applies, the court does not (in contrast to the common law position) have discretion to allow proceedings in a place other than that selected by the choice of jurisdiction clause, as long as that clause is valid. Having said that, the common law would rarely fail to give effect to a jurisdiction clause, so this may be a difference that is more apparent than real. But there are cases where choice of jurisdiction clauses have been ignored; Donohue v Armco Inc181, considered in detail at para  9.04 dealing with anti-suit injunctions, is a good example. 3.186 The issue of lis alibi pendens – the situation in which there are proceedings in two courts simultaneously – is considered separately in Chapter 5. But it can at this stage be noted that, under Article 31(2), where there are proceedings before the court selected by a jurisdiction agreement, the courts of any other state shall stay any proceedings before it until the chosen court decides it does not have jurisdiction. This shows the supremacy of a choice of jurisdiction clause. Article 31(2) is new to the Brussels Recast Regulation. 3.187 Note, however, that even where there is a choice of jurisdiction clause, a party will lose the benefit of it if that party submits to the jurisdiction of a court other than that chosen by the jurisdiction clause. If a party starts a claim in a court other than that agreed and the defendant submits, that court will have jurisdiction despite the jurisdiction clause: see Taser International Inc v SC Gate 4 Business SRL182. Therefore, those who wish to rely on a jurisdiction clause have to act promptly and must not take a step in the litigation for fear of submitting. 181 [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425. 182 C-175/15 [2016] QB 887.

154

Jurisdiction over persons domiciled in EU Member States 3.190

3.188 The focus of Article 25 is the case where there is a jurisdiction clause in favour of the courts of an EU Member State. But what happens when the chosen courts are of a non-Member State? It has been held that certain articles of the Regulation are capable of ‘reflexive effect’, meaning that its principles can be applied in favour of the courts of a non-Member State even though the rules are expressed as referring only to Member States. The European Court had, perhaps with not the greatest clarity, hinted that courts of Member States could give effect to choice of jurisdiction clauses in favour of third states in Coreck Maritime v Handelsveem BV183, which said that a court had to assess the validity of a choice of jurisdiction clause (in favour of a non-Member State) in accordance with its own conflict of law rules184. In Ferrexpo AG v Gilson Investments Ltd185, it was concluded that Article  24 had reflexive effect so that where, for example, the issue concerned the affairs of a company incorporated under the laws of a nonMember State, and the accuracy of a public register in a non-Member State, that issue should be resolved in that state. It was held that there was a discretion to stay proceedings in favour of the third state in such circumstances. By the application of the same principles, the court has power, by the reflexive application of Article 25, to stay proceedings in favour of a third state where a jurisdiction clause selects that state as the place in which disputes should be determined. 3.189 Reflexive effect was given to a choice of jurisdiction clause – in that case in favour of the courts of Western Australia – in Plaza BV v Law Debenture Trust Corpn plc186. Proudman J described reflexive effect as ‘a term of art in the field of conflicts of law, allowing the court to apply by analogy provisions of European law by treating non-member states as if they were member states’. Proudman J upheld the choice of jurisdiction in favour of Western Australia, holding that the parties’ autonomy to choose the forum in which to resolve their disputes was an important one which existed in European law. 3.190 The final point to make about jurisdiction clauses is that there may be reasons of public policy not to give effect to them. Whilst Article 25 reflects the importance of jurisdiction clauses and domestic law reflects the importance of pacta sunt servanda – holding people to their word – there may be cases where public policy overrides the parties’ agreement. Good examples are the provisions relating to consumer and employment contracts where jurisdiction clauses are of no effect unless agreed after the dispute arises. On that basis, public policy as now reflected in the Brussels Recast Regulation means that jurisdiction clauses agreed beforehand will not be enforced: see Samengo-Turner v J&H Marsh & McLennan187 and Petter v EMC Europe Ltd188. It may be best to regard these cases as applying principles designed specifically for the employment and consumer contracts sphere and thus as a decision derived from public policy to depart from the Article  25 rules in some cases. What this does mean is that where, for a 183 C-387/98. 184 Ibid, at para 19. 185 [2012] EWHC 721 (Comm), [2012] 1 Lloyd’s Rep 588. 186 [2015] EWHC 43 (Ch). 187 [2007] EWCA Civ 723, [2008] ICR 18. 188 [2015] EWCA Civ 828, [2015] IRLR 847.

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3.191  Jurisdiction

particular type of case, there are specific rules governing jurisdiction clauses, those rules will supplant Article 25.

The Hague Convention on Choice of Court Agreements 3.191 Before dealing with the common law or domestic law rules which apply to persons not domiciled in EU Member States (and which may, depending on the outcome of EU departure negotiations, apply more widely) it is appropriate to refer to a more recent international agreement, the Hague Convention on Choice of Court Agreements 2005. That is now in force in the UK (as of ‘exit day’ – 31 January 2020)189. 3.192 The Convention is of limited application, as it only applies where the parties have made a choice of exclusive court. That may be thought to add little to the position under the common law (or to Brussels Recast Regulation). It only applies to international agreements – ie when all the parties are not in the same state. An agreement on a choice of court must be in writing or by some other accessible means of communication. The Convention applies to civil or commercial matters but not to, amongst others, agreements to which a consumer is party, cases relating to employment contracts, personal injury claims, cases concerning damage to tangible property or rights in rem over immovable property. The EU has made its own declaration excluding some insurance contracts from the scope of the Convention so as to protect policyholders. 3.193 The chosen court has jurisdiction unless the agreement is null and void under the law of the state chosen to have jurisdiction – that law, it appears, rather than the law chosen to govern the whole contract. It is expressly provided that the chosen court must not decline jurisdiction in favour of some other state. Other courts are required to dismiss or suspend claims before them unless the agreement containing the choice of court is null and void under the chosen law, or giving effect to the choice would lead to manifest injustice or be manifestly contrary to the public policy of the state before which the claim has been brought, or for exceptional reasons the agreement cannot reasonably be performed. 3.194 It is expressly provided that interim measures are not governed by the Convention. Hence, if the parties have chosen the courts of one country, they could resort to another country for interim protection.

JURISDICTION UNDER DOMESTIC LAW: PERSONS NOT DOMICILED IN MEMBER STATES Overview 3.195 The text that follows deals with defendants who are not domiciled in EU Member States. (Strictly speaking, what follows will also apply to defendants 189 See SI 2018/1124.

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Jurisdiction under domestic law: persons not domiciled in Member States 3.200

domiciled in such states where the subject matter of the claim falls outside the Brussels Regulation, not being a civil and commercial matter.) 3.196 The Brussels Regulation has no application to such defendants, save in respect of cases involving exclusive jurisdiction (Article  24) and cases where the defendant enters an appearance (Article  26) or where the parties have chosen a Member State as a jurisdiction to which they have agreed to submit their disputes (Article 25) and also employment cases, where employees can sue employers domiciled abroad on the basis of the place where they habitually work, consumers who may sue non-domiciled parties in the state of their domicile and insurance, consumer and employment claims concerning branches, agencies or other establishments in the EU of entities which are domiciled outside the EU and where the claim arises from the operation of the branch etc. 3.197 Outside those cases, however, one is dealing with a different set of rules and, whilst there may be some similarities, it is to that different group of rules, mainly derived from the Civil Procedure Rules but importantly supplemented by common law principles, that one looks in order to decide whether there is jurisdiction over non-EU domiciled defendants.

When will the English court have jurisdiction? 3.198 There are essentially three bases on which the English court may have jurisdiction: (i) by the very simple expedient of serving a claim form on the defendant in England who is present in the jurisdiction and so able to be served; (ii) by the party’s submission to the jurisdiction; and (iii) where a claimant is given permission to serve the claim out of the jurisdiction. Service in the jurisdiction 3.199 Under English rules, the mere fact of presence in England suffices, even if that was only temporary: see, for example, HRH Maharanee Seethadevi Gaekwar of Baroda v Wildenstein190, where a writ was served on a French defendant at the Ascot races. By reason of being in England, the prospective defendant could be served and that by itself was enough to confer jurisdiction on the English court. The presence of an individual is easy enough to follow: M Wildenstein’s presence at Ascot was enough, for example, even if, as Edmund Davies LJ observed, being served whilst there will have ruined his day at the races. 3.200 Service may be effected by posting a claim form to a person’s address. There is valid service even if the person is temporarily absent abroad at the time 190 [1972] 2 QB 283 at 291–292, 294.

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3.201  Jurisdiction

of service: City & Country Properties Ltd v Kamali191. In the case of partnerships, cases can be brought by serving a partner present in the jurisdiction: see Worcester City and County Banking Co v Firbank, Pauling & Co192. 3.201 The position for companies is a little more complicated. If the company is incorporated in England, it can be served by leaving a claim form at or sending it by post to its registered office193: the existence of that office counts as presence in England. (Service may be in person, by taking the claim form to that office, or by post194.) 3.202 As to foreign companies, s  1046 of the Companies Act 2006 permits regulations to be made requiring overseas companies to provide certain particulars. The Overseas Companies Regulations 2009195 apply to overseas companies which open a UK establishment. An establishment is a branch, or a place of business which is not a branch. Within one month of opening the establishment, the company must deliver a return which, amongst other things, contains details of the principal place of business of the establishment and, by regulation 7(1) (e), the name and service address of every person authorised to accept service, or a statement that there is no such person. This means that the company may be served through the person so identified but if there is no such person, the company may be served at any of its places of business in the UK196. 3.203 Where an overseas company has a branch in England, proceedings served on it must be at least in part connected with the business of the branch in England: see Saab v Saudi American Bank197. But companies may only be brought before the English court if they have a place of business in England: see The Theodohos198. Further, companies must be carrying on business in England in order to be served in the jurisdiction. If the company does not, it cannot be served by leaving a claim form with a person in a senior position: see SSL International plc v TTK LIG Ltd199. It is not enough that a company engages a third party to act on its behalf within the jurisdiction, unless that third party has power to act as its agent, in the sense that the agent has power to carry on business on behalf of the company and not merely, for example, to pass on orders. The point is that the company can be here via an agent but only where the agent conducts its business: see Okura & Co Ltd v Forsbacka Jernverks Aktiebolag200. It is possible to serve a company by serving one of its directors. However, as indicated above, that is subject to the rule that such service will not be effective if the company does not carry on business within the jurisdiction: see SSL International.

191 [2006] EWCA Civ 1879, [2007] 1 WLR 1219. 192 [1894] 1 QB 784. 193 Companies Act 2006, s 1139. 194 CPR 6.3(1). 195 SI 2009/1801. 196 Companies Act 2006, s 1139(2)(b). 197 [1999] 1 WLR 1861. 198 [1977] 2 Lloyd’s Rep 428. 199 [2011] EWCA Civ 1170, [2012] 1 WLR 1842. 200 [1914] 1 KB 715.

158

Jurisdiction under domestic law: persons not domiciled in Member States 3.207

3.204 It is obvious that the potentially very broad basis for the English court to claim jurisdiction relying only on presence in England can lead to cases being brought in the UK which have little or no connection with the country. For that reason, the court has a power to stay the proceedings, in particular, on the socalled forum non conveniens ground. This is dealt with in Chapter  4 on challenges to jurisdiction. Submission to the jurisdiction 3.205 The second basis on which the English court may have jurisdiction is if the defendant submits to it – if, in other words, by its actions the defendant consents to the court having jurisdiction (even if it might earlier have taken some objection). 3.206 The court will have jurisdiction where a party voluntarily submits in the sense of taking part in a claim. That will be so even if, had the point been argued, the court would not have had jurisdiction for the claim. In that sense, submission trumps everything. It is a reflection of party autonomy – if someone agrees that the court may hear a claim, that ends the matter. That is the case even with jurisdiction clauses in favour of the courts of other countries. If a person has entered a contract which provides that disputes will be heard in state A but the other party sues that person in state B, there could be a challenge to jurisdiction. However, if the person sued instead participates in the claim in state B, then the court in state B has jurisdiction. 3.207 It is submission in the sense of participating in the substantive claim that counts. A party who contests jurisdiction does not submit201: see Williams & Glyn’s Bank plc v Astro Dinamico Compania Naviera SA202. But the defendant must be clear that it is challenging jurisdiction and do so in accordance with the timetable laid down in the rules: failure to act promptly will lead to the conclusion that one has submitted. A defendant who does not clearly challenge jurisdiction in time will be deemed to have submitted, and in truth it is all too easy for a defendant who does not remain alert to do so. It is likewise easy to submit by doing too much. Thus, a defendant who serves a defence or, for example, applies to strike out the claim, engages with the merits and will be held to have submitted. However when a defendant has applied under CPR Part 11 to challenge jurisdiction or the time for making such an application has not expired, any conduct said to amount to a submission must be ‘wholly unequivocal’, meaning that the only explanation for the conduct is an intention that the claim be tried in the English court: see SMAY Investments v Sachdev203. The test for determining whether a person has submitted is objective: how would a well-informed bystander have regarded the defendant’s actions: see Global Multimedia International v ARA Media204. Thus an overt statement that one is challenging jurisdiction – preferably not diluted by 201 202 203 204

CPR 11(1), (3). [1984] 1 WLR 438. [2003] 1 WLR 1973. [2006] EWHC 3612 (Ch), [2007] 1 All ER (Comm) 1160 at paras 27–29.

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3.208  Jurisdiction

other more equivocal conduct by which a party engages with the merits – is often the best course. 3.208 It is important to realise, however, that the party must be submitting to the trial of the action taking place in the English court. The SMAY case says that a party who appears to challenge an ancillary matter such as a freezing order does not, by that conduct, submit to the trial taking place in the English court. However, a defendant in such a case must confine the argument to challenging the relief and not get dragged into agreeing matters that are relevant to the conduct of the trial. 3.209 A defendant who serves an acknowledgement of service which does not contest jurisdiction but indicates an intention to resist the claim may be treated as having submitted, although that may not itself be sufficient: see Global Multimedia205. Indeed, a defendant who fails to make an application challenging the court’s jurisdiction within 14 days of filing an acknowledgement of service (28 days in the Commercial Court) is deemed to submit206. Taking steps such as serving a defence or seeking to strike out the claim would amount to submission. In this jurisdiction (it may be different elsewhere) defendants are best advised solely to challenge jurisdiction and not to engage with the merits of the case. 3.210 A party may authorise a solicitor to accept service and that act is capable, in the absence of anything else, of amounting to submission. However, the acceptance of service by the solicitor ought not to be determinative because, having been served, a party may contest jurisdiction. So, for example, in Sphere Drake Insurance plc v Gunes Sigorta Anonim Sirketi207, solicitors said they would accept service on behalf of a client but reserving the client’s right to challenge jurisdiction. The claim was duly served on the solicitors who did accept service. Because they had said that their agreement to accept service was subject to their client’s right to challenge jurisdiction, it followed that the fact that the solicitors had been served did not amount to a submission to the court. But the court stressed that it needed to be made clear that acceptance of service was subject to that caveat. Hence solicitors who agree to accept service would be well advised to say that in doing so they reserve the right to challenge jurisdiction. That case also reflects the broader principle that service may be effective where it takes place in accordance with an agreement between the parties. The example was given of a person agreeing that proceedings could be served on a spouse, perhaps if the prospective defendant was ill. But where, as in that case, solicitors agreed to accept service but expressly said that their client’s right to contest jurisdiction was reserved, it could not be regarded as a submission. Insofar as service on the solicitors was by agreement between the parties, it was a term of that agreement that the defendant reserved the right to challenge jurisdiction.

205 At para 28(ii) (although in that case the defendant ticked the box to indicate an intention to contest the claim but not that challenging jurisdiction – para 18). 206 CPR 11 (CPR 58.7 in the Commercial Court). 207 [1988] 1 Lloyd’s Rep 139.

160

Jurisdiction under domestic law: persons not domiciled in Member States 3.214

3.211 One advantage identified in the course adopted in that case was the potential for saving time and costs if, instead of a claimant making an application to serve out of the jurisdiction, the claimant sought to agree with the defendant that it would accept service. If it did so unconditionally, there would be no need to make the application to serve out but if it reserved the right to challenge then the jurisdiction arguments would be held only if it was necessary to do so. 3.212 There is, of course, a different type of submission where a party has agreed that a certain court should have jurisdiction by way of a contractual choice of jurisdiction clause, but the legal basis for jurisdiction in such cases is different: pacta sunt servanda – holding people to their word, rather than relying on an act done in response to a claim – which amounts to an agreement in respect of that claim that the court before which it was commenced has jurisdiction to determine it. As will be seen, the existence of a jurisdiction clause provides a basis on which a party may serve out of the jurisdiction. Permission to serve the claim out of the jurisdiction 3.213 The third basis on which a person may be brought before the English court is if the claimant is able to serve the claim out of the jurisdiction on the defendant. There are two bases for doing so, which are contained in CPR Part 6. Where the permission of the court is not required 3.214 CPR 6.33 covers the case where permission from the court is not required. This rule applies where the court has jurisdiction under the Brussels Regulation and other international conventions, as long as there are no other proceedings between the same parties concerning the same claim in another EU state. This rule will apply, therefore, where there is a defendant domiciled in England or someone else who, under the Brussels Regulation, is amenable to the jurisdiction of the English court, even if that person is not physically present in England so as to able to be served here or has not submitted to the jurisdiction. This rule includes important cases such as where the defendant is not a consumer but is party to a consumer contract, where the defendant is an employer, and where there is a jurisdiction clause conferring jurisdiction on the English court. A very important provision, which avoids the need in employment cases to rely on the gateways set out in Practice Direction 6B, is CPR 6.33(2)(b)(iii), which provides that a claimant may serve out if no proceedings between the parties are pending in the courts of another Member State and the defendant is ‘an employer and party to a contract of employment within Article  20 of the Judgments Regulation’. Permission is not required to serve out in such cases. This is plainly a very wide power conferring the ability to serve out of the jurisdiction. Another important rule is CPR 6.33(2)(b)(ii), which applies where the defendant is not a consumer but is party to a consumer contract under Article  17 of the Brussels Recast Regulation. Again, permission is not required.

161

3.215  Jurisdiction

3.215 CPR 6.34 requires a claimant when serving a claim form to file with it a notice containing a statement of the grounds on which the claimant contends to be able to serve out of the jurisdiction and to serve that with the claim form. Where the permission of the court is required 3.216 The second and more complex route to service out is that where the permission of the court is required208. The grounds are first set out, and then developed to explore how they are to be applied, both in terms of the components of the grounds to serve out and the more general tests to be applied in deciding whether permission should be granted. 3.217 There are in general three steps to be followed before service out will be permitted: (i) first, the claimant must show that there is a serious issue to be tried on the merits: see Seaconsar Far East Bank Ltd v Bank Markazi Iran209. This means that the claim would have to be able to defeat an application for summary judgment as having a real but not fanciful prospect of success on the substance of the case: see Elek v Bar Tur210; (ii) second, the case must be one in which service out may be ordered – it must be shown to the requisite standard (see para 3.225) to fall within the rules which define when permission to serve out may be granted; (iii) third, there is the broader question whether it is appropriate to allow service out – whether the case should be heard in England. This is often referred to as (or as including) the forum conveniens test. 3.218 The need to satisfy these three tests is shown by AK Investments CJSC v Kyrgyz Mobile Tel Ltd211. The tests must all be satisfied. A  party cannot, for example, make up for weakness in the merits of the case by showing a strong case that England is the appropriate forum: see Seaconsar212. 3.219 Assuming there is an arguable case on the merits, one can take the two remaining steps – does the claim fall within a jurisdictional gateway and is England the appropriate forum – separately. In the text below the scope of the rules which permit service out are first identified and then explained. The issue of the exercise of discretion, including forum conveniens, is dealt with at para 3.267. 3.220 But before getting into the rules, there is one point that may be of practical value. It is possible to come to an agreement with a defendant that the defendant will accept service and thereafter decide whether to challenge jurisdiction. This 208 209 210 211 212

162

CPR 6.37 and PD 6B. [1994] 1 AC 438 at 453-457. [2013] EWCA Civ 1774, para 4. [2011] UKPC 7, [2012] 1 WLR 1804 at para 71. [1994] 1 AC 438 at 456.

Jurisdiction under domestic law: persons not domiciled in Member States 3.222

can avoid the need for the cost of making an application to serve out. It may be, if there is a clear case for service out, that the defendant will not challenge jurisdiction, thus side-stepping the need for an application under CPR 6.37. This course was approved in Sphere Drake Ins v Gunes Sigorta213. In that case, the defendants’ solicitors agreed to accept service but reserved their right to challenge jurisdiction. If they did not make that challenge, their acceptance of service would have been a submission. If they did, the issues arising as to service out would be argued by the parties. But in the latter event the claimant would not have needed to make a prior application for service out. So this may be a practical expedient which in some cases can reduce costs. The rules permitting service out 3.221 It must be determined whether the case is of a type in which service out may be permitted at all. That depends on whether the case falls within CPR Part 6 and, in particular, Practice Direction 6B. 3.222 The grounds contained in CPR PD 6B are as follows: General grounds (1) A  claim is made for a remedy against a person domiciled within the jurisdiction. (2)

A claim is made for an injunction(GL) ordering the defendant to do or refrain from doing an act within the jurisdiction.

(3)

A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and – (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

(4)

A claim is an additional claim under Part 20 and the person to be served is a necessary or proper party to the claim or additional claim.

(4A) A  claim is made against the defendant in reliance on one or more of paragraphs (2), (6) to (16), (19) or (21) and a further claim is made against the same defendant which arises out of the same or closely connected facts. Claims for interim remedies (5)

A claim is made for an interim remedy under section 25(1) of the Civil Jurisdiction and Judgments Act 1982.

Claims in relation to contracts (6)

A claim is made in respect of a contract where the contract – (a) was made within the jurisdiction;

213 [1988] 1 Lloyd’s Rep 139.

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(b) was made by or through an agent trading or residing within the jurisdiction; (c) is governed by English law; or (d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract. (7)

A claim is made in respect of a breach of contract committed within the jurisdiction.

(8) A  claim is made for a declaration that no contract exists where, if the contract was found to exist, it would comply with the conditions set out in paragraph (6). Claims in tort (9)

A claim is made in tort where – (a) damage was sustained, or will be sustained, within the jurisdiction; or (b) damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.

Enforcement (10) A claim is made to enforce any judgment or arbitral award. Claims about property within the jurisdiction (11) The subject matter of the claim relates wholly or principally to property within the jurisdiction, provided that nothing under this paragraph shall render justiciable the title to or the right to possession of immovable property outside England and Wales. Claims about trusts etc … (16) A claim in made for restitution where (a) the defendant’s alleged liability arises out of acts committed within the jurisdiction; or (b) the enrichment is obtained within the jurisdiction; or (c) the claim is governed by the law of England and Wales. … Claims for breach of confidence or misuse of private information (21) A claim is made for breach of confidence or misuse of private information where – (a) detriment was suffered, or will be suffered, within the jurisdiction; or (b) detriment which has been, or will be, suffered results from an act committed, or likely to be committed, within the jurisdiction.

The above bases for jurisdiction are often referred to as ‘jurisdictional gateways’. 164

Jurisdiction under domestic law: persons not domiciled in Member States 3.225

3.223 Under CPR 6.37, a claimant seeking permission to serve out has to: (i) identify the ground within PD 6B on which the claimant relies; (ii) state that it believes the claim has a reasonable prospect of success; (iii) provide the defendant’s address or where the defendant is likely to be found; and (iv) state the grounds on which it is reasonable for the court to try the claim. NML Capital Ltd v Argentina214 holds that where a party wishes to change the basis on which it claims the right to serve out, it should be allowed to do so rather than having to make a fresh application215. (This might arise, for example, on an application to set aside an order permitting service out to enable a person who had applied on one ground to add another.) Interpretation of the jurisdictional gateways 3.224 The criteria for each of the potential jurisdictional gateways are dealt with below. They set out the circumstances in which the court has the power to allow service out. It is important to first make the point, developed below, that these headings provide bases on which the court may exercise a discretion to allow service out. If none of these requirements is satisfied, the court will have no basis to exercise discretion and permission to serve out (where required) will not be granted. Where one of the bases for jurisdiction exists, the court has power to exercise discretion. The court may or may not do so, depending whether it considers that it is appropriate for the case to be heard in England. The matters to be taken into account are considered at para 3.267. 3.225 The starting point is to note that in deciding whether the case falls within any of the jurisdictional gateways set out above such that service out is permissible, the court will consider whether there is a good arguable case that the claim falls under any such heading. In some cases it is necessary to rely on what has been described as a jurisdictional fact, for example, that a contract was made in England or breached in England or that damage due to a tort was sustained in England. It does not have to be established on the balance of probabilities that the case so falls; that the jurisdictional facts are shown to exist: see Canada Trust Co v Stolzenberg216. It is sufficient that there is a good arguable case that the claim falls into a gateway. In Canada Trust it was said that the good arguable case test reflected that one side had a much better argument on the material available (although, as explained below, the word ‘much’ is no longer regarded as being part of the test: so it is the better argument on the – inevitably partial – material available). The test means that the claimant must provide a plausible evidential basis for the application of the relevant jurisdictional gateway. If there is an issue of fact about that, the court must take a view about it, so far as it can, based on 214 [2011] UKSC 31, [2011] 2 AC 495. 215 Ibid, especially para 75. 216 [1998] 1 WLR 547 at 553, 558.

165

3.226  Jurisdiction

the available material but recognising the limits of its ability to do so. There must be a plausible, even if contested, evidential basis for saying that the case falls into a gateway. Thus, what is needed is the good arguable case that the claim falls within one or more of the jurisdictional gateways: Brownlie v Four Seasons Holdings Inc217. That was then repeated in Goldman Sachs International v Novo Banco SA218. 3.226 This apparently simple – or simply expressed – test has led to a substantial volume of cases, including at the highest level, to explain what it means and how it is to be applied. One of the problems is that a decision as to jurisdiction – taken at an early stage and on an interim basis – will not be re-ventilated at trial (this was the language of Green LJ in Kaefer Aislamientos at para 85). Once a claimant has permission to serve out, that is it; that decision will not be re-considered even if it later turns out that the jurisdictional facts on which service out was permitted were not present. The need for the claimant to have the better case to justify that the claim falls within the jurisdictional gateway may also reflect the traditional view that service out on an overseas defendant is an exorbitant – or excessive – jurisdiction, ie  is an assertion of sovereign power over a person: see Amin Rasheed Shipping Corpn v Kuwait Insurance Co219. More recent cases have cast some doubt on this idea: see Abela v Baardarani220, but as indicated earlier, the language is still used. In Abela Lord Sumption said that litigation between residents of different states is a routine incident of modern commercial life. Perhaps that is so, but there will be plenty of cases outside the field of international commerce where for a person in one state to be called before the courts of another (not having agreed to submit to the jurisdiction of that court) will be a substantial and intrusive step. It may be because of that that the service out test requires the claimant to have the better of the argument that the claim falls within one of the gateways. However, in Kaefer Aislamientos SA de cv v AMS Drilling Mexico SA de CV221, Green LJ said that the justification was the efficiency of the conduct of litigation. 3.227 Most recently the Court of Appeal provided guidance in the Kaefer Aislamientos case to try to deal with various ‘glosses, reformulations and explications’ which had built up. In doing so, the Court applied two Supreme Court decisions, Brownlie v Four Seasons Holdings Inc and Goldman Sachs International v Novo Banco222. The issue was whether the test to be applied was absolute: did the case meet a standard of arguability, or relative – was one party’s argument stronger than the other’s, so that even if objectively arguable, it was still weaker than the other side’s. The Court of Appeal observed that, following in particular Goldman Sachs, there was a three-limb test: has the claimant applied a plausible evidential basis for saying that the jurisdictional gateway applies; that if there was an issue of fact, the court had to take such view as it could at 217 218 219 220 221 222

166

[2017] UKSC 80, [2018] 1 WLR 192 at paras 4–7. [2018] UKSC 34, [2018] 1 WLR 3683 at para 9. [1984] AC 50 at 65. [2013] UKSC 44, [2013] 1 WLR 2043. [2019] EWCA Civ 10, [2019] 1 WLR 3514. [2017] UKSC 80, [2018] 1 WLR 192 and [2018] UKSC 34, [2018] 1 WLR 3683 respectively.

Jurisdiction under domestic law: persons not domiciled in Member States 3.229

the interlocutory stage; and that the limits of the material available at that stage meant that there was a good arguable case for the application of the gateway if there was a plausible, albeit contested, basis for it. 3.228 The Court of Appeal said that the first limb imported a relative test – that the claimant showed that it had the better argument (‘much’ the better argument was rejected); the question was who had the relatively better argument. The burden of proving that the case falls within the jurisdictional gateway is on the claimant but that burden is not to prove the existence of the jurisdictional fact on the balance of probabilities. The claimant must prove there is an arguable case that such facts exist and that case must be better than its opponent’s. The second limb recognised that judges at the interim stage would not always be able to come to a concluded view. The judge was to use ‘judicial common sense and pragmatism’. The third limb recognises a relative test but covers the case when the judge cannot say who has the better argument. Green LJ said that this limb moves to some extent away from a relative test and applies a test of good arguable case and plausibility of evidence. Flowchart 3.229 Before exploring the jurisdictional gateways in greater detail, the following flowchart provides a more visual guide to jurisdiction under domestic law.

167

3.229  Jurisdiction

Yes

Is the defendant domiciled in a Brussels Regulations Member State?

Brussels Regulations apply if the case is civil or commercial

No

domestic provisions apply

If the defendant is domiciled in a Member State, is the case civil or commercial? Yes – Brussels Regulations apply

No– domestic law applies

Is the defendant present in the jurisdiction? Yes – if the person can be served here, the English court will have jurisdiction

No – consider other rules

Has the defendant submitted to the jurisdiction?

Yes – the English court has jurisdiction

No – assuming no application to serve out has been made, the court will not have jurisdiction

Can the claimant serve the defendant out of the jurisdiction?

Yes – if (a) the claimant has an arguable case on the merits, (b) the claimant has a good arguable case – the better case on the available material – for saying that the claim falls within one of the jurisdictional gateways (set out below) and (c) England is the appropriate forum – forum conveniens. Does the claim fall within one of the jurisdictional gateways: remedy against a person domiciled in the jurisdiction; injunction to restrain action in the jurisdiction; the party is a ‘necessary or proper party’ to another claim or to a Part 20 claim; claim under the CJJA, s 25; claim in relation to a contract made within or through an agent in England or governed by English law or with an English jurisdiction clause or for a declaration that no contract exists which, if it did, would meet those tests or for a breach of contract in England; claim in tort where the tortious act was done or damage sustained in England; enforcement of a judgment or arbitral award; claim relating to property within England; claim for restitution based on acts done or enrichment obtained in England or where English law governs; claims for breach of confidence or misuse of private information where the act was done or detriment suffered within the jurisdiction.

168

Jurisdiction under domestic law: persons not domiciled in Member States 3.234

The jurisdictional gateways in detail 3.230 A  party who applies for service out will identify the gateway which is believed to apply to the case. It is possible that more than one gateway will apply and, if so, each can be relied upon. It was at one stage thought that if permission to serve was granted on one basis it could not subsequently (for example at a hearing when service out is challenged) be upheld on another basis. But, as indicated above, that view has lately been regarded as too strict, with the consequence that permission to serve out granted on one basis could later be upheld on another ground (without the need to apply again): see NML  Capital Ltd v Republic of Argentina223. Domicile in England 3.231 In many cases jurisdiction over those domiciled in England would be covered by the Brussels Regulation and permission would not be required. This provision is presumably intended to apply to cases which, because of their nature, are not covered by the Brussels Regulation such as those non-civil and commercial matters set out in Article 2 (eg bankruptcy and wills and arbitration claims). Claims for an injunction 3.232 This covers the case where an injunction is sought in relation to order the defendant to do or refrain from doing an act within the jurisdiction. The court will be astute to the case where the claim is about something else and an injunction application is added in order to confer jurisdiction. There may also be problems if a defendant is threatening to do things in several places, and in particular if the bulk of the threatened activity is not in England: cf GAF Corpn v Amchem Products Inc224. 3.233 This provision entitles a party who claims an injunction by way of substantive relief in the jurisdiction to serve out. However, this does not extend to relief such as a freezing order, which was not substantive relief but merely a means to protect a claimant who might recover in another action: see Mercedes Benz AG v Leiduck225. (But such a claimant might rely on the gateway based on interim relief: see para 3.240.) Necessary or proper party 3.234 This covers the case where one defendant has already been identified on whom a claim form has been or will be served – sometimes referred to as the anchor defendant – and the claimant seeks to bring into the proceedings another defendant located outside the jurisdiction who is a ‘necessary or proper party’ 223 [2011] UKSC 31, [2011] 3 WLR 273. 224 [1975] 1 Lloyd’s Rep 601, followed in Innovia Films Ltd v Frito-Lay North America Inc [2012] EWHC 790 (Pat), [2012] RPC 24. 225 [1996] AC 284.

169

3.235  Jurisdiction

to the claim against the anchor defendant. (The anchor defendant will normally be someone present in the jurisdiction who can, for that reason, be sued here.) This has been described as an anomalous head because it is not founded on any territorial connection: Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd226. A party will be a proper party if the claims against the anchor and overseas defendants involve one investigation, or if the claims against the two are ‘closely bound up’ or involve a ‘common thread’. One way the question has been framed is to ask whether ‘supposing both parties had been within the jurisdiction, would they both have been proper parties to the action’227. However, a defendant will not be a proper party if the claim against it is bound to fail: The Brabo228. In that case, of course, it could also be said that the claimant did not have an arguable case that the claim fell within the gateway. It is necessary that the defendant be someone against whom the claimant has a claim that it is reasonable for the court to try. This means that a claimant may not identify a notional English-domiciled defendant and on that basis serve the defendant – the real (and perhaps only) defendant out of the jurisdiction. However, the fact that all that is required is for there to be a claim against the anchor defendant which it is reasonable to try does mean that other overseas defendants can be joined to the claim against the anchor defendant – as long as that other defendant is a necessary or proper party. This is regardless of whether the overseas defendant is someone over whom the court would otherwise have jurisdiction. But that overseas defendant must be a necessary or proper party to the claim against the anchor defendant. It has been said that the test is whether, if the defendant had been within the jurisdiction, that party could properly have been added to the action: see Williams v Cartwright229. 3.235 Examples include Massey v Heynes & Co230, in which an English agent was sued for breach of warranty of authority – purporting to act with authority it did not have – and the Austrian principal was added in a claim for breach of contract which the court would otherwise not have had jurisdiction to hear. See also Williams v Cartwright, in which an action in deceit was brought against defendants in England and a further defendant accused of the same deceit was also added, and The Manchester Courage231, in which the builder of a ship sought to bring a third party claim against a Swedish party and it was held that the builder was able to do so 3.236 There may be cases in which the claim is started against the UK-based defendant for the principal purpose of being able to sue the overseas defendant who would not otherwise be subject to the jurisdiction of the English court. Perhaps surprisingly, it has been held that the fact that the English defendant – the first defendant – is sued only for the purpose of bringing the second defendant before the English court is ‘not fatal to the application to serve D2 out of the

226 [2011] UKPC 7, [2012] 1 WLR 1804 at para 73. 227 Ibid, at para 87. 228 [1949] AC 326. 229 [1895] 1 QB 142. 230 (1888) 21 QBD 330. 231 [1973] 1 Lloyd’s Rep 386.

170

Jurisdiction under domestic law: persons not domiciled in Member States 3.241

jurisdiction’: see Altimo232. Thus in Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd233, the first defendant was in liquidation and that party was sued in England in order to bring a claim against overseas defendant (the second defendant), who did have assets. But whilst the aim of bringing the second defendant in is ‘not fatal’, it will be a factor to be considered in the exercise of discretion: see Multinational234 and Altimo235. 3.237 Because the overseas defendant must be a necessary or proper party to the domestic claim, this is not, or should not be, a way of bringing in non-UK defendants to respond to new or different claims. This, therefore, serves as a limit to the extent to which overseas defendants can be brought into claims in England. Necessary or proper party to Part 20 claim 3.238 This is a similar ‘necessary or proper party’ rule for Part 20 claims – when either a defendant makes a counterclaim against the claimant and another, or the defendant’s response to a claim is to sue a third party. Further claims against same defendant 3.239 This covers the case where there is already a claim of a certain type (including, for example, breach of contract) and another claim is made against the same defendant but arising out of the same or closely connected facts. Claims for interim remedies 3.240 This permits a claimant to serve out where an application for an interim remedy is made under s 25 of the Civil Jurisdiction and Judgments Act 1982. As originally drafted, that permitted interim relief to be brought where there are proceedings in another Brussels Regulation state or in another part of the UK and which fall within the scope of the Regulation. The section was later amended to include countries outside those bound by the Brussels Regulation, so as to extend to defendants anywhere. Hence the English court can, in effect, grant interim relief in support of claims taking place in other EU and non-EU jurisdictions: see Credit Suisse Fides Trust SA v Cuoghi236. 3.241 Section 25(2) of the Civil Jurisdiction and Judgments Act 1982 provides a limitation, stating that the court may refuse relief if the fact that the only jurisdiction it has to make the order is the section itself (ie there is no other basis on which the court has jurisdiction over the defendant) makes it ‘inexpedient’ to grant relief.

232 At para 76. 233 [1983] Ch 258. 234 At 268. 235 At para 79. 236 [1998] QB 818 at 826.

171

3.242  Jurisdiction

3.242 This is, nonetheless, a potentially far-reaching power and one which enables the English court to grant relief even if the court before which proceedings are ongoing could not grant the same relief. A striking example of the grant of this relief is Republic of Haiti v Duvalier237. In that case, Haiti sued its former president for embezzling $120 million. The claim was brought in France. The Republic brought proceedings in England for an order that the defendants provide information about their assets and to freeze those assets. Apparently, the French court could not make such an order. However, the Court of Appeal upheld the order in reliance on s 25. Staughton LJ observed that, but for that section, the court could not have granted relief because the Republic would not have had a substantive cause of action before the English court. But s 25 enabled the English court to grant relief in support of a foreign court. Indeed it was suggested that the Brussels Regulation required a court to make protective measures available in support of another contracting state238. 3.243 All the cases emphasise that such freezing orders are exceptional and should be rare. Nonetheless, similar orders were made in Credit Suisse Fides Trust (see para  3.240) which concerned alleged misappropriation of funds. A freezing order was granted in aid of the proceedings in Switzerland. The Court of Appeal rejected the argument that it was only the court before which a case was proceeding (which here had no power to make a freezing order) that could entertain applications for such relief. The defendant had said that the English court should not act to ‘remedy defects in the law of other countries’, but this was rejected, the court pointing out that the remedy operated in personam: see also Motorola Credit Corpn v Uzan239. 3.244 It has been held in cases pulled together in Motorola240, that it would be inexpedient to grant the order where: (i) to do so would interfere with case management in the primary court; (ii) the foreign court before which the claim is proceeding has a policy not to make the order which the English court is asked to make (as opposed to just not making or not being able to make them); (iii) the making of the order would give rise to the risk of conflicting, inconsistent or overlapping orders in other jurisdictions, in particular in the courts of the state where the defendant resides or assets are located; (iv) there may be a conflict as to jurisdiction meaning that a worldwide order would be inappropriate; and (v) the English court was being asked to make an order which it could not enforce if disobedience was to be expected. This may mean that the English court needs either a person or assets in the jurisdiction against which it could enforce sanctions by way of committal. 237 238 239 240

172

[1990] 1 QB 202. Ibid, at 212. [2004] 1 WLR 113. Ibid, at para 115.

Jurisdiction under domestic law: persons not domiciled in Member States 3.248

Claims in respect of contract 3.245 In contract claims: (i) the court has jurisdiction where the contract was made in England, made through an agent residing or trading in England, governed by English law or having a term giving the English court jurisdiction; (ii) the court will also have jurisdiction for a breach of contract committed within the jurisdiction or for a declaration that no contract exists where, if it did, the conditions in (i) above would be satisfied. 3.246 Whether these requirements are met is to be decided by English law. So, for example, the question whether a contract was made in England would be decided by English law principles dealing with matters such as the postal rule: see Entores LD v Miles Far East Corpn241 and The TS Havprins242. Whilst that seems to be the rule, it does appear slightly odd, and there ought to be scope for saying that the governing law or putative governing law ought to decide where the contract was made and where a breach occurred, if for no other reason than to ensure consistency in different courts. 3.247 In order to decide by what law a contract is governed, an English court will apply its own conflict of laws rules: see Amin Rasheed Shipping Corpn v Kuwait Insurance Co243. 3.248 As to breach within the jurisdiction, on its face this applies to any contract, no matter what its governing law. There will be a breach in England if an obligation was required to be performed in England. That may be the case where there is an obligation required to be performed in England which is not performed. But it will be necessary to establish that performance was due here. That would appear to have to be determined in accordance with the law which governs the contract. If the contract permitted performance in a number of places, failure of performance would not, or not necessarily, occur in England. Sometimes matters will be easier, as where, for example, a contract of sale requires delivery in England. A complaint about non-delivery would be a complaint of a breach in England. Where there is a contract of employment or for services, it seems likely that pay will be due where the employee resides or the service provider is based. So if the claim concerns non-payment of wages or fees for an employee or service provider based in England, it seems that the breach would be committed in England. Where there is a claim for a declaration that no contract exists, the court will have jurisdiction where, if such a contract exists, it would satisfy any of the requirements set out in para 3.245 point (i).

241 [1955] 2 QB 327. 242 [1983] 2 Lloyd’s Rep 356. 243 [1984] AC 50 at 60.

173

3.249  Jurisdiction

3.249 A very important basis for the English court to have jurisdiction and to enable service out is that the parties’ contract selects the English jurisdiction. Whether there is such a clause, and what its effect is, will be decided by applying the law governing the contract (or which would govern it in the event that there is a dispute whether there is a concluded contract – the putative governing law). 3.250 Jurisdiction clauses may be of two types: (i) an exclusive jurisdiction clause, whereby the parties agree that in the circumstances described they will submit to the courts of a particular jurisdiction; or (ii) a non-exclusive clause, which enables – but does not require – proceedings to be brought in that forum. The latter essentially records that a party will not oppose being sued in a particular place. It seems that if the choice is non-exclusive, it will still fall within the CPR PD 6B, para 3.1(6)(d). But the fact that a party is not bound to submit to the jurisdiction may be relevant when an application is made to stay English proceedings. 3.251 There may be a question whether a particular claim falls within the jurisdiction clause and thus whether the party has agreed to submit to the court for the purposes of the relevant claim. This is a question of ascertaining the nature of the claim and then construing the clause. As to that, cases in other areas have shunned fine distinctions between claims which fall within a clause and those which do not, unless that is compelled by the wording. An example is Fiona Trust & Holding Corpn v Privalov244, in which Lord Hoffmann gave short shrift to construction arguments designed to suggest that some types of dispute fell within (in that case) an arbitration clause and others did not. He said that rational businessmen would want any dispute arising from their relationship to be decided by the same tribunal – in that case, arbitration. It seems likely that the same expansive approach would be taken to choice of jurisdiction clauses. The principle was applied to a jurisdiction clause in Trust Risk Group SpA v AmTrust Europe Ltd245 but in that case there was the added difficulty that the parties were subject to two contracts with different jurisdiction clauses. In that context, the Fiona Trust principle did not assist in deciding which clause should prevail. The question will be under which contract the dispute arose. In Etihad Airways PJSC v Flöther246, it was said in terms that Fiona Trust applied to a jurisdiction clause247. 3.252 What happens if a contract is rescinded or avoided or otherwise brought to an end (assume lawfully)? Does the choice of jurisdiction clause fall as well? In the Fiona Trust case, the House of Lords held that an arbitration clause did not fall. But one must be careful with that case, as the reasoning was based on 244 245 246 247

174

[2008] 1 Lloyd’s Rep 254. [2015] 2 Lloyd’s Rep 154. [2019] EWHC 3107 (Comm), [2020] QB 793. Ibid, at para 60.

Jurisdiction under domestic law: persons not domiciled in Member States 3.257

the Arbitration Act 1996. A better analogy may be with the rule that even where a contract is brought to an end by acceptance of repudiatory breach, a liquidated damages clause survives. By the same token, it could be argued, a dispute resolution clause in the form of a choice of jurisdiction clause should survive. 3.253 Matters may be harder if a party argues that there was never a contract at all, for example because it is alleged that the parties did not reach a consensus ad idem. If no contract was concluded, then it may follow that there was no agreement as to a jurisdiction clause. But if there is a dispute whether a contract was agreed, the question would be whether the party asserting the contract has the better of the argument (Canada Trust v Stolzenberg). This could mean that a party would be able to serve out and confer jurisdiction on the English court even if it were later held that there was no contract. 3.254 The question whether there was an agreement would be determined by the law which would have governed the contract, assuming that a contract was agreed. 3.255 As indicated, if the contract contains an English choice of jurisdiction clause, the English court will give effect to it simply as a means of holding parties to their agreement, and the clause would provide a basis for serving out of the jurisdiction. However, there may be public policy reasons not to do so. Good examples are the provisions relating to consumer and employment contracts under the Brussels Regulation, where jurisdiction clauses are of no effect unless agreed after the dispute arises. On that basis, public policy means that jurisdiction clauses agreed beforehand will not be enforced: see Samengo-Turner v J&H Marsh & McLennan248 and Petter v EMC Europe Ltd249. 3.256 It is unsurprising that if a contract contains a choice of jurisdiction clause in favour of a foreign court, a claimant’s prospects of being given permission by the English court to serve out so as to enable a claim to be brought in England are not strong, unless there are exceptional circumstances which warrant the claim being heard in England: see Mackender v Feldia AG250; Evans Marshall & Co v Bertola251. An important recent example of the exercise of discretion to depart from a choice of jurisdiction clause is Donohue v Armco252, where there were concerns about duplicated proceedings and possibly inconsistent judgments involving multiple parties. That case is considered in some detail in the context of anti-suit injunctions: see para 9.04. Claims in tort 3.257 The basis for the English court to have jurisdiction in a case concerning a non-EU domiciled defendant in a tort claim is two-fold: (i) that damage was 248 249 250 251 252

[2007] EWCA Civ 723, [2008] ICR 18. [2015] EWCA Civ 828, [2015] IRLR 847. [1967] 2 QB 590 at 604. [1973] 1 WLR 349. [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425.

175

3.258  Jurisdiction

suffered in England; or (ii) that the act giving rise to the damage occurred in England. Subject to what is said below, this may be said broadly to reflect the rules laid down by the Brussels Regulation, at least as they were understood when this change to the then Rules of the Supreme Court was made in 1987. Indeed, it has been observed that the rule was changed to give effect to the Regulation: see Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc253. As mentioned at para 3.82, the Mines de Potasse d’Alsace case under the Brussels Regulation held that the place where the harmful event occurred may be both the place where the tortious act is done and the place where damage occurs. Metall und Rohstoff held254 that in order to decide whether a claim is founded on tort, the English court has to apply ‘exclusively English law’, which appears to mean English conflict of law rules (as, in a tort case, the Court applied the former choice of law rule contained in Boys v Chaplin255). The same case holds in relation to damage that it is enough for the English court to have jurisdiction that some significant damage is suffered in England; it is not necessary to show that all the damage was suffered here. This flowed in part from the language of the rule referring to ‘damage’ and not ‘the damage’. 3.258 An example of what is meant by significant damage is Berezovsky v Forbes Inc256, in which a Russian businessman sued a US-based publisher in England, alleging that an article about him was libellous. The article was contained in a magazine which sold 785,000 copies in the US and just 1,900 in the UK. The claim was able to proceed here but the claimant confined his claim to damage in the UK. Reliance was also placed on the fact that the businessman had close contacts with the UK and so had a reputation to protect here. It is of interest that argument in the House of Lords did not challenge the proposition that some – enough – damage had been suffered. The issue was instead the appropriateness of England as a forum. 3.259 The scope of the tort gateway was considered in two stages in the Brownlie litigation. In that case, the widow of the renowned international lawyer Sir Ian Brownlie sued following an accident in Egypt in which her husband and daughter had died. She sought to sue in England for her own personal injury and as her husband’s executrix under the Law Reform (Miscellaneous Provisions) Act 1934 and for damages for bereavement and loss of dependency under the Fatal Accidents Act 1976. In the Supreme Court, in Brownlie v Four Seasons Holdings Inc257, it was held that Lady Brownlie had sued the wrong company and the claim failed for that reason. The Supreme Court expressed obiter views whether her claim fell within the tort gateway. The Court was divided, with three members expressing the view that the claim did fall within the gateway and two concluding that it did not. This issue later came to be decided by the Court of Appeal once the claim had been amended to sue the correct defendant,

253 [1990] 1 QB 391 at 437. 254 Ibid, at 443–445. 255 [1971] AC 356. 256 [2000] 1 WLR 1004. 257 [2017] UKSC 80, [2018] 1 WLR 192.

176

Jurisdiction under domestic law: persons not domiciled in Member States 3.261

in FS Cairo (Nile Plaza) LLC v Brownlie258. The accident occurred in Egypt so it was plain that the act alleged to give rise to the claim did not arise in England. The question was whether, injury and death having been sustained in Egypt, it could be said that damage had occurred in England. One of the issues the Court of Appeal addressed was the extent to which this CPR gateway was designed to follow the EU law as to jurisdiction, and in particular the extent to which, in applying the CPR, account should be taken of decisions of the European Court of Justice reached after the date when the rule was amended. The Court of Appeal accepted that the domestic rules had been amended in 1987 to reflect a particular decision of the European Court which showed how narrow the former domestic gateway had been – that was a reference to the Mines de Potasse case, which was the seminal case construing the scope of the Brussels Convention (as it then was) tort rule. But it did not follow, in interpreting the domestic rule, that the court should follow later decisions of the European Court of Justice. The Court of Appeal noted, following Metall und Rohstoff, that it was enough that some damage be suffered in England; it was not even required that most of the damage be suffered in England. It held that the English court construing the CPR did not have to follow European jurisprudence as that had developed and accepted that the domestic rules created a wider gateway. A difference between the domestic and EU approach was shown in Marinari v Lloyds Bank plc259. It has already been observed that, applying the words of the English rule, it is enough if some damage is suffered in England. In Marinari the European Court said that the place where damage occurred could not be: construed so extensively as to encompass any place where the adverse consequences of an event that has already caused actual damage elsewhere can be felt.

3.260 Part of the reason for this is the primacy under the Brussels Regulation of the place where the defendant is domiciled, and the stipulation – for that reason – that additional bases for jurisdiction should be narrowly construed; hence the limit on the places where damage has been suffered. But the English rule as construed in Metall und Rohstoff is just wider. However, as the Court noted, the forum conveniens rule, which would apply to service out under the CPR but not to a Brussels Regulation case, acts as a limit on what might otherwise be regarded as an extravagant claim to jurisdiction. Importantly for that case, the Court of Appeal accepted a line of first instance cases which had been referred to by Lady Hale in the earlier Brownlie case and which held that a claim could be brought in England based on personal injuries suffered abroad where damage is suffered in England. That damage could include pain and suffering which a person who lives in England but who is injured abroad continues to suffer when returning home. 3.261 As to where the tortious act is committed, it must be shown that a more than relatively minor or insignificant act was committed in England even if other

258 [2020] EWCA Civ 996. 259 [1996] QB 217.

177

3.262  Jurisdiction

acts were also committed elsewhere: Mettall und Rohstoff260. In Distillers Co v Thompson261, a case about the provision of the drug thalidomide, the Privy Council said that in determining whether a cause of action arose there were three possibilities: that every part of the cause of action occurred in a place; that the last event – the event which completed the cause of action – occurred there; or that the act which gives rise to the complaint occurred there. It was held that the last was the correct test, although it was noted that it might not provide a simple answer for all cases. In that case, the nub of the allegation – what gave rise to the complaint – was the failure to warn potential users about the danger of the drug. That could have occurred as a result of failing to include a warning label at the time of manufacture but also failing to warn doctors and chemists in the place where the drug would be used. The latter meant that the courts in the place where the patient purchased the drug had jurisdiction. 3.262 In Metall und Rohstoff the claimant sought to serve out against the parent of a company which had been held liable for defrauding the claimant in trades on the London Metal Exchange. The parent company was sued in conspiracy, inducing breach of contract and that the defendants were liable to account as constructive trustees. It was held that, although many acts occurred in New York, in substance the tort of inducement was committed in London. Enforcement of a judgment or arbitral award 3.263 This enables the English court to enforce a judgment or arbitral award. As arbitration falls outside the Brussels Regulation, an arbitral award would always be governed by the CPR. The enforcement of such a judgment may need the party in whose favour the judgment is given to bring an action against the party liable. If that person is outside the UK, this rule permits service out on the judgment debtor. There is no pre-requisite to service out that there be assets in the jurisdiction: see Tasarruf Mevduati Sigorta Fonu v Demirel262. A  party seeking service out would have to show a good arguable case that judgment should be given on the basis of the award and that there was a reasonable basis for expecting a benefit from the judgment. 3.264 An application to commit a person for contempt is not a claim to enforce a judgment because, whilst a committal application is a claim to enforce, that which is being enforced is not a judgment: see Deutsche Bank AG v Sebastian Holdings263. The power to commit is a common law power reflecting the court’s inherent jurisdiction. The procedure to commit is governed by CPR Part 81. That power and the right to serve an application to commit operate internationally; CPR Part 81 has extra-territorial effect. Permission is not required to serve an application to commit where a court has made an order with which a person has not complied, as the fact that it has made such an order means that the court 260 [1990] 1 QB 391 at 437. 261 [1971] AC 458. 262 [2007] 1 WLR 2508. 263 [2017] 1 WLR 1842 at para 19.

178

Jurisdiction under domestic law: persons not domiciled in Member States 3.267

already has jurisdiction over the person: Deutsche Bank AG v Sebastian Holdings in the Court of Appeal264. Claims concerning property in England 3.265 The rule permits service out in claims concerning property within the jurisdiction, whilst making it clear that it does not render justiciable the title or right to possession of immovable property outside England and Wales. The rule refers to ‘property’ and not ‘real property’ and it has been held that the rule thus extends to claims about personal property: see Re Banco Nacional de Cuba265. The rule extends to ‘any claim for relief, whether for damages or otherwise, so long as it relates to property located within the jurisdiction’. Claims concerning restitution 3.266 The rule says that there may be service out when the acts giving rise to the claim in restitution occur in the jurisdiction or the enrichment is obtained in England or the claim is governed by the law of England and Wales. That means that most unjust enrichment claims in which an element of that claim – the enrichment or the presence of the unjust factor – arises in England – will enable a claimant to serve out. Is England the appropriate forum: discretion and forum conveniens 3.267 As was indicated at para  3.217, surmounting one of the jurisdictional gateways is only the first hurdle for a claimant seeking to serve out of the jurisdiction. The next step will be to persuade the court to exercise discretion in the claimant’s favour. A large part of that exercise will turn on the question whether England is the appropriate place to hear the claim – the forum conveniens. This is something unique to our domestic rules of jurisdiction. It is not reflected in the Brussels Regulation, where the rules are determinative. The point has been made that some English jurisdiction rules – for example the rule relating to a breach of contract occurring in England – may seem expansive. The forum conveniens rule is a domestic means by which limits may be placed on those rules. In an equal and opposite context, the forum conveniens rule may operate where broad rules confer jurisdiction automatically, without the need to serve out. The rule that if a non-EU domiciled person is present in England, that person can be served in England, and it will suffice for jurisdiction is an obvious example. But the forum conveniens rule operates as a limit on those bases for jurisdiction because of the right of a person, discussed below, to apply for a stay of otherwise valid English proceedings because England is not the forum conveniens. This is mentioned at the outset to identify the two complementary situations in which the principles of forum conveniens may be engaged.

264 [2018] EWCA Civ 2011, [2019] 1 WLR 1737. 265 [2001] 1 WLR 2039 at para 33.

179

3.268  Jurisdiction

3.268 It was traditionally held that a claimant is confined to the particular jurisdictional gateway on which it relies and which is established as giving rise to the right to serve out. So the claimant could not serve out on basis A  and then, having got the defendant in England, fashion a claim based on cause of action B so as to resist any application to set aside the grant of permission to serve out: see Metall und Rohstoff v Donaldson Lufkin & Jenrette Inc266. It has been suggested that this rule has been overtaken by NML Capital v Republic of Argentina267, which did allow a claimant greater latitude to amend the basis upon which permission to serve out was to be justified. NML was cited in Alliance Bank JSC  v Aquanta Corp268, where it was said that it took a less rigid and more generous approach to changing the basis on which service out was sought and then applied in Gunn v Diaz269 (changing ground from tort, on the basis of damage suffered here, to necessary or proper party). It was there said that NML was ‘plainly intended to bring about a change of approach, consistent with changes brought about by the CPR’. 3.269 The discretionary element in considering any application for permission to serve out derives in part from CPR 6.37(3), which provides that: The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.

3.270 There are several factors for the court to bear in mind in its exercise of the discretion. One is the Amin Rasheed point (see para 3.226) about bringing foreign defendants to these shores being an exorbitant jurisdiction, with the consequence that it should be exercised cautiously. But as the Baadarani case shows (see para 3.02), that attitude may be waning. In any event the key question – and on one view the question which addresses whether serving the overseas defendant does amount to an exertion of exorbitant jurisdiction – is whether England is the forum conveniens. 3.271 Second, there must be a strong enough case on the merits (ie the merits of the underlying claim, as opposed to the basis for saying that the case falls within CPR PD 6B, para 3.1) against the person on whom the claimant wishes to serve proceedings. As to that, the test is whether there is a serious issue to be tried: see Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran270. The test is one familiar from American Cyanamid v Ethicon271, where it was held that there was a serious issue to be tried if the case was sufficiently strong to survive a strike out application. 3.272 The third point is the most important. It is that England is the appropriate place to bring the claim – CPR  6.37 – or that it is the forum conveniens. This principle was best articulated in Lord Goff’s magisterial 266 [1990] 1 QB 391 at 436. 267 [2011] UKSC 31, [2011] 2 AC 495. 268 [2013] 1 Lloyd’s Rep 175. 269 [2017] EWHC 157 (QB), [2017] Lloyd’s Rep 165. 270 [1994] 1 AC 438. 271 [1975] AC 396.

180

Jurisdiction under domestic law: persons not domiciled in Member States 3.274

judgment in Spiliada Maritime Corpn v Cansulex Ltd272. That case concerned an application to serve out of the jurisdiction. The following text begins, as did Lord Goff, with what might be thought a digression, by considering the rules which apply to enable a party properly sued in England and Wales (for example because of presence in the jurisdiction) to stay the claim in this jurisdiction. Lord Goff observed that where someone was served within the jurisdiction, that party could apply to the court to stay the claim on the grounds of forum non conveniens – that there was some other forum which had jurisdiction in which the case could more suitably be tried for the interests of all parties and the interests of justice. (The concept of the application for a stay is considered in Chapter  4, on challenges to jurisdiction.) The cases showed that a stay of a claim against a person properly served within the jurisdiction would be ordered where there was some other forum to which the defendant was amenable and where justice could be done at less inconvenience and expense, and proceedings in that forum would not deprive the claimant of any ‘legitimate personal or juridical advantage’ which would be available in England. In the case of the other forum, it had to be ‘clearly or distinctly more appropriate than the English forum’. The starting point is that the other court had to have jurisdiction in respect of the claim. So if, for example, a claim were not recognised as a cause of action in the other forum, it would not be an available forum. The other court must also have jurisdiction over the defendant and so be able to decide the case. If this was so, the question then became whether the English court should require the claim to be brought in that other jurisdiction on the basis that it was the more appropriate forum. Whether that was the case would depend on factors such as where justice could be done at less inconvenience or expense having regard to things such as where the parties reside, where witnesses are located and which law governs. The burden would be on the defendant to show that that was the case. 3.273 Lord Goff’s insight in Spiliada was to realise that comparable principles of forum conveniens, as applied in the case where a party properly sued in England sought to stay the claim in favour of another jurisdiction, also applied when a court was considering whether permission should be given to a claimant to serve out of the jurisdiction. Those principles applied in an equal and opposite way to the principles which governed applications for a stay of proceeding in this jurisdiction. That meant that in a service out case it was for the claimant to show that the English court was the most suitable forum for the trial of the action so as to justify bringing a foreign defendant before the English court rather than proceeding in some other court. Service out was permissible where England was clearly the appropriate forum for the trial of the action. 3.274 Factors that might persuade the English court to grant permission include: (i) that an injunction is sought to restrain something from happening in the jurisdiction; 272 [1987] AC 460.

181

3.275  Jurisdiction

(ii) that the law governing the claim is English (although that may depend on the issues in the case); (iii) where the parties live (but not always if, for example, one party’s residence is a tax haven); (iv) the availability of witnesses. Other factors are developed below. 3.275 The ultimate test is whether it can be shown – by the claimant – that the English court is distinctly more suitable for the interests of justice; that it was the proper place to bring the claim. If so, leave to serve out should be granted. 3.276 The fact that the parties have, by a jurisdiction clause, chosen England as the forum to hear their disputes ought to be a strong, if not determinative, indicator that England is the appropriate forum. In cases where parties have chosen a foreign court to determine their disputes, it would take a very strong case to allow them to go back on their word and sue in England: thus the primacy of the foreign clause is maintained: see Mackender v Feldia AG273. By the same token, when the parties have chosen England as the forum in which to resolve their disputes that, of itself, should be enough to mean that England is the forum conveniens. It was said in Marubeni Hong Kong and South China Ltd v The Mongolian Government274 that where the parties have selected England as the place to hear their disputes, that creates ‘a strong prima facie case that England is the appropriate forum’275. That means, consistent with Mackender, that a defendant must identify a strong reason why the claim should not proceed in England. 3.277 There are innumerable cases dealing with the exercise of discretion and in each case different factors will be taken into account and differing weights will be given to such factors. One factor in Spiliada was that there had recently been other litigation in England on similar facts. That is an example of how particular factors and the weight to be attached to them may fall to be taken into account. 3.278 It is not proposed to set out a list of such cases. Indeed, Lord Templeman in Spiliada276 said that judges should not be asked to consider the facts of other cases. Instead one example follows, which shows rival views of how the balance may be struck. The case is VTB Capital plc v Nutritek International Corpn277, which was a misrepresentation claim in which an English bank, a subsidiary of a Russian bank, alleged that it had relied on fraudulent representations which originated in Russia but were received by the claimant in London and caused it to enter an agreement in London to enable a Russian company to buy assets from companies located in Russia and the British Virgin Islands. It was assumed that

273 [1967] 2 QB 590. 274 [2002] 2 All ER (Comm) 873. 275 Ibid, at para 63. 276 At 465. 277 [2013] UKSC 5, [2013] 2 AC 337.

182

Jurisdiction under domestic law: persons not domiciled in Member States 3.280

English law governed the claim but most of the actors, including those who were accused of misrepresentation, were in Russia. 3.279 The Supreme Court was divided. However, amongst the judgments it is interesting to note that Lord Mance for the majority attached little weight to the fact that English law governed the tort, as the issues in the case were factual rather than legal278. He instead focused on where the tort was committed279 and where loss was suffered280 but the key issues in the case for him were the accuracy of reports emanating from Russia281 and that the witnesses and documentary evidence would be in Russia282. He concluded that since the greater part of the factual subject matter involved Russia, that was the appropriate forum. Lord Clarke dissented but he stressed the importance of identifying the issues in order to compare fora283. He said that the fact that the tort was committed in England and that English law governed were not conclusive but provided strong grounds for saying that England was the proper forum284, holding that it was generally appropriate for a tort governed by English law to be decided in an English court. His ultimate conclusion was that the centre of gravity in the case was not Russia because the ‘critical ingredients’ all took place in London. It is suggested that the difference in this case was not one of principle. It was, rather, how the balance was to be struck. But the case is a useful example of the sorts of factors to be considered and the weight to be attached to them. 3.280 Another factor to be considered is the risk of multiple proceedings and irreconcilable judgments. When there are proceedings on foot in another jurisdiction, this can be a factor which tells against England being the forum conveniens. Thus, in Lungowe v Vedanta Resources plc285, Zambian claimants sued the Zambian-based owner of a copper mine which they alleged had discharged toxic matter, and its English parent company. Both parties were sued in negligence. The parent was sued by virtue of its domicile in England and the subsidiary on the basis of the necessary or proper party gateway under CPR PD 6B. Both parties sought to set aside jurisdiction. The parent did so on the basis that there was no triable claim against it and because it was sued improperly as a means of bringing the claim against the subsidiary. The subsidiary sought to set aside jurisdiction on the basis that England was not the forum conveniens. The Supreme Court held that where a claimant would in any event proceed against an anchor defendant in England that is a strong if not decisive factor in favour of concluding that England is the proper place for all claims so as to avoid the risk of inconsistent judgments. Thus, even though in that case all the connecting factors such as the events and the evidence were in Zambia, the fact that there would be a trial in England in any event was regarded by the first instance judge as conclusive in favour of 278 279 280 281 282 283 284 285

Ibid, at para 49. Ibid, at para 51. Ibid, at para 57. Ibid, at para 58. Ibid, at para 62. Ibid, at para 192. Ibid, at paras 211–212. [2019] UKSC 20, [2019] 2 WLR 1051.

183

3.281  Jurisdiction

the view that England was the forum conveniens. However, the Supreme Court attached weight to the fact that the anchor defendant had agreed to submit to the Zambian court so all claims could be heard there. The claimant could therefore avoid the risk of irreconcilable judgments by suing all defendants in the foreign state. A difficulty with this argument is that it comes close to bringing in a forum conveniens analysis in an Article 4 case: the claimant had the inalienable right to sue the parent in England because of domicile. Why should it give up that right? The Supreme Court would have decided that England was not the forum conveniens because of the factors connecting the case with Zambia and that the risk of irreconcilable judgments was not, because the claimants could address it, a trump card. 3.281 However, the Vedanta case shows ultimately the importance of an exercise in justice. Its final conclusion was that England was the forum conveniens because the claimants, poor Zambians, would not be able to afford to secure justice in Zambia because there was no legal aid nor a facility for conditional fee arrangements and there were not lawyers equipped to take the case. For that reason only the case remained in England. 3.282 When a first instance judge has decided a forum conveniens question, an appellate court should be slow to intervene in the judge’s assessment: Trust Risk Group SpA v AmTrust Europe Ltd286. In Spiliada v Cansulex, Lord Templeman had said that the assessment of the relative merits of a trial in England or abroad was pre-eminently a matter for the trial judge; appeals should be rare and appellate courts should be slow to interfere. He also expressed what has turned out to be the optimistic view that submissions in these cases would be measured in hours, not days. That comment was picked up by the Supreme Court in Lungowe, which expressed concern about the disproportionate way in which the jurisdiction issues had been litigated in that case.

286 [2015] 2 Lloyd’s Rep 154 at para 33.

184

CHAPTER 4

Challenges to jurisdiction 4.01 This chapter assumes that a defendant has been served. It may be that a claimant has sued a defendant out of the jurisdiction either without seeking permission because the claimant says that the Brussels Recast Regulation applies or, in the case of a non-EU domiciled defendant, with permission because the claimant says that the case falls within CPR PD 6B, para 3.1 and England is the proper place to bring the claim. 4.02 What can the defendant do? Can the defendant avoid being sued in England? The answer to those questions varies, and diverges substantially depending on the basis on which jurisdiction is claimed.

CLAIMS GOVERNED BY THE BRUSSELS RECAST REGULATION 4.03 In the event that the claimant says that the basis for jurisdiction derives from the Brussels Recast Regulation, the only ground on which a defendant can challenge the court taking jurisdiction is if it can be argued that the Regulation does not cover the case. This is because the European Court has held that in a case in which the court has jurisdiction because of the application of the Brussels Regulation, there is no scope for the court to decline jurisdiction by deciding that it is forum non conveniens. This was established in Owusu v Jackson1. In that case, a UK-domiciled claimant had sued a UK-domiciled defendant in respect of injuries he suffered in Jamaica, having hired a holiday villa in Jamaica. There were also other defendants in Jamaica. The claimant’s claim against the UK-based defendant was that the defendant had acted in breach of contract by failing to provide a property and facilities that were reasonably safe, causing the claimant to suffer injury in an accident. The UK defendant was sued in England on the basis of domicile. The claimant also sued Jamaican defendants, who were added pursuant to CPR Part 6 as necessary and proper parties to the claim against the English defendant. The English defendant said that the English court should decline jurisdiction on forum non conveniens grounds in favour of Jamaica, on the grounds that the defendants were based there; contracts and any tortious duties would be subject to the law of Jamaica; witnesses were based in Jamaica and an investigation of the circumstances surrounding the villa would take place in Jamaica.

1

C-281/02 [2005] QB 801.

185

4.04  Challenges to jurisdiction

4.04 The European Court held that forum non conveniens principles were incompatible with the Brussels Regulation because Article  4 was mandatory, and there could be no derogation from it. Moreover, to permit courts to decline jurisdiction on forum non conveniens grounds would contradict the EU principle of legal certainty by preventing a defendant from being able to know which court would have jurisdiction. Hence, in contrast to the domestic position, if a court had jurisdiction because of the application of the Brussels Regulation, it could not decline that jurisdiction in favour of some other court if it was concluded that the other court was more convenient. The court may only decline jurisdiction in accordance with the Regulation, for example if the parties have chosen another court to have jurisdiction. 4.05 One other basis on which a defendant can challenge jurisdiction, within the Brussels Regulation, is if there are already proceedings on foot between the same parties in another jurisdiction – lis alibi pendens. That basis for challenging jurisdiction is explored in Chapter 5.

CLAIMS NOT GOVERNED BY THE BRUSSELS RECAST REGULATION 4.06 The position where the claim is not governed by the Brussels Regulation, either because the case falls outside the scope of the Regulation or because the defendant is not domiciled in a Member State or otherwise amenable to the jurisdiction rules laid down in the Regulation, is different. In such cases a defendant may apply to the court to stay proceedings before it on the ground that the English court is not the appropriate forum – the forum conveniens – as well as asserting that the rules of jurisdiction do not apply to the particular claim. 4.07 The basis upon which a party might say that the court lacks jurisdiction applying the common law rules has been set out at para 3.217. Put simply, the defendant in such a case will say that, applying those rules, the court lacks jurisdiction, for example because there is no good enough case on the merits, or because the claimant does not have a sufficient case in the Canada Trust/ Brownlie sense for saying that any of the provisions of CPR PD  6B, para  3.1 apply. The forum non conveniens challenge is different. Such a challenge accepts that the court has jurisdiction but asserts that the court should not exercise its jurisdiction in the circumstances of the case because it is not appropriate for the case to be heard in England. 4.08 Before turning to the forum non conveniens test and how it is applied, it is worth making some important points about procedure. A party served with a claim form is required to serve an acknowledgement of service. CPR 10.1(3) says that a person may file an acknowledgement of service if ‘he wishes to dispute the court’s jurisdiction’. That includes doing so on forum conveniens grounds. Failing to serve an acknowledgement of service would leave the defendant at risk of the claimant applying for judgment in default, in circumstances where the defendant has not challenged jurisdiction. 186

Claims not governed by the Brussels Recast Regulation 4.11

4.09 CPR  11 deals with disputing the jurisdiction of the court. It provides that a defendant who wishes to do so must file an acknowledgement of service. CPR 11(1), (3) says that a defendant who files an acknowledgment of service does not, by doing so, lose any right to dispute the court’s jurisdiction. But it is important for a defendant to limit itself to disputing jurisdiction. The defendant must not engage with the substance of the claim by, for example, serving a defence, requesting an extension of time within which to do so or seeking to strike out a claim on the merits. A defendant who does these things will be taken to have submitted to the jurisdiction. Hence, on the acknowledgement of service form (N9), the defendant should just tick the box to indicate an intention to contest jurisdiction. However, in order effectively to contest jurisdiction the defendant must thereafter apply for an order by which the court declares that the court has no jurisdiction or should not exercise any jurisdiction which it may have. (The latter would, of course, cover the case in which the court says it has jurisdiction but should not exercise it because England is not the forum conveniens.) The application must be made within 14 days (28 days in the Commercial Court) and be supported by evidence. A very important point to note is that a party who files an acknowledgment of service but who does not also make an application will be treated as having accepted that the court has jurisdiction: CPR 11(5), see also Global Multimedia International Ltd v ARA Media Services2.

Forum non conveniens 4.10 The application of the forum non conveniens test is considered below. It should be stressed at the outset that different principles apply in two different situations: (i) the case where the basis for jurisdiction is that the parties have agreed a choice of jurisdiction; and (ii) the case where jurisdiction is claimed on some other ground. The following section deals with cases other than those based on choice of jurisdiction. The case where the parties have made a choice of jurisdiction is dealt with at para 4.20. Cases other than those based on choice of jurisdiction 4.11 The test to be applied on an application for a stay derives from Spilada v Cansulex3. A stay will be granted where the defendant shows – the burden being on the defendant – that there is some other tribunal, having competent jurisdiction, in which the case may be tried more suitably for the interests of all parties and the ends of justice. This test divides into two:

2 3

[2006] EWHC 3612 (Ch) at para 26. [1987] AC 460 at 476–478.

187

4.12  Challenges to jurisdiction

(i) Can the defendant show that there is another forum to whose jurisdiction the defendant is amenable where justice can be done between the parties at substantially less inconvenience or expense? (ii) Will the grant of an order for a stay be unfair to the claimant? 4.12 As to the former point, Lord Goff said that the defendant had to show that the other forum was ‘clearly or distinctly more appropriate than the English forum’. That other forum must have jurisdiction over the defendant and in respect of the claim; it must be available for the claimant. For example, if the claimant’s claim was not recognised in the foreign jurisdiction, or if that court would not have jurisdiction over the defendant, then it could not be a suitable forum. An example is Mohammed v Bank of Kuwait and the Middle East KSC4, in which a Kuwaiti bank sought to stay English proceedings brought by an Iraqi citizen in London. The bank argued that Kuwait was the more appropriate forum because the case concerned a contract of employment governed by Kuwait law, involving employment in Kuwait, and all the witnesses – except the claimant, who lived in Iraq – were based in Kuwait. It was accepted that Kuwait was an appropriate forum but the Court of Appeal held that it was not available to the Iraqi claimant because he was unable to travel to Kuwait and it was speculative whether he would be able to instruct a lawyer in Kuwait. Because the forum was not available to the claimant, it could not be a suitable alterative forum. 4.13 If the other forum did have jurisdiction, the question then is whether the other forum is the place where the matter could be more suitably tried. That would depend on an exercise in judgment. Factors that would be relevant include: •

where the parties are based;

•

which law governs the claim;

•

the location of witnesses; and

•

whether the grant of a stay would lead to a multiplicity of proceedings.

A key factor in Spiliada5 itself was that there had been an earlier claim on similar facts, so that the courts, lawyers, experts and witnesses were already aware of the relevant facts. 4.14 As to whether the stay would be unfair to the claimant, in MacShannon v Rockware Glass Ltd6, Lord Diplock expressed the point as being that the stay should not deprive the claimant of a ‘legitimate personal or juridical advantage’. In Spiliada, Lord Goff recognised that, where a claimant had commenced a claim in England which was within the court’s jurisdiction, the claimant would have certain advantages, but rephrased the test to say that the stay would be refused where justice required that the stay should not be granted. It is for the claimant to show both the unfairness and that justice requires the stay not to be granted. 4 [1996] 1 WLR 1483. 5 [1987] AC 460. 6 [1978] AC 795.

188

Claims not governed by the Brussels Recast Regulation 4.18

Lord Goff expanded on this7 – under the heading ‘Treatment of “a legitimate personal or juridical advantage”’ – by saying that proceedings in England might give advantages such as higher damages, interest, fuller disclosure and longer limitation periods. But he said that these factors should not persuade a court to refuse a stay where a defendant had identified a clearly or distinctly more appropriate forum, as long as in that forum a claimant would achieve ‘substantial justice’. In Connelly v RTZ Corpn8, Lord Goff said that if a defendant has identified a clearly more appropriate forum, ‘generally speaking the [claimant] will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the English forum’9. 4.15 There are examples of cases where a stay has been refused even though a claimant would be deprived of more extensive discovery rules in the English forum: see Trendtex Trading Corpn v Credit Suisse10, upholding the judge’s decision to stay English proceedings despite a complaint that this would deprive the claimants of English discovery rules. 4.16 In Lungowe v Vedanta Resources11, Zambian claimants brought a claim in England against an English-domiciled party and a non-English domiciled parent company which was added as a necessary party under CPR PD  6B. It was held, as against the parent company, that it was clear that Zambia was the forum conveniens and applying that test permission to serve out should not have been given. However, because the claimants would not have achieved justice in Zambia as they would be unable to fund their claims there, and there was a lack of the required legal expertise in Zambia, that meant that the claimants should be allowed to serve out. 4.17 An obviously difficult case concerns time bars. If a claimant is in time to sue in England but out of time in the other forum, should the claimant be required to proceed elsewhere? Lord Goff said that if there was an obviously more appropriate forum and the claimant had allowed time to elapse there and come to England just because of the more generous time bar, then a stay should be granted. But if the claimant did not act unreasonably in not commencing proceedings elsewhere then the stay should be refused. He also considered that the court could say that a condition of the grant of a stay could be that the defendant waive the foreign time bar. 4.18 One matter which may be relevant is where a claimant in England has legal aid but would not have that benefit in the foreign jurisdiction. In Connelly v RTZ  Corpn plc12 it was said that the fact that a claimant would not receive legal aid in the other forum which would have been available in England would not in general justify refusing a stay and so allowing proceedings to continue in 7 Ibid, at 482. 8 [1998] AC 854. 9 Ibid, at 872. 10 [1982] AC 679. 11 [2019] UKSC 20, [2019] 2 WLR 1051. 12 [1998] AC 854.

189

4.19  Challenges to jurisdiction

England even if there was another, clearly appropriate, forum. However, it could exceptionally be a relevant factor. Therefore where, as in that case, the claim could not be effectively prosecuted without legal aid, its absence in the foreign jurisdiction justified refusing a stay of proceedings in England. 4.19 Another factor which may be relevant but where courts have traditionally been reluctant to engage is the case where there is criticism of the foreign forum such that the defendant says that that court will not provide justice to that defendant. The court starts with the proposition that other courts provide satisfactory justice and a party challenging that must advance positive and cogent evidence to the contrary: see The Abidin Daver13. More recently it has been said that it must be shown that there is a ‘real risk that justice will not be obtained in the foreign court by reason of incompetence or lack of independence or corruption’: see AK Investment CJSC v Kyrgyz Mobil Tel Ltd14. What must be shown is very serious, but arguably the ‘real risk’ test is less demanding. However, in Ferrexpo AG v Gilson Investments15 it was held that whilst there were grounds for general concern about the independence of the judiciary in Ukraine, there was not a real risk that a party would not receive justice. Cases dealing with jurisdiction clauses, referred to at para 4.20, accept that a relevant factor is where, for political, racial or religious reasons, a defendant would not receive a fair trial. In Cherney v Deripaska16, a service out case, the judge allowed service out to allow proceedings to be commenced in England even though Russia was the natural forum, in part because of concerns that the claimant would not receive a fair trial in Russia. It may also be necessary in dealing with stay applications to consider Article 6 of the European Convention on Human Rights, and whether the claimant would receive a fair trial abroad if the claim were stayed. It could be argued that the decision to stay the English proceedings would deprive the claimant of Article 6 rights if the forum in favour of which the English proceedings were stayed was one in which the claimant would not receive a fair trial. On that basis, it could be argued that the decision to stay was a breach of Article 6 by the English court. But in principle a defendant may be able to raise concerns more widely about the quality of justice in the other forum and, if it is held that those concerns are wellfounded, that would be a powerful reason to refuse a stay of English proceedings. Cases based on choice of jurisdiction 4.20 One factor of great relevance to the exercise of discretion is the case where the parties have agreed a choice of jurisdiction clause in favour of a foreign court. The text below is concerned with the case where the court chosen is not an EU Member State, so that Article 25 of the Brussels Recast Regulation does not apply. Article 25 is referred to below.

13 14 15 16

190

[1984] AC 398 at 411C. [2011] UKPC 7, [2012] 1 WLR 1804 at paras 95, 97, 101. [2012] EWHC 721 (Comm). [2008] EWHC 1530 (Comm) (upheld at [2009] EWCA Civ 849).

Claims not governed by the Brussels Recast Regulation 4.23

4.21 There are cases in which a statutory provision, such as the Employment Rights Act 1996, s 203, would prevent parties choosing a jurisdiction for their disputes. Section 203 renders void any term of a contract insofar as it purports to exclude or limit the operation of the Employment Rights Act. (There are equivalent provisions in other employment protection legislation such as the Equality Act 2010, s  144.) On the face of it, that would preclude reliance on a choice of jurisdiction clause which said that an employee had to bring a claim in an identified forum. An example, not relating to a choice of jurisdiction clause but a clause which may be regarded as equivalent, is Clyde & Co v Bates van Winkelhof17. In that case, a solicitor was party to an LLP agreement which contained an arbitration clause. The claimant brought discrimination and whistle-blowing claims in the employment tribunal. The respondent firm applied to stay the claim in favour of arbitration and for an injunction restraining the tribunal proceedings pending the arbitration. It was held that, insofar as the arbitration clause was relied on to restrain the commencement of tribunal proceedings, it was void or unenforceable by s 203 of the Employment Rights Act 1996 and the Equality Act 2010, s 144 and so could not provide a basis for a stay of the tribunal claim. It seems that the same approach ought to be taken in a case where an employer sought to rely on a choice of jurisdiction clause to say that an employee was required to bring proceedings in an identified court rather than a tribunal. An employee would say that s 203 or equivalent rendered void a term which purported to prevent the bringing of a tribunal claim. 4.22 But what of the general position outside these cases? Imagine this situation. A defendant (not being domiciled in the EU) is presented with a claim form in England during a visit here. The defendant is party to a contract containing a choice of law clause in favour of a US state (which means that Article 25 of the Brussels Recast Regulation has no direct application). On the application of domestic jurisdiction rules, apart from the jurisdiction clause, the English court has jurisdiction over the claim. The defendant applies to the court to stay the proceedings. What does the court do? It has a discretion how to act, but in general the court will grant a stay for the simple reason that to do so prevents the parties – in particular the claimant, of course – from going back on their word. That was the language used by Diplock LJ in Mackender v Feldia AG18 (a case refusing leave to serve out). 4.23 The criteria to be taken into account were set out in The Eleftheria19 and The El Amria20 (approved by the House of Lords in The Sennar21) as follows:

17 [2011] EWHC 668 (QB), [2011] IRLR 467. 18 [1967] 2 QB 590 at 604. 19 [1970] P 94. 20 [1981] 2 Lloyd’s Rep 119 at 123–124. 21 [1985] 1 WLR 490.

191

4.24  Challenges to jurisdiction

•

where claimants sue in breach of a jurisdiction clause in favour of a foreign jurisdiction, the English court has a discretion whether or not to stay the claim. (That decision is a matter for English law, as opposed to decisions as to, for example, the correct construction of a jurisdiction clause, which would be determined by the law governing the contract);

•

the discretion should be exercised by granting a stay unless strong cause is shown for not doing so;

•

it is for the claimant to show that the discretion should not be exercised in favour of a stay;

•

in exercising discretion, the court should consider all the circumstances;

•

relevant factors would include: — where the evidence is situated; — which law applies; — with which country the parties are connected; — whether the defendants are seeking a trial abroad for procedural advantages; — whether the claimants would be disadvantaged in suing abroad because of being deprived of security, facing greater difficulty in enforcing a judgment, being subject to a time bar or that the claimant would for political, racial or religious reasons not receive a fair trial.

4.24 There is scope for the view that the last bullet point could give too broad a basis for the exercise of discretion against a stay. What is said about time limits, for example, is not easy to reconcile with Spiliada. One other factor may be where there are related proceedings in a foreign jurisdiction between parties who are not subject to the choice of jurisdiction clause. That could be a reason to refuse a stay and allow proceedings to be pursued between all parties in that jurisdiction. 4.25 However, matters have now been made simpler by the more recent leading case, Donohoe v Armco22. The case concerned an application for an anti-suit injunction in circumstances where US-based companies had sued an individual in New York, alleging fraud. The relevant contracts contained an English choice of jurisdiction clause. It was accepted that the claims fell within the scope of the jurisdiction clauses. Lord Bingham said that where parties had chosen a foreign jurisdiction, the court would ordinarily exercise its discretion to secure compliance with the contractual bargain unless the party suing in the non-contractual forum could show strong reasons to be allowed to sue in that forum. Lord Bingham referred to The Eleftheria as mentioning some matters which might – in some cases – be material. But he noted that, in general, effect was given to the agreed choice of jurisdiction clause. 22

192

[2001] UKHL 64, [2002] 1 Lloyd’s Rep 425.

Claims not governed by the Brussels Recast Regulation 4.29

4.26 Lord Bingham noted that the right to be sued only in the agreed forum was ‘an important and substantial, and not a formal or technical, right’23. In the event an injunction was refused, with the consequence that proceedings could take place in New York but only because the claimants were able to bring their claim (which was the same as that against Mr Donohoe) in New York against other parties who were not bound by the jurisdiction clause. Thus to have granted the injunction would have led to a multiplicity of proceedings and that was a strong reason not to enforce the choice of jurisdiction clause. However, as a quid pro quo, the claimants had to agree not to enforce any punitive damages they might be awarded in New York. In this way, Mr Donohoe was not deprived of the substantial advantage of being at risk of a lower level of damages that would have inured had he been sued in England. 4.27 A  further question which arises in connection with jurisdiction clauses other than under Article 25 is whether the party sued in a different court in breach of such a clause has a right to claim damages for having been sued in breach of the clause. For example, but for the undertaking procured by the Court in Donohoe v Armco, could Mr Donohoe have sued for damages if, being sued in the US, he lost and was held liable in respect of punitive damages that would not have been awarded had he been sued in England? Or could he recover as damages the costs he incurred in the US jurisdiction if he succeeded but, as happens in some US states, was not able to recover his costs from the other side? An example of the latter was United Discount Co Ltd v Zoller24, in which a defendant was sued in New York in breach of an English choice of jurisdiction clause. The defendant applied to recover as damages costs incurred in New York in striking out the claim there, which were not recoverable in the New York court. The Court of Appeal held that damages were recoverable in respect of costs incurred in another jurisdiction if a person was sued there in breach of an exclusive jurisdiction clause. 4.28 Although this section is dealing with defendants not domiciled in the EU, Article 25 of the Brussels Recast Regulation should briefly be mentioned. That article applies regardless of the domicile of the defendant. What it says is, when the parties have chosen the courts of a Member State as the place to resolve their dispute, then that court shall have jurisdiction. The jurisdiction will be exclusive unless the parties agree otherwise (unless the agreement is null and void). But this does not turn on the domicile of the parties. 4.29 What Article 25 means, in contrast to the position under domestic law, is that there is no scope to depart from the agreed jurisdiction. Article 31(2) of the Brussels Recast Regulation provides that where there are proceedings before the chosen court, all other courts must stay proceedings until the chosen court decides it does not have jurisdiction. That seems, slightly unsatisfactorily, to leave open the possibility that the claimant sues (only) in a court other than that chosen. It might have been thought that that court ought to stay the proceedings before it. However, that does not appear to be what Article 31 says. 23 24

Ibid, at para 29. [2001] EWCA Civ 1755, [2002] 1 WLR 1517.

193

CHAPTER 5

Lis alibi pendens 5.01 The lis alibi pendens provisions relate to the situation in which there is litigation in more than one country. How should the English court respond when a claim is brought before it but where there are also proceedings in another forum? There are a number of factors which may be relevant and which can pull in different directions. These include: •

Which is the appropriate forum?

•

Is there a jurisdiction clause?

•

Who commenced proceedings first?

•

Is there a basis for saying that one set of proceedings was commenced with a tactical purpose?

The issue of lis alibi pendens is also relevant to, but is merely a subset of, actions for anti-suit injunctions to restrain proceedings. These are considered in Chapter 9. Once again, it is necessary to consider separately cases under the Brussels Recast Regulation and cases under domestic law.

STAYS UNDER THE BRUSSELS RECAST REGULATION 5.02 There are several relevant provisions when dealing with the Brussels Recast Regulation1. When one court has exclusive jurisdiction under Article 24, any other court before which a claim is brought must declare that it lacks jurisdiction2. This is not so much a lis alibi pendens case – there is no requirement, in order for Article 27 to apply, that there be other litigation in another forum. Instead Article 27 operates by saying that, because the claim should be brought in another court – that which has exclusive jurisdiction – therefore any court other than that identified by Article 24 must decline jurisdiction if the case comes before it.

1 2

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Ibid, Article 27.

195

5.03  Lis alibi pendens

A summary of the relevant Articles 5.03 Section 9 (Articles 29–34) of the Brussels Recast Regulation is headed ‘Lis pendens – related actions’. In the text which follows, the rules are first set out, and then the detail of how they have been applied and interpreted is explained. 5.04 Article  29 applies where there are actions involving the same cause of action and the same parties in more than one Member State. In that event, all but the first seised state must stay the actions before it until the jurisdiction of the first seised court is established. 5.05 Under Article 30, where there are related actions in more than one Member State, any court other than that which is first seised may stay proceedings before it. Where the court first seised has jurisdiction, other courts may decline jurisdiction entirely. Related actions are those which 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. 5.06 Article 31 says that where an action falls within the exclusive jurisdiction of more than one court, any court other than that first seised shall decline jurisdiction. It also says that where a court is chosen by the parties (Article 25), any other Member State shall stay proceedings until the court which was the subject of the jurisdiction clause declares it has no jurisdiction. But this is subject to Article  26 – submission. If the chosen court decides it has jurisdiction, all other courts shall stay claims before them. But this does not apply to choice of jurisdiction in consumer, employment or insurance cases, unless the requirements for jurisdiction clauses in those types of case are satisfied. (This provision is new to the Brussels Recast Regulation, and did not appear in the 2001 Brussels Regulation3.) 5.07 Article 32 defines when a court becomes seised of a case. 5.08 Articles 33 and 34 empower courts of Member States to stay claims before them in cases where their jurisdiction is founded on domicile, one of the special jurisdiction provisions in Article 7, Article 8 dealing with multiple defendants or Article 9 dealing with ships and proceedings are pending before a third state. There is a power for the court in the Member State to stay proceedings before it in favour of a ‘third state’ in certain circumstances. 5.09 Article 35 is also important. It provides that an application may be made to the courts of a Member State for ‘provisional, including protective measures’ under the law of that state, even if the courts of another state have jurisdiction over the substantive claim. In Van Uden Maritime BV v Kommanditgesellschaft4 3

Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 4 [1999] QB 1225.

196

Stays under the Brussels Recast Regulation 5.11

it was held that, in the case where a court had jurisdiction over a matter (in breach of contract, for example), it was also empowered to grant interim relief but that Article 35 meant that courts could grant interim relief even if they did not have substantive jurisdiction. In such cases the available interim measures would depend on national law. In that case the court, which did not have substantive jurisdiction because there was an arbitration clause, could use Article 35 to order ‘provisional or protective measures’. Even if a case were proceeding before the courts of another Member State, Article  35 would still be available to enable other courts to take such measures. But the measure must be truly provisional. It seems that English freezing and search orders would meet this test as they are not concerned at all with the merits of a case. There must, however, be a ‘real connecting link’ between the subject matter of the measures sought and the territorial jurisdiction of the particular state, although how this connection is to be ascertained is not wholly clear. An example might help to clarify the rules: a party is a defendant to a claim in one Member State. The claimant is concerned the defendant’s principal assets are in another Member State. In such a case, the second state could be justified in freezing those assets within the jurisdiction in support of (and so as not to render nugatory) the proceedings in the first state. There would, in that sense, be a real connecting link. That was that analysis applied in ICICI Bank plc v Diminico NV5, where it was decided that assets in England and Wales held by a party who was not present within the jurisdiction justified a domestic freezing order but not a worldwide freezing order. 5.10 It has been said that the aim of the lis alibi pendens provisions is to prevent parallel proceedings before different courts and to avoid the potential for conflicting decisions. This would be relevant to the recognition of judgments. The provisions seek to avoid the case where irreconcilable judgments might arise, impacting on the ability of one court to recognise the judgment given by another: see Gubish Maschinenfabrik KG v Giulio Palumbo6. In that case it was said that the concept of lis pendens under the Brussels Regulation is an independent one, and not necessarily the same as that deployed under national law. The Court noted that the only requirements for Article 29 to apply were that there were actions between the same parties in respect of the same cause of action.

The rules in detail Mandatory stays: Article 29 5.11 Article 29 is the starting point when dealing with the detail behind these rules. It covers the simplest case, where the same parties are involved in a dispute concerning the same cause of action in more than one state. Unsurprisingly, any court other than that first seised must stay the proceedings pending the determination of the first court’s jurisdiction. But until that time, it is a stay which must apply, not the dismissal of the claim or a conclusion that later seised courts 5 6

[2014] 2 CLC 647. Case 144/86 [1989] ECC 420.

197

5.12  Lis alibi pendens

lack jurisdiction. This meant that in JP  Morgan Europe Ltd v Primacom7, the English court stayed one set of proceedings in favour of a German court in which proceedings had been commenced first, despite an English choice of jurisdiction clause. (This case was decided before Article 31(2) came into effect: that article deals with stays where there is a jurisdiction clause.) Yet the court was still able to grant interim remedies under what is now Article 35, in that case a freezing order. What this does mean, however, is that it is not open to the court seised second to conclude that the first seised court lacks jurisdiction. That is a matter for the first seised court. This is part of the general EU rule that it is for each state to determine its own jurisdiction and not for state A to decide that state B lacks jurisdiction. 5.12 The only exception to this is the case where the second seised court has exclusive jurisdiction or, now, where there is a choice of jurisdiction clause in favour of the second seised court, ie Article 31 applies. 5.13 One important matter – exclusive jurisdiction – is not mentioned in Article 29. But in Weber v Weber8 the European Court held that where the second seised court had exclusive jurisdiction, it had to give its judgment on the substantive case in order to comply with the exclusive jurisdiction rule and therefore did not have to stay proceedings before it. 5.14 On the face of it, the only requirement for Article 29 to operate is that there be proceedings in more than one Member State. There is no mention of, for example, the domicile of the defendant. In Overseas Union Insurance Ltd v New Hampshire Insurance Co9, a US company sued a Singapore company and two English companies in France. The defendants in France then brought applications for declaratory relief in England. That case involved the same cause of action in both fora. The English court stayed proceedings before it in favour of a decision as to jurisdiction by the French court. The European Court held that it was right to do so, noting that the power to stay depended neither on a defendant’s domicile nor on the basis on which any court had jurisdiction (save for an exclusive jurisdiction case). The Court also said that all that the second-seised court could do was to stay the proceedings before it. That court could not itself investigate whether the first-seised court had jurisdiction. The court second seised could, of course, determine the question whether it had exclusive jurisdiction or, now, if it was the country selected by a jurisdiction clause, which would mean that other courts would have to stay proceedings before them. But otherwise it was for the first-seised court to decide on its own jurisdiction. 5.15 Article 29 does not, however, apply to the situation where proceedings are ongoing in a non-Member State. That is now governed by Article 33, considered at para 5.36. Article 33, however, is a new provision in the Brussels Recast Regulation. Where it does not apply, it may be possible to apply Articles 29 and 7 [2005] EWHC 508 (Comm). 8 [2015] Ch 140 at paras 55–60. 9 [1992] QB 434.

198

Stays under the Brussels Recast Regulation 5.19

30 (or their equivalent) ‘reflexively’ in favour of proceedings in non-Member States: see para 5.42. As a fall-back, parallel proceedings before a non-Member State would be governed by the domestic law rules discussed at para 5.44. 5.16 Article  29 applies in cases in which there are two sets of proceedings involving the same cause of action and the same parties. A useful summary of all the principles explaining what that test means is set out in Federal Republic of Nigeria v Royal Dutch Shell10, citing The Alexandros T11, which sets out very clearly and helpfully the principles developed below. 5.17 Who are the same parties? A complicated situation arose in The Tatry12, in which there was a dispute between a ship owner and three sets of cargo owners who alleged that the shipowner had contaminated product in the course of a voyage. The shipowner brought an action against two of the cargo owners and then, a year later, against the third in The Netherlands. Subsequent to the first claim, but before the second, two of the cargo owners (separately) sued the shipowner in England. The Court held that the purpose of the lis pendens provisions was to avoid parallel proceedings and thus the risk of inconsistent decisions. It said that ‘the same parties’ meant that the parties in both sets of proceedings should be identical even if the same party was a claimant in one case and a defendant in another. That meant that the second seised court needed to stay proceedings before it only to the extent that the parties before it are the same as in the other court. So if the same claimant sues the first and second defendants in the first court, and the second and third defendants in the second court, the second court would have to stay the case only against the second defendant. That would be the case even though the substantive issue against all defendants was the same. The Court noted that this gave rise to the risk of fragmented proceedings but said that this was addressed by Article 30, which permitted stays in the case of related proceedings. 5.18 Parties who are linked may be regarded as the same party, such as an insurer and an insured. In Drouot Assurances SA v Consolidated Metallurgical Industries13, an insurer of a barge which had sunk sued the owner of cargo and its insurer and the latter two brought a claim against the (insured) owner of the vessel and charterer. The question was whether the insurer of a vessel was deemed to be the same party as the owner. The Court held that they would only be the same party if the interests of the two were identical and indissociable from one another. 5.19 What is the same cause of action? In the Gubisch case it was said that the same cause of action had an independent and autonomous meaning, which was that the claims had the same subject matter. It was not necessary that two claims be entirely identical. The Court in The Tatry held that a cause of action was ‘the facts and the rule of law relied on as the basis of the action’. The same facts and same rule of law must be relied upon in both actions. The proceedings must 10 [2020] EWHC 1315 (Comm) at paras 41–49. 11 [2013] UKSC 70, [2014] 1 Lloyd’s Rep 223. 12 [1999] QB 515. 13 [1999] QB 497.

199

5.20  Lis alibi pendens

have the same end in view: see Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV14. This is an additional requirement to the same cause of action derived from the use of the word ‘objet’ in the French text. The Supreme Court suggested that the question was whether the two claims were the ‘mirror of one another’ and thus legally irreconcilable: see The Alexandros T15. It is not enough that common issues may arise in the two claims. 5.20 One reason that the correct identification of the cause of action will often be relevant is that parties often choose to proceed before a court, so that it is the first court seised, in which they apply for a declaration – for example a declaration that a party is not liable to another party. The Court in The Tatry16 said that an application for a declaration of non-liability was the same cause of action as a claim by a party alleging (say) breach of contract by the party seeking the declaration. The recognition that a claim for a declaration that party A is not liable to party B is the same cause of action as a claim by party B that party A is so liable is important. It is by no means unusual for a party to bring proceedings for a negative declaration. The recognition that such a claim involves the same cause of action as a substantive claim brought for damages means that the party who commences proceedings – perhaps for damages for breach of contract – after a party has commenced a claim for a declaration that it is not liable, is not able to say that the party which started proceedings first has not brought the same cause of action and thus that Article 29 does not apply. This, of course, encourages what might be regarded as pre-emptive applications for declaratory relief and, to that extent, forum shopping. Both claims have the same object in mind, namely the determination of contractual liability. The fact that one claim seeks declaratory relief and the other damages does not mean they are not the same cause of action. 5.21 The same cause of action focuses only on the claimant’s claim. Causes of action do not fall to be considered as different because of matters raised in the defence: see Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV17. 5.22 All of this means that the mandatory provisions of Article 29 will apply in only relatively straightforward and, it may be said, limited situations: see Glencore International AG v Shell International Trading and Shipping Co Ltd18. Outside the cases where one has, putting it colloquially, the same case and the same parties, such as, for example party A bringing the same claim against party B in two jurisdictions or the case where party A brings a claim in one place and party B brings a claim for a declaration that it is not liable in another, the permissive provisions of Article 30 referred to below may instead be invoked. 5.23 When is a court seised? This is governed by Article 32. The court will be seised when the document instituting the proceedings is lodged with the court, as long as the claimant does not thereafter fail to serve it. That means that an 14 C-111/01, para 25. 15 At para 30. 16 [1999] QB 515 at para 40. 17 C-111/01. 18 [2000] CLC 104 at 110.

200

Stays under the Brussels Recast Regulation 5.26

English court would be seised when the claim form is issued, even though that would be before the date of service, as long as the claimant then serves it in time. In Dresser UK Ltd v Falcongate Freight Management Ltd19 the Court of Appeal held that the court was not seised upon the mere issue of a claim but rather when the defendant was served. The Court also said that a court would be seised earlier if it was asked to make an interim order such as a search order or a freezing order (even though, by definition, the defendant would not know at the time of the application that the proceedings had been commenced). However, that case was decided under the Brussels Convention, which did not contain the equivalent of Article  32 of the Brussels Recast Regulation (as noted by Lord Sumption in Cameron v Liverpool Victoria Insurance Co Ltd20). Despite the lack of enthusiasm shown in Dresser for the proposition that the court was seised on issue, that seems to be the position under the Regulation. 5.24 The alternative for which Article 32 provides, unlikely to be relevant in England, is where the document has to be served before it is lodged at court. In that event it is the date when it is received by the court for service. Again, that date will not apply if the claimant has not done what was required by way of service. 5.25 Amendments may need to be considered separately. It does not seem right to suggest that an amendment to a claimant’s causes of action has any effect on the date when the court is seised: it was still seised on the date of issue even if the basis for the claim is thereafter changed. But when a new party is added, the court is only seised for that party when the party is added: see The Alexandros T21. That would appear to be the date when permission to amend is granted. 5.26 There is an important exception to the rule that the court other than that first seised must stay in the case where there is a choice of jurisdiction clause. This flows from Article 31(2), a new provision in the Brussels Recast Regulation. Article 31(2) states that where the parties have chosen a court to have jurisdiction and that court is seised, any other court must stay proceedings before it until the chosen court decides that it has jurisdiction and, if it does, must decline jurisdiction in favour of the chosen court. This is important because it avoids the risk of a party suing in a state other than that identified in the choice of jurisdiction clause and then saying other courts (including that of the chosen court) must stay proceedings before it. It thus prevents a party subject to a jurisdiction clause being able to sue elsewhere and then say that the court in which the party has sued is the court first seised with the consequence that that court would have to reach its own conclusion as to jurisdiction. This meant that what Jacobs J said was ‘impolitely termed the “Italian torpedo”’ is no longer available to a litigant seeking to avoid the effect of a jurisdiction clause: see Macquarie Global Infrastructure Funds 2 Sarl v Gonzalez22. Article 31(2) represents a change from the position under the 2001 Brussels Regulation, because under that Regulation the court in which 19 [1992] QB 502. 20 [2019] UKSC 6, [2019] 1 WLR 1471 at para 14. 21 [2013] UKSC 70, [2014] 1 Lloyd’s Rep 223, para 60. 22 [2020] EWHC 2123 (Comm).

201

5.27  Lis alibi pendens

a party was sued was the court first seised even if a claim in that court was in breach of a jurisdiction. That meant that if the court chosen by the jurisdiction clause was second seised, it has to stay proceedings in favour of the first (nonchosen) court. That was shown by in Erich Gasser GmbH  v MISAT  Srl23, in which the Court had held that where the court chosen by a jurisdiction clause was second seised, it nonetheless had to stay a claim before it in favour of the first seised court until the first seised court decided it did not have jurisdiction even though, by definition, that was not the court chosen by the parties. It was there said that the sole issue was the chronological order in which courts were seised. This remains the position under the 2001 Brussels Regulation but not under the Brussels Recast Regulation. The hope must be, of course, that the first seised court will recognise and give effect to the choice of jurisdiction clause and so decline jurisdiction, enabling the second seised court to continue. But that will only be after much delay and cost. Article 31(3), also new to the Brussels Recast Regulation, states that where the court chosen by a jurisdiction clause has established jurisdiction, any other court must decline jurisdiction. Permissive stays: Article 30 5.27 Having considered the arguably restrictive provisions of Article  29 – restrictive in the sense that the scope of their application is tightly defined – Article 30 confers a much wider power to stay. It is a power as opposed to an obligation but it does give courts the option to exercise discretion. 5.28 Article  30 applies where there are related actions in the courts of different Member States. This provision is not limited to the situation where the cases involve the same parties nor the case where they involve the same cause of action. All that is required is that the actions be related, as considered below. For that reason it is wider than Article 29 and capable of operating in spheres where that article does not apply. It is also more flexible so that if there are concerns about the basis for the first court’s jurisdiction (as in JP Morgan v Primacom above – although, as explained, the particular issue in that case would no longer arise) or if the first seised court is proceeding slowly, the second seised court does not have to stay. 5.29 Where there are related actions, the courts other than that first seised may – but do not have to – stay the proceedings before them. The court which is first seised has no such discretion. This can lead to some fine and detailed analysis of when claims are related and which court is first seised. The correct approach is first to consider whether two claims are related and then ask which was commenced first in respect of one or other of those actions. So, for example, in The Alexandros T24, a case was commenced and then stayed but it was held that the English court had been first seised of the action since that, and not any particular claims or causes of action, was the focus. The fact that claims had been stayed did not mean they were not still before the court. One has to be careful, however, 23 24

202

C-116/02 [2005] QB 1. [2013] UKSC 70, [2014] 1 Lloyd’s Rep 223.

Stays under the Brussels Recast Regulation 5.34

to see whether a claim brought is a new claim, which would affect the date on which the court was seised. 5.30 There is a particular reference to stays when the first seised court had the power to consolidate claims. In that event, the second seised court has the power to decline jurisdiction, ie not merely stay a claim but decide not to hear it. 5.31 Related actions are defined in Article 30 as those which 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’. Here, too, there is scope for the second court to exercise, if not a discretion, at least a judgment as to whether two claims are to be regarded as closely related. Hence, in contrast to the strictures of Article 29, there is an exercise of judgment at two stages: (i) whether these actions are closely related; and (ii) if so, whether there should be a stay of proceedings before the second seised court. 5.32 The concept of related claims was considered by the House of Lords in Sarrio SA v Kuwait Investment Authority25. It was held that the key issue of principle was to avoid conflicting and contradictory decisions. Hence the notion of irreconcilable judgments was not limited to the case where decisions would have mutually exclusive legal consequences. Rather, the words covered a range of situations, from the case where the matters before the courts were virtually identical, to cases where the connection is close enough that there was a risk of irreconcilable judgments. That latter risk did not only arise where the primary or essential issues in the cases were the same. Instead the Article 30 test should be applied in a broad common-sense manner. Thus in that case, that the same factual question arose in both sets of proceedings meant that there was a risk of irreconcilable judgments. 5.33 In JSC Commercial Bank Privatbank v Kolomoisky26 it was said that it was expedient to hear cases together when it was desirable to do so. Claims could be ‘related’ so as to give rise to the discretion to stay, even if the claims could not be consolidated into one action. However, where the proceedings in the secondseised court could not be consolidated with those in the first-seised court, it was a strong reason to refuse a stay of the claim in the court seised second. In that case, proceedings had been commenced in Ukraine and had been dismissed, with the consequence that the claim in England could not proceed in that forum. Although the two claims were related, the fact that the English claim could not be joined with the claim in Ukraine was decisive in the circumstances of that case against staying the English claim (applying Article 30 reflexively – see para 5.42): had the English claim been stayed, the case would not have been heard anywhere. 5.34 Article  30(1) therefore gives a broad power to stay a claim, meaning that it remains on foot but nothing will happen to it. Article  30(2) applies to the case where the first seised court has power to consolidate claims. In that 25 26

[1999] 1 AC 32. [2019] EWCA Civ 1708, [2020] 2 WLR 993.

203

5.35  Lis alibi pendens

case the second seised court may go further than staying the case before it but instead wholly decline jurisdiction, with the consequence that both cases will have to proceed in the first seised court. This, like the general power to stay under Article 30(1), is discretionary. Thus even if the first seised court has power to consolidate, the second seised court could elect to stay the proceedings – leave them on foot but not dismiss them – rather than declining jurisdiction. 5.35 Sometimes courts may have to make finely balanced procedural decisions in order to avoid perceived unfairness which could arise as a result of proceedings in more than one jurisdiction. In Federal Republic of Nigeria v Royal Dutch Shell27, the claimant brought claims in England alleging that the defendants had secured a licence from a public authority by the payment of bribes. Similar allegations were being considered in criminal proceedings in Italy and, in the light of Italian rules, the same claimant had been joined to those criminal proceedings in order to achieve a civil remedy. The claimant applied to the English court to delay the hearing of the English proceedings under either Article 29 or 30 until after the determination of the Italian proceedings. The application under Article 29 succeeded because the judge accepted that the two cases involved the same parties and the same cause of action. However, he also considered obiter the application under Article 30. As to that, the judge held that it was clearly appropriate to stay the English proceedings because the issues in them overlapped with or were so closely connected to those in the Italian proceedings that the Italian claim should be determined first in order to avoid the risk of inconsistent judgments. That the English claim could not be consolidated with the Italian proceedings was not a bar to the application of Article 30 – citing Kolomoisky. The fact that they could not be consolidation was outweighed by other factors, including the relatedness of the claims, the risk of inconsistent decisions and the fact that the Italian claims were further advanced. Stays in favour of courts of a non-Member State 5.36 Articles 29 and 30 deal with the case where there are concurrent proceedings before Member States. Article 33 deals with the case where a Member State has jurisdiction on defined grounds and there are proceedings before a third state – ie the courts of a country which is not a Member State – involving the same parties and the same cause of action. Article 33 allows the court of the Member State to stay the claim before it in certain circumstances in favour of the courts of the third state. 5.37 This is a new provision in the Brussels Recast Regulation. The power exists where the Member State court would have jurisdiction not only on the basis of domicile – Article 4 – but also one of the extended jurisdiction provisions of Article 7 – contract, tort etc; the case where a defendant is sued on the basis that the claim against that defendant is closely connected so as to fall within Article 8; or Article 9. Thus, there could be no stay, for example, if the court had exclusive 27

204

[2020] EWHC 1315 (Comm).

Stays under the Brussels Recast Regulation 5.42

jurisdiction under Article 24, even if the matter were also proceeding before a court in a third state. The claim in the Member State court and the non-Member State court must involve the same parties and the cause of action – terms familiar from Article 29. Having identified the circumstances in which an EU court might be able to stay a case in favour of a non-Member State, the article then sets out the criteria by which a court might decide to do so. They are that the third state would give a judgment capable of recognition and enforcement in the Member State, and that it is necessary for the proper administration of justice to stay. 5.38 It is apparent that, consistent with the policy underlying much of the Brussels Recast Regulation, the concern is to avoid the risk of inconsistent and conflicting judgments. By Article 33(2) the Member State court may continue with proceedings if those in the third state are stayed or discontinued, or it appears that those proceedings will not be concluded in a reasonable time, or the continuation is ‘required for the proper administration of justice’. An obvious case where that would be so is if there were a (binding) choice of jurisdiction clause in favour of the third state. 5.39 If the proceedings in the third state conclude and give rise to a judgment capable of recognition, the Member State court shall dismiss the proceedings before it. 5.40 Article 34 contains a rule similar to that which applies under Article 30 in respect of actions in Member States. It provides that where the court of a Member State is seised of an action which is ‘related to the action in the court of a third State’, the Member State has the power to stay proceedings before it. As in the case of Article 33, this rule is confined to cases where the Member State court has jurisdiction under Articles 4, 7, 8 or 9. 5.41 The power to stay exists where: (i) it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments; (ii) it is expected that the third state court will give a judgment capable of enforcement in the Member State; and (iii) it is necessary for the proper administration of justice to grant a stay. 5.42 Articles  33 and 34 are new to the Brussels Recast Regulation. What is the position under the earlier version of the Regulation (and the Lugano Convention)? The point has already been made under the heading of exclusive jurisdiction and choice of jurisdiction clauses above that, despite the absence of express references in the Brussels Regulation, the principles of ‘reflexive effect’ means that a court may give effect to choice of jurisdiction clauses in favour of third states or to recognise the competence of such states to deal with, for example, disputes about land situated in those states. Reflexive effect means that provisions of the Regulation which on their face apply only to courts in Member States could be treated as applying to other courts. This applies, for example, in 205

5.43  Lis alibi pendens

respect of jurisdiction clauses in favour of non-Member State countries and cases about, for example, real property located in a non-Member State. The argument is that, just as the Regulation confers jurisdiction on the state chosen by the parties by their jurisdiction clause where that state is a Member State, the same principle should apply when the chosen court is not that of a Member State. Or if the subject matter of a dispute is land in a country which is not a Member State, European courts should recognise the claim of the courts of that state to exercise jurisdiction. These principles have been identified and applied in cases such as Ferrexpo AG v Gilson Investments Ltd28 (the equivalent of an Article 24 case) and Plaza BV v Law Debenture Trust Corpn plc29 (a choice of jurisdiction case). In JSC Commercial Bank Privatbank v Kolomoisky30 it was held, approving Ferrexpo, that the equivalent in the Lugano Convention of Article 30 in the Brussels Recast Regulation could be applied reflexively so as to enable a stay in favour of proceedings in a non-Convention state in order to avoid the risk of inconsistent judgments. 5.43 The principles of reflexive effect are mentioned in the context of concurrent claims in Member States and non-Member States because these principles may be applicable in situations where the Regulation itself does not make provision for concurrent claims in non-Member States, including when the 2001 Brussels Regulation or the Lugano Convention apply. Articles  33 and 34 of the Brussels Recast Regulation do so, but there is no equivalent in the 2001 Regulation or in the Lugano Convention of those provisions. The point, however – and Kolomoisky is an application of this – is that the principles of reflexive effect are capable of filling the gap caused by the absence of the equivalent of Articles 33 and 34.

STAYS UNDER COMMON LAW 5.44 Turning to the situation where the Brussels Recast Regulation does not apply, the existence of proceedings in another jurisdiction will be relevant to the question whether England is the forum conveniens. Thus, such proceedings will be taken into account when deciding whether leave to serve out should be granted and whether proceedings before the English court should be stayed. 5.45 But the question whether to stay an English claim when there are sets of proceedings elsewhere is also a discretionary decision which may involve a much wider range of factors. Guidance as to the exercise of discretion was given in Reichhold Norway ASA  v Goldman Sachs31. In that case a claim was commenced in England and the defendant then commenced arbitration proceedings in Norway. The defendant applied for a stay of the English proceedings pending the resolution of the arbitration. The judge granted the stay and was upheld by 28 29 30 31

206

[2012] EWHC 721 (Comm), [2012] 1 Lloyd’s Rep 588. [2015] EWHC 43 (QB). [2019] EWCA Civ 1708, [2020] 2 WLR 993. [2000] 1 WLR 173.

Stays under common law 5.47

the Court of Appeal. This was not a Brussels Regulation case and so the judge did not rely merely on the order in which claims had been started. Instead the decision was based on the court’s inherent jurisdiction. The judge considered a range of factors, including where the claimant could seek a remedy as quickly as possible and with minimum inconvenience and expense and that the principal claim was that in the arbitration. The issue was whether the benefits of granting a stay clearly outweighed the disadvantage to the other party. The Court of Appeal said that a stay of bona fide proceedings would only be granted in rare and compelling circumstances and recognised the risk of abuse in the making of such applications. But it held that the judge had been entitled to make the decision he had. 5.46 A  useful summary of the principles was given in Klöckner Holdings GmbH v Klöckner Beteiligungs GmbH32 as follows: •

the court has a wide discretion to stay proceedings, but in circumstances where the claimant itself has voluntarily brought the two sets of proceedings, a stay should only be granted in very rare circumstances (in that case after there had been numerous steps in the English proceedings and the foreign proceedings were started 2½ years after the English proceedings);

•

a stay should only be granted if the benefits of doing so clearly outweigh any disadvantage to the other party;

•

a particularly compelling case would be required for a stay to be granted to the claimant years after it has brought the claim;

•

a stay will not, at least in general, be appropriate if the other proceedings will not even bind the parties to the action stayed, let alone finally resolve all the issues in the case to be stayed;

•

a stay will not, at least in general, be appropriate if the parties to the other proceedings are not the same;

•

a defendant against whom a serious allegation (such as deceit) is made is entitled to an expeditious hearing, and should not be left for years waiting for the outcome of another case over which it (and the Court) has no control.

5.47 In Curtis v Lockheed Martin UK Holdings33, there was a claim in London between the seller and buyer of shares, and earlier proceedings in Turin between the company in which shares were sold and a third party. The defendants to the UK claim had become parties in Turin. The defendants applied for a stay of the English proceedings because of the risk of inconsistent judgments between London and Turin. Teare J held that inconsistent decisions could be a reason for a stay but that the party applying for such had to show very strong reasons for such an order to be made where proceedings were properly commenced in England. The judge said that the burden was not greater than that would apply when one was considering a forum non conveniens argument. 32 33

[2005] EWHC 1453 (Comm) at para 21. [2008] EWHC 260 (Comm).

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CHAPTER 6

Choice of law 6.01 In any case with an international element, it is likely to be necessary to decide which system of law should govern the resolution of the dispute between the parties. This is a separate question from which court has jurisdiction to hear the claim. So, for example, in a contract for sale between a seller in country A and a buyer in country B for the shipment of goods from A to B, which law will govern the obligations between the parties? This could be relevant in the case where the claim is that A has failed to provide conforming goods, in which case the question will be to what obligations was A subject. Or the case where B has failed to comply with the obligation to pay, in which case questions may arise as to the extent of B’s obligation, where it was to be performed and the consequence of a failure. Or take the case where a person in country A is injured in country B by a defendant from country C. The question arises which system of law should govern the duties owed by the defendant based in country C to the claimant in country A. 6.02 Choice of law rules thus apply to different types of cause of action. It is possible for a single case to involve more than one choice of law. So, for example, in a case about a breach of a restrictive covenant, a case against an employee for breach of contract will require one to determine the law governing the contract, but a case against an employer accused of inducing breach will require one to identify the law applicable to the economic tort of inducement of breach. 6.03 In each case, the identification of the appropriate law involves a threestage process. First, it is necessary to characterise the issue before the court: what type of case is it? Second, select the conflict of law rule which lays down a connecting factor for that issue: what is the conflict of law rule which identifies the law which governs that issue? Third, identify the system of law which is tied by that connecting factor to the issue in question: what system of law is to be selected, applying that conflict of law rule. This three-stage process emerges from Macmillan v Bishopsgate Investment Trust plc1, followed in Raffeisen Zentralbank Österreich AG v Five Star Trading LLC2, where it was said that the overall aim was to identify the appropriate law to govern a particular issue. That judgment was approved by the Privy Council in Investec Trust (Guernsey) Ltd v Glenalla Properties Ltd3.

1 2 3

[1996] 1 WLR 387 at 391–392. [2001] EWCA Civ 68, [2001] QB 825 at 840. [2018] UKPC 7, [2019] AC 271 at para 65.

209

6.04  Choice of law

6.04 The issue of how to characterise a claim is a matter for the law of the forum: see Macmillan4. However, as discussed below, when – as will often be the case – the court is applying EU-derived law, the characterisation of claims will be based on autonomous EU law concepts which the English court will have to apply. There may be a knotty question about what one is characterising. It was said in Macmillan that this did not depend on looking solely at how the claim was formulated but at ‘the true issue or issues thrown up by the claim and defence’, which would determine how one characterised the relevant rule of law; or to look at each issue and decide the appropriate law to resolve the dispute. A good example of this is Re Cohn5. In that case a German mother and daughter died in an air raid. The question was who was entitled to their estates. That would depend on who was deemed to have died later. English law presumed the older person to have died first. German law presumed them to have died simultaneously. The judge characterised the issue as one of entitlement to testamentary dispositions. That was a matter for the law of the domicile. The issue was not one of evidence but the application of a rule of law once one had correctly characterised the issue. Therefore the way in which the judge characterised the case ended up determining the outcome. 6.05 One has to be careful about characterising a case by reference to domestic law concepts that might not be recognised in other legal systems. That may be a problem where one is concerned with equitable disputes which may have no correlative under other legal systems. Some of this complexity is reduced in certain types of case because, as mentioned above, when decisions have to be made under the auspices of EU-inspired legislation, courts will be required to adopt uniform or independent classifications of cases which are not dependent on national law. It is said that many of the relevant concepts – for example of contractual and non-contractual obligations – are ‘independent concepts’ which do not depend on national law. So the question will be whether a case falls to be regarded as coming within the parameters of those independent concepts. That may mean squeezing domestic law concepts – for example breach of an equitable obligation – into an autonomous EU law concept. The point was made in Macmillan that it was to be hoped that the answers to the choice of law questions would be the same in whatever court they were raised. It was suggested that there was a danger of looking at cases too narrowly through domestic eyes. The effect of the EU injunction to apply independent concepts is a step towards more uniform application of principles where the EU-derived rules apply. The intention is that all courts across the EU (and the UK to the extent that it continues to apply this law) would give the same answer to a question. 6.06 The principal causes of action concerned are contract and tort. They have been governed by EU law, first by the Rome Convention6, latterly the Rome

4 5 6

210

[1996] 1 WLR 387 at 407. [1945] Ch 5. Convention on the Law Applicable to Contractual Obligations 1980.

Cases where effect will not be given to foreign law 6.09

I Regulation7 and Rome II Regulation8. The UK government has provided for those Regulations to continue to govern and to provide the rules for choice of law in the UK, despite the country’s imminent departure from the EU. That is the effect of the amendments made by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 20199, which in effect states that that will continue to be the law.

CASES WHERE EFFECT WILL NOT BE GIVEN TO FOREIGN LAW 6.07 Before the rules applicable to different types of case are considered, the situations in which the court will not give effect to the chosen law are identified. As explained below, there are provisions of the European Conventions applicable to choice of law which have carve outs in favour of the public policy of the forum. But outside the cases in which these provisions apply, or developed before their adoption, there are categories of case in which the English court will not give effect to what would otherwise be the governing law selected in accordance with English conflict of law rules. In any event, the English rules may inform how the English court would apply the public policy and other exceptions under the EU conventions. 6.08 There are two situations in English law where effect will not be given to foreign law: (i) where the chosen law is incompatible with domestic public policy; and (ii) where an action is brought to enforce foreign penal, revenue of public laws or cases founded on the act of a foreign state.

Incompatible with public policy 6.09 It has been said that there is ‘abundant authority’ that an English court will decline to recognise or apply what would otherwise have been the governing law when to do so would be against English public policy: see Vervaeke v Smith10. That is not, of course, the same as saying that the English court does not like the foreign law or the result that it achieves. Public policy is narrower than that, and indeed the integrity of a conflict of law system means that it must be kept within narrow bounds and be applied in clear cases. In Vervaeke it was said that the court was slower to invoke public policy in the context of the conflict of laws than when a purely municipal issue was involved. One situation where public policy may arise is if it were held that a foreign law would be incompatible with human rights. That requirement has now been given statutory force, of course, following 7

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. 8 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations. 9 SI 2019/834. 10 [1983] 1 AC 145 at 164.

211

6.10  Choice of law

the enactment of the Human Rights Act 1998. But long before that Act came into force, foreign law was refused recognition or enforcement on human rights grounds. So, for example, in Oppenheimer v Cattermole11 a German tax law which deprived German Jews of their nationality in certain circumstances was held by a majority of the House of Lords to be discriminatory, breaching human rights and contrary to international law. Thus that law would not be enforced. 6.10 However, in less dramatic circumstances it has been held that English rules of restraint of trade are matters of public policy so that if a post-termination restraint were valid by the law governing the contract, it would still not be enforced if it breached English restraint of trade principles: see Duarte v Black & Decker Corpn12. The same was held to be true of the case where a contract was procured by duress: see Kaufman v Gerson13. 6.11 Foreign law may also be disregarded if it is breach of international law. Thus in Kuwait Airways Corpn v Iraqi Airways Co14, Iraqi law had the effect of divesting the Kuwait Airways Corporation of the ownership of aeroplanes which would otherwise have belonged to it. KAC brought an action to recover its aircraft. The law governing the claim, in tort, was (or included) the law of Iraq. Under that law, KAC had no claim because its title to the aircraft had been divested. KAC said that the English court should not, as a matter of public policy, give effect to Iraqi law which had that effect. Lord Nicholls noted that foreign law might often differ from English law as to its outcome but that that was not a reason to fail to respect it. However, the court was not obliged to give ‘blind adherence’ to foreign governing law and it could be disregarded if it produced a result wholly alien to the fundamental requirements of justice as administered by an English court such that the foreign law was contrary to public policy. He noted that recourse to the rules of public policy should be exceptional and exercised with great circumspection but gave as examples of when they should be cases such as fundamental breach of human rights, citing Oppenheimer. But the cases were not so limited. Foreign law might not be applied where it would be an affront to basic principles of justice and fairness. It could decline to do so also in order to give effect to clearly established rules of international law. In that case the Iraqi law was disregarded as being a flagrant violation of international law since the law was a consequence of Iraq’s annexation of Kuwait, which has been declared unlawful by the UN.

Penal, revenue or public law 6.12 An early but full statement of the principle is contained in the Privy Council judgment in Huningdon v Attrill15. There, an action was brought against the director of a company, seeking to hold him liable for the debts of the company 11 [1976] AC 249. 12 [2007] EWHC 2720 (QB), [2008] 1 All ER (Comm) 401 (considered below). 13 [1904] 1 KB 591. 14 [2002] UKHL 19, [2002] 2 AC 883. 15 [1893] AC 150.

212

Cases where effect will not be given to foreign law 6.15

on the basis of a New York statute which said that if the officers of a company made any misrepresentation in a report of the company’s affairs, they would be liable for the company’s debts. The Privy Council said that the question was whether the enforcement of the law would involve directly or indirectly the enforcement of the penal law of another state. Such a proceeding had to be in the nature of a suit in favour of the state whose law was infringed. As to that, it was said that crimes were local in that they were only punishable in the state where they occur. This meant that a civil suit for the enforcement of a punishment for a crime should not be entertained in the English court. The focus of the rule against enforcing foreign penal law was on a remedy for criminal wrongs or breaches of public law for which a penalty was imposed. The statute making the directors liable imposed, in one sense, a penalty in that it made the directors liable but it provided only a civil remedy – a protective and remedial measure – and was not penal in the relevant sense as it did not give rise to an action on behalf of the foreign government. Had there been an attempt to enforce another provision of the statute which imposed a fine for making false statements, that would have been penal and so would not have been justiciable in England. 6.13 In Williams & Humbert Ltd v W&H Trade Marks (Jersey) Ltd16, the rule was briefly expressed as being that the English court would not enforce the penal and revenue laws of another state. As Lord Denning MR said in AttorneyGeneral of New Zealand v Ortiz17, the English court does not sit to collect taxes for another country or to inflict punishment for it. In Banco de Vizcaya v Don Alfonso de Borbon y Austria18 an application that a bank give up certain securities formerly owned by the deposed King of Spain was refused, because it would have enforced Spanish penal law whereby the ex-King was deprived of his property. 6.14 Whether a law is regarded as a penal or revenue law is a matter for characterisation according to English law: see Government of the Islamic Republic of Iran v The Barakat Galleries Ltd19. That requires the substance of the right sought to be enforced to be examined. The mere fact that a legal provision of a foreign country contains criminal sanctions does not mean that the whole of the law is penal. So in the Barakat case, Iranian law designed to prevent the removal of antiquities was not penal even though the legislation did contain criminal sanctions. What was sought to be enforced was the vesting in the state of antiquities that had not yet been found, and that was not penal. It did not deprive anyone of title, nor did it take effect retroactively. 6.15 So far as revenue law is concerned, it has been held that the rule is limited to cases involving the direct or indirect enforcement of the revenue laws of a foreign state, the point being that each country’s sovereign authority is confined to its own territory and may not be extended beyond that. An English court will not allow a state to act in excess of its own jurisdiction by enforcing tax 16 [1986] AC 368 at 428. 17 [1984] AC 1. 18 [1935] 1 KB 140. 19 [2007] EWCA Civ 1374, [2009] QB 22 at para 106.

213

6.16  Choice of law

obligations outside the state. Thus, in Government of India v Taylor20 the Indian government was not entitled to prove in a liquidation for income tax due to it. The scope of enforcement in foreign revenue law is narrowly defined: direct or indirect enforcement of revenue laws of another country. In Re State of Norway’s Application21 the Norwegian authorities sought to obtain evidence from Englishbased witnesses concerning the tax liability of a wealthy deceased Norwegian shipowner and the tax he owed to the Norwegian authorities. The would-be witnesses opposed this application on, amongst other grounds, the basis that it involved the enforcement in England of another country’s revenue laws. It was held that this did not involve the enforcement of foreign revenue laws. There was no issue of the extra-territorial exercise of foreign law. There was no exercise of sovereign authority in seeking evidence in the UK. The evidence was sought for the purposes of enforcing tax rules in Norway, not outside that country. 6.16 The rule also applies to foreign public law. That refers to acts which are of a sovereign character or done by virtue of sovereign authority. This has been held to mean laws which are comparable to revenue or penal laws, such as exchange controls. It applies to actions to enforce the governmental interests of a foreign state. The categories are thus quite limited. In the Barakat case, for example, the claim to recover antiquities was not a claim to enforce a public law or assert sovereign rights but rather a claim based on a right of ownership founded on Iranian law, which vested products in the state by its law. The fact that the owner of the property was the state and not a private individual was no impediment to recovery, there being no issue of compulsory acquisition which might have given rise to different questions. 6.17 In Attorney-General v Heinemann Publishers Australia Pty Ltd22, the High Court of Australia refused to enjoin the publication of Peter Wright’s ‘Spycatcher’ book in part because to do so would be to enforce English public law in circumstances where the claim to restrain publication was based on UK governmental interests, namely the protection of Wright’s obligations owed as a member of the security service. The UK government’s interest in bringing the action was to maintain the secrecy of the security services in the interests of national security, which was a governmental interest. 6.18 There is also a wider principle which is not – or not limited to – the conflict of laws, which is that courts may not pass judgment on the acts of foreign states. For example, where as part of defamation proceedings the court was asked to rule that a foreign state had acted unlawfully in its conduct of certain transactions, it held that these matters were not justiciable: see Buttes Gas and Oil Co v Hammer23. 6.19 It has been suggested that it is difficult to give a comprehensive definition of the doctrine but in essence it reflects judicial abstention in cases which are 20 [1955] AC 491. 21 [1990] 1 AC 723. 22 [1989] 2 FSR 631. 23 [1982] AC 888.

214

Cases where effect will not be given to foreign law 6.19

concerned with the exercise of sovereign authority: see Rahmatullah v Secretary of State for Defence24 and Belhaj v Straw25. In the latter case, Lord Mance said that there were three elements to the rule affecting foreign acts of state: (i) a foreign state’s legislation will normally be treated as valid so far as it affects movable or immovable property, save where there is a conflict with a fundamental principle of public policy (as in Oppenheimer); (ii) a domestic court will not normally question the validity of a sovereign act in respect of property within the foreign state’s jurisdiction; (iii) a domestic court will refrain from adjudicating upon certain categories of sovereign act of a foreign state abroad even if they occur outside the foreign state’s jurisdiction. There are some exceptions, such as involvement in torture, unlawful detention, rendition and breaches of international law (Kuwait Airways) which could enable claims to be brought before the English court. This is a large topic, as a glance at the mere length of the judgments in the Rahmatullah and Belhaj cases shows, and since the issues go beyond the conflict of laws it is not proposed to explore it further here.

24 25

[2017] UKSC 1, [2017] AC 649. [2017] UKSC 3, [2017] AC 964.

215

CHAPTER 7

Choice of law in contract 7.01 In the light of the apparent decision that EU law will continue to govern the UK’s choice of law rules in contract and tort, this chapter begins with a statement of the principles of the Rome Convention1 and the Rome I Regulation2. However, just in case, heaven forbid, there were to be a change of heart in government, the chapter will conclude with a brief statement of the common law rules. In any event, those rules are capable of being relevant to contracts to which the Rome Convention or Rome I Regulation do not apply. 7.02 In summary, under the Rome Convention and Rome I  Regulation the governing law is that which is expressly or impliedly chosen by the parties, but provision is also made as to the governing law to be applied in the absence of choice. The governing law is responsible for most elements of the contract, including interpretation, performance and the consequences of breach. 7.03 The essence of the choice of law rules set out in the Rome I Regulation is as follows: (i) first, the law chosen by the parties: that may be expressly chosen or clearly demonstrated by the terms of the contract or the circumstances of the case; (ii) second, in the absence of choice, there is a series of rules applicable to different types of contract; (iii) third, if the contract does not fall into any of those categories, the law is that of the place where the party required to effect the characteristic performance of the contract is habitually resident; (iv) fourth, there is a fall-back for the case where the contract is ‘manifestly more closely connected’ with another country, in which case the law of that country will apply. 7.04 The Rome Convention came into existence in 1980. It applies to contracts entered into after 1 April 1991. It was later replaced by the Rome I Regulation3, which applies to contracts entered into after 17 December 2009. For this reason, some cases refer to the Rome Convention and some to the Rome I Regulation.

1 2 3

Convention on the Law Applicable to Contractual Obligations 1980. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. Except in Denmark and in overseas countries and territories of EU Member States.

217

7.05  Choice of law in contract

7.05 Effect was given to the Rome Convention by the Contracts (Applicable Law) Act 1990. That Act sets out the Rome Convention in its Schedule 1. At the time it came into force, it was the Rome Convention which governed, and the Act as a whole is focused on the Convention. However, s 4A, which came into effect on 17 December 2009, says that nothing in the Act applies to the determination of contractual choice of law which falls to be decided under the Rome I Regulations. In this way, statutory effect is given both to the Rome Convention (for contracts entered into up to 16  December 2009) and to the Rome I  Regulation (which applies to contracts entered into on or after 17 December 2009). 7.06 The Contracts (Applicable Law) Act 1990 has, however, been prospectively amended by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU Exit) Regulations 20194. From the time that the UK leaves the EU, s 2 of the 1990 Act will provide that the Rome Convention (set out in Schedule 1 to the Act) applies to contracts made on or after 1 April 1991. Section 4A provides that the Act does not apply where matters fall to be determined under the Rome I Regulation. The Rome I Regulation is referred to below, even though both it and the Rome Convention will be relevant, depending on the date when the contract was entered into. There are few relevant differences between the two. 7.07 One substantial change is that by s 6 of the European Union (Withdrawal) Act 2018 English courts will no longer be bound by decisions of the European Court of Justice, and may not make references to the European Court after the completion of the implementation period, which is defined by statute as 31 December 2020. 7.08 Turning to the Rome I Regulation, according to Article 1 it applies to ‘contractual obligations in civil and commercial matters’. The concept of contractual obligations has a specific EU definition in the context of the Brussels Recast Regulation. Recital 7 of the Rome I Regulation provides that the provisions of that regulation should be read consistently with the Brussels Regulation. This was reinforced by the European Court in Ergo Insurance SE v If P&C Insurance AS5, in which the court applied cases derived from the Brussels Regulation to inform the meaning of contractual obligations under the Rome I  Regulation, holding that that concept meant a legal obligation freely consented to by one person towards another6. That, then, is the core test: obligations freely assumed by one party to another. In Granarolo SpA v Ambrosi Emmi France SA7, it was held (in the context of jurisdiction) that a contractual relationship could arise tacitly, for example where parties were engaged in a long-standing business relationship which had been formed even without a contract in writing. However, such a relationship could not be presumed and had to be demonstrated by a body of consistent evidence, including the existence of a long-standing relationship, good faith between the parties and the regularity of transactions. 4 SI 2019/834. 5 C-359/14 and 475/14 [2016] RTR 14. 6 Ibid, at paras 43–44. 7 C-196/15.

218

 7.11

7.09 In Cristiano Committeri v Club Mediterranee SA8, an employer contracted with a provider for the supply of team-building activities for its employees. One employee was injured in the course of one such activity and sued the provider. It was held that the employee’s claim was contractual because the employer had made a contract with the provider in order to confer benefits on the employee and the provider was required to perform its obligations under the contract. It seems that, had this been decided under English law, the employee’s claim would have been in tort since the employee was not a party to the contract. Nor is it clear how the employee (as opposed to the employer) undertook any legal obligations. (Compare Jakob Handte & Co GmbH v Societe Traitements Mecano-Chimiques des Surfaces9, a jurisdiction case, in which one party bought goods from another and then sold them to a sub-buyer. It was held that the sub-buyer’s claim against the manufacturer was not contractual because of the lack of any contractual link between the sub-buyer and the manufacturer. Perhaps it would be said in Committeri that the defendant knew that the employer was contracting on behalf of the employees so as to give rise to obligations accepted by the provider towards them.) 7.10 As explained below, a matter remains contractual even where one party denies the existence of the contract, or seeks to avoid it. 7.11 There are several exceptions to the operation of the Rome I Regulation. It does not apply to revenue, customs or administrative matters, nor to questions about the status or legal capacity of persons. There is also a fairly wide range of contractual obligations to which it does not apply, as follows: •

questions involving the status or legal capacity of natural persons, save for deciding whether persons had contractual capacity in cases where the parties are both in the same country;

•

obligations arising from family relationships or their equivalent;

•

obligations relating to wills and succession, property rights arising from a matrimonial relationship and rights and duties arising from broadly expressed family relationships;

•

obligations arising from bills of exchange, cheques, promissory notes and negotiable instruments;

•

arbitration agreements and agreements on choice of court;

•

questions concerning company law or the law of corporate or unincorporated bodies;

•

questions of agency – whether an agent can bind a principal or a person bind a company or other body;

•

the constitution of trusts and the relationship between settlors, trustees and beneficiaries;

8 [2016] EWHC 1510 (QB). 9 C-26/91.

219

7.12  Choice of law in contract

•

obligations arising from dealings prior to the conclusion of a contract;

•

some insurance contracts;

•

questions of evidence and procedure.

The Rome Convention also contained an exception for insurance covering risks in the UK or EU (but not reinsurance) but this is not repeated in the Rome I Regulation. 7.12 Article 2 of the Rome I Regulation is designed to show that the choice of law rules are of universal application. In a touching reference to the UK’s departure from the EU, the language of Article 2 has been amended in Schedule 1 to the Contracts (Applicable Law) Act 1990 for its application in the UK to say that the law specified by the Convention shall be applied whether or not it is the law of the UK, replacing the former reference to ‘the law of a Contracting State’.

PARTY CHOICE 7.13 Chapter II of the Rome I Regulation contains what are described as ‘uniform rules’. These begin with the general principle in Article 3 that the contract is governed by the law chosen by the parties. The choice may be made expressly or be clearly demonstrated by the terms of the contract or the circumstances of the case. The parties may select the law applicable to the whole or only part of the contract. For example, in the case of the sale of products in numerous countries, the parties might say that sales in France were governed by French law, in Germany by German law and so forth. ‘The law’ of a country is its domestic law and not its private international law rules. This means that if a contract chooses the law of country X, that law will not be taken to include the conflict of law rules which might say that the law applicable to the particular contract was the law of country Y. This derives from Article 20 of the Rome I Regulation. 7.14 Article 3 thus defers to the autonomy of the parties. The most straightforward case is that of an express choice. Most commercial contracts tend to contain a choice of law clause. The effect of Article 3 is that the law chosen can be any system of law at all, even one apparently unrelated to the contract or the parties. (There are a couple of exceptions to this discussed at paras 7.16–7.18.) 7.15 The decision whether there is an effective choice of law clause is to be determined by the law which would govern assuming there was a valid choice of law clause: the putative governing law. If there is a clause saying the contract is governed by the law of X, it is that law which determines whether the choice of X law is valid. That is the effect of Article 10(1) of the Rome I Regulation. However, Article 10(2) provides a limit to that, saying that a party may rely on the law of the place of that party’s habitual residence to establish a lack of consent if it would not be reasonable to determine the effect of the party’s conduct in accordance with the putative governing law. 220

Party choice 7.19

7.16 There are some limits on freedom of choice. For example, by Article 5 of the Rome I  Regulation, parties to a contract for the carriage of passengers may only choose the country of the passenger’s or carrier’s habitual residence or where the carrier’s central administration is situated or the place of departure or the destination. 7.17 Article 7 says that: •

in relation to insurance contracts (other than for large risks) the parties may only choose the law of the state where a risk is situated or that of the policyholder’s habitual residence;

•

in the case of life insurance, the parties may choose the law of the state of which the insured is a national,

•

where the insurance covers risks limited to events occurring in a state other than that in which the risk is situated, the parties may choose the law of that state and

•

where risk relates to a commercial or professional activity carried on in a number of states, the parties may choose the law of any of those states.

7.18 However, the choice of law is not absolute. That is because ‘where all the other elements relevant to the situation at the time of the choice are connected with one country only’ then the parties’ choice of law will not prejudice the application of the laws of that country which cannot be derogated from by agreement. Therefore in respect of such laws, the parties will be bound by the rules of the country which cannot be derogated from by contract – referred to in the Rome Convention (but not the Rome I Regulation) as its mandatory rules10. This would apply not only where the English court is dealing with a choice of foreign law but also where parties are before the English court and have chosen English law. If all the features of the case are connected with another country, it would be open to a party to rely on the rules of the law in that country which may not be derogated from by agreement. Article 3(4) says that where all other elements of the case are located in one or more Member States, the choice of a different law does not affect the application of EU law as implemented in the forum. The UK has amended this provision to refer to ‘retained EU law’. Further, by Article 9, the choice of a law does not affect the rules of the law of the forum where they apply irrespective of the governing law. That is developed in more detail at para 7.39. 7.19 The extent of party choice is further reflected in Article 3(2) of the Rome I Regulation, which permits the parties to change the applicable law – to agree that the contract is subject to a law other than that which previously governed it. That could also mean that the parties could agree, part way through the currency of a contract, that it will be subject to a governing law even if they had previously not had any express agreement such that the governing law was determined by the circumstances of the case.

10

Rome I Regulation, Article 3(3).

221

7.20  Choice of law in contract

7.20 In some cases decided under English law, the parties have agreed a clause which provides for different law to apply in different circumstances, or which allows a party to elect which law should apply. In Astro Venturoso Compania Naviera v Hellenic Shipyards SA11 it was held that a clause which said there should be arbitration in England under English law, but if the arbitration clause was invalid the dispute was to be decided in Greece under Greek law, was valid. It seems that this sort of variability is also envisaged by Article  3(2): it is the paradigm of party choice. 7.21 The alternative approach to choice of law, in the absence of an express choice, is that which is demonstrated by the terms of the contract or the circumstances of the case. The focus of this part of Article 3 is on trying to identify the choice the parties have made rather than imposing a choice of law, but the difference may be elusive. In Lawlor v Sandvik Mining and Construction12 this was described as an ‘implied choice of law’. It was said that whether there was such a choice was to be assessed objectively and that the ‘unspoken thoughts’ of the parties were inadmissible in evidence. It was said that the parties ‘must have taken it without saying’ that their contract should be governed by a certain law; that it is the only reasonable conclusion to be drawn from the circumstances. It does not have to be shown that there was a subjective conscious choice. Factors from which a choice of law might be inferred could include the case where previous agreements between the parties have contained a choice of law clause or where they have in such an agreement made a choice of jurisdiction. The House of Lords had said that a choice of arbitration in London was an indication of a choice of English law to govern the contract, albeit not conclusive: see Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation  SA13. Recital (12) to the Rome I Regulation states that the choice of a court is one factor in determining whether a choice of law has been clearly demonstrated. In Oldendorff v Liberia Corpn14 it was argued that there was an implied choice of English law because the parties had selected arbitration in London to resolve any disputes. Clarke J agreed, holding that the position set out in the Compagnie d’Armement Maritime case was reflective of Article 3. 7.22 As indicated, Article 10(2) of the Rome I Regulation provides for potential limits to a person’s consent by reference to the law of the place where the person habitually resides. Article 3(5) provides that the ‘existence and validity of the consent of the parties as to the choice of applicable law’ is to be determined in accordance with Articles 10, 11 and 13. 7.23 The position in domestic law is that the material or essential validity of a contract is governed by (what would be) its proper law. Thus in Dimskal Shipping Co v International Transport Workers’ Federation15, shipowners sought to avoid contracts on the grounds of duress having been subject to the imposition 11 12 13 14 15

222

[1983] 1 Lloyd’s Rep 12. [2013] 2 Lloyd’s Rep 98. [1971] AC 572 at 596, 609. [1996] 1 Lloyd’s Rep 380. [1992] 2 AC 152.

Choice of law where the parties do not make a selection 7.25

of demands, including financial demands, by the ITWF trade union. They also claimed restitution of the sums that had been demanded by the union (including sums paid to seamen working on the ship). The agreement for payment was governed by English law and on that basis it was for English law to decide whether the claims of duress were well-founded. Article 10(2) provides the possibility for an exception to this, to enable the person who challenges consent to rely on the law of the place where the person is habitually resident if it would not be reasonable to rely on the governing law. However, it has been held domestically that this provision and the reference to the law of a party’s habitual residence is available only where the point in issue is whether consent existed at all as opposed to where it was invalidated by matters such as mistake, misrepresentation, duress or undue influence: see Lupofresh Ltd v Sapporo Breweries Ltd16. That case held that the effect of duress was a matter for the governing law. Thus Article 10(2) would not have been relevant to the analysis in Dimskal. 7.24 The exception under Article 3(3) for the provisions of law which could not be derogated from was considered in Banco Santander Totta SA v Cia Carris de Ferro de Disboa SA17. That case said that the primary rule or fundamental principle was party autonomy. In that context, Article 3(3) was a limited exception which was to be construed narrowly. It was said that the provision was designed to apply when the circumstances showed that the contract was ‘purely domestic’18 – confined to one country – such that it would be appropriate to expect the law of that country to apply. Thus where the parties choose the law of country A but all the elements of the case are linked to country B, then respect would be accorded to country B’s laws. But where that is not the case, because, for example, the parties are located in different countries or performance is to be in a range of countries, there is no scope for Article 3(3) to operate.

CHOICE OF LAW WHERE THE PARTIES DO NOT MAKE A SELECTION General rules 7.25 Article  4 of the Rome I  Regulation provides for the ‘applicable law in the absence of choice’. This is expressed to be without prejudice to Articles 5–8, which lay down rules for particular types of contract. But Article  4 starts by working in much the same way, in that it imposes a system of law for particular types of contract. Hence Article 4 contains a general rule and Articles 5–8 specific rules for different types of contract. Thus under Article 4: (i) contracts for the sale of goods are governed by the law of the country where the seller is habitually resident. One obvious advantage of this is that all sales by that seller will be governed by the same law. Had the law of the country of the buyer’s residence been chosen, then different laws would 16 17 18

[2013] 2 Lloyd’s Rep 444. [2017] 1 WLR 1323. Ibid, at para 57.

223

7.26  Choice of law in contract

have applied to the sale of the same product depending where the buyer lived; (ii) contracts for the provision of services are governed by the law of the country of the service provider’s habitual residence. The same point applies; (iii) contracts relating to a right in rem in immovable property are governed by the law of the country in which the property is situated. This, of course, correlates with the jurisdiction rule; (iv) tenancies of immovable property for less than six months are governed by the law of the place where the landlord is habitually resident; (v) franchise contracts are governed by the law of the place of the franchisee’s habitual residence; (vi) distribution contracts are governed by the law of the place of the distributor’s habitual residence; (vii) auction contracts are governed by the law of the place where the auction takes place; (viii) there is a provision dealing with interests in financial instruments. 7.26 As can be seen, there are frequent references to habitual residence. Article 19 deals with that. It says that a company etc is habitually resident where it has its central administration. The habitual residence of a natural person acting in the course of business is that person’s principal place of business. There is no reference to natural persons otherwise. Where a contract is concluded with a branch, agency or establishment or the performance under a contract was the responsibility of a branch, agency or establishment, the place where that branch etc is located is the habitual residence. Cases decided under the jurisdiction rules will determine the meaning of branch, agency or establishment. The date when habitual residence is to be assessed is the date when the contract is concluded. 7.27 There is, then, a general provision which says that where a contract does not fall within that list then the governing law is that of the place where the party required to effect characteristic performance of the contract is habitually resident. In the case where one party pays the other to do or provide something, it is the thing done by the party who is paid which counts as the characteristic performance. Thus in Cox v Ergo Versicherung AG19, there was an assignment of a chose in action (the right to bring a claim following an accident). There was no express choice of law. On the assumption that there was no implicit choice it was held that the characteristic performance of the contract was the assignment and that the governing law was therefore that of the place where the assignor was habitually resident.

19 [2012] EWCA Civ 1001.

224

Choice of law where the parties do not make a selection 7.30

7.28 There are two final catch-all provisions. One says that where the circumstances of the case show that the contract is ‘manifestly more closely connected with a country’ other than that indicated, then the law of that country applies20. The other says that if the law cannot be determined by the rules in Article 4(1) and (2), then the governing law is that of the country with which the contract is most closely connected21. In a case decided under the Rome Convention, Intercontainer Interfrigo SC v Balkenende Osthuizen BV22, it was held that the presumptions in the Articles (there Article 4(5) of the Rome Convention) were designed to identify with which country a contract was most closely connected but that where a judge decided that the contract was more closely connected with a country other than that identified by the presumptions, then those presumptions could be ‘disregarded’. This appears to give judges a quite wide power if the facts justify the view that a contract is more closely connected with another country. But note the limiting language of ‘manifestly’ in the Rome I Regulation, which appears designed to limit the circumstances in which that power could be exercised. In Molton Street Capital LLP v Shooters Hill Capital Partners LLP23 it was said that the word manifestly suggested ‘a more stringent standard’24. 7.29 That is the general position under the Rome I  Regulation. The Rome Convention should also be briefly mentioned. The Convention is applicable, of course, to contracts entered into prior to 17 December 2009 and so is still capable of being relevant. The Rome Convention adopts a less prescriptive approach. Article  4 of the Convention records that contracts are governed by the law of the place with which it is most closely connected, and that is presumed to be the country where the person who is to effect the performance which is characteristic of the contract is habitually resident or, in the case of a company, has its central administration. But where a contract is entered into in the course of a trade or profession, the governing law is that of the place where the business is situated, unless performance is to be effected via a different place of business in which case it is the country where the business which provides the performance is situated. Article 4 of the Convention thus operates differently from the Rome I Regulation. The latter sets out various rules to be applied, whereas the Convention lays down a general test of close connection and then offers presumptions. But it is implicit in the notion of a presumption that it is not set in stone and can be departed from. That is made express by Article 4(5) of the Convention, which provides that the rule based on characteristic performance does not apply if characteristic performance cannot be determined and that the presumptions may be disregarded if it appears from the circumstances that the contract is more closely connected with another country: see Intercontainer above. 7.30 The Rome Convention makes express provision about contracts dealing with rights in immovable property – presuming that the law is that of the place where the property is situated – and contracts for the carriage of goods, saying 20 Rome I Regulation, Article 4(3). 21 Rome I Regulation, Article 4(4). 22 [2010] QB 411. 23 [2015] EWHC 3419 (Comm). 24 Ibid, at para 94.

225

7.31  Choice of law in contract

that the presumption based on the characteristic performance of the contract does not apply but that in the case where the place where the carrier’s business is based and the place of loading are the same, then the law of that country will apply.

Specific types of contract 7.31 Returning to the Rome I  Regulation, it is necessary to move from the general case to specific types of contract. As to that, Articles 5–8 of the Rome I  Regulation (and Articles  5–7 of the Rome Convention) deal with particular types of contract. 7.32 Article 5 of the Rome I Regulation deals with contracts of carriage, both for goods and passengers. The governing law for a contract for the carriage of goods is that of the place of habitual residence of the carrier but only if the place of receipt or delivery or the habitual residence of the consignor is in the same country. If not, then the governing law is the place of delivery as agreed by the parties. 7.33 In relation to contracts for the carriage of passengers, the law is that of the habitual residence of the passenger as long as the place of departure or the destination is in the same country. Otherwise, the governing law is that of the place of the carrier’s habitual residence. (The point has already been made that Article 5 places limits on the parties’ ability to choose the law.) There is a fallback for the case where the contract is manifestly more closely connected with some other country. 7.34 Article  6 of the Rome I  Regulation deals with consumer contracts. It is complicated. The basic principle is that contracts between a consumer and someone engaging in a trade or profession are governed by the law of the place of the consumer’s habitual residence as long as the other party pursues activities in, or directs activities towards, that place. If that is not the case, then Articles 3 and 4 apply, save that the parties may not deprive the consumer of the protection of provisions under the law of the place where the consumer was habitually resident, from which there can be no derogation by agreement. But Article 6 does not apply in cases where services are to be supplied to a consumer exclusively in a place other than that of the consumer’s habitual residence or in cases concerning carriage, rights in immovable property or certain cases involving financial instruments. 7.35 Article 7 deals with insurance contracts. It applies to all insurance within the EU and insurance of large risks anywhere. Insurance, other than for large risks is governed by Articles  3, but subject to the limits on choice contained in Article 7(3). However, if the law of the states which may be chosen confer a greater freedom of choice of applicable law, the parties may take advantage of that right. If the parties do not choose the governing law, it is the law of the Member State in which the risk was situated at the time of the contract. In the 226

Choice of law where the parties do not make a selection 7.38

case of large risks, the governing law – in the absence of choice – is that of the insurer’s habitual residence. Article 7 does not apply to reinsurance. 7.36 Article  8 of the Rome I  Regulation deals with individual employment contracts. The primary rule is that the governing law will be that chosen by the parties. However, it notes that the parties’ choice may not deprive the employee of the protections which would have been applicable in the absence of choice and which may not be derogated from by agreement. The formulation under the Rome Convention was different. It said that a choice of law for an employment contract could not deprive the employee of the protection afforded by the ‘mandatory rules of law’ which would apply in the absence of choice. In Duarte v The Black and Decker Corpn25 it was held that the law of restraint of trade, which might render a post-termination restraint unenforceable, was not such a mandatory rule. (It was, however, a rule of public policy which trumped the applicable law, under Article  16 of the Convention.) Both formulations would appear to preclude an employee contracting out of various statutory protections (save for by a valid compromise agreement). 7.37 If there is no choice in respect of an employment contract, the law is that of the country in which the employee habitually works under the contract of employment. That country is not deemed changed if the employee is temporarily moved to another state. If the employee’s place of habitual employment cannot be determined, then the governing law is that of the country where the business through which the employee was engaged is situated. There is then a fall-back for the case where the circumstances as a whole suggest that the contract is more closely connected with a different country. 7.38 One question which arises is what counts as a contract of employment, ie when will Article 8 of the Rome I Regulation apply? An answer to that was given in Bosworth v Arcadia26 in the European Court of Justice. That case concerned a very powerful chief executive officer and chief financial officer who determined their own terms of employment and exercised substantial control over the company which they said was their employer. The case was a jurisdiction case but in the course of it the European Court addressed the question of what counted as a contract of employment. (In the event, that was the only question it considered.) The European Court held that the meaning of a contract of employment did not depend on national law but had to be given an independent interpretation. As to that, an employee was someone who performed services for and under the direction of another in return for payment. Thus an employment relationship implied a hierarchical relationship between the worker and the employer, a relationship of subordination. Only if those features were present – and it was held in Bosworth they were not – would the contract be a contract of employment.

25 [2008] 1 All ER (Comm) 401. 26 [2020] ICR 349.

227

7.39  Choice of law in contract

MANDATORY PROVISIONS 7.39 The point has already been made in connection with choice of law under Article 3 of the Rome I Regulation that the choice of a law does not affect the enforcement of provisions which cannot be derogated from by contract where all the features of the case are linked to a country other than that whose law is chosen. Article 9 of the Regulation (reflecting Article 7 of the Rome Convention) contains a similar provision in favour of the law of the forum and the law of the place where the contract is to be performed. Article 9 preserves ‘overriding mandatory provisions’. These are provisions which are regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisations which apply regardless of the law governing the contract. The country in question may be the forum (Article 9(2)) or the place where the obligations arising from the contract have to be performed (Article 9(3)). It has been held that this provision is a derogation from the principle that the applicable law is that chosen by the parties and for that reason must be interpreted strictly: see Hellenic Republic v Nikiforidis27. In that case it was held that Article 9 did not allow mandatory provisions of any country other than the forum or the place of performance to be taken into account. But if the governing law permitted the law of some other country to be taken into account, that would be an application of the governing law and was not precluded by Article 9. 7.40 As indicated, Article 9(2) of the Rome I Regulation does not restrict the application of the overriding mandatory provisions of the forum. Article  9(3) deals with the law of the place where the contract is to be performed, to the extent that the mandatory provisions of the law of the place for performance renders the performance of the contract unlawful. 7.41 So far as the law of the English forum is concerned, sometimes there are statutory provisions which say they have effect regardless of the governing law of the contract. An example is s 204 of the Employment Rights Act 1996. Another is s 27(2) of the Unfair Contract Terms Act 1977. In an exceptional case, the effect of legislation may be that the choice of a particular system of law is of no effect: see The Hollandia28. 7.42 As to the law of the place of performance, English law, prior to the Convention, gave effect to the principle that a contract could not be enforced insofar as it was unlawful by the law of the place where it was to be performed. Thus in Ralli Brothers v Compania Naviera Sota Y Anzar29, a contract governed by English law required payment of freight of 50l per ton. Goods were to be carried to Spain where the law imposed a limit of 875 pesetas per ton. It was held that the contract was invalid insofar as it was unlawful by the law of the country where it was to be performed, even though lawful by its governing law. Hence, since the contract required payment of freight in a sum greater than 875 pesetas 27 [2017] ICR 147. 28 [1983] 1 AC 565. 29 [1920] 2 KB 287.

228

Mandatory provisions 7.45

per ton for delivery to Spain it was, to that extent, unlawful with the consequence that the contractual amount of freight could not be recovered. As long as the law of the place where the contract is to be performed can be characterised as an overriding mandatory provision, Article 9(3) of the Rome I Regulation is to similar effect. It seems to follow also from Nikiforidis that a domestic law rule which took into account the law of the place of performance, or some other system of law, would be upheld and not regarded as incompatible with Article 9. 7.43 Under the Rome Convention, Article 7 states that effect could be given to the ‘mandatory rules’ of a country with which ‘the situation has a close connection’ but only insofar as those rules had to be given effect ‘regardless of the law governing the contract’. In fact when the UK enacted the Rome Convention it omitted Article 7, as it was entitled to do. However, now that the Contracts (Applicable Law) Act 1990 has been prospectively amended (see para  7.06 above) to reflect the fact that the UK is leaving the EU, s 2(1) provides for the Rome Convention to apply up to the time when the Regulation takes effect. The version of the Convention in Schedule 1 has a variant on Article 7 to provide that it will not affect the application of the laws of the forum when they are mandatory irrespective of the applicable law. 7.44 Finally Article 21 says that the law specified by the Rome I Regulation may be refused if its application would be ‘manifestly incompatible with the public policy of the forum’. It was on that basis that the chosen law in Duarte v The Black and Decker Corpn30 had to give way to English law principles of restraint of trade because they were regarded as matters of public policy. Therefore even if the restraint in that case had been valid under the law chosen by the parties, because English principles of restraint of trade was a doctrine of public policy, if the clause was bad by English law, that prevailed over the chosen law. It has been said that public policy should be given a restrictive interpretation. Where there was no illegality under the law governing a contract but only under English law, public policy would only be engaged where the illegality reflected considerations of international public policy rather than purely domestic public policy: see RBRG Trading (UK) Ltd v Sinocore International Co Ltd31, a case concerning the enforcement of an arbitration award. It has been said that a court should be slower to invoke public policy in the field of the conflict of laws than when a purely municipal legal issue is involved: see Vervaeke v Smith32. That case said that public policy should be invoked with ‘extreme reserve’. 7.45 It has also been held that there may be cases where parties are caused to enter contract because of duress which is ‘so unconscionable’ that the English court would refuse as a matter of public policy to give effect to a contract as required by its governing law: see Royal Boskalis Westminster NV v Mountain33. In that case, the issue was duress which – whether or not it was regarded as affecting the contract according to its governing law – was so unconscionable 30 31 32 33

[2008] 1 All ER (Comm) 401. [2018] 2 Lloyd’s Rep 133 at para 25(3). [1983] 1 AC 145 at 164. [1999] QB 674 at 729.

229

7.46  Choice of law in contract

that it would be open to the English court, as a matter of public policy, to override the governing law. That was therefore an example – no doubt extremely rare in practice – of public policy applying not because of a rule of English law which rule is held to amount to public policy but because of a consequence which, as a matter of public policy, the court should recognise and to which it should attach weight. Note, however, that this only applies to manifest incompatibility with English public policy. The mere fact that an English court would not regard as binding a contract which was binding according to its governing law would not be enough to engage this principle. 7.46 There is also a respect in which this public policy rule operates in an opposite way. Where the law governing a contract is foreign law and there is a provision of that law which is regarded as contrary to public policy but which affects the contract, the English court may decline to give effect to that provision of foreign law. So, for example, in Re Fried Krupp Actien-Gesellschaft34 a German statute provided that interest (which was otherwise payable under German law) could not be claimed on debts by persons domiciled in Great Britain. It was held that this provision was designed to penalise particular classes of person and that the statute would not be recognised. Hence the English court enforced payment of interest.

THE SCOPE OF THE APPLICABLE LAW 7.47 The scope of the applicable law is the subject specifically of Article 12 of the Rome I Regulation. It is also addressed by Articles 10 and 11, although in these cases there are occasions when systems of law other than that chosen by the parties or imposed by Article 4 may be relevant. 7.48 Sometimes there may be a dispute whether a contract was agreed at all. By Article  10, ‘the existence and validity of a contract’ is to be governed by the law which would govern it if there were a contract – the putative governing law. The identification of the system of law by which one answers the question whether there was a contract is controversial. Parties might prefer the question to be governed by what they would regard as their own law – whether that be the law of the place where they are domiciled or the law of the place of habitual residence – particularly where consent is an issue: as to that, see para 7.49. A party might say that in circumstances where there is a challenge to whether there is a contract at all, the application of the law which would apply if there were a contract tends to assume the opposite of what that party is contending – that there is no contract or no binding contract. But the alternatives are also problematic. The law of the forum has no obvious connection with the parties, and to allow them to rely on, say, the law of the place of habitual residence could favour one party over another. So the law we end up with is the putative governing law. That was also the position in domestic law: see The Evia Luck35. 34 35

230

[1917] 2 Ch 188. [1992] 2 AC 152 at 167–168.

The scope of the applicable law 7.50

7.49 But in fact that is not the complete answer because Article  10(2) provides that where the issue is consent, a party may rely on the law of that party’s habitual residence where it would not be reasonable to apply the putative governing law. This has limited application. It goes only to challenges to consent and not, for example, to the case where a party says there was no equivalence of offer and acceptance or no consideration such that there was no binding contract. It has also been held that consent here refers to the existence, not the validity, of consent. In some cases – duress is an example – it is sometimes said that a person’s consent is vitiated. The argument is that the consent was wrongly procured. However, as indicated above, Article 10(2) does not apply to the case where a party says that consent was wrongly procured or the validity of consent was affected. It only applied to the case where the party says that there was no consent: see Lupofresh Ltd v Sapporo Breweries Ltd36, where the example was given of a party who did not realise that, under the governing law, silence could indicate consent. The limitation of Article 10(2) to cases concerning the existence, as opposed to the validity, of consent means that not only arguments that consent was procured by duress but also those based on misrepresentation, undue influence or non-disclosure would fall outside Article 10(2) and would be matters for the governing law or putative governing law. Also, it does not enable a party always to rely on the law of the place of habitual residence, only where it would be unjust to rely on the putative governing law. 7.50 Article  11 of the Rome I  Regulation deals with formal validity. It is a rather convoluted read. It contains the following provisions: (i) first, where persons (or their agents) are in the same country at the time they agree a contract, it is to be regarded as formally valid if it satisfies the formal requirements of either the governing law or the law of the place where the contract is concluded; (ii) second, if the parties are not in the same country at the time the contract is concluded, then it will be formally valid if it is determined to be so either by the law governing the contract, or the law of the countries in which either (or presumably any, in the case of a contract with more than two) party was based at the time the contract was concluded, or the law of the place where either party was habitually resident; (iii) third, a ‘unilateral act’ intended to have effect in relation to an existing or contemplated contract is formally valid if valid in accordance with the law which governs or would govern the contract or the law of the place where the act was done or the law of the place where the person doing the act was habitually resident. None of this applies to a consumer contract (falling within Article 6). In such cases, formal validity is governed by the law of the place where the consumer is habitually resident.

36

[2013] 2 Lloyd’s Rep 444.

231

7.51  Choice of law in contract

7.51 In the case of rights in rem in immovable property, formal validity is decided by the law of the place where the property is situated, as long as, by that law, requirements as to formal validity are imposed regardless of where the contract is concluded or the governing law, and the requirements cannot be derogated from by agreement. 7.52 As to what counts as formal validity, the Court of Appeal in Integral Petroleum SA v SCU-Finanz AG37 held that formal validity was concerned with a person’s external manifestation of a will to be bound by a contract and the requirements that affect that, such as, for example, the need for a signature. (In that case, the issue was whether a company had done that which its articles required in order to enter a contract. That was held to be an issue of the requirements of the company’s constitution – things it needed to do before it could agree to contract – and not the formal validity of a contract which followed consequent on that decision.) 7.53 Thus the effect of this provision is to expand the range of countries whose law is capable of upholding the formal validity of a contract. Certainly in English law, formal requirements – outside contracts affecting land and guarantees and some consumer contracts such as hire purchase agreements – are slight. This provision surely increases the prospect that the contract will meet such formal requirements as may exist. 7.54 Article 11 also deals with the formal validity of ‘unilateral acts’, which include things done under, or which are referable to contracts such as notices of termination. Insofar as such acts relate to existing or contemplated contracts, their formal validity is to be determined by the governing law or the law which would govern the contract were it in existence – the putative governing law. 7.55 Finally, Article  12 is headed ‘scope of the law applicable’. Which elements of the contract are determined by the governing law? The answer is: most of them. Thus, the governing law deals ‘in particular’ with interpretation, performance, the consequences of total or partial failure to perform including the assessment of damages, how obligations are extinguished and prescription and limitation of actions and the consequence of the nullity of the contract. 7.56 However, it is said that in relation to the manner of performance and the steps to be taken in the event of defective performance ‘regard shall be had to the law of the country in which performance takes place’. This recalls the rule that a contract may be invalid where performance is unlawful by the law of the place of performance: see Ralli Brothers v Compania Naviera Sota y Aznar38. 7.57 Much of this is self-evident. The governing law would have to deal with matters such as the correct construction of the contract, what is required by performance and the consequence of failure to perform. But the scope of 37 38

232

[2015] 1 Lloyd’s Rep 545. [1920] 2 KB 287.

The scope of the applicable law 7.62

the governing law is wider than this and includes some things which might be thought procedural, such as the limitation of actions. 7.58 As to the manner of performance, English cases have held that the mode of performance of a contract may be affected by the law in the place where it is to be performed. In Jacobs, Marcus & Co v Credit Lyonnais39, goods were to be shipped from Algeria. Military operations there rendered that impossible. Under the law in Algeria, those operations would be regarded as a frustrating event. It was held that the English-law governed contract incorporated all provisions of foreign law which would regulate the method of performance insofar as not inconsistent with English law as the governing law. But that did not go as far as to provide an excuse for non-performance available under the law in Algeria but not under English law. A distinction is drawn between the mode of performance, which may be governed by the law of the place of performance, and the substance of the obligation, which is for the governing law: see Bonython v Australia40. 7.59 The consequences of breach will include questions such as whether a party may terminate a contract in response to the other’s breach and what, if any, future obligations of performance remain. 7.60 In relation to damages, it is said that the assessment of damages is to be determined by the application of the governing law within the limits of the court’s procedural law. It may be that it would mean that the identification of the heads of recoverable damage were a matter for the governing law whereas matters of quantification would be for the law of the forum. It would appear that it would be for the governing law to decide whether what in England were classified as equitable remedies, such as injunctions, were available. In OJSC TNK-BP Holding v Lazurenko41, the governing law was, albeit with hesitation, applied to an application for an interim injunction. 7.61 The extinguishing of obligations – how they come to an end – would on the face of it cover not only termination for breach but also matters such as frustration: whether a party was entitled to treat an extraneous event as bringing a contract to an end. This would also be relevant to the question whether a contract could be avoided, for example because of fraud. 7.62 A corollary of this is that the consequences of the nullity of a contract is also a matter for the governing law. That might include dealing with the case where, if a contract was treated as a nullity, property or payments made by the parties should be restored to the other. It might be objected that this is restitution rather than contract, but it is included in the Rome I Regulation and so is to be treated as contractual.

39 40 41

(1884) 12 QBD 589. [1951] AC 201 at 219. [2012] EWHC 2781 (Ch).

233

7.63  Choice of law in contract

7.63 Article  12(1)(c) of the Rome I  Regulation states that the consequences of total or partial breach of obligations, including the assessment of damages, is a matter for the governing law. But this is expressed to be ‘within the limits of the powers conferred in the court by its procedural law’. English law had traditionally drawn a distinction between the recoverable heads of damage (which were regarded as a matter for the governing law) and the assessment of damage (which was regarded as a matter of procedure and therefore for the law of the forum: see for example Harding v Wealands42, a tort case, but the distinction is equally applicable to contract). However, in the particular context of contract regard has to be had to Article 12, which states that the assessment of damages is a matter for the governing law. On that basis, it seems that the introduction of the Rome I Regulation means that the assessment of damages will no longer be a matter for the law of the forum but instead will be determined by the governing law. That was regarded as more satisfactory by Lord Sumption in Cox v Ergo Versicherung43, referring to a similar provision in the law applicable to non-contractual obligations. But that provision is different, because it does not have an exception based on procedural law, meaning that the correct approach to the assessment of damages is still not as clear as one would wish.

CAPACITY TO CONTRACT 7.64 Issues of the capacity of a person to contract are (mostly) outside the Rome I Regulation. This is stated by Article 1(2)(a). The one exception is the application of Article  13, which deals with the case where a contract is made between persons in the same country. It seems that this ought to mean that, subject to that article, issues of capacity would be for the law of the domicile, at least so far as an individual person is concerned, since capacity is a matter specific to an individual: see Cooper v Cooper44 and High Commissioner for Pakistan in the UK v Prince Muffakham Jah45 (where the point was described as ‘less clear’). The same case indicated that the capacity of a corporation would be governed by the law of the place of incorporation. However, there is some uncertainty and some suggestion that the governing law could decide the point46. 7.65 Article 13 imposes a limit on this to the following extent: if a contract is concluded by persons in the same country, a person who would have capacity under the law of that country may rely on a lack of capacity under the law of another country (presumably the law of that person’s domicile) only if the other party was aware (or but for negligence would have been aware) of that incapacity.

42 43 44 45 46

234

[2007] 2 AC 1. [2014] AC 1379 at para 23. (1888) 13 App Cas 88. [2020] Ch 421 at 488. Ibid, at 489.

The common law 7.68

THE COMMON LAW 7.66 As indicated above, the domestic law position must also be considered, in order to cover those cases which do not fall within the Rome I Regulation. This includes arbitration agreements because arbitration falls outside Rome I: Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb47, noting, however, that the common law and the law under the Rome I Regulation are similar. The starting point for the common law was party selection. Where the parties had chosen a system of law to govern their contract, that would prevail. This was known as the ‘proper law’. Such an agreement could be express or it could be inferred from the contract as a whole in the light of the circumstances known to the parties. In the absence of agreement, the contract would be governed by the system of law with which the transaction had its closest and most real connection. These principles are gleaned from James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd48. The ‘closest and most real connection’ test is an objective one (see Bonython v Commonwealth of Australia49) and so involves the imposition of a system of law by the court. English law, as the law of the forum, is applied to determine whether the parties have agreed on a system of law to govern a contract. As indicated in the Enka Insaat case, there is much similarity between that test and the test under the Rome I Regulation, save for the reference in English law to the system of law which has the closest and most real connection with the transaction. 7.67 The proper law would deal with matters such as the interpretation of the contract, whether it had been validly agreed and what counted as breach. The identification of heads of damage for breach was a matter for the proper law but at common law the assessment of loss was a matter for the law of the forum as this was treated as procedural: see for example Harding v Wealands50, a tort case, but the principle is equally applicable to contract. 7.68 Whatever its proper law, a contract was invalid insofar as its performance was unlawful by the law of the place for performance: see Ralli Brothers v Compania Naviera Sota y Aznar51. In that case, a contract governed by English law provided for the payment of freight in an amount over the maximum which was lawful in the place of performance. It was held that the requirement to pay freight above that maximum could not be enforced because of illegality by the law of the place of performance.

47 [2020] UKSC 38, [2020] 1 WLR 4117 at para 27. 48 [1970] AC 583 at 603–605, 610–611. 49 [1951] AC 201. 50 [2007] 2 AC 1. 51 [1920] 2 KB 287.

235

CHAPTER 8

Choice of law in respect of non‑contractual obligations 8.01 The rules containing the law applicable to non-contractual obligations are to be found in the Rome II Regulation1. As indicated at para 2.11, the UK government’s present intention is that Rome II will continue to subsist as part of English law, and so the choice of law in such cases will remain determined by that Regulation. Effect is given to Rome II in England and Wales in a slightly convoluted way. The Private International Law (Miscellaneous Provisions Act) 1995 changed the choice of law rule in tort and delict, abolished certain common law rules and enacted new rules. But s 15A, introduced by the Law Applicable to Non-Contractual Obligations (England and Wales and Northern Ireland) Regulations 20082, states that the part of the 1995 Act which provides for those new rules is not to determine issues which fall to be determined by Rome II. In this way, Rome II governs. The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU  Exit) Regulations 20193 indicate that, after the UK’s departure from the EU, Rome II will continue to apply. However, at the end of this chapter, the domestic law position is also dealt with, in case changes do occur, and in order to cover any case which is not caught by Rome II; as will be seen, there are several such cases. 8.02 The rather cumbersome title ‘non-contractual obligations’ includes, but as will be seen, is not limited to tort; it also covers other types of claim which would in English law be characterised other than as tort. The language of non-contractual obligations derives from Article 1 of the Rome II Regulation, which says that Rome II applies to ‘non-contractual obligations in civil and commercial matters’. It reflects the division in EU law between contractual and non-contractual obligations. The aim is that the Rome I Regulation and the Rome II Regulation should, between them, cover all civil and commercial cases. By deciding whether the claim is contractual or non-contractual, one identifies which set of rules applies. The Rome II Regulation applies to events concerning non-contractual obligations which give rise to damage occurring after 11 January 20094. It is the date of the event giving rise to the damage and not the date of the damage which is relevant. 1

Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations. 2 SI 2008/2986. 3 SI 2019/834. 4 Article 32 as interpreted in C-412/10 Homawoo v GMF Assurances SA.

237

8.03  Choice of law in respect of non‑contractual obligations

Whilst that might suggest that one will not be concerned with events prior to that date as time goes by, there will be some cases which do involve historic events. Those who contract mesothelioma, for example, or other conditions which take time to develop, may focus on events many years ago where the exposure and damage pre-dated January 2009. 8.03 Whilst it has been suggested that the concept of a non-contractual obligation and no doubt tort/delict etc are independent concepts, the European Court has given little guidance to what they actually mean. In Ergo Insurance SE  v IF P&C Insurance AS5 it was held that a non-contractual obligation meant an obligation that was not related to a contract and covered obligations derived from the concepts referred to in Article 2 of the Rome II Regulation. That refers to tort/delict, unjust enrichment, negotorium gestio and culpa in contrahendo plus ‘non-contractual obligations that are likely to arise’. But that just takes one back to the need to define the identified concepts and to give content to them. 8.04 One matter relevant to litigation in England is that English law has many obligations which derive from equity such as duties of confidence, fiduciary duties and liabilities in respect of breach of trust which may not have counterparts in the law of other EU countries. It seems safe to assume, however, that many of these obligations would be characterised as non-contractual, not least because (mostly) they are not contractual. One possible exception is fiduciary duties, as these often derive from contractual relationships – for example appointment as a director of a company. Cases such as Customer Systems plc v Ranson6 say that the starting point for determining whether fiduciary duties are owed is the contract7. In such cases it seems likely that the choice of law rule would be that applicable to contract. It will not always be the case that the basis for the imposition of a fiduciary duty is contractual – a non-executive director, for example, who does not have a contract. But it is nonetheless tentatively suggested that fiduciary obligations of directors as well as, more obviously, employees, are better treated for choice of law purposes as contractual rather than non-contractual obligations. 8.05 Breach of confidence, to the extent that it involves personal confidences and the right of privacy, is excluded from Article 1(2)(g) but it does not appear that this should apply to breaches of commercial confidence, since such claims are not expressly mentioned and they may often be contractual. In Vidal-Hall v Google Inc8, a case about service out, it was held that a complaint of misuse of private information was to be regarded as a tort. That case drew a distinction between breach of confidence and misuse of private information and held that the latter should be characterised as a tort (for service out purposes). However, it does appear that privacy claims are excluded from the Rome II Regulation. The applicable choice of law rule in those circumstances is considered below.

5 [2016] RTR 14 at para 45. 6 [2012] IRLR 769. 7 Ibid, at para 25. 8 [2016] QB 1003.

238

Scope of the Rome II Regulation 8.09

8.06 The basic rule contained in Article 4 of the Rome II Regulation is that the law governing a non-contractual obligation/tort is the law of the place in which damage occurs regardless of the place where the act giving rise to the damage is done. But there are some exceptions and rules applicable to particular types of case. In addition there is a novel provision which allows parties to choose the law which will govern a non-contractual claim. These are discussed at para 8.14.

SCOPE OF THE ROME II REGULATION 8.07 First, the scope of the Rome II Regulation is considered and, in the light of that, the rules which apply to cases that do not fall within it. As to those, the Rome II  Regulation begins by setting out the categories of case to which it does not apply. Many of these are similar to the exclusions from the Rome I Regulation. 8.08 The Rome II Regulation does not apply to revenue, customs or administrative matters or to the liability of the state for acts and omissions of state authority. That is a potentially large omission because of the number of cases in domestic law in which individuals have alleged negligence against the state in relation to, for example, educational provision or welfare. Difficult cases concerning the acts of public authorities are discussed under the equivalent provisions of the Brussels Recast Regulation (see para  3.21). There, the point is made that actions of a public authority under statute would probably be excluded. This was contrasted with the case where the public authority adopts private obligations pursuant to contract. What that may mean is that, for example, educational negligence cases – being based on the discharge of a statutory responsibility – fall outside the Rome II Regulation. That said, it may be unlikely that such cases have an international element. 8.09 Article 1(2) of the Rome II Regulation lists a number of types of case, mostly familiar from the Rome I  Regulation, to which the Regulation does not apply: •

non-contractual obligations arising out of a wide definition of family relationships;

•

non-contractual obligations arising out of matrimonial property regimes or equivalent and wills and succession;

•

non-contractual obligations arising out of bills of exchange, cheques, promissory notes and negotiable instruments;

•

non-contractual obligations arising out of the law of companies or other bodies, corporate or unincorporated regarding matters such as their creation, capacity, internal organisation, winding up, the personal liability of officers and members for the obligations of the company and, perhaps sitting rather oddly, the personal liability of auditors to a company or its members in the statutory audit of accounting documents. Thus, on the face of it, negligence actions against auditors by shareholders are excluded; 239

8.10  Choice of law in respect of non‑contractual obligations

•

non-contractual obligations arising out of the relations between settlors, trustees and beneficiaries;

•

non-contractual obligations arising out of nuclear damage;

•

non-contractual obligations arising out of violations of privacy rights and relating to personality and defamation.

8.10 Hence there is a significant range of exclusions. Perhaps the most striking in the context of tort is claims concerning privacy rights and defamation. The number of privacy actions has increased in recent years, as the English courts have recognised a tort of invasion of privacy derived from a consideration of Articles 8 and 10 of the European Convention on Human Rights, as featured in cases such as Campbell v Mirror Group Newspapers9. Defamation remains a thriving area of tort law. Yet both these fall outside the ambit of Rome II. 8.11 By Article  1(3) the Rome II  Regulation does not apply to matters of evidence and procedure, subject to Articles  21 and 22. Article  2 then sets out the broad scope of the Regulation. It covers tort/delict cases, unjust enrichment, negotiorum gestio and culpa in contrahendo. Article  3 provides that the law specified – ie determined by – the Regulation will be applied whether or not it is the law of a Member State. This article has been prospectively amended, by The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc) (EU  Exit) Regulations 2019, and from 1  January 2021 will state that the law so identified is to be applied whether or not it is the law of the UK or a part of the UK. 8.12 The Rome II Regulation then sets out separate sections: (i) Chapter II, dealing with torts/delicts; (ii) Chapter III, dealing with unjust enrichment, negotiorum gestio and culpa in contrahendo; (iii) Chapters IV and V  then set out rules of more general application which are capable of applying to all types of case falling within the Regulation, dealing with matters such as parties’ right to choose the law in a noncontract case and the scope of the applicable law. 8.13 Turning to the content of the Rome II Regulation, it may be helpful to start not with Chapters II and III, which set out specific rules, but with some of the provisions of general application, as they contain some novel provisions.

FREEDOM OF CHOICE 8.14 Article 14 of the Rome II Regulation enables parties in certain situations themselves to decide what law should govern a non-contractual dispute. There 9

240

[2004] 2 AC 457.

Freedom of choice 8.16

are two types of case. In all cases, parties may enter into an agreement after the event giving rise to the damage has occurred. Thus, if something happens which gives rise to a claim, it is open to parties to say that the consequent dispute will be resolved in accordance with the law which they choose. There might, of course, be a risk that one party would choose a particularly favourable law, but the fact that there has to be an agreement, after the event, reduces that risk. This does provide some certainty as to their proceedings. There is much to be said for this innovation in terms of providing that certainty and predictability. As will be seen, in a tort case the general rule is that the governing law is the law of the place in which damage occurs. There is an exception in favour of another country when all the circumstances are manifestly more closely connected with that country, but then one is subject to the whims of a local judge and that person’s decision on whether that test is satisfied. But the ability to decide removes all such risk. For example, one might have a case where two English people were involved in a car accident in a foreign country. It would be open to them to agree that their dispute would be governed by English law. They would then have the advantage of proceedings in England (as in this hypothesis the defendant is domiciled in England), which would be governed by English law. That could have substantial advantages both in terms of certainty and predictability and enabling parties to have a claim governed by their ‘home’ law. There could also be savings in cost as one would not, in that example, have to incur the expense of engaging with, perhaps even have experts to assist in, the ascertainment of foreign law. 8.15 The second situation in which parties may choose is confined to the case where all parties are engaged in pursuing a commercial activity. In that event, the parties may agree before any event occurs what the governing law shall be. Reference is made to an agreement ‘freely negotiated’. It may be that this is intended to prevent reliance on standard form contracts. In either case, the choice has to be expressed or demonstrated with reasonable certainty. 8.16 It seems to follow that, in the case of parties engaged in commercial activity, they could agree different choices of law depending on the different types of potential dispute. But that might also leave open the possibility that they had not accurately predicted a type of case which in fact arose. It would then be a question of construing their contract in order to work out whether the claim which has in fact emerged was one which they envisaged. On the other hand, parties who simply said that any non-contractual dispute which arose between them would be determined in accordance with an identified system of law would, on the face of it, have done all that was required. One might, for example, have a clause in a contract which said that any dispute between the parties would be determined by the courts of a named country applying the law of that country. Thus, just as one frequently has a situation in which parties to a contract identify the law that will govern their contract, persons who are not party to a contract but who have other dealings might agree, in effect, that matters arising from their relationship would be governed by a certain law. Contracting parties could likewise agree 241

8.17  Choice of law in respect of non‑contractual obligations

that, as well as their contract being governed by a particular law, other disputes between them would be governed by an identified system of law. Thus for the purposes of non-contractual disputes, the parties would be saying that any dispute between them would be determined in accordance with an identified country’s law. Moreover, in the event that the parties chose to adopt a more case-by-case analysis, it would still be open to them after the event to enter into an agreement to cover the particular case which had arisen. 8.17 No choice of law will affect the application of laws from which parties cannot derogate by agreement in the event that ‘all the elements relevant to the situation at the time when the event giving rise to the damage occurs are located in a country other than the country whose law has been chosen’. Therefore, even if the parties – whether before or after the event – choose a particular governing law, that choice cannot prevent the application of the law of the place with which all elements of the case are connected where persons may not contract out of those laws. Nor, where all the elements of the case are located in a Member State, may that choice affect the application of EU law (or, as it is put in SI 2019/834, ‘retained EU law’). The power to choose the governing law does not apply to cases falling within Article 6 (unfair competition and acts restricting free competition) or Article 8 (intellectual property).

GOVERNING LAW APART FROM CHOICE 8.18 Apart for the case where the parties make a choice as to the law that will apply, the governing law is laid down by Chapters II and III of the Rome II Regulation. As is explained below, there are also rules, applicable to all types of case, which deal with the scope of the law so identified and other potentially relevant systems of law.

Tort/delict 8.19 The choice of law in what in English law is called tort is governed by Chapter II of the Rome II Regulation. The chapter contains a general rule and then some specific rules applicable to particular types of case. ‘The law’ so chosen is the substantive law of a country, not including its conflict of law rules: see Article 24. 8.20 By Article  4 of the Rome II  Regulation, the general rule in tort – but subject to later provisions of the Regulation – is that the law applicable to a tort is the law of the country in which the damage occurs irrespective of: (i) the country in which the event giving rise to the damage occurs; and (ii) the country in which indirect consequences of the tortious act occurs. 242

Governing law apart from choice 8.24

Thus the focus is on the place where direct (the main) damage occurs, to the exclusion of the place where the allegedly tortious act is committed. Hence it appears theoretically possible that a person could do an act in country A which was not a tort in that country, but which caused damage in country B where it was a tort, and the defendant’s liability would depend on the law of country B. 8.21 Damage covers any consequence arising from the tort (Article 2(1)) but may also cover damage that is likely to arise or damage that is likely to occur (Article 2(3)). The latter could be particularly relevant to the case in which an injunction was sought to restrain the commission of a probable tort. 8.22 Locating the place of damage may not always be easy. If a person is exposed to a hazardous substance in one place but later experiences symptoms – perhaps, in cases like mesothelioma, many years after the event – where does the damage occur? It is suggested that the answer should be in the place where the symptoms arise, but there is a case for saying that damage occurs where the person is exposed to the risk. This could give rise to questions of great practical importance. Imagine the case of a person who lives in one country and goes to another to work for a short time, being exposed to a hazardous substance there. Someone who does not experience symptoms until returning home would no doubt be reluctant to have to go back to the country in which the work had been done to pursue a claim. 8.23 Another area of difficulty is financial loss. A misrepresentation is made in country A to a person located in country B who acts on it by making decisions in country C and then goes to live in country D and at that point realises that loss has occurred. Where did the damage occur? In Domicrest Ltd v Swiss Bank Corpn10, a case about jurisdiction, an English company released goods from England on the basis of a representation made by a Swiss bank in Switzerland but received in England that it would pay on behalf of a customer. The claimant said this was a misrepresentation as in the event the bank did not pay. It was held that the place of damage was likely to be the place where the misrepresentation was received and relied on. But in that case the damage was held to be in the places where the goods were released without payment, since it was the loss of the goods which gave rise to damage. 8.24 Cases under the Brussels Recast Regulation may shed light on where the damage occurs in other contexts. Universal Music International Holding BV v Schilling11 was a negligence case in which a party alleged that, because of the negligence of its lawyers, it ended up paying too much for a Czech company by an agreement signed in the Czech Republic. It sought to argue that it had suffered damage in The Netherlands because it was established there and sent its payment from a bank in The Netherlands. The European Court held that the damage was suffered in the Czech Republic because the purchase price was payable there. The fact that the sum was paid from a Dutch account did not alter 10 [1999] QB 548. 11 [2016] QB 967.

243

8.25  Choice of law in respect of non‑contractual obligations

that fact, the Court noting that the fact that a party suffered financial damage in a country resulting from the loss of assets elsewhere was not sufficient to justify the conclusion that the party had suffered damage in the place where the financial assets were located. In AMT Futures v Marzillier12 there was a similar analysis. An English company which had the benefit of an English choice of jurisdiction clause in its contracts sued a law firm which had induced claimants to sue in Germany. The first instance judge held that harm had been suffered in England, where the company had been deprived of the benefit of its jurisdiction clause, but the Supreme Court disagreed holding that the direct harm was the expenditure in dealing with the German proceedings, which had occurred in Germany. 8.25 Often this may boil down to what is direct damage and what is consequential, since Article  4 of the Rome II  Regulation distinguishes where damage occurs and where indirect consequences occur. In Lazar v Allianz SpA13, a Romanian claimant sued to recover damages following the death of his daughter in a car accident in Italy. His claim included what an English lawyer would refer to as damages for nervous shock. The claimant sued in Italy, relying on Italian law which gave a remedy for damage resulting from the death of a family member. The question which arose was whether damage was suffered in Italy by a claimant who lived in Romania. The Court said that the issue was to distinguish between damage and indirect consequences. The governing law would be the law of the place where damage occurred, irrespective of where indirect consequences were felt. It held that in the case of personal injury the place where the direct damage occurred – the accident – was the connecting factor for the purposes of determining the applicable law. But damage sustained by the relatives of the injured person were indirect consequences. 8.26 To take an example from a different context, in Four Seasons Hotels Inc v Brownlie14, another jurisdiction case, this time based on domestic law and CPR PD 6B, there was a car accident in Egypt. This had financial consequences to the claimant widow in the UK in respect of what was described as the aftereffects of the accident. The claimant claimed as her deceased husband’s executrix and for bereavement and loss of dependency. The Supreme Court (whose ruling was obiter and not given by reference to Rome II – indeed the analogy was rejected despite having been persuasive in the Court of Appeal) was split as to whether damage meant the personal injury damage alone or also its financial consequences, the majority preferring the latter interpretation. The Court of Appeal, as ratio, followed the Supreme Court majority and held that the relevant damage had been suffered in England: FS Cairo (Nile Plaza) LLC v Brownlie15. As indicated, one has to be careful about how far one presses Brownlie, as it was a jurisdiction and not choice of law case, based on domestic provisions which were held not to follow European provisions and the case was not decided even by analogy with Rome II. 12 [2018] AC 439. 13 [2016] 1 WLR 835. 14 [2018] 1 WLR 192. 15 [2020] EWCA Civ 996.

244

Governing law apart from choice 8.32

8.27 However, this rule does not apply where the alleged tortfeasor and the alleged victim – the person sustaining damage – have their habitual residence in the same country at the time when the damage occurs, because in that case the law of the country in which they are habitually resident applies. So one might have a situation where two citizens habitually resident in Germany are involved in an accident in France causing damage in France. In that case, German law would apply. It seems that the person sustaining damage must be the person who sustains the direct damage and so, in the Lazar case, that was the victim of the car accident rather than the relative. 8.28 Habitual residence is defined in Article  23 of the Rome II  Regulation. In the case of companies, it is the place where their central administration is located. In the case of damage occurring in the course of the operation of a branch, agency or other establishment, it is the place where the branch etc is located. The habitual residence of a natural person acting in the course of business is the principal place of that person’s business. 8.29 The only exception to both of these rules is that where all the circumstances of the case concerning the tort are manifestly more closely connected with another country, in which case the law of that country will apply. One example given is the case where there was a pre-existing relationship between the parties, such as a contract, which was closely connected with the tort in question.

The special rules – Articles 5–8 8.30 In the following cases it is assumed that the parties have not chosen the governing law under Article 14 of the Rome II Regulation and so the question is what law should apply in the absence of choice. Product liability 8.31 Product liability is governed by Article  5 of the Rome II  Regulation, which applies to non-contractual obligations arising out of damage caused by a product. The applicable law is be determined by a hierarchy of selections, in the sense that if an earlier test is satisfied, one does not need to consider later tests. However, all of this is without prejudice to Article 4(2). That means that where both the person claimed to be liable and the person suffering damage have the same habitual residence, then the law of that country will govern without the need to consider Article 5. 8.32 Turning to the Article 5 tests themselves, they apply a hierarchy: (i) the first test is that it is the law of the country in which the person sustaining damage was habitually resident when the damage occurred if the product was marketed in that country; 245

8.33  Choice of law in respect of non‑contractual obligations

(ii) second, if that test does not apply, the governing law is the law of the country in which the product was acquired if the product was marketed in that country; (iii) third, if neither of the foregoing tests apply, the governing law is the law of the country in which damage occurred, if the product was marketed in that country. 8.33 A  key to all these tests is where the product was marketed. However, the governing law will be the law of the country where the person claimed to be liable is habitually resident if that person could reasonably foresee that the product or a product of a similar type would be marketed in any of the countries identified by the first three criteria. The key to all this, then, is the fact that a product is marketed in certain countries and that the defendant knows this. If the defendant does not know and could not be expected to know that its product has been marketed in place A, then it is felt it would not be fair for the law of place A to apply to claims for damages connected with its use. In that event, the manufacturer of the product will be held liable only in accordance with the law of its habitual residence. 8.34 It does seem in modern times that it may be quite easy to show that a product is marketed in a particular place. It is notable that the language is of marketing the product. The drafting does not replicate that in the Brussels Recast Regulation dealing with consumer contracts, which refers to activities being directed to a place. If a manufacturer operates an Internet-based advertising campaign which is accessible anywhere, can it not be said that it is marketing its products everywhere? Might that not also apply to a manufacturer’s own website which parades its products? That would surely be so if, from any particular place, a consumer could, via that website, purchase the product. 8.35 But, as indicated, where a product is not or could not be foreseen to be marketed in a particular place, then the law of the place where the would-be defendant is habitually resident will be applied. 8.36 There is a final exception, as occurs repeatedly throughout Rome II, for the case where the circumstances of the case show that the tort is manifestly more closely connected with another country which might be based on a pre-existing connection between the parties. Unfair competition and acts restraining fair competition 8.37 Article  6 of the Rome II  Regulation is not an exception to Article  4 but clarifies its scope: it shows how Article  4 is to be applied in the case of unlawful competition. This emerges from Recital 21 of the Rome II Regulation, which says in terms that Article 6 is not an exception to Article 4 but rather a clarification of it. 246

Governing law apart from choice 8.42

8.38 Article 6 provides that the law applicable to non-contractual obligations arising out of acts of unfair competition is the law of the country where competitive relations or the collective interests of consumers are or are likely to be affected. But, importantly, if the act of unfair competition affects exclusively the interests of a specific competitor, then Article 4 – the general rule based on the law of the place of damage – applies. 8.39 The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be, affected. However, where the market is, or is likely to be, affected in more than one state, a claimant who sues a defendant in the state of the defendant’s domicile may rely on the law of that state as long as the market in that state is directly and substantially affected. 8.40 The starting point is what is meant by unfair competition. No doubt that would be an independent EU law concept. For what it is worth, there is no tort of unfair competition in English law: see L’Oreal SA v Bellure NV16. Recital 21 of the Rome II Regulation provides that the competition provisions are to ‘protect competitors, consumers and the general public and ensure that the market economy functions properly’. That tends to suggest that there is a wider focus – on the economy generally – rather than a narrow one on individual arrangements. The Unfair Commercial Practices Directive – outside the scope of this book – deals with matters such as the functioning of markets and the protection of consumers with a focus on ‘unfair business to consumer commercial practices’. In that context, one can see that a focus of unfair competition cases could be matters such as cartels. 8.41 The Advocate General in Verein für Konsumenteninformation v Amazon EU Sarl17 said that Article 6(1) of the Rome II Regulation extended to any act which was likely to alter relations between the participants in a market, whether between competitors or in respect of consumers which included – the issue in that case – unfair terms in consumer contracts18. The Court picked up on this at para 42 of its judgment, referring to the collective interests of consumers as a group and the conditions of competition on the market. 8.42 Thus it can be seen that matters such as cartels and allegations that entities are abusing their dominant position – matters falling within classical EU competition law – would be caught by Article 6. What is less clear, and more relevant to this book, is whether claims involving individual contractual provisions such as post-termination restraints or provisions in sale and purchase agreements preventing vendors competing with the entity they have sold, would engage Article 6. Liability for breach of those provisions by the parties bound by them would, of course, be a matter of contract. But there could also be scope for tort claims against a person who induced breach of any such provision. Do these engage Article 6? 16 [2008] RPC 9 at para 142. 17 [2017] QB 252. 18 Ibid, at paras 71–73.

247

8.43  Choice of law in respect of non‑contractual obligations

8.43 There may be a question whether such conduct falls within the scope of unlawful competition. Even if it did, there may be a question whether Article 6 would be applicable to determine the governing law. The reason for that is Article 6(2), which says that where an act of unfair competition affects exclusively the interests of one competitor, then Article 4 applies. Thus even if the case of, say, a vendor being induced to compete with the business sold via a sale and purchase agreement were to be regarded as a matter concerning unfair competition, it would be an issue affecting only one party – the purchaser – and on that basis Article  4 would govern. The Explanatory Memorandum19 to the original proposal suggested that matters affecting a specific competitor could include enticing staff, disclosure of business secrets and inducing breach of contract. Thus, on the basis that such matters would count as unfair competition, the effect of Article 6(2) is to take one back to Article 4 and the place of damage. 8.44 Article 6(3)(a) refers to non-contractual obligations arising from a restriction on competition. A post-termination restraint might be said to be a restriction on competition, but that would be a contractual provision and so not covered by a provision dealing with non-contractual obligations. Moreover, even if one could characterise a claim based on the inducement of breach of such a provision, it might be hard to say that ‘the market’ was affected by any such action, meaning there would be limited scope for Article 6(3) to operate. Since the nature of that complaint would be that it affected one competitor, it would fit more happily in Article 6(2). Parties may not choose a law to govern unfair competition cases: because of Article 6(4), Article 14 does not apply to such cases. Environmental damage 8.45 Article  7 of the Rome II  Regulation says that the governing law in relation to non-contractual obligations arising from environmental damage is that determined by Article  4(1), but it empowers a party to choose the law of the place where the event giving rise to damage occurred. Under the jurisdiction provisions, it was held that the place where the tort occurred could be either the place of the event or the place of damage: see Handelswekerij GJ  Bier NV  v SA  Mines de Potasse d’Alsace20, a case about environmental damage, as it happens. Article  7 appears to replicate that approach in the context of choice of law. Infringement of intellectual property 8.46 In cases of non-contractual obligations arising from an infringement of an intellectual property right, the governing law is the law of the country for which protection is claimed. Where the infringement is of a ‘unitary Community 19 20

248

Commission of the EC 2003/0168 (COD). Case 21/76 [1978] QB 708.

The scope of the governing law 8.50

intellectual property right’, the governing law, to the extent not laid down by the Community instrument, is the law of the country in which the act of infringement was committed. Thus, this is a focus on where the harmful event occurred, not where damage occurred. Parties may not choose a different law under Article 14. Industrial action 8.47 In the case of a non-contractual obligation arising from industrial action, claims against a worker or employer or organisation representing their professional interests is the law of the place where the actions is taken: see Article 9. However, Article 9 refers only to liability for damages, whereas in most industrial action cases the focus will be on an application for an injunction. It may be that the answer is that if a case is, or could be, brought for damages, that determines the governing law but, as explained below, it will be that law which decides the available remedies, which could include an injunction. This is, however, subject to Article 4(2), such that where both parties have the same habitual residence, the law of that country will apply. This will surely be the case in most industrial action cases. Claims against insurers 8.48 By Article 18 of the Rome II Regulation, a person who has suffered damage may proceed directly against the insurer of the person alleged to be liable if either the law applicable to the non-contractual obligation or the law applicable to the insurance contract permits. Multiple liability 8.49 Where a person has a claim against several debtors – perhaps joint tortfeasors – and one of them meets the claim in whole or in part, decisions as to the ability of the debtor who has paid to recover a contribution from the others is determined by the law which governs the debtor’s (nob-contractual) liability to the creditor: see Article 20 of the Rome II Regulation.

THE SCOPE OF THE GOVERNING LAW 8.50 Having set out the rules which identify the applicable law, the next question is what is its scope: how far does it extend? This is set out principally in Article 15 of the Rome II Regulation. The answer is that the scope of the applicable law is extensive. Article 15 lists a range of matters ‘in particular’, suggesting that other matters may also be for the applicable law. 249

8.51  Choice of law in respect of non‑contractual obligations

8.51 It is obvious that the applicable law will determine the basis and extent of liability: the circumstances in which persons will be liable for breaching non-contractual obligations or, putting the matter in language less redolent of an EU Regulation, what counts as a tort, ie what component elements need to be satisfied in order to establish liability? For example, it would be the applicable law which would determine whether the defendant owed a duty of care to a claimant and what was the standard of care owed. It also deals with who is liable. This might include whether a principal is liable for the acts of an agent and the scope of vicarious liability. 8.52 The applicable law also covers grounds for exemption of liability, limitations of liability and any division of liability. The last calls to mind, in England, the Civil Liability (Contribution) Act 1978 whereby the liability of numerous tortfeasors can be apportioned. Thus, when English law applies, that Act would be relevant to the apportionment of liability as between defendants. However, the Court of Appeal has held that the 1978 Act has extraterritorial effect such that it would apply to proceedings in England even where the law governing the tort is not English law. The point arose in Roberts v The Soldiers, Sailors, Airmen and Families Association21. In that case, a child suffered brain damage at birth through what was claimed to be the negligence of a midwife employed by the defendant association to work at a hospital in Germany where the child was born. The claimant sued the association and the Ministry of Defence in England. Both of them brought a third party claim against the hospital seeking a contribution under the 1978 Act. It was agreed that the law governing the contribution claim was German law and that a claim was out of time for the purposes of that law. But the defendants argued that the 1978 Act had extraterritorial effect so that such a claim could be brought under the English legislation. The Court of Appeal held that the Act had extraterritorial effect and could be relied on even though the law governing the claim to a contribution was German law. This was said to flow principally from s 7(3) of the Act, which said that the right to recover a contribution under the Act superseded any other right, apart from an express contractual right, to recover a contribution. On that basis, it was said, the English statute superseded foreign applicable law. Thus this was a decision solely on statutory construction – whether the Act was intended to have extraterritorial effect. There is a question whether this is consistent with the provisions of the Rome II  Regulation, which suggests that divisions of liability are matters for the governing law. Irwin LJ doubted that the Act would not apply when the governing law was foreign law. Indeed he said that the section ‘overrode foreign law’. It was also said that the Act applies regardless of the law which governs the claim. It is suggested that that is a difficult argument and very hard to square with the Rome II Regulation, given that the Regulation is intended to have uniform effect across EU courts. Put shortly, if the 1978 Act applies in the English court when dealing with a tort whose governing law is, say, German, then one could end up with a different answer to the same question in an English court than in a German, or French, or Spanish court. That risk of different outcomes is one thing that uniform choice of law rules is designed to avoid. But the Court of 21 [2020] EWCA Civ 926.

250

The scope of the governing law 8.55

Appeal construed the English statute as superseding foreign law. Perhaps the stronger argument – again one of statutory construction – is that preferred by David Richards LJ. He did not base his decision on s 7(3) but instead relied on s 1(6). That section states that it is immaterial that the claim would be determined by reference to the law of a country outside England and Wales. That does seem a stronger basis for saying – long before the Rome II Regulation – that Parliament has decided that, whatever the governing law, the 1978 Act should apply. The only point to make in this regard, however, is that at the time this Act was passed, the choice of law rule in English law was so-called double actionability – that the tort had to be wrongful both by the law of the place where the tort was committed and by English law. Applying that rule, it is less objectionable to say that English law (alone) would decide questions of contribution. Moreover, the assessment of damages would have been regarded, in contrast to the position under Rome II, as a matter for the lex fori: Harding v Wealands22. It may nonetheless be right to say that the construction of the Act means that, even after the Rome II Regulation, English law should prevail on this point. But even then there remains a tension between the Rome II Regulation and the 1978 Act. 8.53 The applicable law also deals with the existence, nature and assessment of damage or the remedy claimed. Hence matters such as the scope of recoverable damages, its assessment and the approach to mitigation would be matters for the applicable law. This reflects the point made above that this is a change from the former common law position, which treated the assessment of damages as a matter for the lex fori. It would also be for the applicable law to decide the availability of remedies such as injunctions (although there may be scope for an argument that interim injunctions are matters of procedure and so for the law of the forum). Reference is also made at Article 15(d) to measures to be taken to ‘prevent or terminate injury or damage or to ensure the provision of compensation’. The latter presumably refers to means of enforcement of damages awards. 8.54 The applicable law deals with whether a right to claim damages may be transferred, including by inheritance. This would include laying down rules as to the ability of a person’s estate to continue a claim, but also rules as to the assignment of claims. However, it may be that in relation to contractual assignments there would be scope for contract rules, determined under the Rome I Regulation, also to apply. Thus one might have to construe a contractual assignment to see what it meant and then apply the law applicable to torts etc to see whether any such contractual assignment was effective to transfer the claim in relation to a non-contractual obligation. 8.55 This law deals with who may claim compensation for damage sustained personally and whether someone may be liable for the acts of another person. There is an express statement that rules of vicarious liability and as to the liability of principals for their agents is governed by the applicable law.

22

[2007] 2 AC 1.

251

8.56  Choice of law in respect of non‑contractual obligations

Finally, reference is made to the extinction of obligations and rules of prescription and limitation. So a court might apply foreign limitation periods to decide whether a claim could be brought at all. 8.56 By Article 22 of the Rome II Regulation, it is for the applicable law to lay down the rules as to burden of proof and as to presumptions of law. So, for example, if English law were applicable, principles such as res ipsa loquitur would have to be applied by the court hearing the case. 8.57 Article 21 deals with formal validity, although its scope is not easy to predict. It provides that a ‘unilateral act’ relating to a non-contractual obligation will be formally valid if it satisfies the requirements as to formal validity of the law governing the non-contractual obligation in question or the law of the country in which the act is performed. 8.58 Article 17 of the Rome II Regulation gives rise to the possibility of varying the effect of the applicable law (especially insofar as based on the law of the place where damage is sustained). It states that in assessing the conduct of the defendant, account shall be taken, as a matter of fact and so far as appropriate, of the rules of safety and conduct which were in place at the time and place of the event giving rise to liability. Thus, for example, an argument as to negligence governed by the law of the place where damage occurs could be affected by considering the rules in place where the harmful event occurred. 8.59 Despite the applicable law, Article 16 provides that it does not affect the law of the forum which is mandatory irrespective of the applicable law. In contrast to the Rome I Regulation which provides an explanation of what counts as overriding mandatory provisions, the Rome II Regulation contains no such definition. However, in Da Silva Martins v Dekra Claims Services Portugal SA23 it was held that consistency of interpretation between the two regulations required that the meaning of overriding mandatory provisions in the Rome I Regulation should be read over to the Rome II Regulation. It was also said that what counted as a mandatory rule, since it involved a departure from the applicable law, was to be interpreted strictly, that is to say, in a limited way. Hence the question was whether there were objectives in national law which were of such importance that they justified departing from the applicable law. In that case, a limitation period under the law of the forum was not such a provision. Although not referred to in the Roberts case (see para 8.52), perhaps this would have been an argument in favour of the English court giving effect to the Civil Liability (Contribution) Act in that case. 8.60 A  further exception in favour of the law of the forum is provided by Article 26 of the Rome II Regulation, which allows the forum to refuse to apply the law identified by the Regulation only if (and this must also mean to the extent that) its application is manifestly incompatible with the public policy of the forum. The point was made at para 7.44 that public policy was held in Duarte v 23 [2019] RTR 16.

252

Culpa in contrahendo 8.64

Black & Decker Corpn24 to include English rules of restraint of trade. An example alluded to in the recitals is the case where the applicable law allows punitive damages. One thing not governed by the applicable law is matters of evidence and procedure, save as provided for by Articles 21 and 22: Article 1(3).

NEGOTIORUM GESTIO 8.61 Negotiorum gestio relates to non-contractual obligations arising from acts performed without authority in connection with the affairs of another. This is not a notion familiar to English law. It is essentially a means by which a person is entitled to payment for conferring a benefit on another, but the person acting does so voluntarily and without any legal obligation. Perhaps an inexact equivalent is sums paid to those who salvage a lost ship, but here the benefit of the salvage is conferred on a person, not a thing. The rules are laid down by Article 11 of the Rome II Regulation. 8.62 Where a non-contractual obligation arises out of an existing relationship between the parties, the applicable law is that which would have governed the relationship (such as, in the case of a contract, the law which would have been the governing law of the contract). If that law cannot be determined on that basis, and the parties have the same habitual residence, it is the law of that country. If neither of those applies, the applicable law is that of the country where the act was performed. Finally, if the case is manifestly more closely connected with another country, the law of that country applies.

CULPA IN CONTRAHENDO 8.63 Culpa in contrahendo is concerned with non-contractual obligations arising out of dealings prior to the conclusion of a contract. It seems likely that what will fall within the concept of culpa in contrahendo, being concerned with pre-contractual matters, will be things such as fraud or misrepresentation which induce a contract. 8.64 The choice of law rules laid down by Article 12 of the Rome II Regulation begin by saying that the law applicable to a non-contractual obligation arising out of dealings prior to a contract – whether the contract was concluded or not – is that law which governs or would have governed that contract. If there is no such law, then the law of the country in which damage occurs applies, regardless where the act giving rise to damage was done, or the place where indirect consequences were felt; or, if the parties have the same habitual residence at the

24

[2007] EWCA 2720 (QB), [2008] 1 All ER (Comm) 401.

253

8.65  Choice of law in respect of non‑contractual obligations

time of the event giving rise to damage, that law; or, if the case is manifestly more closely connected with another country, the law of that country.

UNJUST ENRICHMENT 8.65 The choice of law rules in relation to unjust enrichment involve four elements as follows: (1) If a non-contractual obligation arising out of unjust enrichment concerns a relationship between parties, such as arising from a contract or a tort which is closely connected with the unjust enrichment, then the applicable law is that which governs the relationship. (2) If (1) does not provide the answer but both parties are habitually resident in the same country when the event giving rise to the unjust enrichment occurs, then the law of that country applies. (3) If neither (1) nor (2) provides the answer then the applicable law is that of the place where the unjust enrichment took place. (4) But there is a fall-back that if all the circumstances of the case and the obligation arising from the unjust enrichment are manifestly more closely connected with a different country, then the law of that country applies. As in other cases, it is open to the parties to choose the applicable law. 8.66 The law of unjust enrichment, or restitution as it has been called, has been developing in England for some time. At its core is the idea that a person has received some gain at the expense of another and that there is between them an unjust factor which means that the gain should be restored. Cases have included, for example, payments made by mistake or in response to the demand of a public authority which had no power to require the payment, cases of duress or total failure of consideration and some cases of restitution for wrongs (but query whether they would be classified merely as torts under the Rome II Regulation and so not be governed by the restitution provisions). It appears that cases of public authorities acting in excess of their power and, for example, demanding taxes that were not due might fall outside of the Rome II Regulation because of Article 1. 8.67 The European Court has not given an interpretation of the – inevitably independent – concept of unjust enrichment. Article 10 of the Rome II Regulation does refer to ‘payments of amounts wrongly received’, which appears to correspond with mistaken payments. In Masdar (UK) Ltd v Commission of the EC25, the Court said a person who suffers loss which increases the wealth of another when there is no legal basis for that enrichment has the right to restitution, the key being that there was no valid legal basis for the enrichment. 25

254

[2009] 2 CMLR 1.

Domestic law 8.72

8.68 The issue of the governing law was considered in Banque Cantonale de Geneve v Polevent Ltd26, which concerned a claim in which a party sought to recover a payment said to have been procured by fraud or made by mistake. This was treated as including a restitutionary claim to recover a sum paid by mistake. The judge held that, there being no pre-existing relationship between the parties and the fact that they did not share a common habitual residence, meant that the test to be applied was based on the place where the unjust enrichment took place and that was the place where the payment had been received.

DOMESTIC LAW 8.69 It has been indicated that there are several categories of tort case, in particular defamation and cases concerning privacy rights, which fall outside the Rome II Regulation. In addition, torts committed before 11 January 2009 are not covered by the Rome II Regulation. This might be particularly relevant to, for example, historic exposure to noxious substances the consequence of which only appears later. It is therefore appropriate to spend a short time setting out domestic law which will apply to such cases. 8.70 The common law has a long history but the principles there developed were swept away by statute in most cases. That is not so in relation to defamation, however, because defamation was excluded from the statute. Hence one needs to have awareness of both the common law and statutory position. 8.71 The traditional common law position relied on the principle of double actionability – that the wrong gave rise to tortious liability in England and would give rise to civil liability under the law of the place where the tort was committed. This principle was laid down in Boys v Chaplin27. It was applied and restated in an appeal from Hong Kong in Red Sea Insurance Co Ltd v Bouygues SA28. However, that case said that, exceptionally, a claimant could rely solely on the law of the place where the tort was committed even if the claim was not actionable under the law of the forum where the claim or an issue within it had the most significant relationship with a particular place. 8.72 In determining where a tort was committed in order to identify the system of law in the place where the event took place, one is concerned to identify where the act occurred which gives the claimant the cause of complaint. In Distillers Co v Thompson29, the question was where a cause of action arose for jurisdiction purposes. The Privy Council rejected the argument that a cause of action arose in a place only if every ingredient of the cause of action occurred there or if the necessary and sufficient last ingredient occurred there, preferring a test based on 26 [2016] QB 394. 27 [1971]  AC  356, applying with slightly different language the principles in Phillips v Eyre (1870) LR 6 QB 1. 28 [1995] 1 AC 190. 29 [1971] AC 458.

255

8.73  Choice of law in respect of non‑contractual obligations

the occurrence of an act which gave cause for complaint. This was later referred to as the substance test: where in substance did the claim arise: see Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc30. 8.73 The common law rule was, save in defamation cases, set aside by the Private International Law (Miscellaneous Provisions) Act 1995. Section 10 abolished the double actionability rule. Instead s  11 created the rule that the applicable law was the law of the place where the events constituting the tort occurred. Then specific instances were given to cover the case where events occurred in different countries. In a personal injury case, the applicable law was the law of the place where an individual was when the injury was sustained. In the case of damage to property, the applicable law was that of the place where the property was at the time it was damaged. In other cases, the law was determined based on the place where the most significant element of the events occurred. 8.74 However, the general rule under s 11 could be displaced if the significance of the factors connecting a tort with the country whose law would be applicable and the significance of factors connecting the tort with another country meant that it was ‘substantially more appropriate’ for the applicable law to be the law of the other country. 8.75 Section 14 of the Private International Law (Miscellaneous Provisions) Act 1995 states that, whatever the applicable law, rules of evidence, pleading and practice as well as procedure are governed by the law of the forum. 8.76 So far as defamation itself is concerned, the Defamation Act 2013 provides that the English court does not have jurisdiction to hear a claim against a person not domiciled in the UK or an EU  Member State unless England is ‘clearly the most appropriate place in which to bring an action in respect of the [defamatory] statement’. 8.77 Where the common law or the 1995 Act applies, the scope of the applicable law is narrower than under the Rome II Regulation. In particular, the common law always treated the assessment of damages as a matter of procedure and therefore not something governed by the applicable law. There is a distinction between the question what damages may be recovered and how they are to be assessed. The identification of actionable damage is part of the rule which determines liability on the basis that in tort defendants are liable for something (and in English law, damage is the essence of many torts). So the question what heads of damage are recoverable is a matter of the law applicable to the tort. But at common law the assessment of those damages is a matter of procedure and so, not least because of s 14, a matter for the law of the forum: see Harding v Wealands31 and Cox v Ergo Versicherung AG32. As Lord Hoffmann put it in the 30 [1990] 1 QB 391. 31 [2007] 2 AC 1. 32 [2014] AC 1379.

256

Domestic law 8.77

former case, a person is not liable in tort; the person is liable for something and the identification of that for which the person is liable – the heads of damage in respect of which the claimant may claim – is a matter for the governing law. But the assessment of the loss, its calculation, is at common law treated as procedural and so, in contrast to the position under the Rome I Regulation and the Rome II Regulation, is regarded as a matter for the law of the forum.

257

CHAPTER 9

Anti-suit injunctions

THE NATURE OF ANTI-SUIT INJUNCTIONS 9.01 The court has the power to grant an injunction to restrain a person suing in a foreign court or to enforce such orders in the UK. This is only a personal remedy: the injunction is addressed solely to the claimant who has brought proceedings against the defendant overseas and restrains that person from acting. It does not, therefore (at least in terms), interfere with or challenge the fact of those proceedings, nor interfere with their conduct before the foreign court. But an individual who is subject to an anti-suit injunction yet continues to pursue the proceedings abroad risks being held in contempt and punished; in that way, the order is enforced. 9.02 The statutory authority for an anti-suit injunction is s  37 of the Senior Courts Act 1981, which permits injunctions to be granted in all cases where it is just and convenient to do so. In fact courts had granted injunctions to restrain persons taking proceedings as long ago as the early 19th century: see Societe Nationale Industrielle Aerospatiale v Lee Kui Jak1. 9.03 Domestically, the history of injunctions restraining persons from bringing proceedings in a particular court goes back even further. The courts of Equity were not hesitant to prevent parties suing in the common law courts where, putting it at a basic level, the courts of Equity thought they would do a better job and a defendant should not be left to the vagaries of the common law. They were granted when it would be unconscionable for a party to rely on common law rights: see Re Maxwell Communications Corpn plc (No 2)2.

TYPES OF ANTI-SUIT INJUNCTION 9.04 Anti-suit injunctions may be considered in two groups. The first, simply stated, group is the case where the parties have agreed an exclusive jurisdiction clause and one party sues in breach of it. That is a straightforward case for seeking an anti-suit injunction on the simple ground that the party bringing the claim otherwise than in the chosen forum acts in breach of contract. The leading case 1 2

[1987] AC 871. A history of the relevant cases is set out at 892. [1992] BCC 757 at 762.

259

9.05  Anti-suit injunctions

dealing with that principle is The Angelic Grace3, in which it was said that an injunction would lie on the simple ground that the party had agreed not to bring the proceedings in that forum. Whilst there might, in other cases, be concern about the attitude of the foreign court, that was not the case where a party had promised not to bring proceedings in that court. That case was approved and applied by the Supreme Court in AES  Ust-Kamenogorsk Hydropower Plant LLP  v Ust-Kamenogorsk Hydropower Plant JSC4. On Angelic Grace principles, a party to a contract containing an arbitration clause may be enjoined from conducting court proceedings: see Times Trading Corpn v National Bank of Fujairah5. (Indeed both Angelic Grace and AES were arbitration cases.) The principle derived from The Angelic Grace is, however, subject to two caveats. One is that, as explained more fully below, no anti-suit injunction may, under the Brussels Recast Regulation6, be issued against the courts of a Member State. The other is that the remedy is discretionary and there may in particular cases be factors which tell against the grant of injunctive relief. In Donohue v Armco Inc7, the House of Lords recognised the power of the court to grant an anti-suit injunction to restrain proceedings brought in breach of a jurisdiction agreement and held that the court would ordinarily exercise its discretion to do so. However, in that case, the fact that the defendant who benefited from a choice of jurisdiction clause was but one of several defendants who were being sued abroad and that it would be inconvenient to have parallel proceedings in two jurisdictions meant that no injunction to restrain proceedings overseas in breach of a jurisdiction clause should be granted. But the claimant there did have to give up the right to the benefit of certain advantages, such as punitive damages which were available in the foreign forum. 9.05 The other category of case, broadly expressed, is where the issue of proceedings in another jurisdiction is vexatious or oppressive. A useful summary of the domestic principles in relation to the broader categories of case is set out in Deutsche Bank AG v Highland Crusader Offshore Partners LP8 as follows: Leaving aside the provisions of the Brussels I  Regulation and previous conventions, which are not relevant in this case, I would summarise the relevant key principles as follows. (1) Under English law the court may restrain a defendant over whom it has personal jurisdiction from instituting or continuing proceedings in a foreign court when it is necessary in the interests of justice to do. (2) It is too narrow to say that such an injunction may be granted only on grounds of vexation or oppression, but, where a matter is justiciable in an English and a foreign court, the party seeking an anti-suit injunction must generally show that proceeding before the foreign court is or would be vexatious or oppressive. (3) The courts have refrained from attempting a comprehensive definition of vexation or oppression, but in order to establish that proceeding in a foreign court is or would be vexatious or oppressive on grounds of forum 3 4 5 6 7 8

260

[1995] 1 Lloyd’s Rep 87. [2013] 1 WLR 1889, para 25. [2020] EWHC 1078 (Comm), [2020] 2 Lloyd’s Rep 317. Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425. [2010] 1 WLR 1023.

Types of anti-suit injunction 9.07

non conveniens, it is generally necessary to show that (a) England is clearly the more appropriate forum (‘the natural forum’), and (b) justice requires that the claimant in the foreign court should be restrained from proceeding there. (4) If the English court considers England to be the natural forum and can see no legitimate personal or juridical advantage in the claimant in the foreign proceedings being allowed to pursue them, it does not automatically follow that an anti-suit injunction should be granted. For that would be to overlook the important restraining influence of considerations of comity. (5) An anti-suit injunction always requires caution because by definition it involves interference with the process or potential process of a foreign court. An injunction to enforce an exclusive jurisdiction clause governed by English law is not regarded as a breach of comity, because it merely requires a party to honour his contract. In other cases, the principle of comity requires the court to recognise that, in deciding questions of weight to be attached to different factors, different judges operating under different legal systems with different legal policies may legitimately arrive at different answers, without occasioning a breach of customary international law or manifest injustice, and that in such circumstances it is not for an English court to arrogate to itself the decision how a foreign court should determine the matter. The stronger the connection of the foreign court with the parties and the subject matter of the dispute, the stronger the argument against intervention. (6) The prosecution of parallel proceedings in different jurisdictions is undesirable but not necessarily vexatious or oppressive. (7) A  non-exclusive jurisdiction agreement precludes either party from later arguing that the forum identified is not an appropriate forum on grounds foreseeable at the time of the agreement, for the parties must be taken to have been aware of such matters at the time of the agreement. For that reason an application to stay on forum non conveniens grounds an action brought in England pursuant to an English non-exclusive jurisdiction clause  will ordinarily fail unless the factors relied upon were unforeseeable at the time of the agreement. It does not follow that an alternative forum is necessarily inappropriate or inferior. (8) The decision whether or not to grant an anti-suit injunction involves an exercise of discretion and the principles governing it contain an element of flexibility.

9.06 As that passage emphasises, an important consideration for the English court will be comity – respecting and not interfering or being seen to interfere with proceedings before foreign courts. That is why in most cases it will be necessary to show not only that England is the appropriate forum but also that there is some factor which means it is inappropriate for the claimant to proceed abroad – most commonly that it is vexatious or oppressive to do so. It is the existence of such a factor which justifies the English court in taking a step which can be seen and, as will be shown, often is seen by foreign courts as interfering with the proceedings before them. Thus to say that the English forum is the appropriate forum is a necessary, but not sufficient, condition for the grant of an anti-suit injunction. 9.07 Cases where an anti-suit injunction may be appropriate also include those where an injunction is necessary to protect the jurisdiction of the English court: see Aerospatiale9. In such cases the protection of the English jurisdiction may prevail over concerns of comity. 9

At 892G–893D.

261

9.08  Anti-suit injunctions

ANTI-SUIT INJUNCTIONS AND THE BRUSSELS REGULATION 9.08 It should be stressed that there is no scope for an anti-suit injunction to restrain a claimant proceeding against a defendant in a Member State under the Brussels Recast Regulation, at least in relation to court proceedings. Any challenge to such proceedings must be brought in the foreign court to invite it to decide itself that it will decline jurisdiction: see Turner v Grovit10. In that case an employee sued in the employment tribunal in London but was then sued by his employer in Spain, the country where he had been working. The employee applied for an injunction to restrain the employer from continuing with the Spanish proceedings. The Court of Appeal granted the injunction which caused the employer to discontinue the proceedings. But the employer appealed, challenging the power of an English court to grant such relief. The House of Lords asked the European Court whether such an anti-suit injunction was compatible with the Brussels Convention (the rules in force at that time). The Court ruled that it was not. It began by noting that the Convention was based on mutual trust by states of one another’s legal systems and observed that the jurisdiction of a court was not to be reviewed by another state. It held that an injunction directed against a defendant preventing it from proceeding in a foreign court interfered with the jurisdiction of that court, even though nominally directed only against the claimant suing abroad, and that such interference was incompatible with the Convention. It was even held that it would be incompatible with the Brussels Regulation to grant an anti-suit injunction to restrain proceedings in a Member State on the grounds that those proceedings would be contrary to an arbitration agreement: see West Tankers Inc v Allianz SpA11. It would be for the court before which the claim was commenced to consider the effect of the arbitration agreement. 9.09 The Brussels Recast Regulation may, however, be relevant in providing a basis on which to seek an anti-suit injunction against a person who sues a defendant in a place other than that specified by the Regulation: see SamengoTurner and Petter, referred to at para 9.28 ff, where employees who said that the Regulation meant they should be sued only in the country of their domicile, and that choice of jurisdiction clauses in a contract related to employment which selected certain US courts were unenforceable, were granted anti-suit injunctions to prevent their (US-based) employers suing them in the US. But one may note that it appears to follow from Turner v Grovit that no such order could have been made to prevent the employer suing in another EU Member State. 9.10 Subsequent to those decisions, a case arose in which a party said she could only be sued in the country of her domicile because of Article 4. She sought an injunction to restrain her former partner suing her in New Zealand. The Court of Appeal did not accept that Samengo-Turner and Petter settled the matter and so referred to the European Court the question whether Article 4 of the Brussels Regulation, providing that persons should be sued in the state of their domicile, 10 11

262

[2005] 1 AC 101. [2009] 1 AC 1138.

Anti-suit injunctions in domestic law 9.14

conferred a directly enforceable right on an individual and, if so, whether a Member State was obliged to provide a remedy, including by way of an anti-suit injunction, to prevent a person from being sued in a (non-EU) country contrary to that article: see Gray v Hurley12.

ANTI-SUIT INJUNCTIONS IN DOMESTIC LAW 9.11 Turning from the Brussels Regulation, it is necessary to consider the antisuit injunction remedy as a matter of domestic law in cases which do not fall within the Brussels Regulation. In such cases, the anti-suit injunction may be a powerful remedy. At its core is the imposition of injunctive relief in order to ensure that a defendant is sued in a correct forum (and, as will be seen, that can include an injunction to stop a defendant being sued other than in the Member State in which the proceedings should be brought in order to comply with the Brussels Regulation). 9.12 Take the simple case in which the parties to a contract have agreed that proceedings should be brought between them in England. If a party acts in breach of contract by commencing proceedings in some other state, an injunction may lie to restrain the breach of contract which is committed by commencing the proceedings elsewhere. In Donohue v Armco Inc13, Lord Bingham said at para 24 that if parties have agreed to submit their disputes to a particular forum, the court will ordinarily exercise its discretion – including by an anti-suit injunction – to secure compliance with the contractual bargain unless the other party can show strong reasons why it should not. The same principle applies to arbitration clauses as was held in The Angelic Grace referred to above. Further examples are Starlight Shipping Co v Tai Ping Insurance14, in which parties were bound by an English arbitration clause, and an anti-suit injunction was granted to prevent proceedings in a Chinese court. In Times Trading Corpn v National Bank of Fujairah15 it was said that the court would ordinarily exercise its discretion to restrain the pursuit of proceedings brought in breach of an arbitration clause unless strong reasons could be shown for refusing relief16. 9.13 There are two issues in any anti-suit injunction: (i) whether the English court has jurisdiction over the party bringing the foreign proceedings, so as to be able to grant a remedy against that person; (ii) the circumstances in which an anti-suit injunction may be issued. 9.14 As to the first issue, since the Brussels Recast Regulation does not apply, it will either be necessary to serve the party suing overseas – the defendant to 12 13 14 15 16

[2020] 1 FLR 864. [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425. [2008] 1 Lloyd’s Rep 230. [2020] EWHC 1078 (Comm), [2020] 2 Lloyd’s Rep 317. Ibid, at para 38(vii), applying The Angelic Grace.

263

9.15  Anti-suit injunctions

the application for the anti-suit injunction – in England by reason of that party being present in England and so able to be served in England, or to be granted permission to serve out under CPR PD 6B. There is no provision in the Practice Direction dealing specifically with anti-suit injunctions so the question is whether any other provision offers a route. In the case where there is a contractual choice of jurisdiction clause, the contract provisions of CPR PD 6B may assist because they specifically permit service out where the defendant is subject to an English choice of jurisdiction clause. 9.15 However, the court may also have jurisdiction on the basis of so-called subject matter jurisdiction: that the object of the proceedings is within the jurisdiction of the English court. So in SAS Institute Inc v World Programming Ltd17, the English court could grant an injunction to restrain a party from seeking to take steps to obtain the enforcement in England of a judgment given by courts in the US where the focus of the judgment was debts situated in England which, because of their situs, were subject only to the jurisdiction of the English court. In that case, it was held that a US court which had given judgment, whilst having personal jurisdiction over the defendant, did not have ‘subject matter jurisdiction’ over that to which the judgment related, the debts situated in England, but that the English court did. 9.16 In the case where the claimant for the anti-suit injunction says that proceedings should, in accordance with the Brussels Recast Regulation, be commenced in England and the party bringing the claim is (as must be the case for an anti-suit injunction to be available) domiciled outside the EU, it will be necessary to find some basis for service out in CPR  Part 6. Rule 6.33 allows service out on categories of person – for example employers and parties to consumer contracts – which are not expressed by reference to domicile. It was on the basis of this rule that employees served out against US-based employers for the purpose of seeking an injunction to restrain claims against them in the US where the employees alleged that the attempt to sue in foreign courts is a breach of their rights under the Brussels Regulation: see Samengo-Turner v J&H Marsh & McLennan18 and Petter v EMC Europe Ltd19, considered at para 9.28 ff. 9.17 However, it has been held that once the English court has jurisdiction over a substantive claim – ie there are proceedings in the English forum, even if also elsewhere, then the court has jurisdiction to make ancillary orders including an anti-suit injunction without the need to identify a separate head of jurisdiction for that application; the application for an anti-suit injunction, when proceedings are already on foot, does not need to be identified as a separate claim: see Masri v Consolidated Contractors International (UK) Ltd20. 9.18 What this may in practice mean is that if a person is sued abroad but then brings an action in England for declaratory relief in respect of the parties’ rights, 17 [2020] EWCA Civ 599. 18 [2008] ICR 18. 19 [2015] IRLR 847. 20 [2009] QB 503 at para 59.

264

The exercise of discretion to grant the injunction 9.21

that cause of action – the claim for declarations – could be relied on as proceedings within which the party seeking the declaration could apply for ancillary relief, including an anti-suit injunction, as long as the person suing abroad could be served in respect of English proceedings. This is a potentially very important observation because it means that if a party who is a claimant overseas may be brought to England as a defendant to an application for declaratory relief, then the court may have the power to grant an anti-suit injunction. 9.19 This reflects an important difference between alternative forum cases – situations in which there either are or could be proceedings in both England and another forum – and single forum cases, where there is no remedy available in England and the only place in which a party can sue is abroad. These principles have been refined in later cases, as explained at paras 9.21–9.22.

THE EXERCISE OF DISCRETION TO GRANT THE INJUNCTION 9.20 As to the exercise of discretion, one may start with the test of what is just and convenient in the circumstances, under the Senior Courts Act 1981, s 37. In Stichting Shell Pensionefonds v Krys21, Lord Sumption referred to three categories of case which has been identified by Lord Cranworth in 1855 and which, he said, had served generations of judges as tools of analysis22. They were (i) cases of simultaneous proceedings in England and abroad; (ii) where the foreign forum was inappropriate because the proceedings could better be resolved in England; and (iii) where the foreign proceedings were contrary to equity and good conscience. A  problem with these, save for the vaguely defined last, is that they sound as though an anti-suit injunction may be granted on the basis that England is the forum conveniens. But whilst that must be shown as a necessary condition for the grant of such an injunction, it is not sufficient, as shown by the Aerospatiale case considered in the next paragraph. 9.21 In Societe Nationale Industrielle Aerospatiale v Lee Kui Jak23, the widow of the victim of a helicopter accident brought proceedings in Brunei (where she and her deceased husband lived) and also in Texas. The defendant sought an injunction to restrain the Texan proceedings. It was held that the injunction could be ordered where the ends of justice required it. The party sought to be restrained had to be amenable to the English court so that the injunction could be an effective remedy. An injunction might be granted when proceedings were oppressive or vexatious. That would not always be the case when a party brought multiple proceedings, as there could be legitimate grounds to do so, such as a 21 [2015] AC 616. 22 Ibid, at para 18. 23 [1987] AC 871.

265

9.22  Anti-suit injunctions

party having assets in, or being subject to the jurisdiction of, particular countries. There might, however, be vexation when a party used a particular forum because of inducements such as punitive damages. To grant the injunction it was necessary to show both that England was the natural forum and that justice did not require that the claimant be allowed to proceed abroad. England must be the natural forum but that is not enough to restrain proceedings abroad. There must be some further factor: that the foreign proceedings were vexatious or oppressive. In that case, Brunei was the forum conveniens. If the Texan proceedings had involved strict liability or punitive damages, that would have meant proceeding there would have been vexatious or oppressive. To avoid this risk, the claimant had undertaken to pursue neither. However, in the Texan proceedings, one party would have been unable to bring a claim for an indemnity which was available in Brunei and that factor made the Texan proceedings oppressive. The Aerospatiale case also emphasised that, because the jurisdiction does affect a foreign court, it must be exercised with caution. This point has been repeated in numerous cases. It is an element of the requirement of comity; respecting foreign courts and only interfering with them in limited circumstances where there is some positive reason for doing so. That is particularly the case in single forum cases – where the claimant can only sue in the foreign court. It would be a very rare case in which an anti-suit injunction would be granted against a non-English party to enjoin that party from suing abroad if the foreign forum were the only available forum. To do so would mean that no claim could be brought. That was repeated in Masri at para 56. 9.22 As indicated, it will usually have to be the case that England is the natural forum if an injunction is to be ordered, or at least have a sufficient interest in the matter: see Airbus Industrie GIE v Patel24. This is partly because of the problem which arises in single forum cases: if the would-be claimant is enjoined from suing abroad when there is no ability to do so in England, that has a profound effect on that party’s ability to prosecute the claim at all. The question will be whether the party applying for the injunction has a legitimate interest to justify that remedy. The Airbus Industrie case also emphasises the importance of judicial comity. In that case, an English court refused to grant an anti-suit injunction in relation to proceedings in Texas where the natural forum for the claim was India: considerations of comity meant there was no justification for the English court to intervene in relation to proceedings in Texas on behalf of a third state. But where a claimant who sues abroad can (a fortiori should) sue in England, that will mean that the anti-suit injunction will not deprive the claimant of a remedy. Samengo-Turner and Petter may be said to be examples of that, even though, as discussed at para 9.28, there were other stronger reasons, founded in the rights of the defendants, to justify the injunctions. 9.23 In South Carolina Insurance Co v Assurantie Maatschappij ‘De Zeven Provincien’ NV25, it was suggested that an injunction could be granted where one party threatened to invade the legal or equitable rights of the other – acting in 24 [1999] 1 AC 119 at 138–139. 25 [1987] AC 24.

266

The exercise of discretion to grant the injunction 9.25

breach of a jurisdiction clause would be an example of that – or where a party behaved unconscionably, which might include proceeding in a court which was not the forum conveniens. (That, however, was not a case where there were two competing fora.) That formulation needs to be read with care and does not go as wide as it might appear, given the observation in Aerospatiale that England not only had to be the forum conveniens but there also had to be some other factor which justified the grant of the injunction. 9.24 The circumstances in which it would be just and convenient to grant an anti-suit injunction were summarised by Rix LJ in Glencore International AG v Exeter Shipping Ltd26 as follows: (i) the threatened conduct must be unconscionable which primarily means oppressive or vexatious or interfering with the process of the court. In the latter context, unconscionable is analogous to an abuse of process; (ii) the grant of relief is necessary to protect an applicant’s legitimate interest in proceedings in England which must be the natural forum. There must be a clear need to protect the English proceedings. 9.25 Factors that have been held relevant are: (i) the case where the defendant in the foreign proceedings is subject to onerous procedures. Thus in Bankers Trust International plc v PT  Dharmala Sakti Sejahtera27, the fact that foreign proceedings could involve a large scale investigation that might cause concluded English proceedings to be re-opened and where there was no chance of recovering costs meant that the pursuit of those proceedings was abusive and oppressive; (ii) where there is no real connection with the foreign forum or a lack of any good reason to bring the case in the foreign forum other than perhaps to prevent or inhibit proceedings in England; (iii) if the proceedings are instituted in bad faith or to obstruct the proceedings in this country: see Turner v Grovit28; (iv) if they are bound to fail (even in a single forum case): see British Airways Board v Laker Airways29; (v) inconvenience, for example by having two sets of concurrent proceedings which would cause needless expense and ‘over-proliferation of pleadings and disclosure’: see Albon v Naza Motor Trading Station30. But the mere existence of two sets of proceedings is not itself enough to be vexatious, even where the court concludes that England is the natural forum: see Cadre SA v Astra Asigurari SA31; 26 [2002] 2 All ER (Comm) 1. 27 [1996] CLC 252. 28 [2002] 1 WLR 107 at para 29. 29 [1985] AC 58 at 86. 30 [2007] 2 CLC 782, a case about arbitration but which applied principles about enjoining proceedings. 31 [2006] 1 Lloyd’s Rep 560 at para 13, citing Aerospatiale at 895–896.

267

9.26  Anti-suit injunctions

(vi) multiple actions: ibid or seeking to relitigate matters: see Masri; (vii) similarly, bringing an action which should have been part of earlier proceedings; (viii) the fact that other parties, for example not bound by a choice of jurisdiction clause, are involved giving rise to the risk of parallel proceedings: see Donohue v Armco32. 9.26 These, however, are only examples. The wider test of unconscionability must be applied. An important factor which underlies all these considerations is comity; that respect must be given to foreign courts and foreign legal systems, even if they do things differently and apply different rules from those which would apply in England. Thus, it is not enough that there are two sets of proceedings, one in England and one in another country. Nor is it enough that the English court decides that it is the appropriate forum (although the decision that that is so is a pre-requisite to any relief). What one is looking for is some additional factor which means that the pursuit of the foreign proceedings is open to objection. 9.27 It is open to the party sought to be enjoined to identify disadvantages which will flow if the foreign proceedings are enjoined. This is an invocation of the sorts of ‘personal or juridical advantage’ the loss of which is relevant when deciding on the appropriate forum. Sometimes the advantages which a claimant might wish to invoke can be counter-productive. If, for example, by suing in a particular forum, a claimant may receive punitive damages, that could be a factor showing the oppressive and unfair nature of the use of that forum. In the Airbus case, the defendants seeking to sue in Texas in their reply submissions waived their right to punitive damages, which was said to have a profound effect on the exercise of discretion.

ANTI-SUIT INJUNCTIONS BASED ON A PARTY’S RIGHT TO BE SUED IN A PARTICULAR FORUM 9.28 Sometimes an application for an anti-suit injunction may be brought on the basis that the proceedings contemplated abroad would breach the putative defendant’s rights in relation to the place where proceedings should be issued – whether under the Brussels Recast Regulation or the domestic law rules. A good example of this is Samengo-Turner v J&H March & McLennan (Services) Ltd33, which it is helpful to consider in some detail. In this case, UK-domiciled employees worked for a company which had a US-based parent. The parent made available an incentive award scheme which required sums to be repaid if the employees engaged in ‘detrimental activity’. Proceedings were brought in New York based on the incentive award scheme in reliance on a New York jurisdiction clause. The employees applied for declarations and an anti-suit injunction on the basis that under the Brussels Regulation they could only be sued in England 32 [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425 at paras 27, 36. 33 [2008] ICR 18.

268

Anti-suit injunctions based on a party’s right to be sued in a particular forum 9.30

in relation to matters related to their contracts of employment. Meanwhile, the New York proceedings continued. There was a question whether the incentive award scheme with the parent company was related to the employees’ contracts of employment. It was held that it was. It was also held that the claim in New York had been brought by ‘the employer’. Even though the company running the award scheme was not party to the contract of employment, because that scheme was treated as being related to the employment, the company running it was treated as the employer. The effect of both these conclusions was that the employment provisions of the Brussels Regulation were engaged. One consequence was that the New York jurisdiction clause had to be ignored (as it had not been agreed after the dispute arose). It followed that the employees: (a) were not bound by the choice of jurisdiction clause; and (b) could only, because of the Brussels Regulation, be sued in the state of their domicile. On that basis, and despite the New York court having rejected the challenge to its jurisdiction, the English court granted a worldwide anti-suit injunction, holding that the only way to give effect to the employees’ rights under the Regulation was to do so. 9.29 This case is interesting for a number of reasons. First, the court was not much troubled by identifying the employees’ cause of action. Reference was made to an application for declarations. The first declarations sought are not explained and it may be that they were no more than declarations as to where the employees could be sued. Second, the employer was easily brought before the English court because of CPR 6.33(2)(b)(iii) – the defendant was an employer and party to a contract of employment. Third, it shows the great power of the rights created by the Brussels Regulation, since it was a recognition of those rights that meant the employees could prevent themselves being sued elsewhere. Fourth, it shows the willingness of the court to act despite the views of foreign courts. Whilst recognising that such injunctions should not be granted lightly, the court recognised a clash of views – the New York court said the choice of jurisdiction clause was effective and the English court said it was not; and the English court imposed its own view based on law in force in England. 9.30 A further case along the same lines is Petter v EMC Europe Ltd34. That was a similar case about a stock plan provided by a US parent. The employee left and a claim was commenced against him in Massachusetts based on the stock plan and its Massachusetts choice of jurisdiction clause. He then brought a claim for declarations in England, including as to the enforceability of terms of the stock plan and at the same time sought an anti-suit injunction. The Court of Appeal took the same approach as in Samengo-Turner. The jurisdiction clause was ineffective. The employee could only be sued in England and was entitled to bring his claims in that jurisdiction. An anti-suit injunction should be granted to give effect to the employee’s rights under the Regulation. Again, it is noteworthy that the expedient of seeking a declaration was enough for the employee to show that he had brought a claim, on the back of which he could apply for injunctive relief. An application for permission to appeal to the Supreme Court was granted in Petter but the appeal was not pursued as the case settled. 34 [2015] IRLR 847.

269

9.31  Anti-suit injunctions

9.31 These cases have been controversial. Professor Adrian Briggs and Thomas Raphael QC35 are very critical. Raphael advances four arguments. First he says that the Brussels Recast Regulation does not create a right to be sued anywhere. The Regulation is only a directive to courts to determine jurisdiction questions. Second, the Brussels Recast Regulation does not reflect anti-suit principles within it. Third, this is not a case where a person is sued somewhere in breach of a jurisdiction clause. It is the opposite; a party subject to a jurisdiction clause seeks to avoid it. That means there needs to be vexation or unconscionability and there is none. Fourth, the usual rule in a jurisdiction clause case is that it should be enforced unless there are strong reasons for not doing so and there are none here. 9.32 These are strong arguments but the answer to all of them seems to be the provisions of the Brussels Recast Regulation, which mean that the choice of jurisdiction clause may not be enforced. Once that is accepted, it is not necessary to think of rights: the basis for the employee to be sued in the US falls away. The court must give effect to that. This means that the clause just falls away such that the employee cannot be required to be sued abroad. One would then have ordinary forum conveniens questions. The unconscionability could be said to be reliance on an unlawful clause. What this does mean is that there will be robust debate in the Supreme Court if the point gets there. 9.33 As indicated, these cases turned on the specific employment provisions of the Brussels Recast Regulation: Article 22. Different decisions would be reached in cases where the Regulation did not render a choice of law clause unenforceable. In OT Africa Line Ltd v Magic Sportswear Corpn36, a bill of lading had an exclusive English jurisdiction clause. The owner and recipient of goods, supported by insurers, commenced proceedings in Canada alleging short delivery. The claimant relied on a Canadian statute which permitted claims to be brought in Canada where the goods were loaded in Canada or the defendant resided or had a place of business in Canada or the contract was made in Canada. That applied regardless of the jurisdiction clause. The second two criteria were met, meaning that Canadian statute permitted the claim to be brought. The defendant in Canada brought a claim in England accusing the insurer of causing the owner and recipient to act in breach of the bill of lading. The defendant sought an antisuit injunction to restrain the proceedings brought in Canada, even though they were lawful according to Canadian law. The Court of Appeal granted the injunction. Longmore LJ pointed out that the jurisdiction clause gave strong grounds for such an injunction. He also noted that comity had a smaller role in considering anti-suit injunctions when one was concerned with a jurisdiction clause; comity meant respecting parties’ agreement. It might be said that that is a harder analysis when one is ignoring or departing from foreign law that applied despite that agreement. There are two points which one might make about this case. One is that it would have been open to the court to decide that Canadian law was an exceptional circumstance which justified either not enforcing a jurisdiction 35 36

270

At [2007] LMCLQ 433 and [2016] LMCLQ 256 respectively. [2005] 2 Lloyd’s Rep 170.

Anti-suit injunctions based on a party’s right to be sued in a particular forum 9.34

clause or, which would not have gone as far, merely not granting an anti-suit injunction. A basis for that would have been the importance of comity – respecting other courts and the law of other countries. It could also have been said that it was not vexatious or unconscionable to sue in Canada in accordance with one’s right to do so under that law. The Court of Appeal recognised this argument but ultimately said that, so far as the jurisdiction clause was concerned, everything depended on the law applicable to the contract. But that does not really address the point, which is – knowing the effect of the contract – whether the Canadian law was an exceptional factor which justified not giving effect to the contract. As to the anti-suit injunction, a key factor was comity but again that was effectively trumped by the importance of the contractual clause. The second point is that it could be said there is a tension with Samengo-Turner and Petter. It might be argued that the effect of the latter is that where law recognised in England – the Brussels Regulation – deprives a jurisdiction clause of effect, that law is applied in preference to the jurisdiction clause. But where foreign law supersedes a jurisdiction clause, the clause is applied in preference to the foreign law. There might be scope for suggesting that the same approach should be taken in both cases. At all events, this supports the view that Samengo-Turner and Petter will be confined to the employment sphere – or perhaps any other sphere where the Brussels Recast Regulation (or any statutory replacement) affects the enforcement of a jurisdiction clause. 9.34 The questions whether these cases are confined to employment, and the logical extent of the suggestion that the Brussels Recast Regulation can create a right to be sued in a particular place, were considered but not resolved in Gray v Hurley37. The issue in that case was an application by an English-domiciled claimant for an anti-suit injunction to restrain proceedings which had been commenced against her by her former partner in New Zealand. Her case was that she had the right to be sued in the state of her English domicile under Article 4 and on that basis should be granted an anti-suit injunction to restrain the proceedings in New Zealand. That was rejected by the judge and went to the Court of Appeal. By that time, the partner who had commenced the proceedings in New Zealand had run out of money and so did not appear in the English court. The question articulated by the Court of Appeal was whether Article 4 obliged the court to grant an anti-suit injunction to prevent a claimant from litigating against a defendant in a third (non-EU) state. One argument was that one could develop the principles in Samengo-Turner and Petter to say that, by the same token, Article 4 created a right only to be sued in the state of the defendant’s domicile and that that right could be enforced by an anti-suit injunction. The Court of Appeal rejected that, holding that the cases only dealt with the employment provisions. Thus those cases did not bind the court to say that an anti-suit injunction should be granted in every case where a person was sued in a jurisdiction for which the Brussels Regulation did not provide. The question was, therefore, one of principle. As to that, it is fair to say that the Court of Appeal was unimpressed with the suggestion that Article 4 could give rise to an enforceable right only to be sued in the state of one’s domicile. However, the Court of Appeal decided that the matter 37

[2020] 1 FLR 864.

271

9.35  Anti-suit injunctions

was not acte clair and on that basis referred to the European Court the questions whether the right under Article 4 – to be sued in the state of one’s domicile – was a directly enforceable right and, if so, whether states were bound to protect that right by way of an anti-suit injunction. In addition, it asked whether any obligation to give an anti-suit injunction extended to the case where the cause of action in the third state was not available in the courts of a Member State.

ANTI-SUIT INJUNCTIONS, THE BRUSSELS RECAST REGULATION AND BREXIT 9.35 These cases, and the points made about the Brussels Recast Regulation more generally, give rise to knotty questions in the context of Brexit. Imagine that the situation post-December 2020 is that the UK has not persuaded the EU to allow it to sign the Lugano Convention, so the common law rules apply. There are then (at least) four questions. First, how would Samengo-Turner and Petter fall to be decided in those circumstances? The employees would no longer be able to rely on the Brussels Recast Regulation to say that they are entitled to be sued only in England. They would no longer be able to rely on that Regulation to say that the jurisdiction clauses are unenforceable against them because they were contained in contracts related to employment and were not agreed after the dispute arose. On that basis, in the absence of any other domestic law provision and taking the matter purely in principle, it seems that effect would be given to the jurisdiction clauses and the anti-suit injunctions should be refused because those clauses mean that the cases should be brought in courts in the US and those clauses are not rendered unenforceable by law applicable in England in the form of the Brussels Recast Regulation. In Petter it was said that there was a clash between a contractual jurisdiction clause and the requirements of legislation binding on the English court. But unless the UK signs the Lugano Convention, and in the absence of any domestic provision, there would be no legislation which could act as a counter to the jurisdiction clause. It is important to recognise the different principles which would apply once the Brussels Recast Regulation falls away. 9.36 In fact, however, it appears that the government does intend to introduce legislation which will reflect and arguably go further than the Brussels Recast Regulation in respect of employment claims. The Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 201938 deal with jurisdiction in employment and consumer cases. Regulation 26 provides for a new s  15A of the Civil Jurisdiction and Judgments Act 1982, to deal with those matters. So far as employment is concerned, a new s 15C basically reflects the position under the Brussels Recast Regulation but adapted so as to apply to UK parties. So employers domiciled in the UK may be sued in the part of the UK in which the employer is domiciled. Employers generally may be sued in the place in the UK where the employee habitually works. Employees domiciled in the UK may 38 SI 2019/479.

272

Anti-suit injunctions, the Brussels Recast Regulation and Brexit 9.38

only be sued in the UK. By s 15C(6) jurisdiction clauses are only effective if they are agreed after the dispute has arisen, or if they give the employee the right to sue in a wider range of places. It appears to be the UK government’s intention to preserve the Samengo-Turner and Petter position. 9.37 Second, imagine then a case in which an English claimant sues a German defendant in England on the basis of the German defendant’s fleeting presence in England. Could the German defendant say to the English court that the effect of the Brussels Recast Regulation is that the German defendant should (assuming none of the additional provisions apply) be sued in Germany as the state of domicile such that the English court should decline jurisdiction? On the face of it, that seems unlikely since the determination of jurisdiction is a matter for English law and not affected by the defendant’s domicile. In cases such as SamengoTurner and Petter it was the fact that the court had to apply the Brussels Recast Regulation as part of the law in force in England which allowed them to make the anti-suit injunctions. But that would not apply in the case of a German defendant. However, would not the well-advised German defendant apply to the German courts for an anti-suit injunction to restrain the English claimant proceeding in a country other than that of the defendant’s domicile? There might be German law questions about the ability to sue the English defendant and obtain such relief. But that aside, the remedy would appear open. There might then be a question whether the English court would recognise the German order (applying, in this context, the common law). 9.38 Third, what of the situation in which an English defendant was sued in a European country on the basis of the rules of jurisdiction applicable in that country? Such a defendant would not be able to invoke as against the courts of that country the right to be sued in the state of a defendant’s own domicile because that party would not be able to invoke the Brussels Recast Regulation and, being a defendant in, for EU purposes, a third country, would be subject to the national jurisdiction rules of other EU states. That defendant would not, on the face of it, be able to invoke the domestic legislation which echoed the Brussels Recast Regulation. So far as the other European country is concerned, the English defendant is not protected by the Regulation. When considering domicile, the case of Corman-Collins v La Maison du Whisky SA39 was referred to, in which a Belgian-domiciled company sued a French-domiciled company in Belgium, relying on Belgian legislation which conferred jurisdiction on the Belgian courts. The European Court in that case held that the Belgian legislation had to give way to the rules under the Brussels Regulation, which conferred the sole basis for jurisdiction. Thus the French defendant had to be sued in France or in the courts of the country identified according to the nature of the claim. But if the Belgian claimant were to sue an English defendant on the basis of that legislation, after the UK has left the EU, the Brussels Recast Regulation could not come to the rescue of the English defendant and enable the English defendant to say that the claim should be brought in England as the state of

39 [2014] QB 431.

273

9.39  Anti-suit injunctions

domicile. The English defendant would therefore be susceptible to the claim in Belgium permitted by the local legislation. 9.39 Fourth, once the Brussels Recast Regulation is not in force, it seems to follow that UK parties would be able to secure anti-suit injunctions against EU defendants. Thus, cases like Turner v Grovit – employee suing in the English employment tribunal who was sued by his employer in Spain – might be decided differently.

ANTI-SUIT INJUNCTIONS AND ARBITRATION 9.40 Anti-suit injunctions may also be relevant in the international context when a contract contains an arbitration clause which chooses a seat for the arbitration in a particular place. A party who commences a court claim in England in the face of an arbitration clause will be subject to an application under s 9 of the Arbitration Act 1996. But where the proceedings are started abroad, a court may grant an injunction under s  37 of the Senior Courts Act 1981 to enjoin the commencement of such proceedings in a forum outside Brussels Member States when the parties have agreed to arbitrate: see AES  Ust-Kamenogorsk Hydropower Plant LLP  v Ust-Kamenogorsk Hydropower Plant JSC40. If the contract is governed by English law, the interpretation of the arbitration clause will be governed by Fiona Trust Holding Corpn v Privalov41, a case which takes a broad approach to arbitration clauses, assuming that business people are likely to have intended that any dispute arising out of their contract should be determined by the same tribunal. Where an arbitration clause applies, an anti-suit injunction may be ordered to restrain the issue of proceedings in another place. It is possible that, as well as granting an injunction to restrain a party from commencing or continuing foreign proceedings, the court may grant a mandatory injunction to require a party to discontinue such proceedings: see Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil SA42. It has been said that the court need feel no diffidence in granting an injunction to restrain foreign proceedings as long as it is sought promptly and the foreign proceedings are not too far advanced: see The Angelic Grace43. The need to apply promptly reflects the equitable principle that delay may lead to equitable remedies being refused. In the Daiichi case it was held that an anti-suit injunction could be applied for before the foreign proceedings begin, once they have begun, in a short time after that, when pleadings are complete, after that but before trial, during the trial or even after judgment but that the longer a party waits the less likely it is that an injunction will be granted and considerations of comity will have greater force as time passes. Failure to seek relief promptly can be a strong reason not to grant such an injunction. Prejudice to the respondent to an application will be a significant factor. If there has been delay, the court will want to consider whether there is good reason for it. 40 41 42 43

274

[2013] 1 WLR 1889. [2008] 1 Lloyd’s Rep 254. [2020] EWHC 1223 (Comm), [2020] 2 Lloyd’s Rep 137. [1995] 1 Lloyd’s Rep 87.

Anti-enforcement injunctions 9.42

9.41 There may be two issues to consider: the enforcement of the agreement to arbitrate; and enforcing the agreement that the arbitration was to be held in a particular location. In Enka Inssat Ve Sana Yi AS v OOO Insurance Company Chubb44, an agreement contained an arbitration clause which nominated London as the seat of the arbitration. One party to the contract commenced proceedings against another in Moscow. An application was made for an anti-suit injunction which was refused at first instance on the basis that the Russian court was the forum conveniens. The Supreme Court disagreed and held that an anti-suit injunction should be granted. It said that forum conveniens was irrelevant when parties had agreed to arbitrate in London. But central to its conclusion was that English law governed the agreement to arbitrate (even though not the main contract). The Court noted that there could be three relevant systems of law in a contract which contains an arbitration clause: that governing the dispute; that governing the agreement to arbitrate; and that governing the arbitration process – the so-called curial law. The Court said that in general the law which governed the contract would also govern the arbitration agreement at least where that law was expressly chosen unless (which is unusual) that a separate law was identified to govern the arbitration agreement. Where there was no express choice of law in the main contract, the governing law for the agreement to arbitrate would be (applying the common law, since arbitration is outside the Rome I Regulation) the law which had the closest connection with the contract. Where the parties chose a seat for their arbitration, the law to govern the arbitration agreement would generally be the law of the seat (even if that differed from the law governing the contract). In that case, the parties had not expressly chosen a system of law to govern the contract, although it was impliedly governed by Russian law. Therefore English law as the law of the seat was that which had the closest connection with the agreement to arbitrate and English law provided for an antisuit injunction. The Supreme Court did not follow the approach of the Court of Appeal of saying that the choice of the English seat was necessarily the choice of English law as the curial law to govern the process of the arbitration. It follows that, if the parties had expressly chosen a system of law, that would have affected the availability of an anti-suit injunction. Its availability would then have been a matter for the chosen law. There is a tension in this case and some force in the minority view that, if Russian law is the impledly chosen law to govern the main contract, it should also govern the arbitration agreement contained within that contract.

ANTI-ENFORCEMENT INJUNCTIONS 9.42 Thus far, the focus has been on considering cases in which a party seeks to restrain action by another who wishes to sue that party. But there may also be issues concerning a party taking action in another state to enforce a judgment, what might be described as anti-enforcement injunctions. In SAS  Institute Inc v World Programming Ltd45 a US claimant had sued in the US essentially for 44 [2020] UKSC 38, [2020] 1 WLR 4117. 45 [2020] EWCA Civ 599.

275

9.42  Anti-suit injunctions

infringement of intellectual property rights. That led to a judgment providing for compensation of $26 million, which award was trebled under US legislation. An attempt to enforce the US judgment in the UK failed and the English judge upheld a counterclaim by the defendant to the US proceedings to recover the non-compensatory element of the award by reference to domestic legislation. In addition, an anti-suit injunction was initially granted to prevent the US claimant taking steps in US courts to require the defendant to assign certain debts and make certain payments. When the matter went back to the US courts they were, to put it mildly, slightly cross, describing both the award of the counterclaim and the anti-suit injunction as an affront to the system of justice in the US. The antisuit injunction was later set aside and that decision was appealed to the Court of Appeal which held that the debts the defendant had been obliged by the US court to pay were situated in the UK. They were therefore beyond the reach of a foreign court, enforcement of debts in the UK being a matter for the courts of the UK. It was held that the injunction sought in that case was a form of anti-suit injunction and, as such, had to be approached with caution and would only be granted in rare cases. But there was no additional requirement of exceptionality when what was sought was an injunction to restrain enforcement; it is not a separate jurisdictional requirement that the case be exceptional. The court emphasised comity, respect for other jurisdictions. In part in that context it was held that no injunction should be granted to restrain the claimant from enforcing debts which arose in the US as they were properly the subject of the US courts, the debts being located in the US. But so far as UK debts were concerned, since they were situated in England and were within the jurisdiction of the English court, the claimant would be enjoined from seeking to enforce those debts via a judgment of the US courts. This is an example of a different form of anti-suit injunction but it is also a good explanation of circumstances in which an English court has jurisdiction: here not because it had personal jurisdiction over a defendant but because it had subject matter jurisdiction over that to which a judgment related.

276

CHAPTER 10

Practice and procedure

INTRODUCTION 10.01 Matters of procedure are governed by the law of the forum. It is also for the law of the forum to say what counts as procedure, although its freedom to do so is, of course, curtailed by provisions such as the Brussels Recast Regulation1 and the Rome I and II Regulations2 which must be applied faithfully. If, under those rules, a matter is regarded as substantive, it is not open to the law of the forum to re-classify it so as to become a matter for that law. A good example of this is the assessment of damages. In Harding v Wealands3, a case concerning an accident in Australia, it was held that, at common law, the assessment of damages is a matter of procedure. That was relevant because the law governing the tort, that of New South Wales, imposed limits on the ability to recover damages which meant that lower damages would be awarded applying that law than the law of England. The House of Lords emphasised that the identification of actionable damage – that for which a person could recover – is ‘an integral part of the rules which determine liability’ and so a matter for the law governing (in that case) the tort. As Lord Hoffmann put it, one is not liable in tort; one is liable for something. The rules which determine that for which the defendant is liable are inseparable from the rules which determine what conduct gives rise to liability. Thus the heads of loss are a matter for the governing law. For example, if the law governing a tort says that certain heads of damage are not recoverable, effect must be given to that. By way of example, in Boys v Chaplin4, the law governing the tort determined whether compensation was recoverable for non-financial loss. If the governing law did not provide compensation for such loss, then an English court could not, in a tort case, award damages for pain, suffering and loss of amenity. But the Harding case held that at common law the calculation or quantification of damages within those confines is procedural and so for the lex fori. That common law principle was not affected in tort by the Private International Law (Miscellaneous Provisions) Act 1995. Section 14(3) provided that the Act did not affect any questions of procedure, and that was held to include the assessment of damages. However, this is an example of a situation in which European 1 2

3 4

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations and Regulation (EC) No  864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations respectively. [2007] 2 AC 1. [1968] 2 QB 1.

277

10.02  Practice and procedure

provisions have affected the rule of the common law identified in Harding. Under the Rome I and Rome II Regulations, the assessment of damages is stated to be a matter for the governing law. Thus this has been determined by those provisions as being substantive and hence not a matter for the lex fori. Lord Sumption commented on the replacement of the lex fori by the governing law in such cases in Cox v Ergo Versicherung5, saying that he regarded that as more satisfactory. 10.02 The question who may be a party to proceedings – for example whether a dissolved company may be a claimant – is a procedural matter for the law of the forum: see Banque Internationale de Commerce de Petrograd v Goukassow6. 10.03 Rules of evidence are rules of procedure for the law of the forum (subject to the point about presumptions under the Rome I  and Rome II  Regulations). Issues of disclosure are matters for the law of the forum: see Bank Mellat v HM Treasury7. In that case it was held that the English court had power to order disclosure of documents even if their provision would be unlawful under foreign law (in that case, the law of a party’s domicile). 10.04 How the trial is to be conducted is a matter of procedure. It has traditionally been said that the grant of interim relief is a matter of procedure. As is explored more fully in some of the chapters dealing with particular types of claim (see Chapter  15 onwards), this may be very important because, if it is correct, it is capable of meaning that an English court can, at the interim stage, grant relief even if there were doubts whether such relief would be available at trial as a substantive remedy. The matter was alluded to but not resolved in OJSC TNK-BP  Holding v Lazurenko8, where it was said that the Rome I  and Rome II Regulations may have changed the common law position under which the availability of remedies was a matter for the law of the forum (as a matter of procedure) and instead make that a matter for the lex causae. That is no doubt the case where final remedies are concerned but the issue here is whether that is so in relation to interim remedies. In fact, the judge did not decide the point, noting that doubts had been expressed in both Dicey & Morris9 and Halsbury’s Laws. It may be that the point is still open for argument. 10.05 One basis for saying that interim relief is a matter of procedure is s 25 of the Civil Jurisdiction and Judgments Act 1982, which provides as follows10: 25 Interim relief in England and Wales and Northern Ireland in the absence of substantive proceedings (1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where— 5 [2014] AC 1379 at para 23. 6 [1923] 2 KB 682. 7 [2019] EWCA Civ 449. 8 [2012] EWHC 2781 (Ch), [2012] All ER (D) 147 (Oct) at para 20. 9 See now Dicey, Morris & Collins on the Conflict of Laws (15th edn, 2018). 10 What is quoted is the section in its present form. It is much amended by SI 2019/479 to remove references to matters such as Brussels Contracting States and the Brussels Regulation, but the core of it remains.

278

Introduction 10.07

(a) proceedings have been or are to be commenced in a Brussels Contracting State or a State bound by the Lugano Convention or a 2005 Hague Convention State or a Regulation State or a Maintenance Regulation State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and (b) they are or will be proceedings whose subject-matter is either within the scope of the Regulation, as determined by Article  1 of the Regulation, within the scope of the Maintenance Regulation as determined by Article 1 of that Regulation, within scope of the Lugano Convention as determined by Article  1 of the Lugano Convention or  within scope of the 2005 Hague Convention as determined by Articles 1 and 2 of the 2005 Hague Convention (whether or not the Regulation, the Maintenance Regulation, the Lugano Convention or the 2005 Hague Convention has effect in relation to the proceedings). (2)

On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.

(3)

Her Majesty may by Order in Council extend the power to grant interim relief conferred by subsection (1) so as to make it exercisable in relation to proceedings of any of the following descriptions, namely— (a) proceedings commenced or to be commenced otherwise than in a Brussels Contracting State or a State bound by the Lugano Convention or a 2005 Hague Convention State or Regulation State or a Maintenance Regulation State; (b) proceedings whose subject-matter is not within the scope of the Regulation as determined by Article  1 of the Regulation, the Maintenance Regulation as determined by Article  1 of that Regulation, the Lugano Convention as determined by Article 1 of the Lugano Convention or the 2005 Hague Convention as determined by Articles 1 and 2 of the 2005 Hague Convention.

10.06 As originally drafted, the section enabled the court to grant interim relief where there were proceedings in another EU state. An Order in Council made under s 25(3) extended that to proceedings in any jurisdiction. Thus, this section essentially allowed the court to grant interim relief in support of proceedings elsewhere. That by itself suggests, at least, that this process of granting interim relief in support of proceedings in a foreign court is procedural; it is something the English court does of its own motion and not because of the law governing the claim. 10.07 But what of the case where there are proceedings before the English court? Can it still be said that applications for interim relief are procedural? Several academic texts have asserted that the grant of interim relief is a matter of procedure, although they have not cited authority. It is suggested that there is a good case for saying that the nature of interim relief is that it is properly 279

10.07  Practice and procedure

to be regarded as procedural. If one turns to the classic guidelines in American Cyanamid v Ethicon11, it is plain that the grant of interim relief is not concerned with giving a remedy which might be regarded as a matter for the governing law in a tort or contract case. The court at the interim stage is not even deciding who is right or wrong. It is simply making a decision about the future conduct of the case: on the footing that there will be a trial, what should happen pending the trial? Should a defendant be temporarily restrained from doing something or should the defendant’s acts be allowed to continue? Interim relief is often described as ‘holding the ring’: preserving matters so that at trial there is something of value to argue about. Lord Diplock said that an interlocutory injunction was ‘both temporary and discretionary’ and of course he rejected the notion that there should be a mini-trial: that it was appropriate even to look for a prima facie case. As long as there is a serious issue to be tried – and that means that the case is not apt to be struck out – the sole question is what the court should do at that interim stage: what is the course of action which will cause least damage? One of the key questions – the adequacy of damages – is a purely procedural one in that the court is deciding whether an injunction at that stage is appropriate at all or whether a party should be left to a remedy in damages. The idea that injunctions are procedural is reflected in the view, expressed in Castanho v Brown & Root (UK) Ltd12, that an ‘injunction can be granted against a party properly before the court whenever it is appropriate to avoid injustice’. So as long as the court has (territorial) jurisdiction over the defendant, it may do what appears just. That is now reflected in s 25 of the Civil Jurisdiction and Judgments Act 1982 which, as noted above, permits interim relief to be granted when proceedings are on foot elsewhere. In Fourie v Le Roux13, it was said that provided the court had in personam jurisdiction over a party, the court had jurisdiction to grant an injunction14. This analysis does not tie the grant of injunctions to any particular cause of action but recognises that they are part of the court’s procedural armoury, including, at the interim stage, to take such steps as are appropriate to manage the case. The gap between a substantive claim and an interim remedy is shown by cases such as Burris v Azadani15 which show that interim relief may be granted in a form which could not be available at trial. In that case an injunction was granted to restrain the defendant from coming within a certain radius of the claimant’s home. It was accepted in the Court of Appeal that the defendant would not commit a tort by coming within that radius but it was held that the court’s power to grant relief was not limited to the case where the defendant’s conduct was tortious. Bingham MR said that an example of an injunction that did not depend on the identification and restraining of unlawful conduct was a freezing order but he said that such an order was made ‘to try and ensure that the procedures of the court are in practice effective to meet their end’. In the case of the freezing order, that is designed to preserve assets so that they are available to meet a judgment.

11 [1975] AC 396. 12 [1981] AC 557. 13 [2007] 1 WLR 320. 14 Ibid, at para 30. 15 [1995] 1 WLR 1372.

280

Particular elements of procedure 10.12

10.08 It is often said that matters of evidence are matters of procedure, but here, too, things are more complicated than might appear. This may include questions about how matters can be proved. May one, for example, in construing a contract governed by foreign law, look at the parties’ negotiations? How does one decide whether a document is privileged? These are questions that can be seen to engage with the substance of a contract – in the first case, what does it mean – as well as with evidence. In relation to construction, it has been said that it is the court’s job to apply the canons of construction which would be applied by the governing law and in consequence to ‘admit and consider such evidence as [the courts of the country whose law governs] would admit and consider, in order to arrive at the intention of the parties’: see St Pierre v South American Stores16. That reflects the more up-to-date view that the interpretation of the contract is a matter for the governing law, suggesting that the approach to construction taken by that law should be adopted. Sometimes foreign law will be characterised as procedural and so effect will not be given to it because procedure is for the law of the forum. In Naraji v Shelbourne17, it was held that a rule of the law governing a contract which stated that a contract could not be enforced unless it was in writing and signed was regarded under the governing law as being a rule of evidence and so procedural and did not therefore mean that the contract could not be enforced in England. 10.09 As to privilege, it was held in Rochester Resources Ltd v Lebedev18 that the question whether a document is privileged is a matter of English law, the view of foreign law being irrelevant. 10.10 The relevance of evidence to the substance of a case is also reflected in the Rome I and Rome II Regulations. Both provide that matters may be proved in a way recognised by the law of the forum or by the governing law. 10.11 Limitation periods might also be thought to be a matter of procedure but the Rome I and Rome II Regulations provide that they are to be determined by the governing law. This reflects the position in English law as a result of the Foreign Limitation Periods Act 1984, which provided that the governing law laid down the limitation period. There was an exception for public policy. English law decides when proceedings have been commenced (and thus whether they are within the applicable time limit).

PARTICULAR ELEMENTS OF PROCEDURE 10.12 The following paragraphs outline aspects of procedure which frequently arise in connection with disputes that give rise to conflict of law issues, having regard to the applications which are frequently made. These are touched on in other chapters but it may be helpful also to refer to them in the context of practice and procedure. 16 17 18

[1937] 1 All ER 206 at 209. [2011] EWHC 3298 (QB), [2011] All ER (D) 111 (Dec). [2014] EWHC 2185 (Comm) at para 23.

281

10.13  Practice and procedure

Service out 10.13 In the case where a party wishes to serve another party out of the jurisdiction, there are separate procedures depending whether jurisdiction is conferred by the Brussels Recast Regulation or is sought under domestic law. 10.14 So far as Brussels Recast Regulation cases are concerned, CPR 6.33 permits service out of the jurisdiction without the permission of the court essentially where the court has power to determine the case under the Civil Jurisdiction and Judgments Act 1982 (which gives effect to the Brussels Convention) or the Lugano Convention or the Brussels Recast Regulation and the defendant is domiciled in the UK or a Member State and there are no other extant proceedings in the UK or a Member State. It is necessary in such cases to file with the claim form a statement which explains why permission to serve out is not required19. 10.15 Where the Brussels Recast Regulation does not apply and a claimant wishes to serve a defendant abroad, it will be necessary to make an application to the court in accordance with CPR 6.37. That requires an application to be made to a High Court Master under CPR Part 23. The applications are made without notice to the prospective defendant. They are usually decided on the papers. That application requires not only the claim form but also a witness statement which sets out the basis for the case against the defendant and states the deponent’s belief that the claimant has a reasonable prospect of success. The witness statement must also identify the ground within CPR PD 6B on which the claimant relies as conferring jurisdiction and explains why England is the appropriate forum in which to resolve the dispute – that England is the forum conveniens.

Challenges to jurisdiction 10.16 A  party served out of the jurisdiction who wishes to challenge service must first file an acknowledgement of service. The party should just tick the box on the form N9 to indicate that the party challenges jurisdiction. No other steps, in particular serving a defence, should be undertaken. It is essential that the would-be defendant who wishes to challenge jurisdiction does not engage with the merits of the case by doing things such as serving a defence, or requesting an extension of time in which to do so, or serving a request for further information. No matter how strongly the party feels about the merits of the case, the welladvised defendant will simply challenge jurisdiction and stop at that. 10.17 The party served needs to make an application in accordance with CPR Part 11 disputing the court’s jurisdiction. It is important to do this promptly. The application must be made within 14 days (28 days in the Commercial Court) because, if it is not, the defendant is deemed to accept that the court has jurisdiction. But it is sensible to get on with matters as quickly as possible, partly to avoid the risk that the party served is dragged into dealing with other matters 19 CPR 6.34.

282

Particular elements of procedure 10.20

which could involve the suggestion that there has been a submission to the jurisdiction. There is a suggestion that the requirement to serve an application does not apply in cases where a party seeks to argue that the matter should not proceed on the ground that England is not the forum conveniens. The point appears to be that in such a case the party is not challenging that the court has jurisdiction, only that it should not exercise it. But Part 11 applies both where a party says that the court does not have jurisdiction and where it is said that the court should not exercise the jurisdiction, so the safer course is to treat the requirement to make an application as applicable to both types of case. That seems also to have been the view of the Court of Appeal in Hoddinott v Persimmon Homes (Wessex) Ltd20. In any event, for the practical reasons given, a party is advised to make the application and to do so promptly and before other things happen, in order to avoid the suggestion that there has, by conduct, been a submission to the jurisdiction. 10.18 In support of an application under CPR Part 11, it is open to a party to say that the conditions in CPR Part 6B are not satisfied so that service out is not permitted, or that England is not the suitable forum so that, on forum conveniens grounds, it should decline jurisdiction.

Applications for injunctions 10.19 Although not specifically relevant to questions of jurisdiction, it is proposed to spend a short time dealing with the procedure for applications for injunctions. This is in part because numerous of the cases which are mentioned in this book, in the chapters dealing with particular types of case, may involve injunction applications. 10.20 Any application for an injunction will require the following documents: (i) A claim form. A party must usually have issued a claim against a defendant and be able to formulate a cause of action. (If matters come on very speedily, the claimant may undertake to issue a claim form, but in any case an injunction must be in support of, or at least related to, a claim. The ‘related to’ formula catches applications for relief such as freezing orders and search orders where there may be a separate claim and the relief sought is referable to the claim.) There are difficulties in applying for an injunction in the absence of an underlying claim, as was recognised in Fourie v Le Roux21. In that case a freezing order was granted but there was no substantive claim to which it related. Lord Scott said it was difficult to see how a freezing order could properly be granted in the absence of the formulation of the case for substantive relief that the applicant for the order intended to institute. It was, therefore, held that it was improper to grant the relief. There may be exceptions since the courts have not said that there is an immutable rule, but in most cases it will be necessary for the claimant to 20 21

[2007] EWCA Civ 1203, [2008] 1 WLR 806. [2007] UKHL 1, [2007] 1 WLR 320.

283

10.21  Practice and procedure

issue a claim to which the injunction can relate. It would be sensible to do that even if the only relief claimed is the injunction. One can recognise that there may be cases in which a claimant will be concerned about publicity. There are two ways of dealing with this. One is that the claimant may produce to the court a draft claim form and undertake to issue the claim. The other is that an application may be made enabling the claimant to refer to the parties by initials rather than using real names: see, for example, JIH  v News Group Newspapers Ltd22. That was a case about a celebrity’s sex life but there may also be concerns for commercial confidentiality which, in an appropriate case, might be breached if publicity were to attach to a claim. (ii) A draft order. It is of cardinal importance that a claimant should draft and place before the court the order which is sought. That in part reflects the obvious principle that injunctions should be formulated in such a way that they can be understood and complied with: as to that, see Lawrence David Ltd v Ashton23, which said that it was a ‘cardinal rule that any injunction must be capable of being framed with sufficient precision so as to enable a person injuncted to know what it is he is to be prevented from doing’. (iii) A witness statement: the claimant will have to set out in a witness statement the facts which justify the grant of injunctive relief. 10.21 In the usual course, injunction applications will be presented in open court. However, it is open to a party to request that the court sits in private. That will almost always be the case where what is sought is a freezing order or a search order because any element of publicity would be capable of defeating the purpose of the application.

22 [2011] EWCA Civ 42, [2011] 1 WLR 1645 at para 21. 23 [1989] ICR 123.

284

CHAPTER 11

Interim remedies

INTRODUCTION 11.01 When considering service out under domestic provisions the text above refers to the power to do so for the purposes of applying for an interim remedy under s  25 of the Civil Jurisdiction and Judgments Act 1982. The availability of interim remedies under the Brussels Recast Regulation, as provided for by Article 35, was also considered. However, since the grant of interim remedies is important as a freestanding topic and since it is not necessarily confined to cases where the court has jurisdiction under domestic rules, it is sensible to have a separate chapter dealing with interim remedies. 11.02 There are two issues: (i) the scope of the powers to grant any interim relief in a case involving a foreign element; and (ii) the content of the available remedies. The two issues overlap when the case law is examined in detail, to establish how the issue of whether to grant relief has been decided in specific cases, and – if it was decided that it should be – what relief should be given. 11.03 The principal scope of the power in domestic law to grant such relief in respect of international proceedings is s  25 of the Civil Jurisdiction and Judgments Act 1982. As originally conceived, this section provided that the court would have power to grant interim relief where proceedings have been or are to be commenced in a Brussels Regulation Member State, and where the subject matter of the case fell within the scope of the Regulation. But in 1997 it was expanded to apply to proceedings commenced or to be commenced in any state, whether a Brussels Regulation State or not, and whether the subject matter fell within the Regulation or not. Thus interim relief could be granted, putting it broadly, in connection with any foreign proceedings. 11.04 But s 25(2) is important. That subsection provides: On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it. 285

11.05  Interim remedies

Thus, the fact that the court would not otherwise have jurisdiction to grant the relief is relevant to the question whether the court should grant relief at all. 11.05 Section 25 is available in both cases under the Brussels Recast Regulation and cases which fall outside that Regulation. However, the Regulation itself makes provision for interim measures, which are referred to as ‘provisional, including protective, measures’. Article 35 provides as follows: Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that Member State, even if the courts of another Member State have jurisdiction as to the substance of the matter.

The existence of this provision means that, in a case falling within the Brussels Recast Regulation, the court will have to approach its powers having regard to Article 35. 11.06 In that context, two things must be considered: (i) the types of relief that can be granted; (ii) the circumstances in which, in cases with a foreign element, relief has been granted. These points are considered in respect of different types of relief below. 11.07 There is no express limit in s 25 on the type of relief which can be granted by an English court on an interim basis even if, in practice, it is relief of certain types which has been granted. For that reason, one can start by identifying the framework of the law in England providing for these remedies before showing how this particular relief has been applied in cases with a foreign element. There are perhaps two types of relief which it is appropriate to consider in the first instance in the light of the case law: freezing orders and search orders.

FREEZING ORDERS 11.08 The freezing injunction was ‘invented’ in cases in the mid-1970s, one of which, Mareva Cia Naviera SA  v International Bulkcarriers SA1, gave its name, pre-CPR, to the injunction – a Mareva injunction. Its essence is an order restraining a defendant from disposing of its assets, often in circumstances where a claimant fears that a defendant will dissipate or conceal assets in order to make any judgment against it incapable of enforcement and so worthless. In the Mareva case itself the assets in question were sums held in a bank in London but in other cases, Mareva or freezing injunctions have been granted to restrain the disposal of assets worldwide. The power is now contained in s 37(3) of the Senior Courts Act 1981, which refers to the court’s power to prevent a person 1

286

[1975] 2 Lloyd’s Rep 509.

Freezing orders and international claims 11.12

removing assets located from the jurisdiction of the High Court, and states that the power may be exercised whether or not the party is domiciled, resident or present within the jurisdiction. 11.09 On an application for such relief, the applicant must show that it, as claimant in the litigation, has a good arguable case and that there is a real risk of dissipation of assets so as to render any judgment nugatory. A good arguable case imposes a higher test than that there is a serious issue to be tried: see Derby & Co v Weldon2. That case states that a freezing order may apply not only to assets in England and Wales but worldwide. Indeed whilst recognising the exceptional nature of a worldwide Mareva injunction, the court’s decision was to allow an appeal against the first instance judge’s refusal to make a worldwide order. The same case says that the court may also make an order requiring a party to disclose where assets are to be found, both within and outside the jurisdiction. 11.10 A freezing order will have to enable the respondent to pay for ordinary living expenses and legal fees and, in the case of a commercial respondent, business debts. Sometimes express amounts are set out in the order. Sometimes this is framed as reasonable sums. But on either basis a respondent is entitled to carry on living and, as a commercial entity, trading. 11.11 Third parties who knowingly facilitate a breach of a freezing order act in contempt and the standard form order warns that this is the case. It will often happen that a respondent’s banks are notified of the order. They will then be aware of the risk of contempt. But the standard form also says that banks may exercise a right of set-off in relation to any facility granted before the order and that there is no need to enquire into the use of money if it appears to be permitted. That reflects what was referred to as the Babanaft proviso, an addition to the order made in Babanaft International Co SA v Bassatne3 to say that third parties should not be affected by the order nor be required to enquire into whether any instruction given by the respondent to the order was in compliance with it. That reflected the principle that an English judgment could not operate by way of an attachment on foreign assets or by creating a charge over them. To create such a proprietary right would be to extend English jurisdiction too far. It is for the court of the country in which the assets are situated to decide how to enforce a judgment. Thus it would be for that court to decide whether any proprietary rights were created.

FREEZING ORDERS AND INTERNATIONAL CLAIMS 11.12 There are numerous examples of freezing orders being made in England in connection with proceedings in other jurisdictions. An excellent example is Republic of Haiti v Duvalier4, in which the former president of Haiti and his wife 2 3 4

[1990] Ch 48 at 57. [1990] Ch 13. [1990] 1 QB 202.

287

11.13  Interim remedies

and mother were being sued in France for embezzling hundreds of millions of dollars from the Republic of Haiti. There was evidence that the defendants were seeking to conceal their assets. In that case the French court lacked the power to make a freezing order but it was held that the English court had the power, before any judgment was given in France, to freeze the defendants’ assets. It was held that there should be international co-operation to prevent the defendants taking steps they appeared minded to take to conceal their assets. 11.13 Credit Suisse Fides Trust SA v Cuoghi5 concerned the misappropriation of $21 million which was the subject of proceedings in Switzerland. An application was made for a worldwide Mareva order against an English-domiciled party alleged to be an accomplice of the principal defendant. He argued that it was for the Swiss courts, not the English, to make such an order. That was rejected, at least as far as it concerned an English-domiciled defendant over whom the court had jurisdiction by reason of domicile. It was most appropriate that protective orders be made by the courts best able to make those orders effective. The purpose of such orders was to assist other states. In going further than the court in which the proceedings were conducted would be able to go, the English court was not attempting to remedy any defect in the original court’s law or procedure. It was, in particular, appropriate for the English court to act when a person was domiciled or had assets in England. 11.14 Another case in which such an order was made was Motorola Credit Corpn v Uzan6. That concerned a worldwide freezing order in relation to proceedings in New York against four defendants who were Turkish citizens, one of whom lived in the UK and two of whom had assets in England. In that case, the New York court lacked the power to make a pre-judgment Mareva order of the type sought in England. In considering the expediency test under s 25(2) of the Civil Jurisdiction and Judgments Act 1982, the court said that there should be a two-stage enquiry. First, whether the facts would justify relief if the substantive proceedings were in England and, if so, second, whether the fact that the proceedings are elsewhere makes it inexpedient to grant relief. The court recognised that, because of its wide powers, the English court might be called on to be an ‘international policeman’ and was not averse, in the suitable case, to taking on that role, even if the power to do so might be more limited in Brussels Regulation cases, as explained at para 11.17. There were, in the court’s assessment, five factors to consider in deciding whether it would be expedient to grant interim relief: (i) whether doing so would interfere with the management of the underlying claim; (ii) whether it was the policy of the court dealing with the underlying claim not to make such orders (as opposed to simply not having the power to do so); (iii) whether there was a risk of inconsistent or overlapping orders;

5 [1998] QB 818. 6 [2003] EWCA Civ 752, [2004] 1 WLR 113.

288

Freezing orders and international claims 11.16

(iv) whether there was a risk of conflicts as to jurisdiction which might make a worldwide order inappropriate; (v) whether there was a risk of disobedience with which the court could not deal – whether the court might be making an order which it could not enforce. 11.15 In Motorola it was said that the mere fact that a freezing order was not a remedy that is available in the place where the claim was proceeding did not mean that the English court could not make an order. There is a difference between the situation in which the foreign court does not make orders of the type sought in England, and the case in which there is a policy that such orders should not be made. In the latter situation, it would be inexpedient for the English court to make the order. 11.16 It is worth mentioning that when a worldwide freezing order is made, it is usually a condition that a party will not seek to enforce it abroad without the permission of the court. A reason for that is to avoid a multiplicity of proceedings. However, if permission is given, a party may apply to a foreign court to enforce the order against assets in that state but will have to have the permission of the English court to make that application: see Derby v Weldon7. In Dadourian Group International Inc v Simms8, the Court of Appeal laid down a series of guidelines for when such permission should be granted: (i) permission to enforce a worldwide freezing order abroad should only be granted for the purpose of ensuring the effectiveness of the order but it must not be oppressive to the existing or potential future parties; (ii) it is necessary to consider all the circumstances in particular as to the proportionality of the steps proposed to be taken abroad; (iii) the interests of the applicant need to be balanced against the interests of the other parties and any potential new parties; (iv) permission should not normally be given which would enable the claimant to obtain relief in the foreign forum which is superior to that granted by the domestic order; (v) the evidence before the judge must be comprehensive including as to the applicable law and practice in the foreign court and evidence as to assets believed to be located in the foreign jurisdiction; (vi) there must be a real prospect that there are assets in the foreign forum; (vii) there must be evidence of the risk of dissipation of those assets; (viii) applications should normally be on notice.

7 At 59. 8 [2006] EWCA Civ 399, [2006] 1 WLR 2499.

289

11.17  Interim remedies

ARTICLE 35 11.17 Much of what has been said relates to claims considered as a matter of domestic law under s 25 of the Civil Jurisdiction and Judgments Act 1982. However, in some situations, the case has involved a Brussels Regulation or Lugano Convention element. Cuoghi was an example of such a case. Where the case does concern parties domiciled in a Brussels Recast Regulation state, Article 35 permits courts to provide interim relief. The circumstances in which such courts may do so were set out in Van Uden Maritime BV  v Kommanditgesellschaft in Firm Deco-Line9. That was a case in which the parties were arbitrating but one party, being concerned that the other was dragging its feet, applied to the Dutch court for interim relief in the form of interim payments. The starting point is that the court needed to determine whether it had jurisdiction in a Brussels Regulation sense over the defendant. (That was not an issue in Cuoghi, as the defendant was domiciled in England.) If so, the next question was the ability of the court to grant interim relief where, as in that case, the court was not dealing with the substantive claim. The European Court made the point that when a court did have jurisdiction over a claim, there was no difficulty in that court being able to order any interim (or, as it was referred to, provisional or protective) measure. That was merely an example of the exercise of the court’s jurisdiction. But the Court accepted that the effect of Article 35 (rather like England’s own s 25) was that a court could make interim orders even if it did not have substantive jurisdiction and even if some other court did. Importantly, the Court accepted that where a national court was asked to make an interim order, its jurisdiction to do so could be based on its own national rules and did not have to be derived from the Brussels Regulation: it said that the provisions (in that case, the Convention) which listed rules of national jurisdiction which could not be relied on in cases falling under the Regulation did not apply to applications for what is referred to as interim relief10. In Cuoghi, even if the defendant had not been domiciled in England, the fact that he was served in England would have been enough to enable interim relief to be considered. 11.18 As to the content of interim relief, the measures that could be ordered were those laid down by national law. Here one had the Court accepting the existence of a jurisdiction but then not being at all prescriptive as to the steps which an individual court could take. Interestingly, the Court rejected the argument that, because the parties had agreed to arbitrate and arbitration falls outside the scope of the Brussels Regulation, the court could have no role at all. The Court said that the subject matter of an application for interim relief had to fall within the Brussels Regulation, ie be a civil or commercial matter. But the effect of Article 35 was that as long as the subject matter of the application fell within the scope of the Brussels Recast Regulation, it could be relied upon as a basis for interim relief even if the parties had elected to arbitrate. The same was true in the case where some other state had jurisdiction under the Regulation. In slightly cumbersome language, the Court said that the purpose of interim measures was 9 [1999] QB 1225. 10 Ibid, at para 42.

290

Article 35 11.21

to ‘preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case’11. One can see in that language a reflection of what the English court sought to do in Duvalier. The purpose of the freezing order was to support the French proceedings by providing a remedy the effect of which was to ensure that any judgment given by the French court would have effect and not be rendered meaningless in consequence of the defendants having disposed of all their assets. Thus what was done was supportive of or complementary to what was happening in the court dealing with the substance of the case. The Court in Van Uden, recognising this, said that it might be necessary to take steps such as the implementation of time limits or other conditions to ensure that a measure was protective in character rather than determinative. Finally, it was said that the ability of a court, other than that dealing with the substance of the case, to provide protective measures was conditional on: the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the contracting state before which those measures are sought12.

11.19 Thus whilst, as indicated above, jurisdiction for the purposes of interim relief could be founded on provisions of national law, the Court here added what might be regarded as its own jurisdictional test for the purposes of interim relief: the need for a ‘real connecting link’. One can see how, for example, in the context of cases like Duvalier, such a test might lead to an argument that the freezing relief sought should be limited to assets within the jurisdiction. Perhaps. But in a case such as that, an English court might say that it was preferable to freeze assets everywhere rather than to leave a claimant having to pursue separate proceedings in any country where assets might be located, particularly if, as is often the case in freezing injunction cases, the claimant does not know where all the assets are to be found and if the courts of some places where assets are located may lack the power to grant freezing relief. In addition, the claimant may need to act quickly to avoid a defendant taking steps to remove or conceal assets from any jurisdiction in which they are located. 11.20 Returning to the substance of interim relief, the Court in Van Uden said that it could not pre-empt the outcome of the substantive action, as it was argued an order for an interim payment might do in that case. As to that particular remedy, it would be provisional only if the order for it contemplated its repayment should the claim fail. 11.21 In Banco Nacional de Comercio Exterior SNC  v Empresa de Telecommunicationes de Cuba SA13, an application was made for a worldwide freezing order against the Cuban state telecommunications company. It was held that a worldwide order was inappropriate as the company was not resident in England and there was therefore no connecting link between the measure sought 11 12 13

Ibid, at para 37 Ibid, at para 40. [2007] EWCA Civ 662, [2008] 1 WLR 1936.

291

11.22  Interim remedies

and the territorial jurisdiction of the English court. There was also a risk of inconsistent or overlapping orders in other jurisdictions. 11.22 There are now, therefore, both domestic cases and, in the Brussels Regulation context, EU cases on the availability of interim relief. The links and differences between them were usefully explored in a domestic case, ICICI Bank UK plc v Diminco NV14. That case concerned a challenge to a worldwide freezing order made in aid of proceedings in Belgium against an Antwerp-based defendant. It was held that there was a real risk of dissipation and the judge indicated that the core question was whether it was inexpedient to grant relief within the meaning of s 25(2). The judge set out the following principles:15 •

it will rarely be appropriate to grant a freezing order where the defendant has no assets here and owes no allegiance to the English court. This appears to be a reflection of the point that the court should not make orders to which parties will or may not adhere or which the court would not be able to enforce;

•

if the defendant has assets within the jurisdiction a domestic freezing order may be appropriate;

•

if the defendant is resident in the jurisdiction or someone over whom the court has in personam jurisdiction, a worldwide freezing order may be appropriate;

•

if the defendant is not resident in, nor subject to, the court’s jurisdiction, a worldwide freezing order will only be ordered in exceptional circumstances which might include where there is a Van Uden real connecting link with the jurisdiction of the English court; or it is appropriate and consistent with comity for the English court to act as an international policeman, but that would require the court to have some means of enforcement of its order; or it is just and convenient to make the order having regard to the ‘five factors’ referred to in Motorola at para 11.14.

In that case, the court made a freezing order over domestic but not overseas assets. Nor did the judge order disclosure in respect of foreign assets.

SEARCH ORDERS 11.23 Search orders are mentioned because, although they have not featured in international cases as freezing orders have, this is an obvious form of remedy which could be relevant to litigation with an international element. The search order, as it is now called under the CPR, is another invention from the mid1970s. The case which gave them their original name was Anton Piller KG  v Manfacturing Processes Ltd16. Anton Piller orders, as they became, were orders 14 15 16

292

[2014] EWHC 3124 (Comm), [2014] All ER (D) 207 (Oct). Ibid, at para 27. [1976] Ch 55.

Search orders 11.24

which provided that a defendant was obliged to permit a claimant’s solicitors to enter premises in order to search for evidence. It was a form of order that could only be made in the most exceptional circumstances, where there was a strong case for saying that a defendant might seek to destroy or conceal evidence. It is not a search warrant; it does not give the claimant the right to enter the defendant’s premises. But it does order the defendant to give admission such that, if permission is refused, the defendant will be in contempt. The order can be made where it is essential that a claimant have access to evidence and where there are grounds to believe that the defendant, if forewarned, will destroy evidence. There are three pre-conditions to the grant of the order: (i) the claimant must have an extremely strong prima facie case; (ii) the damage which the claimant fears must be very serious; (iii) there must be clear evidence that the defendant has incriminating documents or things and that there is a ‘real possibility that they may destroy such material before any application inter partes can be made’. 11.24 The courts began to make these orders with enthusiasm. In some cases, of which Universal Thermosensors Ltd v Hibben17 is an example, things did not always go well. In that case, the orders had been served at 7.15 am, including on a female defendant who came to the door ‘in her night attire’ to be told of the order while her children were still in bed. She was informed of her right to obtain legal advice but, unsurprisingly at an early hour, was unable to do so. Concern was expressed that the Anton Piller process was open to abuse. Several guidelines were laid down: (i) such orders should only be executed in office hours on working days so that defendants would be able, as the orders are required to provide, to take legal advice; (ii) if the order is to be served at a private house where a woman is likely to be present, the person serving the order must be, or be accompanied by, a woman; (iii) orders should provide for a list to be made of that which is taken away; (iv) the restriction on informing others of the order, which is often provided for, not least in case a claimant may wish to pursue others, should not last too long; (v) when orders are executed at business premises, that should be in the presence of an officer of the company; (vi) it may be necessary to limit the circumstances in which a claimant may be granted access to a competitor’s documents; (vii) the service of the order should be overseen by a supervising solicitor, not being the claimant’s solicitor, even though that person may also be present.

17

[1992] 1 WLR 840.

293

11.25  Interim remedies

These requirements were later set out in a Practice Direction18. Detailed rules now appear in CPR 25 PD 25A. 11.25 Reference has been made to both freezing orders and search orders but it is fair to say that the only cases in which substantive relief has been granted in support of a foreign court are freezing orders cases. It is easy to see why. Cases such as Duvalier indicate that the English court may assist a foreign court to take protective measures when what is in issue before that court either concerns a defendant’s assets or there is a worry that a defendant will avoid judgment by concealing assets. Freezing order cases are thus truly supportive of the foreign court, rather than using s 25 of the Civil Jurisdiction and Judgments Act 1982 as a means of providing domestic relief where foreign proceedings are on foot. 11.26 There are some other cases outside freezing orders where s 25 has been identified as a basis for the English court to take action, but again in ways that are supportive of the foreign court rather than using s 25 as a means of obtaining free-standing relief. One example is courts providing support to one another in cases of cross-border insolvency. The focus of such cases, again, is on assets located within the jurisdiction and covers things such as vesting UK based assets in foreign office holders or making orders for the local cross examination of witnesses in support of the foreign proceedings. Such cases were mentioned in Credit Suisse Fides Trust v Cuoghi19 and Rubin v Eurofinance SA20. 11.27 However, it may be that s 25 can be used more broadly as a legal foundation for the grant of a range of interim measures – as has been suggested, as part of the court’s procedural rules – not being confined to freezing order cases.

18 19 20

294

See [1994] 1 WLR 1233. [1998] QB 818 at 827. [2012] UKSC 46, [2013] 1 AC 236 at paras 30–31.

CHAPTER 12

Proof of foreign law 12.01 Foreign law in the English court is a matter of fact to be proved by evidence. Therefore one often has experts – lawyers and professors of law – giving evidence as to the law of a particular country. But it is also up to the parties to raise the case that foreign law applies. The application of foreign law and its meaning must be pleaded: see Ascherberg, Hopwood & Crew Ltd v Casa Musicale Sonzogno Di Peitro Ostali1. If no one does so, or if there is no evidence, the court will just apply English law. 12.02 It was said in Bank Mellat v HM Treasury2 that: (i) in English private international law, foreign law is a question of fact to be proved by a duly qualified expert as to both the interpretation and application of the law; (ii) the burden of proof rests on the party seeking to establish the proposition of foreign law in question; (iii) the English court will not undertake its own researches into foreign law; (iv) the court may use ‘its own intelligence and common sense’; (v) courts should be reluctant to dismiss expert evidence which is uncontradicted but may do so if it is obviously false, suggests partiality or lacks logic. The court may not dismiss the evidence on the basis of its own research. 12.03 Whilst foreign law is a question of fact, it has been suggested that it is a special type of finding of fact with the consequence that an appellate court may be more ready to interfere with the conclusions of a first instance judge than in other cases, especially where the judge’s conclusions are based on a review of textbooks and judgments, because findings as to foreign law are findings of fact ‘of a peculiar kind and the same considerations do not apply in deciding whether and to what extent this court should interfere with the decision of the [first instance tribunal]’: see Parkasho v Singh3.

1 2 3

[1971] 1 WLR 173. [2019]  EWCA  Civ 449, applying A/S  Tallinna Laevauhisus v Estonian State SS  Line (1947) 80 Lloyd’s Law Rep 99. [1968]  P  233 at 250, followed in Bumper Development Corpn v Commissioner of Police of the Metropolis [1991] 1 WLR 1362.

295

12.04  Proof of foreign law

12.04 It seems that the same will apply to choice of law under the Rome I Regulation4 or the Rome II Regulation5. Whilst those instruments determine the applicable law, how that is proved is a matter of evidence or procedure for the forum and so either if foreign law is not pleaded or not evidenced, it would not fall to be applied.

4 5

296

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations.

CHAPTER 13

Foreign judgments

INTRODUCTION 13.01 Apart from questions about when an English court will have jurisdiction to hear a case, important questions may arise about when an English court will recognise and give effect to a foreign judgment. It can immediately be seen that this question is not dissimilar to a jurisdiction question. The issue here is whether and when respect should be accorded to the decisions of other courts. 13.02 Judgments emanating from a foreign state only have effect – may be recognised or their consequences be enforced in the UK – when that is required by legislation, which may be domestic or European, or a common law principle. Domestic judgments, within their own forum, have immediate effect so, for example, providing a legal basis on which A is to pay money to B, giving rise to a debt enforceable by B in that place, or to an obligation on A not to do certain things which, if A  does them, can cause A  to be committed for contempt of court. This is reflective of the nature of the authority of a state’s organs. Within England, the judgments of English courts are immediately effective. But none of this applies in the UK to foreign judgments, which have to go through certain hoops before effect can be given to them or their consequences. Unless a foreign judgment satisfies the requirements – whether under the common law or by statute or EU Regulation – for recognition and enforcement, it has no effect in the UK. So a person cannot, other than by following the necessary steps, take action in England to require a person to comply with a foreign judgment. 13.03 The recognition and enforcement of foreign judgments gives rise to (at least) two sets of consequences. One is that, where a judgment is recognised, it is capable of determining matters between the parties: of concluding whether, for example, one party acted in breach of a contract with another. If recognised, that judgment will create an estoppel or res judicata and, for example, prevent the unsuccessful party in the foreign court contending for the contrary in England. Statute provides that the successful party cannot bring a fresh claim on the same cause of action: s 34 of the Civil Jurisdiction and Judgments Act 1982. 13.04 The other consequence is that, when the judgment is enforced, it gives rise to the right to recover that for which the judgment provided, such as the payment of a sum of money. Thus, it will be necessary for a claimant to consider, if it gets a judgment in state A, whether it will be possible to enforce that judgment in state B, being the place where, for example, the defendant has substantial assets 297

13.05  Foreign judgments

against which the claimant would wish to enforce its judgment. If the answer is ‘no’, then suing in state A may be of limited utility. By the same token, a defendant’s reaction to proceedings in one state may vary according to the location of that party’s assets. If the bulk of a defendant’s assets are not in the place where a defendant is being sued, and if a judgment of the courts of that place will not be recognised in the states where that defendant’s assets are located, the defendant may take a rather more relaxed approach to those proceedings than would otherwise be the case. 13.05 So far as legislation is concerned, for judgments given by courts of countries in the EU and allied European states one looks to the Brussels Recast Regulation1 and the Lugano Convention. There are also separate treaties with the UK which apply to other countries. Statutory provision for recognition and enforcement under domestic law has been made by the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933, each applying to different countries. Where a country is subject to that legislation, it will apply to judgments given by the courts of that country. In the absence of a legislative mechanism, the common law applies. That works, in short, by enabling people to rely on the foreign judgment for the purpose of creating an English cause of action and then an English judgment which can be enforced in the usual way. 13.06 There is a difference between recognition and enforcement but also numerous respects in which one or other may arise. Recognition means treating a claim as having been determined once and for all by the foreign court: see Clarke v Fennoscandia Ltd (No  3)2. A  foreign judgment might also be recognised in England in the case where a person has been unsuccessfully sued in one jurisdiction and then seeks to rely on the judgment dismissing the claim in that jurisdiction if sued in the same or a related matter in England. In that context, the English court recognises the judgment by giving effect to the fact that the same claim has been heard and determined elsewhere. Thus it may be said that a foreign judgment which is recognised creates an estoppel; it means that the matters on which the foreign court have adjudicated are treated as having been judicially determined and so are res judicata. Once a judgment which is recognised has been given, its effect is to estop the parties per rem judicatem from asserting matters contrary to that which has been adjudged. The judgment is final and conclusive in respect of the matters it determines. It is no longer necessary to prove that which the judgment has found because the judgment is conclusive. See, domestically, Thoday v Thoday3. Such an estoppel can arise where the same parties were involved in the foreign and the domestic litigation and the subject matter is the same and there is a final judgment. If the whole issue in both cases is the same, cause of action estoppel will arise: the whole action will have been decided. But also issue estoppel may arise based on individual 1 2 3

298

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. [2008] SC (HL) 122 at para 21. [1964] P 181 at 197–198 per Diplock LJ.

Introduction 13.07

decisions taken by the foreign court whose judgment is recognised4. This was established by Carl Zeiss Stiftung v Rayner Keeler Ltd5 in which it was said that a (recognised) foreign judgment was ‘equally conclusive with English judgments’6 and so could create estoppels (including as to individual issues) as long as the judgment was final and conclusive on the merits. It was there suggested that an English court might have to be cautious in its approach to foreign judgments and the issues decided within them because of different procedures and therefore possible uncertainty as to what was judicially decided. It will always be necessary to look carefully to see which parties were the subject of the foreign judgment. In The Sennar7 it was said that a decision was on the merits if it stated certain facts and applied the law to them. It was said that an issue estoppel would arise from a foreign decision even if the English court would criticise the reasoning of the foreign court. In that case, the decision of a Dutch court that a claimant’s cause of action was in contract and that the action was enforceable only before the courts of another country was held to be a decision on the merits which bound the parties, even though the court did not decide the substance of the issue (because the court concluded that the issue should have been decided elsewhere). Hence in that case what might be regarded as a procedural matter – the characterisation of a claim, and jurisdiction – was held to have been finally decided and to bind the English court. In MAD Atelier International BV v Manès8, it was held that in order to be final and conclusive and so to create an estoppel, it was necessary for the foreign court to regard the matters on which it has passed judgment as having ‘preclusive effect’. This means that the foreign legal system must have a doctrine of issue estoppel or its equivalent. It is not enough for English law to determine the issues which the foreign judgment resolves. Thus, the foreign judgment should not be given a more conclusive effect in England than it would have in the country of origin. 13.07 Thus where a judgment is given in favour of a defendant, the defendant may, if the judgment is recognised in England, rely on it in order to resist being sued in England, by saying that the foreign judgment has finally concluded that a claimant’s claim fails or perhaps has decided issues in that claim which cannot be raised afresh in England. But what is the position for a successful claimant? When a judgment is given in England on a cause of action, it is said that the cause of action merges into the judgment with the consequence that no further action can be brought on it. However, at common law that principle did not apply to a foreign judgment so that a successful claimant in foreign proceedings was not prevented from bringing the same claim in England: see Republic of India v India Steamship Co Ltd9. That gave rise to obvious injustice which statute sought to address. Section 34 of the Civil Jurisdiction and Judgments Act 1982 provides: No proceedings may be brought by a person in England and Wales or Northern Ireland on a cause of action in respect of which a judgment has been given in 4 5 6 7 8 9

Ibid, at 197. [1967] 1 AC 853. Ibid, at 917. [1985] 1 WLR 490. [2020] 3 WLR 631. [1993] AC 410 at 417.

299

13.08  Foreign judgments

his favour in proceedings between the same parties, or their privies, in a court in another part of the United Kingdom or in a court of an overseas country, unless that judgment is not enforceable or entitled to recognition in England and Wales or, as the case may be, in Northern Ireland.

13.08 The effect of this was to reverse the common law rule that the foreign judgment did not extinguish a cause of action. However, it may not go quite as far as that. In the Republic of India case, owners of cargo sued first in India and recovered £6,000 in damages. But their true loss was £2.6 million and so they sued in England. The defendants said that the claim was barred by s 34. However, the House of Lords, relying on the words ‘No proceedings may be brought’ said that s 34 was not a complete bar to the action but was a defence to it such that the claimants could rely on arguments of waiver or estoppel to prevent reliance on the section. In that case, the question whether such arguments were available was remitted to the first instance judge. 13.09 In order for s 34 to apply, the foreign judgment must be based on the same cause of action which a party seeks to bring in England; the proceedings abroad must be between the same parties or their privies; and the foreign judgment must be enforceable in England: see Black v Yates10. 13.10 Turning from recognition to enforcement, the enforcement of a foreign judgment means that the judgment is executed, so that, for example, the English court requires a defendant to pay the sum which the foreign court has adjudicated is due. Or the person sued in England might set up a foreign judgment which found for that person by way of a counterclaim to the action now brought against the formerly successful party when sued in this jurisdiction. In that way, the party benefiting from the foreign judgment would seek, by way of counterclaim, to recover what the foreign court had ordered. By the same token, a party who was unsuccessful abroad and held liable for a certain sum may seek to rely on the judgment if the opposing party seeks to recover more on the same cause of action in England.

MEANS OF ENFORCEMENT OF JUDGMENTS 13.11 So far as the means of enforcement are concerned, as indicated above, this may, depending on the circumstances, be by statute, whether European or domestic, or the common law. Thus, for the present, enforcement of a judgment given by an EU or EFTA  State will be under the Brussels Recast Regulation or the Lugano Convention. Judgments of non-EU  States which are subject to the English Acts will be enforced under those Acts; each Act applies to different states. The remaining means of enforcement is by the common law but, as explained below, that does not mean direct enforcement of the foreign judgment but instead its use to create a domestic cause of action giving rise to a domestic judgment. 10

300

[1992] QB 526 at 543.

Conditions for recognition and enforcement 13.14

13.12 The above paragraph states the current position but of course there will, at least at first, be changes after the UK leaves the EU. Because of the UK’s departure from the EU and the consequential repeal of the Brussels Recast Regulation, common law rules and domestic statutes will apply to judgments in cases which are commenced after IP completion day: see part 6 of SI 2019/479 read in the light of Schedule 5 to the European Union (Withdrawal Agreement) Act 2020. In the event that the UK is able to sign the Lugano Convention, its provisions – which reflect the 2001 Brussels Regulation11 – will come into force12. However the Brussels Recast Regulation remains in force in respect of judgments given in cases which were commenced before the date on which the UK finally leaves the EU13. Given this imminent change, this chapter deals first with the common law and domestic statute and then with European/EFTA legislation.

CONDITIONS FOR RECOGNITION AND ENFORCEMENT Common law 13.13 There are domestic statutes providing for the enforcement of judgments. They apply to identified countries based on bilateral treaties or agreements with other countries (or sometimes states within countries, such as Canadian provinces). In addition, many cases will be governed by EU-derived legislation. In those circumstances, it might be thought that the common law takes a back seat. It is, in a sense, the default provision when no other scheme applies. However, it is proposed to deal with the common law first in part because, at least so far as domestic statutes are concerned, many of the approaches taken by the common law have been adopted within them and also because, as indicated above, the common law may assume a more prominent role once the UK leaves the EU, should the UK not sign up to the Lugano Convention. 13.14 At common law, a person enforces a judgment by bringing a domestic action based on it. The successful party in overseas litigation will claim to be due a sum of money, for example, because that is what the foreign judgment says. When judgment is given, the party in whose favour the foreign judgment was given can enforce it by bringing a claim on it in England which gives rise to an English judgment reflective of what the foreign judgment has awarded. The party may then rely on the English judgment recognising the foreign judgment so as to create a domestic debt. In Owens Bank Ltd v Bracco14 it was said that a foreign judgment was treated by the common law as imposing a legal obligation on the judgment debtor which would be enforced in an action on that judgment in the English court in which the defendant would not be permitted to re-open the issues of fact or law which had been decided by the foreign court. The only exception to this was expressed to the case where the judgment was obtained by 11 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 12 This is discussed in more detail at para 2.04. 13 SI 2019/479, reg 92. 14 [1992] 2 AC 443.

301

13.15  Foreign judgments

fraud. By way of example, in Colt Industries v Sarlie (No 2)15, a successful party in the US brought an action in England based on the US judgment. The party applied for and obtained summary judgment and it was held that this was right even though the judgment was subject to appeal: despite that possibility, it was a final and conclusive judgment. As indicated, the only exception to that would be where the judgment was obtained by fraud. The scope of and approach to that exception is considered at para 13.44 below. 13.15 Strictly speaking, therefore, where the common law applies, what is being enforced is the English judgment, albeit that the basis for that judgment is the earlier, recognised foreign judgment. 13.16 At common law a judgment of a foreign court can be recognised in England only if the court had jurisdiction to give the judgment. Jurisdiction in this instance has an international meaning and is determined by the English court applying its own conflict of law rules and not by applying the rules of jurisdiction of the foreign court. That the court has such jurisdiction is a key requirement. If it does, the judgment may be enforced as long as it is final and conclusive and for a definite sum of money. There are, however, certain grounds on which a foreign judgment may be impeached and in that event it will not be recognised and, if not recognised, cannot be enforced. 13.17 The court giving judgment must have jurisdiction in the international sense, which means that the jurisdiction is one recognised by English conflict of law rules. The court will have – or, more accurately, be treated as having – jurisdiction in essentially two cases. One is where the person was present in the jurisdiction at the time when the proceedings were commenced. The other is where, in various ways, the person submitted to the jurisdiction of the court: see Rubin v Eurofinance SA16. The Supreme Court in that case rejected replacing rules based on presence and submission with a rule based on there being a real and substantial connection between the claim and the foreign forum in which it was decided. 13.18 As to the requirement of presence, if the person was present in the jurisdiction when the claim was started, the court will have jurisdiction: see Adams v Cape Industries plc17. There must have been physical presence at the date of the issue of the claim; temporary presence will suffice provided it is voluntary. It is presence at the time the claim is commenced, not the time when the cause of action arose, that is required: ‘at the time of suit’: see Sirdar Gurdyal Singh v Rajah of Faridkote18. Older cases had suggested that residence was required19 but the presence test identified in Adams v Cape now prevails, at least at common law. There is scope for saying that this is a rather extravagant basis for claiming jurisdiction in contrast to a requirement based on domicile or nationality. At least 15 [1966] 1 WLR 1287. 16 [2012] UKSC 46, [2013] 1 AC 236 at paras 6–7. 17 [1990] Ch 433 at 517–519. 18 [1894] AC 670 at 683. 19 Eg Emanuel v Symon [1908] 1 KB 302.

302

Conditions for recognition and enforcement 13.22

in those cases one could say that the court would be expected to have authority over a person just as British nationals would expect to be subject to the authority of the courts in (at least their part of) the UK. But the presence test means that if a person is on holiday in a country at the time when the action begins, then the court is treated as having jurisdiction. That is so because the test is just presence, not even residence: in Adams v Cape it was said that voluntary presence, whether or not accompanied by residence, was sufficient to give jurisdiction. It can, however, be argued that this approach dovetails with the basis on which, at common law, the English court claims jurisdiction. If a person can be served in England – which would require presence (even if transitory) in England – then the English court has jurisdiction. A rule which says that a foreign court is treated as having jurisdiction based on the presence of the defendant can be seen as applying the same principle. 13.19 One issue in Adams v Cape was how a corporate body was to be regarded as being present in a jurisdiction. It was held that this meant carrying on business in a place to some reasonable extent from a fixed place of business for more than a minimal period of time. Hence the lack of an office in a place would count against presence there. Presence might also be shown if the corporation carried on business via an agent in a place; a representative in the place with the power to bind the company. 13.20 The question in each case will be whether the particular company against which the judgment was issued was present in the country. It will not be enough that another company in the same group was present, because each company is to be treated as a separate entity. Thus company A will not be present in a country merely because its subsidiary, company B, is so present. 13.21 As to the second basis for international jurisdiction, submission to the jurisdiction, that may take various forms. The characterisation of whether there has been a submission is a matter for English law; it is not enough that the foreign court would regard the person as having submitted: see Desert Sun Loan Corpn v Hill20. The question is not whether what was done would have amounted to a submission in English proceedings, nor whether the foreign court would treat the defendant as having submitted. The international context requires a broader approach than considering whether there would have been a submission for the purposes of English proceedings, but it remains the case that the foreign court’s view is not determinative: see Rubin v Eurofinance SA21. 13.22 A voluntary submission – where a party is sued in a country and participates in the proceedings – is sufficient. A party who has submitted to a foreign court cannot be heard to say that the court had no jurisdiction to decide the issues raised by the proceedings in which submission was made: see Murthy v Sivajothi22. 20 21 22

[1996] 2 All ER 847 at 862. [2012] UKSC 46, [2013] 1 AC 236 at para 161. [1999] 1 WLR 467 at 476–477.

303

13.23  Foreign judgments

13.23 It was noted above in the context of challenges to jurisdiction that a party who does more than acknowledge a claim and indicate an intention to contest jurisdiction may be held to have submitted – and so be unable to challenge jurisdiction – by taking steps in the action such as serving a defence. Similar principles will be relevant in deciding whether a person has submitted to the foreign court for the purposes of enforcing a judgment. In Akai Pty Ltd v People’s Insurance Co Ltd23 it was said that there would be a submission if a party took a step which was only necessary or useful if the party was not objecting to jurisdiction. This was repeated in Rubin24. A step that was not consistent with or relevant to a challenge to jurisdiction would usually be a submission to the jurisdiction. It is a question of English law whether a party has submitted, so the fact that the foreign court believes a party has done so is not determinative: see Akai. 13.24 There are particular examples in the context of litigation abroad of how a party may submit. In Guiard v Dec Clermont & Donner25, an English defendant was sued in France. The defendant did nothing about the claim. Default judgment was entered and enforcement proceedings commenced, including notice of the judgment being served on the defendant’s bank. At that point, the defendant asked for the default judgment to be set aside and for judgment to be given in its favour. The case was thereafter reheard and the defendants won at first instance but then lost on appeal. It was held that there was a submission and it did not matter that this was in response to the taking of enforcement proceedings. The defendant’s error in that case was in not just challenging jurisdiction. Alternatively, it could have done nothing at all and then the judgment would not have been enforceable in England as there would have been no submission (assuming there was no presence at the time of the claim). But it would, of course, have been enforceable in France, which may explain why the defendant felt it necessary to take some action. Perhaps surprisingly, in Harris v Taylor26 it was held that a defendant who appeared in court to challenge the order granting permission to serve proceedings out of the jurisdiction (there of the Isle of Man court) submitted to the jurisdiction. In Henry v Geoprosco International Ltd27 a defendant who was sued in Alberta applied to the court to set aside a decision permitting service out and to contend that the claim should be stayed in favour of arbitration. It was not otherwise argued that the Alberta court lacked jurisdiction. The application for a stay having been dismissed, the defendant took no further part in the proceedings. Having secured judgment in Alberta the plaintiff sought to enforce in England, arguing that the defendant had submitted to that court. The Court of Appeal referred to the ‘much criticised’ decision in Harris v Taylor and held that an English court would not uphold a foreign judgment in the case where a defendant voluntarily appeared before that court solely to contest jurisdiction because that would not involve a submission. However, there would be a submission where a defendant invited the foreign court not to exercise the jurisdiction it had under its own law; that accepted that there was jurisdiction 23 [1998] 1 Lloyd’s Rep 90. 24 At para 159. 25 [1914] 3 KB 145. 26 [1915] 2 KB 580. 27 [1976] QB 726.

304

Conditions for recognition and enforcement 13.26

but involved a submission that the jurisdiction should not be exercised. In that case the defendant had therefore done more than just contest jurisdiction. It was held that an appearance was voluntary even if it was made to protect property which the defendant anticipated would be seized. However, an appearance just to challenge the court’s jurisdiction would not count as a submission. Therefore the problem in both Harris and Henry was that the defendant was engaging with the question whether the court should exercise its jurisdiction as opposed to disputing that the jurisdiction existed. The former counted as a ‘conditional appearance’. The court fairly noted that the effect of its decision was that the dividing line between what was and was not a voluntary submission was narrow and difficult to draw satisfactorily. 13.25 The effect of Harris and Henry has been reversed by s  33 of the Civil Jurisdiction and Judgments Act 1982, which says that, for the purposes of deciding whether an overseas judgment should be enforced, a person is not to be taken to have submitted to the court by reason of appearing to contest jurisdiction, ask the court to stay the claim in favour of arbitration or protect or obtain the release of property seized or threatened with seizure: see Strategic Technologies Pte Ltd v Procurement Bureau of the Republic of China Ministry of National Defence28, where the issue was the common law unaffected by the statute. A defendant who takes any step beyond those referred to in s 33 will be taken to have submitted. In the light of the Harris and Henry cases, the defendant must act carefully so as to remain within s 33. However, it has been said that s 33 should not be construed narrowly: see Marc Rich & Co v Societa Italiana Impianti29, in which a party served what was referred to as ‘an alternative defence on the merits’, making it abundantly clear that jurisdiction was challenged, and this did not amount to a submission. However, a later defence by which the defendant opposed an application for declaratory relief was a submission. Thus a party which asserts as its primary defence that the court has no jurisdiction will not be taken to have submitted by also taking steps which are relevant to the merits of the claim. The question will be whether the party has abandoned a challenge to jurisdiction: AES  Ust-Kamenogorsk Hydropower Plant LLP  v AES  Ust-Kamenogorsk Hydropower Plant JSC30 (in the Court of Appeal; the issue was not live in the Supreme Court). In that case a party lost its jurisdiction argument and, having done so, engaged with the merits. Submitting an alternative pleading on the merits, particularly in circumstances where that was required by the procedures in the foreign court, was not a submission. This approach is far-removed from that in Harris and Henry. 13.26 There may be a difficulty if a particular legal system requires a person who challenges jurisdiction also to address the merits of the case. A party who does so, when required, will not, for that reason, be taken to have submitted: see Golden Endurance Shipping SA v RMA Watanya SA31. 28 29 30 31

[2020] EWHC 362 (QB) at para 101. [1992] 1 Lloyd’s Rep 624. [2012] 1 WLR 920. [2016] EWHC 2110 (Comm) at paras 28–33, 43 and 47.

305

13.27  Foreign judgments

13.27 A party who submits is deemed to submit not only for the purposes of the action in which the act of submission takes place but also for related actions, that is to say actions concerning the same subject matter and other related claims. 13.28 The defendant who counterclaims in the foreign court will be taken to have submitted to its jurisdiction. This is a clear case of a party invoking the court’s jurisdiction. 13.29 The other instance in which a party is taken to submit to a particular court is where there is an agreement to submit through a jurisdiction clause. In that event, the foreign court will have jurisdiction in the international sense. This flows from the decision in Sirdar Gurdyal Singh v Rajah of Faridkote32 and Emanuel v Symon33. It has been said that an agreement to submit does not have to be contractual in nature: one does not, therefore, have to have a jurisdiction clause. All that is necessary is that a party consent to appear before a court. Because all that is required is an agreement, it is possible to imply an agreement to consent to the jurisdiction: Blohn v Dresser34. That was a departure from what was said in earlier cases such as Sirdar Gurydal but now has the approval of the Privy Council in Vizcaya Partners Ltd v Picard35. Such terms are not lightly to be implied. It was said in Vizcaya that an agreement to submit could not be implied from the mere fact of being a shareholder in a foreign company, that the contract which is the subject of proceedings was made in a foreign country, that the contract was governed by the law of that country or that it was to be performed in that country. It may be that this observation reflects the position when the governing law of a contract is English law, because the case which contained that observation also said that the question whether a term falls to be implied is a matter of the law governing the contract. (This also flows from Vizcaya. In that case, the expert evidence did not establish that there was a basis for saying that it was an implied term of the parties’ contract that the relevant party submitted to a particular jurisdiction.) 13.30 A development of the principles in relation to submission is contained in s 32 of the Civil Jurisdiction and Judgments Act 1982. That section provides that a foreign judgment is not to be recognised when the bringing of proceedings in that court was contrary to an agreement under which the question was to be settled otherwise than by proceedings in that country, and the person against whom judgment was given did not agree to the proceedings which led to the judgment, and the person did not counterclaim in or otherwise submit to the jurisdiction. 13.31 If one has a situation in which there is either an agreement (presumably, per Vizcaya, express or implied) that disputes will be resolved in another jurisdiction or by other means, such as arbitration, then the judgment is not to be enforced unless the other party agreed to proceedings in that court or submitted – which could include but is not limited to by counterclaiming. None of this 32 [1894] AC 670. 33 [1908] 1 KB 302 at 309. 34 [1962] 2 QB 116 at 123. 35 [2016] Bus LR 413.

306

Conditions for recognition and enforcement 13.36

applies if the agreement as to where to sue was illegal, void or unenforceable. It is expressly stated that the questions as to, for example, the existence of a jurisdiction agreement and whether a party submitted are not a matter for the law of the place whose courts gave judgment: s 32(3). 13.32 One can immediately see how ss 32 and 33 fit together. Section 32 says that foreign judgments are not to be enforced in certain circumstances and s 33 applies where, in essence, a party takes action in the foreign court with a view to giving effect via that court to those restrictions (by, for example, asserting that the foreign court lacks jurisdiction). 13.33 It was at one time thought that it was enough to found jurisdiction that a person was a national of the state of the court which gave judgment: see Emanuel v Symon36. But that is no longer so: see Vogel v R and A Kohnstamm Ltd37. 13.34 Judgments are not enforced simply on the basis that, if the case was in England, the English court would have jurisdiction; what has been referred to as the principle of the comity of nations or reciprocity is not a basis for enforcement: see Societe Cooperative Sidmetal v Titan International Ltd38. This was repeated in Rubin v Eurofinance SA39. The issue is whether the foreign court had jurisdiction in what the English court regards as the international sense. 13.35 The judgment must be final and conclusive: see Nouvion v Freeman40. That will be the case if the particular court making a decision cannot re-open it. The foreign judgment must be regarded by the court giving the judgment as having a preclusive effect. Thus the foreign court must have a doctrine of issue estoppel or its equivalent which means that the foreign court must treat its judgment as meaning that the issue in question cannot be re-litigated: MAD Atelier International BV v Manès41. The fact that the judgment is subject to appeal does not mean it is final and conclusive: see Colt Industries v Sarlie, above. It may be in such a case that the judgment would be recognised subject to conditions depending on the outcome of the appeal. But there may be occasions when a court does not purport to give a concluded judgment. An obvious example could be a judgment on an application for interim relief. By definition that is not final because such relief falls to be re-considered at trial. It is possible that a judgment may be final and conclusive in relation to one or more matters even if others are not concluded. In that event, it could be recognised in respect of the concluded matters. 13.36 It is said that a judgment must be for a definite sum, although sometimes this is linked to the question of whether there was a final judgment. In

36 37 38 39 40 41

[1908] 1 KB 302 at 309. [1973] QB 133 at 141. [1966] 1 QB 828. [2012] UKSC 46, [2013] 1 AC 236 at para 127. (1889) 15 App Cas 1. [2020] 3 WLR 631.

307

13.37  Foreign judgments

Beatty  v  Beatty42, which concerned an attempt to enforce a New York divorce order requiring payment of alimony, it was said that there was not a final judgment because the amount of alimony could be varied from time to time. However, it was possible to enforce an order for past sums due. Scrutton LJ said that the judgment had to be for a ‘sum certain’, even if that involved the court doing some arithmetic and Sargent LJ referred to the need for a ‘definite debt’. The requirement that the judgment be for a definite sum was stated in Israel Discount Bank of New York v Hadjipateras43. 13.37 In accordance with the general principles, considered at para 13.52 in the context of public policy, the English court will not enforce a judgment, even for definite sum, if it is a penalty or tax demand. So in United States of America v Inkley44 an action to enforce a bail bond for which the defendant had been held liable by a judgment in Florida failed because the subject matter was penal. The bond was payable because of the defendant’s participation in criminal proceedings and the fact that it gave rise to a civil judgment did not affect its underlying nature. By contrast, in Raulin v Fischer45 the victim of a crime in France was entitled to apply for damages in the course of a prosecution. It was held that the award of damages was not penal and so the victim could be entitled to enforce the French judgment to that extent. 13.38 What has been said above relates to judgments in personam: judgments which hold a particular person liable or exonerate a person. There is a separate type of judgment, namely a judgment in rem which deals with things such as property – and their ownership or sale or their treatment in insolvency. 13.39 The courts whose judgments will be recognised and enforced when they relate to property (whether immovable or movable) are the courts for the place where the property was situated: see Castrique v Imrie46. It is for the English court to work out where property is located and on that basis to work out which is the lex situs which will govern whether the property is movable or immovable and the validity of a transfer of that property. Whether a judgment takes effect as judgment in rem will depend on the lex situs. Where, according to that law, a party had title, the English court would give effect to that decision: see Air Foyle Ltd v Center Capital Ltd47. 13.40 In Pattni v Ali48 it was said that a judgment in rem was a judgment by a court where relevant property was situated, adjudicating on its title or disposition as against the whole world and not merely as between the parties to a claim. So a statement that X owns a particular house would be a judgment in rem. This is to be distinguished from a judgment as to contractual rights in respect of property 42 [1924] 1 KB 807. 43 [1984] 1 WLR 137 at 141. 44 [1989] QB 255. 45 [1911] 2 KB 93. 46 (1869–70) LR 4 HL 414 at 429. 47 [2003] 2 Lloyd’s Rep 753. 48 [2007] 2 AC 85.

308

Conditions for recognition and enforcement 13.43

which would be a judgment in personam. Hence a judgment that X owed Y certain sums consequent on the sale of property would be a personal judgment as to X’s contractual liability. In the Pattni case, which was a dispute about payment for shares, the judgment was an in personam one even though the court also made orders requiring the transfer of shares. All the court was doing was deciding the rights of the vendor and purchaser of the shares between themselves, and then taking steps to give effect to its judgment. But the mere fact that the asset underlying the dispute was shares did not make this a judgment in rem. An order for specific performance, even insofar as it requires the transfer of property, such as shares, remains an order in personam and not in rem.

Cases where a judgment will not be enforced at common law 13.41 There are limited circumstances in which a foreign judgment may be ‘impeached’ or not enforced. However, a foreign judgment will not be reviewed as to its merits. It will not be enforced if the court giving the judgment did not have jurisdiction in the international sense: that is apparent from what has been said about the conditions for recognition and enforcement. But it does not matter that the court did not have jurisdiction according to its own rules: see Pemberton v Hughes49, where the issue was a procedural irregularity in arranging the hearing which rendered subsequent proceedings void in the court which took the decision. But the court said that the only jurisdiction which mattered was that in the international sense. Jurisdiction in any other sense was not regarded as material. In Adams v Cape Industries plc50 it was said that ‘a foreign judgment cannot, in general, be impeached on the ground that it was not competent to do so according to the law of the country concerned’. 13.42 The Pemberton case also says that English courts never look to the propriety of the proceedings in the foreign court unless they offend against English notions of substantial justice. But if they do not, the judgment of a court which had jurisdiction in the international sense is to be enforced with no enquiry as to its merits. This means that an English court will not decline to enforce a judgment because it thinks the outcome is wrong, whether on the facts or the law. 13.43 The observations about substantial justice seem now to have developed into three rules: (i) a foreign judgment may be challenged on the grounds of fraud; or (ii) enforcement may be refused if to do so would be contrary to public policy; or (iii) enforcement may be refused if the proceedings in which the judgment was given were contrary to public policy.

49 50

[1899] 1 Ch 781. [1990] Ch 433 at 550.

309

13.44  Foreign judgments

Fraud 13.44 The rule that a judgment would not be enforced if it had been obtained by fraud was established in Abouloff v Oppenheimer51, in which an unsuccessful defendant in Russian proceedings alleged that the Russian court’s judgment had been the result of fraudulent concealment by the successful claimant in that case. It was held that a party could not in those circumstances merely rely on the foreign judgment and that the issue of fraud could be and had to be litigated in England. It was said that: where a judgment has been obtained by the fraud of a party to a suit in a foreign country, he cannot prevent the question of fraud from being litigated in the courts of this country, when he seeks to enforce the judgment so obtained.

13.45 The reason for this was to prevent a party taking advantage of its own wrong. This did not involve challenging the correctness of the foreign judgment. Indeed, it was suggested that the raising of the fraud issue did not involve deciding afresh that which had been decided by the foreign court. One view was that the question whether that court had been misled was not before the foreign court which had taken the decision and for that reason the English court was not reviewing the substance of the foreign court’s decision. However, there will be plenty of cases in which the issue of fraud was before and would have been decided by the court – see Owens Bank below – and so to that extent the English court would be reinvestigating the conclusions of the foreign court, something which, in general, it does not do. In Abouloff the court would have investigated the fraud even if it had been before the foreign court. The court recognised this issue in Vadala v Lawes52 and said that a party could advance this argument even if the allegation of fraud involved re-considering that which the foreign court had considered and decided. In the context of fraud, it was permissible to re-open the case by adducing the same evidence and advancing the same arguments that had been before the foreign court. That principle was applied, if not reinforced, in Jet Holdings Inc v Patel53, in which it was said that where a party sought to resist the enforcement of a foreign judgment on grounds of fraud, it did not matter that the foreign court had considered the matter and decided that there was no fraud. It was said by reference to Abouloff and Vadala that a foreign judgment obtained by fraud could not be enforced even though the allegation of fraud was investigated and rejected by the foreign court. 13.46 The correct approach to the effect of fraud was considered by the House of Lords in Owens Bank Ltd v Bracco54. In that case it was alleged that a judgment had been obtained by fraud. The case was brought to recover loan repayments in circumstances where the alleged debtor said that there had been no loan and the documents supposedly evidencing it were forgeries. The foreign court had rejected this and held that the loan documents were genuine but when 51 52 53 54

310

(1882) 10 QBD 295. (1890) 25 QBD 310. [1990] 1 QB 335 at 344. [1992] 2 AC 443.

Conditions for recognition and enforcement 13.47

it came to enforcement in England, the defendant repeated the fraud argument and sought to avoid effect being given to the judgment (as it happens, under legislation) because of the fraud. It was accepted that, if the loan documents had been forged, the judgment of the foreign court had been obtained by fraud. But the question was how to approach that. At the time Owens was decided, the law was that an English judgment could only be challenged on the grounds of fraud if the party challenging it could rely on fresh evidence which was not available and could not by reasonable diligence have been obtained at trial. The reason for that was that a judgment determines the issues between the parties and is final and conclusive, meaning that it can be re-opened or challenged by collateral attack only in exceptional circumstances (see, for example, Hunter v Chief Constable of the West Midlands Police55). The strictness of this rule has been diluted now by Takhar v Gracefields Developments Ltd56, which denies the existence of a ‘reasonable diligence’ requirement; if decisive new evidence is deployed to show fraud, that could be relied on to challenge the judgment irrespective of whether the evidence could have been deployed at trial unless a deliberate decision was taken not to investigate or rely on that material. There would, however, still need to be fresh evidence. The question in Owens was whether the same self-limiting approach to re-opening English judgments should be taken to a foreign judgment. It was held, relying on Abouloff and Vadala, that the common law gave primacy to the principle that ‘fraud unravels everything’ and that meant that, in deciding whether to enforce the foreign judgment, the English court could decide whether it had been obtained by fraud. The English court thus did not accord to foreign judgments the same finality it did to English ones. It did not matter that, to that extent, the English court would be reopening the issues at trial and deciding for itself whether a fraud, which the foreign court had rejected, had taken place. This shows, in the context only of fraud, that the English court is prepared to re-investigate the matter that was before the foreign court. That undoubtedly gives rise to a tension when compared to the general rule as to the finality of foreign judgments. One consequence of this may be the need to keep allegations of fraud and what is to be regarded as such an allegation within reasonable bounds. That was the approach of the Privy Council in Owens Bank Ltd v Etoile Commerciale SA57, which upheld and re-stated the Abouloff/Vadala/Bracco line of authority (albeit with an express lack of enthusiasm) but dismissed the attempt to unravel a foreign judgment on the grounds of fraud for the lack of convincing evidence and particularity. 13.47 As to what fraud means, it was held in Midtown Acquisitions LP v Essar Global Fund Ltd58 that it could include matters such as the bribery of witnesses or giving perjured or forged evidence but that, in any case, ‘conscious and deliberate dishonesty’59 was required. This does, however, appear to leave open the possibility that in any case where a party says that evidence given in a foreign

55 [1982] AC 529. 56 [2019] 2 WLR 984. 57 [1995] 1 WLR 44. 58 [2017] 1 WLR 3083. 59 Ibid, at para 65.

311

13.48  Foreign judgments

court was forged, the affected party can invite the English court to re-open the matter. 13.48 However, if the issue of fraud has been specifically raised and decided before the foreign court, that may bind the English court. So in House of Spring Gardens Ltd v Waite60, judgment was given by an Irish court. It was alleged that the judgment had been obtained by fraud and that issue was determined by another Irish court which dismissed the allegation. It was held that this bound the English court such that it was not appropriate to raise again the very issue which had been determined by the foreign court. The Court of Appeal was not prepared to, as it saw it, extend the line of cases dealing with fraud affecting foreign judgments. Abouloff and Vadala were distinguished because in those cases the question whether the foreign proceedings had been affected by fraud was not decided in that court. It was held that the second foreign judgment, dealing with the fraud issue, created an estoppel and it would be an abuse of process to seek to go behind it. In that case there was no question of the judgment dismissing the fraud allegation having itself been obtained by fraud and so, the very issue of fraud having been decided in subsequent proceedings, that bound the English court. In truth this is not easy to square with Abouloff and Vadala and may reflect a hostility to those decisions, repeated in Owens Bank Ltd v Etoile Commerciale which limits their scope. 13.49 More generally, estoppel and the principles in Henderson v Henderson61 may preclude enforcement of a judgment. If the subject matter of the foreign judgment sought to be enforced had been decided by an earlier court, the judgment of the earlier court would create an estoppel which would bind the parties and prevent reliance on the later judgment. That is not an issue of the conflict of laws but the application of the principles that once a matter has been decided, that is the end of it and the point may not be re-litigated. That was described by Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd62 as part of a general procedural rule against abusive proceedings. Thus, when an English court has decided a matter, the issue which the English court has decided is res judicata. The consequence of this is that a foreign judgment dealing with the same issue will not be recognised: see Vervaeke v Smith63 (where it was said that res judicata was an application of public policy and either was enough to prevent enforcement of the foreign judgment). There was reference to the paucity of authority on refusing to recognise judgments on grounds of public policy64 but it was held that the decision of an English court on the issue was such a ground: as Lord Diplock described it, a plain case of estoppel per rem judicatem. 13.50 The principle in Henderson v Henderson expands the rule by saying not only that what was determined in a former case is binding but also that it extends to things which ought to have been litigated in those proceedings in order to 60 [1991] 1 QB 241. 61 (1843) 3 Hare 100. 62 [2014] AC 160. 63 [1983] 1 AC 145 at 156, 161. 64 Ibid, at 164.

312

Conditions for recognition and enforcement 13.53

avoid a person being vexed twice and reflecting the principle that there should be finality in litigation. Therefore if in litigation of a particular claim, a party ought to have taken a point but did not, the party will not be able to bring a fresh claim on that point: the ‘subject matter of the litigation’ ought to be resolved at the first sitting and may not be raised anew later. 13.51 In order to create an estoppel, the earlier judgment must be final and conclusive and not obtained by fraud or collusion, but if that is the case, it will be determinative and recognition will be denied to a later inconsistent judgment. As part of this principle, a judgment will not be enforced if it is inconsistent with an earlier foreign judgment. Thus in Abdul Rahman Showlag v Abdel Moniem Mansour65 it was held that where there were two competing foreign judgments, the first in time prevailed and was to be enforced to the exclusion of the later judgment. Public policy 13.52 A  judgment will also not be enforced where it is contrary to English public policy. In Re Macartney66, the judge relied on English contract cases dealing with the non-enforcement of contracts insofar as they are inconsistent with public policy and said that the same principle applied to the enforcement of judgments founded on contracts that were contrary to public policy. However, in JSC VTB Bank v Skurikhin67 it was noted that the ambit of the public policy exception is not capable of precise definition and that rules of public policy may change over time. However, the rule may extend to refusal to recognise or enforce judgments which offend universal principles of morality. That latter observation reflects a comment made by Phillips J in Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd68 in the context of contract rather than the enforcement of judgments (but following Macartney, a relevant consideration) where he said that some heads of domestic public policy were based on universal principles of morality. There is also an overlap between public policy and considerations of natural justice and what amounts to a penalty. 13.53 But courts need to be careful and avoid an over-broad application of public policy issues, in particular where the foreign court has dealt with the matter said to give rise to such an issue. For example, in RBRG Trading (UK) Ltd v Sinocore International Co Ltd69, an arbitration case, a party sought to avoid enforcement of an award on the ground that the underlying contract had been tainted by illegality. The arbitral tribunal had dealt with and rejected the illegality argument. In those circumstances it was not appropriate for recourse to be had to English public policy (which would have involved re-opening the issue) when considering whether to enforce the award. It was said that the public policy 65 [1995] 1 AC 431. 66 [1921] 1 Ch 522. 67 [2014] EWHC 271 (Comm) at para 30. 68 [1988] QB 448. 69 [2018] 2 Lloyd’s Rep 133.

313

13.54  Foreign judgments

ground should be given a restrictive interpretation. This was a case under the Arbitration Act 1996 but it may be thought that the issue of respect being granted to the foreign court would apply equally to the judgments of foreign courts. If that is right, it would show a marked difference of approach between fraud cases and public policy cases. 13.54 It is permissible not to enforce a judgment if the circumstances in which the judgment was given offend against English notions of substantial justice: see Pemberton v Hughes70. That was re-stated in Macalpine v Macalpine71, in which it was said that justice meant that notice had been given to a litigant and that the party had an opportunity to advance a case. 13.55 Such cases would probably include the situation in which the court giving judgment had failed to comply with Article  6 of the European Convention on Human Rights. That could be said to reflect the obligation on courts under s 6 of the Human Rights Act not to act incompatibly with a Convention right, but it leads to the oddity that, for the purposes of recognition, the English court may end up imposing on another court, even if it is not a signatory to the European Convention on Human Rights, the duty to act in conformity with it by saying that, because judgment was given in circumstances which were not compatible with Article 6 (and even if Article 6 is not applicable in that country), the judgment will not be enforced. That, however, appears to be the approach suggested by the European Court of Human Rights. In Pellegrini v Italy72, a marriage was annulled by an ecclesiastical court in the Vatican on the application of a party who then sought to have that decision recognised by the Italian court. The complainant before the European Court of Human Rights alleged that the proceedings before the ecclesiastical court were in breach of Article 6 and for that reason the decision should not have been recognised by the Italian court. The Vatican was not a signatory to the Convention. The Strasbourg Court said that compliance with Article 6 meant that the Italian court had to satisfy itself of the fairness of the proceedings before the ecclesiastical court, saying in terms that such a check was required where the court whose judgment was sought to be enforced was not a signatory to the Convention. The failure of the Italian court to check was itself a breach of Article 6. However, the scope of that case was narrowed, at least in England, by the opinions of the House of Lords in Government of the United States v Montgomery73. That was a case in which a confiscation order made by a US court was enforced in England. Speaking of Pellegrini, Lord Carswell limited its application by noting that the Vatican was party to a Concordat which laid down when the judgments of the ecclesiastical court would be enforced. Its terms meant that the Italian courts had to give effect to Article 6. In the normal run of cases, the territorial limits of Article 6 – that it only applies to signatory states – would not mean that a party could rely on a breach of Article 6 to avoid enforcement of a foreign judgment given by the courts of a country where Article  6 70 [1899] 1 Ch 781. 71 [1958] P 35. 72 (2002) 35 EHRR 2. 73 [2004] 1 WLR 2241.

314

Conditions for recognition and enforcement 13.60

did not apply. A person could claim that Article 6 was ‘indirectly engaged’ only where a court’s judgment would involve a ‘flagrant denial of justice’. 13.56 There is also a statutory rule of general application, regardless of the basis on which the judgment would be otherwise recognised, which precludes recognition. That is the Protection of Trading Interests Act 1980 which is considered separately at para 13.71.

Enforcement under statute 13.57 So much for the common law. Enforcement under statute will now be considered. At this stage, only domestic statutes are discussed. Recognition and enforcement under the Brussels Recast Regulation and Lugano Convention are considered at para 13.76. 13.58 Apart from EU-derived law, there are two relevant domestic statutes: the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933. The Administration of Justice Act 1920 applies to judgments given in the courts of ‘His Majesty’s Dominions’. The Act applied to countries identified by an Order in Council. The scope of the application of the 1920 Act was curtailed by the 1933 Act to the extent that the 1933 Act would supersede the 1920 Act in relation to cases which the later Act covered. This works by making an order under the 1933 Act to the effect that where such an order is made, that order – and in consequence the 1933 Act – apply in preference to the 1920 Act. But in cases not covered by an order made under the 1933 Act, then the 1920 Act continues to apply. 13.59 Dealing first with the 1920 Act, it provides that where a judgment has been given by, in essence, the courts of certain Commonwealth countries, then the person in whose favour the judgment has been ordered may apply to the English court to have it registered here. Such application must be made within 12 months of the judgment (subject to the court’s power to grant additional time). If it is ‘just and convenient’ to do so, the judgment may be registered here74. 13.60 There are a number of cases where judgment may not be registered, including: (i) where the foreign court did not have jurisdiction; (ii) where the judgment debtor did not reside or carry on business in the place where the judgment was given, nor voluntarily appear or submit to the jurisdiction; (iii) where the judgment debtor was not served; (iv) where the judgment was obtained by fraud;

74

Administration of Justice Act 1920, s 9.

315

13.61  Foreign judgments

(v) where an appeal is pending; or (vi) for reasons of public policy the judgment should not be enforced. This all flows from s 9 of the 1920 Act. 13.61 It is not clear whether ‘jurisdiction’ means the court’s own conception of jurisdiction or what has been referred to as international jurisdiction, but the reference elsewhere to carrying on business or being resident in the place suggests that the focus may be on the court’s own rules of jurisdiction. For example, in Sfeir & Co v National Insurance Co of New Zealand75, the judgment of a court in Ghana was not enforced against a New Zealand defendant which was served out of the jurisdiction but did not carry on business in Ghana or submit to the court. 13.62 Section 12 of the 1920 Act defines a judgment as a judgment or order whereby a person is obliged to pay a sum of money and includes an arbitration award. On the face of it, this does not include a judgment for an injunction. 13.63 Section 9(3) of the 1920 Act provides that a registered judgment shall have the same effect as a domestic judgment and that the domestic court will have its usual powers of enforcement. 13.64 Turning to the 1933 Act, that empowers the Crown to identify countries which fall within its ambit so as to permit the enforcement of judgments of those countries. The Act applies to judgments which are final and conclusive and require the payment of a sum of money or an interim payment but not the payment of taxes or equivalent. A judgment is final and conclusive even if an appeal has been lodged76. In Joint Stock Co ‘Aeroflot-Russian Airlines v Berezeovsky77, Arden LJ observed that it was surprisingly hard to find a judicial definition of finality but adopted the principle that it meant that no party was entitled to seek a review of the judgment nor carry out a fresh examination of the matter. As to that, English law lays down the rule that the judgment must be final and binding but whether a judgment has that effect or not is a matter for the law of the place where the judgment was given. 13.65 Section 2 of the 1933 Act provides that a judgment creditor has six years to apply for the foreign judgment to be registered in the High Court, which is far more generous than the period under the 1920 Act. But this does not apply if the judgment has been wholly satisfied or could not be enforced by execution in the court which gave judgment. A registered judgment has the same effect as a domestic judgment for the purposes of execution, proceedings may be brought on the basis of it and any sum awarded by the foreign court will be subject to interest.

75 [1964] 1 Lloyd’s Rep 330. 76 Foreign Judgments (Reciprocal Enforcement) Act 1933, s 1(3). 77 [2014] EWCA Civ 20.

316

Conditions for recognition and enforcement 13.69

13.66 Section 4 of the 1933 Act requires, and in one case empowers, the court to set aside a registered judgment. There is a requirement to set aside registration in circumstances which have some similarity to those mentioned in s 9 of the 1920 Act, namely that the judgment was not one which could be registered or which was registered in contravention of the Act, the court did not have jurisdiction, the defendant was not served in time to enable a defence of the proceedings, the judgment was obtained by fraud, it would be contrary to public policy to enforce it or, a new provision, that the rights under the judgment were not vested in the person who seeks to enforce it. The mandatory grounds for refusing registration reflect the common law: see In Re New Cap Reinsurance Corpn Ltd78. Section 4(2) of the 1933 Act then sets out circumstances in which a court is deemed to have jurisdiction, including: (i) submission by voluntarily appearing in the proceedings; (ii) where the defendant counterclaimed; (iii) an agreement to submit before the commencement of the proceedings; (iv) residence or, in the case of a business, having a principal place of business in the place; or (v) where the proceedings arise out of a transaction effected through a particular office, where that office was in the place. These grounds for jurisdiction are very similar to the common law, save for the reference to residence rather than presence. There is also reference to the case where the subject matter is immovable property and, at s 4(2)(c) a fall back to cover the case where the judgment does not fall within the previous provisions but ‘the jurisdiction of the original court is recognised by the law of the registering court’. There is a power to refuse registration when an appeal is pending. 13.67 The registration may (as opposed to must) be set aside if the subject matter of the judgment had already been determined by another court which had jurisdiction to do so. 13.68 The only basis on which an action may be brought to recover a sum of money ordered by a foreign court to be paid is by an application for registration79. 13.69 Section 8 of the 1933 Act says that final and conclusive judgments for the payment of a sum of money are to be recognised even if they are not registered, save for the case where a judgment has been registered and that has been set aside for any reason other than that a sum of money was not payable, the judgment has been satisfied, or the judgment could not be enforced by the courts of the country where it was given. Thus, a party would be able to rely on even an unregistered judgment to create an estoppel.

78 79

[2012] Ch 538 at para 19. Foreign Judgments (Reciprocal Enforcement) Act 1933, s 6.

317

13.70  Foreign judgments

13.70 Section 9 of the 1933 Act is a provision which means that registration may be denied to the judgments of countries whose approach to the recognition and enforcement of UK judgments is substantially less favourable than the approach of the UK to judgments of that country. Thus for reasons related not to the litigants but to the approach of a country, judgments may, in general, be denied registration.

Other statutory exceptions to the recognition of foreign judgments 13.71 Whether a foreign judgment would be eligible for recognition under the common law or under English statute, where the judgment is for ‘multiple damages’ or based on a rule of law specified in statutory instruments on the ground that it is ‘concerned with the prohibition or regulation of agreements, arrangements or practices designed to restrain, distort or restrict competition in the carrying on of business of any description’, it is not to be enforced under the 1920 or 1933 Acts and no steps may be taken at common law for the recovery of sums ordered by the judgment. That is the effect of s 5 of the Protection of Trading Interests Act 1980. (The only statutory instrument issued under the section concerns Australian trade practices.) 13.72 Multiple damages means where a judgment is for an amount which is ‘arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damage sustained by a party in whose favour the judgment is given’. If one has a judgment which determines that the claimant has suffered loss of £10, and which awards damages of £20, £30 or any multiple of £10, it will fall within this definition. The purpose of the Act was to prevent the enforcement of awards made principally in the US but also elsewhere under anti-trust legislation: see Service Temps Inc v MacLeod80. An example of this is what became the anti-suit case of SAS Institute Inc v World Programming Ltd81. In that case, a court in North Carolina had given an award of damages of $79 million. That was calculated on the basis that the claimant’s loss was assessed at $26 million but was trebled under North Carolina legislation to $79 million. The English High Court refused to enforce the element of the judgment which involved the tripling of the award82. The Act deprives the claimant of the ability to enforce not only the multiple element of the award but the whole award. Thus even where one can ascertain what loss was determined – as was the case in SAS, even that part of the award may not be enforced. This was discussed at some length at first instance in the SAS case where the judge addressed (obiter) differing views that had been expressed and preferred the view that, on the correct construction of the statute, it was the whole award that was covered by the rule that ‘a judgment to which this section applies shall not be registered’. It was the judgment in toto and not bits of it that were caught by that wording that were 80 [2014] SLT 375 at para 32. 81 [2020] EWCA Civ 599. 82 That refusal is reported at [2019] FSR 30.

318

Conditions for recognition and enforcement 13.75

not to be enforced. It will be different if the court has given judgment on several bases, some of which do not involve the award of multiple damages or also, presumably, if the court has given several judgments. 13.73 Section 6 of the Protection of Trading Interests Act 1980 provides an additional right to citizens ‘of the United Kingdom and Colonies’, companies incorporated in the UK and persons carrying on business in the UK. Where such a person has paid damages consequent in a judgment falling within s 5 or has paid a contribution towards a sum owed by another person in respect of such a judgment, then the defendant who has paid the award is entitled to recover from the person in whose favour the judgment was awarded a sum equal to the amount paid which exceeds the compensatory sum. One has a perhaps odd distinction. If I as a claimant have been awarded a judgment for multiple damages overseas, I will not be able to enforce any part of the judgment in the UK. But if my defendant has (foolishly, as it would turn out) paid me on the back of this judgment, then the defendant to my claim may only recover from me the noncompensatory element of the award. If the defendant has paid the compensatory element, that will not be disturbed. However, this right of recovery does not apply where the defendant, being an individual, was ordinarily resident, or, in the case of a company, had its principal place of business, in the place where the judgment was given at the time when the proceedings were commenced. Nor does it apply where the defendant is a business who carried on business in the country where the judgment was given and the judgment concerned exclusively activities carried on in that country. 13.74 The section also states that proceedings may be brought in England even if the party who has obtained the judgment abroad is not within the jurisdiction of the court. It seems in any event that the claimant does not need permission to serve out. This is because of CPR 6.33(3), which provides: 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 1982 Act, the Lugano Convention, the 2005 Hague Convention, or the Judgments Regulation, 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.

(This has been amended from IP completion date to omit references to the Lugano Convention and the Judgments Regulation: see the Civil Procedure Rules 1998 (Amendment) (EU Exit) Regulations 201983.) 13.75 At first blush, this provision is of enormous scope, since it applies to any statutory power to decide a claim. However, it has been held to apply only to statutes which make it plain on their face that a person may be sued even though 83 SI 2019/521.

319

13.76  Foreign judgments

not within the jurisdiction of the court. In Re Harrods (Buenos Aires) Ltd84 it was said that the rule would apply where an enactment indicates on its face that it is expressly contemplating proceedings against persons who are not within the jurisdiction of the court85. The Protection of Trading Interests Act 1980 satisfies that criterion.

Brussels Recast Regulation 13.76 Turning to the Brussels Recast Regulation (and the same will be relevant under the Lugano Convention if the UK signs that), one can deal separately with the recognition of judgments and their enforcement. 13.77 As to recognition of judgments given in other Member States, the Brussels Recast Regulation contains a readily accessible regime for cases falling within its ambit, namely civil and commercial matters. The recitals record the aim of facilitating the free circulation of judgments. Article 36 contains the general rule that judgments given by courts in Member States shall be recognised in other Member States without any special procedure being required. Anyone wishing to rely on a judgment in another state must produce a copy of the judgment and a certificate issued by the relevant court in the form of Annex 1 to the Regulation. 13.78 The procedure under the 2001 Brussels Regulation is slightly different and a little more cumbersome. Article  33 provides for judgments of Member States to be recognised in such states. It says that a judgment should be recognised without any special procedure being required but Article 38 then says that a judgment given in one state is enforceable in another when a party applies for it to be enforced and it has been declared enforceable. In the UK, what was required was that the judgment be registered in the relevant part of the UK. 13.79 Judgments of Member States in civil and commercial matters are to be enforced under the Brussels Recast Regulation because they come from the courts of those states. The domicile or nationality of the defendant is not relevant. Nor does it matter that the beneficiary of the judgment is not domiciled in the EU. Thus even judgments of such states against or in favour of non-EU parties will be recognised and enforced as long as the judgments are those of Member States. This is part of the general aim of providing for the free circulation of judgments amongst Member States. 13.80 The rules for recognition (and enforcement) relate to judgments of all kinds. They are not confined to money judgments. There being no reference, as in the domestic legislation, to judgments that are final and conclusive, they include interlocutory judgments (The Tjaskemolen86), such as freezing orders (Normaco Ltd and Norilsk Nickel v Lundman87), but only if there was an opportunity for 84 [1992] Ch 72. 85 Ibid, at 116. 86 [1997] 2 Lloyd’s Rep 476. 87 [1999] I L Pr 381.

320

Conditions for recognition and enforcement 13.84

the respondent to resist it (Bernard Denilauer v SNC Couchet Freres88). Hence purely ex parte orders, made without an inter partes hearing, are not judgments which may be recognised: see EMI Records Ltd v Modern Music Karl-Ulrich Walterbach GmbH89). Hence, in the case of an application for (at least some types of) injunctive relief, a party who applies and secures relief ex parte will not be able to enforce that relief in other EU countries, but once there has been an inter partes hearing and an order in consequence, the successful party will be able to do so. 13.81 In Gothaer Allgemeine Vrsicherung AG v Samskip GmbH90 it was held that judgments included any judgment without drawing distinctions according to their content, and on that basis could include a judgment by which a court declined jurisdiction (for example on the basis of a choice of jurisdiction clause) as well as provisional or interlocutory decisions. Hence in that case subsequent courts were bound by a first court’s findings in relation to a jurisdiction clause, meaning that the second court in which a party sued was bound to give effect to the judgment of the first court that the jurisdiction clause meant that the courts of a third state (and not the second state before which proceedings had been commenced) had jurisdiction. 13.82 The rules only apply to judgments given by the courts of Member States. They do not apply to judgments given by third states: see Owens Bank v Bracco91. 13.83 Difficult questions can arise because of the exclusion of arbitration from the scope of the Brussels Recast Regulation. However, in National Navigation Co v Endesa Generacion SA92 it was held that a judgment of a foreign court ruling that an arbitration clause had not been incorporated into a contract was binding both in court and in arbitration proceedings. 13.84 There are limited grounds on which a judgment may not be recognised. That does not in general include the case where the enforcing court takes the view that the court giving judgment lacked jurisdiction under the Brussels Recast Regulation. That is because the enforcing court may not review the jurisdiction of the original court93. A party who thinks that the original court did not have jurisdiction should appeal in that forum. However, recognition will be refused if the judgment conflicts with the jurisdiction provisions dealing with insurance, consumer or employment claims where the insured/policyholder, consumer or employee was defendant, or the provisions conferring exclusive jurisdiction. (Oddly, the 2001 Brussels Regulation, which is to the same effect, does not include employment cases.) The reference to the case where a judgment conflicted with the jurisdiction provisions dealing with consumer, employment and insurance cases means that if, in those categories of case, the court giving 88 C-125/79 [1981] 1 CMLR 62. 89 [1992] QB 115. 90 [2013] QB 548. 91 [1994] QB 509. 92 [2010] 1 Lloyd’s Rep 193. 93 Brussels Recast Regulation, Article 45(3).

321

13.85  Foreign judgments

judgment should not have taken jurisdiction, then the court in which recognition was sought could re-open the jurisdiction question and decide that the first court was wrong94. However, the court in which recognition is sought is bound by the findings of fact made by the court which gave the judgment, which would include factual findings relevant to jurisdiction. But outside insurance, consumer or (under Brussels Re-cast) employment claims, the enforcing court may not decline to enforce a judgment because it concludes that the court deciding the matter did not have jurisdiction. 13.85 A judgment shall not be recognised if it is manifestly contrary to public policy in the state in which recognition is sought or, if given in the absence of a defendant where that party had not been served with or notified of the proceedings or if it is irreconcilable with an earlier judgment involving the same parties given in the state where recognition is sought or any other Member State or a third state involving the same parties or the same cause of action95. The list of circumstances in which recognition may be refused is exhaustive and is to be interpreted restrictively: see FlyLAL-Lithuanian Airlines AS v Starptautkiska Lidosta Riga VAS96. 13.86 The scope of ‘public policy’ must be interpreted strictly because it is a potential obstacle to the aim of the Brussels Recast Regulations of allowing the free movement of judgments. Thus regard is to be had to that ground only in exceptional circumstances, and the limits of what could count are a matter for EU law. That covered ‘fundamental rights’, including the right to a fair legal process. A court could rely on public policy only where recognition or enforcement would be ‘at variance to an unacceptable degree with the legal order of the state in which enforcement is sought as much as it infringes a fundamental principle’. There would have to be a ‘manifest breach of a rule of law regarded as essential in the legal order of the state in which enforcement is sought or of a right recognised as being fundamental within that legal order’. This was laid down in Bamberski v Krombach97, which accepted that a refusal to allow a defendant to have a defence presented unless he appeared in person was a breach of a fundamental principle in the place where recognition was sought because that was part of the fundamental principles of the right to a fair hearing. 13.87 It might be thought that, in the UK, the 1920 and 1933 Acts would be indicative of public policy. But that may not always be the case. Under those Acts enforcement could be denied in the case where a judgment had been obtained by fraud. One might have thought that this was a prime example of public policy. However, in the case of an EU judgment, it cannot be relied on as a reason not to enforce the judgment, at least in the case where the foreign court has dealt with the allegation of fraud, because to do so would be to review the substance of the foreign court’s decision. In a case where a party relies on fresh evidence, for example to show that a judgment was obtained by fraud, the best course would 94 Ibid, Article 45(1)(e) and (3). 95 Ibid, Article 45(1). 96 [2014] 5 CMLR 27 at para 46. 97 [2001] QB 709.

322

Conditions for recognition and enforcement 13.90

usually be to require the party to take action in the court which gave judgment. Unless that happened, the foreign judgment would be respected: see Interdesco SA v Nullifire Ltd98. 13.88 As indicated, public policy may not be relied upon to decline jurisdiction if the enforcing court considers that the original court lacked jurisdiction. This will include the situation in which the court decides that the parties have not contracted out of the jurisdiction. For example, in the National Navigation case99, a Spanish court held that an arbitration clause had not been incorporated into a contract. That meant that the court did not decline jurisdiction in favour of arbitration. It was held that that decision was binding and was not contrary to public policy; it was not for the English court as the enforcing court to decide whether the original court had been correct about its jurisdiction. Thus, it was held that once it was accepted that the judgment fell to be recognised, there was no room for an argument that public policy was being infringed. That also includes the case where the court deciding the matter has taken jurisdiction under the more extensive provisions applicable to non-EU defendants. 13.89 Recognition may also be refused where the judgment was given in default of appearance100. That covers the case where the defendant was not served with or notified of proceedings. It has been said that the purpose of this is to ensure that a judgment is not recognised where the defendant has not had a proper opportunity to advance a defence: see Hendrickman v Magenta Druck & Verlag GmbH101. In that case it was not enough that a lawyer purporting to act for a party had acknowledged proceedings if the lawyer in fact lacked authority. That was the case despite the view of the domestic court, which had given judgment to the contrary. Indeed it was said that it was for the court from which recognition was sought to decide whether the exceptional circumstances existed. The substantive question is whether the rights of the defendant to participate are effectively respected, but the focus is on substantive compliance: see Orams v Apostolides102. A defendant who had not been properly served but who had the right to a remedy against a judgment given in default of appearance would not be able to resist enforcement if that right was not exercised. Similarly, when the defendant has in fact taken advantage of that right of challenge public policy will not require enforcement to be refused103. 13.90 The requirement is that the person be served in sufficient time. Yet it has been held that what is sufficient time is a matter for the court before which enforcement is sought and that it may conclude that insufficient time was given even if the time provided was in conformity with the law of the place where judgment was given. No doubt in reality the circumstances will be rare in which the court asked to grant recognition will hold that the time given to a defendant 98 [1992] 1 Lloyd’s Rep 180. 99 See para 13.83. 100 Brussels Recast Regulation, Article 45(1). 101 [1997] QB 426. 102 [2011] QB 519 at para 75 (CJEU). 103 Ibid, paras 78–79 (CJEU).

323

13.91  Foreign judgments

to prepare for a case was insufficient. However, the enforcing court does have that power: see Trade Agency Ltd v Seramico Investments Ltd104. The court may, however, take account of circumstances arising after service was effected (perhaps illness or change of address would be examples). 13.91 An issue of public policy may also arise if a person is not permitted to be heard in connection with a matter, at least where the exclusion of that person was a ‘manifest and disproportionate’ infringement of the right to be heard. This was considered in the context of English proceedings where, because of a defendant’s conduct in failing to comply with a disclosure order, he was disbarred from taking any further part in the proceedings. The Court accepted that the exclusion could be capable of promoting the fair administration of justice. The public policy question was whether the party’s exclusion was a manifest and disproportionate infringement of the right to be heard. If it was, public policy would count against recognition of the consequent judgment: see Gambazzi v DaimlerChrysler Canada Inc105. Where a party had a right to be heard in respect of a freezing order originally made ex parte, that did not involve any breach of the requirements of public policy: see Meroni v Recoletos Ltd106. 13.92 This all reflects the broader principle that the court giving the judgment will have complied with Article 6 of the European Convention on Human Rights. There is a strong – but not irrebuttable – presumption that the courts of other European nations will do so: see Maronier v Larmer107. In that case, there had been a breach of fair procedures when a case was reactivated after a 12-year delay but without being served afresh on the defendant, with the consequence that he was unaware of it. In those circumstances, it was contrary to public policy to enforce the judgment. 13.93 The reference to Article 6 might mean that in the case where a court had failed to give reasons, recognition could be refused. The principle was accepted, although not found present on the facts, in FlyLAL-Lithuanian Airlines AS  v Starptautkiska Lidosta Riga VAS108. 13.94 In a case where judgment is given in default and without considering the merits, public policy will mean that the judgment should not be recognised only where such a judgment involves a manifest and disproportionate interference with the right to a fair trial: see Trade Agency Ltd v Seramico Investments Ltd109. But if the defendant has been told of the claim and has failed to take part, that would appear not to be the case. 13.95 Recognition may also be refused where the judgment is irreconcilable with a judgment in the place where recognition is sought, or with an earlier 104 C-619/10 at para 38. 105 [2010] QB 388. 106 [2017] QB 85. 107 [2003] QB 620 at para 25. 108 [2014] 5 CMLR 27. 109 C-619/10.

324

Conditions for recognition and enforcement 13.97

judgment given in another Member State or a third state. Under Article 45(1)(c) of the Brussels Recast Regulation the English court may refuse to recognise a judgment given in a foreign court where that judgment is irreconcilable with an English judgment involving the same parties, whether given before or after the foreign judgment. Thus the English judgment will prevail, whenever the foreign judgment was given. Under Article 45(1)(d) enforcement may be refused if the judgment is irreconcilable with a judgment given in another Member State or a third state in a case involving the same cause of action and same parties prior to that which is sought to be enforced. Thus in the case of judgments given by courts other than those of the place where enforcement is sought, enforcement may be refused in favour of the earlier judgment. The rule concerning irreconcilable judgments applies where there is another judgment involving a dispute between the same parties and, in the case of a third state, the same cause of action. In Solo Kleinmotoren GmbH  v Emilio Boch110 it was held that a settlement with which a judgment was said to be incompatible was not a judgment. It seems that the analysis would be different if the settlement were annexed to a Tomlin Order in domestic proceedings. The Brussels Recast Regulation provides that a settlement which has been approved by a court and which is enforceable in the place where it was approved will be enforceable in the same way as ‘authentic instruments’ (Article 58). These are documents drawn up by a public official and which are enforceable in the state where they are drawn up. It is provided that such instruments may be enforced in other states in the same way as judgments. Hence not only ‘authentic instruments’ but also Court-approved settlements, which it seems would likely include Tomlin Orders, should be enforceable in other states. 13.96 The exception only arises where there are conflicting judgments in different states. In Salzgitter Mannesmann Handel GmbH v SC Laminorul111, proceedings were brought against a German company in Romania. They were dismissed. The same action was then brought again and succeeded when the defendant failed to appear. The defendant sought to resist enforcement of the second judgment in Germany on the ground that there were irreconcilable judgments. But it was held that this rule applied only to irreconcilable judgments in two states and not to that situation arising in the same state. The court noted that cases in which judgments might not be enforced were listed exhaustively and should be interpreted strictly. Perhaps the defendant should have asked the German court to enforce the first judgment at the time it was given. 13.97 It is expressly provided that the judgment of another Member State may not be reviewed as to its substance112. This means that even where it was alleged that the court giving the judgment had committed a manifest error of EU law, that was not a ground to refuse recognition. Individual courts must leave it to the courts of other Member States to apply EU law correctly. It is not for the enforcing court to pass judgment on the merits of the first court’s decision even if, apparently, 110 [1994] Il PR 457. 111 [2014] 1 WLR 904. 112 Brussels Recast Regulation, Article 52.

325

13.98  Foreign judgments

it was plainly wrong. This is because the Brussels Recast Regulation requires the automatic recognition of judgments. Nor did the error in EU law give rise to any issue of public policy: Diageo Brands BV v Simiramida113. However, the Court of Justice did say that public policy might be involved when recognition of a judgment would be ‘at variance to an unacceptable degree with the legal order of the state in which recognition is sought, in as much as it would infringe a fundamental principle’114. For that to be the case there would have to be a ‘manifest breach of a rule of law regarded as essential to the legal order of the state in which recognition is sought or of a right recognised as being fundamental within that legal order’. That does not in terms suggest that a breach of EU law will ever suffice but the Court did later refer to a ‘manifest breach of an essential rule of law in the EU legal order and therefore in the legal order of that member state’. What that test does mean is far from clear. The Advocate General did not add detail, merely reciting the same principle115. The Advocate General gave as an example Gambazzi v Daimler Chrysler Canada Inc116, but that was not a case about an error of law. That was a pure public policy case because a party had been excluded from proceedings and so a decision had been reached in breach of a party’s manifest right to be heard. In general, where a party believes there has been an error of law, it is incumbent on that party to take local steps to challenge the decision rather than wait until the issue of enforcement arises. The prohibition on reviewing the merits includes, save in relation to insurance, consumer and (under the Brussels Recast Regulation) employment cases and exclusive jurisdiction cases, the court’s conclusions as to jurisdiction. As indicated above, outside those cases, the second court may not review the taking of jurisdiction by the first court: see Overseas Union Insurance Ltd v New Hampshire Insurance Co117. 13.98 When an appeal is brought, the court in which enforcement is sought may stay the proceedings seeking enforcement. Reference is made in Article 51 of the Brussels Recast Regulation to an ‘ordinary appeal’. That was defined in Industrial Diamond Supplies v Luigi Riva118 to mean an appeal which could lead to the annulment or amendment of a decision and for which a time period is laid down by national law. It was stressed that such an appeal must be ‘part of the normal course of action’ and thus foreseeable by the opposing party. However, Article  51 provides that where the judgment is given in the UK, any form of appeal shall be treated as an ordinary appeal. A stay on enforcement was ordered in Petereit v Babcock International Holdings119, partly because of the size of the award relative to the paying party’s assets, which would have had a substantial effect on its cash flow. However, it was ordered that the defendant had in return to provide security in the form of a bank guarantee.

113 [2016] Ch 147. 114 Ibid. at paras 44, 49–52. 115 At para 44 of the AG Opinion. 116 [2010] QB 388. 117 [1992] QB 434 at paras 23–26. 118 [1978] 1 CMLR 349. 119 [1990] 1 WLR 350.

326

Conditions for recognition and enforcement 13.103

13.99 Means of enforcement may not be undertaken during the time limit for lodging an appeal. Enforcement of the judgment may be made conditional on security so as not to run the risk that the successful party is deprived of the benefit of the judgment. However, the court in Petereit emphasised that there was no automatic right to a stay merely because there was a pending appeal. 13.100  There is a power to suspend proceedings if the judgment is challenged or if a party applies for a decision that there are grounds to refuse recognition in accordance with the provisions dealing with refusal of recognition. 13.101  A state which recognises a judgment must accord to the judgment the authority and effectiveness which it had in the state that gave the judgment: see Hoffman v Krieg120. However, the method by which a judgment is enforced is probably a matter of procedure and therefore something for the law of the forum. 13.102  As to enforcement, Article 39 of the Brussels Recast Regulation provides that a judgment which is enforceable in the Member State in which it was given shall be enforceable in other Member States without any declaration of enforceability being required. That differs from the equivalent provision in the 2001 Brussels Regulation, Article  38, which required a declaration that a judgment was enforceable save that in the UK what was required was that the judgment be registered for enforcement. Where a judgment is enforced in a country, it carries with it the power to benefit from any ‘protective measures’ under the law of the place where it is enforced. The procedure for enforcement is governed by the law of the Member State in which a party seeks to enforce: see Capelloni v Pelkmans121. 13.103  In England, EU judgments are enforced by registration. In contrast to the common law position, there is no requirement to commence a fresh action on the basis of the judgment. Indeed in Jozef de Wolf v Harry Cox BV122 it was said that a party must use the Brussels Regulation procedure for recognising and enforcing a judgment and could not bring a fresh action in another state for the same judgment even if to do so was cheaper or easier. The procedure for enforcement is governed by CPR Part 74. A party seeking to enforce must provide evidence, including a copy of the judgment and, if necessary, a certified translation, and identifying the judgment creditor and judgment debtor and stating the ground on which the creditor is entitled to enforce the judgment and, in the case of a money judgment, the amount which remains unsatisfied. The application is made without notice to the judgment debtor but an order granting permission to register a judgment is then to be served on the judgment debtor. That party may apply to set aside registration and thus enforcement. Under the Brussels Recast Regulation such a party makes an application, whereas under the 2001 Brussels Regulation this was done by way of an appeal. Under the 120 C-145/86 [1988] ECR 645. 121 [1986] 1 CMLR 388. 122 [1977] 2 CMLR 43.

327

13.104  Foreign judgments

2001 Regulation an appeal had to be lodged within one month. The Brussels Recast Regulation contains no express time limit, but CPR 74.6 says that when the English court makes an order registering a judgment, one of the matters which must be set out in the order is the time within which an application to set aside must be made. If the original application fails, the party against whom the judgment is enforced may bring one further appeal on a point of law. 13.104 Once a judgment is registered it is to be treated for the purposes of enforcement as if it had been given by the English court. This emerges to date from the Civil Jurisdiction and Judgments Order 2001123, Schedule  1, para  2, although it will be repealed from IP completion day. It was referred to in Cyprus Popular Bank Public Co Ltd v Vgenopoulos124. This reflects the principle set out in Hoffman v Krieg125. 13.105  Enforcement may be refused on any of the grounds on which recognition may be refused. The court to which such an application is made may limit the enforcement proceedings to protective measures (a freezing order, for example), suspend the enforcement proceedings, or make the enforcement conditional on the provision of security. 13.106  During the time specified for an appeal, no measures of enforcement may be taken in respect of a judgment. That does not include informing the other party or a third party of the judgment: see Cyprus Popular Bank Public Co Ltd v Vgenopoulos126. 13.107 A  further variant on enforcement is the European Enforcement Order made pursuant to Regulation 805/2004127. That applies to uncontested claims, which are defined by Article  3 as claims which a debtor expressly admits or which the debtor has never objected, or where the debtor has initially objected but then took no part in court proceedings or has agreed to it in an ‘authentic instrument’. The case where the defendant takes no part would presumably include default judgments. The claim must have been for payment of a specific sum of money. 13.108 By Article  5, a judgment certified as a European Enforcement Order shall be recognised and enforced in other Member States without the need for a declaration of enforceability and without any possibility of opposing its recognition.

123 SI 2001/3929. 124 [2018] QB 886. 125 C-145/86 [1988] ECR 645. 126 [2018] QB 886. 127 Regulation (EC) No 805/2004 of the European Parliament and of the Council of 21 April 2004 creating a European Enforcement Order for uncontested claims.

328

Conditions for recognition and enforcement 13.110

Hague Convention 13.109  The last thing to mention briefly is the Hague Convention on Choice of Court Agreements 2005, to which the EU, Mexico, Singapore and Montenegro are parties. It provides that a judgment given in a Convention state shall be recognisable and enforced in another state only if it is recognisable and enforceable in the state where the judgment was given – the state of origin. Recognition or enforcement may be postponed or refused if the judgment is ‘the subject of review in the state of origin or if the time limit for seeking ordinary review has not expired’. That presumably includes the case of an appeal. 13.110  There is to be no review of the judgment as to its merits and the subsequent court is bound by the first court’s findings of fact. However, recognition or enforcement may be refused on the following grounds, many of which are familiar in other contexts: •

the agreement (selecting the court) was null and void under the law of the state of the chosen court, unless that court has decided that the agreement is valid;

•

a party lacked capacity to conclude the agreement under the law of the requested state, which appears to mean the law of the state in which recognition or enforcement is sought. Thus, that country can give its own judgment as to capacity. As such, this ought not be subject to the decision of the court giving judgment, which will not have applied the law as to capacity of the ‘requested state’;

•

the document commencing the claim was not notified to the defendant in sufficient time to enable a defendant to prepare a defence, unless the defendant participated and did not challenge the manner of notification in circumstances where it was permitted to do so. This exception applies also where the defendant was notified but in a manner incompatible with the fundamental principles of the state in which recognition or enforcement is sought concerning service of documents. This is therefore a natural justice point, but will be lost if the defendant participates and does not take the point. Again, it seems that if the court has ruled on the point, that will preclude this ground of challenge;

•

the judgment was obtained by fraud ‘in connection with a matter of procedure’. It is not clear what the limit to matters of procedure is intended to cover. Would that include the case in which false evidence is given? One would hope so;

•

recognition or enforcement would be manifestly incompatible with the public policy of the state in which recognition or enforcement is sought;

•

the judgment is inconsistent with a judgment given in the state in which recognition or enforcement is sought in a dispute between the same parties;

•

the judgment is inconsistent with a judgment given in any other state in a dispute between the same parties involving the same cause of action, as 329

13.111  Foreign judgments

long as that other judgment is enforceable in the state in which recognition or enforcement is sought. 13.111  There is a general power to refuse to enforce damages awards where the sums awarded do not compensate for actual loss or harm suffered. Thus, a court may refuse to enforce a punitive damages award. It is expressly provided that a judgment may be severed where a party seeks to enforce only part of a judgment or only part is capable of being recognised.

330

CHAPTER 14

Jurisdiction in the employment tribunal

JURISDICTION 14.01 The question of international jurisdiction in the employment tribunal has not been the subject of detailed consideration by the courts and only to a limited extent by academics. Inevitably, then, some of what is said below is opinion, or may be speculative.

The role of rule 8 14.02 There are two reasons for this lack of analysis. One is that parties and tribunals, and some commentary, have traditionally relied on the Employment Tribunals (Constitution and Rules of Procedure) Regulations 20131 (the Rules of Procedure), Schedule 1, r 8, which has deflected the need to consider jurisdiction rules in greater detail. It is suggested at para 14.09 ff that r 8 cannot be relied on as a basis for jurisdiction, which means that jurisdiction rules have to be found elsewhere. If that is correct, it undermines much of the traditional focus in tribunals. 14.03 Rule 8 itself provides: (1) A  claim shall be started by presenting a completed claim form (using a prescribed form) in accordance with any practice direction made under regulation 11 which supplements this rule. (2) A claim may be presented in England and Wales if— (a)

the respondent, or one of the respondents, resides or carries on business in England and Wales;

(b)

one or more of the acts or omissions complained of took place in England and Wales;

(c) the claim relates to a contract under which the work is or has been performed partly in England and Wales; or

1 SI 2013/1237.

331

14.04  Jurisdiction in the employment tribunal

(d) the Tribunal has jurisdiction to determine the claim by virtue of a connection with Great Britain and the connection in question is at least partly a connection with England and Wales. (3) A claim may be presented in Scotland if— (a)

the respondent, or one of the respondents, resides or carries on business in Scotland;

(b)

one or more of the acts or omissions complained of took place in Scotland;

(c) the claim relates to a contract under which the work is or has been performed partly in Scotland; or (d) the Tribunal has jurisdiction to determine the claim by virtue of a connection with Great Britain and the connection in question is at least partly a connection with Scotland.

14.04 As can be seen, if this rule deals with jurisdiction, it would do so based on the place where a respondent carries on business, or where there is another connecting factor to link it to England and Wales, such as where the acts occurred. The consequence of r 8 would be that the tribunal has jurisdiction over any respondent which carries on business in England and Wales, even if it has no base in England and Wales. In fact, it is even wider than that. If a party sues several respondents and just one of them carries on business in England or Wales, then the tribunal has jurisdiction over every respondent, no matter where based nor how tenuous that particular respondent’s connection is with the UK. That would entail, to use the language of one of the cases, ‘unlimited extra-territorial jurisdiction’2. It would also mean that the foundation for jurisdiction in the tribunal was different from that in the High Court – whether applying the Brussels Recast Regulation3 or not – and indeed far wider. Thus an employment tribunal would have jurisdiction over respondents who did business in England even if they were not domiciled in England (as is required by Brussels Recast Regulation) and even if they were not present and could not be served in England (as is the position under the common law). It would also, as indicated, have jurisdiction over respondents B and C because respondent A did business in England. There would be no need for the tribunal, in contrast to the court, to decide whether it needed to give permission to serve out. It could always serve out, against anyone, as long as one respondent could be identified (even if not the main player) who did business in England. If that analysis is correct, it is quite breathtaking, and would require some explanation and justification. However, it is argued below that the suggestion that this is a rule conferring jurisdiction in the international sense is wrong, and that one must look to more traditional sources. 14.05 The second reason for international jurisdiction not having been the subject of detailed focus is that attention has been diverted to different questions, namely the territorial scope of employment legislation and the extent to which that is capable of applying to persons not employed in Great Britain. The issue 2 3

332

Jackson v Ghost [2003] IRLR 824. Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

Jurisdiction 14.07

here, which is different from the question of whether the tribunal has international jurisdiction over a party, is whether particular cases fall within the territorial ambit of the legislation founding a claim. How far geographically does UK legislation extend? That is the subject of a series of cases starting with Lawson v Serco4, discussed below. However, those cases are a distraction from questions of jurisdiction because they are not dealing with that issue at all. It may be more accurate to describe those cases as dealing with choice of law – ie whether the law applicable to a particular relationship includes a right that is derived from UK legislation. 14.06 The correct starting point to questions of jurisdiction is that set out by Langstaff J in Simpson v Intralinks5. Citing an article by Louise Merrett in the Industrial Law Journal in 2010, Langstaff J said that the word jurisdiction was used in three different senses. First was the question whether, in a case where there was a foreign element, the tribunal had jurisdiction to hear the claim against the respondent at all – whether it had international jurisdiction. The second was whether the case should be heard in the tribunal or the High Court. The third was whether a claimant’s claim fell within the territorial scope of the legislation. The passage from the article cited by the judge is very clear and worth setting out in full: First, in all cases where there is a foreign element, the question arises as to whether the English court or tribunal has jurisdiction to hear the case at all or whether it should be heard in a foreign court … this is an issue of private international law and will be referred to as international jurisdiction. If the defendant is domiciled in a member state of the European Union, the question of international jurisdiction must be determined by applying the rules of the Brussels I  Regulation … Secondly, in domestic cases or in a foreign case where England has international jurisdiction, there may be an issue as to which domestic court or tribunal should hear the case: for example, should the case be heard in the High Court or county court, or in some countries by a court in a particular district? This issue will be referred to as domestic jurisdiction. In employment cases, this issue is of particular significance. That is because of the role of employment tribunals in enforcing employment rights. Broadly speaking, ‘normal’ common law claims, for example in tort arising from injuries sustained at work, or in contract, are brought in the common law courts … whereas statutory employment rights must be enforced through the employment tribunals … Thirdly, even if the court or tribunal has jurisdiction to hear the claim in both of the senses described above, and English law applies, in the case of statutory employment rights the claimant must show that he falls within the scope of the relevant legislation … most statutory rights have either express or implied territorial limits which must be satisfied … this last issue … will be referred to as territorial scope.

14.07 Although the concern of this chapter is not with the second sense of the word jurisdiction, the quoted passage is important because it shows that jurisdiction in the international sense is something different from the question of 4 [2006] UKHL 3, [2006] ICR 250. 5 [2012] ICR 1343.

333

14.08  Jurisdiction in the employment tribunal

the territorial scope of legislation. In cases involving a foreign element, a tribunal will have to address both of those issues. 14.08 How is ‘international jurisdiction’ determined in the employment tribunal? This is a very important question and one which is highlighted by the traditional focus of tribunals on r 8. The practice in the employment tribunal is that if an employee sues an employer anywhere in the world, the tribunal will serve the claim on the employer. No doubt this happens in part because in the tribunal the process of serving a claim is an administrative rather than a legal function, so it is never the case that a judge has to engage with the issue of whether the claim should be served. Because there is no mechanism by which a claimant can – or even has to – apply for permission to serve out, there is no judicial element to the decision who should be served. The truth may be that not enough employers have been alive to these issues to raise the point. But consider for a moment the exceptional claim to jurisdiction which this entails. The reality of the position in the tribunal, as indicated, is that it will serve anyone anywhere in the world. On that basis, its power to serve out is not subject to any limits at all. Compare the position of the High Court, where one may only serve out of the jurisdiction with the permission of the court. Claim forms are marked ‘not to be served out of the jurisdiction’. A claimant has to make an application to a High Court Master, supported by evidence, to justify the step of serving out. But the tribunal does not bother with any of that. It just serves out, and that is that. 14.09 As indicated above, many have taken the view that the question is answered by r 8 of the Rules of Procedure 2013. That, if correct, would be a ground for the rather expansive approach to service out discussed above. Indeed, in a passage in Louise Merrett’s article not set out by Langstaff J she said that (at least so far as respondents not domiciled in the EU are concerned) jurisdiction was determined by r 8. That is also the view expressed in Harvey on Industrial Relations and Employment Law. But that approach indicates the extravagant breadth of the tribunal’s claim to jurisdiction. If an employer carries on business in England – and it might be said to do so merely by having an employee in England – then no matter where in the world the employer is based, it may be sued in England. That is an extraordinary claim, in particular when one considers the comparison with the High Court. 14.10 It is submitted that that is not correct, and indeed that r 8 has nothing whatever to do with determining jurisdiction in an international sense. All that r 8 is concerned to do is to decide in which tribunal –either England and Wales, or Scotland – a case should proceed. The rule assumes that a tribunal in Great Britain has jurisdiction, but it does not decide whether or when it does so. Still less does r 8 confer or lay down rules for British employment tribunals to have jurisdiction. 14.11 It is submitted that this follows both from the background to and terms of the rule itself and from authority. Dealing first with the rule, its origin is the Employment Tribunals Act 1996. Section 7 is the provision which empowers the Secretary of State to make regulations. The section then sets out the sorts of 334

Jurisdiction 14.15

things the regulations may contain. Those include, by s 7(3)(a), provision ‘for determining by which tribunal any proceedings are to be determined’. 14.12 Nothing in s 7 provides that any regulations may set out when the tribunal has jurisdiction to hear a case. The reference to determining by which tribunal the case is to be determined is, on the face of it, dealing with the administrative question of which tribunal a claim should be allocated to – either England and Wales, or Scotland – bearing in mind that there are tribunals in those two jurisdictions. That is then what r 8 of the Rules of Procedure 2013 does. But the statutory authority which gives rise to the rule did not empower the Secretary of State to make rules providing when the tribunal would have (international) jurisdiction. Thus, to say the rule does so is to treat it as doing something for which the governing Act did not provide. 14.13 It also appears from r 8 itself that it does not set out when the tribunal has jurisdiction; rather it assumes, or works on the basis that it is the case. Thus rr 8(2)(d) and 3(d) refer to the situation where the tribunal has jurisdiction because of ‘a connection with Great Britain’. What the rule then does is to allocate the case as between England and Wales and Scotland, depending on the area with which the claim has a connection. But the starting point is that the tribunal has jurisdiction because of a connection with Great Britain and on the face of it that jurisdiction must derive from elsewhere. The allocation to England and Wales or Scotland is a matter of administration, not jurisdiction. It seems to be recognised that the question when a tribunal will have jurisdiction because of a connection with Great Britain is to be determined by some other rule and if, but only if, that condition is satisfied, then the rule can operate to allocate the claim to either England and Wales or to Scotland. 14.14 Authority also shows, either directly or by irresistible implication, that r 8 does not govern jurisdiction in the international sense. The clearest statement to this effect is Jackson v Ghost6. That case concerned r 11(5) of the 2001 Rules7 which is in similar terms to r 8 of the current 2013 Rules, referring to a respondent residing or carrying on business in England and Wales. An earlier case, Lawson v Serco in the EAT, had held that the only limit on the right to bring a claim under the Employment Rights Act 1996 was the then r 11(5) – that the respondent resided or carried on business in England and Wales. In Jackson v Ghost, however, Judge Peter Clark observed that, if such an interpretation were correct, it would have ‘resulted in unlimited extra-territorial jurisdiction for employment tribunals, save for the requirement that the respondent resides or carries on business in England and Wales’8. 14.15 But Judge Clark held that the EAT in Lawson v Serco had been incorrect, because what is now r 8 was not concerned with international jurisdiction. The

6 [2003] IRLR 824. 7 Employment Tribunals (Constitution and Rules of Procedure) Regulations 2001, SI 2001/1171. 8 [2003] IRLR 824 at para 72.

335

14.16  Jurisdiction in the employment tribunal

sole purpose of the rule was to decide whether the claim should proceed in England and Wales or in Scotland. He said: Significantly, we think in the present context, is that, whereas reg 11(5)(a) of the 2001 Regulations provides that the rules of procedure scheduled to the Regulations apply in proceedings to which they relate where one or more respondents reside or carry on business in England and Wales, the equivalent provision in the 2001 Regulations, Scotland substitutes respondents who reside or carry on business in Scotland. The key lies in the Transfer of Proceedings provisions contained in rule 21 of the respective rules of procedure contained in Schedule  1 to the respective sets of Regulations. Quite simply, where the respondent resides or carries on business in England and Wales a complaint should be heard there; if in Scotland, it should be heard before a Scottish employment tribunal. Regulation 11(5)(a) does not confer jurisdiction on the employment tribunal to hear a complaint brought under ERA; it merely determines where, if the ET has jurisdiction, the case should be heard9.

It is the last sentence that is important: r 8 does not confer jurisdiction but merely decides, assuming there is jurisdiction, where the case should be heard. Jackson was followed by another EAT case decided at the same time, Financial Times v Bishop10. 14.16 The second authority which appears to show that the rules of jurisdiction are not to be found in r 8 is the Intralinks case11. In the passage from Langstaff J’s judgment cited at para  14.06, it was observed that, in the case of an EU-domiciled respondent, international jurisdiction is governed by the Brussels Recast Regulation. It follows that, at least so far as EU-domiciled respondents are concerned, jurisdiction is not governed by the domestic Rules of Procedure. It is not enough to confer jurisdiction to say that the respondent does business in England and Wales. Either the respondent must be domiciled in England or the employee must habitually work in England. Neither of those tests is based on the location where the employer carries on its business. 14.17 It is true that Ms Merrett does say in her article (cited at para 14.06) that jurisdiction over non-EU domiciled respondents is governed by the Rules of Procedure, although it is noteworthy that Langstaff J did not set out that part of the article. But having regard to the matters on which Ms Merrett does rely, it is submitted that it cannot be correct. That is because once it is recognised – as Ms Merrett explains it must be – that there is a separate question whether the tribunal has international jurisdiction, then, in the case of EU-domiciled respondents, that jurisdiction has to be governed by the Brussels Recast Regulation. As indicated, that would mean jurisdiction being conferred either by a respondent’s domicile or by the application of the rules specific to employment cases based on the place where the employee habitually works. Under the Brussels Recast Regulation, the fact that a respondent carries on business in England and Wales is not enough to confer jurisdiction. Nor, in the case of non-EU domiciled respondents, is that 9 Ibid, at para 79. 10 [2003] UKEAT/0147/03. 11 [2012] ICR 1343.

336

Jurisdiction 14.20

enough to confer jurisdiction at common law. What this means is that reliance on r 8 creates a new and additional basis for jurisdiction not present in either of the systems of law which provide the general rules for jurisdiction. Unless it is to be suggested that employment tribunals are to be exempted from the jurisdiction rules which apply to all other courts, it must follow that the Rules of Procedure do not determine jurisdiction. Were that not the case, then those rules, and not the Brussels Recast Regulation, would determine jurisdiction over EU-domiciled respondents. But the passage in the article cited by Langstaff J shows that they do not. 14.18 It follows that it is not the Rules of Procedure but some other provision which determines the question of whether the tribunal has jurisdiction in the international sense. As the Merrett article cited in Intralinks makes clear, the source for determining such jurisdiction is, at least in the case of EU-domiciled respondents, the Brussels Recast Regulations. That is plainly right. Thus the correct test (for the most part) is to look to the Brussels Recast Regulation to decide whether the tribunal has jurisdiction at all and, if it does, to use r 8 to decide whether the claim should proceed in England and Wales or Scotland. Where the respondent is not domiciled in the EU, jurisdiction can be conferred on the basis of the place where the employee habitually works. If that is not in England, the basis for jurisdiction appears to be the common law: for example, can the respondent be served here. Problems arise, however, where the respondent is not domiciled in the EU and the employee does not habitually work in England, and hence Article 21 of the Brussels Recast Regulation does not confer jurisdiction. May the tribunal serve out of the jurisdiction? This is considered below. 14.19 As indicated, Louise Merrett’s article suggested that jurisdiction over employers not domiciled in the EU would be governed by r 8. It is submitted that this is wrong for two reasons. One is that, as explained above, r 8 does not deal with jurisdiction at all. But the other, perhaps more compelling, reason is that the Brussels Recast Regulation deals with employers not domiciled in a Member State. Thus Article 21 provides that employers not domiciled in a Member State may be sued in the courts of the place where the employee habitually carries out work. One does not, therefore, need to resort to r 8, and indeed it would be wrong to do so, as the Brussels Recast Regulation determines jurisdiction on a different basis. It follows, therefore, that no matter where the employer is domiciled, it can be argued that jurisdiction is determined by the Brussels Regulation. 14.20 Under Article 4 of the Brussels Recast Regulation, an English-domiciled respondent may be sued in England. Also, because of Article 21, an employer domiciled in any Member State and those not domiciled in Member States may be sued in the courts for the place where the employee habitually works. Sometimes, however, a claimant will not be able to sue an employer in England. That this is the case is an important recognition of the fact that jurisdiction rules are not limited to r 8, because the cases show that where the employer is not domiciled in the UK and the employee does not habitually work in the UK, the tribunal will not have (Brussels Regulation) jurisdiction, and that remains the case even though the employer carries on business in England. That means a case 337

14.21  Jurisdiction in the employment tribunal

will not be able to proceed. An important example of how the correct jurisdiction tests work is Powell v OMV Exploration & Production Ltd12. In that case, the employer was domiciled in Austria. The employee sought to rely on his habitual place of work, but since most of his work was done in Dubai he could not show that England was where he habitually worked. The fact that he did some work in the UK, when on leave from his duties in Dubai, was not enough to make any part of the UK the place where he habitually worked. It followed that the employment tribunal had no jurisdiction either based on domicile or based on Article 21of the Brussels Recast Regulation. The consequence in that case was that neither the employer’s domicile nor the place where the employee habitually worked enabled him to pursue a claim in England, with the consequence that – at least as far as England was concerned – he could not bring a claim. Interestingly, it was not even suggested that because the employer carried on business in England, r 8 conferred jurisdiction. This is, therefore, a very valuable guide to how the rules of international jurisdiction work in the tribunal.

Agents and employees of a respondent employer 14.21 There has been much discussion above of the position of the employer and how the tribunal may have jurisdiction over employers. There remains one difficult additional case, however. What are the rules of jurisdiction when a claimant seeks to sue someone who is not the employer but who is, for example, sued as an agent for the employer or an employee for whom the employer is vicariously liable but against whom the claimant also seeks a remedy? For example, there might be a discrimination or whistle-blowing case in which a claimant sought to sue the employer alleging detriments and also the individual who inflicted the detriment. That could also include, following Timis v Osipov13, a case in which the employee sued the employer for unfair dismissal for making a protected disclosure and also the manager who had decided that the employee should be dismissed. Or one might have a case where a claimant sought to sue an employer not domiciled in the UK and where the UK was not the place where the employee habitually worked so that the Brussels Recast Regulation did not confer jurisdiction. Could the agent be sued? 14.22 What are the rules which then govern? If the agent or other person (such as a fellow employee) is domiciled in the UK, then the Brussels Recast Regulation applies to confer jurisdiction on UK tribunals, and no more is needed. However, it seems that Articles 20–23 will not apply as against agents and other non-employer respondents because those articles apply only to the employer. Hence, if the agent or fellow employee is not domiciled in the UK, that person cannot be sued in the UK on the basis of the employee habitually working in the UK. Hence the basis for bringing that respondent before the tribunal must, if it can, be found elsewhere.

12 [2014] ICR 63. 13 [2018] EWCA Civ 2321, [2019] ICR 655.

338

Jurisdiction 14.27

14.23 This gives rise to two issues: (i) whether there are any other provisions of the Brussels Recast Regulation which could be relied on to confer jurisdiction in the UK over an EU-domiciled respondent who is sued as agent or in some capacity other than as employer; and (ii) what rules apply to agents and other third parties who are not domiciled in the EU? 14.24 At the start of this chapter, the point was made that because of a relative lack of consideration of such questions, some of what was said would be speculative and the expression of a view. What follows falls within that category. One can start with the issue of jurisdiction over a person domiciled in the EU but not in the UK whom a claimant might seek to sue as worker or agent. Because this prospective respondent is domiciled in some other EU country, the Brussels Recast Regulation applies to that person14. The question therefore arises whether there are provisions of the Brussels Recast Regulation which could be relied on against such (EU-domiciled) respondents. It is suggested that there may be two. 14.25 First, there is an important provision in Article 8 of the Brussels Recast Regulation which applies in the case where there is more than one defendant. In such cases, all defendants may be sued in the courts of the place where any one of the defendants are domiciled, as long as it is expedient to hear the claims against all defendants together. Thus Article 8 provides: A person domiciled in a Member State may also be sued: (1)

where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims 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.

Note that this only applies to respondents domiciled in an EU Member State. 14.26 What this means is that where, for example, a claimant sues a UK-domiciled employer, then the claimant will be able to sue the non-UK (but EU) domiciled respondent in England as long as the claims are closely connected etc. It may be that one could even go further. If the claimant sues an employer and several agents in connection with the same matter (and assuming the employer is EU domiciled), it would be enough if just one of the respondents (even if not the employer) was UK domiciled, to enable the claim to be brought in England against all EU-domiciled respondents. 14.27 The test is that the claims must be so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments. That appears likely to be easily satisfied in the case where an employer and a worker or agent are sued for the same detriment, or the employer is sued for 14

Brussels Recast Regulation, Art 5.

339

14.28  Jurisdiction in the employment tribunal

unfair dismissal and the worker sued for subjecting the claimant to a detriment by deciding that employee should be dismissed. It must surely be the case that those claims are closely connected and would have to be determined together. 14.28 Note, however, the limits on Article 8. It only applies where at least one respondent is domiciled in the UK. It would not be enough that a tribunal had jurisdiction under Article 21 against a non-UK, but EU domiciled employer who could be sued in the place where the employee habitually worked. Article 8 only works if one respondent is domiciled in the UK. But it seems one ought to be able to say that the principal respondent is the employer and that, for example, someone domiciled in the EU as an agent is someone who ought to be joined because the claims against the employer and the agent will be very closely linked and so should be heard together. 14.29 The second, slightly more adventurous means by which it can be argued that the tribunal could claim jurisdiction is Article 7(2) of the Brussels Recast Regulation, which deals with tort. Article 7(2) states that the courts of the place where the harmful event occurs have jurisdiction. Thus, if an employee sought to sue a non-UK (but EU) domiciled worker or agent in respect of a case where harm was suffered in the UK, the question would arise whether the claimant could say that a cause of action based on, say, the infliction of a detriment for making a protected disclosure or on grounds of a protected characteristic, involved the commission of a tort. 14.30 There is a question whether a whistle-blowing or discrimination claim would count as a tort for the purposes of the Regulation. Tort, in that context, is a specific term of general application across the EU, and does not depend on domestic law. However, it would not be without relevance that discrimination has been referred to domestically as a statutory tort: see London Borough of Lewisham v Malcolm15. That case was decided by reference to s  25 of the Disability Discrimination Act 1995 (now replaced by the Equality Act 2010), which provided for a discrimination claim in the context of goods and services and premises to be actionable in the same way as any other claim in tort. To the same effect, in the context of sex discrimination, is Hall v Woolston Hall Leisure16. Compensation is to be assessed in the same way as for a statutory tort: see Hurley v Mustoe17. It has been held that subjection to a detriment for whistleblowing is a form of discrimination: see Virgo Fidelis Senior School v Boyle18. 14.31 Thus while there is as yet no authority on the point, it must be arguable in the context of the Brussels Recast Regulation that discrimination or subjecting a person to detriment because of whistle-blowing counts as a tort. The argument would be that there was a stronger case for saying that when the person accused was not the employer but was a fellow employee or an agent of the employer. 15 [2008] UKHL 43, [2008] 1 AC 1399 at para 86. 16 [2000] IRLR 578 at para 42. 17 [1983] ICR 422. 18 [2004] ICR 1210.

340

Jurisdiction 14.36

14.32 If that is correct then, as against a respondent domiciled in the EU, a claimant can say that, if the harmful event occurred in the UK, the courts of the UK have jurisdiction. This would have some advantage over relying on Article 21, as that article would apply only where a respondent was domiciled in the UK or the employee habitually worked in the UK. The tort gateway does not depend on anyone being domiciled in the UK. Domicile in the EU and a harmful event in the UK would suffice. The risk, however, is that it would be said that the employment provisions are a self-contained code. They are subject to some exceptions (such as Article 8 in claims against the employer) but Article 7 is not one of them. Therefore to stretch employment claims into tort claims pulls them too far. This is an area to be explored. 14.33 The final and most difficult question under this heading is how to deal with claims against fellow workers and agents who are not domiciled in the EU, or employers not domiciled in the EU and where the employee does not habitually work in the UK (so that Article  21(2) would not apply). As indicated above, a claimant could not rely on Articles  21–23 against a fellow worker or agent, because those articles apply to the employer. As an agent or co-worker is not the employer, it appears that those articles cannot apply. In the example given above where the employee does not habitually work in the UK, Article 21(2) would not apply against the non-EU domiciled employer. What, then, are the governing rules? Can the employee bring the claim? On the face of it, the Brussels Recast Regulation does not apply. For the reasons given above, r 8 of the Rules of Procedure does not apply. 14.34 This then gives rise to the question, in effect, whether a tribunal may serve a claim out of the jurisdiction on a non-EU domiciled respondent in the same way as another civil court could. It has been pointed out that the interpretation of the Rules of Procedure contended for by some would allow service out in many, if not most, cases. Under those rules, if any respondent carries on business or resides in England, then all respondents may be served, no matter how tenuous their link with England. It is to say the least odd to suggest that one type of court in the UK should have so wide and far-reaching powers to serve out, far wider than any other court. That reflects the point made in Jackson v Ghost (see para 14.14). Such an argument would also mean, as indicated, that in the case of non-EU domiciled respondents the right to serve out would be far more extensive than in the case of EU domiciled respondents. 14.35 If r 8 does not apply, then where does one find the rules? The problem which arises is that if neither the Rules of Procedure nor the Brussels Recast Regulation govern, it is a struggle to find any rules which would be capable of conferring jurisdiction in the case of a non-EU domiciled respondent. 14.36 The obvious temptation is to look, at least by analogy, to the provisions of the CPR dealing with service out. There are difficulties with this argument. The CPR themselves state that they apply to the High Court and County Court. There is no provision of Rules of Procedure which says that the CPR apply by default (unlike, for example, in relation to disclosure). 341

14.37  Jurisdiction in the employment tribunal

14.37 One possible argument to bring the CPR in is this: under Article 6 of the Brussels Recast Regulation, jurisdiction over those not domiciled in Member States is governed by national law. It might be argued that national law is the CPR. 14.38 The truth is that it may be helpful for claimants to rely on the provisions of the CPR because Practice Direction 6B contains numerous provisions which enable the civil courts to serve out and which could be valuable to the tribunal. They include situations where the person sought to be served is a ‘necessary or proper party to [the] claim’ and claims in tort where England and Wales is the place where the damage was sustained or will be sustained. Thus if – and it is a big if – the tribunal was able to apply or adopt the CPR, then there may be bases which justify it serving out on non-EU domiciled respondents. 14.39 But there may be a better argument. As with much of this chapter, there is no authority to support this argument. Nor does it appear to have been mentioned anywhere else but it is hoped that it is none the worse for that because, if what is here said is correct, it is a complete answer to the concern expressed above as to the apparently unlimited scope for the tribunal to serve process out of the jurisdiction. 14.40 CPR PD  6B, para  20 provides for permission to be granted to serve out where a claim is made ‘under an enactment which allows proceedings to be brought and those proceedings are not covered by any of the other grounds referred to in this paragraph’. This seems to mean that a claimant in the tribunal could apply to the High Court for permission to serve out of the jurisdiction any claim brought in the tribunal under any enactment. Then the High Court could grant permission. Thus one would not have the tribunal arrogating to itself the power to serve anyone anywhere but instead the High Court exercising its own power under the rules to enable a respondent not in England and Wales to be served. That would also be the complete answer to the overseas respondent who challenges the fact of being served abroad. In the author’s view, this is the answer to the problem that arises of trying to confer international jurisdiction where the Brussels Recast Regulation does not apply. 14.41 It need hardly be said that this point will be thrown into sharper focus once the UK has left the EU because then the Brussels Regulations will have no place at all.

THE TERRITORIAL SCOPE OF LEGISLATION 14.42 As explained above, the question of how far the legislation extends is separate from the question of whether the tribunal has (international) jurisdiction over a respondent. If the tribunal lacks international jurisdiction, that should be an end to the case. But it is possible that the tribunal has jurisdiction in that sense but that the legislation does not extend to the circumstances of the particular employee or the employee’s claim because the territorial scope of the legislation does not extend that far. 342

The territorial scope of legislation 14.46

14.43 The starting point for this analysis is often said to be that the UK parliament cannot have intended to legislate for the whole world. For example, the mere fact that English law contains a right not to be unfairly dismissed should not mean that everyone, everywhere in the world would have the right to bring such a claim against any employer in any country. Thus, even aside from the different question of jurisdiction, there must be a question as to the geographical scope of the legislation. What this means is that one must work out the territorial reach of legislation such as the Employment Rights Act 1996 and the Equality Act 2010. 14.44 Earlier versions of the legislation contained some form of geographical limit. So, for example, the Employment Rights Act 1996 formerly contained s  196, which provided that it did not apply to ‘any employment where under his contract of employment the employee ordinarily works outside the United Kingdom’. The interpretation of that provision had what Lord Hoffmann in Lawson v Serco19 described as a ‘somewhat chequered history’, as judges expressed different views about whether one looked at the terms of the contract of employment or what actually happened during the employment. That provision was repealed, however, meaning that the former debate is of mainly historical interest. In the light of the repeal, the courts had to work out themselves to which employments – or to employments in which geographical locations – the legislation was to extend. 14.45 The law has emerged from decisions of the House of Lords and Supreme Court: see Lawson v Serco20, Duncombe v Secretary of State for Children, Schools and Families21 and Ravat v Halliburton22. The issue has also been aired in the Court of Appeal: see Bates van Winkelhof v Clyde & Co23, CreditSights v Dhunna24 and Jeffery v British Council25. 14.46 In Jeffery v British Council, Underhill LJ very wisely said that he would not attempt a further survey of the well-travelled ground but instead set out a useful and succinct summary of the principles as follows: (i) there is no express statutory provision in either the Employment Rights Act 1996 or the Equality Act 2010 dealing with the ‘territorial reach’ of the legislation; (ii) hence it was necessary to infer what principles must have been intended to govern the scope of application of the Acts; (iii) in general, Parliament must have intended that those who live and work abroad, even if for a British employer, will be subject to the law of the place where they work and not British law. These are so-called ‘expatriate workers’ and they fall outside the scope of the legislation – both the 19 [2006] UKHL 3, [2006] ICR 250. 20 [2006] UKHL 3, [2006] ICR 250. 21 [2011] UKSC 36, [2011] ICR 1312. 22 [2012] UKSC 1, [2012] ICR 389. 23 [2013] ICR 883. 24 [2014] EWCA Civ 1238, [2015] ICR 105. 25 [2018] EWCA Civ 2253, [2019] ICR 929.

343

14.47  Jurisdiction in the employment tribunal

Employment Rights Act and the Equality Act. In these cases, reliance is placed on what was called the ‘territorial pull of the place of work’; (iv) there may be exceptional cases where there is a ‘sufficient connection’ with Great Britain (Great Britain rather than the UK, as the Employment Rights Act 1996 does not extend to Northern Ireland – see s  244) and British employment law which overcome the territorial pull of the place of work and justify the conclusion that British legislation should apply. Such cases might be where the worker has been posted abroad by a British employer for the purposes of a business conducted in Great Britain and where the employee works in a ‘British enclave’ abroad; (v) there may be a sufficient connection in the case of those posted abroad by a British employer for the purposes of a business conducted in Britain or who work in a ‘British enclave’ abroad (vi) in the case of peripatetic workers, those whose place of work varies, the legislation will apply if they are ‘based’ in Great Britain; (vii) in the case of the truly expatriate worker, the connections with Great Britain will have to be exceptionally strong. 14.47 A more detailed analysis derives from these cases. The first major case was a series of appeals reported under the name Lawson v Serco. Those were unfair dismissal cases. Lord Hoffmann observed that the wording of the right not to be unfairly dismissed contained no express geographical limitation and on its face applied to anyone working under a contract of employment anywhere in the world. But there had to be some implied limitation. The question was how to find it, bearing in mind that it was inconceivable that Parliament could have been intending to legislate for those having no connection with Great Britain. Lord Hoffmann said that legislation was ‘prima facie territorial’. What is interesting is that Lord Hoffmann said that, in conflict of laws terms, the question was whether s  94 of the Employment Rights Act 1996 was ‘the appropriate choice of law in deciding whether and in what circumstances an employee can complain that his dismissal was unfair’. He said that this was linked to jurisdiction because the tribunal would have jurisdiction only if s 94 was ‘the appropriate choice of law’. That, however, appears to refer to jurisdiction in the sense that a tribunal has jurisdiction to decide only claims which statutes empower it to decide. That does not appear to be a reference to international jurisdiction. Thus it seems that, consistent with Louise Merrett’s article discussed above, Lord Hoffmann was separating jurisdiction in the international sense – with which he was not concerned – and the territorial scope of the Act which he characterised as an issue of applicable law. 14.48 Because s 196 of the Employment Rights Act 1996 had been repealed, it was for the courts to work out the implied limitations on the territorial scope of the legislation. Lord Hoffmann said that the answer had to be based on principles, not rules. The paradigm case was an employee working in Great Britain. The Act would apply to those working in Great Britain at the time of dismissal. Lord 344

The territorial scope of legislation 14.51

Hoffmann preferred this to the contract-based test which had found favour in those cases construing the old s 196. 14.49 The next category of case was peripatetic employees – those whose place of work varied over time, such as airline pilots. In such cases, an employee would be covered by the statute if the employee was, in fact, ‘based in Great Britain’. The reference to ‘in fact’ is to show that this is a factual enquiry rather than one dependent on the terms of the contract. 14.50 The remaining category was ‘expatriate employees’. Here the base was of no help. In general the legislation should not extend to employees who worked abroad and were based abroad but there might be cases where there were other factors so powerful that the employment relationship had a greater connection with Great Britain than the country where the employee worked. It would be necessary for the employer to be based in Great Britain but also the employee would have had to be, for example, posted abroad for the purposes of a business carried on in Great Britain, such as a foreign correspondent of a British newspaper. Another example is where the employee worked for a ‘British enclave’ in a foreign country, such as an employee working on a Ministry of Defence site in Germany. 14.51 Two later cases recognised that foreign employment was capable of generating many different types of situation which were not necessarily easily addressed by Lord Hoffmann’s principles. Duncombe v Secretary of State for Children, Schools and Families26 concerned teachers in the European Schools, for the education of children of staff working in the EC institutions. Lady Hale observed that their case did not fall within Lord Hoffmann’s examples and so the question was whether their case was another example. This case followed Lawson. Lady Hale said that only exceptionally would employees working or based abroad be covered by UK legislation, the principle being that it could be the case when the employment had a much stronger connection with Great Britain and British employment law. She said that it was a mistake to ‘try and torture the circumstances of one employment to fit one of the examples given, for they are merely examples of the application of the general principle’. The employment tribunal held that the teachers were working in an international enclave but that their employment was so closely connected to Britain that the Act should apply. The Supreme Court agreed that, whilst these cases did not fall within Lord Hoffmann’s examples, they were another example of a case where there was an overwhelmingly stronger connection with Britain and British employment law than with any other system of law. They were employed by the British government under contracts governed by English law and, whilst employed in an international enclave, had no connection with the countries in which they were based. They were there because of the commitments of the British government.

26

[2011] UKSC 36, [2011] ICR 1312.

345

14.52  Jurisdiction in the employment tribunal

14.52 Ravat v Halliburton27 was another case which was difficult to fit into Lord Hoffmann’s examples. In that case, the employee lived in Britain but worked in Libya for an employer based in Scotland, which was an associate of a US-based company. His work was done for the benefit of a German company. He paid UK tax and when he was dismissed his grievance and appeal were dealt with in Scotland. The claimant was not a peripatetic employee, nor working in a British enclave. However, Lord Hope said that the principle was that the employment must have a stronger connection with Great Britain than the place where the employee works. The place of employment will usually be decisive but it is not absolute. In that case the employer’s business was based in Great Britain and the employee was sent abroad as part of that business. These and other factors meant there was a sufficient connection with Great Britain. One such factor was that the employer had assured the employee that the protection of domestic employment law would subsist. 14.53 There may be yet other cases. Thus in Bates van Winkelhof v Clyde & Co28, the claimant was a member of an English LLP and worked part of her time in England but the majority of her time in Tanzania. The Court of Appeal held that because she worked part of the time in England it was not necessary to conduct a comparative exercise between the two jurisdictions. Where a claimant works some of the time in Great Britain, the circumstances do not need to be exceptional to connect that person with British law. The question instead is whether the connection with Great Britain is ‘sufficiently strong’ to justify the conclusion that Parliament would have thought it appropriate that the tribunal deal with the claim. In that case the tribunal had been entitled to conclude that the connection with Great Britain was sufficiently strong. 14.54 Another example, but going the other way, is R  (on the application of Hottak) v Secretary of State for Foreign and Commonwealth Affairs29. In that case, Afghan nationals were recruited to work as interpreters for the British Army in Afghanistan. Their attempt to bring claims (in this case discrimination claims brought in judicial review proceedings) in England failed because they were working abroad and their only connection with Great Britain was that their employer was the British government. That factor was, by itself, insufficient. 14.55 The test was helpfully summarised in Dhunna v CreditSights30. The right to claim unfair dismissal would only exceptionally apply to employees working or based abroad. The test for what was exceptional was that the employee could show strong connections with Great Britain and British employment law such as to displace the general rule that the right to claim unfair dismissal was not to be extended to employees working abroad. Dhunna stresses that it is no part of that enquiry to conduct a comparison of the systems of employment law in Great Britain and the foreign jurisdiction. 27 [2012] UKSC 1, [2012] ICR 389. 28 [2013] ICR 883. 29 [2016] EWCA 438, [2016] ICR 975. 30 [2014] EWCA Civ 1238, [2015] ICR 105.

346

The territorial scope of legislation 14.59

14.56 The same approach to territorial scope has subsequently been applied to cases of detriment and dismissal for whistle-blowing: see Jeffrey v British Council31 and Smania v Standard Chartered Bank32 respectively. The Lawson approach has also been applied to cases under the Equality Act 201033. 14.57 The question whether a person falls within the territorial scope of the legislation is a question of law: see Lawson. However, in Ravat it was held that the question whether there is a sufficient link with Great Britain is a question of fact. In the Jeffery case a divided Court of Appeal (Underhill LJ dissenting) found some difficulty in reconciling the two cases but held that the question whether there was a sufficiently strong connection such that it was appropriate for the employee to have a claim of unfair dismissal was a question of law, albeit that an appellate court should be slow to interfere with an evaluative judgment. There would be factual questions as to the underlying circumstances but their evaluation was a question of law. 14.58 There is one other important issue which may lead to a different conclusion, albeit that the force of this point is likely to disappear once the UK has left the EU. This principle concerns claims based on rights derived from EU law, at least where those rights were directly effective. That was in issue in Bleuse v MBT Transport Ltd34, where the issue was holiday pay derived from the Working Time Regulations 199835 and, ultimately, the Working Time Directive36. In that case, Elias J said that even if the domestic legislation would not apply to a person because of where the person worked, the tribunal in England would have to give effect to directly effective community law rights, to honour the EU law principle of effectiveness. However, this case raises numerous questions. A person who works in another EU Member State, and who might be excluded from (at least domestic British) employment law for that reason, ought to be able to bring a claim in that other state. 14.59 In Ministry of Defence v Wallis37, employees of the MoD based in Belgium and the Netherlands sought to bring unfair dismissal and sex discrimination claims. The latter claims also invoked rights under the Equal Treatment Directive. It was held that the tribunal had jurisdiction over the unfair dismissal claim by reference to Lord Hoffmann’s expatriate workers principle. The sex discrimination claim could not be brought because of the provisions of the Sex Discrimination Act 1975 then in force. However, the Court of Appeal held that those provisions had to be modified in order to give effect to the right derived from EU law. This was necessary in order to make the right effective. That right would not be effective if it had to be pursued in another EU State when other claims could be heard in England. 31 [2018] EWCA Civ 2253, [2019] ICR 929. 32 [2015] ICR 436. 33 See Hottak. 34 [2008] ICR 488. 35 SI 1998/1833. 36 Directive 2003/88/EC of the European Parliament and of the Council of 4  November 2003 concerning certain aspects of the organisation of working time. 37 [2011] ICR 617.

347

14.60  Jurisdiction in the employment tribunal

14.60 As indicated, the force of the Bleuse point seems to disappear once the UK leaves the EU. The analysis is based on the principle of effectiveness in EU law: that sufficient means must be given for the enforcement of directly-effective EU rights. But after the UK leaves the EU, there will be no such rights. It appears to be the UK government’s intention to incorporate EU rights into domestic law. But they will then be equivalent to domestic law rights and will have no superior status to which the principle of effectiveness could be applied. 14.61 There are some statutory provisions which do contain express territorial terms which would operate in place of the Lawson analysis. Thus s 285 of the Trade Union and Labour Relations (Consolidation) Act 1992 states that certain provisions of that Act (including, for example, the right not to be subjected to a detriment on trade union grounds) do not apply to a person ‘where under his contract of employment an employee works … outside Great Britain’. That is almost the language of the repealed Employment Rights Act 1996, s 196, save that the later Act referred to a person ‘ordinarily’ working outside Great Britain. 14.62 Because of the similarity of the language used in the repealed s  196, it is to cases decided under that section to which one looks to decide the geographical extent of those provisions of TULR(C)A  1992. Those cases say that the determination of where a person ‘under his contract of employment’ ordinarily works requires focus on the contract rather than on where the employee in fact worked: see Wilson v Maynard Shipping Consultants AB38 and Carver v Saudi Arabian Airlines39.

38 [1978] ICR 376. 39 [1999] IRLR 370.

348

Part II

How applicable rules apply to employment and commercial cases

Part I of this book identified the rules applicable to jurisdiction and choice of law. The next stage is to consider how those rules apply in a range of employment and commercial cases. The approach taken in each of the chapters dealing with individual cases is as follows. Each chapter deals with a different type of case. It begins by identifying the legal issue in the case – the nature of the claim. By reference to those issues the chapter will then describe the applicable rule of private international law, referring back to the summary of the principles set out in Part I but without repeating the detail of those principles. Each chapter then seeks to provide some case studies which work by way of examples to explain how the rules would fall to be applied in different types of case falling under the broad subject heading.

CHAPTER 15

Team moves

GENERAL INTRODUCTION 15.01 The factual situation which arises in these cases is that a group of employees moves from one employer to another, often together and very often in a co-ordinated fashion. It is the co-ordinated nature of the move which is most frequently capable of giving rise to claims. As explained, at least under English law, claims may be brought against departing employees and also against the employer which is recruiting the team. One can begin with a statement of the position under English law which will be relevant at least to how the potential claims are characterised for the purposes of jurisdiction and choice of law rules and also in a case where English law governs to describe the relevant substantive law. But in a case where the governing law is not English, it would be for that law to determine whether a claimant has a good claim and what are the parameters of that claim. 15.02 Of course, there is nothing to stop individual employees looking for new employment and each person is entitled to look for another job, approach potential employers and exploit possible opportunities without acting in breach of any duty by doing so: see Laughton and Hawley v Bapp Industrial Supplies Ltd1. In that case, employees who worked for a company supplying nuts and bolts did not act in breach of contract when they decided to set up their own business and so contacted suppliers about the supply of nuts and bolts to them. There is no breach if an employee leaves – on notice, of course – even if this is at a time which creates difficulties for the employer. An employee’s resignation cannot be rendered unlawful because it comes at an inconvenient time for – or even causes damage to – the employer: a party may terminate a contract lawfully in accordance with its terms at any time. Even directors owe no duty in relation to the timing of their resignation, because the power to resign is not a fiduciary power: see CMS Dolphin Ltd v Simonet2. 15.03 However, problems can arise when employees decide to leave as a group. It not infrequently happens that an employer is faced with a situation in which a group of employees seeks to leave simultaneously or in a short period. This has obvious consequences on the ability of the employer to continue its business but also risks setting up an often well-equipped competitor, ready at short notice to 1 [1986] IRLR 245. 2 [2002] BCC 600.

351

15.04  Team moves

challenge for the employer’s business. The legal issues may fall into two groups. One applies to employees and in particular to ‘team leaders’, senior employees in an area of the business who may, for example, manage a group of more junior employees. It may happen that a new employer approaches the head of a team and encourages not only that person to leave but also to persuade other team members to do so as part of a ‘team move’. The law is clear that it is a breach of contract for a team leader to assist a new employer by encouraging colleagues to leave: see Tullett Prebon plc v BGC Brokers LP3. That case holds that it is a breach of the duty of good faith to assist a competitor. The judge put it very clearly. He dealt with team heads or desk heads specifically. He said, as set out above, that there is nothing to stop such a person responding to an approach made directly to that individual to leave and join another employer. He then said4: Where it is sought to recruit a desk as a whole, or the greater part of the desk, it is very likely that the desk head will be approached first with the object of sounding him out as to the desk. He is then in a difficult and sensitive situation. While the desk head may see his obligation to his desk as being to get the best for them, his duty in law as desk head is to act in the interest of his employer and not that of the desk. His employer’s interest is to prevent the recruitment of the desk. He is obliged to inform his employer that the rival company is seeking to recruit the desk. … In addition the desk head must not do anything to assist the recruitment of his desk. Information may or may not be categorised in law as confidential. But where he provides information which he knows is requested for the purpose of furthering the recruitment, this is a breach of his duty to his employer. Where a desk head decides that he is in favour of the recruitment of his desk and thereafter assists the recruitment in such small or large ways as may arise, he is in plain breach of his duty: he has crossed the line between observing his duty to his employer and acting in the interest of his employer’s rival. I appreciate that what I have set out may not be how some of those in the inter-dealer business commonly conduct themselves, but the legal principle is straightforward.

15.04 As the latter part of this quotation shows, breaches may also arise in other ways apart from assisting the new employer to recruit a team. It can be a breach of obligations of good faith to assist a potential new employer by providing information about staff, their aptitudes and pay etc, so as to enable the new employer to identify those whom it might wish to approach. The breach consists again in assisting the employer, whether the information is confidential or not. The employee is acting in breach of the duty of good faith by helping a rival. Hence, liability does not depend on the information being confidential. 15.05 Team move claims often involve so-called recruiting sergeants. It is by acting as such that a senior person is likely to act in breach of duty as described in Tullett Prebon. Thus in UBS (Wealth Management UK) Ltd v Vestra Wealth LLP5 a senior manager procured a large number of employees simultaneously to 3 4 5

352

[2010] EWHC 484 (QB), [2010] IRLR 648. Ibid, at paras 68 and 69. [2008] EWHC 1974 (QB), [2008] IRLR 965.

General introduction 15.08

submit resignation letters to the employer, written in the same or similar terms. It did not take too much imagination to draw the inference that this was an orchestrated move and the conclusion that by procuring these orchestrated letters there had been a breach of duty by the ‘internal recruiting officers’. 15.06 The second situation in which employees who are not team leaders may act in breach of contract is by encouraging one another to leave. This, too, has been said to be a breach of the implied duty of loyalty. In one of the leading and much-cited cases, QBE  Management Services (UK) Ltd v Dymoke6, HaddonCave J said that employees who discussed amongst themselves leaving to join a competitor were in breach of duty as soon as they had those conversations. 15.07 It may follow from QBE that the restrictions which apply to team leaders apply to employees more generally such that it is a breach of the duty of good faith for any employee to encourage another to leave. Indeed, HaddonCave J said in terms that ‘It is a breach of the duty of fidelity for an employee to recruit or assist another to act in competition’7. He also said that it could be a breach of good faith for a junior employee to solicit a senior employee to leave8, and that two employees were in breach of their duty of good faith to their employer about starting a new venture9. In the first case that was because of one employee soliciting another; in the second it was because of the failure to report the approach. 15.08 There may be scope for questioning this approach in subsequent cases. Although now much criticised by commentators and in the cases, not least QBE, the Court of Appeal in Searle v Celltech10 did say that there was nothing in the law to prevent groups of employees from deciding to leave. What one has is the often present clash between contractual obligations and freedom to trade: the reason that employees may wish to leave is to better their position, and this aim may be of wider benefit to the community. Principles of restraint of trade mean that employees should not be inhibited from improving their lot. That is what Searle was saying. There may also be other situations, for example where employees work for a difficult and unpleasant employer and for that reason get together to consider moving on, whether to a new employer or to establish their own business. Can it really be said that this involves a breach of obligations of fidelity? The other problem with the QBE line of cases is that the judge in QBE cited a case concerning a director’s fiduciary duty in order to divine principles about employees’ contractual obligations of good faith11. But we have it on the authority of Ranson v Customer Systems plc12 that directors’ duties and the duty of good faith are different and that it is dangerous to reason by analogy from cases about company directors to cases about employees. Moreover, shortly 6 [2012] EWHC 80 (QB), [2012] IRLR 458. 7 Ibid, at para 169. 8 Ibid, at para 53. 9 Ibid, at 51. 10 [1982] FSR 92. 11 [2012] EWHC 80 (QB), [2012] IRLR 458 at para 169. 12 [2012] EWCA Civ 841, [2012] IRLR 769.

353

15.09  Team moves

before QBE there had been another case, Lonmar Global Risks Ltd v West13, which said in terms that employees were under no restraint against engaging in legitimate preparation and were able to inform other employees of their plans and offer such persons a job with a potential competitor in the future. These points suggest that the QBE analysis, which is undoubtedly in the ascendant at the moment, may come to be revisited and either be approved or departed from by the Court of Appeal.

WHAT CLAIMS MIGHT BE BROUGHT? 15.09 For the present, however, what the above analysis means is that, at least so far as individual employees are concerned, they may act in breach of contract in connection with a team move and may do so very easily. An employer might bring a claim against an individual employee, for example seeking an injunction to restrain a team leader from encouraging colleagues to leave, or seeking to recover damages in the case where the team leader has done so. 15.10 There may also be a cause of action against individual employees in conspiracy. The argument would be that the employees had clubbed together – agreed – to do an act which would be unlawful because it would involve a breach of contract by one or some of them at the behest of others. That would count as a conspiracy to do an unlawful act. Thus, one could seek to enjoin the conspiracy and/or seek damages in a conspiracy claim for the departure of the team. 15.11 What of the new employer and its role? In practice, the employer who has lost staff will often focus principally on what it will regard as the ‘poaching’ employer. In many cases, the team leader or other employees may be encouraged by the new employer to act in breach of contract whether by encouraging a team leader to talk to team members with a view to them leaving the existing employer and moving to the new one, or encouraging individuals to speak to one another and persuade each other of the merits of the move so as to cross the QBE  v Dymoke line. 15.12 On the basis that that would be a breach of contract by the individual employee, the case against the employer would be that it was liable for the tort of inducing breach of contract, or perhaps in conspiracy. But it is important for the employer who has lost staff to realise that the other employer’s liability is dependent on the recruiting employer having induced employees to act in breach of their contracts. If employees have decided of their own volition to leave and if they have, off their own bat, encouraged others, there is no liability for the new employer. If the recruiting employer approaches employees on a one-by-one basis and encourages each individual to join, saying to the individuals that they should not encourage their colleagues to leave, then there is no breach. Recruiting employers may often be well-advised to be patient. Experience suggests that it is 13

354

[2010] EWHC 2878 (QB), [2011] IRLR 138.

What claims might be brought? 15.14

often the case that when a pivotal individual leaves an organisation, others may follow. There is often no need to seek to orchestrate a team move. 15.13 As indicated above, the basis for the recruiting employer’s liability is that it induces other persons – the employees of the business approached – to act in breach of their contractual obligations. The parameters of the tort of inducement of breach of contract were definitively explored in OBG  Ltd v Allan14. Lord Hoffmann said that a person had to know that what was being procured was a breach of contract. It was not enough to know that the person was procuring an act which as a matter of law was a breach of contract. One must know that what one does will have this effect. It is not enough that one ought reasonably to have known this. He therefore cited a case about trade secrets in which a person caused another to reveal an employer’s trade secrets, honestly believing that the secret in that case was the property of the employee. Because the defendant did not believe that what he was doing was to induce a breach of contract, the necessary mental element was missing. That the individual had been negligent was not enough to provide the requisite knowledge for a claim of procuring breach of contract. The defendant must either know of the contract or deliberately not enquire into its existence. (Quaere how this fits with the statement that it is not enough to say that a person should reasonably have known that what was procured would be a breach of contract.) It seems likely that in most cases an employer using employees of another company to recruit team members would know that to invite them to encourage other employees to join the approached employee and leave will be to induce a breach of the implied term of good faith. The person procuring the breach must intend to do so. Normally, knowingly inducing the breach will be enough. It is not a defence to say that the breach was induced in order to achieve some other outcome. But one must intend, for whatever purpose, to bring about the breach. It is not enough that the breach is a foreseeable consequence where it was not an end desired by the defendant (even if desired as a step on the route to some other end). For example, in Millar v Bassey15 where the singer Shirley Bassey broke a contract to perform for a recording company, this could not make her liable to accompanying musicians whose contracts were broken because, whilst the breach of those contracts was foreseeable, it was neither Bassey’s desired end nor a means of achieving that end. 15.14 Another potential cause of action is conspiracy – here a conspiracy between the recruiting employer and the departing employees. A conspiracy is committed where two or more parties either: (i) agree to do an unlawful act; or (ii) seek to injure another person by lawful means. The alternatives are different. The key element of the first is the use of unlawful means. In the second it is the aim of injuring the other which is predominant, whatever the means. Thus in the latter case one has the slightly odd situation that 14 [2007] UKHL 21, [2008] 1 AC 1. 15 [1994] EMLR 44.

355

15.15  Team moves

an agreement by more than one person to do a lawful act may become unlawful if the purpose of doing it is to injure the claimant. That is so even though one person doing a lawful act with the intention of harming another would not act unlawfully. 15.15 In the context of team moves it seems likely that the main – if not sole – basis for a conspiracy claim would be that the parties had agreed to do an unlawful act, ie  act in breach of at least the recruiting sergeants’ employment contracts. 15.16 Hence, it is possible to identify the relevant causes of action as follows: (i) against the old employees: breach of contract; conspiracy; perhaps misuse of confidential information in a case where it arises (which is touched on briefly below but which is also addressed in Chapter 16 on breach of confidence); (ii) against the new employer: inducing breach of contract and conspiracy. Thus, on either basis, the claims will be tort claims and that will inform the jurisdiction and choice of law questions.

POTENTIAL REMEDIES 15.17 Before turning to the conflict of law questions, it is wise to have a brief word about the sorts of remedies which may be sought by an employer who has lost a team. Again, what is said here is relevant to English law but it is worth dwelling on this because a prospective claimant’s starting point will be to consider what remedies might be sought to deal with a team move. Having identified the potential remedies that might be sought, a question may arise as to what remedies are available under whatever is the governing law; and whether, in the event that the governing law does not provide the employer’s preferred remedy, English law may nonetheless assist. Arguments to this effect are discussed below when the scope of the governing law in any particular case is considered. 15.18 The remedies likely to be sought would include both injunctions and damages. As to injunctions, the employer might seek to restrain an employee from encouraging further employees to leave, thus restraining breaches of the implied duty of fidelity. In relation to new employers, the claimant employer might seek injunctions to restrain them from approaching new employees. There have even been cases in which the claimant employer has invited the court to restrain a new employer from employing members of the claimant’s workforce, whether or not they were approached by the recruiting employer. The basis for this has been the so-called springboard injunction. The argument is that employees whom the new employer might recruit have been identified, and perhaps had their heads turned so as to make it more likely that they would join the new employer, as a result of a breach of duty by the ‘recruiting sergeant’, induced by the new employer. 356

Potential remedies 15.21

To enable the new employer to employ those individuals would be to allow it to take advantage of its own earlier wrongdoing. The availability of springboard injunctions in this type of case is shown by UBS v Vestra16. 15.19 However, it is often the case that, by the time the original employer discovers the team move, everyone the new employer wanted to recruit will have gone. That was the case in UBS v Vestra, where a large number of employees resigned simultaneously. The inference to be drawn in such cases is that by the time the old employer discovers what is happening, it is, in one sense, too late because the whole team has left. Certainly in advising employers who are planning to recruit a team from another employer it is often sensible to suggest that, whatever else the recruiting employer does, it should get on with things, because once employees have given notice, certain things cannot occur. Thus, for example, no court will make an order requiring employees who wish to leave to remain with the old employer or to restrain them from giving notice. Injunctions to require a person to work for another are never made. They are, in fact, precluded by s 236 of the Trade Union and Labour Relations (Consolidation) Act 1992, which provides that a court may not by an order for specific performance or an injunction ‘compel an employee to do any work or attend at any place of for the doing of any work’. 15.20 Partly because of those restrictions, it may be possible to fashion other types of relief. In UBS  v Vestra, the claimant specifically sought springboard relief and the relief that was granted restrained departing employees from having dealings with clients. In such cases the employer says that because the new employer has taken away a ready-made team, that team is better able to compete with the old employer and that its ability to do so flows from what is alleged to be the unlawful removal of the team. Thus the old employer seeks to prevent the team from acting for the new employer in a way which competes with the old. 15.21 Another possibility, not yet present in the cases but with a logical foundation, is to seek an order restraining the departing employees from joining the new employer. The argument here would be that the only basis on which the employees have left the old employer to join the new is the impermissible encouragement of them to do so. An application of the springboard principles therefore seeks to restrain the departing employee from being able to take advantage of that wrongdoing, by saying that, if the employee had not been unlawfully enticed to leave, then the individual would not be joining the new employer at that time (if at all). Hence, restraining the departing employee from joining the new employer (for a time) is a way of limiting the effect of the wrongdoing and depriving the new employer of the springboard advantage flowing from its wrongdoing in inducing departing employees (or their recruiting sergeants) to act in breach of contract. This would not compel the employee to work for the old employer and so not fall foul of s 236.

16

[2008] EWHC 1974 (QB), [2008] IRLR 965.

357

15.22  Team moves

15.22 Damages claims could be brought against employees, alleging that individuals had acted in breach of duties of good faith by, for example, acting as a recruitment sergeant. Thus this would be a straight contractual claim. 15.23 Against the new employer, the claim would be for damages in tort for procuring breach of contract. Damages in such cases would reflect the loss consequent on the breach. That will often be difficult to quantify but might include, for example, additional salary paid to remaining staff to encourage them not also to leave. In addition, where the effect of the departure is that the employer has lost a team that was able to service a client, the employer might seek to recover income which would otherwise have been paid by that client but which is lost to the employer of the departing team. 15.24 As indicated, it will not always be easy to formulate loss. Beyond that, the defendants will often say that employees would have left at some point in any event. They may say that the departure of one prominent individual would have caused others to leave to follow that individual. The claimant employer’s argument would be that they would not all have left simultaneously or possibly at all and on that basis it has suffered additional costs and loss of income as indicated above.

CONFLICT OF LAWS 15.25 Turning to the conflict of law questions, it is necessary, of course, to consider both jurisdiction and choice of law. In the case of employees domiciled in the UK and the new employer defendant domiciled in England, such persons will be able to be sued in the jurisdiction based on their domicile. But in other cases it will be necessary to consider the jurisdiction rules in breach of contract and tort cases. Choice of law will be determined by the rules applicable to contract and tort cases.

Jurisdiction 15.26 It is necessary to consider separately jurisdiction in relation to EU-domiciled defendants, to whom the Brussels Recast Regulation will apply, and those domiciled elsewhere, to whom the common law rules and CPR will apply. (Some of the case studies below deal with how domicile is to be determined.) As to EU defendants, the starting point is to consider where they are domiciled, because of the centrality of domicile under the Brussels Recast Regulation. 15.27 The simplest case is a team move involving English-domiciled employees, whose move is orchestrated by an English-based employer. In that event, each defendant could be sued in England based solely on domicile in England. 358

Conflict of laws 15.33

15.28 The advantages of relying on English domicile to sue in England may mean that a claimant employer will decide who to pursue based solely on domicile. So if, for example, a team move is being orchestrated by an Englishdomiciled defendant employer, then even if the affected employees are domiciled or located in other countries, the claimant employer might be well advised to focus solely on the English-domiciled orchestrator and pursue the employer as sole defendant even if that means not being able to bring the employees before the English court. 15.29 If the prospective defendants are not domiciled in the UK, and thus would not give the domestic court jurisdiction based solely on domicile, it is necessary to consider other bases on which jurisdiction may be claimed and, in particular, whether it may be possible to serve proceedings on defendants based abroad. Hence the variants are as follows. 15.30 As indicated, the easiest case is English-domiciled defendants who can, of course, just by reason of domicile, be sued in England. 15.31 The next question is how to deal with defendants domiciled in other EU countries, to whom the Brussels Recast Regulation will apply. Here there are two groups to consider. Claims against individual employees would be for breach of their contracts of employment. Article 22 of the Brussels Recast Regulation limits the employer’s options by saying that an employee may only be sued ‘in matters relating to individual contracts of employment’ in the place where the employee is domiciled. A German-domiciled employee would have to be sued in Germany, for example.

Claims against employees 15.32 An English-based employer cannot evade this rule in the case of a claim against employees in the context of an internationally arranged team move by, for example, identifying one employee domiciled in England and using that employee as the lead defendant to sue other employees domiciled in other countries on the basis of Article 8. The reason for this is that Articles 20–23 are subject to Article 8 only in the case of proceedings brought against an employer: see Glaxosmithkline v Rouard17. This plainly imposes very material limits on the scope for jurisdiction to be exercised in claims against employees for breaching their contracts. However, if one sued an English domiciled employee, one might also be able to sue the non-English but EU-domiciled orchestrating employer in reliance on Article 8. 15.33 There may be a question whether the claimant employer could formulate a claim in, say, conspiracy and on that basis argue that the claim did not relate to the employment. A  problem with that cause of action is that a conspiracy based on unlawful means would rely on breaches of individual contracts. Might 17

C-462/06 [2008] ICR 1375.

359

15.34  Team moves

a conspiracy to cause harm be more productive? The authority of Arcadia Petroleum v Bosworth18 suggests that it may be possible, by clever pleading, to avoid a claim being one which relates to a contract of employment, but it is not easy and it would be difficult to place any confidence in the ability of an employer to avoid the employment provisions so far as EU-domiciled employees are concerned. It is fair to say that (admittedly pre-Bosworth) Silber J  was unenthusiastic about such an attempt in CEF v Mundey19. Post-Brexit, the same restrictions would be in place at least so far as English-domiciled employees are concerned, because s 15C of the Civil Jurisdiction and Judgments Act 1982 states that employees domiciled in the UK must be sued in the part of the UK in which they are domiciled. But that does not apply to other EU-domiciled employees, who would then presumably be able to be sued in England on an application of CPR PD 6B.

Claims against the new employer 15.34 So far as claims against the new employer are concerned, these would principally be tort claims for inducing employees to breach their contracts of employment. If the new employer is domiciled in the EU, the claimant employer could rely on the tort provisions of the Brussels Recast Regulation in Article 7. Article 7 states that the courts for the place where the harmful event has occurred or may occur have jurisdiction. The place where the harmful event occurs is both the place where the act giving rise to the claim occurs and the place where damage is suffered. Thus, if there is a raid on staff in English premises, the harmful act will have been done in England. Even if the team move occurs elsewhere, an English company which may be able to say it suffers in England could sue in England. The one potential for difficulty is that the place where the damage is suffered as a result of the harmful event is that where direct harm is suffered. If, for example, there were a team move affecting the foreign subsidiary of an English parent company, the parent could not say it had suffered loss in England consequent on the financial loss to the foreign parent because it is only direct loss which counts for these purposes: see Dumez France SA v Hesssiche Landesbank20. 15.35 An employer would not be able to use Article 8 to bring claims against multiple employees in England on the back of one English-domiciled employee for the reasons given at para  15.32. However, in the case where one had an English-domiciled employee sued in England for breach of contract, it would be possible to use Article 8 to sue an EU-domiciled employer who had arranged a team move. The argument would be that the claims of breach of contract against the domestic employee defendant and that of inducing breach against the EU-domiciled employer were so closely connected that it would be expedient to hear them together to avoid the risk of inconsistent judgments. In both 18 [2018] EWCA Civ 818. 19 [2012] EWHC 1524 (QB), [2012] IRLR 912 at para 167. 20 C-220/88.

360

Conflict of laws 15.37

cases, a question would arise whether the employee had acted in breach of contract. That would be the sole issue in the claim against the employee and in the claim against the recruiting employer it would be necessary to show that the employer had procured a breach. It would be undesirable for two courts to be considering the same question in relation to breach and so, for that reason, Article  8 would suggest that the two claims should be brought together. For example, if an English-domiciled employee is induced by, say, a Spanish employer to act in breach of duties of fidelity by acting as a recruiting sergeant, the claimant employer could sue the English-domiciled employee for breach of contract and rely on Article 8 to sue the Spanish employer in England. This approach avoids difficult questions which might arise in tort cases about where the act was done and where damage was suffered. This is a good example of a claimant being able to rely on its own identification of the defendant whom it wishes to treat as the lead defendant in order to bring several parties before the court. It need hardly be said that there will be cases in which the party whom a claimant regards as the principal wrongdoer is the recruiting employer. For the reasons given above, the claimant could not treat that employer as the lead defendant and by bringing a claim against it in England rely on Article  8 to sue employees in England. Yet if the claimant can identify an English-domiciled employee who can be sued for breach of contract, that is a mechanism by which the claimant can gain access to an otherwise elusive corporate defendant. The recruiting employer might, perhaps, argue that since it was being sued in tort for inducing the employee to act in breach of contract, the claim therefore related to an individual contract of employment. But the claimant would say that the claim against the recruiting employer was not concerned with the contract at all but with its acts of inducement. 15.36 What of defendants not domiciled in the EU? In that event, the domestic law rules apply. (These may, who knows, also become more generally relevant after the UK leaves the EU.) The starting point under domestic law is that a person who can be served in England may be sued in England. Whilst it may be optimistic to expect that one would bump into the participants in a team move on the King’s Road in Chelsea, it may be possible to treat a prospective corporate defendant as present in England because, although it is a foreign company, it has a UK establishment and so is required by the Overseas Companies Regulations 200921 to identify persons authorised to accept service in England. If such a company has a place of business in the UK then, even in the absence of the identification of a person authorised to accept service, the company may be served at its place of business. 15.37 But what of the true foreign defendant – one neither present in England nor with a place of business in England? In that event, the question would be whether the court would allow the defendant to be served outside the jurisdiction under CPR PD 6B so as to confer jurisdiction. There seem to be four potential grounds for seeking permission to serve out:

21 SI 2009/1801.

361

15.38  Team moves

(i) there might be a claim in the case where a team move is occurring in England for an injunction to restrain a defendant from doing acts within the jurisdiction22; (ii) in relation to non-EU domiciled employees, a claim may be brought for breach of contract. A court would have power to grant permission to serve out where the contract of employment was made in England, governed by English law or made through an agent residing in England23; (iii) as to the recruiting employer, against whom the claimant had a tort claim, service out could be ordered in the event that damage was sustained in England or a tortious act done in England24; (iv) the final apparent jurisdictional gateway under domestic law is that a party has been served in England and another party is a necessary or proper party to the claim. This recalls the point made above in relation to EU-domiciled defendants that, if a claimant is able to sue a defendant in England so that the court has jurisdiction over that party – the lead defendant – then it is possible to bring in other defendants who are necessary and proper parties. For example, in the case of an employee sued for breach of contract, one would argue that the recruiting employer, alleged to have induced the breach, was a necessary or proper party. In each case, of course, it will be necessary to show not only that one of the jurisdictional gateways is satisfied but also that England is the appropriate forum in the Spiliada v Cansulex forum conveniens sense.

Choice of law 15.38 If it is assumed that the English court has jurisdiction over the defendants, what system of law will govern the dispute or disputes? So far as employees are concerned, since the claims will be brought in contract, the governing law will be the law chosen by the parties: Article 3 of the Rome I Regulation25. In the absence of choice, by Article 8 of the Rome I Regulation the governing law will be that of the place where the employee habitually works. Any choice of law is subject to the rules of the public policy of the forum. That has been held to include English rules concerning restraint of trade: see Duarte v The Black and Decker Corpn26. It is not obvious how restraint of trade principles would be relevant in a team move situation. One possibility, perhaps, is the case where a contract requires an employee to inform the employer of an approach by a third party employer. That theoretically engages principles of restraint of trade and has been argued to be an unlawful inhibition on the right of employees to trade freely. 22 23 24 25 26

362

CPR PD 6B, para 3.1(2). CPR PD 6B, para 3.1(6). CPR PD 6B, para 3.1(9). Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. [2008] 1 All ER (Comm) 401.

Case studies 15.42

However, in Tullet Prebon plc v BGC Brokers LP27 it was held that an obligation on an employee to report to an employer an approach by another employer did not operate in restraint of trade. 15.39 As to the recruiting employer, the claim will be in tort. The governing law, assuming, as seems likely, that the parties do not make a choice under Article 14 of the Rome II Regulation, is the law of the place where damage occurs28. But in this context, it is only direct damage which counts, which would mean, for example, that a parent company would not be able to claim that it had suffered loss consequent on loss suffered by a subsidiary. Thus, for example, an Englishdomiciled parent company with numerous subsidiaries overseas could not claim that it had suffered loss, such that English law covered the tort claim, in consequence of a foreign subsidiary being the victim of a team move. 15.40 There is one important, if not fully resolved, question concerning the applicable law which is relevant to applications for injunctions. As was explained when the grant of interim relief was considered at para 10.04, there is scope for the argument that the grant of interim relief is a matter of procedure and so for the law of the forum. It was cautiously suggested in OJSC TNK-BP Holdings v Lazurenko29, despite some (then) academic commentary to the contrary, that the grant of interim relief was a matter for the governing law under Rome I or II. But if it were correct – or even arguably correct – that application for interim relief were matters of procedure such that the law to be applied to such applications was the law of the forum, this could be of great importance in expanding the availability of such relief in England.

CASE STUDIES 15.41 Having set out the correct approach to these cases, the following section now explores a number of scenarios, some fictional and some reflecting – or close to – decided cases, to consider how the rules apply in practice.

Case 1 15.42 A  French national is employed by a company domiciled in China. The employee is employed as a sales manager and in that position is responsible for selling the company’s products across Europe and also in Wuhan. The employee has been employed by the company since 2012.

27 28 29

[2010] EWHC 484 (QB), [2010] IRLR 648 at para 67. Article 4 of the Rome II Regulation. [2012] EWHC 2781 (Ch).

363

15.43  Team moves

Between 2012 and 2018 the employee lived in Wuhan. The employment contract is governed by the law of China. The employee: •

has always owned a property in England;

•

has had a base or main place of abode in England, reflecting the fact that the employee’s sales activities have focused more on Europe;

•

spends only approximately 20% of the time in England. The rest is spent working for the employer across Europe and China. During those times, the employee lives out of hotels and a serviced apartment located in Wuhan;

•

has the right to reside permanently in China (being married to a Chinese national); and

•

since 2018 has paid tax in England, but also in China.

The employee is alleged to have instigated a team move by encouraging junior employees in the same team to leave the employer and join another company based in China. The employee (and the other employees, who have left simultaneously) recently joined the Chinese company competitor. The new employer, alleged to have induced the employee to recruit others so as to facilitate the team move, is based in China. Can the employer sue in England and seek injunctive relief in England both against the employee and against the new employer to prevent it gaining an advantage from the team move; and against both for damages to recover loss consequent on the move of the team? 15.43 The employee and the new employer must be considered separately. With regard to the employee, the claimant knows that if the employee is domiciled in England then proceedings can be commenced in England. Thus the starting point requires an investigation as to what is meant by being ‘domiciled’ for the purposes of the Brussels Recast Regulation and/or as a matter of English law. This is, of course, the crucial starting point for jurisdiction to be conferred by the Regulation. Is the employee domiciled in England? The starting point is that the employee’s nationality is or may be a red herring. Jurisdiction is not decided by nationality but by domicile. 15.44 Article  62 of the Brussels Recast Regulation requires consideration of the question of domicile to be determined by the application of English law. How, then, does English law determine domicile? Section 41(2) of the Civil Jurisdiction and Judgments Act 1982 states that: (2) An individual is domiciled in the United Kingdom if and only if— (a) 364

he is resident in the United Kingdom; and

Case studies 15.47

(b) the nature and circumstances of this residence indicate that he has a substantial connection with the United Kingdom. (emphasis added)

Further, s 41(6) provides that: (6) In the case of an individual who— (a)

is resident in the United Kingdom, or in a particular part of the United Kingdom; and

(b)

has been so resident for the last three months or more, the requirements of subsection (2)(b)… shall be presumed to be fulfilled unless the contrary is proved.

‘Resident’, when used in the Civil Jurisdiction and Judgments Act, has its ordinary meaning: ‘settled or usual place of abode’: see Dubai Bank v Abbas30. 15.45 The following matters may also be relevant to whether an Individual has a ‘substantial connection’ with the UK: •

whether the individual has indefinite leave to remain in the UK;

•

whether the individual requires visa clearance to enter the UK;

•

whether HMRC regards the individual as resident for tax purposes;

•

the fraction of the year for which a person is in the UK;

•

whether the person has places of residence elsewhere;

•

the balance sheet value of the person’s assets within the UK as against the value of his assets elsewhere;

•

whether business interests are so widely scattered that it may properly be said that the person has no residence anywhere.

15.46 The position, therefore, is not clear-cut in circumstances where the employee: •

spends so little time in England;

•

has a right to reside in China; and

•

may have assets elsewhere.

15.47 In this case, however, based on the information set out in the case study, the better argument appears to be that the employee is domiciled in England. This is because the employee: •

has been resident in England for more than three months;

•

has maintained England as the main place of the employee’s abode: that seems to be central to the existence of ‘residence’. The argument would be that since the employee’s main abode or home is in England, residence is

30 [1997] ILPR 308.

365

15.48  Team moves

established here even though the employee travels frequently and for long periods abroad. It may help that the travel is to a range of different places because it would then be harder to argue that any of those other places is a place of ‘residence’ as opposed to places where, through convenience or necessity, varying amounts of time are spent. This is particularly so given that the time spent abroad is in hotels or serviced apartments: that ought not, even if undertaken for long periods, be counted as residence in those other places. It is a more superficial connection with places by reason of the nature of the contact with those places; •

clearly has substantial connections with England – owning property in the jurisdiction is a powerful indicator of connections;

•

pays tax in England; and

•

does not appear to have any permanent residence, still less a permanent address, elsewhere.

15.48 If it is correct that the employee is domiciled in England, the Brussels Recast Regulation applies, and by reason of domicile the employee may be sued in England. Article 22, which applies specifically to employees and which reflects the domicile rule, providing that employees may only be sued in the state of their domicile, also applies. 15.49 What, then, of the new employer? In this example the employer is based and incorporated (thus domiciled) in China. It has no presence in the UK and so can only be sued in England if it is served out of the jurisdiction. That will depend on CPR PD 6B. What bases are there to bring the employer before the court? 15.50 Perhaps the most obvious route is CPR PD 6B para 3.1(3), namely that the claim form has been served on the employee (on the basis of domicile, as indicated) and the employer is a necessary or proper party to the claim against the employee. Since the employee will be accused of acting in breach of contract and the employer of inducing that breach, it seems there is a strong case for saying that the new employer is a proper party to the claim against the employee. This is not water-tight. It would be possible for the new employer to argue that the causes of action were wholly different and that the claimant was illegitimately using its ability to sue the employee in order to bring an employer before the court, when it is doubtful that the court would otherwise have jurisdiction so to do. In other cases tort might be considered, but that may be difficult here. The team move has been orchestrated in China. Thus, the act of inducing breach of contract by a China-based employee has taken place in that country. Since the employer in this example is Chinese, it seems that damage will have been suffered in China. Had the employer been English, it would have been better placed to say damage was suffered in England so as to provide a jurisdictional gateway in tort. 366

Case studies 15.55

So far as the governing law is concerned, in the contractual claim against the employee that will be the law of China, as that is the law chosen by the parties. 15.51 The law applicable to the tort claim against the new employer will depend on the place where harm was suffered. On the face of it, damage will have been suffered in China because that is the place where the employer is suffering the loss of staff.

Case 2 15.52 An English-domiciled company wishes to sue: (i) former employees; and (ii) the new employer/competitor in an archetypal team move case. The new employer is domiciled in England, as are some of the ex-employees. The majority of the ex-employees are domiciled in another EU Member State. There is a term in their contracts of employment stating that each employee submits to the jurisdiction of the English courts. 15.53 This case study essentially looks at jurisdiction in respect of each of the potential defendants in a classic team move case. This particular example is designed principally to address jurisdiction issues but will also touch on choice of law. 15.54 In the scenario described, all the defendants are domiciled in EU Member States, with the consequence that the case is governed by the Brussels Recast Regulation. In that context, there is no doubt that the English court has jurisdiction over the new employer, domiciled in England, and those employees domiciled in England. The harder case is the employees domiciled not in England but in another EU country. The starting point is that ‘in matters relating to individual contracts of employment’ they must be sued in the state of their domicile: Article 22. 15.55 The employer cannot rely on Article 8 to say there are other defendants being sued in England so that the non-English domiciled employees should be sued in England, because Article  8 is not one of the exceptions to Article  22 insofar as claims by employers against employees are concerned. The employer cannot rely on the choice of jurisdiction clause. That is because, under Article 23, such clauses are only enforceable if entered into after the dispute has arisen or to the extent that they allow the employee to bring proceedings in a wider range of courts, neither of which applies in this example. The generic provisions of Article 7 – contract and tort – do not apply insofar as the claim concerns individual contracts of employment, because those provisions are not identified as exceptions to Article 22. Thus the employment provisions apply to the exclusion of contract and tort provisions in (most) claims against employees. 367

15.56  Team moves

15.56 On the face of it, therefore, the employer is in the unsatisfactory position of having to bring separate claims against the EU-domiciled employees in their own states of domicile; and if the employees hail from several states, there would have to be a series of claims in a number of states. All of this reflects the articles’ intention to protect the weaker party, ie the employee. 15.57 One possible way arises in which the employer might seek to avoid this duplication of proceedings. Could the employer formulate the claim against the employees in such a way that it could be said that the claims did not relate to individual contracts of employment, by advancing them, for example, in conspiracy or alleging that individual employees were liable for inducing others to breach their contracts by encouraging colleagues to leave? This possibility was alluded to but rejected as undesirable by Silber J in CEF v Mundey31. But it may be that it receives some support from the approach of the Court of Appeal in Bosworth v Arcadia Petroleum Ltd32. That was a case in which various senior persons (then treated as employees) were sued for alleged fraud and breach of fiduciary duty. They said they should have been sued only in the state of their domicile. It was noted that one consequence of this would be the need for a multiplicity of proceedings and the inability to sue all the alleged conspirators in the same place. The individuals argued in that case that the claimant could not by ‘clever pleading or amendments’ avoid what was in reality a case concerning the conduct of the defendants as employees and therefore related to their employment contracts. The Court of Appeal in that case did ultimately look at how the case was advanced. It rejected the proposition that a case would fall within Article 22 if the claim could have been pleaded as a breach of the contract of employment. The question was instead whether the ‘reality and substance of the conduct relates to the individual contract of employment’33. The Court rejected the argument that the conspiracy claim in that case related to the contract of employment so as to require the claimants to sue in the state of the employees’ domicile. It was said that the allegations were that the individuals had acted outside the contracts of their employment. 15.58 Some caution was expressed about the Bosworth case in the context of jurisdiction (paras 3.142–3.143), but it may be capable of allowing an employer to advance a case in a way which enables it to say that it does not relate to the contract of employment but is a tort case, whether in conspiracy or inducement. The biggest problem may be that in a conspiracy claim the unlawful means relied on would be breach of contract (or its inducement). So far as the employees are concerned, therefore, it becomes hard to say that this is not a case related to their contracts of employment, even if it is put in conspiracy. 15.59 As to choice of law, in the claim against the employees the law will be that which the parties have chosen to govern their contracts. In the absence of choice,

31 [2012] EWHC 1524 (QB), [2012] IRLR 912 at para 167. 32 [2016] EWCA Civ 818. 33 Ibid, at paras 64–65.

368

Case studies 15.64

the law will, under Article 8 of the Rome I Regulation, be the law of the place where the employee habitually works. 15.60 So far as the claim against the recruiting employer is concerned, that is a tort claim. Hence the law is that of the place where damage is suffered. There may be some debate about that in this case. If the majority of employees are based in another EU country there may be scope for saying that the damage is suffered where they are recruited. But what of the case where some employees are poached in France, some in Germany, a few in Denmark and one or two in the Netherlands? In that case it may be truer to say that damage is suffered by the English employer in England where its finances are hit by the departures.

Case 3 15.61 An English-domiciled company seeks to sue: (i) former employees; and (ii) a competing company, both of whom are engaged in a team move against it. The employees are each domiciled in England and they work in England. The competing company is domiciled abroad, although within an EU Member State. The employees’ contracts of employment are governed by English law. 15.62 The principal difference between this case study and Case 2 above is that in this example all the employees are domiciled in England: it is only the new employer that is domiciled abroad, in an EU  Member State. That means that jurisdiction over the employees is easy: they can all be sued in England, as they are domiciled in England. 15.63 But what of the non-English domiciled new employer? As to that, the claim against it is tortious – inducing breach of contract and conspiracy. That claim would not be caught by Article 22 and it does not relate to an individual contract of employment. The focus is on the conduct of a third party in essence interfering with those contracts. The basis for Article 22 – the protection of the weaker party – does not apply to the corporate defendants sued for inducing breach. 15.64 The claimant employer would plainly not wish to have to sue the EU-domiciled employer in the state of its domicile. Apart from anything else, to do so gives rise to the obvious risk of inconsistent judgments. For that reason, this appears to be a strong case for the application of Article 8 of the Brussels Recast Regulation – claims against other defendants where one defendant is sued in the state of domicile. There is a lead defendant before the English court – the employees alleged to have acted in breach of contract. This provides a basis to sue the new employer on the ground that there are closely connected claims. This 369

15.65  Team moves

is a good example of a situation in which an employer can take advantage of the court having jurisdiction over one defendant – here the employee – in order to be able to bring the other defendant – the party on whom it is principally focused, the recruiting employer – before the court. But the recruiting employer could also be sued in tort in the place where the harmful event occurs. On the face of it, since the team move takes place in England that by itself is enough to give the English court jurisdiction. 15.65 As to choice of law, the contractual claims would be governed by the law applicable to the contracts of employment which is English law, so no problem arises for the claimant employer. 15.66 In the claim against the new employer in tort, the law would be that of the place where damage occurs. That is likely to be England because that is where the employer is based.

Case 4 15.67

An English-domiciled company wishes to sue: (i) its English-domiciled former employees; (ii) their English-domiciled new employer; and (iii) the new employer’s parent company, domiciled in America, in connection with an attempt to poach staff from the English-domiciled claimant. The evidence suggests that both the new employer and the US parent are active in the poaching exercise. In this example, it is assumed that the staff who are being poached are to join the English employer, though there is a prospect that some may join the parent company in the US.

15.68 The main element in this example is the presence of potential defendants in different jurisdictions and the focus on the US parent company. This can ­happen, for example, where the claimant suspects that a global parent company was the principal orchestrator behind or instigator of the team move and encouraged, or directed the encouragement of, the move of staff. It may be that the main acts of inducement of employees to breach their contracts are committed by the parent company. The claimant would not wish to sue the local subsidiary alone, only to discover that it was not responsible for any acts of inducement. It will therefore need to try to sue all the potential defendants. Can the employer bring a claim against all these defendants? Claims against the former employees and the new employer – as above – are all covered by the Brussels Recast Regulation. The English courts plainly have jurisdiction solely by reason of domicile. 370

Case studies 15.71

15.69 What of the US-based parent company? The parent company appears not to be domiciled within an EU Member State, but there may be an argument based on its relationship with the new employer. Is there any argument that the parent of the new employer has a presence within the UK? In the absence of these factors or submission to the jurisdiction – as might happen when the Englishdomiciled defendants are before the court – one looks to see whether there is a basis on which the English court could have jurisdiction. 15.70 As to that, because of the parent company’s domicile, the Brussels Recast Regulation does not apply. Thus, the question is whether the English court could have jurisdiction under any of the CPR PD 6B gateways. There are several possibilities. First, to the extent that the claimant seeks an injunction, the argument would be that the claimant was seeking an injunction to restrain the US defendant from doing things within the jurisdiction34. There is one potential hurdle, but in the application of the American Cyanamid test, it may not be too challenging: where is the US company doing the things which the claimant seeks to restrain? If the poaching group is clever, it will not have had the US parent approaching staff in England. On that basis, that which is sought to be enjoined would not be happening in England. If the parent’s activity was behind the scenes and so could not be identified as taking place in England, it may be harder to show that the para 3.1(2) requirement is met. The question will then be, since the recruitment exercise is taking place in England, whether its orchestration is activity taking place in England such that it can be enjoined in England. Second, the claimant might also say that it has sued the new employer based in England in relation to the recruitment exercise and wishes to sue the US parent in relation to the same activity. Hence the US parent is a necessary or proper party to the claim against the English employer. Alternatively, third, it may be said that this is a tort claim as against the US parent, based upon the inducement of employees to breach their contracts. For the reasons given above, there may be argument whether the tortious acts were committed in England, but the claimant would say that damage was suffered in England consequent on the loss of staff in England and on the basis of that damage the English court has jurisdiction. 15.71 Assuming that the claimant can fall within one of the CPR PD 6B gateways, that leaves some issues as to the appropriate forum, which will involve questions such as the location of witnesses and evidence. But what is likely to be key is the fact of the other related proceedings in England against the old employees and new (English-domiciled) employer arising out of the same facts. It would be undesirable to require the claimant to bring the same claim in two jurisdictions, giving rise to the risk of inconsistent decisions. This is the converse of the case which arose in Donohue v Armco Inc35 where the existence of claims in the US justified the rejection of an anti-suit injunction in favour of a defendant even though he had the benefit of an English choice of jurisdiction clause.

34 35

CPR PD 6B, para 3.1(2). [2001] UKHL 64, [2002] 1 Lloyd’s Rep 425.

371

15.72  Team moves

15.72 As to choice of law, the claim against the employees will be governed by the law applicable to the employment contracts, whether that chosen or the law of the place where the employees habitually work. 15.73 The claim against the new employer and the parent company will be in tort. Hence, the governing law will be that of the place where damage is suffered. That seems to be England, because it is England that staff are being induced to leave. That position is not affected if some staff go to work in the US for the parent company. The damage to the employer still occurs in England, where it loses its staff.

Case 5 15.74 A  US-based employer with a subsidiary in the UAE believes a team move is being orchestrated by another UAE company causing employees to move to the other company. The employees are employed under contracts governed by the law of the UAE. The US-based parent wishes to obtain injunctive relief to restrain the team move. It is able to identify a UK-domiciled individual who has been instrumental in arranging the team move. Loss is suffered and will be suffered in the UAE. The law in the UAE does not grant the remedy of an injunction. 15.75 This is a good example of a claimant seeking relief by focusing on a defendant in respect of whom there was no doubt as to jurisdiction. Because the identified individual was domiciled in England, that defendant could be sued here. The problem in this case is the applicable law. The individual employees who had been induced to act in breach of contract were employed under contracts governed by the law of the UAE. There was scope for debate whether their contracts contained terms equivalent to the obligations of good faith that would be recognised in English law. Of greater difficulty was that loss was suffered in the UAE. Since the claim against the identified defendant was brought in tort, that meant that the governing law was that of the UAE. But UAE law did not provide for injunctive relief at all; the remedy sought in England was not available under UAE law. However, the claimant could rely on the argument that the grant of interim relief is a matter of procedure and thus for the law of the forum and in this way seek to sidestep the potential difficulties imposed by the application of the law of the UAE. This example is based on AT Kearney FZ-LLC v Baigorri36.

36 [2014] EWHC 4419.

372

Case studies 15.79

Case 6 15.76

This is an archetypal team move case. The employer and competitor are both domiciled in Spain. The employer has commenced litigation in Spain against the competitor and its employees/ex-employees, who are moving. However, the employer discovers that an individual who is orchestrating the team move (the recruiting sergeant) is domiciled in, and employed by a company which is also domiciled in, England. Other than the recruiting sergeant’s domicile, the litigation has little link with England.

15.77 The issue in this case is whether the claimant can pursue the Englishdomiciled recruiting sergeant in England. There are also linked questions: first, whether the Spanish-domiciled defendants could be joined to English proceedings commenced against the English-domiciled recruiting sergeant; and second, ultimately for the Spanish court but based on the application of the Brussels Recast Regulation, whether the English-domiciled defendant can be joined to the existing Spanish proceedings. 15.78 The starting point for the analysis of this case study, however, is lis alibi pendens – the existence of parallel proceedings and the effect that has on a claimant’s ability to proceed against a defendant over whom there is no doubt that the English court has jurisdiction. But for the Spanish proceedings, the answer to the question whether the defendant could be sued in England would be easy: domicile in England means that the answer is yes. However, the issue which arises is the effect of the Spanish proceedings. Can the prospective English defendant argue that the English court should stay the proceedings before it because of the proceedings in Spain? This would not be to decline jurisdiction, merely to prevent the proceedings carrying on. 15.79 The situation is that the Spanish proceedings involve the employees who have been encouraged to move and the recruiting employer but, in this example, do not yet involve the English-domiciled recruiting sergeant. The recruiting sergeant is not (yet) a party in Spain. The proposed English proceedings do not involve the Spanish defendants. Indeed, so far as the employee defendants are concerned, it is difficult to see that they could ever be party to English proceedings as long as the claims against them relate to their individual contracts of employment. Because of Article 22, they could only be sued in Spain. It follows that the claims in Spain and England do not involve the same cause of action and the same parties. For that reason, Article 29 of the Brussels Recast Regulation does not apply, and second-seised states are not obliged to stay claims brought before them. 373

15.80  Team moves

15.80 But these are clearly related claims. The question is whether 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’? That seems to be satisfied here. As against the employer and recruiting sergeant, they involve the same causes of action. The factual questions are the same. That gives rise to the risk of inconsistent decisions, because the facts to be considered in Spain will include the role of the recruiting sergeant undertaken, it will be said, at the behest of the Spanish recruiting employer. In those circumstances, Article 30 has effect, which means that the English court is empowered to stay the claim: that provision states that where there are related proceedings, courts other than that first seised may stay proceedings before them. But should it? A  potential problem is that the English recruiting sergeant could not be sued in Spain because, being an employee, that defendant could only be sued in the country of domicile, England. The English court might think that it should proceed with the claim, as England is the only place where the recruiting sergeant may be sued. One possible way of making the English court less likely to do so is if the Spanish employer were made party to the English proceedings. The question then would be whether there was a basis on which the English court could have jurisdiction. Not domicile. Could there be jurisdiction in a tort claim? It seems that the tortious act was committed in Spain. If the claimant employer is domiciled in Spain, it seems that loss will be suffered there. These factors therefore point against adding the Spanish defendant to the English proceedings. 15.81 The question whether to stay is, of course, discretionary, but this seems a strong case because the facts and the cause of action against the Spanish employer can be resolved in Spain. Whilst the recruiting sergeant can only be sued in England, the English court might think it best to allow what might be thought of as the main claim to proceed in Spain first so that the English court can benefit from its findings – a classic stay. There is much to be said, therefore, for allowing that court to do so first. However, as the claimant, it may be possible to say to the English court that it should stay, but perhaps not yet. It would be open to the English court to decide to stay the claim but only after having granted injunctive relief. It seems likely that the English court would be reluctant to allow a defendant over whom it undoubtedly has jurisdiction and who would not be able to seek to delay matters by challenging jurisdiction to continue to threaten to act unlawfully, especially as the English employee could not be sued in Spain. 15.82 Can the claimant change its mind in the light of the discovery of the English domiciled defendant and seek to sue all defendants in England? This gives rise to two issues: jurisdiction and lis alibi pendens. As to jurisdiction, the English court would not have jurisdiction over the Spanish employee defendants because, as long as the claims against them arise from their contracts of employment, which it appears they would, only the courts of the place where they are domiciled would have jurisdiction: see Article 22 of the Brussels Recast Regulation. As to the Spanish employer, the issue is the claim in tort. The English court would have jurisdiction if either the harmful act were done in England or damage were suffered in England. But even then one finds oneself caught by the lis alibi pendens problem. The Spanish-domiciled defendants can say that the 374

Case studies 15.87

claims in England and Spain involve, as against them, the same cause of action and the same parties giving rise, they would say, to the obligation to stay. The claimant can say that that is not correct, because of the addition of the Englishdomiciled recruiting sergeant. Even on that basis, the case for an Article  30 discretionary stay is strong. 15.83 A claimant who had had a change of heart about the best forum could, however, stay the claim in Spain against all defendants other than the employees who have to be sued in England. As long as there is jurisdiction, commence a claim in England against the Spanish employer and the English recruiting sergeant. There is then no Article 29 issue and the basis for an Article 30 stay is much weaker. 15.84 The question also arises whether, applying the Brussels Recast Regulation, the Spanish court could have jurisdiction over the English-domiciled recruiting sergeant. Here there may be difficulties. If the claim is seen as relating to the recruiting sergeant’s contract of employment, then only the English court, as the state of the recruiting sergeant’s domicile, would have jurisdiction because of Article 22. If, however, it is possible to formulate the claim in tort, on the basis that the recruiting sergeant is working with the recruiting employer to encourage staff to act in breach of their contractual obligations of good faith by seeking to persuade colleagues to leave and join a rival, then one could find oneself in the territory of Article 7. The issue in that case would be where the harmful event occurred: where was the tortious wrong committed and where was damage suffered? If the answer to either of those questions is ‘Spain’, then, on the face of it, the Spanish court would also have jurisdiction over the recruiting sergeant on an application of the Brussels Recast Regulation and the risk of inconsistent judgments falls away. 15.85 The law governing the claim against the recruiting employer will be that of the place where damage is suffered. In the claim against the recruiting sergeant, the governing law is that applicable to the contract of employment.

Case 7 15.86 The same facts as Case 6 above, but the employer, employees and related proceedings are located in a country outside of the EU, rather than Spain and proceedings are on foot in a non-EU country. The recruiting sergeant remains domiciled in England. 15.87 So far as the English-domiciled recruiting sergeant is concerned, the English court has jurisdiction based on domicile. The issue again is the concurrent proceedings in another state which is not a Member State for Brussels Recast 375

15.88  Team moves

Regulation purposes. Article  33 enables a court to stay proceedings in favour of a non-Member State where the claims involve the same parties and same cause of action. That will not be the case in the claim involving the recruiting sergeant because in this example the recruiting sergeant is not a party to the other proceedings. Article 34 provides for a permissive stay in the case where the domestic proceedings are ‘related to the action in the court of a third state’. There may be a stay if it is expedient to hear the related actions together to avoid the risk of irreconcilable judgments and the judgment of the foreign court will be capable of recognition in England. 15.88 It seems that if the foreign court before which the proceedings are being heard would give a judgment capable of recognition in England, then the analysis set out in Case 6 above would apply. The claims appear to be related. There is a risk of inconsistent judgments which tell in favour of a stay. But it may be, as in the above example, that the English court could be persuaded to take some action before granting the stay. 15.89 If the foreign judgment would not be recognised in England, then on the face of it Article 34 would not apply and the common law power to stay would be in issue. Given that the parties in the two sets of proceedings would not be the same such that the recruiting sergeant would not be bound by the judgment of the foreign court, it may be that an English court would be more reluctant to grant a stay. In any event, it is likely that the English court would be prepared to grant some relief before doing so. The governing law position is as above.

376

CHAPTER 16

Breach of confidence 16.01 The law of confidence arises in numerous contexts. As will become apparent, the way in which the case is formulated is capable of being relevant to identifying the conflict of law rules, both as to jurisdiction and choice of law, which will apply in any case. 16.02 In this chapter, first the applicable domestic legal principles are set out. The legal principles will be relevant for two purposes. One is that it will assist in determining how a court will characterise a claim – and it may be that this will depend at least to some extent on how it is pleaded. But it will also assist a party in ascertaining the content of the law in the case where English law governs. 16.03 In any confidential information case there will be questions whether the information concerned is properly characterised as confidential: whether its inherent quality gives it the status of confidential information and whether the circumstances in which the information is communicated or obtained give rise to an obligation of confidence. If the information is confidential and it has been obtained in circumstances giving rise to an obligation of confidentiality, then a claim may arise where the information is used or disclosed in an unauthorised way. Each of these elements warrants separate consideration.

WHEN IS INFORMATION CONFIDENTIAL? 16.04 First, what counts as confidential information in English law? In this context, it is inevitable that there is an element of circularity in the definition: information is confidential because it has the quality of confidence. That was the language used in one of the leading cases, Coco v AN Clark (Engineers) Ltd1. It was there said that the information had to have the quality of confidence and to have been imparted in circumstances importing an obligation of confidence. In an action for breach of confidence, a claimant would have to show that there had been unauthorised use of the information to the detriment of the owner of the information. Megarry J’s analysis in that case has been referred to as ‘the classic exposition’ by the House of Lords: see Campbell v Mirror Group Newspapers Ltd2. 16.05 As to the requirement that the information must have the quality of confidence, the starting point was to distinguish information in the public domain. 1 [1969] RPC 41. 2 [2004] UKHL 22, [2004] 2 AC 457 at para 13.

377

16.06  Breach of confidence

However, even publicly available information may be confidential if it is used in novel ways – but it is then the use of that information which is confidential. For example, one might have a case where a customer list is compiled from publicly available information. It might be said that the individual names and details, being in the public domain, are not confidential. But the list itself is confidential, because a person has accumulated that information and used it in a particular way. See, for example, Roger Bullivant v Ellis3. There are many examples of what might count as having the quality of confidence such as secret processes and designs but also ideas (such as the idea for a carpet grip in Seager v Copydex Ltd4), information about dealings between enterprises and their customers, and plans that businesses wish to develop. What will often be key is the desire of the owner of the information not to disseminate it but to keep it ‘in-house’. 16.06 In Coco, Megarry J  was not able to give a precise definition of when information was imparted in circumstances of confidence: the test was put in terms of whether a reasonable person standing in the shoes of the recipient would have realised on reasonable grounds that information was being provided in confidence. It was said that this would include the case where ‘information of commercial or industrial value is given on a business-like basis and with some avowed common object in mind, such as a joint venture of the manufacture of articles by one party for another’. The circumstances would have to be ‘of sufficient gravity’. 16.07 Megarry J  relied on Prince Albert v Strange5, in which Prince Albert sought to restrain the publication of various etchings he had made. One of the bases on which an injunction was granted was breach of confidence, because the etchings had been produced for the Prince’s own use or to be provided to friends but not made generally available such that the work was of a private character. Megarry J said that the most helpful authorities were Saltman Engineering Co Ltd v Campbell Engineering Co Ltd6, Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd7 and Seager v Copydex Ltd. The Saltman case dealt with rights of confidence arising in equity (discussed below) and laid down the test based on information having the quality of confidence. In the Seager case, the Court of Appeal dealt with the situation in which some information was in the public domain and some private and said that in such cases a recipient of the private (confidential) information could only use that which was in the public domain.

WHAT CIRCUMSTANCES GIVE RISE TO AN OBLIGATION OF CONFIDENCE? 16.08 English law recognises principally three situations in which an obligation of confidence can arise: contract; equity; and statute. 3 [1987] ICR 464. 4 [1967] 1 WLR 923. 5 (1849) 1 Mac & G 25. 6 (1948) 65 RPC 203. 7 [1960] RPC 128.

378

What circumstances give rise to an obligation of confidence? 16.12

Contract 16.09 So far as contract is concerned, different types of contract may impose obligations in different ways. One may have a commercial relationship in which parties agree that certain information will be kept confidential. So, for example, parties discussing a joint venture or the potential take-over of a business will often agree that certain matters will be kept confidential. In many cases that will involve defining what counts as confidential information. Where that happens it may be unnecessary to engage in every case with the question what is to be regarded as confidential information. If, for example, parties discussing a potential take-over agree that the target company’s turnover or the identity of its customers or its business plans are to be kept confidential, it will be unnecessary to engage in a separate analysis whether a court would, absent any statement by the parties, regard the information as having the requisite quality of confidence. The reason for this is that, whether or not ‘truly’ confidential, if the parties have agreed that certain information is to be treated as confidential, or whether or not it is to be so treated, is not to be disclosed, that by itself is capable of giving rise to a cause of action for breach of contract. If a party has agreed not to disclose certain categories of information, an application can be made to restrain such disclosure merely to enforce that agreement, regardless of whether a court would agree that the information was confidential. 16.10 However, it is frequently the case that, by way of attempting to ensure full coverage of a confidentiality clause, contracts will say that an obligation of confidentiality requires a person not to disclose, amongst other things, ‘confidential information’. It is at that point that the legal definitions of confidentiality come into play. 16.11 It may be that, even in the absence of express terms, in the case where party A  shares confidential information with party B  there will be an implied obligation on B not to make use of the information other than for the purposes for which A provides it. In Saltman Engineering, Lord Greene MR said that if parties entered a contract under which one of them obtained confidential material, the law would imply an obligation to keep the confidence of that information. 16.12 It is well settled that contracts of employment contain implied duties in relation to confidential information. The legal foundation for these obligations is the implied duty of good faith recognised in cases such as Robb v Green8. The law is set out in the much-cited case of Faccenda Chicken v Fowler9. That case concerned the alleged misuse of confidential information. That which was claimed to be confidential was information concerning the names and addresses of customers, the most convenient route to be taken to customers, the usual requirements of individual customers as to both quantity and quality of products, the day of the week when deliveries were to be made and prices charged to individual customers. It was claimed that this ‘package’ taken as a 8 9

[1895] 2 QB 315. [1987] Ch 117.

379

16.13  Breach of confidence

whole constituted confidential information. The case held that duties in respect of confidential information derive from the implied term which imposes a duty of good faith or fidelity on the employee. Neill LJ noted that there would be a breach of that term if, during the employment, the employee copied a list of customers for use after the end of employment or deliberately memorised such a list. That was because the implied obligation of good faith imposed a duty of confidentiality during the employment. The obligation in respect of confidential information after the termination of employment was more limited. Employees were not permitted to use or disclose information such as secret processes of manufacture or chemical formulae or ‘other information which is of a sufficiently high degree of confidentiality to amount to a trade secret’. But that did not extend to all information which the employee acquired during employment, even if that information was confidential such that disclosure of it after termination would be a breach of the duty of good faith. Thus it was only trade secrets which employees were under a duty not to use or disclose after the termination of employment. In order to decide whether information was a trade secret it would be necessary to consider the nature of the employment and in particular whether the employment was one in which the employee customarily handled confidential information; the nature of the information itself – whether it was highly confidential; whether the employer had impressed on the employee the duty of confidence; and whether the information could be easily isolated from other information which the employee was free to use or disclose. The Court decided that the ‘package’ of information, even including the pricing information, lacked the necessary quality of confidence to count as a trade secret even though it would have been confidential information which, during the employment, the employee was entitled to use only for the benefit of the employer. 16.13 The judge at first instance in Faccenda Chicken (whose decision was upheld) identified three categories of information: (i) trivial information, or information which was in the public domain that employees were free to use; (ii) information which an employee was required to treat as confidential during the employment but which necessarily remained in the employee’s head and became part of the employee’s skill and knowledge, which had to be kept confidential to the employer during the employment but which could be used by the employee after the employment had ended; and (iii) trade secrets – information which was so confidential that, even if learned by the employee, could not be used after the employment had ended. The Court of Appeal did not specifically adopt that categorisation, although some comments appear to suggest that it was approved. Later cases have treated that categorisation as being correct: see, for example, Lancashire Fires Ltd v SA Lyons & Co Ltd10. There is one difficulty with this three-limb categorisation: there may be information used in the course of employment which is not so 10 [1997] IRLR 113.

380

What circumstances give rise to an obligation of confidence? 16.16

confidential as to be a trade secret but which is also not properly characterised as part of an employee’s skill and knowledge. This is still information which is confidential and which may be protected as such during the employment, and may be relied on, for example, to justify a post-termination restraint, even if not subject to a restriction on its use after the employment has ended. The particular relevance of this point concerns post-termination restraints. The law is that people may not be restrained from using their skill and knowledge. If it is right to say that all category two information becomes part of an employee’s skill and knowledge, then it would be hard for the employer to rely on that information to justify a post-termination restraint. It may be more accurate to say that there is a category of information which is not a trade secret but which is confidential and may not be used other than for the employer during the employment, but without characterising that as information which becomes part of the employee’s skill and knowledge. 16.14 The meaning and extent of a trade secret was arguably expanded in Lansing Linde v Kerr11. In that case Staughton LJ posed the question ‘what are trade secrets and how do they differ (if at all) from confidential information’? He defined a trade secret as information used in a trade or business whose dissemination the owner of the information either limits or at least does not encourage and which if disclosed to a competitor would cause real or significant harm to the owner. He expressly said that this included not only secret formulae but also in appropriate cases the names of customers and the goods which they buy. ButlerSloss LJ said that trade secrets could include ‘highly confidential information of a non-technical or non-scientific nature’. 16.15 In Lancashire Fires (see para 16.13) the Court of Appeal made the valuable point that ‘the nearer an employee is to the inner counsels of an employer, the more likely he is to gain access to truly confidential information’. The same case distinguished between the ‘stock-in-trade’ of the former employer and the employee’s own professional expertise, even if that was gained from the employment. 16.16 The distinction between trade secrets which can fairly be regarded as the employer’s property and the skill, experience, know-how and general knowledge of the employee has been identified. This was said in the context of a posttermination restraint in FSS  Travel and Leisure Systems Ltd v Johnson12, but the point about needing to identify a separate body of knowledge which, in a nontechnical sense, the employer can say is its property, remains valid. The employer needs to point to a stock of knowledge which a person ‘of ordinary honesty and intelligence would recognise to be the property of his old employer and not his own to do as he likes with’: see Printers & Finishers Ltd v Holloway13. Employees are free, however, to take advantage of knowledge they have gained through doing a job, even if it might be said that that knowledge was obtained 11 [1991] ICR 428. 12 [1998] IRLR 382. 13 [1965] 1 WLR 1 at 5.

381

16.17  Breach of confidence

on the employer’s time and through having worked for the employer. Mummery LJ observed in FSS  Travel that ‘lack of precision in pleading and absence of solid evidence in proof of trade secrets are frequently fatal to [in that case] enforcement of a restrictive covenant’. Indeed in that case the employer failed because it had not adduced sufficiently cogent relevant evidence to identify and establish a separate body of objective knowledge qualifying for protection as a trade secret. The employer’s evidence in that case had been that the employee knew how to do things. But that was an indication of general skill and not of the existence of a separate body of knowledge.

Equity 16.17 Turning from contract, obligations of confidence can arise in equity as a result of the mere fact that a person comes across confidential information. The very fact of its confidentiality can impose a duty of confidence on a recipient even in the event that there is no contract between the owner and the recipient. A duty of confidence arises in equity when confidential information comes to the knowledge of a person (the confidant) in circumstances where the confidant has notice that the information is confidential. The jurisdiction of equity in breach of confidence cases is ancient, going back at least to the Statute of Uses of 1535, according to Coco v AN Clark (Engineers) Ltd. Lord Goff gave a striking example of this in Attorney General v Observer Ltd14 (the ‘Spycatcher’ case) when he said that a duty of confidence would be owed where a person comes across an obviously confidential document which has been wafted by an electric fan out of a window, or where an obviously confidential document such as a private diary is dropped in a public place. 16.18 This is a particularly important principle, which provides protection in respect of third parties. Imagine the case, for example, in which a person is party to a potential joint venture which fails. That person takes away information relating to the joint venture and reveals it to another potential joint venture partner. The person who was party to the original plan may be bound by contractual obligations of confidence. But the third party recipient who receives ex hypothesi obviously confidential information will owe a duty of confidence because of the receipt of obviously confidential information. Or take the case in which an employee takes away confidential information belonging to an employer and imparts it to a new employer. As long as the information has the requisite degree of confidence, the recipient employer will owe the original employer a duty of confidence in equity. 16.19 For the sake of completeness, one can mention a right which is related to the right of confidentiality but has different origins and that is the right of privacy derived from cases such as Campbell v Mirror Group Newspapers15. The issue in these cases is not commercially confidential information but information about 14 15

382

[1990] 1 AC 109 at 281. [2004] UKHL 22, [2004] 2 AC 457.

What circumstances give rise to an obligation of confidence? 16.20

a person’s private life. Cases often arise because of a threat of publicity about a person’s private affairs. The right to privacy has been recognised, being derived from Article 8 of the European Convention on Human Rights. The cases often involve striking a balance between Article 8 and the right to freedom of expression contained in Article 10. 16.20 In a breach of confidence case, a claimant may seek to restrain the use or disclosure of confidential information. In many cases, the key focus will be on use: restraining parties from exploiting confidential information which they have received. But there will also be cases where disclosure is in issue – an employee revealing information to a new employer, for example. As Megarry J observed in Coco, a claim of breach of confidence will usually involve showing that the use of the information will be to the detriment of the claimant. So far as restraints on disclosure are concerned, there is potential for arguments to be based on the Human Rights Act 1998, but such arguments are seldom run in a commercial context and it is not thought that the argument is strong. The argument is based on s 12 of the Human Rights Act, which applies in any case where a court is being asked to make an order which might affect the right to freedom of expression. It says that no relief should be granted unless the claimant is ‘likely to establish that publication should not be allowed’. This section is a boon for newspaper publishers because it means that, for example, someone complaining about threatened publication of private information will have to show that a claim that publication should not be allowed is likely to succeed. What this means is that in such cases the burden on the claimant is far higher than the usual American Cyanamid ‘serious issue to be tried’ test. In a privacy case, the claimant will have to show that it is likely that the Article 8 and Article  10 balance will be struck in favour of the right to privacy. The section is capable of being relevant to cases about confidential information, but it is less clear that this will be the case in a commercial dispute where the owner of information seeks to prevent, for example, a commercial rival or an ex-employee revealing information. The test to be applied was considered in Cream Holdings Ltd v Banerjee16, a case about confidential information. There, a former employee disclosed to newspapers confidential information about her employer which she alleged showed that the company had been engaged in corruption. The company sought an injunction to restrain publication. The principal focus was on publication by the newspapers although the company sought also to prevent further disclosures to the press by the employee. The issue in the House of Lords was what was meant by ‘likely’ to establish that publication should not be allowed. The House of Lords rejected the argument that it meant more likely than not. It held that the test was a flexible one. It was in most cases a higher standard than American Cyanamid but in an appropriate case that higher standard could be dispensed with; the language of a real possibility or sufficiently likely to justify the grant of an order was preferred.

16

[2005] 1 AC 253.

383

16.21  Breach of confidence

Statute 16.21 Statute has a lesser role. The Official Secrets Act is an obvious example. There are other more specific examples such as s 348 of the Financial Services and Markets Act 2000. The advantage of legislation is that it tends to identify information which is to be treated as confidential, thus sidestepping the need to classify information as confidential.

DEFENCES 16.22 There are limited defences to the disclosure of confidential information, albeit that it is not obvious how they will arise in a commercial setting. The essence of the defences is that the public interest justifies the disclosure. An element of this is the rule that there is no confidence in iniquity such that it will not be a breach of confidence to disclose wrongdoing. In Initial Services Ltd v Putterill17, an employee left a company, taking documents which he believed showed that the company had been engaged in price fixing. He provided the documents to the newspapers. The company brought an action alleging breach of confidence. It was held that there was (or at least arguably was, since this was a strike out application) a defence to the disclosure of confidential information which revealed ‘any misconduct of such a nature that it ought in the public interest be disclosed to others’, those others being those who had a proper interest to receive it. It is said that ‘There is no confidence as to the disclosure of an iniquity’. The central test is whether the disclosure is in the public interest. That meant that the disclosure had to be to someone who had a proper interest to receive the information. In Lion Laboratories v Evans18, the defence was put more generally as one of public interest. In that case, employees disclosed to the press confidential documents showing that a device used to test the level of alcohol in drivers’ breath had an unacceptably high failure rate. Lion Laboratories recognised the need to balance the competing interests in preserving confidential information and the public being informed of matters of legitimate concern (supported by the right of free expression). It was held that where the matters disclosed were in the public interest, in the sense that the public had a need to know about the matters, that could be a defence to a claim of breach of confidence. That was not limited to cases of wrongdoing by the party seeking to restrain publication. In that case the information about the device was so important that its publication at least arguably defeated the company’s right of confidentiality. More recently, cases have considered the balance between the right to freedom of expression under Article 10 of the European Convention on Human Rights and the Article 8 right to privacy: HRH Prince of Wales v Associated Newspapers19. This means that there must be a public interest in breaching the confidence. It is not enough that the matter be in the public interest. That has been applied also to cases about

17 [1968] 1 QB 396. 18 [1985] QB 526. 19 [2008] Ch 57.

384

Remedies 16.25

the disclosure of commercially confidential information: Brevan Howard Asset Management LLP v Reuters Ltd20. 16.23 One defence that is probably not available is breach of contract by an employer. An employee who is constructively dismissed is able to rely on acceptance of the employer’s breach of contract in order to be relieved of any posttermination restraints: see General Billposting v Atkinson21. However, it seems unlikely that a constructive dismissal will bring confidentiality obligations, even such contractual obligations, to an end. The point was left open in Campbell v Frisbee22 in the sense that it was held not suitable for summary determination, but the equitable nature of the duty of confidence suggests that it is unlikely that the obligation would fall away because of a repudiation by the employer.

REMEDIES 16.24 The final issue to consider dealing with the substantive law is the available remedies for breach of confidence. There are two principal remedies. One remedy is the obvious action for an injunction to restrain the use or disclosure of confidential information. Another is to seek damages for its misuse. In any application for injunctive relief, it will be necessary to specify with care the confidential information with which the person may not deal because the order must be precise as to what is enjoined. In Lawrence David Ltd v Ashton23 it was said, in the context of an application for an injunction to restrain the disclosure of confidential information, that it is ‘a cardinal rule that any injunction must be capable of being framed with sufficient precision so as to enable a person injuncted to know what it is he is to be prevented from doing’. 16.25 The other remedy is the important remedy of springboard relief. This relief was originally identified in the context of confidential information, though it has expanded now and is not confined to breach of confidence cases (Midas IT  Services v Opus Portfolio Ltd24). The basic premise is that where a person has acted unlawfully, in this hypothesis by misusing confidential information, and in consequence has gained an advantage or head start, the wronged party may be awarded an injunction to hold back the defendant for a period of time to reflect the head start illegitimately obtained. A good example is Roger Bullivant v Ellis25. In that case an employee took away a card index containing contact details for the employer’s customers. An advantage which flowed from doing so was that the employee was better able to contact customers in order to deal with them and could do so more quickly than would have been the case had he left and not taken the customer list. On that basis, an injunction was granted to restrain 20 [2017] EWCA Civ 950, [2017] EMLR 28. 21 [1909] AC 118. 22 [2002] EWCA Civ 1374, [2003] ICR 141. 23 [1989] ICR 123. 24 (21  December 1999, unreported), cited in numerous cases including Dyson Technology Ltd v Pellerey [2015] EWHC 3000 (Ch) at para 141. 25 [1987] ICR 464.

385

16.26  Breach of confidence

him from entering into contracts with customers for a period of time to reflect the period of head start. The key point is that the injunction must be limited to the period of time which reflected the advantage which the defendant has secured. It has to be established that the defendant has obtained a competitive advantage and that the advantage subsists at the time of the application: see Sun Valley Foods Ltd v Vincent26. In that case, the defendants had removed confidential information but the judge concluded that the advantage obtained by doing so was short term and did not subsist, and so springboard relief was refused. This means that argument as to the duration of any head start can and should be central to all arguments for springboard relief. It does not matter how badly the defendant has behaved. If no advantage continues to ensue from the wrongdoing, there can be no injunction, no matter how badly the defendant has behaved: see Sectrack NV v Satamatics Ltd27. Concern has been expressed that an interim springboard injunction effectively delivers the claimant the substantive relief which it seeks and that the grant of such relief can affect innocent third parties such as customers and employees of the defendant’s venture. For that reason, a judge hearing an application for interim relief should not just apply the American Cyanamid test but the more stringent test laid down in Lansing Linde v Kerr, which requires some assessment of the relative strengths of the parties’ cases. That goes both to the question whether the defendant has obtained an illegitimate head start and also the duration of the advantage which the defendant has obtained: see Forse v Secarma Ltd28. The purpose of springboard relief is not to punish a defendant but to restore the parties to the competitive position in which they would have been but for the wrongdoing. 16.26 Having identified the legal background, the next question is how breach of confidence cases are likely to be treated for conflict of law purposes. One starts with the issue of characterisation. It seems likely that there will be different approaches depending on the circumstances of the case. There are broadly three possibilities. In a case where the parties are bound by contract and confidential information is communicated between contracting parties, particularly where the contract has express or implied terms dealing with confidential information, the case is likely to be characterised as breach of contract. In the case in which it is alleged that an employee has acted in breach of confidence, the case is likely to be treated as one relating to the contract of employment. This will be the case both where the case is put on the basis of breach of the implied duty of fidelity but also, as is often the case, where the employer also pleads breach of an equitable duty of confidence. It seems likely that the case will nonetheless be regarded as relating to a contract of employment. The other situation is that involving third party recipients or others who do not owe any contractual duties. Such persons would be regarded under English law as owing equitable duties of confidence. It seems that these cases would be characterised as involving a tort (for Brussels Recast Regulation jurisdiction purposes) and ‘non-contractual obligations’ (for choice of law). Indeed in some domestic cases, breach of confidence (or at least 26 27 28

386

[2000] FSR 825 at 834. [2007] EWHC 3003 (Comm) at para 68. [2019] EWCA Civ 215, [2019] IRLR 587.

Jurisdiction 16.29

its cousin, breach of privacy) has been referred to as a tort: see Campbell29. Under both the Brussels Recast Regulation and the Rome I  Regulation, autonomous definitions are given to torts and non-contractual obligations. These will not attach weight to fine distinctions in domestic law such as actions based on equitable obligations.

JURISDICTION 16.27 Dealing with jurisdiction rules, one has to consider separately the case of EU-domiciled defendants, who will be governed by the Brussels Recast Regulation, and defendants domiciled elsewhere.

EU-domiciled defendants 16.28 Starting with the EU-domiciled defendant, it is necessary to have regard to the range of possible cases. Putting aside the standard case of jurisdiction based on domicile, the position seems to be as follows. In cases where the parties are bound by commercial contracts, jurisdiction will be based on Article 7 of the Brussels Recast Regulation where the matter relates to a contract. That will most obviously be the case where a party bases a claim on a contract term dealing with confidential information. But even if there is no express or implied term and so a claimant may plead the claim on an equitable duty of confidence, if the parties were subject to a contract and it was part of that contractual relationship in which the confidential information was disclosed or misused, it still seems likely that the matter would be treated as one ‘relating to a contract’. In that event, jurisdiction will be conferred on the courts of the place of performance of the obligation in question. That is not likely to be an easy question in the case where the obligation in question is one not to reveal confidential information. It may be that the focus would be on the place where the parties envisaged acting. So, for example, if the underlying contract concerned a joint venture or the purchase of a business in a particular location, it may be that such location is where the obligation not to use confidential information arose. It may be that the focus would be on the place where disclosure of the information would cause harm. But equally it is possible to say that the obligation could arise in any number of places. 16.29 It may also be necessary to have regard to the full shape of the case. Imagine a situation in which a person in state A has disclosed information to a person in state B in circumstances which mean that the person in state B owes a duty of confidence. A claimant might choose to sue the defendant in state B as a lead defendant for a claim in tort (on the basis of what English law would treat as an equitable duty of confidence), and then sue in the same place the person who has disclosed the information, under Article 8 of the Brussels Recast Regulation.

29

[2004] UKHL 22, [2004] 2 AC 457 at para 15.

387

16.30  Breach of confidence

16.30 Aside from commercial contracts, duties of confidentiality obviously arise in connection with employment contracts. In such cases, the duty of confidence would relate to a contract of employment, meaning that the employee could be sued only in the place of the employee’s domicile. That seems likely also to be the case even in the situation where the employer alleges an equitable duty of confidence. Hence, as in other employment cases, there are severe restraints on the employer’s ability to choose where to sue. Unlike in other cases, the employer’s problem is not solved by identifying, for example, a commercial party as a recipient of confidential information and seeking to add the employee as a further defendant in reliance on Article  8. Articles  20–23 of the Brussels Recast Regulation do not permit that. 16.31 The other category of case is that just mentioned – the case of a third party recipient. As indicated above, in that situation, the case – although analysed in English law as involving the commission of an equitable wrong – would be likely to be characterised for Brussels Recast Regulation purposes as involving a tort. On that basis, jurisdiction would be conferred on the courts of the place both where the wrong was committed and where damage was suffered. In the case of the third party recipient, the wrong is to make use of the confidential information received. A  person who receives confidential information and does not either destroy or return it but instead uses it would be liable for breach of a confidence as a third party recipient. Hence the place where the tort is committed seems likely to be the place where the recipient makes use of the information. There is every possibility, of course, that this wrong could be committed in more than one place. The alternative possibility focuses on the place where harm is caused: where the claimant suffers damage. But as indicated the focus must be on direct damage and not more remote indirect damage.

Non-EU domiciled defendants 16.32 What of defendants in respect of whom jurisdiction is not to be decided by the Brussels Recast Regulation (or equivalent)? For present purposes the straightforward case of the person who is present in the English jurisdiction or who submits to the jurisdiction is put aside. The question is then likely to be whether the defendant can be served out of the jurisdiction. That will, of course, also involve the question whether the English forum is the most appropriate forum. If it is, the question is which gateway provision is engaged. 16.33 There seem to be several possibilities, as follows: (i) the domestic claimant might seek an injunction to restrain activity in this jurisdiction, such as the use of confidential information. That would justify service out under CPR PD 6B, para 3.1(2); (ii) in the case where the English court has jurisdiction over one party, for example an English-domiciled employee alleged to have disclosed confidential information, then it would be possible to serve out, for example 388

Choice of law 16.35

on a non-EU recipient, on the basis that the latter was a necessary or proper party to the claim against the employee: CPR PD 6B, para 3.1(3); (iii) where the parties are in a contract, the claimant could seek permission to serve out if the contract was made in England or through an agent in England or was governed by English law or has an English choice of jurisdiction clause: CPR PD 6B para 3.1(6); or where there was a breach in England (CPR PD 6B para 3.1(7)). These categories of case could, on the face of it, include the situation in which a non-EU based employee acted in breach of a contract of employment; (iv) CPR PD  6B, para  3.1(21) contains specific provision for breach of confidence, and states that the court will have jurisdiction where the detriment is suffered within the jurisdiction or the detriment results from an act committed within the jurisdiction. The rule is thus similar to the tort rule. There does not seem any reason why this rule could not be relied on as founding an additional basis for jurisdiction even where parties are bound by a contract. But perhaps this rule would be of most value in respect of claims against third party recipients: either the misuse of the confidential information by a third party recipient in England or its misuse anywhere which causes harm in England would be enough to confer jurisdiction on the English court. It seems more likely in domestic law that this rule would be relevant, rather than the rule applicable to tort. It is only under EU law laid down for the purposes of the Brussels Recast Regulation that an extended interpretation of tort is adopted.

CHOICE OF LAW 16.34 What of the law governing the claim? Here it is necessary to distinguish between a contractual claim and a ‘non-contractual’ claim which would be relevant in particular to the claim against the third party recipient. 16.35 In relation to claims founded on contract, the law will be that chosen by the parties, either expressly or because it is the law demonstrated by the terms of the contract or the circumstances of the case. In the absence of a choice, one might have a situation in which the obligation of confidence arises under a contract for which the Rome I  Regulation makes specific provision under Articles  4–8. One must recognise that an obligation of confidence is likely to arise as part of a broader contract dealing with other matters. For example, if an obligation of confidence arises under a contract for the provision of services, the law will by Article 4 be the law of the place where the party providing services is habitually resident. If the contract does not fall into any of the categories for which specific provision is made, then one falls back on the general rule, which is that the governing law is the law of the place of habitual residence of the party bearing the obligation to effect performance characteristic of the contract. That might well, of course, be unrelated to any obligation in respect of confidential information where the subject matter of the contract is something else. 389

16.36  Breach of confidence

16.36 Under an employment contract, where the parties do not choose the law, the applicable law will be that of the place where the employee habitually works: see Article 8 of the Rome I Regulation. As to a claim against a third party recipient, this would likely be regarded as a claim concerning a non-contractual obligation governed by Rome II and so the governing law would be that of the place where the damage occurs regardless where the tortious act is done. Against that analysis, examples are set out below of how the rules might play out in different cases.

CASE STUDIES Case 1 16.37

An English-domiciled employee of an English-based company supplies confidential information belonging to the employer to a French-domiciled company

16.38 On the face of it, the English-domiciled employee, whether accused of breach of contract or whether the case is out on the basis of an equitable breach of confidence, could only be sued in England because of Article 22 of the Brussels Recast Regulation. This is because, however the case is pleaded, it seems it would relate to the contract of employment. 16.39 The claimant ought also to be able to sue the French-domiciled recipient in England on the basis of Article 8. The argument would be that the case against the provider and that against the recipient are so closely connected that it would be expedient for them to be heard together. What one has in essence is a joined-up case, which treats the supply and the receipt of the information as part of one act. It will be asked why the party providing the information supplied it to the recipient. The answer will be that it enabled the recipient to use it in a way that the party, and presumably the party supplying it, intended. Thus one had a continuum between the provision of the information and its receipt. On the basis that the supply and receipt are part of the same larger act, the argument would be that the case against both parties should be heard together. It would be unsatisfactory, for example, to have two courts making potentially inconsistent findings as to the reason why the information was supplied or the purposes for which the recipient intended to use it. Even apart from Article 8, if the English employer can show that it will suffer damage in England, then the English court will have jurisdiction under the Article 7 tort provisions on the basis that the claim against the third party is tortious. 390

Case studies 16.46

16.40 The applicable law in relation to the claim against the employee will be the law governing the contract of employment. 16.41 As to the claim against the third party, if the English claimant can show that it will suffer harm in England, then English law would apply.

Case 2 16.42

The same facts as Case 1, but with a US-domiciled employee and company.

16.43 In this example the defendants are not EU-domiciled, so the Brussels Recast Regulation will not be relevant. The question will be, since it is assumed that the defendants are neither present in England, nor submitting to the jurisdiction of the English court, how can the English court claim jurisdiction? There are several possibilities, and considering how best to exploit them is capable of improving the claimant’s prospects of ensuring that the English court will claim jurisdiction. 16.44 Because the employee is US domiciled, the strictures of the Brussels Recast Regulation do not apply. The employee may be sued for breach of contract if the contract was made in England or is governed by English law. If not, it seems that the claimant could rely on the service out rules dealing with breach of confidence. It will be enough that either the breach occurs in England or damage is suffered in England. 16.45 If the employee can be sued in England, that ought to be enough to allow the recipient to be sued as a necessary or proper party under CPR PD 6B, para 3.1(3). Just as in relation to the Article 8 of the Brussels Regulation argument in the Case 1 example above, the argument would be that the provision of the information and its receipt were two sides of the same coin: they were part of a continuous act. The claimant has one case, in which it challenges the provision of the information to the third party and to that end its use by the third party: the original provision was for the purpose of enabling the third party to make use of the information. No doubt it is that end use which brings about the greatest risk of harm. But that harm only comes to be realised because of the provision of the information in the first place. That justifies the claim that in fact both parties are necessary or proper parties to the claim against the other. 16.46 The recipient might also be sued under the rule applicable to breach of confidence – CPR PD 6B, para 3.1(21) – if the act of breach or the damage occur in England. 391

16.47  Breach of confidence

16.47 The governing law would, in relation to the employee, be that applicable to the contract. If no law is chosen, it will be the law of the place where the employee habitually works. The example does not say, but if the employee works mostly in the US then the law of a US state would be relevant. 16.48 As to the claim against the new employer, the law would be the law of the place where damage was suffered. Since the claimant employer is based in England and we assume the confidential information emanated from England, it seems likely that damage would be suffered in England.

Case 3 16.49 A German participant in a joint venture with an English company supplies confidential information to a French company which is interested in establishing a rival joint venture. 16.50 This case again arises in the context of the Brussels Recast Regulation but in a purely commercial context. It is likely that the joint venture parties are in a contractual relationship and, to the extent that the joint venture involved the provision of confidential information, it is likely that there are either express or implied terms governing its use. The disclosure to the commercial rival would probably be a breach of contract. 16.51 As the defendant who provided the information is domiciled in Germany and the recipient in France, domicile does not provide the basis for the English court to have jurisdiction over either of them. However, it would be worth the claimant considering a range of possibilities to try to claim jurisdiction over both defendants. 16.52 There would be a question whether the party who disclosed the informa­ tion could be sued in breach of contract. Let us assume that there is no express choice of law clause in any contract. Since the joint venture was pursued with an English company and on the hypothesis that the information disclosed has emanated from the English entity, there must be an argument that the obligation to keep the information confidential was to be performed in England: the infor­ mation was not to be revealed outside the joint venture which, if that was taking place in England, would mean that it should not be revealed outside England. On that basis, the claim of breach would concern breach of an obligation which should have been performed in England, justifying the defendant who had dis­ closed the information being sued in England. Hence it would be argued that England was the place for performance of the obligation in question – here the obligation to maintain confidentiality – and for that reason the English court has jurisdiction. 392

Case studies 16.57

16.53 So far as the recipient is concerned, this claim is likely to be characterised for the purposes of the Brussels Recast Regulation as relating to tort. On that basis, the English court would have jurisdiction if damage was suffered in England. 16.54 It would be advisable for the claimant to explore both these routes because if either succeeds it is likely that the other defendant would be subject to English jurisdiction under Article 8 of the Brussels Recast Regulation. 16.55 Choice of law is not easy so far as the German joint venture partner is concerned. One assumes that the relationship is contractual – an agreement to pursue a joint venture. There is no suggestion that the parties have made any choice of law. The case does not obviously fall within Articles 4–8. There might be some cases in which it could be said that a joint venture involved party A providing services to party B but in most cases the issue would be the agreement to pursue the plan in question. In that case the governing law would be the habitual residence of the person required to effect the characteristic performance of the contract. What does that mean in a joint venture? On the face of it, the parties agree together to pursue a particular end. It may be difficult to say that any of them undertakes the performance characteristic of the contract. This is not like, for example, a sale contract where the characteristic performance would be that of selling the good. Hence here one has an English and German party, each of which is required to pursue the common end of giving effect to a plan hatched between them. In that sense, both parties are performing the obligations characteristic of the contract but they have different habitual residences. One might argue that if the joint venture relates to a proposed business in a particular country then that country would be likely to be the place where the characteristic performance was to be undertaken. 16.56 If the proposed joint venture was to be undertaken in England, might it be said that the contract is manifestly more closely connected with England such that English law should apply under Article 4(3) of the Rome I Regulation. This difficulty might justify the English claimant also formulating a separate claim in reliance on an equitable breach of confidence. This is done quite frequently in confidential information cases. The hope would be that, by formulating an alternative claim which would, for the purposes of the Rome II Regulation be a tort claim, the governing law would be the law of the place where damage was suffered. 16.57 The position is easier in relation to the French recipient of confidential information. The argument would be that it was liable as a recipient of confidential information which, would, for choice of law purposes, be treated as a tort. Hence the governing law as far as the claim against the recipient is concerned would be the law of the place where damage is suffered. The English company would say that it suffers damage in England because it is in England that it suffers loss of its information. The French company might want to say that the damage occurs in France where it uses the information, but the argument would be that that is indirect or secondary damage. The real harm is the removal of the information from England. Where it ends up going to is secondary to that harm. 393

16.58  Breach of confidence

Case 4 16.58 The same facts as Case 3, but this time the German joint venture participant supplies a US company. 16.59 The analysis in relation to the German joint venture partner is the same as above. What is different is the analysis in relation to the recipient, who in this example is not domiciled in a state to which the Brussels Recast Regulation applies. Hence, in relation to the recipient the rules of jurisdiction contained in CPR PD 6B will apply. 16.60 As to that, if the court can have jurisdiction over the German provider of the information then it seems that there is a strong case for saying that the US recipient is a necessary or proper party, and so permission to serve out should be given to enable it to be a defendant to the claim against the German provider of the information. 16.61 Because the claim against the US entity would be for breach of confidence – here by using the confidential information as a third party recipient – the claim can also be formulated under CPR PD 6B, para 3.1(21) as a breach of confidence claim. In this example it seems likely that the harmful event – the disclosure of the material – would take place in England because the detrimental act is the revealing of the information. In addition, if, as seems likely, the claimant can say that damage will be suffered in England, then as long as it can be established that England is the appropriate forum, that would be a ground on which to serve out as against the US recipient. 16.62 As to choice of law, the position is as above. Again, the law governing the breach of contract by the joint venture party would, on the face of it, be the law governing the contract, with all the difficulties mentioned above. Here also, the claimant might seek to formulate an alternative claim in equity. As to the claim against the recipient in tort, the governing law would be the law of the place where damage was suffered.

Case 5 16.63 A German partner to a joint venture is sued in Germany for damages for revealing confidential information. The German defendant has substantial assets in England. Can the claimant apply to the English court for a freezing order in England to restrain the release of those assets in England and elsewhere? 394

Case studies 16.67

This example is given because the issue here is not so much one of jurisdiction and choice of law, but the ability of the English court to provide relief which will be supportive of, in this case, the German court. 16.64 The power for the English court to grant a remedy is reflected in Article 35 of the Brussels Recast Regulation, which enables the courts of one Member State to grant provision, including protective, measures, when another Member State has jurisdiction over a case. In English law, the power to make such orders is derived from s 25 of the Civil Jurisdiction and Judgments Act 1982. That led to cases such as Republic of Haiti v Duvalier30, in which the English court granted a freezing order over the assets of the former president of Haiti who was being sued in France. There is no doubt that the court has this power. Whether it should be exercised was considered in detail in ICICI Bank UK plc v Diminco NV31, in which it was held that a freezing order would not normally be granted unless a defendant had either assets in England or was, because of domicile or residence, amenable to the jurisdiction of the English court. The court emphasised the need for the English court to be able to take steps to enforce its orders, in truth so that they were not in vain. This may limit the circumstances in which a worldwide freezing order is appropriate, particularly having regard to the need not to interfere with the proceedings in another court. But in the case where the defendant, in this case in Germany, has substantial assets in England, that would appear to mean that the grant of a freezing order in respect of those assets was legitimate. Ironically, the case for doing so might be thought particularly enhanced if the German court is unable to grant such relief.

Case 6 16.65 A French-domiciled employee is sued in France for revealing confidential information. The claimant subsequently seeks to bring a claim against an English-domiciled party who was recipient of the confidential information and who is alleged to have misused it as a third party. 16.66 No question arises as to jurisdiction in this case. The English-domiciled recipient may be sued in England by reason solely of domicile. The issue that arises is how to deal with the fact that there are proceedings involving if not precisely the same matters but at least linked matters in another jurisdiction. 16.67 This gives rise to lis alibi pendens issues, in this example in the context of the Brussels Recast Regulation. In this case, the French court is seised first. The question then arises how other courts, before which proceedings are commenced later, should respond. There are two relevant provisions of the Brussels Recast 30 31

[1990] 1 QB 202. [2014] EWHC 3124 (Comm), [2014] 2 CLC 647.

395

16.68  Breach of confidence

Regulation. Under Article 29, a court other than that first seised when the claims in the two courts involve the same parties and the same cause of action. That does not apply in this case, as the defendant in England and the defendant in France are different. Indeed it seems that even if the English proceedings threatened both the French and English parties, the parties would still not be the same. It seems also to be the case that the causes of action are not the same. In the French proceedings, the claim will be put as breach of contract. In the English proceedings, the allegation will be in tort. Thus the criteria for a mandatory stay under Article 29 would not be met. 16.68 However, Article  30 gives the power to a second seised court to stay proceedings when the claim before it is related to a claim in another court; the rules are put in terms that the court ‘may’ stay proceedings. The question here will be the extent to which the English court thinks either that its findings, were the case before it to proceed, might cut across what the French court was considering and the extent to which it thinks it might be helped by the findings of the first seised court. 16.69 If the case against the recipient were to proceed in England, that might trespass on the same territory with which the French court was dealing because, in considering whether the information was unlawfully revealed, the French court would inevitably consider by whom it was received. Hence the case for staying the English proceedings looks strong. 16.70 There must, therefore, be a material risk that the English court would decline jurisdiction in the sense of staying or delaying the hearing before it until the French court has decided the case before it. However, it may be that the English court would be persuaded to grant interim relief to protect the position prior to any substantive claim being heard. 16.71 If the English court took jurisdiction there would be a question of which law it should apply. The claim against the third party recipient would be in tort thus focusing on the law of the place where damage was suffered. On the basis that the English recipient received the information in England, it seems that damage would be suffered in England, such that English law would be applied. An alternative is to focus on the place where the information is used. However, if the information is received in England, it seems that it is preferable to focus on the place where the information was received for the following reason. One might have a case in which a person received information in place A and used it in places B, C and D. If one were to apply the law of the place where the information was used, one would have to apply different laws depending on where the information was used. One could rely on an analogy with jurisdiction cases concerning defamation where focus has been on where damage occurs. Applying Shevill v Presse Alliance32, one could say that damage was suffered in the place of publication – where the information was revealed – or the place of use.

32

396

[1995] 2 AC 18.

CHAPTER 17

Applications for anti-suit injunctions

GENERAL INTRODUCTION 17.01 Anti-suit injunctions and the basis for them are dealt with in Chapter 9. As explained there, such injunctions may be said to fall into two camps. One is where a party sues in a place in breach of an exclusive jurisdiction clause. That provides a strong basis for the grant of an anti-suit injunction and usually such an injunction will be ordered (but not always, because – as Donohue v Armco Inc1 shows – there may be exceptional circumstances which justify the refusal of relief). The principles are set out in The Angelic Grace2. But outside jurisdiction clause cases, anti-suit injunctions are available in a wide range of situations, including the case where the commencement of proceedings abroad is vexatious or oppressive. They may also be granted in some cases – the full extent of which is as yet unclear – where a party suing abroad acts in a way which defeats what has been described as the right of a defendant to be sued in a particular forum. An anti-suit injunction does not stop the (usually foreign) proceedings taking place. It acts personally on the claimant, or would-be claimant, in the other jurisdiction, preventing that person from bringing or conducting the proceedings where the grounds for an anti-suit injunction arise. It is thus possible that, despite an antisuit injunction, the proceedings to which the injunction relates could continue. But a person who continues to conduct such proceedings despite the anti-suit injunction would, by breaching an English High Court order, be in contempt of court and could be imprisoned. Although the injunction does not in form affect the foreign proceedings, that is its substantive effect. This means that considerations of comity – respect for foreign courts – are very important. 17.02 The basic principle is said to be that anti-suit injunctions may be ordered where it is in the interests of justice to do so, but that broad principle contains numerous instances which fall within it and limit its application. Such injunctions will often be sought to restrain the pursuit of proceedings in a foreign jurisdiction by a party who says that, if there is to be a claim at all, it should be brought in England. Whilst cases turn on their facts, it has been suggested that examples of cases where the ends of justice may justify an anti-suit injunction include the case where there are simultaneous proceedings in the courts of two countries on the same subject matter where complete justice could be given in England; where the foreign proceedings are brought in an inappropriate forum and England is the 1 2

[2001] UKHL 64, [2002] 1 Lloyd’s Rep 425. [1995] 1 Lloyd’s Rep 87.

397

17.03  Applications for anti-suit injunctions

natural forum; and where the pursuit of the proceedings gives rise to unfairness. These categories derive from Stichting Shell Pensioenfonds v Krys3. That case was an example of the last type of oppression or vexation because one creditor of an insolvent company sought to place itself in a better position than others by suing in a foreign court while the company was being wound up in the domestic court. An anti-suit injunction was granted to restrain the foreign proceedings. 17.03 Some care needs to be taken not to apply at least the first two tests too rigidly, because it has been said that parallel proceedings by themselves are not necessarily abusive and the mere fact that England is the natural forum does not alone justify an anti-suit injunction. However, in the case where a party proceeds in a foreign court which has an expansive approach to jurisdiction but which has no obvious connection to the dispute, it may be that the mere fact of exploiting that broad jurisdiction in those circumstances would be regarded as oppressive. But in any case in which the English court is asked to grant an anti-suit injunction, it must be established that it is the natural forum; that is a sine qua non. 17.04 As indicated above, a good, indeed perhaps the most powerful, example of the application of the interests of justice rule is the case in which a party is bound by, or has the benefit of, a choice of jurisdiction clause. A strong ground for granting an injunction to require a party not to continue proceedings abroad is the case where a defendant is subject to an English choice of jurisdiction clause. There is a strong public policy, reflecting the interests of justice, in holding parties to their bargains: pacta sunt servanda, as it was put in Petter v EMC Europe Ltd4. But this is not an absolute rule, reflecting (i) the focus on the interests of justice; and (ii) that the grant of an injunction is discretionary. Thus, for example, in Donohue v Armco Inc an anti-suit injunction to restrain proceedings in New York was refused despite an English choice of jurisdiction clause. But the reasons for that decision were very particular, namely the existence of related proceedings in New York against other defendants who were properly sued there and who did not have the benefit of English choice of jurisdiction clauses. Thus the anti-suit injunction to restrain a claimant suing one of the prospective defendants in New York was refused in order to avoid the risk of parallel proceedings and potentially inconsistent decisions. 17.05 Another situation in which such relief may be sought is in the case where a party is able to say that, as a matter of English law, that party has the right to be sued or sued only in England. In that case, the injunction lies in order to enforce that right, on the basis that being sued elsewhere is vexatious. As the examples below indicate, a powerful instance of such a case is where the defendant is an employee and, because of the Brussels Recast Regulation, has the right only to be sued in the state where he or she is domiciled. Moreover, in those cases, jurisdiction clauses will, in most situations, be unenforceable. When in those circumstances an employer seeks to sue the employee in another state, an antisuit injunction may be relied on to restrain such conduct. However, some of the 3 4

398

[2014] UKPC 41, [2015] AC 616. [2015] EWCA Civ 828, [2015] IRLR 847.

General introduction 17.08

cases referred to in the examples below are controversial because their effect may be to interfere with otherwise valid proceedings before foreign courts where the only reason for doing so is the application of domestic law. 17.06 More generally, an anti-suit injunction will lie when the pursuit of the foreign proceedings is vexatious or oppressive. In such cases it will usually be necessary to show that England is the forum conveniens. That is a necessary but not sufficient condition. 17.07 Anti-suit injunctions may also be granted to restrain a party from seeking to enforce a foreign judgment (as opposed to proceeding in a foreign jurisdiction). A case may arise in which a foreign court has got to the stage of deciding a case – presumably in circumstances where the defendant either did not apply for or did not obtain an injunction to restrain that process – and the English court is asked to prevent enforcement. An example of this is the long-running litigation in SAS Institute Inc v World Programming Ltd5. That case concerned allegations of breach of intellectual property rights, in which a company domiciled in North Carolina sued a UK company for breach of copyright and breach of contract following the UK company’s development of a software program. Proceedings in England failed and so the North Carolina company sued in that state, which led to the award of $26 million in compensatory damages but additional punitive damages leading to a total of $79 million. Attempts to enforce that judgment in England failed for a number of reasons, including that even the compensatory award under the relevant US statute was barred by the Protection of Trading Interests Act 1980 which excludes from registration judgments falling within various categories. The claimant then registered the North Carolina judgment in California for enforcement purposes. That jurisdiction provided for orders requiring a defendant to assign identified debts to the judgment creditor and to turn over payments received from customers anywhere in the world. The claimant indicated that it was seeking such orders in respect of assets and customers outside the US. It was the enforcement of these provisions which the defendant sought to enjoin. The English court granted an interim anti-suit injunction which led to a rather troubled response from the US court. The Court of Appeal upheld the grant of an anti-suit injunction on the basis that the debts to which the order applied – for example sums due from customers – were situated in the UK, being the domicile of the debtor. It was held that the US judgments, insofar as they applied outside that country, were exorbitant and so would not be enforced. This meant that the court could grant an anti-enforcement injunction, which may be seen as a particular variant of an anti-suit injunction but applying to prevent enforcement rather than the conduct of a claim. However, that was only applied in respect of non-US debts and customer payments on the basis that the judgment was, to that extent, exorbitant. 17.08 It is necessary that the defendant to an application for an anti-suit injunction be subject to the jurisdiction of the court. If that party is a party to litigation in England, either having commenced a claim in England or having been served, 5 [2020] EWCA Civ 599.

399

17.09  Applications for anti-suit injunctions

no problem arises. But otherwise there needs to be a basis on which the English court can claim jurisdiction. Sometimes that will involve the applicant for an anti-suit injunction commencing a claim for declaratory relief, but it will still be necessary to show, in the case of a defendant based overseas, that there exists a ground for the English court to have jurisdiction. 17.09 Anti-suit injunctions may also be relevant when a contract contains an arbitration clause. A party to such a contract who commences proceedings in a foreign court may be met with an application for an anti-suit injunction. Where the court claim is commenced in England, s 9 of the Arbitration Act 1996 means that the English court will normally be obliged to stay the claim in favour of arbitration. That measure does not, of course, affect the foreign court but the English court can assist the party wrongly sued by an anti-suit injunction. That said, it will often be preferable to allow the foreign court to stay the proceedings before it because of the arbitration clause, but if that does not happen then, as long as it has jurisdiction over the party who has commenced the claim, the English court may grant an injunction. This was laid down in AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC6, in which Lord Mance expressed the view that the power to stay domestic proceedings under s 9 and the power to enjoin foreign proceedings were ‘opposite and complementary sides of a coin’. This chapter seeks to give examples of particular types of cases, some general anti-suit cases and some arising in particular contexts.

CASE STUDIES Case 1 17.10 An English-domiciled party and a German-domiciled party have signed a contract containing an exclusive English choice of jurisdiction clause. The German-domiciled party commences proceedings in Germany. 17.11 This might be thought a strong case for the grant of an anti-suit injunction on the simple ground that the German claimant is suing in breach of a jurisdiction clause. That was certainly the view of the English court prior to the development of the law in the European Court of Justice. The leading case, The Angelic Grace7, involved proceedings in Italy in breach of an arbitration clause. The Court of Appeal granted an anti-suit injunction and rejected the argument that it should be for the Italian court, which is, of course, also party to the Brussels Recast Regulation, to determine jurisdiction for itself. However, the Court of Justice has 6 7

400

[2013] UKSC 35, [2013] 1 WLR 1889. [1995] 1 Lloyd’s Rep 87.

Case studies 17.14

held that in cases governed by the Regulation, it is not open to the courts of one country to grant an anti-suit injunction to restrain proceedings in another Member State. The Court of Justice has adopted the approach, rejected in The Angelic Grace, that it is for the court before which proceedings are brought to decide its own jurisdiction. The case that decides this is Turner v Grovit8. In that case, an employee brought a claim in the English employment tribunal and his employer commenced an action in Spain accusing the employee of unprofessional conduct and seeking damages. The English court granted an injunction to restrain the Spanish proceedings but the House of Lords asked whether the grant of such relief was consistent with what is now the Brussels Recast Regulation. The Court of Justice robustly said ‘no’. It held that the system was based on mutual trust and that it was for the court before which proceedings were brought to apply the uniform rules. It was therefore not open to other courts to review the jurisdiction of the court before which the proceedings had been commenced. The Court said that an anti-suit injunction undermined the jurisdiction of that court. That is not quite correct, as the injunction lies only against the party, but one can see why the Court was of that view since the substantive effect is to prevent proceedings in another court without that court having decided that it lacked jurisdiction. 17.12 Thus in this example the English defendant would have to ask the German court to give effect to the choice of jurisdiction clause. But if it did not do so, there would be no basis on which the English court could enjoin the German claimant from proceeding there. Hence no anti-suit injunction would be granted to prevent the German claimant suing in Germany.

Case 2 17.13 The same facts as Case 1 above, but the party seeking to sue is domiciled in Canada and seeks to sue in Ontario. In this example the contract was made in Ontario. 17.14 This is perhaps the paradigm anti-suit case. One party sues another in breach of the terms of a contractually agreed choice of jurisdiction clause. The English court has jurisdiction over the Canadian-domiciled would-be claimant because of the parties’ choice of English jurisdiction. Thus Article  25 of the Brussels Recast Regulation applies to confer jurisdiction, as that article applies regardless of the domicile of the parties. That apart, there would – if need be – be jurisdiction under CPR PD 6B on the basis that the parties had chosen the English jurisdiction. The English-domiciled party might then apply for relief against the Canadian-domiciled party, restraining it from bringing a claim in Ontario. The legal foundation for that is the parties’ choice of jurisdiction clause. It follows that England is the forum conveniens. The leading case is The Angelic Grace, 8

C-159/02 [2005] 1 AC 101.

401

17.15  Applications for anti-suit injunctions

in which it was held that the case where a party sued in breach of an exclusive jurisdiction clause was ‘the paradigm case for the prompt issue of an injunction’ on the simple basis that to sue in one place where a party has contracted to bring proceedings in another place is a breach of contract such that proceedings may be brought to restrain that breach. Millett LJ said that there was no reason for the English court to hesitate in granting an injunction to restrain a party from engaging in foreign proceedings ‘on the clear and simple ground that the defendant [to the application for an anti-suit] has agreed not to bring them’. The Court refused to leave it to the foreign court before which proceedings had been commenced to decide jurisdiction itself. That case is also noteworthy because the Court of Appeal took a broad approach to an arbitration clause, holding that tort claims also came within it such that the anti-suit injunction had a wide reach.

Case 3 17.15 The same facts as Case 2 above, but the Canadian claimant relies on a Canadian statute which permits claims to be brought in Canada regardless of a jurisdiction clause where the contract was made in Canada. 17.16 One might have thought that this would be a good example of a case where there was an exceptional circumstance – the Canadian statute – which justified the court not enforcing the jurisdiction clause. However, that was not the approach taken by the Court of Appeal in OT Africa Lines Ltd v Magic Sportswear Corpn9. The Court held that primacy had to be given to the choice of jurisdiction and that where there was a jurisdiction clause, there was less scope for comity to operate so as to respect the legislation in which a party sued contrary to the choice of jurisdiction clause.

Case 4 17.17 An English employee sued an English-domiciled company in England for breach of contract. An associated company of the employer, which had operations in Spain, sued the employee in Spain for damages for negligence. Can the employee obtain an injunction to restrain the Spanish proceedings on the basis that they were brought to harass, and the real and only claim was the employee’s claim in England?

9

402

[2005] EWCA Civ 710, [2005] 2 Lloyd’s Rep 170.

Case studies 17.22

17.18 This is a Turner v Grovit scenario in which an employee seeks an antisuit injunction to restrain the associated company of the employer proceeding in another European jurisdiction. Despite the view of the domestic court that the instigation of the Spanish proceedings was an abuse of process10, nonetheless the remedy of an anti-suit injunction is not available against another EU state. It is for the courts of that state to apply the jurisdiction rules and, if it does not have jurisdiction, to decline the case. But it is not open to the courts of a third country to, in effect, say that another Member State lacks jurisdiction. Matters will presumably be different after the UK leaves the EU.

Case 5 17.19 The same facts as Case 4 above, but the claim is commenced before a court in the US by an associated company based in the US. 17.20 The situation here appears to be close to the Samengo-Turner and Petter cases considered further in Case 7 below. In essence, the employee says that because of Article 22 of the Brussels Recast Regulation, employees may only be sued in the place of their domicile. As an English-domiciled employee, the defendant in the US can claim a right to be sued only in England and on that basis can claim that the institution of proceedings in the US should be restrained. No issue of interfering with the jurisdiction of the courts of a Member State arises. This is rather a case of protecting the English jurisdiction and the rules which apply to it.

Case 6 17.21 The same facts as Case 5 above, involving an English-domiciled defendant but in this case the would-be defendant works under a contract for services, not a contract of employment and it is that party who is sued in the US by the associated company. 17.22 The analysis in this case is more nuanced and may depend on the court’s views of the justification or otherwise of the proceedings in the US. The defendant might wish to say that a party, such as the defendant, who is domiciled in England has a right to be sued only in England because of Article 4 of the Brussels Recast Regulation. It is at present undecided whether that provides a basis for an antisuit injunction and the Court of Appeal referred that question to the Court of 10 [2000] QB 345.

403

17.23  Applications for anti-suit injunctions

Justice in Gray v Hurley. If the court took the view that the US proceedings were abusive and designed to harass, that could of itself justify an anti-suit injunction on standard domestic principles on the ground that the foreign proceedings were unconscionable. However, absent some reason for suggesting that the US proceedings were unreasonable or designed to harass, considerations of comity would be likely to tell against the grant of an anti-suit injunction. The claimant in the US would no doubt rely on the exceptional nature of the employment cases and argue, with justification, that they had no application to a contract for services.

Case 7 17.23 English-domiciled employees are employed by an English company which has a US parent. The parent runs an incentive scheme which provides for payments to be made to qualifying employees. The scheme was governed by New York law and contained a New York choice of jurisdiction clause. The scheme contained a term requiring employees to repay awards in the event that they engaged in defined detrimental activity. The parent commenced proceedings in the courts of New York, initially seeking information to enable it to know whether it could reclaim awards. The employees sought an anti-suit injunction from the English court to restrain the parent company from pursuing the claim in New York. 17.24 This case gives an important illustration of how jurisdiction rules and, in that context, applications for anti-suit injunctions work in the employment context. This example also demonstrates how matters are likely to change once the UK leaves the EU unless it is permitted to sign the Lugano Convention or the government makes legislative changes as it proposes. The example is, therefore, addressed in two ways: (i) as matters presently stand where the Brussels Recast Regulation applies (and as will be the case if the Lugano Convention applies) (the instant case); and (ii) where those provisions no longer have effect (set out in Case 8 below). 17.25 This is an example of an anti-suit injunction being based on a defendant’s right to be sued in a particular place. The employee defendants’ case was that under the rules applicable to them contained in the Brussels Recast Regulation, they could only be sued in England and they asked the court to give effect to that right by restraining a claimant from bringing proceedings in contravention of that right. 17.26 The first question is how to bring the foreign defendant – here the US-based parent company – before the court. The answer seems to be CPR 6.33(2)(b)(iii), which provides that a claim form may be served out of the jurisdiction without 404

Case studies 17.31

the need for the permission of the court where ‘the defendant is an employer and a party to a contract of employment within Article  20 of the Judgments Regulation’. Whether the US parent company was properly to be treated as the employer is discussed below, but establishing an arguable case that it is would be sufficient to confer jurisdiction on the English court. 17.27 A key question is whether it is correct to say that the effect of the Brussels Recast Regulation is that the employees may only be sued in England. The employees rely on Article 22, and say that the article means that they can only be sued in the state of their domicile, because in matters relating to individual contracts of employment the employee must be sued in the state of domicile. However, the employer says that this is not a case based on the employment contract, but on an incentive award scheme offered by another party who is not the employer. Thus the first question is whether the cause of action relates to an individual contract of employment at all. It was held in Samengo-Turner that it did, because the incentive award scheme was part of the benefits of the employees’ employment and therefore, whilst not the contract of employment itself, the scheme was sufficiently related to the contract to be regarded as relating to that contract. 17.28 The next question is whether the claimant is being sued by ‘an employer’. The parent company is not the employer. However, the logic of the view that the case related to a contract of employment meant that the claimant should be treated as the employer. Thus, Articles  20–23 apply, which would ordinarily mean – by Article 22 – that the employees had to be sued in the country of their domicile. 17.29 But what of the choice of jurisdiction clause in favour of the courts of New York? Here, too, the Brussels Recast Regulation governs. Article 23 provides that the choice of jurisdiction clause has no effect, because it had not been agreed after the dispute arose. Thus, the employees are not bound by the clause. That means that they cannot be compelled to appear before the New York courts. 17.30 On the basis that statute in the form of the Brussels Recast Regulation requires that the employees be sued in England, it would be appropriate, to give effect to that Regulation, to grant an anti-suit injunction to stop the US parent company suing in New York. 17.31 This example is, of course, based on Samengo-Turner v J & H Marsh and McLennan (Services) Ltd11 and Petter v EMC Europe Ltd12. The only hesitation to express about it is the decision in Gray v Hurley13, a case concerning a defendant who said she could only be sued in the state of her domicile, where it was not acte clair that the right to be sued in accordance with the Brussels Recast Regulation, at least so far as the right to be sued in the state of one’s domicile under Article 4, 11 [2008] ICR 18. 12 [2015] EWCA Civ 828, [2015] IRLR 847. 13 [2020] 1 FLR 864.

405

17.32  Applications for anti-suit injunctions

was a right which should be protected by an anti-suit injunction. That question was referred to the European Court of Justice.

Case 8 17.32 The same facts as Case 7 above, but it arises once the UK is no longer party to the Brussels Recast Regulation or equivalent. 17.33 This example considers a question which has not, for obvious reasons, been addressed in case law: how would such a situation be dealt with post-Brexit, if the UK does not sign up to the Lugano Convention? 17.34 The starting point is that it is unclear whether the same analysis would apply in determining whether the (in our example) non-EU domiciled employer could be brought before the court at all. This is very important, of course. If a person seeks an anti-suit injunction but the party against whom it is sought is not properly before the court, then there is limited scope for the grant of such an order. CPR  6.33(2)(b)(iii) is put in terms of the Judgments Regulations. That provision will, it is to be assumed, cease to have effect. It may be that an employee could rely on the provisions of CPR PD 6B dealing with service out in contract cases. It may also be that an amendment will be made to the CPR which will allow employers to be served out of the jurisdiction in equivalent situations (albeit not, of course, expressed by reference to the Brussels Recast Regulation). 17.35 But what of the application for an anti-suit injunction? There are two points to make about this. One can start with the analysis which would apply assuming that, the Brussels Recast Regulation having been swept away, nothing emerges to fill their place. What, then, as a matter of principle, would the situation be under purely domestic law? The first issue to note is that the limiting provision of Article 22 (providing that employees may only be sued in the state of their domicile) will no longer have effect. Perhaps more important, Article 23 – which has the effect of rendering choice of jurisdiction clauses ineffective save in the case where they agreed after the dispute has come into existence – will also no longer exist. The Court of Appeal in Petter v EMC Europe Ltd emphasised the importance of holding people to their bargains, including in the case where they have agreed jurisdiction clauses. The Court cited Donohue v Armco Inc14 as authority for the proposition that, unless there are strong reasons to do otherwise, parties should be held bound by jurisdiction clauses which they have entered. In that case, the decision by the EU legislators to protect the party presumed to be weaker was (at least) a public policy reason for not holding a party to a choice of jurisdiction clause. Indeed, as a binding rule of law, there is a case for saying it was more than that. But if that is no more, and in the absence of any domestic 14

406

[2002] 1 All ER 749.

Case studies 17.38

legislation, the question arises what reason could there be for not holding parties to their choice of jurisdiction agreements? On the face of it, the argument is that there is little – if any – such reason, especially when one bears in mind that the contract in question was related to but not itself the contract of employment and conferred additional benefits at the behest of a party based itself in a different jurisdiction. Thus it seems highly likely that the Petters and Samengo-Turners of the future will not be able to secure anti-suit injunctions where they have agreed choice of jurisdiction clauses, unless the UK legislature steps in to protect them. 17.36 The second point to make, however, is that the government does appear to be alive to the jurisdictional advantages that flow from the employment provisions of the Brussels Regulations. By statutory instrument15, provision has been made for new ss 15A–15E to be added to the Civil Jurisdiction and Judgments Act 1982, applicable from the end of the Implementation Period (see para 2.03), to deal with consumer and employment matters. So far as employment is concerned, a new s  15C basically reflects the Brussels Regulation but only as it applies to the UK. Employers domiciled in the UK may be sued in the part of the UK in which the employer is domiciled. Employers generally may be sued in the UK where the employee habitually works. Employees domiciled in the UK may only be sued in the UK. By s 15B(6), jurisdiction clauses are only effective if they are agreed after the dispute has arisen or if they give the employee the right to sue in a wider range of places. It appears to be the government’s intention that the Samengo-Turner and Petter position is preserved.

Case 9 17.37 The same facts as Case 7 above, but the jurisdiction clause, as well as conferring jurisdiction on the courts of New York says that the employee may sue for breach of the incentive awards scheme in: (i) England; or (ii) any country in which the employee resides. 17.38 This raises a quite important point. As has been seen, the jurisdiction clauses in Samengo-Turner and Petter were ineffective. In those cases the only jurisdictions selected were US states, and the clauses were not agreed after the dispute has arisen. However, that is not the only case in which a jurisdiction clause may be enforced. By Article 23 of the Brussels Recast Regulation, jurisdiction clauses may be enforced where they permit the employee to sue in places other than those permitted by Articles  20–23. What of the jurisdiction clause in this example? In version (i), it probably makes no difference, because the employee who habitually works in England would be able to sue in England under Article 21. However, if one had an employee who habitually worked somewhere other than England, then the variant under (i) would enable the employee to sue 15

The Civil Jurisdiction and Judgments (Amendment) (EU) Regulations 2019, SI 2019/479, reg 26.

407

17.39  Applications for anti-suit injunctions

in a wider range of places than permitted by the Brussels Recast Regulation. On that basis, effect should be given to the jurisdiction clause even though agreed before the dispute has arisen. Version (ii) may be better still for the employer. Regardless where the employee works, claims can be brought wherever the employee resides. That confers jurisdiction on a wider range of places than the Regulation. For that reason it seems that this clause should be enforced and no anti-suit injunction should be granted against the US company; an enforceable jurisdiction clause would mean the employee did not have the right only to be sued in the state where the employee was domiciled.

Case 10 17.39 After the UK has left the EU and in circumstances where neither the Brussels Recast Regulation nor the Lugano Convention applies in the UK, an English-domiciled employee employed by a German-domiciled employer to work for the employer in England wishes to sue the employer for breach of contract. How can that be done? 17.40 Assuming that the prospective amendments to the Civil Jurisdiction and Judgments Act 1982 referred to in Case 8 are brought into force, that will help our employee. The right to sue the employer in the place where the employee habitually works applies regardless of the domicile of the employer, so, as now, the employee can rely on the place of habitual work to confer jurisdiction on the English court.

Case 11 17.41 The same facts as Case 10 above, but the employer is domiciled in Australia. 17.42 It seems that the answer should be the same. The reason for that is that s 15C of the Civil Jurisdiction and Judgments Act 1982 will apply wherever the employer is domiciled and so, on the face of it, extends to non-EU domiciled employers. That means that even against an Australian-domiciled employer, the employee can base jurisdiction on the place where the employee habitually works. Reliance on this section would also presumably justify service out.

408

Case studies 17.46

Case 12 17.43 After the UK has left the EU and in circumstances where neither the Brussels Recast Regulation nor the Lugano Convention apply in the UK, a German-domiciled employee employed by an English company to work in England is sued in England for breach of a post-termination restraint in a contract of employment governed by English law and containing an English choice of jurisdiction clause. Relying on rights under the Brussels Recast Regulation as a domiciliary of Germany, the employee applies for a stay of the proceedings commenced by the English employer in England, claiming to be entitled only to be sued in Germany. Will such a stay be granted? 17.44 Case 8 above refers to how the situations in Samengo-Turner and Petter might be determined once the UK has left the EU and how, at least so far as a defendant employee domiciled in the UK is concerned, it seems that, absent legislative change, the result would be different and that the inability of the English employee to invoke the Brussels Recast Regulation would in all likelihood deprive the employee of the ability to avoid the choice of jurisdiction clause. In this example, positing a case where, subsequent to the UK leaving the EU not only does the Brussels Recast Regulation cease to have effect but also the UK has not signed up to the Lugano Convention. But the defendant in the example, who is German, will say that the Brussels Recast Regulation does apply to the case, as a result of the individual’s domicile: because the employee is domiciled in Germany, the Brussels Recast Regulation applies to the employee with the consequence, it would be argued, that: (i) the employee can only be sued in the state of domicile; and (ii) the choice of jurisdiction clause is ineffective. 17.45 This is not a straightforward case. There appear to be two possible analyses. One is that the English court would respect the law applicable to the employee – law which the individual would say should be capable of being relied on and as containing rights of which the employee should not be deprived. On this footing, it would be argued that the law as contained in the Brussels Recast Regulation was an exceptional situation justifying the court not giving effect to the choice of jurisdiction clause. 17.46 But on the other hand, the English court might say that its function is to apply domestic rules of jurisdiction, which no longer includes the Brussels Recast Regulation. By the domestic rules, the choice of jurisdiction clause means that the employee has agreed to submit to the court. In this context, the attempt by the German defendant to rely on the Brussels Regulation would seek to apply foreign law – and certainly law inapplicable in England – to determine the English court’s jurisdiction. It would be said that it was not open to the German defendant to invoke law applicable to that individual (by reason of 409

17.47  Applications for anti-suit injunctions

domicile), a matter personal to the individual, to defeat what would otherwise be the applicable rule of jurisdiction. Section 15C of the Civil Jurisdiction and Judgments Act 1982 does not help the German employee because it provides only that UK-domiciled employees must be sued in the place where they are domiciled. The provisions dealing with jurisdiction clauses likewise only apply to UK-domiciled employees. 17.47 It is thought that the latter argument is likely to prevail. In such a case, an individual would be seeking to say that because certain law, inapplicable in England, applies to that individual, therefore the English court should not give effect to its own rules of jurisdiction. That seems to be a high hurdle to clear. On that basis, it seems likely that the English court would not stay the claim. 17.48 However, would not the well-advised German defendant apply to the German courts for an anti-suit injunction to restrain the English employer proceeding? It is not known whether German courts have the power to make such orders, but it would be worth our German employee asking the question.

Case 13 17.49 An investment company which invested in a fund that had defrauded investors is being wound up in England. An investor applies for an attachment order over the assets of the company in the Netherlands. May an anti-suit injunction be issued to restrain the investor seeking to enforce the attachment order? 17.50 The problem in this case is that when a company is being wound up, all its assets are subject to a ‘statutory trust’ in favour of all creditors. In this case, that statutory trust is imposed in England. For one party to try, in effect, to get ahead of the pack would be to the disadvantage of the creditors as a body because the individual claim could reduce the sums available for distribution. In winding up a company, the court is acting in the interests of all creditors and it would be inconsistent with that aim if individual parties were able to effect their own remedies outside the winding up. An anti-suit injunction will therefore issue to restrain such proceedings. This is a good example of the application of public policy rules underlying claims for anti-suit injunctions. This example is based on Stichting Shell Pensioenfonds v Krys16.

16

410

[2014] UKPC 41, [2015] AC 616.

Case studies 17.53

Case 14 17.51 A US company alleges that it has been defrauded by managers who were engaged in a management buy-out of a group company. The sale and pur­ chase agreement contained an exclusive jurisdiction clause in favour of the courts of England. The company begins proceedings in New York alleging fraud by the defendant purchasers and others leading to the sale. The defend­ants in New York included certain parties to the sale and purchase agreement but also others who were not party to that agreement (and so not subject to the jurisdiction clause) but were alleged to be implicated in the fraud. Some claims, but not all, fall within the jurisdiction clause. May the managers obtain an anti-suit injunction to restrain the New York proceedings? 17.52 The starting point so far as those who were party to the sale and purchase agreement and so subject to the choice of jurisdiction clause is that a court will usually exercise discretion to restrain proceedings commenced in breach of a choice of jurisdiction clause. Strong reasons will be needed to allow a claim to proceed in breach of an agreed jurisdiction clause. However, in this case, the defendants were not only those who were party to the sale and purchase agreement and its jurisdiction clause but also other persons who were not party to those agreements and so did not benefit from the jurisdiction clause. There are some claims which are not caught by the jurisdiction clause and so which may be brought in the US. Since it was obviously necessary that the totality of the claims be resolved in one place and since some claims are brought against persons who do not benefit from the jurisdiction clause and some fall outside that clause, these are powerful reasons to allow all claims to proceed in the US despite the jurisdiction clause and so to refuse an anti-suit injunction. However, the fact that the proceedings were brought in the US in breach of the jurisdiction clause would enable the individual defendant in the US to bring an action for damages for breach of contract. This example is based on Donohue v Armco Inc17.

Case 15 17.53 A Russian company engages a Turkish company to build a power plant in Russia. The plant is insured by a Russian insurer. The construction 17

[2001] UKHL 64, [2002] 1 Lloyd’s Rep 425.

411

17.54  Applications for anti-suit injunctions

contract contained an arbitration clause selecting London as the seat of the arbitration. Following a fire at the site for which the insurer made payment to the Russian company, the insurer, being subrogated to the rights of the Russian company which engaged the contractor, commences proceedings in Moscow against the Turkish construction company alleging that defects in its work had caused the fire. The main contract contains no express choice of law clause. Can the construction company obtain an anti-suit injunction against the insurer? 17.54 The key issue here is the choice of London as the seat of the arbitration. Arbitrations are subject to control by the courts. The question is which law should govern the arbitration. When the parties choose the law to govern their main contract, that law will also govern the arbitration agreement. But where, as in this case, the parties have not expressly or implicitly chosen the governing law for the contract, the selection of the seat for an arbitration impliedly chooses the law to govern the agreement to arbitrate. Hence, the implied choice of English law consequent on the choice of seat enables the English court to grant the remedy of an anti-suit injunction. The grant of an anti-suit injunction to restrain a breach of the arbitration agreement by suing elsewhere rather than pursuing the arbitration is an exercise of the powers of the governing law of the arbitration agreement impliedly chosen by the choice of seat. On that basis, the commencement of proceedings in Russia was in breach of the arbitration clause in favour of a London arbitration and should be restrained by an anti-suit injunction. The purpose of the anti-suit injunction in such cases is to enforce the integrity of the arbitration agreement. Where parties have agreed the arbitration they have contracted out of the process of going to court and if they find themselves being called to a foreign court that defeats the purpose of the arbitration agreement. The question whether proceedings may be commenced goes to the substantive jurisdiction of the arbitral tribunal, which is a matter for the law governing the agreement to arbitrate to determine. 17.55 This example derives from Enka Insaat Ve Sanayi AS v OOO ‘Insurance Company Chubb’18, which is a very important case on the principles by which one determines the law applicable to arbitration agreements and the relation of the law governing the agreement to arbitrate and the main contract. 17.56 The main point which emerges from this case is the identification of the system of law which will apply to an agreement to arbitrate within a wider agreement. The case holds that when the law of the main contract is expressly or impliedly chosen, that law will govern the agreement to arbitrate. But in the absence of choice, the law governing the agreement to arbitrate will be that with which the agreement to arbitrate is most closely connected. That will generally – in the absence of a choice of law – be the law of the seat chosen for the arbitration. In Enka Issaat there was no express or implied choice of law for the main contract but it was most closely connected with Russia. Because there was no 18 [2020] UKSC 38.

412

Case studies 17.59

express or implied choice of law, the law applicable to the agreement to arbitrate was that with which that agreement was most closely connected and that was the law of the chosen seat, in London. This meant that English law permitted the grant of an anti-suit injunction. The Supreme Court did not adopt the approach of the Court of Appeal which focused on the ‘curial law’, the procedural law governing the arbitration.

Case 16 17.57 A Spanish-domiciled employee works for a Spanish-domiciled employer but does so exclusively in England, albeit for the Spanish company. The contract of employment is governed by Spanish law. The employee seeks to sue the employer in England for breach of contract. The Spanish employer subsequently commences proceedings in Spain for a declaration that it was not in breach of contract. Can the Spanish employer obtain an injunction restraining the English proceedings? 17.58 The employee is able to sue in England by reason of the fact that the employee habitually works in England. Article  21 of the Brussels Recast Regulation confers jurisdiction on the English court. That of itself would preclude an application for an anti-suit injunction at the behest of the Spanish employer, even if it were otherwise available. Turner v Grovit19 holds that that remedy is not available. It is also not open to the Spanish employer to say that England is not the forum conveniens because of the connections with Spain. That concept has no application when jurisdiction is governed by the Brussels Recast Regulation. In those circumstances, it is not open to the English court to restrain the proceedings against it. It would be different if the English court held a preliminary hearing which concluded that the employee had not habitually worked in England. In those circumstances there would be a judicial decision that the grounds for jurisdiction under the Regulation did not exist. The case would then be that the English court did not have jurisdiction and it would decline jurisdiction. 17.59 The logic of this case is that, since the English and Spanish proceedings involve the same parties and the same cause of action, the Spanish court should stay the proceedings before it under Article 29. But that would be solely a matter for the Spanish court. The English court would not be entitled to pass judgment on the Spanish court’s jurisdiction or the lack of it.

19

C-159/02 [2005] 1 AC 101.

413

17.60  Applications for anti-suit injunctions

Case 17 17.60 The same facts as Case 16 above, save that the Spanish employer’s application for declaratory relief was commenced before the employee commenced proceedings in England. 17.61 This is less an anti-suit situation than a case in which the English court should stay proceedings before it on the basis that the same cause of action involving the same parties is before two courts and therefore Article 29 applies. The Spanish court has jurisdiction because the employee is domiciled in Spain. Thus, whilst the English court would also have jurisdiction on the basis of the employee’s habitual place of work, the position here is that there are two courts both of which have jurisdiction and, in order to avoid the risk of inconsistent decisions, it is necessary to determine before which court the matter should proceed first. In this example, the Spanish and English proceedings involve the same parties and the same cause of action. The result should therefore be that, under Article 29, the English proceedings are stayed since it is the court seised second.

Case 18 17.62 A  US-based company wishes to sue an English-domiciled defendant in New York for breach of a contract to provide services in New York, it being alleged that the services provided were defective. The contract is governed by the law of New York and contains a New York jurisdiction clause. The defendant wishes to obtain an injunction. 17.63 The difficulty for the defendant in this case is two-fold. First, it is not obvious that the English court has jurisdiction over the New York claimant. If it does not, it cannot make any order. It may be that the English party could frame a claim for declaratory relief in relation to the contract, but it would be necessary to show that one of the gateways for service out was satisfied in relation to that claim. It is not obvious that it would be in circumstances where one assumes the contract was not made in England, is not governed by English law and the breach in question occurred in New York. Because of the choice of New York jurisdiction, the defendant cannot claim a right to be sued in England which would be breached by the pursuit of the claim in New York. Hence it is not easy to see any basis on which the claimant based in New York could be subject to the jurisdiction of the English court. The other difficulty is that New York is not only the chosen forum but is also the forum conveniens for the resolution. This means that the necessary condition for an anti-suit injunction – that England is 414

Case studies 17.67

the forum conveniens – appears to be absent. In circumstances where there is a New York choice of jurisdiction clause, it is hard to say that the pursuit of a claim there is oppressive or vexatious. 17.64 The defendant’s best argument is to rely on the right under Article 4 of the Brussels Recast Regulation to be sued in the state of the defendant’s domicile. But the difficulty with that is that the defendant has agreed to the jurisdiction clause. In contrast to the employment cases, Samengo-Turner and Petter, there is no basis for challenging the legality of the jurisdiction clause in favour of the law of New York as this is a contract for services and not an employment contract. The Brussels Recast Regulation itself recognises that effect is to be given to the choice of the courts of a Member State to have jurisdiction: Article 25. It would be a big step to say that the right to be sued in the state of the defendant’s domicile had the effect of precluding an opposing party’s right to sue in the forum of a non-Member State chosen by the parties. 17.65 As things stand, the UK  Court of Appeal has referred to the European Court of Justice the question whether an anti-suit injunction should or may be granted to give effect to the Article 4 right to be sued in the state of one’s domicile in Gray v Hurley20, but in that case there was no choice of jurisdiction clause in issue. It is fair to say that the Court of Appeal was unenthusiastic at the proposition that Article 4 gave rise to an enforceable right only to be sued in the state of one’s domicile. As a matter of language, Article 4 can be contrasted with Article 22, which expressly provides that the employer may only bring proceedings in the courts in which the employee is domiciled.

Case 19 17.66 The recipient of services sues the supplier of services in England under a contract governed by English law but also brings the same claim in Texas because of the availability in that forum of punitive damages. The defendant wishes to enjoin the claimant from bringing the Texas proceedings. 17.67 The issue here is that the defendant is being vexed twice with the same cause of action. Moreover, it appears that the reason for suing in Texas is the availability of punitive damages. To the extent that they involved the award of multiple damages, such an award would not be enforced in England because of the Protection of Trading Interests Act 1980. The defendant would, therefore, say that this is a good example of unconscionable proceedings. The English court has jurisdiction over the claimant because it has commenced proceedings in England. The English court is entitled to require the claimant to decide in which forum it wishes to proceed. It might decide that it prefers to proceed in Texas 20

[2019] EWCA Civ 2222, [2020] 1 FLR 864.

415

17.68  Applications for anti-suit injunctions

because of the higher damages available. The question would then be whether it would be vexatious or oppressive to do so. The answer to that may depend on which is the forum conveniens. If the answer is that the most appropriate forum is England, that would lead to the argument that it was vexatious or oppressive to sue in another state. That may particularly be the case where the foreign court does offer, for example, enhanced damages: see Societe Nationale Industrielle Aerospatiale v Lee Kui JAK21. However, merely to say that England is the forum conveniens is not enough. It is necessary for the jurisdiction to be engaged that that is the case. But the court would look for some additional factor which rendered the proceedings in the foreign forum oppressive or vexatious. Parallel proceedings are not necessarily themselves an abuse: see Airbus Industrie GIE v Patel22. That may partly be because different courts may come to different views as to which is the natural forum. The English court will also not wish to engage in criticism of other fora. Hence the need for additional factors. One possibility which sometimes arises when a particular forum offers what might be seen as extravagant advantages is that the would-be foreign claimant agrees to give up the right to what might, to English eyes, look like an extravagant right derived from the foreign forum. If done, as was the case in Donohue v Armco, that can affect the calculus of whether the foreign proceedings are oppressive or vexatious.

Case 20 17.68 A  US hedge fund sues a German bank in Texas in respect of financial instruments the hedge fund had purchased, alleging that the purchase had been induced by fraudulent misrepresentation. The German bank sues the US hedge fund in England to recover sums which the fund had not paid. The contract between the parties was governed by English law and contained a non-exclusive choice of English jurisdiction; it identified England as a forum to which the parties submitted but said that did not stop them suing elsewhere. The court in Texas held that it had jurisdiction. 17.69 The starting point is the non-exclusive jurisdiction clause. Where, as here, the clause expressly permitted proceedings to be commenced otherwise than in the expressly identified forum, it could not be a breach of contract to sue in some other forum. Hence, in order to justify an anti-suit injunction there had to be some factor other than suing other than in the identified jurisdiction. The mere fact of parallel proceedings would not be enough to constitute unreasonableness. If that were the case it would treat a non-exclusive jurisdiction clause as if it were an exclusive jurisdiction clause. The links with England were not stronger than the links with Texas. In those circumstances there is nothing oppressive or vexatious in suing in Texas and an anti-suit injunction should be refused. 21 22

416

[1987] AC 871 at 894. [1999] 1 AC 119 at 132.

Case studies 17.72

17.70 There is also an issue about whether the English proceedings should be stayed. On the footing that the Texas proceedings were commenced first, one has a claim in a Member State and a claim in a third state. However, it is not obvious that Articles 33 or 34 of the Brussels Recast Regulation apply because they only do so where the English court has jurisdiction under Articles 4, 7, 8 or 9. That would not be the case here. The basis for the English proceedings is Article 25 – the jurisdiction clause. A key question may be whether England is the forum conveniens. That does not appear likely, as none of the parties is English and it does not appear that any of the events was connected with England. If the court concludes that it is not the forum conveniens, and if the Texan proceedings were commenced first, it seems likely that the English court would stay the proceedings before it. There is perhaps one oddity: it may not be that Texas is the truly most appropriate forum. But as it is a forum before which proceedings have been commenced and which does have jurisdiction, it is the only other and, at least, first seised court, which would be likely to mean that the English court would stay proceedings before it. The defendant could avoid that by showing that there were elements of the proceedings in Texas which were unfair to it. That might mean that England was the forum conveniens. That might also justify a different view being taken of the application for an anti-suit injunction on the grounds that it might then be said that the Texan proceedings were unconscionable.

Case 21 17.71 Parties to a contract for the construction of a building in Texas have agreed to resolve their disputes by arbitration and have chosen London as the seat of the arbitration. There is no express choice of law clause in the contract. One party commences a court action in Texas. All the relevant events took place in Texas and the witnesses and evidence are located there. The other party seeks an anti-suit injunction in England.

17.72 The key issue here is that the parties have chosen London as the seat for their arbitration. In the absence of an express choice of law to govern the contract, the choice of London as the seat of the arbitration is an implied choice of English law to govern the agreement to arbitrate, carrying with it the right to grant remedies to ensure that the agreement to arbitrate is effective. That is the case regardless of the absence of an express choice of law governing the remainder of the contract as different parts of the contract may be governed by different systems of law and the choice of the London seat is to be regarded as a choice of English law for the purposes of the arbitration clause: see Enka Inssat Ve Sana Yi AS v OOO Insurance Company Chubb23. That being so, it is for English law to decide whether to grant an anti-suit injunction. It does not 23 [2020] UKSC 38.

417

17.73  Applications for anti-suit injunctions

matter that, as is almost certainly the case, the forum conveniens is Texas. The fact that the parties have chosen to arbitrate means that the court can and should enforce that agreement by enjoining foreign proceedings, or indeed any court proceedings, in preference of arbitration. Matters would be different, however, if the main contract had been agreed to be governed by the law of Texas because that law would then govern the agreement to arbitrate.

Case 22 17.73 The insurer of cargo being carried on a vessel brought proceedings in an arbitration in London against the owners of the vessel because of damage to cargo being carried. It then commenced a claim in the courts of Brazil against the managers of the vessel and others for the same loss but saying that that claim was brought in tort, not contract. Those sued in Brazil sought an anti-suit injunction to restrain the proceedings there. 17.74 Where proceedings are commenced in breach of an arbitration clause, an anti-suit injunction will usually be granted unless there are strong reasons why it should not be: see The Angelic Grace24. The English court has jurisdiction over the insurer claimant as a consequence of the London arbitration clause. In particular since arbitration proceedings have been commenced, there could be no reason not to grant an anti-suit injunction. This example is loosely drawn from Daiichi Chuo Kaisha v Chubb Seguros Brasil SA25.

Case 23 17.75 A bill of lading contains a London arbitration clause. One party brought proceedings in a court in China alleging that good had been delivered otherwise than on presentation of a bill of lading. The defendant to the Chinese proceedings applied for an anti-suit injunction but did not make its application until nine months after the Chinese proceedings had begun. 17.76 This is a good reminder that an injunction is a discretionary remedy and that delay may tell against the grant of injunctive relief. There is a particular problem if the foreign proceedings have reached a relatively advanced stage because whilst an anti-suit injunction is not, in form, an injunction affecting 24 25

418

[1995] 1 Lloyd’s Rep 87. [2020] EWHC 1223 (Comm).

Case studies 17.79

foreign proceedings, it can appear to have that effect and an English court will be reluctant to interfere with foreign proceedings. The further developed the foreign proceedings are, the greater the risk it will appear that the English judge is interfering with them. Therefore the claimant who delays in applying runs the risk that no anti-suit injunction will be granted. That was the decision in Essar Shipping Ltd v Bank of China Ltd26, on which this example is based.

Case 24 17.77 A  Lebanese company brings claims against a UK-based company in Lebanon. The UK-based company obtains anti-suit injunctions requiring the company not to take any further steps in the proceedings and not to issue any further claims. However, the Lebanese company not only continued the existing proceedings but also commenced a further claim. 17.78 The point has been made that anti-suit injunctions do not interfere with foreign proceedings but impose sanctions on those who commence or continue proceedings when an injunction has been issued. In circumstances where no steps were taken to end the original proceedings and a further claim was commenced, the Lebanese company acted in breach of the injunction. Hence both the corporate entity and its directors who knew of the injunction were in contempt. The approach to sentence is similar to that for breach of a freezing order as both are serious attacks on the court’s administration. Thus in Dell Emerging Markets (Emea) Ltd v Systems Equipment Telecommunications Services SAL27, on which this example is based, the sanctions imposed included sentences of immediate imprisonment for up to 18 months on the individual directors who were personally involved in acts which amounted to breach of the court orders. The judge refused to suspend the sentences. However, the judge indicated that if the contemnors took steps such as to cease the proceedings, then a proportion of the sentences would be remitted. But they would still spend some time in prison.

Case 25 17.79 A  bank obtains judgments in Russia against the defendants. It seeks to enforce the judgments in France and Bulgaria. The parties agree after the Russian judgments that the English court will have exclusive jurisdiction to

26 27

[2015] EWHC 3266 (Comm), [2016] 1 Lloyd’s Rep 427. [2020] EWHC 561 (Comm).

419

17.80  Applications for anti-suit injunctions

determine their disputes and proceedings are then commenced in England. May the defendants enjoin enforcement of the Russian judgments? 17.80 This is an example of an application for an anti-enforcement injunction. In circumstances where the parties had agreed that the substantive disputes between them would be determined in England, it would be inconsistent with those terms to allow one of the parties to rely on earlier judgments. They had, in effect, agreed to supersede earlier steps by proceedings in England and it was a necessary corollary of that that the Russian judgments be not enforced. This example is based on Bank of St Petersburg OJSC v Arkhangelsky28.

28

420

[2014] EWCA Civ 593, [2014] 1 WLR 4360.

CHAPTER 18

Breach of contract claims between employers and employees involving different jurisdictions

GENERAL INTRODUCTION 18.01 The issue in this tranche of cases is any breach of contract claim which may arise between employer and employee. This would not be limited to claims in relation to, for example, unpaid wages by an employee against an employer but also, for example, cases in which employers seek to enforce post-termination restraints against employees, whether by applying for an injunction or seeking damages. There are numerous issues which may arise in such cases when they have an international context. In all such cases there will be jurisdiction questions concerning: (i) where parties may sue; (ii) where the parties are liable to be sued; and (iii) choice of law issues as to the law governing the contract. 18.02 As to jurisdiction, employees domiciled in EU Member States may only be sued in the state of their domicile by reason of Article  22 of the Brussels Recast Regulation. This is a severely limiting provision. It excludes, for example, the possibility of suing one party in the country of its domicile or under, for example, one of the Article  7 provisions and then adding the employee as an additional defendant under Article 8. This is because the employment provisions in the Brussels Recast Regulation are not expressed to be subject to Article 8. 18.03 EU-domiciled employers may, of course, be sued in the state of their domicile. But Article 21 provides that employers, whether domiciled in the EU or not, may also be sued in the courts of the place where an employee habitually works or, if the employee does not work in one country, the courts of the place where the business which engaged the employee was situated. 18.04 In addition, where a non-EU domiciled employer has a branch, agency or other establishment in an EU Member State and the dispute arises out of the operation of that branch etc, then the employer entity is deemed to be domiciled in that state. For example, one might have a Canadian company which has a 421

18.05  Breach of contract claims between employers and employees involving different jurisdictions

branch office in London. The branch is still a part of the Canadian entity: it is not a separate company incorporated in England. If a dispute arose from the operations of that branch because, for example, it took a decision affecting the employee, then the Canadian entity would – for the purposes of jurisdiction – be deemed to be domiciled in England. 18.05 In the case of non-EU domiciled employers, they may be sued in the place where the employee habitually works under Article  21 of the Brussels Recast Regulation. That aside, the right to sue them will be governed by domestic law. There are two elements to this. One is that an employer, for example domiciled in the US, may be sued in England if it is present in the jurisdiction and so can be served in England. In the case of foreign companies, that may be achieved as a result of it registering particulars under the Companies Act 2006 (ss 1046 and 1056) which require it to identify details of persons who can be served with proceedings. Where the company is present and carries on business within the jurisdiction, process may be served on a person holding a senior position within the company1. The other issue is that the employer may be sued out of the jurisdiction if the employee’s claim falls within the CPR Part 6 or – if necessary – one of the CPR PD 6B gateways, and England is the forum conveniens. The starting point is CPR 6.33(2)(b)(iii), which provides that a claimant may serve out if no proceedings between the parties are pending in the courts of another Member State and the defendant is ‘an employer and party to a contract of employment within article 20 of the Judgments Regulation’. That is a very broad power and is based on the mere fact that the defendant is the employer. It will be interesting to see whether an equivalent provision will make its way into the CPR once the UK has left the EU. 18.06 If such a provision is not introduced post-Brexit, and if it were necessary to look beyond that provision, then it seems that the relevant provisions dealing with serving a non-EU party out of the jurisdiction would be those parts of CPR PD 6B dealing with contract. This would confer jurisdiction where the contract was made within the jurisdiction or is governed by English law or has an English choice of jurisdiction clause or that a breach of contract has occurred or may occur in England. It will be necessary also to show that England is the appropriate forum in the Spiliada v Cansulex2 sense. 18.07 In this context, where the court has jurisdiction over one defendant, it is possible to use the fact of that jurisdiction to bring a claim against another nonEU domiciled defendant under the ‘necessary or proper’ party provisions of CPR PD 6B, para 3.1(3). 18.08 Turning to choice of law, there may, in particular in the context of post-termination restraints, be public policy considerations in the light of the decision in Duarte v Black & Decker Corpn3 that domestic principles of 1 CPR 6.5(3)(b). 2 [1987] AC 460. 3 [2007] EWHC 2720 (QB), [2008] 1 All ER (Comm) 401.

422

Case studies 18.12

restraint of trade are matters of public policy. This means that, even if the clause is enforceable under its governing law, if it is unenforceable under English law, it may not be enforced in England.

CASE STUDIES Case 1 18.09 An English-domiciled employee working for an Italian-domiciled employer in England under a contract governed by Italian law wishes to sue for unpaid wages and wants to bring the claim in England. 18.10 This case is governed by the Brussels Recast Regulation. Whilst the employer is domiciled in Italy and would no doubt prefer to be sued in that country, the employee can bring the claim in England because that is the place where the employee habitually works. Whether the claim succeeds or fails will be governed by Italian law.

Case 2 18.11 The same facts as Case 1 above, but the English-domiciled employee habitually works in Denmark. 18.12 In this case, the employee will struggle to sue before the English court because: (i) the employer is domiciled in Italy; and (ii) the employee habitually works in Denmark. That appears to mean that the claim can only be brought in Italy or Denmark. An example of this is Powell v OMV  Exploration & Production Ltd4. In that case, the employer was domiciled in Austria and the employee habitually worked in Dubai, albeit he lived in England. It was held that the employee could not bring the claim (in that case for unfair dismissal) before the English tribunal. It did not matter that the employee occasionally worked in England, because the test was habitual work.

4 [2014] ICR 63.

423

18.13  Breach of contract claims between employers and employees involving different jurisdictions

Case 3 18.13 In this instance, the employee works in England for an employer domiciled in California, pursuant to a contract governed by Californian  law, and wishes to sue for breach of contract. 18.14 The English court has jurisdiction because of Article 21: the employee habitually works in England. It seems that the employee can serve the employer out of the jurisdiction pursuant to CPR 6.33(2)(b)(ii). Service out does not require permission in that case. An example of the employee’s ability to serve out of the jurisdiction on, in that case, a US-domiciled employer is shown by Petter v EMC Europe Ltd5. The law governing the contract would be Californian law.

Case 4 18.15 A  German-domiciled-individual (the claimant) is negotiating terms of employment with a Japanese-domiciled company. Before the contract is signed, the individual commences work in the hope and expectation that the agreement will be signed – and also in the hope and expectation of being able to demonstrate the ability to do the job well and as a result of that seek to improve the terms on offer. The role is a sales position where the individual will sell goods across the globe. The Japanese company has an office in London, from where the individual is provided with a desk and secretarial support. Negotiations drag. No contract of employment is ever signed. After six months, the individual has not been paid any remuneration despite carrying out some work, and is told to leave immediately. The individual wishes to sue the Japanese company in England for unpaid wages (whether as a debt or breach of contract), restitution in the form of payment for services provided in the alternative and claim for wrongful dismissal. Can the individual bring the claim before the English courts? 18.16 The first question is whether and, if so, how, the English court could have jurisdiction over the Japanese defendant. On the face of it, the prospective defendant is domiciled outside the EU and so, in the ordinary way, one would think that jurisdiction would be governed by domestic law. Is there a way around this? Part of the claimant’s claim may be to suggest that by working for the 5

424

[2015] EWCA Civ 828, [2015] IRLR 847.

Case studies 18.17

company, even though there was not a signed (or even finally agreed) contract in place, the claimant was in fact employed by the company on the simple basis that there was at least a tacit agreement whereby the individual would perform work for the company and, it would be said, do so in the anticipation of pay. The argument would be that this was all that was required to create a contract of employment. It would reflect the well-recognised reality that there is no requirement for any particular form to create a contract of employment and that this can be done easily and, indeed, on the basis of a tacit or implied agreement, and without the need in every case for a final and concluded agreement: a tacit work-wage bargain is enough. On that basis, the claimant would say that it is at least arguable in the Canada Trust v Stolzenberg sense that there was an employment relationship and that the claimant was an employee. That seems the appropriate test to apply, even when the question in issue is a claim to jurisdiction under the Brussels Recast Regulation: see Benatti v WPP  Holdings Italy Srl6. There might be scope for argument as to whether what the individual was doing was employment or the provision of services, or equally carrying out gratuitous work at the individual’s own behest rather than pursuant to any agreement at all, but rather in the hope that an agreement would arise. In Benatti consideration was given to whether the individual was an employee or acting as a self-employed consultant. The judge held that it was the latter and the Court of Appeal agreed. It was held that employment would be indicated by the provision of services by one party in return for remuneration; that the person providing the services was subject to control of the recipient; and that the person was integrated into the organisational framework of the recipient. There would probably be scope for argument as to all those factors in the instant example and the company would say that the individual was choosing to try to be helpful but not pursuant to any agreement, not subject to control and, unless and until employed, not integrated into the business. See also Holterman Ferho Exploitatie BV v Spies von Bullesheim7. 18.17 If, despite these uncertainties, the individual established that there existed an employment contract, it would mean that the putative employee could invoke Article 21(2) and rely on the rule that an employer not domiciled in a Member State may be sued in the place where the employee habitually works. In this case, the claimant had an office in London but the planned role was global. Where, then, did the claimant habitually work? In Mulox v Geels8, an employee was a Dutch national who lived in France and had an office at his home from which he sold the employer’s products in Germany, Belgium, the Netherlands and Scandinavian countries and for that purpose visited those countries frequently. The case was decided under the Brussels Convention of 1968, and the contract provisions of that Convention focused on the place of performance of the contractual obligation in question. For that reason, one may be cautious about applying Mulox v Geels to an Article 21 case. But the obligation in question was the obligation to work and so the issue to be decided was where was the work undertaken – where was 6 7 8

[2007] EWCA Civ 263, [2007] 1 WLR 2316. [2016] ICR 90. C-125/92 [1994] IRLR 422.

425

18.18  Breach of contract claims between employers and employees involving different jurisdictions

the work actually carried out? Where the employee worked in several countries, it was held to be the place where the employee mainly discharged his obligations to the employer, which was held to be the place where he had his office, to which he returned after each trip to another country where he was selling the company’s products. A  similar conclusion was reached in Rutten v Cross Medical Ltd9. There, the employee had an office in the Netherlands and carried out two thirds of his work in that country but also worked in the UK, Belgium, Germany and the US. The question in that case was where the employee habitually worked (but again for the purposes of the Convention and its contractual provisions) and it was held that the place where the employee habitually worked was where the effective centre of the employee’s working activities was established and from where the essential parts of his duties were performed. In that case the fact that an employee had an office in one place and carried out a substantial portion of his work there meant that it was the place where he habitually carried out his work. These cases would, therefore, lend support to the view in the present example that the claimant habitually worked in London. 18.18 Nogueira v Crewlink Ireland Ltd10 was a case under Article 21. It concerned airline cabin crew. The contract of employment deemed the employee’s work to be carried out in Ireland but described Belgium as the employee’s ‘home base’. The employee sued in Belgium. The Court of Justice noted that although the Convention had not had the equivalent of Article 21 and the specific employment provisions, their drafting was very similar to the contract provisions in the Convention. The place where the employee habitually worked was where the employee in fact performed the essential part of the duties. The ‘home base’ was a significant indicator of where that place was. 18.19 The case has so far been advanced on the basis that the individual was an employee and attempts to rely on the favourable provisions of the Regulation that apply to employees even of employers not domiciled in an EU Member State. But that may be as far as the Regulation can assist in relation to non-Member State defendants if the claimant is not an employee. Whilst there is provision in Article 7(5) to allow a claim to be brought in the place where a branch or agency is situated, that only applies as against persons domiciled in Member States. Hence, one could not bring a claim against a person domiciled in a third country about the operation of a branch or agency situated in a Member State. 18.20 Are there other bases for jurisdiction if the case for being an employee is felt to be too weak? Since the notional other party to the contract is Japanese, the question would be whether there could be a basis to serve out on domestic law principles. The claimant might argue that, even if not an employee, nonetheless work was done for the Japanese entity and that was on the, at least tacitly agreed, basis that the individual would be paid. It might be argued, therefore, that there was at least a contract for services. Could a claim be served out of the jurisdiction to recover pay under the contract for services? The starting point, of course, is 9 [1997] ICR 715. 10 C-168/16 [2018] ICR 344.

426

Case studies 18.22

that the claimant would have to establish that an arguable –or better – case could be made that such a contract existed, on Canada Trust v Stolzenberg principles. It would be contended, unless it were to be suggested that this work was done voluntarily, that there was at least an arguable basis for inferring a contract. The basis for serving out would be CPR PD 6B, para 3.1(6)(a), ie that the contract with the Japanese entity was made within the jurisdiction, or para 3.1(7), ie that the breach was committed within the jurisdiction. Since all the evidence of the work done was located in the UK and perhaps the people with whom the claimant had discussions were based, and the contract was made in England, that would give grounds for saying that England was the appropriate forum. But the better case might be to say that the individual was to be paid in England so the breach – the failure to pay – was committed in England. 18.21 This deals with the claim, whether based on an alleged contract of employment or a contract for services, to recover pay for work done on a contractual basis. It highlights the different routes to jurisdiction and the different procedures. To the extent that the claimant is able to assert employment, the claim could be served without the need for permission under CPR 6.33(2)(b)(iii) on the basis that the defendant is an employer and party to a contract of employment within Article 20 of the Brussels Recast Regulation. But if the case were advanced on the grounds of a contract for services, permission would be required to serve out under CPR 6.36 and CPR PD 6B. Hence, it is important to decide which route to pursue. The key point is that if a party serves a claim, believing, for example, that Article 21 is the route to enable the claim to be served, but it transpires that this belief is incorrect, service in that manner, ie without permission, will not be effective for the purposes of a claim based on a different cause of action, such as a claim based on a contract for services. 18.22 The alternative claim alluded to in the example is a claim in restitution. That claim essentially says that the claimant has conferred benefits on the defendant which it has accepted, and which gives rise to an obligation to pay. This is a further example of how a claimant needs to identify and articulate a cause of action. For the purposes of this claim, the claimant would not be asserting a contract of employment or a contract at all. Is there a case for saying that the benevolent provisions of Articles 20–23 of the Brussels Recast Regulation could extend to include a claim in restitution? It appears doubtful that this could be correct, because those articles are based on the existence of a contract of employment: ‘matters relating to a contract of employment’. There is one argument that could be made, but it is a stretch. In Profit Investment Sim SpA v Ossi11, the Court of Justice held that a claim for the annulment of a contract and restitution of sums paid under the contract was a matter relating to a contract for the purposes of Article 7 of the Brussels Recast Regulation. Could this mean that a claim for restitution for the value of services provided in anticipation of a contract of employment was similarly related to a contract of employment so as to fall within Articles 20–23? It seems doubtful for two reasons: (i) it would still have to be established that the contract in question was – or at least that the 11

[2016] 1 WLR 3832.

427

18.23  Breach of contract claims between employers and employees involving different jurisdictions

better argument is that it was – a contract of employment; (ii) the other, more substantial, reason is that in Profit Investment Sim there was no doubt that there was a contract. A party was seeking to annul the contract and to obtain a remedy, but that which it sought to annul was a contract. For that reason, one can see why the court found that the claim related to a contract. But here, on this analysis, no contract exists and it is difficult to see how a claim whose basis is the lack of a contract can be said to be a claim relating to (any) contract, whether a contract of employment or otherwise. 18.23 On that basis, the ability to bring the restitutionary claim must be determined by domestic law and the CPR PD  6B, since the putative defendant is domiciled in Japan. There are several potentially relevant gateways. Paragraph 16 of the Practice Direction deals specifically with claims in restitution and applies where the defendant’s liability arises from acts committed within the jurisdiction or where the enrichment is obtained within the jurisdiction. Both would seem to be the case here. The acts said to give rise to the unjust enrichment are the things the individual does (principally) in England. The enrichment is received in England because it is in England that the recipient company is better off as a result. Whilst it might be said that the ultimate beneficiary inured to the Japanese company in Japan, the argument would be that this was the indirect benefit, and the real and substantive benefit was received in England even if that was later passed down the line to Japan. 18.24 A further possibility, in particular if the claimant sued alleging a contract for services and its breach would be CPR PD  6B, para  4A – a claim is made against a defendant under, amongst others, paras (6) or (16), and a further claim is brought against the same defendant arising from the same or closely connected facts. Now, in our example, there are arguable bases both for a contract and a restitution claim so engaging both paras 6 and 16. But the effect of para 4A is that a claim under one is enough to enable another claim arising from the same facts to be formulated. 18.25 So much for jurisdiction. The question then arises what law should apply. That involves considering potentially three issues: the contract of employment; the contract for services; and the restitutionary claim. As to both contractual arguments, the difficulty here is that there is no expressly agreed contract. Whether a contract of employment or a contract for services, the contract is one to be inferred from the circumstances. In that situation, not only is there no express choice of law, but also it is not easy to say that a choice is demonstrated by the terms of the contract – of which there are very few beyond the imputed agreement to work or provide services for pay – or the circumstances of the case. The latter means of ascertaining the governing law has been said to be to look for an implied choice of law. This is not easy when the whole contract is implied. If what is to be inferred is an employment contract, then by Article 8 of the Brussels Recast Regulation the governing law is that of the place where the employee habitually works. As suggested above, in this case that appears to mean England. If this is a contract for services, Article 4(1)(b) says that the governing 428

Case studies 18.29

law is that of the place where the service provider is habitually resident. That, too, points towards English law. For this reason it seems likely that the governing law would be taken to be English law, either on the basis that the individual habitually works in England or on the basis that, as service provider, the claimant is habitually resident in England. 18.26 Once the governing law for the contract claim is identified, it provides a key to unlock many of the problems. It is English law which will decide whether there was a contract at all – whether an agreement is to be inferred from the circumstances – and what the nature of the contract is, whether an employment contract or a contract for services. It will then also be English law which decides what terms, if any, should be implied as to payment for the work done or services provided. 18.27 So far as the restitutionary claim is concerned, there appear to be two possibilities under Article  10 of the Rome II  Regulation. Where the unjust enrichment arises from a relationship between the parties, the governing law is that which governs the relationship. Unfortunately, that leads to a difficulty: if one gets into the claim in restitution because there is no contract, then it will be difficult to say that the claim arises from that relationship. Choice of law based on habitual residence would not apply where the parties are located in different countries. That leaves the law of the country in which the unjust enrichment takes place which would probably be England.

Case 5 18.28 An English-domiciled employee is employed by a French-domiciled employer to work solely in Germany. The employee is summarily dismissed and wishes to sue for wrongful dismissal. 18.29 In this example there is no doubt there is an employment contract and the prospective defendant is domiciled in the EU so that the Brussels Recast Regulation applies. The employee could sue the employer in France, being the state of its domicile, or in Germany, being the place where the employee habitually works. But it does not seem that there is a basis on which the employee can sue in England since that is neither the employer’s domicile not the place where the employee works. This reflects the decision in Powell v OMV Exploration & Production Ltd12, referred to in Case 2 above, in which an English employee was employed by an Austrian-domiciled company to work in Dubai. It was held that the employer could be sued in Austria by reason of its domicile but that because 12 [2014] ICR 63.

429

18.30  Breach of contract claims between employers and employees involving different jurisdictions

the employee did not habitually work in England, the employer could not be sued in England. Nor, since the employee did not habitually work in any other EU Member State, could a claim be brought in any other Member State. This is an important recognition of the reality, harsh as it will seem to some, that English-domiciled employees may not be able to sue in their home courts or tribunals.

Case 6 18.30 The same facts as Case 5 above but the contract contains an English choice of jurisdiction clause 18.31 The jurisdiction clause would be likely to enable the employee to sue in England. Whilst, under Article 23 of the Brussels Recast Regulation, choice of jurisdiction clauses are generally not effective unless agreed after the dispute has arisen, that is not the case where the clause allows an employee to bring proceedings in courts other than those indicated in Articles 20–22. Under those articles, the employee would be able to sue in France or Germany. The effect of the clause is to enable the employee to sue in a wider range of places than that of the employer’s domicile or the place where the employee habitually works. Hence, it is strongly arguable that effect would be given to that clause in the employee’s favour because it permits claims to be brought in additional places, thus enabling the employee to sue in England. In that event, it does not matter that the clause was agreed before the dispute arose. 18.32 It would then be necessary to consider what law would govern the claim. There is no suggestion in this example that the parties have expressly chosen governing law. In circumstances where the parties are of different domiciles but the employee is employed to work in Germany, there might be a case for saying that the terms carry with them an implied choice of German law. But even if there were no such implied choice, under Article 8, the governing law would be the law of the place where the employee habitually worked, namely German law.

Case 7 18.33 The case of the English-domiciled employee is as in Case 5 but the employer is domiciled in the US. One can consider the case with and without a jurisdiction clause. 430

Case studies 18.38

18.34 This is the same case as that outlined in Case 5 but in this example the employer is not domiciled in an EU Member State but is outside the EU, in the US. The employee cannot rely on Article 21 of the Brussels Recast Regulation to sue in England because the place where the employee habitually works is Germany. In those circumstances, it seems that domestic principles apply. It is assumed that the US-based employer is not present in England and thus cannot be served in England. The question then becomes whether it can be served out of the jurisdiction, in the US or some other country when the Brussels Recast Regulation does not apply. The answer appears again to be CPR 6.33(2)(b)(iii), even though the employer is based in the US. In those circumstances the employee may not need the choice of jurisdiction clause, but to the extent that that enables the employee to sue in a wider range of fora than Article 23, it would be respected.

Case 8 18.35 An employer domiciled in the UK wishes to sue a French-domiciled employee who works solely in the UK for injunctive relief to restrain breach of a post-termination restraint in an employment contract, and also a German-domiciled company for which the employee wishes to work in breach of the term and by which the employee has been induced to breach the term. 18.36 Here one has two potential defendants – an employee and a company for which the employee proposes to work. So far as the employee is concerned, this is a claim relating to a contract of employment; it seeks to enforce a contractual term. This means that, according to Article 22 of the Brussels Recast Regulation, the employee may only be sued in the courts of the employee’s domicile, in this example, France. 18.37 It makes no difference that the employer might also wish to sue the German-domiciled employer for inducing breach of contract. The claim against the new employer would be in tort for inducing the employee to act in breach of contract. To the extent that the claimant company suffers harm in England or the act of inducement takes place in England, that would mean that the new employer could be brought before the English court. 18.38 However, the fact that the English employer could sue the German new employer before the English court would not enable the English employer to add the employee as a defendant on the ground that the claim against the two are so closely connected that it would be expedient to hear them together. The reason for this is that Articles 20–23 are not subject to Article 8, save in relation 431

18.39  Breach of contract claims between employers and employees involving different jurisdictions

to proceedings brought against an employer. That means that it is not open to an employer suing an employee to seek to depart from the rule that the employee can only be sued in the state of the employee’s domicile by relying on Article 8. 18.39 The employer has a tactical decision to make about where to proceed first. The risk is that it would be said if the employee was sued in France and the new employer in England that these were related actions for the purposes of Article 30. If the employer sues the employee in France first, that could lead the German employer to invite the English court to stay its proceedings pending the determination of the – it would be said, related – proceedings in France. The English court would not have to do so, of course; Article 30 is permissive, but there is a risk that it might. The employer might be better off, therefore to sue the new employer in England first so that that is the court first seised and then it would hope that the French court would stay the claim before it.

Case 9 18.40 The same facts as Case 8 above but the employee has sued the employer in England for a bonus which has been withheld due to the employee acting in breach of the post-termination restraint and that claim has been brought in the English court. 18.41 In this situation the employer would be able to respond to the employee’s claim by suing for an injunction to restrain the employee acting in breach of the post-termination restraint in the English court. The reason for this is that Article  22(2) provides that the provisions of Articles  20–23 of the Brussels Recast Regulation do not affect the right of a party to bring a counterclaim in the court in which the original proceedings are pending. Therefore if the original proceedings are the employee’s breach of contract claim and that claim is brought in England, the employer would be able to counterclaim for an injunction in the same court.

Case 10 18.42 An employer domiciled in Baltimore seeks to sue in England a former employee domiciled in Kansas who works for the employer in England in order to seek an injunction to enforce a non-compete clause which the former employee threatens to breach by working for a competing employer in England. The proceedings are contemplated in England because England is where the threatened unlawful act will be committed. 432

Case studies 18.45

The contract is governed by the law of Baltimore according to which it is valid and enforceable. There may also be a question of suing the new employer. 18.43 The first question, so far as the employee is concerned, is whether the English court has jurisdiction in a dispute between two US-domiciled parties. That turns on the question whether the court can have jurisdiction over the Kansas-domiciled employee so as to enable proceedings to be served on that employee. Article 22 of the Brussels Recast Regulation does not apply, because that limits employers to proceeding ‘in the courts of the Member State in which the employee is domiciled’, and this employee is not domiciled in a Member State. (Post-Brexit, the provision limiting where employees may be sued will only apply to UK-domiciled employees.) 18.44 Hence, one focuses on domestic law. Can our Baltimore employer serve out on a Kansas-domiciled employee to enable a claim in England? It seems that there are two jurisdictional bases under CPR PD 6B: (i) that the employee is threatening to act in breach of contract within the jurisdiction: it is the threatened work for a competitor which will constitute the breach and that is proposed to take place in England: CPR PD  6B, para 3.1(7); (ii) that the employer seeks an injunction to restrain the employee from doing things in England: that which it is sought to enjoin is working in England for a competitor in that jurisdiction: CPR PD 6B, para 3.1(2). The question would then be whether England was the forum conveniens. In circumstances where the activity which the employer seeks to restrain is threatened to take place in England and where the employee is based in England, that appears to suggest that England is the most appropriate forum. There may be a question – to which we do not know the answer – whether, for example, the courts in Kansas would hold that they are able to act extra-territorially. It is not clear that the facts of the case can have any links with Kansas or Baltimore, since the area of factual enquiry is the proposed work in England. It can, of course, be said that the governing law is that of Baltimore and that might weigh in favour of the courts of Baltimore. 18.45 The law governing the contract is that of Baltimore by which it is valid. But the English judge will have to apply English principles of restraint of trade to decide whether the clause is enforceable according to English law. If it is not, it will be bad as a matter of English public policy, and no injunction will be granted to enforce it: Duarte v Black & Decker Corpn13. It may be thought that that public policy issue, since what is sought to be enjoined is a person working in England, would be a further factor which supported the view that England was the forum conveniens. 13

[2008] 1 All ER (Comm) 401.

433

18.46  Breach of contract claims between employers and employees involving different jurisdictions

18.46 So far as the new employer is concerned, the claim against it would be in tort, for inducing breach of contract. As to jurisdiction, it seems that it could be said that the wrongful act – the inducement to act in breach – would be committed in England such that the English court could have jurisdiction under the tort gateway of CPR PD 6B, para 3.1(9). The same question of forum conveniens would then arise. 18.47 As to the governing law, that would be the law of the place where damage would be suffered. It is probable that this would be Baltimore unless the employer has a business in England which would be harmed.

Case 11 18.48 English-domiciled employees who work all over the world agree together that they will work to rule and decline to carry out all their duties for their US-based employer, which seeks an injunction to restrain their activities and compel them to return to work and carry out all their duties. The contracts of employment do not contain any choice of law. 18.49 Because the employees are – regardless where they work – all domiciled in England, under the Brussels Recast Regulation they may be sued only in England. Whether they have acted in breach will be determined by whatever is the law governing their contracts. In the absence of any express choice, and assuming that no implied choice can reliably be identified, the law governing the contract would be the law of the place where the employee habitually works. Hence, since these employees work all over the world, that could mean that different employees’ contracts are governed by different systems of law. It may be that this would be a factor which caused the court to strive to find an implied choice of law so that the analysis was consistent for all the defendants. 18.50 However, it seems likely that the remedy will be governed by English law or at least that English law would have a role, in particular insofar as the employer seeks an order compelling the employees to return to work. It may be that the law governing the contract is that of some other state. As a matter of common law, judges may not make orders compelling individuals to work for another: see, for example, Evening Standard Co Ltd v Henderson14. This is also reflected in statute15. It seems more than likely that these rules would be regarded as matters of public policy which, regardless of the law governing the contract, would preclude any order being made requiring the employees to go back to work: see Article 21 of the Rome I Regulation.

14 [1987] ICR 588. 15 Trade Union and Labour Relations (Consolidation) Act 1992, s 236.

434

Case studies 18.53

Case 12 18.51 This example is similar to Case 11, save that the employees are domiciled in a number of European countries. The employer alleges that co-ordinated action is being orchestrated from England but wishes to obtain a remedy against all employees. 18.52 The employer in this case faces a difficulty. It can no doubt bring proceedings in England against the employees domiciled in England in relation to their part in the co-ordinated activity based solely on their domicile in England. But as against the others it seems likely that the cause of action against them relates to their contracts of employment and for that reason the employees may only be sued in their state of domicile. In particular, it is not open to the employer to say that those domiciled in other European countries are defendants who should be joined to the claim against the English-domiciled employees, because Article 8 of the Brussels Recast Regulation does not apply to claims against employees. 18.53 There may, however, be an additional argument. No doubt the employer’s principal focus is on the employees who are orchestrating the action. There may be an argument that a claim can be brought against them not for breach of their own contracts of employment but in tort, on the basis that they are encouraging other employees to act in breach of their contractual duties to their employer. On that basis it seems arguable that where one English-domiciled employee was brought before the English court – whether for breach of contract or being an organiser of such breaches – Article 8 would permit the addition of defendants based in other countries who were sued in tort for their role in orchestrating the breaches by other individuals. This gives rise to the knotty question which has arisen in other contexts – for example, Arcadia Petroleum v Bosworth – whether one can formulate a claim in such a way that the jurisdiction rules which apply are not those applicable in respect of matters relating to contracts of employment. What might be in issue in this example is the ability of the employer to formulate a case focused solely on the ring-leaders and ignoring those who are induced, to say that this is purely a tort claim: inducing others to breach their contracts. If so, then the courts of the place both where the wrongful acts are committed and where damage is felt would have jurisdiction. The claimant says that the action is being orchestrated in England, so as to fall within the first part of the test. The governing law would then be that of the place where damage is suffered.

435

18.54  Breach of contract claims between employers and employees involving different jurisdictions

Case 13 18.54 An English-domiciled employee who works in England for a Dutchdomiciled employer wishes to apply for declaratory relief to hold that the post-termination restraints in the employee’s contract are unenforceable. 18.55 In this case the employee habitually works in England. It would be open to the employee to sue for such relief in England under Article 21 of the Brussels Recast Regulation. The question of enforceability would be governed by the law applicable to the contract, but subject always to the view of English law in relation to restraint of trade as a matter of public policy.

Case 14 18.56 The same facts as Case 13 above but the employer is domiciled in Louisiana. In this case, the contract is governed by the law of Louisiana. 18.57 The first question here is whether the employee can sue the employer in England. For the present, it seems that the basis for jurisdiction is CPR 6.33(2) (b)(iii) – that the opposing party is an employer under a contract of employment. As noted above, there is a cause for caution in relying on this provision in the case of non-EU employers and in any event post-Brexit it may be necessary to identify other bases for claiming jurisdiction. One could be that, if the employee proposed to act contrary to the post-termination restraint in England, there would be a breach, or at least a threatened breach, in England. Once again the decision as to enforceability would be a matter for the governing law but subject to the oversight of English law on the basis of public policy, which would be capable of rendering unenforceable a clause enforceable by the law governing the contract.

Case 15 18.58 An employer domiciled in Germany operates throughout Europe but its main place of business is in France. It employs an English-domiciled employee to work across Europe. The employee’s work is in several 436

Case studies 18.61

countries which include but are not limited to England. The employer makes deductions from the employee’s pay and the employee wishes to sue in England. Can that claim be brought in England? 18.59 This case is concerned with where an EU-domiciled employer may be sued. Being domiciled in Germany, it can of course be sued there. The employee could sue in England but only if that was where the employee habitually worked. On the facts of this example, that is not the case. If it were possible to identify a place which was the effective centre of the employee’s working activities, that might help identify the place where the employee habitually works, per Rutten v Cross Medical16. In that case, the employee spent two-thirds of his time in The Netherlands and had an office there. But matters may be harder in the case of a genuinely peripatetic employee: such a person may not habitually work anywhere. But in that case, Article 21 allows the employee to sue in the place where the employee last worked. If the situation is one in which the employee does not habitually work in any one country, the employer may be sued in the place in which the business is situated. In this example that is France, because the employer has decided to run its trans-Europe operations from France. What matters to the employee in this example is that the place of habitual work was not England and so that meant that the power to sue in that place was not available to the claimant. Moreover the other provisions dealing with the situation in which the employee does not have a place of habitual work may not save the employee, as their focus is the place where the business was situated. The employee would be better off if it were possible to say, even if there is not at present a place of habitual work, that the employee did formerly work habitually in one place. In that event, jurisdiction would be conferred on the courts of that place. But life is harder for the truly peripatetic employee.

Case 16 18.60 A  US-domiciled employer wishes to sue a New York-domiciled employee, employed under a contract governed by the law of New York and containing a worldwide non-compete clause. The employee threatens to act in breach by working for a competitor in England. Can the employer sue for an injunction in England? 18.61 Article  21 of the Brussels Recast Regulation does not apply, because this employee is not domiciled in an EU  Member State. As a non-EU domiciled defendant, one therefore looks to domestic law for the answer. It seems that the employer could demonstrate the existence of a jurisdictional gateway, as the employee threatens to act in breach of contract in England. Thus there 16 [1997] ICR 715.

437

18.62  Breach of contract claims between employers and employees involving different jurisdictions

is a threatened breach in the jurisdiction. The question is whether England is the appropriate forum. Here there is a potential conundrum. It can be said that all the connecting factors – save for the place of breach – are outside England. The parties are US domiciled and the contract is governed by US law. The only link to England is the possible breach, which might happen in England. Would the English court consider that it was the forum conveniens on the basis that English law of restraint of trade might apply as a matter of public policy? Should the English court claim jurisdiction so that it can, in essence, police the extent to which those who wish to conduct their trade in this jurisdiction should be free to do so? It seems possible that the English court would say that since the employee proposes to work in England and since the attempt to prevent that engages English restraint of trade principles, those factors suggest that England is the appropriate forum.

Case 17 18.62

A dispute arises between an Italian-domiciled employer and an Englishdomiciled employee concerning pay. The employee habitually works in Italy. The employer begins proceedings in Italy for a declaration that it does not owe certain sums to the employee. The employee commences a claim for payment in England.

18.63 This example is a little messy, because of the doubtful claims to jurisdiction in both cases. The Italian employer ought not be bringing the claim in Italy because the application for a declaration is a claim against the employee and so should only be brought in England, where the employee is domiciled. It will be for the Italian court to deal with the jurisdictional bar. It is not open to the employee to seek an anti-suit injunction to restrain the employer acting in Italy, because that remedy is not available in Brussels Recast Regulation cases: see Turner v Grovit. Hence, the employee must wait and either be sued in the correct jurisdiction or not be sued at all, and that depends on matters being resolved in Italy. The employee must be careful, of course, not to do anything which could amount to submission to the Italian court. Meanwhile the English court has no jurisdiction over the employee’s claim. Since the employer is domiciled in Italy and the employee habitually works there, the claim can only be brought in Italy. For that reason, the English court should decline jurisdiction. It does not seem that CPR 6.33 can save the employee, as the claim is not one over which the court could have jurisdiction under the Brussels Recast Regulation (and thus neither under the Civil Jurisdiction and Judgments Act 1982). If the Italian employer was forced to bring its claim for a declaration in England, the employee could counterclaim in those proceedings. 438

Case studies 18.65

Case 18 18.64 The same facts as Case 17 above but the employee habitually works in England. 18.65 In this case what matters is the order in which the parties took action. Whilst the employer’s claim ought not to have been commenced in Italy, that is nonetheless what has happened. In this example the English court has jurisdiction over the employee’s claim because the employee habitually works in England. The problem is that, since both claims involve the same parties and the same cause of action, there is a lis alibi pendens and the English court, as the secondseised court, must stay the claim before it. The English court is not entitled to investigate the claim to jurisdiction of the court first seised. That is a matter solely for it (save in exclusive jurisdiction cases, of which this is not one). That is established by Overseas Union Insurance Ltd v New Hampshire Insurance Co17. This means that even though it is obvious that the Italian court lacks jurisdiction, because the claim is against the employee and should therefore be brought where the employee is domiciled, it is not for the English court to take that point and it is bound to stay the case before it, at least until the Italian court recognises the employer’s error.

17 [1992] QB 434.

439

CHAPTER 19

Employment tribunal claims involving foreign employers and related parties

GENERAL INTRODUCTION 19.01 This is an important and, as suggested in Chapter  14, misunderstood topic. It appears to be the case in practice that tribunals will serve claims on respondents no matter where in the world they are based. A claimant who names an employer or other respondent anywhere in the world will expect the tribunal to serve a claim on that party and in practice it will do so without requiring the claimant ever to justify that course. Even making that statement makes one realise what a breathtaking claim to jurisdiction this is. Rather than being subject to any rules about when the tribunal can serve out of the jurisdiction, it just does so routinely. The contrast with the High Court’s position is stark. Claim forms are marked ‘not to be served out of the jurisdiction’ and a person who wishes to serve a claim on a defendant abroad must first get the permission of the court. As noted in Chapter 3, that will involve first identifying a jurisdictional gateway through which a party can pass and then showing that England is the appropriate forum for bringing the case. No claimant in the tribunal is ever asked these questions. Why is that and does it mean that something is missing? To the extent that any thought it is given to the question whether a claim should be served on a prospective respondent abroad, the answer given would usually be that the power to serve out derives from the Employment Tribunals (Constitution and Rules of Procedure) Regulations 20131 (the Rules of Procedure), Schedule 1, r 8. To the extent that this point is ever considered at all – and bearing in mind that the service of claims by tribunals is more of an administrative than a legal act – those rules are interpreted to mean that if the employer or indeed any one of the respondents to a claim resides or carries on business in England or Wales (or, for the Scottish tribunal, Scotland) then regardless where the respondent is domiciled, the tribunal has jurisdiction and is able to serve the claim. This is key because it means that one could, if this approach to the rules is correct, have a claim against a UK-domiciled employer and because that is a respondent which carries on business in England then the claimant can sue any other respondent, no matter where based, in reliance on the place of business of one respondent. Or, raising the stakes for the employer, one could have a situation in which, for example, an individual who lives in England is sued and it is alleged that person has acted as agent for an employer based no matter where. But, so the argument 1 SI 2013/1237.

441

19.02  Employment tribunal claims involving foreign employers and related parties

runs, once one respondent resides or carries on business in England, then the claimant can sue any other respondent, wherever that person may be. 19.02 The more reliable basis for claiming jurisdiction is that the employee habitually works in England and Wales. However, as the numerous cases on the territorial scope of legislation show, it is not always the case that the employee habitually works in England; and it is in those situations that employers may be better placed to take jurisdictional points. Yet even in those cases, as long as the matter can, to the extent anyone thinks about it, be squeezed into r 8, the tribunal may think it has jurisdiction. 19.03 The reality is that parties have not in truth engaged with jurisdiction issues more urgently. This may be a basis on which respondents could be criticised, the point being that there may be more cases in which a respondent could, to advantage, take a point about jurisdiction, but they seem often not to do so. This is said not on the basis of knowledge as to how frequently employers do take jurisdiction points, but merely because there is a very small number of appellate cases dealing with the issue, and that tends to suggest that the point is not argued frequently. It is suggested that, if jurisdiction arguments were run, there are potentially more cases in which would-be respondents could challenge tribunals’ claim to international jurisdiction. One set of situations in which this may be particularly relevant is the case in which an employee seeks to sue not just the employer but also third parties who are said to have done things as agent for the employer. Take the well-known case of Timis v Osipov2. In that case an employee sued an employer but also senior managers within the employer who took the decision that the employee’s employment should be terminated. In the event, since the employer became insolvent and the managers were insured, those were the only claims of value. It does not appear that there were any conflict of law issues in that case. But it is no stretch to imagine a case in which there might be, for instance a case in which an employee is dismissed at the behest of a foreignbased parent company or foreign-domiciled directors of that company. The employee might wish to say that the dismissal was on grounds of, for example, having made a protected disclosure, as in Osipov, and claim against the overseas company and directors who might be said to be the decision-makers as agents of the employer. The argument might be that whilst the decision to dismiss was the employer’s, the others involved subjected the claimant to a detriment by deciding or recommending the dismissal. That gives rise to grounds for a claim against the decision-makers. It may be that those parties – none of whom are the employer – would be better placed to bring jurisdiction challenges. As things stand, the employee would say that it has a claim against perhaps three or four respondents. Applying r 8, the claimant says that one of those respondents resides or carries on business in England and, on that basis, the tribunal has jurisdiction over all respondents, even those domiciled abroad. As against the employer, of course, domicile is not key. Employees can bring claims in the place where they habitually work. But here is the key point so far as other potential respondents are concerned. The right to bring claims in the place where the employee habitually 2

442

[2018] EWCA Civ 2321, [2019] ICR 655.

General introduction 19.07

works applies only to claims against their employer. Article 21 of the Brussels Recast Regulation states ‘an employer … may be sued’. But the agent in this example is not the employer and so the jurisdiction given by Article  21 does not, on the face of it, apply to claims concerning employment but not brought against this employer. There is, perhaps, one tension which may need hereafter to be resolved: Article 20 states that the section applies to ‘matters relating to individual contracts of employment’. One could readily say that a claim against someone alleged to be the employer’s agent was a matter relating to employment. But if it is correct that Article  21 is concerned only with claims against the employer, that is a potential limit to the scope of Article 20. 19.04 Chapter 14 sets out a suggested approach to conflict of laws issues arising in the employment tribunal, so that is not repeated here in detail. But it is worth, by way of an introduction to the examples which follow, setting out a few key points. 19.05 In any employment tribunal case, there are or may be three jurisdiction questions: (i) does the tribunal have territorial jurisdiction over the respondent? (ii) may the claim be brought in the tribunal or should it be in the High Court? and (iii) does the legislation on which the claimant relies extend to the circumstances of the case in a situation where the events do not take place in, or solely in, the UK (ie what is the territorial scope of the legislation)? The present concern is with the first and third questions since they are the questions which raise issues relevant to territorial scope. 19.06 As to the first question, international jurisdiction, the starting point is the Brussels Recast Regulation. UK incorporated employers may be sued in England solely on the basis of domicile. But wherever an employer – and, for the reasons set out above, employer is emphasised, rather than any other party – is domiciled, the employee can sue in the UK if the employee habitually works in the UK. Thus, an employee who habitually works in England may sue the employer in England regardless of where the employer is domiciled and whether that is in an EU Member State or not. This is the single most important jurisdiction rule. In many cases (except, as indicated above, the case of claims against those who are not the employer) this will be determinative. 19.07 The real issue and area of contention arises where a claim is brought against a respondent because another respondent carries on business within England. This is said to mean, in accordance with r 8, that regardless of where the employee habitually works or the respondent’s domicile, that respondent may be sued in England. This is, as indicated above, thought to be a principal basis on which employment tribunals would assert the ability to claim jurisdiction. If this is a ground for jurisdiction, it would enable a party who does not habitually work 443

19.08  Employment tribunal claims involving foreign employers and related parties

in the UK to say that a non-UK domiciled respondent can be sued in England merely because it conducts business in England – adding a basis for jurisdiction to that found in the Brussels Recast Regulation. But matters go further than that. The claimant, whether or not habitually working in England, can, if this basis for jurisdiction is correct, not only sue a party who carries on business in England but also any other respondent, wherever based and regardless of the lack of any connection with England, simply because the claimant has been able to identify one respondent in England. These, in the author’s view, are cases which give rise to serious questions as to the tribunal’s jurisdiction and in truth create very difficult questions as to whether the tribunal can indeed have jurisdiction over respondents who are not the employer and who are not domiciled in the UK. 19.08 It is worth briefly repeating why it is suggested that the answer to the jurisdiction question is not to be found in the Rules of Procedure and why, therefore, that analysis does not appear in the examples which follow. A study of the Rules of Procedure leads to the conclusion that all the Rules of Procedure do is to determine in which tribunal (ie  England and Wales, or Scotland) a claim should proceed, and they do not confer international jurisdiction. This is, therefore, solely about the allocation of claims within the UK on the assumption that the UK tribunal has jurisdiction. In Jackson v Ghost Ltd3 it was said that the relevant rule does not confer jurisdiction on the tribunal but merely determines where, if the tribunal has jurisdiction, the case should be heard. Thus the basis for jurisdiction is to be found elsewhere. This also reflects the fact that section 7 of the Employment Tribunals Act 1996, which empowers the making of the Rules of Procedure, does not refer to making rules to say when the tribunal has jurisdiction. Moreover, the Rules themselves appear to anticipate that the tribunal has jurisdiction derived from some other – unidentified – source. 19.09 For these reasons, in none of the examples below is reliance placed on the Rules of Procedure. It would, in the author’s view, be wrong to do so, even though it will be plain in many cases that the answers would be different if one could rely on the Rules of Procedure. That said, as explained in Chapter 14, this is an area in which there is scant authority so it will no doubt be the case that future judicial decisions will shed light on the point. There is a theoretical possibility, it might be supposed, that later appellate courts will rely on the Rules of Procedure, though for the reasons given in Chapter 14, it is suggested, with all due respect, that this would be wrong. 19.10 Thus the starting point for the employment tribunal’s international jurisdiction is the Brussels Recast Regulation. If that Regulation confers jurisdiction, then the tribunal can hear the claim, whatever claim it is. If it does not, then the question of jurisdiction is more difficult. There is a difficult and unresolved question about the extent to which a tribunal could have international jurisdiction over defendants not domiciled in EU Member States and where the employee does not habitually work in the UK. Is there any legal basis for international jurisdiction outside the Brussels Recast Regulation, in the same way that the CPR 3

444

[2003] IRLR 824 at para 79.

General introduction 19.11

is capable of conferring jurisdiction in cases to which the Regulation does not apply? This is an important question which has not been fully considered in any authority. It requires urgent examination by the courts, not least because many employment cases raise matters of great importance insofar as they touch on, for example, issues of equality of treatment. Discrimination claims are, therefore, sometimes regarded as being of significance beyond the parties to the particular case. There will no doubt in practice be a desire to ensure that such cases may be brought before the tribunal rather than leaving claimants to fall back on other legal systems which may provide no, or what is perceived as lesser, protection. However, the legal reality is that, unless a respondent is someone over whom the tribunal has international jurisdiction, no claim can be brought at all. Logically, the answer to the question whether the tribunal has jurisdiction is unrelated to the question of the either the merits of the case or the concern of a domestic court that the claim should be heard. 19.11 Aside from questions of international jurisdiction which mirror those which arise in any court, in the employment tribunal questions also arise as to the scope or extent of the legislation on which a party relies to bring a claim. Herein lies the problem. As now drafted, the employment legislation does not, for the most part, contain any indication of its geographical scope beyond saying that the legislation ‘extends to’ England and Wales and Scotland. This simply means that it is part of the law of Great Britain and not, for example, part of the law of Northern Ireland. It does not assist in determining the geographical reach of the legislation in the sense of prescribing the categories of case to which it applies. The Employment Rights Act formerly contained a provision which said that it did not apply to any employment where the employee ordinarily worked outside the UK. That gave rise to a debate in the cases as to whether the reference to work ‘under the contract of employment’ required a focus on the terms of the contract or the practical reality in order to determine where an employee ordinarily worked. But that provision was repealed, meaning that the courts had to fill the gap using ordinary principles of statutory construction to determine whether the legislation had been intended by Parliament to extend to a particular case. It has perhaps proved easier to say what the legislation should not extend to than to identify the cases which it should cover. The (probably) still leading case is Lawson v Serco Ltd4, which involved three appeals, one concerning a supervisor on an RAF base on Ascension Island, another involving a Ministry of Defence employee at military bases in Germany and the third, an employee of an airline based in Hong Kong, who flew around the world but had a base in London. The House of Lords started from the proposition that all legislation is prima facie territorial and Parliament had not intended to create the right for all employees not to be unfairly dismissed. The House of Lords saw attraction in the test ‘employment in Great Britain’ but the problem was giving any meaning to that phrase. Lord Hoffmann identified three categories of case. The standard case was working in Great Britain. It was said that the person in fact working in Great Britain at the time of the events giving rise to the claim would be protected. The focus was on the facts rather than the terms of the contract. No doubt partly 4

[2006] UKHL 3, [2006] ICR 250.

445

19.12  Employment tribunal claims involving foreign employers and related parties

driven by the cases before the House of Lords, Lord Hoffmann then identified two other categories of case: (i) peripatetic employees, ie those who work in different places. They would be caught by the legislation if they were – in fact – based in the UK. Again the focus was on the factual reality and not the terms of the contract but those who had their base in England, even if they also worked elsewhere, were protected. That meant the pilot was entitled to bring his claim; (ii) expatriate employees. It was said that normally an employee working abroad would not be caught by domestic legislation but might be if working for an employer based in Great Britain. The fact that the employee was posted abroad for the purposes of a British business in circumstances where the employee working abroad could be said to be a representative of a British business, such as a foreign correspondent for a British newspaper, would be caught. Or one might have a case in which an expatriate employee was working abroad in ‘an extra-territorial British enclave in a foreign country’. On that basis both the employee of the Ministry of Defence and the RAF employee on Ascension Island were able to bring their claims. 19.12 On the face of it, this decision cast the net of UK employment law quite wide by reference to those two categories of case (peripatetic employees based in England and expatriate employees). But later cases suggested that this might not be the whole picture, and there were other classes of employee who could be protected. So, for example, in Duncombe v Secretary of State for Children, Schools and Families5, Lady Hale put the matter differently. Rather than focus on categories of case – what Lord Hoffmann had tried to articulate as principles – Lady Hale said that ‘the principle is that the employment must have a much stronger connection with Great Britain and British employment law than any other system of law’. Indeed she said, perhaps in contrast to Lord Hoffmann, that it was a mistake to ‘try to torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle’. A  problem with this is that it leads to an approach which Lord Hoffmann sought to avoid and is expressed at such a high level of generality that it is hard to say in any given case what the answer should be. The employees in that case were not treated as being in a British enclave, rather in ‘an international enclave’ and it was said that there was no system of law with which they were connected such that their connection with British law was overwhelmingly stronger. In that case it did not matter that the employees’ case did not fall within either of Lord Hoffmann’s categories. Rather these were exceptional cases where the individuals’ employment was overwhelmingly closer to British law. Important factors included that their contracts were governed by English law and that they did not pay local taxes – evidencing their separation from local systems of law.

5

446

[2011] UKSC 36, [2011] ICR 1312.

Case studies 19.16

19.13 A  similarly broad approach was taken in Ravat v Halliburton Manufacturing and Services Ltd6, a case which did not fall within either of Lord Hoffmann’s examples. It was held that the employee could bring a claim if the employment relationship had a stronger connection with Great Britain than with the foreign country where the employee works.

CASE STUDIES Case 1 19.14 A UK-domiciled employee who works in the UK sues a UK-domiciled employer for unfair dismissal and for subjecting the employee to detriments, in both cases because the employee has made protected disclosures. The employee also seeks to sue US-domiciled companies and individuals as agents who are alleged personally to have inflicted the detriments of which the employee complains, including by taking the decision that the employee should be dismissed. 19.15 This is a claim under the Employment Rights Act 1996. No issue arises as to the territorial scope of the Act: the employee is UK based and so is protected by the Act. Similarly, no issue arises as to the tribunal’s jurisdiction over the employer. It is domiciled in the UK and for that reason alone the English tribunal has jurisdiction. If it were needed (which it is not), the employee also habitually works in England. Thus the case against the employer presents no difficulty. What is in issue in this case is the international jurisdiction of the tribunal in respect of the parties alleged to be agents, all of whom are domiciled outside the UK and indeed outside the EU. This case highlights the questions which arise concerning the jurisdictional limits to which the tribunal is subject. 19.16 According to Simpson v Intralinks the first question is whether the tribunal has jurisdiction over the US-based respondents. None is domiciled in an EU Member State and so none is subject to the Brussels Recast Regulation. Importantly, the US-based respondents are not the employer. The claimant cannot, therefore, rely on Article  21 because that only permits ‘an employer not domiciled in a Member State’ to be sued in the place where the employee habitually works. It does not seem that Article 21 extends beyond claims against the employer. Can it be argued that those who are alleged to have acted as agents of the employer are to be treated as the employer for the purposes of Article 21? It is thought that this would be unlikely, as the agents are not the employer and the Regulation elsewhere refers to agencies but not in this connection. Reliance cannot be placed on CPR 6.33, even if that could be treated as being relevant to 6

[2012] UKSC 1, [2012] ICR 389.

447

19.17  Employment tribunal claims involving foreign employers and related parties

the tribunal, as that applies only where ‘the defendant is an employer’. These additional respondents are not. 19.17 How can the employee bring the agents before the court? Reliance might be placed on the Rules of Procedure. Schedule 1, r 8 provides that a claim may be commenced in England and Wales if the respondent, or one of the respondents, resides or carries on business in England and Wales. On that basis, the employee says that since the employer resides or carries on business in England, therefore it can add any respondent, on the face of it anywhere in the world, to the claim. That shows the extravagant breadth of this claim to jurisdiction, but for the reasons given in Chapter 14, it is thought that this claim is incorrect. The Rules of Procedure determine where, as between England and Wales and Scotland, claims should be started. But they do not confer jurisdiction on the tribunal. That is the effect of Jackson v Ghost7. It also follows from the Employment Tribunals Act 1996, which contains no suggestion that the Rules of Procedure provide for the jurisdiction of the tribunal. Where else can the employee look? Reference might be made to the CPR, but they do not apply to the tribunal and there is nothing in the Rules of Procedure which adopts or applies them, so that seems a dead end, save, as suggested in Chapter 14, for CPR PD 6B, para (20), which allows service out for claims under an enactment. Reliance might also be placed on para (3) – necessary or proper party – but this requires an application to the High Court. 19.18 The position may, therefore, be that there are no grounds on which those whom the employee wishes to sue as agents who are based abroad can be brought into domestic tribunal proceedings. There is no doubt that the claimant can sue the employer – wherever domiciled. The employee can also advance a case that a person whom the employee regards as an agent has done certain things which give rise to liability and claim that the employer is liable for those things and in that way secure a remedy. That, however, would give a remedy only against the employer, not against those alleged to be agents. The grounds for bringing the agent before the tribunal are much harder to spot. This may not be as dramatic as might be feared. Powell v OMV Exploration & Production Ltd8 shows that there are cases involving foreign employers where even a UK-based employee may not be able to sue at all. What the presently identified restriction says is that, largely because of the limitations inherent in the Brussels Recast Regulation, it may not be possible to sue those who are not the employer where the would-be respondents are not domiciled in the UK.

7 [2003] IRLR 824. 8 [2014] ICR 63.

448

Case studies 19.22

Case 2 19.19 The same facts as Case 1 above but the employer is domiciled in the US.

19.20 Under the Brussels Recast Regulation, the position is the same as long as the employee habitually works in the UK. Because of Article 21, an employee who habitually works in the UK is able to sue the employer no matter where domiciled. However, this only works where the employee habitually works in the UK because the connecting factor which gives rise to the ability to sue is the employee’s place of work. Where the employee does not habitually work in the UK, then in any case where the employer is not domiciled in the UK – and whether domiciled not in the UK but in another EU Member State or elsewhere – then the employee will not be able to sue in England. This is simply a limitation which derives from the Brussels Recast Regulation. The position as to those whom the claimant seeks to sue as agents is the same as in Case 1.

Case 3 19.21 The same facts as Case 1 above but with an English-domiciled employer and agents who are domiciled in another EU Member State.

19.22 In this example there is again no difficulty in proceeding against the employer on the simple basis that it is domiciled in England. Importantly, Article  20 of the Brussels Recast Regulation says that in claims against the employer it is subject to Article 8. That means that the claims against the agents, all of whom are, in this example, domiciled in EU Member States, may be sued as additional defendants. Where the claims against additional defendants are so closely connected to the claim against a main defendant that it is expedient to hear them together to avoid the risk of irreconcilable judgments, then all defendants can be sued in the court of the place in which one of them is domiciled. In this example, the English-domiciled employer would be treated as the lead defendant and on that basis the agents would be added to the claim against the employer in England. But note that Article 8 only applies to additional parties who are domiciled in Member States. It is not, therefore, available for the US-based agents referred to in Case 1 above. 449

19.23  Employment tribunal claims involving foreign employers and related parties

Case 4 19.23 An employee domiciled in England wishes to sue an employer domiciled in Brazil for unfair dismissal. The employee works for the Brazilian company in its English branch. 19.24 The employee may bring claims against the Brazilian employer on the simple basis that the employee habitually works in England. That is enough to confer jurisdiction under Article 21 of the Brussels Recast Regulation. Moreover, since the employee works in England there is no doubt that the domestic legislation will apply, even against a Brazilian employer.

Case 5 19.25 The same facts as Case 4 but the case arises after the UK has left the EU and in circumstances where the UK has not become a signatory to the Lugano Convention. 19.26 The answer here is that the analysis would be the same as long as the prospective addition of the Civil Jurisdiction and Judgments Act 1982, s 15C goes ahead (see para 2.05 for a discussion of this). Section 15C replicates the Brussels Recast Regulation jurisdiction rules but does so as a matter of English law. Most important, it retains the rule that the employee has the right to sue an employer who is domiciled anywhere on the basis solely of habitual work in England. This therefore fills what would have been a significant gap in the jurisdiction rules if the Brussels Recast Regulation simply fell away and were not replaced.

Case 6 19.27 An English-domiciled employee is employed by a German-domiciled employer. The employee works all across Europe but reports to and is managed by the German employer’s branch in Swindon. The employee has been dismissed and wishes to bring unfair dismissal and discrimination claims as a consequence, in the latter case, of things done by managers at the Swindon office. 450

Case studies 19.30

19.28 The employee is probably able to sue the German-domiciled employer in England even if the employee did not habitually work in England. The reason for this is Article 7(5) of the Brussels Recast Regulation, which is expressly stated to apply in cases governed by Articles 20–23. Thus where the case arises from the operation of a branch, agency or other establishment, the courts of the place where the branch etc is situated have jurisdiction. That would give jurisdiction over the discrimination claim, at least, because that claim arises from things done at the English branch. There may be more of a doubt whether the unfair dismissal claim can be brought, because the German employer will say that it was the employer’s decision to terminate and not that of the branch and the claim would have to be against the employing entity. However, in particular if the decision was communicated by the Swindon office, that may enable the employee to bring the claim against the respondent on the basis that it had acted through its agent and is, in accordance with ordinary agency principles, liable for its agent’s acts. It may also be that, if the proposal to dismiss was made by the Swindon branch then, to the extent that that was discriminatory, the claimant could bring a claim of detriment based on that act (rather as in Timis v Osipov9) and on that basis say that the tribunal had jurisdiction for that claim since it was solely based on the acts of the agency. In fact, despite the peripatetic nature of the employments being managed from Swindon, the employee probably habitually works in England.

Case 7 19.29 An English-domiciled employee works for an Austrian-domiciled employer who makes deductions from the employee’s wages. The employee habitually works in Dubai. May the employer be sued in the tribunal in England? 19.30 The employee’s difficulty in this case is the fact that the employer is domiciled otherwise than in England and that the employee habitually works in Dubai. This means that the employee may not rely on Article 21 of the Brussels Recast Regulation to sue the Austrian employer in England. Since the employer is domiciled in Austria, that too provides a block to suing in England. On the face of it, the employer would have to be sued in Austria. This example is similar to Powell v OMV Exploration and Production Ltd10.

9 [2018] EWCA Civ 2321, [2019] ICR 655. 10 [2014] ICR 63.

451

19.31  Employment tribunal claims involving foreign employers and related parties

Case 8 19.31 The same facts as in Case 7 above but the employer is domiciled in Australia and the employee’s contract provides that it is governed by English law.

19.32 The Brussels Recast Regulation does not assist this employee to bring the case before the English employment tribunal because of the habitual work in Dubai and not in England. Thus, Article 21 does not confer jurisdiction on the English courts. However, because this respondent is domiciled outside the EU, the employee is able to identify other causes of action. Whilst the most obvious claim might be brought under the unlawful deductions provisions of the Employment Rights Act 1996, the deductions from pay, unless permitted by the contract, would be in breach of contract, so permitting the employee to bring a breach of contract claim. The question then arises whether it would be possible to serve proceedings out of the jurisdiction against this defendant. The employee could bring a breach of contract claim in the civil courts and try to rely on CPR  6.33(2) for the purposes of establishing jurisdiction. The employer’s answer might be that because the employee did not habitually work in England, the court did not have jurisdiction, so that the provision could not be invoked. That may not be the end of the line, however. This is a contractual dispute. It is possible that the employee could rely on the contract provisions of CPR PD 6B. The employee could say that the contract is governed by English law. If pay is due to the employee in England, the breach of contract will have occurred in England. Either would be enough, treating this as a civil rather than employment claim, to confer jurisdiction on the civil courts. On the basis that the contract is governed by English law, it would be that law which determined the merits of the employee’s claim.

Case 9 19.33 An English-domiciled employee is employed by an English company which is owned by a US-based corporation. The employee works predominantly in England. The US-based parent company runs an incentive scheme by which it pays bonuses and incentive payments to employees. The way the scheme works is that the US parent declares bonus and incentive awards and publishes them in New York. The incentive scheme is governed by New York law and contains a New York choice of jurisdiction clause. The employee believes that the criteria for payment are satisfied but the 452

Case studies 19.37

US parent refuses to pay. The employee believes that this is in breach of contract. May the employee sue in England?

19.34 The ability of the employee to sue in England depends on an analysis of the Brussels Recast Regulation as interpreted in Samengo-Turner and Petter. The defendant to this claim is domiciled in the US. 19.35 This case would likely depend on the Brussels Recast Regulation. The employee habitually works in England and is therefore able to sue an employer not domiciled in England in matters relating to a contract of employment. Samengo-Turner and Petter tell us that bonus or incentive arrangements with parties related to the employer are matters related to contracts of employment and that the administrator of such schemes counts as the employer for the purposes of the Regulation. This means that, by reason of habitually working in England, the employee may sue the US-based parent company in England as if it were the employer. Further, the choice of New York jurisdiction has no effect. Because the clause was not agreed after the dispute had arisen, the US parent is precluded by Article 23 from invoking the clause. It is interesting to consider how much broader this right of jurisdiction is than if purely domestic law applies, uninfluenced by the Brussels Regulation. It seems unlikely this case would permit service under CPR  6.33(2)(b)(iii), as under domestic law the US parent would not be regarded as the employer. It is only the Brussels Regulation which changes that. Also, as a matter of domestic law the employee would not have a contract with the parent. But the analysis under the Brussels Regulation changes that.

Case 10 19.36 The same facts as Case 9 above but the employee in this example works habitually in France.

19.37 This employee will not be able to sue the US parent in England (but would be able to do so in France) for the simple reason that the employee does not habitually work in England and it was that which was the route in to being able to sue the employer in England. 453

19.38  Employment tribunal claims involving foreign employers and related parties

Case 11 19.38 The same facts as Case 9 above but it arises after the UK has left the EU and assuming that the UK has not become a party to the Lugano Convention. 19.39 The analysis in this case will depend on whether the government enacts the new ss  15A–15C of the Civil Jurisdiction and Judgments Act 1982. If it does, one will have domestic statutory provisions replicating the Brussels Recast Regulation. Under s 15C, UK-domiciled employees will be able to sue in the part of the UK in which they are domiciled, and the same restrictions on contracting out will apply. There is then an interesting question: s 15C applies to ‘a matter relating to an individual contract of employment’; will domestic courts, unaffected by EU law, say that an incentive scheme run by the parent company of an employer relates to an individual contract of employment? In fact the Court of Appeal did not rely on any ECJ cases (as there were none), but it did say it had to adopt an autonomous EU meaning. Would the same meaning apply to a domestic statute?

Case 12 19.40 The employee is an airline pilot employed by a Hong Kong incorporated airline. The employee is based at Heathrow and lives in the UK. Like all pilots, the employee flew various trips but came back to the base in London. Having been dismissed, the employee wishes to bring an unfair dismissal claim. 19.41 There are two issues in this case. One is whether the tribunal has international jurisdiction over this employer at all. It is not domiciled in England, being incorporated and based in Hong Kong. Therefore the employee would have to establish habitual work in England. In the case of an employee who flies between various places and so works in different places at different times, it might be difficult to say that that test was satisfied in circumstances where most of the employee’s working time was spent in the air flying between different countries. It would depend on whether the employee’s base at Heathrow – the fact that all flight duties ended up with a return to London – was enough to establish habitual work in England. If it were analysed on the basis – which may or may not be correct – that everyone has to have a habitual place of work, then England would have the strongest claim to be that place. The base could also be determinative in the light of cases such as Rutten v Cross Medical Ltd11. 11

454

C-383/95 [1997] ICR 715.

Case studies 19.44

19.42 The next point is whether unfair dismissal legislation should apply to someone employed by a foreign-based employer and who was not permanently present in the UK but had only a more limited connection with it. This employee would be regarded as a peripatetic employee because the job meant working all over the world in different places from time to time rather than in one place. The law is that, in the case of such employees, the protection of the legislation will extend to them if they are based in England, that is to say where they are factually based and where they would be regarded as ordinarily working even if they spend weeks or months working overseas. Thus one comes back to a similar question whether the employee’s base at Heathrow counts as ordinarily working in England. In circumstances where all journeys end up back in England, the answer appears to be yes. On this basis this employee would be able to sue the Hong Kong airline in England. This example is derived from Croft v Veta plc, one of the cases decided as part of Lawson v Serco Ltd12.

Case 13 19.43 An employee who lives in Britain works in Libya for a British company based in Aberdeen, coming back to Scotland after each period of work in Libya. The employer is a subsidiary of a US entity. Having been dismissed, the employee sues for unfair dismissal. The question is whether the Employment Rights Act 1996 extends to the employee’s employment. 19.44 The tribunal has international jurisdiction over the employer based on its UK domicile, so even though the employee habitually worked in Libya and not the UK, there is no doubt as to international jurisdiction. The question is whether the territorial reach of the Employment Rights Act 1996 should extend to this employment. In general, the place of employment is decisive and that would count against the employee in this case. However, the ultimate test is whether the employment has a stronger connection with Great Britain. In circumstances where the employer’s business was based in Great Britain, even though it was a small part of a US enterprise, and the employee had a home in Britain, coming back after each stint in Libya, the employee was paid in sterling in England, the contract was governed by English law and the employee had been told on moving to work in Libya that the protections of UK employment law would continue to apply, it was appropriate to conclude that the Act should extend to cover the employee’s case.

12

[2006] UKHL 3, [2006] ICR 250.

455

19.45  Employment tribunal claims involving foreign employers and related parties

19.45 This example is derived from Ravat v Halliburton Manufacturing and Services Ltd13. It might be thought a rather generous decision. It is possible that the Supreme Court was much influenced by the fact that the employer had said that UK employment law would continue to apply to the employee. It does also show how difficult and sometimes unpredictable these cases can be – indeed different decisions were made by the tribunal (holding that it did have jurisdiction) and the EAT (holding that the tribunal did not). A concern is that this case makes it harder to predict or advise how later cases should be decided.

Case 14 19.46 Teachers were employed by the Secretary of State for Children, Schools and Families to work in European schools. These schools are supplied by the British government in foreign countries. Those who worked there did not pay local taxes but rather UK tax. The employee wishes to bring a claim of unfair dismissal. 19.47 In this case, no issue arises as to international jurisdiction because the respondent is a British government department. The issue is the scope of the legislation. As to that, the fact that the respondent is a part of the UK State is a useful starting point. Here there is a strong connection between the staff and the British State. The staff are employed by the State to provide a service in various European countries. Whilst they are part of an international rather than British enclave, their connection with Britain and British law is far stronger than that with the place where they work. This example is, of course, derived from Duncombe v Secretary of State for Children, Schools and Families14.

Case 15 19.48 A British employee with a home in Leeds works in Dubai for a British company. The pattern of work means 28 days in Dubai and then the employee returning to Leeds. Pay is in sterling and the employee pays UK tax. Having been dismissed, the employee wishes to claim unfair dismissal.

13 14

456

[2012] UKSC 1, [2012] ICR 389. [2011] UKSC 36, [2011] ICR 1312.

Case studies 19.52

19.49 Because the employer is British and incorporated and domiciled in England, there is no issue as to territorial jurisdiction. The employer wishes to contend that the employee is not protected by the Employment Rights Act 1996 on account of working wholly abroad. But since the employer and employee are British and since the employee comes back to Britain between stints in Dubai, that ought to be enough to mean that the legislation should cover the case.

Case 16 19.50 The same facts as Case 15 above but this time the employer is incorporated in the US. 19.51 There may in this case be a question whether the tribunal would have international jurisdiction over the employer as it is domiciled in the US and the employee does not habitually work in the UK. It may be that this in itself means that the tribunal cannot claim jurisdiction in the case. But even if it could, it is to be doubted whether domestic legislation should extend to this case in circumstances where not only does the employee carry out work abroad, but also does so for a foreign employer. It appears that the connection with Great Britain is lacking and far weaker than in the case where both parties are British. 19.52 Both Case 15 and Case 16 are based on Ravat v Halliburton. Case 15 is the Ravat case. Case 16 has a minor but, it is suggested, significant change, the effect of which is materially to diminish the argument that the connection with Great Britain is stronger. In Case 16 there is a case against a non-British company brought by a person who works wholly abroad and where the principal connection with Britain is the fact that the employee comes back to England after working abroad.

457

CHAPTER 20

Breach of fiduciary duty

GENERAL INTRODUCTION 20.01 Claims concerning breach of fiduciary duty occupy a rather ill-defined position in terms of legal categorisation in English law. The role of fiduciary duties fits into the law in several places. The paradigm of the person who owes fiduciary duties is the company director, whose duties are defined by the Companies Act 2006, as discussed below. But that is not the only category of person who owes a fiduciary obligation. The trustee is another obvious example. Also in many cases issues concerning breach of fiduciary duty are treated as being or related to elements of employment law. That is because in many situations those who owe fiduciary duties by reason of being directors of companies are also employees. But of perhaps greater significance – and the reason why fiduciary duties are treated as being akin to employment law, is that employers will often claim that employees, particularly senior ones, owe fiduciary duties by reason of their role as an employee. Employers will advance this argument because the equitable nature of a fiduciary duty gives rise to equitable obligations and remedies such as the duty to give an account of profits when a party acting in breach of fiduciary duty makes an illicit profit. Consideration of the question whether an employee, not being a director, owes fiduciary duties starts with the contractual obligations owed by the employee. Thus, in Customer Systems plc v Ranson1, the Court of Appeal said that the starting point for determining whether an employee owed fiduciary duties was the contract of employment. More generally, it has been held that senior managers may, by reason of the roles they occupy, owe fiduciary duties. This was the conclusion of the Supreme Court of Canada in Canadian Aero Services v O’Malley2. It held that individuals employed in a senior managerial capacity who were authorised to act on behalf of the company owed it fiduciary duties. A distinction was drawn between employees or servants who held an ‘obedient role’ and those who were charged with developing initiatives for and discharging responsibilities on behalf of the company. This was applied in England in Shepherds Investments Ltd v Walters3. Etherton J also relied on the concept of a de facto director – a person who, although not formally appointed as a director is held out by a company as being a director and who purports to act as such. It may be that employees who occupy senior positions and who are treated by the company as having senior and important roles, often reflected in 1 2 3

[2012] EWCA Civ 841, [2012] IRLR 769. (1973) 40 DLR (3d) 371. [2006] EWHC 836 (Ch), [2007] IRLR 110.

459

20.02  Breach of fiduciary duty

the job titles they hold, will, because of the things they do or, per Ranson, can be required to do, be held to owe fiduciary duties. (The Shepherds Investments case is a good example of the importance of establishing fiduciary duties. In that case the employer established that a senior employee owed fiduciary duties. However, it failed to establish any loss as a result of the employee’s breach of duty. Yet because it was able to advance a claim of breach of fiduciary duty, it was able to seek the remedy of an account of profits. But for the breach of fiduciary duty claim, the claimant’s case to recover damages would have failed.) 20.02 Elias J  distinguished between contractual and fiduciary duties in his much-cited judgment in University of Nottingham v Fishel4. He observed that fiduciary obligations could arise when one party was in a position of influence over another or was in receipt of confidential information imparted by another but also, the most important case, where one party undertook to act in the interests of another in circumstances which gave rise to obligations of trust and confidence. The judge stressed that the mere fact of being an employee did not carry with it the obligations of a fiduciary. Even though it is trite that employees owe duties of trust and confidence to their employers, they are not the same duties as are owed by a fiduciary. The core of the fiduciary’s obligation is to pursue the interests of the beneficiary at the expense of the individual’s interests. It is a duty of undivided or single-minded loyalty to the beneficiary, even at the expense of the fiduciary’s own interests. That is a stark contrast with the obligations of employees. An employee owes a duty of good faith, but that does not require that the employee’s own interests be subordinated to those of the employer. That, however, is the obligation resting on the fiduciary. In the case of a conflict of interest, the fiduciary must always prefer the beneficiary and the beneficiary’s interests over the fiduciary’s own interests. It is an obligation of undivided loyalty which subjugates the fiduciary to the beneficiary. What this can mean is that fiduciary duties may arise in the context of an employment relationship in respect of part only of that relationship. Indeed the decision in the Fishel case was that the individual, an academic at a university, did owe fiduciary obligations in respect of the work of others for whom he was responsible but in respect of whose work he owed obligations to the university to prefer its interests over his own. 20.03 This is not to say that the role of fiduciary duties is confined to employment law; far from it. All that has been done so far is to indicate categories of person who, by reason of their employment (and the terms of their employment contracts) may be held to owe fiduciary duties. The paradigm of the person who owes fiduciary duties, at least in the commercial sphere is, of course, the company director. A person appointed as a statutory director of a company will, merely by reason of that appointment, owe duties to the company which have traditionally been described as fiduciary duties. The duties of directors have now been codified and are contained in the Companies Act 2006, ss 171–177. In the case of directors one now talks of duties under the Companies Act rather than fiduciary duties. However, the duties codified in the Companies Act merely 4 [2000] ICR 1462.

460

General introduction 20.05

reflect the earlier legal and in particular equitable obligations which existed prior to the enactment of these provisions. The duties are still frequently referred to as fiduciary duties and, as indicated, may still be owed by those who are not directors. The duties identified in the Companies Act 2006 are the duty: •

to act within the director’s powers;

•

to promote the success of the company;

•

to exercise independent judgment;

•

to exercise reasonable care, skill and diligence;

•

to avoid conflicts of interest;

•

not to accept benefits from third parties; and

•

to declare an interest in proposed transactions or arrangements.

20.04 Fiduciary duties have their origin in the law of trusts and trustees. The trustee is the origin of the person who owes fiduciary duties and trusts cases are frequently referred to in order to inform the content of a fiduciary’s obligations and the remedies – principally equitable remedies – available for breach. However, these duties may also exist in purely commercial relationships. Another category of case of a person who may owe fiduciary duties is a joint venture party. A good example of this is the important but unfathomably unreported case of Murad v Al Saraj5 (a case which is also very important to the remedy of account of profits, discussed below). In that case there was a proposed joint venture for the purchase and redevelopment of a hotel. The parties agreed to subscribe defined sums to the purchase price, the remainder of which would be borrowed from the bank. One joint venture party complained that the other had misled it because he had said that he would make a contribution to the purchase price in cash but he instead, without informing the other party, offset an amount equivalent to that which he said he would contribute from sums owed to him by the vendor. That included a sum payable to him for having introduced the purchasers. It was held that this was a fraudulent misrepresentation as to the purchase price and his contribution. It was held that the joint venture parties ‘reposed trust and confidence’ in one another by reason of their relationship, and for that reason each owed fiduciary duties to the other. It was held that by not disclosing that the partner was making a contribution by way of set-off, there was a deliberate breach of the partner’s fiduciary duty. In consequence, and as explained below, the judge therefore ordered an account of profits from the defaulting fiduciary. He rejected the argument that the claimant’s recovery should be limited to their loss on the basis that, if the partner had explained how he was funding his contribution, the claimant would have demanded a higher profit share. The conclusion that the partner owed fiduciary duties thus had dramatic consequences for the case. 20.05 The core duty of a fiduciary is fidelity towards the beneficiary. Lewison LJ made the point in Ranson that it is unfortunate that the concept of fidelity can 5 [2005] EWCA Civ 959.

461

20.06  Breach of fiduciary duty

be used in different contexts and have different meanings. All employees owe a duty of good faith. But in the employment sphere that means being loyal to the employer and is often characterised by negatives – what the employee may not do. Thus the employee may not compete with the employer or make use of the employer’s confidential information during the employment. But the duty on a director is more onerous. It is a duty of undivided or single-minded loyalty: see Bristol and West Building Society v Mothew6 (a case about a solicitor rather than a director, but the point holds good). The core duties of the fiduciary are: (i) to act in good faith towards the beneficiary; (ii) not make a profit from one’s position; and (iii) not to place oneself in a position where one’s interests and duties conflict. The last means that as a fiduciary, one must subjugate one’s own interests to those of the beneficiary (the person to whom the fiduciary duty is owed, thus the company in the case of a director)7; and in any case where there is a conflict between the interests of the beneficiary and the interests of the fiduciary, the fiduciary is obliged to sacrifice personal interests and to prefer the interests of the beneficiary. 20.06 Turning to the content of the individual directors’ duties under the Companies Act 2006: (i) directors must act within their powers as laid down by the company’s constitution; (ii) directors must exercise their powers for the purpose for which they are conferred; (iii) directors must act to promote the success of the company. That means acting in a way which the directors think bona fide will promote the success of the company. The Act lists particular matters which must be borne in mind; (iv) directors must exercise independent judgement; (v) directors must exercise reasonable care and skill; (vi) directors must avoid conflicts of interest. In Aberdeen Railway Co v Blaikie Bros8 it was said that directors could not enter into engagements which have or could possibly have a conflict with the interest of those whom the director is required to protect. This means, for example, that a director who comes across a business opportunity in the course of working for a company may not take advantage of that opportunity, even if the company would not be able to benefit from it because the third party would not deal with the company. So, for example, in Industrial Development Consultants Ltd v Cooley9, the director of a company became aware of a business opportunity 6 [1998] Ch 1 at 18. 7 Cf Ranson, para 41. 8 (1854) 1 Macq 461. 9 [1972] 1 WLR 443.

462

General introduction 20.06

with a third party. That information came to the director in his personal capacity. He did not tell the company of the opportunity but resigned in order to secure it, lying as to the reason for his departure so that he could leave earlier. It was said that this gave rise to a conflict of interest between the manager, who would wish to take the job for himself, and the company which would want to have the work even though, on the facts, it would not have got the work. It did not matter that the information came to the director in his personal capacity. He was a director and that was enough to cloak him with the duty of loyalty. As soon as he embarked on discussions about the role, there developed a conflict between his personal interest and his duty to the company. Having received the information, he should have passed it to the company and not kept it for himself. The effect of this was that the director was obliged to account for the profits he made. It was irrelevant that the company could not have obtained the work because the third party would not have dealt with the company. This meant that the director was obliged to disgorge his gains even though the company suffered no loss. There is, however, law of uncertain scope which says that directors do not breach their duties if they become a director of a competing company, but this is of limited application: see In Plus Group Ltd v Pyke10; (vii) a director must not make a profit from the role as director. This is reflected in a number of what might be regarded as quite hard cases. Keech v Sandford11 concerned a trustee for an infant. The infant held a lease of a market which generated profit. The lessor refused to renew the lease to the infant so the trustee took on the lease. It was held that in doing so the trustee had acted in breach of the no-profit rule and should instead have allowed the lease to lapse. In Regal (Hastings) Ltd v Gulliver12, a company planned to purchase assets and transfer them to a third company in which it would take shares. Because the company refused to provide a required guarantee, the shares were instead taken by the directors who later sold them at a profit. It was held that the directors had made an unlawful profit because the plan had been that the company should make the profit but in fact they did. They were held liable to disgorge the profit, and that was the case even though it was the company’s refusal to offer the required guarantee which prevented it from taking the shares. It was enough that, by reason of their role as fiduciaries, they had made a profit. It was said that a person occupying a fiduciary position was not entitled to make a profit which could be obtained only as a result of that position; or, if such a profit was obtained, an account must be given of it. Such liability did not depend on fraud or bad faith. Nor did it matter whether the profit should or would have gone to (in that case) the company. All that mattered was that the directors had made a profit from their role as fiduciaries. Boardman v Phipps13 was a case of a solicitor to a trust whose assets included shares in a company. The company was performing badly. The solicitor suggested that the trust take over the 10 11 12 13

[2002] EWCA Civ 370, [2002] 2 BCLC 201. (1726) Sel Cas Ch 61. [1967] 2 AC 134. [1967] 2 AC 46.

463

20.07  Breach of fiduciary duty

company but the trust refused. In those circumstances, he decided that he and one beneficiary would mount a takeover. Importantly, they acted without the instruction of the other trustees. They did and they turned round the fortune of the company, materially increasing the value of the trust’s shareholding. But, having acquired their own shareholding, the solicitor and beneficiary also made their own profit as the value of the company increased. It was held that the profit arose from the fiduciary duty – the only reason the solicitor knew of the company and had the opportunity to buy the shares was because of his role as solicitor to the trust and thus his fiduciary obligation. Therefore the solicitor had to account for the profit which he had received. However, in that case it was also held that the solicitor should have some allowance for the work and skill he had shown in improving the affairs of the company. In the Cooley case14, more straightforwardly, it was held that the director had unlawfully made a profit through his role; it was only by reason of his being a director that he gained access to the possibility of dealing with the third party and in consequence he made a profit in his role as a director. 20.07 These duties derive from the Companies Act 2006 but they reflect earlier legal and equitable principles and many of them, especially those dealing with obligations of good faith and the duty not to make a profit, would apply equally to employees who owe fiduciary duties. 20.08 It is sometimes also said that fiduciaries owe a duty to reveal their own misconduct. It has been held, however, that there is no separate duty to disclose which rests on a director. However, the fact that a director owes a duty of loyalty may mean that such duty, rather than any separate duty of disclosure, requires the fiduciary to reveal that he or she has acted in breach of duty because it would be in the interests of the beneficiary of the fiduciary duty to know of that breach. So, in the key case of Item Software v Fassihi15, a director of a company approached a customer seeking to take over a contract from the company. He failed to do so but was dismissed for seeking to divert business. The company brought a claim alleging, amongst other things, breach of fiduciary duty by reason of the director’s failure to disclose his own misconduct. It was held that a fiduciary did not owe a separate and independent duty to disclose misconduct. However, it was held that the director’s duty of good faith in that case required him to disclose that he had established a company in order to seek to take away the company’s business. That is reflective of a more general duty of the fiduciary to disclose to the beneficiary matters which may damage its interests. In British Midland Tool Ltd v Midland International Tooling Ltd16, directors of a company were obliged to disclose to the company the fact that a raid was being planned on its workforce for the simple reason that it advanced the interests of the company to know this fact.

14 15 16

464

[1972] 1 WLR 443. [2004] EWCA Civ 1244, [2005] ICR 450. [2003] EWHC 466 (Ch), [2003] 2 BCLC 523.

Remedies for breach 20.11

20.09 It is important to emphasise that not every claim arising from a fiduciary relationship will involve a breach of fiduciary duty; not every breach of duty by a person who is a fiduciary is a breach of fiduciary duty. For example, an act of negligence by a person owing fiduciary duties would not be a breach of that duty: see Bristol and West Building Society v Mothew17. As it was put in that case, ‘a servant who loyally does his incompetent best for his master is not unfaithful and is not guilty of a breach of fiduciary duty’.

REMEDIES FOR BREACH 20.10 As indicated above, among the most important elements of a fiduciary’s duties are the remedies which are available for breach. This includes the potentially very valuable remedy of an account of profits, whereby the fiduciary who has acted in breach of duty is obliged to disgorge profits which flow from the breach. The profits which the company or beneficiary of the duty can claim are unrelated to loss and can be recovered even if the beneficiary has suffered no loss. The example is given above of the case of Cooley, in which the director acted in breach of duty by taking advantage of a business opportunity and was obliged to account for profits he made even though the company would not have been able to take advantage of that opportunity. It has been said that the liability to account does not depend on showing fraud or absence of bona fides, nor that the profit would or should have gone to the company. 20.11 The power of the account of profits remedy is shown by the Murad v Al Saraj case (see para  20.04). This was a case in which it was held that a joint venture partner had acted in breach of duty by misleading the other partners as to the source of his contribution towards the purchase of a hotel which the joint venture was to refurbish. He said that he had contributed £500,000 towards the purchase price but in fact that sum reflected an amount which the vendor credited to the joint venture partner, including a sum payable as commission for having introduced the joint venture as the purchaser, so he in fact paid nothing towards the purchase price. This caused the other joint venture partners no loss. They had not ended up paying more for the hotel. They would, however, have agreed a different profit share had they known the truth: the party who had made the misrepresentation would have received a smaller share. Because the judge had found that the defendant fiduciary had acted in breach of duty, he imposed the remedy of an account of profits but he required the defendant to account for all profits, not just the higher profit he received as a consequence of his misrepresentation. The claimant specifically sought that remedy rather than a loss based remedy as would have been reflected in the difference between the profit share in fact agreed and that which would have been agreed in the absence of a breach of duty. The Court of Appeal upheld the award of an account of profits. It held that remedies in equity were different from common law remedies and were not focused on loss but on disgorging profit. It did not matter that a claimant had 17

[1998] Ch 1 at 16.

465

20.12  Breach of fiduciary duty

suffered no loss nor that the beneficiaries themselves would have been unable to make the profit. Nor can the fiduciary avoid the remedy by saying that the same result would have arisen even if there had been no breach of duty. There is no investigation of hypothetical situations as to what would have happened had there been no breach. The mere fact that the fiduciary made a profit suffices. Nor is this an unjust enrichment remedy. The case emphasised that the reason why such strict impositions are made is derived from the law of trusts – where fiduciary obligations have their origin – to emphasise the strictness of the rules applicable to trustees and pour encourager les autres. 20.12 In taking the account, the starting point is that the fiduciary is liable for all profit obtained. It is for the fiduciary to show why that should not be the case. There are occasions, an example of which is Boardman v Phipps18, where a trustee has acted honestly and openly and should be given some credit. There may be cases where the fiduciary can point to the exercise of skill, for example creating a new product, such that the profit does not flow from the breach. But absent that, and as was the case in Murad, the fiduciary will be liable for all profits. That was a stark outcome, but a useful reminder of the breadth of the remedy, because a person who, by acting unlawfully, secured a larger profit share than would have been the case had he acted lawfully, was liable to disgorge all the profit he made. 20.13 In Novoship (UK) Ltd v Mikhaylyuk19 it was held that the remedy of an account of profits was also available against a third party who assisted a fiduciary to act in breach of duty. That is an important development because, on the face of it, the third party would not owe duties in equity, but because that which is assisted is a breach of an equitable obligation, the party liable for assisting will be susceptible to equitable remedies. 20.14 Against that background, one can turn to consider the conflict of law questions which arise. It seems that the claim may be characterised in two ways. One, in particular where one is concerned with an executive director or a senior employee said to owe fiduciary duties, is a contractual claim. Even where reliance is placed on duties under the Companies Act 2006, it may still be right to treat this as a contractual cause of action because the origin of the claim is contractual. This is consistent with the Ranson observation that the starting point for fiduciary obligations is contract. In other cases – the joint venture in Murad is a good example, the claim would be more likely to be characterised for jurisdiction purposes (at least under the Brussels Recast Regulation) and choice of law as tortious. Whilst in domestic law the issues would be breach of an equitable duty, it seems likely that for jurisdiction purposes it would come within the autonomous definition of tort.

18 19

466

[1967] 2 AC 46. [2014] EWCA Civ 908, [2015] QB 499.

Jurisdiction 20.16

JURISDICTION 20.15 Under the Brussels Recast Regulation, and putting domicile aside, one may be concerned with claims under Article 7 formulated in contract, where the court with jurisdiction will be that of the place for performance of the obligation in question, or tort, based on the place where the wrongful act is done or damage is suffered. But where one has a case concerned with an employee, Articles 20–23 will apply in preference and to the exclusion of the contract provisions in Article  7. Hence an employee sued for breach of fiduciary duty would, if the claim relates to an individual contract of employment, have to be sued in the state of the individual’s domicile. When one is concerned with service out under CPR PD 6B, the position is less clear. Nothing in the Practice Direction refers to breach of fiduciary duty. In the employment sphere it may be best to regard breach of fiduciary claims as part of or analogous to contract claims with the consequence that the contract rules would apply. It might be possible to put cases such as the joint venture example into para 15 (constructive trustees) but that is not strictly accurate, as the duty, for example to account for profits made – is a personal liability. It does not give rise to any proprietary claim, such as might arise where a constructive trust was imposed. But if the rule applies, it covers the case where acts are committed within the jurisdiction or relates to assets within the jurisdiction. 20.16 An example of a case involving jurisdiction questions arising in the context of alleged breach of fiduciary duty is Bosworth v Arcadia20. In that case the CEO and CFO of a company (at that time thought to be employees but later held by the European Court of Justice not to be because of the control they had over the company and the terms on which they were employed, such that they were not in a subordinate position in relation to the company) were accused along with others of defrauding the company. They were both domiciled in Switzerland but the claimant wished to sue them in England. The claims advanced included conspiracy and breach of fiduciary duty. The claimant in that case sought to avoid putting the claims as breach of contract and for that reason argued that they did not relate to individual contracts of employment. When the case had first been argued the claimants had failed to have regard to the employment provisions (in that case in the Lugano Convention, as the defendants were domiciled in Switzerland). Having spotted that error and no doubt recognising that if the claims were put as breach of contract of employment they would have to sue in Switzerland, the claimants re-pleaded their case to omit all references to breach of contract. The case dealt with allegations of conspiracy and the extent to which those allegations related to the individual contract of employment. The Court of Appeal held that they did not and that the contract of employment played only a minor role. As to the case based on breach of fiduciary duty, the individuals argued that they were based on their contracts of employment because they flowed from the assumption of their office. However, the claim of breach of fiduciary duty applied not only in respect of the companies by which they were employed but also other companies in the group. Insofar as there was a contract between an 20 [2016] EWCA Civ 818.

467

20.17  Breach of fiduciary duty

individual and the company to which it was said the individual owed a fiduciary duty, that did relate to the individual contract of employment. But the wider claims of breach of fiduciary duty said to be owed to other entities were treated as tortious (in a Brussels Recast Regulation context). The principal reason for this was that the individuals did not have any contract with any other entity. This is an important indicator that cases concerning many – at least executive – directors with employment contracts will, so far as claims of breach of fiduciary duty are concerned, be treated as falling within the employment provisions of the Brussels Recast Regulation, with the consequence that the director can only be sued in the place of that person’s domicile. 20.17 As to choice of law, the two alternatives referred to above will be relevant. It seems likely that in the case of directors and even more obviously employees said to owe fiduciary duties, the applicable law would be likely, following Ranson, to be that applicable to the contract of employment (if there is one; matters may be less clear in the context of non-executive directors without a contract). Thus the focus will first be on the law chosen by the parties. Where there is no express choice, or one cannot be inferred from the circumstances and the terms of the contract, the default position will be the law of the place where the employee habitually works. 20.18 In other cases not involving employees and directors it seems that, for choice of law purposes, one would apply the rules applicable to tort claims, with the consequence that the applicable law is the law of the place where damage occurs.

CASE STUDIES Case 1 20.19 A senior English-domiciled employee of an English company is sued for acting in breach of fiduciary duty by taking illegitimate preparatory steps to establish a new business and in doing so making use of the employer’s confidential information and competing with the employing entity. 20.20 It not infrequently happens that employers allege that senior employees who are not directors nonetheless owe fiduciary duties. In such a case, the claim for breach of fiduciary duty will, of necessity, relate to the contract of employment because, following Ranson, the starting point for the analysis of the existence and scope of the fiduciary duty is the contract of employment. This means that the defendant employee domiciled in an EU Member State can be sued only in the state of the employee’s domicile, in this example England because of Article 22 of the Brussels Recast Regulation. 468

Case studies 20.25

20.21 Whilst not touched on in Bosworth, it seems to follow from the identification of the contract as the starting point for fiduciary duties that the law governing the scope of the duties is that which governs the employment contract. Hence, the governing law would be the law chosen by the parties or the law of the place where the employee habitually worked. The identification of this law would be of particular importance in determining the available remedies, and in English law could include valuable remedies such as an account of profits.

Case 2 20.22 The same facts as Case 1 above but the senior employee is domiciled in the US 20.23 This case does not, of course, engage the Brussels Recast Regulation, as the employee is domiciled in the US. The question then becomes whether there is a basis on which to serve out. Since, as above, the source of the fiduciary duty in this case is contract, it follows that the claimant company’s ability to serve out will be determined by CPR PD 6B, para 3.1 and the identification either of a contract made within the jurisdiction or perhaps governed by English law or a breach of contract occurring within the jurisdiction. 20.24 There is a further possibility: it may be that the claimant would wish to seek an injunction, whether to restrain further preparatory steps or – on the springboard basis – to hold back the employee from embarking on a competing venture to reflect the head start illegitimately obtained as a result of the excessive preparatory activity undertaken in breach of duty. That would, on the face of it, be an injunction to order a defendant to refrain from doing an act within the jurisdiction, and so would be caught by para 3.1(2). The applicable law position is as in Case 1.

Case 3 20.25 A  senior employee of an English-based company who is domiciled in Italy engages with third parties outside the company, domiciled in various EU countries, in taking illegitimate preparatory steps, in the case of the employee, and in encouraging such steps in the case of the third parties and, in both cases, making use of the confidential information belonging to the claimant employer for the purposes of a new competing business. 469

20.26  Breach of fiduciary duty

20.26 The reason for giving this example is that it ties in with the Bosworth analysis, focusing on the importance of how the claim is formulated. It will be recalled that in Bosworth, in part in an attempt to avoid the case being treated as one falling within the employment provisions, the claimants advanced their case principally as one of conspiracy. One notable element in the case is that whilst the claim was advanced as one of unlawful means conspiracy, the unlawful means were not identified. Had they been defined as inducing the individuals to act in breach of contract, then it might have been harder to avoid the conclusion that the case fell within the employment provisions. 20.27 The starting point in this example, so far as the Italian-domiciled employee is concerned, is that, unless the claim can be formulated in a way which does not relate to the employment contract, Article 22 of the Brussels Recast Regulation means that the employee would have to be sued in Italy. If the employee were sued there, no doubt the other defendants could be added as defendants in that jurisdiction under Article  8. But it may be that the English-based company would wish to bring the claims in England, and the question is whether that may be done. 20.28 In that context, the point of this example is to consider whether it may be possible for a claimant to formulate a claim which does not require it to sue in the defendant employee’s domicile. The company would be well-advised, relying on Bosworth, to formulate this claim solely in conspiracy in which the individual is involved and by doing that to try to deflect attention away from the senior employee’s contract of employment. So far as the third parties are concerned, there is a case in conspiracy but they will also be sued for inducing breach of fiduciary obligations by the senior employee. (It may be that the claim is pleaded solely by reference to the fiduciary obligations and not addressed to any breach of contract so as to try to limit the extent to which the contract of employment is engaged in the case.) There may be difficulties if the unlawful means is inducing breach of a contract of employment. Hence it might be better to say that the unlawful means is a breach of confidence. There is a further reason for focusing on the breach of confidence by all parties – including both the senior employee and the other conspirators who would be held liable as recipients of the information, and thus, for that reason, being fixed with an equitable duty of confidence. If the claim can be identified as principally concerning confidential information, it could be brought in England if damage would be suffered in England. Perhaps a useful tactic would be to have the third party recipients of confidential information and those who have induced breach of contract by the employee as the main defendants. The employee then features solely as a conspirator and someone who has acted in breach of confidence. So formulated, this would be a tort claim and the English court could have jurisdiction on the basis either that the acts were committed in England or damage was suffered in England. But it will be an exercise in pleading the case so as to draw attention away from any allegation of breach of contract, just as was done in the Bosworth case – there for the very reason that the claimant wished to deflect attention away from a possible case based on the breach of a contract of employment. 470

Case studies 20.34

20.29 One factor further justifying that course in this case is the need to avoid a multiplicity of proceedings. If the co-conspirators are properly before the English court because, for example, damage was suffered in England, it would be unsatisfactory that allegations against the senior employee would have to be pursued in Italy as the country of the employee’s domicile. Then, there would be two courts – in Italy and the UK – investigating the same matter, namely things done by the individual employee whether for the purposes of a breach of contract of employment claim against the employee (if that was the way the case had to be put) or a claim of conspiracy or inducing breach of duty against the third parties. This means that there would be an advantage in proceeding in England first. Even if it were held that the English court lacked jurisdiction over the Italiandomiciled employee, the claimant having started in England first could invite the Italian court under Article 30, as the court second seised, to stay its proceedings. 20.30 The governing law would be the law of the place where harm was caused on the basis that the claims the claimant wishes to advance are (primarily) tort claims.

Case 4 20.31 A non-executive director of an English company who is domiciled in The Netherlands is sued to recover a bribe paid by a customer in return for agreeing to offer preferential terms. 20.32 In this example, the non-executive director does not have an employment contract. The appointment is merely as a statutory director and the argument is that the director has acted in breach of the duties imposed by the Companies Act 2006. Dutch domicile has been deliberately selected, as the director would no doubt prefer to be sued there. Can the company sue in England? 20.33 The company would say that, because this case does not concern any employment contract, it is not governed by the employment provisions of the Brussels Recast Regulation. It might be argued that there is a contract to act as a non-executive director, in that the director is paid for discharging that role. However, in Newtherapeutics Ltd v Katz21, it was doubted that there was a contract between a non-executive director and a company. Rather a director is an office-holder. 20.34 It is an open question whether the European Court of Justice would treat engagement as an office-holder as being equivalent to a contract of employment for the purposes of Article 7. If the case were contractual, and on the assumption that it were not treated as an employment contract, the English court would 21

[1991] Ch 226.

471

20.35  Breach of fiduciary duty

have jurisdiction on the basis that the director’s obligations – the obligations in question – were to be performed in England. If this were not regarded as contractual because the source of the obligation is statutory, it might be held to fall within an extended definition of tort for the purposes of the Brussels Recast Regulation. On that basis the English court would have jurisdiction, as damage would be suffered in England. 20.35 Another possibility is to have regard to Article 24, which states that claims about the validity of the decisions of organs of a company fall within the jurisdiction of the place where the company has its seat. However, decisions of the Court of Justice have taken a narrow view of this limb of Article 24 and have sought to avoid all disputes about the decisions of a company falling within it. This case would more likely be regarded as concerning the errant decision of one director than the acts of the company itself. That is supported by the Newtherapeutics case, where it was held that claims concerning the propriety of an individual director’s acts fall outside Article 24. 20.36 The final, but perhaps most convincing analysis is to focus on the nature of the claim. The company would be seeking restitution of the bribe paid to the director. The Advocate General in Shearson Lehman Hutton Inc v TVB22 suggested that claims for restitution were to be treated as falling within Article 7(2) – tort or delict. 20.37 On the basis that the director was a director of an English company it seems that the law applicable to the director’s conduct could be that of the place where the company was incorporated: see Banco de Bilbao v Sancha23 and Carl Zeiss Stiftung v Rayner & Keeler Ltd24. Insofar as this was a tort or equivalent claim, English law would apply as the law of the place where damages was suffered. Alternatively, if these were treated as tort claims, the law would be that of the place where damage was suffered.

Case 5 20.38 The same facts as in Case 4 above but now the non-executive director is domiciled in the US. 20.39 Again, the English company would wish to sue in England but this case falls outside the Brussels Recast Regulation because of the domicile of the defendant. The issue is the basis on which the director could be served out of the jurisdiction. This is not wholly straightforward. This example has been given for 22 C-89/91. 23 [1938] 2 KB 176 at 194–195. 24 [1967] 1 AC 853 at 919, 972.

472

Case studies 20.40

the very reason that the non-executive director does not have a contract in the same way as an executive director might. As indicated, it is doubtful that the case could be argued on the basis that the agreement to act as a director and be paid a fee for doing so meant that this was a contract for services, and thus engaging the contract service out provisions. In the Newtherapeutics case, the judge rejected an attempt to expand the service out rules to include arrangements with officeholder directors as if they were contracts. This thus materially limits the scope to rely on the service out provisions applicable to directors. 20.40 Again, perhaps the best way forward in this case would be to treat it as a claim for restitution of the sum paid by way of a bribe. As to that, this would be a claim for restitution where either the act giving rise to the liability – receiving the bribe – or the enrichment occurred in England, so as to fall within CPR PD 6B, para 16.

473

CHAPTER 21

Fraud

GENERAL INTRODUCTION 21.01 Claims of fraud cover a wide range of situations. The starting point may be thought to be the case of a fraudulent representation on which the addressee of the representation relies in order to enter a contract. Where such a misrepresentation is established, it may, in English law, enable the representee to rescind a contract or to claim damages. That therefore gives rise to grounds for a party to seek a contractual remedy, and such claims which relate to contractual remedies are likely to fall within the Rome I  Regulation1, and in particular Article  12 and its reference to ‘various ways of extinguishing obligations’. But matters are not straightforward, as allegations of misrepresentation – and in particular fraud – are capable of operating as torts even where a party enters a contract. Thus, there may be an initial question of how the claim or allegation in a particular case falls to be characterised such that one can select the appropriate jurisdiction and choice of law rules. In contract, a person who is the victim of any form of misrepresentation, including but not limited to a fraudulent misrepresentation, may seek to rescind the contract and/or claim damages (sometimes under domestic law the right to rescind will be replaced by a right to damages). There may also be contractual consequences in the case where a representation becomes part of the contract. It seems that in those cases a claimant’s case would be based on contract, thus affecting the applicable jurisdiction and choice of law rules. However, the law in the ‘very good old days’ (Salt v Stratstone Specialist Ltd2) that damages could not be awarded for a misrepresentation which had become part of the contract, meaning that the only remedy available was that of recission, was changed by the Misrepresentation Act 1967, which permitted a person to rescind even if a representation had become a term of the contract (s 1) and provided for damages in lieu of recission (s  2). This provision is of relevance to misrepresentations generally and not just to fraud but its importance is that it preserves the right of a claimant to choose to formulate the claim in contract or tort. This may, apart from any other matters which may be relevant to the decision on which way to advance the case, give a claimant greater flexibility in identifying the appropriate jurisdiction and choice of law rules and enable such a claimant to elect to formulate a claim which is most likely, for example, to enable the claim to be brought in a person’s home court. 1

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations. 2 [2015] EWCA Civ 745.

475

21.02  Fraud

21.02 But fraud may arise in a wider range of contexts than those in which the participants are actual or prospective parties to a contract. Thus fraud cases will include the situation in which a party makes a false statement which causes another party to act in a certain way, often parting with money, and that party seeks a financial remedy for loss suffered. The variety of potential cases means that there will be situations in which an allegation of fraud arises in relation to a contract but also forms the basis for a claim in tort, most obviously where the parties to the dispute are not contracting parties. That is capable of impacting on the relevant jurisdiction and choice of law rules. 21.03 As to what constitutes a fraud under domestic law, the essence is that it involves dishonestly misleading a person. In each case, the foundation for the claim is saying something which is false and is either known to be false, or where the person making the statement is reckless as to the truth or falsity of the statement. The starting point is that the defendant must make a statement which is a statement of fact or of law but not of opinion. It will be necessary to construe what was said in order to decide whether it was true – what a reasonable person would have understood from the words used in the context in which they were used: see IFE  Fund SA  v Goldman Sachs International3. A  statement is to be regarded as true if it is ‘substantially correct’. That was the test applied by Rix J in Avon Insurance plc v Swire Fraser Ltd4, in which the judge adopted and applied the Marine Insurance Act 1906. There is a link between falsity and reliance. The judge said that one should not too easily find a misrepresentation. That test was applied in Raffesisen Zentralbank Osterreich AG v Royal Bank of Scotland plc5, where the judge said that the claimant must show that the difference between what was represented and the truth would have been likely to induce a reasonable person to (in that case) enter into the contract6. Apart from statements expressly made, a statement may also be implicit in a person’s conduct. For example, in Advanced Industrial Technology Corporation Ltd v Bond Street Jewellers Ltd7 a person pawned a valuable necklace. It was held that a person who pawns an item is taken to have undertaken – ie represented – that that person has either title to the thing or the right to pawn it. If that is not the case, then the act of pawning will be taken to be a misrepresentation. The statement made must be untrue and the person making the statement must have the requisite state of mind, namely to know that the statement is untrue or not to believe its truth or to be reckless whether it is true or not. By way of example, in Pasley v Freeman8 the defendant represented to the plaintiff that a third party could safely be given credit for the purchase of goods. The plaintiff provided goods on credit and suffered loss when the buyer failed to pay. It was held that an action could be brought against the person who made the statement as to the purchaser’s creditworthiness in circumstances where the statement that the buyer was creditworthy was untrue and was known to the speaker to be untrue. The leading authority on the meaning 3 [2007] 1 Lloyd’s Rep 264, para 50, affirmed at [2007] EWCA Civ 811, [2007] 2 Lloyd’s Rep 449. 4 [2000] 1 All ER (Comm) 573. 5 [2010] EWHC 1392 (Comm), [2011] 1 Lloyd’s Rep 123. 6 Ibid, at para 149. 7 [2006] EWCA Civ 923. 8 (1789) 3 Term Rep 51.

476

General introduction 21.05

of fraud is probably still the well-known case of Derry v Peek9 and in particular the speech of Lord Herschell. That case concerned statements alleged to be false contained in a prospectus offering shares. Lord Herschell drew a distinction between misrepresentation as it affects contract, and claims of fraud. He pointed out that in any case where a misrepresentation is made, in that an incorrect statement is made, the person who acts on the statement may have a contract rescinded which that person has entered into in reliance on the statement, without the need to prove fraud. The fact that the statement was untrue, even if innocently so, enables the contracting party to rescind. (The Misrepresentation Act 1967 contains a statutory limit in that it enables the court to award damages in lieu of rescission, but the common law and equitable position is as stated by Lord Herschell.) But in a non-contractual case – the case in which a person makes a false statement that does not induce a contract, such that the remedy of rescission is not available, it is necessary to show that a person had made a false statement which is: (i) known to be untrue; or (ii) made without any belief in its truth; or (iii) made recklessly, that is to say, careless whether it is true or not: see Derry v Peek10. 21.04 At common law, it is not enough that a false statement is made carelessly; being negligent is not enough. A person who makes a statement, even if it is wrong, will not be liable in fraud where the statement is honestly (even if negligently or even if on insufficient grounds) believed to be true. Even gross negligence is not enough to found a case in fraud. That is so even if negligent statements might be capable of giving rise to their own cause of action in negligence, in the case where the person making a statement owes a duty of care to the person to whom it is made. But if the person has no care whether the statement is true or false – is what might be said to be reckless as to the truth of the statement made – that will suffice to establish liability for fraud. In the case of fraud, in contrast with negligence, it is not necessary to show that the maker of the statement owed any duty of care to the recipient. The fact of dishonesty in the making of the statement is enough to found liability but ‘nothing less than fraud will do’11. The false statement must also cause damage: that is an essential part of the cause of action. 21.05 What matters for our purposes is how a fraudulent statement is to be characterised for the purposes of determining jurisdiction and the applicable law. As noted above, in some cases the matter may be put on a contractual footing, principally when a person seeks a contractual remedy such as rescission. But in other cases, fraud is a tort. Although a different cause of action, it is worth also mentioning negligent mis-statements made by a person who owes a duty of care to another. These give rise to liability in tort even in the absence of fraud. Thus, 9 10 11

(1889) 14 App Cas 337. Ibid, at 374. Ibid, at 367.

477

21.06  Fraud

in the famous case of Hedley Byrne & Co Ltd v Heller & Partners Ltd12, the issue was whether a bank which gave a favourable but negligent reference as to a third party’s financial stability would be liable to the recipient of the reference on the basis that the statement was wrong and negligent, there being no allegation of dishonesty. That turned on the question whether the person giving the reference owed a duty of care to the recipient in circumstances where the claimant’s loss was economic. The liability there, of course, was tortious.

JURISDICTION AND CHOICE OF LAW 21.06 The application of the jurisdiction and choice of rules is not wholly straightforward because of the contractual and tortious elements of the cause of action. Much may depend on the way in which a party advances the case. 21.07 Where the claim is contractual, the jurisdiction rule under Article 7 of the Brussels Recast Regulation will be the place for performance of the obligation in question. That may be difficult to characterise in a misrepresentation case, save where the representation becomes part of the contract. Certainly when one considers the detail of Article 7, it may be hard to see how it applies. That may lead one to fall back on misrepresentation as a tort, giving jurisdiction to the place where the misrepresentation is made or the place where damage is suffered. 21.08 When the Brussels Recast Regulation does not apply, the situation may be easier. If the contract to which the misrepresentation was made is made in England or governed by English law, the claim can be brought in England. If one views the claim as being in tort, England may have jurisdiction if it is either the place where the misrepresentation is made or the place where damage is suffered. In both these cases, of course, England will also have to be the forum conveniens. 21.09 As to choice of law, where a party to a contract seeks release from the contract, such as by way of rescission, the cause of action is contractual. In particular, for the purposes of Article 12 of the Rome I Regulation, rescission seems to be a means of extinguishing obligations and so is a matter to be determined by the law governing the contract. As indicated, however, fraud can also be advanced as a tort claim. In that context there may be two sets of rules which could apply. In the standard tort case, the governing law would be the law of the place where damage occurs. But Article 12 of the Rome II Regulation13 applies to culpa in contrahendo, that is to say, non-contractual obligations which arise out of dealings prior to the conclusion of a contract. In truth there is limited guidance and judicial comment on the meaning of culpa in contrahendo but it might appear to include fraud claims. In such cases, the applicable law is the law which applies to the contract or would have applied had the contract been concluded. The latter case might be thought to include the situation in which a person does 12 [1964] AC 465. 13 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations.

478

Case studies 21.13

not conclude a contract on discovering a fraudulent statement and sues for damages, for example for wasted expenditure. However, in LIC Telecommunications SARL  v VTB  Capital plc14 the judge said that culpa in contrahendo enabled a person to claim damages for wasted expenditure but not for lost profits where a party to contractual negotiations broke them off in bad faith. That gives rise to two observations in passing. One is that this formulation does not sound like a fraud claim. The judge said that the claim in that case was that the claimant had been ‘strung along’ in pursuing a transaction. But that was not fraud. The other is that English law does not recognise a wrong insofar as parties break off negotiations in bad faith. Therefore if English law was the law of the contract the parties entered (or would have entered) it would provide no remedy in those circumstances, suggesting that under English law culpa in contrahendo would have limited scope. 21.10 As noted, there appears to be a shortage of guidance in this area, but it seems correct – having regard just to the wording of Article  12 of the Rome II Regulation – to think that a fraud which induces a contract should fall within that provision. That seems to have been the view of Teare J in Morgan Stanley & Co International plc v China Haisheng Juice Holdings Co Ltd15. Of course, if that is correct, so far as the governing law is concerned, it makes no difference whether one adopts the rule applicable to culpa in contrahendo or the contract rule. 21.11 Outside contract cases or cases of statements leading to contracts, fraud would count as a tort so that the applicable law would be that of the place where damage is suffered.

CASE STUDIES Case 1 21.12 A  document offering shares in a company is published in England but made available to investors worldwide. It contains a false statement about the company’s profit causing people to choose to invest. Investors in France, Germany and England choose to subscribe for the shares. When it becomes apparent that the profits have been overstated, the share price collapses and the investors suffer loss. 21.13 This appears to be a good example of the expansive approach taken in tort cases. On the basis that it can be established that the statement was fraudulent, that would give rise to a freestanding cause of action in tort. Since the document 14 15

[2018] EWHC 169 (Comm). [2009] EWHC 2409 (Comm), [2010] 1 Lloyd’s Rep 265 at para 36.

479

21.14  Fraud

was published in England it is probably the case that the tort was committed in England even if also elsewhere. But it might equally be argued that it was also committed in every place where the document was published. Might there be an analogy with making defamatory statements? In Shevill v Presse Alliance SA16 it was held in the case of a defamatory article published by a newspaper that the place where the event giving rise to damage occurred was made was the place where the newspaper was established. On that basis, if the analogy is sound, it seems likely that the place where the fraud is committed in this example is England, where the offering document is published. The validity of the analogy is shown by Domicrest v Swiss Bank Corpn17, in which it was held, by analogy with Shevill, that in a negligent mis-statement case the place where the harmful event occurs is the place where the statement is made; where it originates. Even in the case of a negligent statement made over the telephone, the relevant act containing the harmful event is what the speaker says – in the place where the speaker is located – even though the recipient receives and relies on the comment in the place where the recipient is based. 21.14 However, of course, the courts of the place where damage is suffered will also have jurisdiction. Thus, in this example, investors who suffer loss in their home state would be able to sue in that state. One of the points made in Shevill was that the courts of the place where the newspaper in the libel case was established could award damages for all loss but the courts for the place where damage was suffered could only award for the harm suffered in that place. However, in this example all the loss for each individual investor would have been suffered in the place where the individual investor is located. In Domicrest it was held that the place where damage occurred was likely to be the place where the statement was heard and relied upon. 21.15 The law governing the claim in tort is, subject to what is said below, the law of the place where damage occurs. That gives rise to one difficulty: if a person in country A can claim to have suffered harm in that country, then the applicable law will be the law of that country. In an example such as this, in which there are investors from different countries, it appears that different laws would apply to the fraud claim depending on where the claimant is based. In the Domicrest case, Rix J made the point, in the context of jurisdiction, that loss was likely to be felt in the place where the claimant is based, with the consequence that a jurisdiction rule based on the place of damage ‘over-favours the plaintiff’s jurisdiction’. But he said that there could be no complaint if the rule was properly applied. When considering the place where damage occurred, his conclusion was that it was the place ‘where the mis-statement is heard and relied on’. In this context it might, however, mean that different standards could be applied to the same act depending on where the claimant is based and this might be viewed as unsatisfactory. Other courts have taken more limiting approaches. In Kronhofer v Maier18, a jurisdiction case, an Austrian invested sums in a German company 16 [1995] 2 AC 18. 17 [1999] QB 548. 18 C-168/02 [2005] 1 Lloyd’s Rep 284.

480

Case studies 21.17

and for that reason transferred monies to Germany. He had not been warned of the risk associated with the investment and sued those who had encouraged him to invest. In that case it was held that damage had been suffered in Germany because it was there that an investment account was opened and sums were paid into that account. It was that investment which suffered a loss. Thus the place where damage occurred was Germany where the investment was made and not Austria where the investor was based and from where he paid the investment sums to Germany. It was not enough for the investor to claim that his assets had diminished as a result of him paying sums to Germany. What this may mean is that the governing law is capable of being determined on the basis of quite fine factual points as to where an investment is made. By contrast, in Kolassa v Barclays Bank19, another jurisdiction case, an investor claimed against a bank after he had been induced to make an investment from which he suffered a loss. It was held that the loss had been suffered ‘in the place where the investor suffered it’ and in that case that was the state where the investor was based. The most recent authority is Löber v Barclays Bank plc20. In that case Barclays issued bonds for which international investors subscribed and then sold on in the secondary market. An Austrian-domiciled individual invested in the bonds, making payments from Austrian banks. The investor suffered loss due to the money invested being used in a pyramid fraud scheme and so she sought to sue Barclays in Austria. It was held that the Austrian courts had jurisdiction as not only was the claimant based in Austria but also the sums paid by way of investment came from her bank accounts in that country in order to enter contracts for the purchase of the asset in Austria. Thus, Austria was the place where damage occurred. 21.16 These cases show the difficulty courts have had in reliably identifying the place where financial loss is suffered and the decisions turn on quite fine points. But in the present example, if investors were required to remit sums to England and the sums so remitted were invested in the company, following Kronhofer the argument would be that loss was suffered in England. Similarly, if the investment were made directly from the investors’ accounts in England, the English court would have jurisdiction. 21.17 It is possible, however, that a fraud claim, particularly one which arises prior to a party entering a contract, would be treated as culpa in contrahendo for the purposes of the Rome II Regulation. In that event, the governing law would be the law of the contract which the parties ultimately enter. There are very few cases dealing specifically with culpa in contrahendo. But it could be of value to the provider of investments to bring the case within this provision because it could then rely on the law of the contract entered into. (Whilst it is hoped this example is useful for the purposes of illustrating how the conflicts rules apply, liability for false statements in a prospectus is now governed by the Financial Services and Markets Act 2000, s 90.)

19 20

C-375/13 [2016] 1 All ER (Comm) 733. C-304/17 [2019] 4 WLR 5.

481

21.18  Fraud

Case 2 21.18 A similar example to that in Case 1 above but with a US-based promoter publishing information alleged to be untrue in order to seek investment in a company listed on the New York stock exchange. An English-based investor wishes to sue the promoter in England. 21.19 In this case, of course, jurisdiction is not governed by the Brussels Recast Regulation. The question is whether the US-based promoter can be served out of the jurisdiction so as to enable a claim to be brought in England. The gateway is tort. The test under the CPR focuses both on the place where the act was done and the place where harm was suffered. In this case, the tortious act is done in the US. Where is harm suffered by the English-based investor? It may be at this point that similarly difficult questions to those discussed above arise in determining the place where loss has been suffered. Of course the domestic courts would not be bound by EU case law when applying the CPR, and it may be that an English court would more easily conclude that a person based in England who is encouraged to part with money from an English bank account has suffered damage in England so that the English court has jurisdiction. That will be important, of course, to identifying the governing law, which will be based on the place where damage is suffered, and assisting in the conclusion that it is English law.

Case 3 21.20 A  Swiss bank brings proceedings in England against a German bank, alleging that the latter had made fraudulent misrepresentations which caused the former to invest in certain assets. The contract for the purchase of the investment contained an English choice of law and jurisdiction clause. 21.21 The first question is how to characterise the claim. It might be put in tort or, if the remedy sought includes rescission, also in contract. That informs the question where the claim should be brought. Applying the jurisdiction rules applicable to tort, that would be the place where the tort was committed or the place where damage occurred. Identifying the place for performance of the obligation in question is harder for the contract analysis. However, in this case there is a choice of jurisdiction clause. That would be relevant to a contract claim. It is also possible in a tort claim for such an allegation of misrepresentation to fall 482

Case studies 21.24

within the scope of a contractual choice of jurisdiction clause, even in the case where the parties have chosen a neutral jurisdiction which, in the event, is neither the place where the tort was committed nor where damage was suffered. It is a question of construction of that clause whether they do so. Choice of jurisdiction clauses are to be construed generously, as was stated in Donohue v Armco21. The present example, very loosely based on UBS AG  v HSH  Nordbank AG22, is an important reminder that no matter what the precise legal formulation of a claim, it is possible that parties intended their dispute to be determined in accordance with an agreed choice of jurisdiction clause. In considering that question, one should have regard to the related principle expressed by Lord Hoffmann in Fiona Trust Holding v Privalov23 that where parties have agreed an arbitration clause they are likely to have intended that all disputes between them should be resolved by arbitration. The same applies, at least as a starting point, to jurisdiction clauses and may mean, for example in culpa in contrahendo situations, that it is the choice of jurisdiction clause which prevails over what would otherwise have been the applicable jurisdiction rule in a case. 21.22 Since the claim is that the bank was caused to enter a contract on the basis of the misrepresentation, whether this is a contract claim, a tort claim where what is complained about is acts causing one party to enter a contract with another, or a culpa in contrahendo claim, the law chosen by the parties to govern the contract should be the applicable law.

Case 4 21.23 A French national residing and carrying on business in England attended an auction in Monaco run by a company domiciled in Monaco and bid for a Ferrari being sold by a vendor domiciled in Austria. The auction catalogue which the purchaser received in London claimed the car had only done around 16,000 miles. That description was inaccurate as the car had driven far more miles and the engine had serious wear. The purchaser said that the low mileage was a key factor in the decision to purchase and that the car would not have been bought had the truth been known. The sale contract is governed by the law of Monaco. The purchaser wishes to sue in England. 21.24 The first question is whether the claimant can sue in England. Insofar as this is considered as a tort claim, based on misrepresentation, that gives rise to a question of where the misrepresentation was made and where loss was suffered. On the face of it the tort was committed in Monaco because the misleading 21 22 23

[2001] UKHL 64, [2002] 1 Lloyd’s Rep 425 at para 14. [2009] EWCA Civ 585, [2009] 2 Lloyd’s Rep 272. [2008] 1 Lloyd’s Rep 254.

483

21.25  Fraud

catalogue was published there. The hope would be to try to establish damage in England. The essential basis of the tort claim was the purchaser’s reliance on the statements in the catalogue. It appears to be suggested that the place of reliance is the place where the bid was placed, and that was Monaco. As to loss, the claimant entered into a contract to buy the car in Monaco and paid for it in Monaco so suffered loss there. It might also be said that damage was suffered in Monaco because it was there that the claimant relied on the contents of the catalogue in order to place a bid. This might also be considered as a contract case but on the face of it the obligation in question is to deliver the car, which was to take place in Monaco. It is difficult to see how the English court could have jurisdiction over a contract claim. If this were a contract claim, the governing law would be that of Monaco as the chosen law. If it is right that damage was suffered in Monaco, that would be the governing law for a tort claim. This is broadly based on Morin v Bonhams & Brooks Ltd24. The decision was based on the application of the Private International Law (Miscellaneous Provisions) Act 1995 rather than the Rome II Regulation. It is of importance that the court accepted that the claim was based in tort. This could perhaps also be said to be a culpa in contrahendo case with the consequence that the governing law would be the law of the contract the parties ultimately entered, but by formulating the claim in tort a party can evade the law governing the contract.

Case 5 21.25 A Portuguese company issues a certificate testifying the airworthiness of a helicopter engine. The engine was sold to various companies and finally to the claimant who is based in England. Each sale was accompanied by the certificate. The claimant wishes to sue the Portuguese company in England for making a false statement concerning the engine. 21.26 This is a pure tort claim. As there was never a contractual relationship between the company verifying the quality of the engine and the ultimate purchaser, there is no question of a contract between the person issuing the certificate and the ultimate purchaser. Nor is there scope for culpa in contrahendo analysis because no contract results. Here, damage occurred when the claimant relied on the certificate for the purposes of deciding to buy the engine. In a case where a party brings a claim in reliance on a statement made, damage will be suffered in the place where the statement is received and relied upon. In this case, the claimant received and relied on the statement in England, meaning that the English court has jurisdiction. It also means that, as England is the place where damage has occurred, English law applies to the claim.

24

484

[2003] EWHC 467 (Comm), [2004] 1 Lloyd’s Rep 702.

Case studies 21.29

This is based on London Helicopters Ltd v Heliportugal25 (albeit the allegation there was of negligence, not fraud).

Case 6 21.27 An Austrian individual invested in a product supplied by an English domiciled bank. The product was described in a prospectus published in Austria. The product was originally purchased by institutional investors which sold them on to individuals such as the claimant. The claimant alleged that the prospectus contained untrue statements which caused the investment. The bank brings an application for negative declaratory relief in England. 21.28 The individual is not susceptible to the English court’s jurisdiction on grounds of domicile. The claimant in this case did not have any contract with the bank, having bought the certificates from a third party. The contract jurisdiction and choice of rules therefore do not apply in the claim against the bank. The claimant’s claim lies solely in tort. Moreover, since the claimant did not enter a contract with the defendant, this is also not a culpa in contrahendo situation. It is purely a tort case. In circumstances where the prospectus was drafted and originally published in Austria, that was the place where the wrong was committed (even though, per Domicrest, it might also be argued that the wrong was committed in every place where the prospectus was published). But even if it could be argued that the wrong was also committed elsewhere, the Austrian claimant is on strong ground to say that the wrong, perhaps the principal wrong, was committed in Austria. Since the claimant suffered loss by making payments from a bank account in the state of the claimant’s domicile, Austria, which would not have been made but for the false statement, that is the place where the claimant suffered damage so as to give the Austrian court jurisdiction. On this basis, the English court should decline jurisdiction to give the negative declaration sought. The bank would be susceptible to the jurisdiction of the Austrian court. This case is a much adapted and simplified version of Kolassa v Barclays Bank26.

Case 7 21.29 An individual domiciled in England entered into a ‘letting agreement’ for the hire of a holiday cottage located in Germany and provided by a 25 26

[2006] EWHC 108 (QB), [2006] 1 All ER (Comm) 595. C-375/13 [2016] 1 All ER (Comm) 733.

485

21.30  Fraud

German company for use by a group of friends. The contract is between the hirer and the owner of the cottage. One of the friends is disabled and had certain needs. On the basis of representations made by the owner in a brochure supplied in England as to the facilities available, the friend agreed to contribute to the cost of hiring the cottage. In the event it is unsuitable and the friend had to secure alternative accommodation. The friend wishes to sue in England. 21.30 Because the friend did not enter the contract with the owner, the friend’s claim is in tort based on the false statement in the brochure. The main issue in the case is that the German owner seeks to say that because the case concerns a letting agreement – which it says is the equivalent of a tenancy –therefore the exclusive jurisdiction provisions of Article 24 of the Brussels Recast Regulation apply and the claim can only be brought in Germany. However, the complaint in this case does not concern the land per se, but rather representations which were made about by the German owner in seeking to encourage consumers to enter into contracts with the owner for the hire of the property. Thus the case falls outside the scope of Article 24 and that does not apply. This is shown by Hacker v Euro-Relais GmbH27. There is a nice question where the tort is committed. The owner will say that the mis-statements appear in documents drafted and published in its home state on the basis that misrepresentations are made in the place where the statement is made. But the claimant will have to argue that because the brochure is published in a variety of places, the tort is not only to be regarded as being committed in the place where the publisher is located. If one applies the defamation cases such as Shevill by analogy, the tort could be committed where the publisher is based and damage would be suffered in all the places where the document is published. The defamation cases say that where a claim is brought in the place of publication, a claimant can only recover loss suffered in that place. That is unlikely to cause this claimant any difficulty because all that is sought is loss for the additional costs paid by that person. However, in this case the loss, in the form of additional costs, appears to be suffered in Germany so it appears that damage is suffered there. This counts against the English court having jurisdiction. 21.31 The applicable law would be the law of the place where damage was suffered. Although the claimant is English and payment of the costs would no doubt come from an English account, it seems that loss is suffered in Germany because it is there that the claimant has to make additional payment for accommodation costs. On that basis, it seems that German law should govern.

27 C-280/90.

486

Case studies 21.34

Case 8 21.32 An English company contracts with a French company for the supply of materials. In reliance on representations made by an Italian company, the English purchaser instructs the French company to buy fabric from the Italian manufacturer. The English company sued the Italian supplier in England alleging that its representations were false and claiming the cost of procuring alternative supplies. The Italian supplier challenged the court’s jurisdiction. 21.33 The claim was in tort because the English buyer had no contract with the Italian fabric supplier. The claim was instead based on false representations made from Italy. In order for the English court to have jurisdiction, England had to be either the place where the tort was committed or where damage was suffered. The representations were made in the place they were uttered rather than the place they were received, applying Domicrest. Since the representations originated in Italy, the place where the harmful event occurred was Italy, and thus the English court did not have jurisdiction on that basis. As to the place of damage, that occurred at the time and place when the fabric samples were received and it was perceived that they did not comply with the representations which the Italian company had made. That happened in France when the samples were received by the French intermediary buyer. Further, on the facts of the case, loss was suffered consequent on delays in producing a product which was to be manufactured in France. It was not enough that the claimant took decisions in England which led to loss. On this basis, it seems that the English court would not have jurisdiction. As to the governing law, since damage occurred in France, the law applicable to the claim would be French law. This example is broadly but not precisely based on Alfred Dunhill Ltd v Diffusion International de Maroquinerie de Prestige SARL28. It shows the importance of working out with some precision where, depending on the facts, loss has occurred.

Case 9 21.34 An English company bought certain musical recordings and intellectual property from the receivers of an English company and then assigned those rights to another company. Swiss and German companies provided warranties to the first buyer concerning licences which affected the

28

[2002] 1 All ER (Comm) 950.

487

21.35  Fraud

recordings. The second buyer alleged that the representations were untrue and sued the companies which had given the warranties in England. 21.35 This claim was in tort. The second buyer did not have a contract with the seller or the parties giving warranties. As to where damage occurred, the misrepresentations did not cause any diminution in the value of the recordings. The loss rather was that the end purchaser paid more for the assets than would have been the case if the representations had not been made. Since the agreement was entered into in London, it was in England that the claimant had arguably overpaid and therefore the English court had jurisdiction. On that basis, the governing law would also be English as the place of damage. This example is broadly derived from Crucial Music Corpn v Klondyke Management AG29.

Case 10 21.36 A US-based company makes a false statement to an English company as to the profitability of a French subsidiary. Relying on the statement, the English company purchases shares in the French company on the French stock exchange. 21.37 In this example, the English claimant’s claim against the US entity is in tort. The first question is whether the English company can serve out against the US company. That turns on whether the tort was committed in England or damage was suffered in England. As to the former, it seems in the light of Domicrest that the tort in the form of the false statement would be committed in the US, because that is where the statement is made. That case was decided under the Brussels Recast Regulation but it seems that the same principle should apply under domestic law since it is the same issue: where the tortious act is committed. As to damage, although the English company would pay for the shares from its English bank account, it seems that damage would be suffered in France because it is there that the English buyer ended up paying more for the shares in France than would have been the case if the representation had not been made. It is also in France that the claimant suffers a loss in the value of the shares which it has purchased. The analogy may not be perfect because it is a Brussels Regulation case, but this is similar to Universal Music v Schilling, where the claimant overpaid for a company in the Czech Republic in consequence, it alleged, of its

29

488

[2007] EWHC 1782 (Ch), [2008] All ER (Comm) 642.

Case studies 21.39

solicitors’ negligence. Loss was suffered in the Czech Republic where the asset was purchased and not in the country from which the purchase price was paid.

Case 11 21.38 The same facts as in Case 10 above, save that following the representation, the English company enters into a contract with the US company to buy the French subsidiary, which contract is governed by English law. 21.39 It may be possible to characterise this as a breach of contract case such that jurisdiction would be conferred under CPR PD  6B on the basis that the contract is governed by English law. If this were purely a tort claim then the issue would be where the tort was committed and where damage was suffered, as analysed above. There would be an argument that the choice of English law would govern even the tort claim, although that would depend on the construction of the clause.

489

CHAPTER 22

International sales contracts 22.01 This is a paradigm area in which conflict of laws questions can arise, both as to jurisdiction – where can parties be served – and as to choice of law. The choice of law issue will almost always be that concerning contract.

DEFINING ‘SALE OF GOODS’ 22.02 The initial consideration is what is meant by sale of goods and in particular how that is to be distinguished from the provision of services. In Car Trim GmbH v Keysafety Systems Srl1, the Court of Justice distinguished the supply of goods and the provision of services referring to the manufacture of goods and the supply of a tangible movable item for the purposes of the Brussels Regulation. There would be a contract for sale where there was an obligation to supply goods unless the purchaser had to supply a substantial part of the materials required for the manufacture or production. If that is the case, it may be more accurate to refer to the contract as a contract for services – the process of putting together an item from materials supplied by the purchaser. If the supplier is responsible for the quality of goods, that indicates a contract of sale. But where the supplier is responsible for the correct implementation of the other party’s instructions, that suggests a contract for services. Where the purchaser imposes certain obligations as to, for example, from where to source materials, that does not mean the contract fails to be a contract for sale. 22.03 In some cases a contract may be for both the sale and installation of goods and thus a contract both for the sale of goods and the provision of services. This might potentially lead to questions about which part of the contract should predominate for choice of law purposes, but in fact that rules are similar and are based on the place where the seller and supplier of services are habitually resident. 22.04 The starting point is to identify factors that may in particular be relevant to the ascertainment of jurisdiction including, under domestic law, having regard to the place for performance of the obligation in question. It is then also necessary to have regard to the uniform provisions dealing with governing law, bearing in mind the distinction between what might be described as commercial sales cases and consumer cases.

1

C-381/08 [2010] 2 All ER (Comm) 770.

491

22.05  International sales contracts

22.05 A  contract of sale under domestic law is a contract by which a person agrees to transfer property in goods for a consideration called the price. There may be a contract of sale providing for the transfer of property in accordance with the contract or an agreement to sell whereby the parties agree to the transfer of property at some future date. 22.06 Important questions may arise as to when and where the obligations under a contract of sale are to be performed and how they may be breached. The key to a sale contract is that the seller agrees to transfer title to the buyer. It follows, of course, that the buyer must have title in the goods: nemo dat quod non habet, as we used to say. If the seller does not have title, that would mean a breach of contract. The breach would presumably be committed in the place where the seller effected – or was intended to effect – delivery, as that was the place for performance, ie the place where the goods should be delivered, and it was the seller’s lack of title which meant that the seller could not perform correctly. The case of delivery to carrier is dealt with below but in the case where a seller hands goods to a buyer it is at that time and in that place that, in order to be able to transfer title, the seller must itself have title in the goods. In the case where goods are to be transferred when the documents representing the goods are tendered, the relevant place would be the place where the documents were tendered: see Niblett Ltd v Confectioners’ Materials Company Ltd2. 22.07 There are particular rules to have in mind relevant to international sales, and in particular sale and the transfer of title on the basis of documents. In international sales, dealings in documents are often in lieu of dealings with real products and the consequences of such dealings may affect title, as well as the subsequent need and obligation to insure and pay for the goods. 22.08 A document of title is, of course, a piece of paper which is capable of operating in lieu of a real item with the consequence that the sale or transfer of the document of title may be regarded as the equivalent of selling or transferring the underlying property. (That also has, amongst other things, consequences for insurance because if a transferee of a document of title becomes entitled to possession of a product, the transferee would wish to insure it. There are also likely to be issues as to the obligation to pay upon transfer of the document of title.) For example, it was held in Clemens Horst Company v Biddell Brothers3 that delivery of a bill of lading in respect of goods which are at sea counts as delivery of the goods and that upon the delivery of the bill of lading payment was due, there being no need to wait for delivery of the goods themselves. In that case, Kennedy LJ, whose judgment was upheld by the House of Lords, said that ‘The bill of lading in law and in fact represents the goods. Possession of the bill of lading places the goods at the disposal of the purchaser’.

2 [1921] 3 KB 387. 3 [1912] AC 18.

492

Defining ‘sale of goods’ 22.13

22.09 By section 1(4) of the Factors Act 1889: The expression ‘document of title’ shall include any bill of lading, dock warrant, warehouse-keeper’s certificate, and warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.

That definition is incorporated into the Sale of Goods Act 1979. 22.10 This is not the place to explore the detail of the documents surrounding an international sale, since this book’s focus is on where various events may occur so far as relevant to questions of jurisdiction and choice of law. But as some of the cases deal with the various documents, and as consideration of them and the transactions surrounding them may be relevant to questions as to the performance of contractual obligations, they will be referred to by way of definition. 22.11 A  bill of lading is issued by a carrier to indicate that goods have been received for carriage. But it is also, as is clear from Clemens Horst, a document through which delivery of goods can be effected. Thus, a bill of lading which states that goods have been shipped can be regarded as representing the goods. In The Prinz Adalbert4 it was held that delivery of an indorsed bill of lading whilst goods were afloat was the equivalent to delivery of the goods themselves: the bill of lading is a symbol of the goods. Possession of a bill of lading enables the holder to take possession of the goods when they arrive. The carrier must normally deliver the goods to the holder of the bill of lading when they reach their destination. This means, for example, that delivery to anyone else after the goods have arrived will be a breach, presumably occurring at the place where delivery was due. In Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd5 shippers released the goods but not against a bill of lading. That meant that the shipping company was liable on the face of it for mis-delivery to the party shipping the goods, the breach occurring at the place where the goods were delivered to the wrong person. 22.12 The seller in an international contract of sale is under a duty to deliver the goods. In the case of goods that are shipped, s 32 of the Sale of Goods Act 1979 deems delivery to the carrier to be delivery to the buyer with the consequence that risk, title and possession of the goods pass on shipment: see Scottish & Newcastle International Ltd v Othon Ghalanos6. 22.13 The buyer’s obligation, of course, is to pay. Where does that obligation arise? It may be that the express terms of the contract provide an answer. In some cases the mode of payment may be specified and that will carry with it a place for performance. In the absence of any express choice or choice which can be 4 [1917] AC 586. 5 [1959] AC 576. 6 [2006] EWCA Civ 1750, [2007] 2 Lloyd’s Rep 341.

493

22.14  International sales contracts

inferred it has been held that it is the debtor’s duty to seek out the creditor, with the consequence that payment would be due where the creditor is based. In The Eider7, a party to a contract complained of non-payment of sums due and wished to serve out of the jurisdiction. To do so, it had to be shown that the breach by failure to pay occurred in England. It was said that the ordinary rule as to payment was that ‘the debtor must follow his creditor and pay where the creditor is’. Therefore if a person makes a contract with a person abroad, the person with the obligation to pay must go abroad to pay it. (There was a suggestion that it might be different if the contract was between two English parties and after the contract one of them elected to go abroad.) Since in that case the payee was and always had been in Germany, the breach by failure to pay did not occur in England even though the services covered by the contract were to be performed in England. 22.14 That case had in mind, as one would expect given its date, the handing over of money by one person to another. But it seems that the same principle would apply to payment by electronic means. If there were a contract involving two German parties to carry out works on a ship in English waters, the principle that the payor has to seek out the payee would mean that the obligation to pay arose in Germany even if, in modern times, that meant sending an electronic payment so that it was received in the German payee’s bank account. Thus, if a seller in England sells goods abroad and so becomes the creditor, payment is due in England. In Robey & Co v The Snaefell Mining Company Ltd8 goods were sold by an English manufacturer to the Isle of Man, to be delivered there. It was held that payment was due to the English creditor in England. Since that case concerned a breach in the failure to pay, the breach occurred in England and the claimant could serve out of the jurisdiction.

JURISDICTION AND CHOICE OF LAW 22.15 Against that brief background, one can turn to consider jurisdiction and choice of law in commercial sales contracts (to distinguish them from consumer contracts which are considered separately below). So far as jurisdiction is concerned, and beginning with defendants domiciled in EU Member States, it is the contract provisions of the Brussels Recast Regulation9 which are relevant. Article 7(1)(b) of that Regulation provides that the court with jurisdiction in the case of a defendant domiciled in a Member State will be the Member State where goods were delivered or should have been delivered. The place of delivery would be likely to depend on the law governing the contract. It would be that law which would ascertain any express terms as to delivery or apply any rule of law in their absence. Section 29 of the Sale of Goods Act 1979 provides that the place of delivery is the seller’s place of business if there is one or, if not, the place of the seller’s residence. However, if to the knowledge of the parties the contract relates 7 [1893] P 119. 8 (1887) 20 QBD 152. 9 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

494

Jurisdiction and choice of law 22.17

to the sale of specific goods which are in some other place, then the place of delivery is the place where the goods are located. It may be that the same would apply to unascertained – ie non-specific – goods where they are part of a larger bulk of goods located in a place or are to be manufactured in a place. Therefore, if the contract was for the sale of wheat which the parties intended should come from a particular farm or for the manufacture of a certain good which it is agreed will be undertaken at a specific factory, then that place would be likely to be the place of delivery, and any failure to deliver would take place there. Further, as indicated above, delivery to a carrier would be treated as delivery for the purposes of English law and so the issue would be where that form of delivery took place. 22.16 In relation to defendants domiciled other than in a Member State, the contract provisions of CPR PD 6B are relevant. This focuses on the case where the contract was made within the jurisdiction or via an agent trading or residing within the jurisdiction or is governed by law or contains an English choice of jurisdiction clause or where the claim concerns a breach committed within the jurisdiction. These criteria, and particularly the last, need to be developed in the context of sale contracts. For example, the points made above about the duty to deliver would also be relevant to determining where a breach had occurred in the case of non-delivery. 22.17 Turning to choice of law, in many sale contracts the parties will choose the governing law expressly and no issue will arise as to its identification. But, as was explained at para 7.21, where there is no express choice of law it is possible for there to be an implied choice, where the choice of law is ‘clearly demonstrated by the terms of the contract or the circumstances of the case’. How does this idea of implied choice apply in sale of goods contracts? There may be several possibilities. One might have a standard form contract which is known to be governed by a particular system of law. Examples that have been given include (outside sales) a Lloyd’s policy of marine insurance. Or one might have a case where the parties have engaged in a course of dealing and have throughout their dealings regarded their contracts as being governed by a particular law. Where parties to a contract containing an agreement to arbitrate have not chosen the law to govern their contract, the law of the place chosen as the seat for an arbitration may carry with it a choice of law, at least so far as the conduct of the arbitration is concerned. Thus in this case the implied choice is limited to the agreement to arbitrate: see Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb10. It will be otherwise when the parties have expressly chosen the law to govern the main contract. In that case, the chosen law will govern the arbitration agreement. But where, as in the Enka Insaat case, the law governing the main contract is not chosen and falls to be inferred then a system of law applying solely to the agreement to arbitrate may be inferred from the selection of the seat for the arbitration. Other factors may be more elusive in identifying the (impliedly) chosen law. In

10 [2020] UKSC 38.

495

22.18  International sales contracts

Lupofresh Ltd v Sapporo Breweries Ltd11 (a case decided under the Contracts Applicable Law Act 1990, which used a similar concept of choice demonstrated with reasonable certainty by the terms of the contract of the circumstances of the case) the use of English language was regarded as insignificant, as was the use of the term ‘CIF UK Port’, as that was a term frequently used in international maritime trade. Similarly a reference to EU and US regulations did not assist, as that showed only that the products being sold (hops) had to be suitable for use in the US and EU. One might add that such reference would not assist the choice of an EU country or US state whose law could govern. Other factors that might be prayed in aid, such as a choice of currency, may be of limited utility. 22.18 In the absence of an express or implied choice, the governing law is determined by Article 4 of the Rome I Regulation12. That article contains a number of rules applicable to particular types of case, and in the case of a contract for sale, states that the governing law is the law where the seller habitually resides. The remaining provisions of Article 4(1) deal with other types of contract. There is a fall-back for contracts of a type not listed, when the governing law is the law of the country where the party responsible for performance which is characteristic of the contract is habitually resident. But in so many of these cases it is the habitual residence of a party which is decisive; and in a sale contract that is the habitual residence of the seller. (As is noted below, this rule is reversed in the case of a consumer contract.) 22.19 Habitual residence is defined by Article 19 of the Rome I Regulation to mean, in the case of a company, the place where it has its central administration and in the case of a natural person conducting business, the location of the person’s principal place of business. Where a contract is concluded by a branch, agency or establishment, or the performance of the contract is the responsibility of the branch, agency or establishment, then the place where the branch etc is located is the place of habitual residence. The time at which habitual residence is to be assessed is the time when the contract is concluded. 22.20 There are also two provisions which may enable a court to depart even from one of the rules set out in Article 4(1) of the Rome I Regulation. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that identified, then that country’s law will apply. To take a fictional example rather than one from the authorities, imagine a case in which a seller domiciled in country A goes to country B to supply a bespoke product to a person in B, where the product is designed to the specification of the person in B and the person in A goes to B to install and oversee it, one might well say that the contract is more closely connected with B than with A, the seller’s habitual residence, which is, in those circumstances, a rather fortuitous place to suggest as providing the governing law for the contract.

11 12

496

[2013] EWCA Civ 948, [2013] 2 Lloyd’s Rep 444. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations.

Jurisdiction and choice of law 22.24

22.21 The other exception, which on its face would not apply to a sale contract at all, is the case where the governing law cannot be determined in accordance with the prior provisions of Article  4 of the Rome I  Regulation. The governing law is then the law of the country with which the contract is most closely connected. 22.22 Consistent with long-standing domestic law, Article  9(3) of the Rome I Regulation provides that effect may be given to the overriding mandatory provisions of the law of the place where the contract is to be performed insofar as those provisions render performance of the contract unlawful. That is thought to reflect the traditional English law position set out in cases such as Ralli Bros v Compania Naviera Sota Y Aznar13. That case concerned a charterparty governed by English law in respect of which an issue arose as to the freight payable. The charter involved the carriage of goods to Spain. Freight was payable in Spain in the Spanish currency. However, under Spanish law there was a ceiling on the amount of freight that could be charged, which this contract exceeded. This meant that the contract was unlawful in its place of performance insofar as it charged freight above that ceiling. It was held that the contract was invalid insofar as its performance was unlawful in the place of performance. This remains the position under the Rome I Regulation. 22.23 The law governing the contract would determine the parties’ obligations. It would be that law which would construe the contract and decide terms which fell to be implied. It would also be relevant in the case of breach consisting of failure to pay. It would be the law governing the contract which would determine where the obligation to pay arose. There might be express terms providing for that or it might be that general principles of law, such as the rule under English law that it is for the debtor to seek out the creditor, would apply. Thus an English seller selling goods under an English law governed contract would be able to say, absent any express terms, that the duty to pay arose in England where the seller, as creditor, was based. 22.24 So far the text has considered contracts between a commercial buyer and a commercial seller, but it is to be recalled that many sale contracts may also be consumer contracts in the case where the purchaser does not act in the course of a business. Different rules apply to consumer contracts, and they should also be touched on here. What, in general, is a consumer contract? The answer is that it is a contract entered into by a person acting outside a trade or profession with a person acting within a trade or profession. Even that definition may give rise to some hard cases as, for example, in the case of a farmer who bought tiles to re-house a building used partly as a home and partly as a farm: see Gruber v BayWa AG14. In fact, for jurisdiction purposes, Article 17 of the Brussel Recast Regulation identifies two types of case. One is the case where a contract is a contract for sale of goods ‘on instalment credit terms’. It is therefore not the contract of sale per se that means this is a consumer contract, but the credit element of 13 14

[1920] 2 KB 287. C-464/01 [2006] QB 204.

497

22.25  International sales contracts

it. However, sale contracts could also be caught by Article 17(1)(c) applying to ‘all other cases’ where either a contract is concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or ‘directs such activities to several states including that Member State, and the contract falls within the scope of such activities’. This would be able to include contracts as long as either condition was satisfied. It is thought that in most cases where a vendor sells products to consumers in a particular place, one could say that the commercial activity was pursued in that place: someone with a shop selling products in London would be pursuing the commercial activity of selling there. 22.25 The idea of activities being directed to a place is intended to capture the situation, common, of course, with online businesses, in which a person is based in one place but (remotely) sells products or perhaps services in another. For example, where a supplier of holidays advertises the service via the Internet and the website is available in numerous countries, will the supplier be held to have directed the activity of selling such services to the state where the ultimate purchaser is based? Here there is a potential clash of aims. On the one hand is the desire to protect the consumer, which would include enabling the consumer to commence proceedings in the forum most convenient for that consumer. On the other hand, in part no doubt because of the unspoken concern that businesses should not be dragged to courts too far away from where they operate, it is felt necessary to impose some limitation to what counts as directing activities to a particular place. The perhaps messy compromise reached in Pammer v Reederei Karl Schlüter GmbH15 was to say that it is not enough that a website is accessible in a particular place; it must also be shown that the trader evinces an intention to deal with persons in that place. That was explained in terms of enabling a consumer to contact the provider in a certain place by means identified on the website. It might be thought that the mere fact that a trader enters into a contract with a person in a particular place means that the trader has directed its activities there and evinced an intention to deal with persons in that place. 22.26 The jurisdiction rule provides that the consumer will be able to sue the commercial provider domiciled in a Member State in the state of that other person’s domicile – the normal domicile rule – but also in the place where the consumer is domiciled16. Hence, no doubt, the definition of consumer which includes the case where the commercial counterparty pursues such activities in the consumer’s Member State or directs activities to them. That provides additional jurisdictional options for the consumer, and means that the other party to the contract will have some connection to that place, thus addressing the point mentioned above that one does not want to drag even commercial providers too far and wide. Where the consumer deals with and wishes to sue a commercial provider not domiciled in an EU Member State but which has a branch, agency or other establishment in a Member State then in relation to matters arising out

15 16

498

C-285/08 [2011] 2 All ER (Comm) 888. Brussel Recast Regulation, Article 18.

Case studies 22.30

of the operations of the branch, agency etc, the non-EU domiciled defendant is deemed to be domiciled in that Member State17. 22.27 The other relevant issue for consumers relates to choice of law. Parties to consumer contracts may choose the governing law in the usual way. However, it is expressly provided by Article  6(2) of the Rome I Regulation that such a choice may not deprive the consumer of the protections of the law which cannot be derogated by agreement and which would have effect under Article 6 of the Rome I Regulation in the absence of choice. As to that, Article 6 provides that where a contract is concluded by a natural person outside that person’s trade or profession with someone who is acting in the course of a trade or profession, the law governing that contract will, in the absence of choices, be the law of the country where the consumer is habitually resident, as long as the commercial party pursues commercial activities in that country or, echoing what was said in the jurisdiction context and intended to be construed in the same way, directs activities to that country. 22.28 There are some exceptions to the default choice of the law of the place of the consumer’s habitual residence, including contracts for the supply of services, where the services are to be supplied to the consumer exclusively in a country other than that of the consumer’s habitual residence. Hence, if the services were provided in several places, one of which was the consumer’s habitual residence, the law of that place would apply. But that would not be the case if the services were provided in several places, none of which was where the consumer was habitually resident.

CASE STUDIES Case 1 22.29 A Cypriot company agrees to buy cider from a Scottish company, to be shipped from England to Cyprus. The buyer refuses to pay and the seller sues in England. Does the English court have jurisdiction? 22.30 The basic jurisdiction rule under the Brussels Recast Regulation is that the courts for the place of performance of the obligation in question have jurisdiction. However, in a sale of goods case it is specifically provided that the place of performance of the obligation in question is the place where the goods are or should have been delivered18. Thus the question in this case was where were the goods delivered? The cider in this example was shipped from Liverpool to Limassol. The contract was governed by English law and so the place of delivery 17 Ibid, Article 17(2). 18 Article 7(1)(b).

499

22.31  International sales contracts

was governed by English law. Under the Sale of Goods Act 1979, delivery of goods to a carrier counted as delivery to the buyer. Thus, when the cider was delivered to a ship in Liverpool that counted as delivery to the buyer and for that reason Liverpool was the place of delivery. It follows, in accordance with Article 7 of the Brussels Recast Regulation, that the delivery was in England and so the English court had jurisdiction. This example is based on Scottish & Newcastle International Ltd v Othon Ghalanos19.

Case 2 22.31 An English company engaged a German-domiciled company to inspect goods which were being purchased by the English company and to report on their quality before payment was made for them. The German company was to inspect the goods in China and submit a report to the company in England. The English company alleged that the reports were inaccurate and so it sought to sue the German company. Could it do so in England? 22.32 Whether the English company could sue in England depended on where the obligation in question was to be performed. The English company said that the obligation was to report to it, which was required to be done in England. But the substantial duty was to inspect the goods and – in the light of that inspection – to produce the report. That inspection was to be done in China, not in England and on that basis the German company could not be sued in England. This example is based on Source Ltd v TUV Rheinland Holdings AG20.

Case 3 22.33 A Belgian company acts as a commercial agent for an Italian company in Belgium and the Netherlands. It terminates the contract for a failure to pay commissions and sues for unpaid commissions and for damages for the early termination of the contract as a consequence of the Italian company’s breach. Could it bring both claims in Belgium?

19 [2008] UKHL 11, [2008] 1 Lloyd’s Rep 462. 20 [1998] QB 54.

500

Case studies 22.37

22.34 The issue in this case is where the obligations were to be performed. There were two obligations. One was to pay commissions. That obligation was to be performed in Italy, where payment was made and the creditor resided. The other was to give due notice of termination of the agreement rather than, as happened, terminating it summarily by failing to pay commissions and causing the counterparty to accept the repudiatory breach and end the contract. The obligation to give notice was to be performed in Belgium, where due notice should have been given to the Belgian contracting party. Since jurisdiction is based on the place where the obligation in question is to be performed and since that means the obligation giving rise to the claim, the Belgian court had jurisdiction over the claim based on unlawful termination or failure to give notice but not the claim for unpaid commissions. This example is based on Leathertex Divisione Sintetici SpA v Bodotext BVBA21.

Case 4 22.35 A Saudi national agreed with a Saudi prince at a meeting in London to effect the sale of aircraft in Libya in return for commission which was requested to be paid to a bank account in London. It was alleged that the agreement was reached over lunch in London and that the claimant was told in London to proceed with the negotiations. The aircraft were sold but no commission was paid. Could the Saudi claimant sue in England? 22.36 Since the claim is brought against a defendant not domiciled in an EU  Member State, the issue in this example is whether service out should be permitted under the domestic rules, ie  CPR PD  6B. The question is whether the claimant has a good arguable case that any of the jurisdiction provisions is engaged. As to that, the claimant’s case is that the contract was made in England so as to engage CPR 6.20(6)(a) and a breach was committed in England. If the provisions are arguably engaged there is a question whether England is the forum conveniens. On the basis of the case as described there is a sufficient case to be arguable that the contract was made in England. 22.37 As to breach, whilst the claimant had requested that the commissions be paid to an account in London, in order to succeed in the argument that the breach occurred in England, it would have to be shown that the only place where the payment was due was London. The rule requires that England be the only place where performance was required. In Cuban Atlantic Sugar Sales

21

C-420/97 [1999] 2 All ER (Comm) 769.

501

22.38  International sales contracts

Corpn v Compania de Vapores San Electerio Limitada22, a ship could, under a contract, deliver a cargo at a UK port of its choice. It sank before choosing a port. It was held that, as it could have delivered to England, Scotland or Northern Ireland and as it had not made a choice before sinking, it could not be said that performance was required or that a breach had occurred by failing to deliver in England because the performance could have been at any of the three places and the breach would only have occurred when one place was chosen. Hence, the question arises whether there will be a breach in England if England is one place where the contract could have been performed? The answer is that there will only be a breach in England if performance is required in England. In this example, the claimant lives and works in several places, albeit spending most time in London. However, it does not follow that the payment was only due in London or that the breach in the failure to pay occurred in London. The remaining question is whether England is an appropriate forum. As to that, the fact that the claimant spends much time in London, the meeting at which the contract was agreed took place in London, and London was a convenient forum for the parties meant that it met the requirement of being the forum conveniens. 22.38 This example is based on Sharab v Al-Saud23. One difficulty with the analysis in that case is that, if the contract may be performed in several jurisdictions and is not performed at all, does it follow that the breach does not occur anywhere because nowhere was the place where performance was required? Why can it not be said that it is breached in all the possible places of performance? The same problem arises in the Cuban Atlantic case. The English court did not have jurisdiction because, where the ship could choose several ports, there was no breach in England. But does it not follow that there was also no breach in Scotland or Ireland?

Case 5 22.39 An English-domiciled seller contracts with a US-domiciled buyer to sell goods under a contract governed by the law of Boston. The seller delivers the goods to a carrier but the buyer fails to pay. May the buyer sue in England? 22.40 The question here is whether the English seller can serve out of jurisdiction against the US buyer. That depends on the contract provisions of CPR PD 6B. As to that, it is not clear that the contract was made in England. It is not governed by English law. The question is whether there is an arguable case that the breach was committed in England. In fact, that question would be governed by the law of Boston, which would determine whether there was any express 22 23

502

[1960] 1 QB 187. [2009] EWCA Civ 353, [2009] 2 Lloyd’s Rep 160.

Case studies 22.42

term as to the place of payment and, if not, what the default rule was. But if the law of Boston is the same as English law, with the consequence that the debtor must seek out the creditor and pay where the creditor is based, then the breach will have occurred in England so that a jurisdictional gateway would be satisfied.

Case 6 22.41 An English-domiciled customer books a trip advertised on the internet by a German intermediary which is ultimately supplied by another German company. On the day, the customer refuses to travel, claiming that the vessel did not meet the description on the website. Could the customer sue for a refund in England? 22.42 The question in this case is whether the contract counts as a consumer contract. In the ordinary course, the German service provider should be sued in the state of its domicile. But if the contract was a consumer contract, the consumer would be entitled under Article 18(1) of the Brussels Recast Regulation to sue in the state of the consumer’s domicile. The contract in this case would be a consumer contract only if the seller pursued commercial activities in the state of a person’s domicile by ‘directing activities’ in that state. Thus, the question is whether the sale of the trips to the consumer domiciled in England involves the direction of the activity of selling that product to a person in that state. Where a trader envisages doing business with a person in a state and to that end publishes contact details on a website and evinces an intention to approach and encourage business from customers in that state, then the trader would be directing activities to that state. This would enable a person to say that this was a consumer contract, and that therefore the claim could be brought in the state of the consumer’s domicile. This example is based on Pammer v Reederei Karl Schlüter GmbH & Co KG24.

24

C-585/08 and C-144/09 [2011] 2 All ER (Comm) 888.

503

CHAPTER 23

Contracts for services 23.01 This category of case gives rise to at least two sets of disputes: (i) breach of contract in circumstances in which either services are not provided, or they are not provided in accordance with the terms of the parties’ contract, or there is a failure to pay; (ii) where the services in question are professional services and there is an argument that the services have been negligently provided. It is in the latter type of case that difficulties may arise in identifying the governing law, as professional negligence cases are capable of giving rise to liability in both contract and tort.

LIABILITY IN CONTRACT 23.02 It might be thought that the principal basis on which the duties of a professional services provider would be policed is by contract. The parties will, by their express terms, have agreed what work is to be carried out and they may have laid down standards which are to be met. Even if they have not, terms such as the exercise of reasonable care and skill will be implied. In Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp1 it was held that the professional’s obligations depend on the term of the retainer and that ‘the duty is directly related to the confines of the retainer’. Sometimes there will be limits in the retainer which will affect the scope of what the professional person is to do. For example, in National Home Loans Corpn v Giffen Couch & Archer2, solicitors were instructed by a lender to act in relation to the remortgage of a property. They were asked to investigate title to the property, say whether any conditions of the loan could not be met and investigate whether the borrower was bankrupt. They were not asked to investigate the state of the loan that was being remortgaged, though they did discover that the borrowers were in arrears with repayments. They did not reveal this to the lender. The mortgagor later fell into arrears with the remortgage, whereupon the lender foreclosed but recovered less than the full amount of the debt when it sold the property. It sued the solicitors for professional negligence for failing to reveal the earlier arrears. The Court of Appeal held that there was no duty to reveal that information because that did not fall within the scope of the solicitors’ retainer which had 1 2

[1979] Ch 384. [1998] 1 WLR 207.

505

23.03  Contracts for services

only been to effect the mortgage. The solicitors’ job was to ensure that there was an effective first charge. Thus the terms of the contract – the particular things the solicitors had been asked to do – were key in setting out the scope of their responsibility and for determining when liability for breach could arise. 23.03 The question what the service provider has agreed or been asked to do turns on the construction of the retainer. That will answer the question whether the service provider is being instructed to promise an outcome or to take reasonable care in the provision of a service. In Midland Bank plc v Cox McQueen3 a bank offered a loan in return for security over property owned by the borrower’s wife. For that purpose the bank needed a charge which had been explained to and signed by the borrower’s wife. Solicitors were instructed to procure the requisite documents and signature. In fact, unbeknown to the solicitor, the borrower brought along someone other than his wife to sign the charge, so in reality the solicitors did not obtain the wife’s signature. The bank sued the solicitors, alleging that they had acted in breach of their retainer because they had not secured the wife’s signature but only that of a third party. The Court of Appeal held that under the retainer the solicitors’ duty was to exercise reasonable care and skill. It would be open to a client to impose a duty to achieve an outcome but that would have to be done in clear terms. But what this shows is that, with clear terms, a client could impose a duty to achieve an outcome as opposed to exercising reasonable care and skill. However, in the absence of that obligation, the only duty will be to exercise care and skill. There can be fine lines. Cox McQueen distinguished an earlier Court of Appeal case, Zwebner v Mortgage Corpn 4, but in that case the terms of the retainer had required the solicitor to ‘properly execute’ the relevant documents, thus requiring an outcome.

LIABILITY IN TORT 23.04 The starting point is that there may be plenty of cases in which liability may only arise in tort. For example, in Smith v Eric S Bush5, the question was whether a house surveyor instructed by a mortgagee to value a house, knowing that the valuation would also be relied on by the purchaser of the house and mortgagor, owed a duty of care to the purchaser in respect of the valuation. The buyers paid the mortgagee a modest survey fee. However, there would in that case be no contractual relationship between the valuer and the purchaser because the valuer had been instructed by the mortgagee to undertake the valuation. Thus liability could only arise, if at all, in tort. In one case it was conceded that the surveyors owed a duty of care because they knew that the report would be showed to the mortgagor and that the mortgagor would rely on it so as to give sufficient proximity for the duty to be imposed. Even where the surveyor did not know that the buyer would rely on the advice, it was held that a duty of care was owed if it was foreseeable that the buyer would suffer loss if the advice was 3 4 5

506

[1999] 1 FLR 1002. [1998] PNLR 769. [1990] 1 AC 831.

Liability in tort 23.06

negligent. In that context there would be sufficient proximity. Where a surveyor valued a small house for a local authority or a building society, the surveyor would owe a duty of care to the end purchaser. The proximity flowed from the surveyor’s knowledge that the report was likely to be relied upon. That the advice was given in a professional rather than social context made it just and reasonable to impose the duty. Two Law Lords expressed the view that the relationship between the surveyor and the purchaser was equivalent to contract or akin to contract (language which had also been used in Hedley Byrne v Heller6) and for that reason sufficiently close to justify the imposition of a duty of care. 23.05 However, even where there is a contract, a duty of care may be imposed in tort. The leading case in this area is Henderson v Merrett Syndicates Ltd7. In that case, names at Lloyd’s of London sued underwriting agents. The names sought to bring actions concurrently in contract and tort. One reason was the more favourable time limit applicable to tort claims (touched on at para 23.07). The House of Lords rejected the argument that the existence of a contract between the parties was inconsistent with and precluded a tortious duty of care being owed. Lord Goff relied on Hedley Byrne to say that a duty of care could be owed for (in that case) a negligent mis-statement and stressed the importance of the assumption of responsibility test. He reasoned from that to the imposition of such a duty on the underwriting agents. It is not difficult to see why the test to impose a duty of care, whether based on assumption of responsibility or foreseeability or proximity, should be held to apply to the relationship between names and managing agents. But the problem is that other things are not equal. The parties have entered a contract in which they have agreed terms and in which, of course, terms would be implied. Thus, the real question is why the contract should not be the end of the liability; why is there a need to add a further strand of liability in tort? Can one not say that it is for the parties – by their contract – to determine the extent of their liability and the law should not add to or amend that? Lord Goff recognised this issue, and noted that other systems had come up with different answers – some confining a party to a contract to a claim in contract, others allowing concurrent liability. Lord Goff preferred the view that liability could exist simultaneously in contract or tort but also accepted that a claim in tort would not enable a party to escape an enforceable limitation of liability clause in the contract. But it was said that otherwise a party could bring whatever seemed to be the most advantageous claim. Lord Goff said that the result might be untidy, but he thought it was the correct one on the basis that tortious liability was imposed by the general law and contractual obligation by agreement between the parties. 23.06 Whilst co-existing, the tortious and contractual duties may not be the same. There may be express contractual terms which require a person to achieve a result rather than, as would be the tortious obligation, to exercise reasonable care. However, it seems that the usually implied term – to exercise reasonable care – would be the same as the tortious duty. 6 7

[1964] AC 465. [1995] 2 AC 145.

507

23.07  Contracts for services

23.07 One consequence of the overlapping bases for liability could be different limitation periods. Indeed that was expressly recognised in Henderson. In contract, time runs from breach whereas in tort it runs from damage. Thus, there is a chance that a claim in contract would be out of time but a claimant would still be in time to sue in tort because damage would post-date the breach. There could be, or at least were at one time, other differences. It was once thought that different rules of remoteness of damage would apply in contract and tort. However, in Wellesley Partners LLP v Withers LLP8 it was held that the same test applies at least where a claimant had concurrent actions in contract and tort and that it is the contractual test for remoteness. Contract and tort claims are separate causes of action and usually each cause of action has its own rules. In contract, damages which can be recovered are for loss which a reasonable person standing in the shoes of the contract breaker would have regarded as not unlikely to result from a breach or which would have been reasonably contemplated to flow from a breach. In tort, meanwhile, the test is reasonable foreseeability. The damage must also be such as to fall within the parameters of the duty of care. It was said in Wellesley that the reasonable contemplation test was more restrictive than the reasonable foreseeability test, because damage may be reasonably foreseeable but still highly unlikely and thus not viewed by the hypothetical contract-breaker as contemplated to flow from a breach. Thus the risk is that the tort test may be more generous, and allow a claimant to recover damages wider than those which would fall to be awarded under the contract test. It was said that in the case where the defendant who is sued in tort also owes duties in contract, the same – contractual – remoteness test should apply.

CATEGORISING A CASE 23.08 Returning to the different types of case mentioned at the start of this chapter, the first category of case – breach of the terms of a contract to provide services by failing to provide the services or failure to pay – is relatively straightforward to analyse. A has agreed to provide services to B and either A has failed to provide those services in accordance with the contract by, for example, not turning up as required, or B has failed to pay for them. One’s concern here is with the performance of the contractual obligations or their breach. 23.09 At the risk of a brief digression, in some cases concerning the provision of services, there is a risk that the service provider will claim to have been an employee of the purchaser of the services which would have consequences for both jurisdiction and choice of law rules. In English law it is not unusual to encounter situations in which those who do not appear to be employees claim to actually be so. This gives rise to a whole raft of cases on deciding who an employee is, which it is not appropriate to examine in detail here. But it also creates a potential dilemma in the context of jurisdiction. Imagine a case in which an English-domiciled provider of services works for a French-domiciled 8

508

[2015] EWCA Civ 1146, [2016] Ch 529.

Categorising a case 23.15

purchaser of those services and works in several European countries but mainly the UK. May the service provider claim against the person paying for those services: (a) to be an employee; and (b) to say that in the capacity of employee the person habitually worked in England, so that the English court has jurisdiction under Article  21 of the Brussels Recast Regulation, even as against a French counterparty? 23.10 It seems that the would-be employee of an employer domiciled in a non-EU jurisdiction could sue the employer out of the jurisdiction without the need for permission because CPR 6.33(2)(b)(iii) allows an employer to be sued out of the jurisdiction without the need for permission. In cases where a provider of services claims to be an employee, it may be necessary to apply the Canada Trust v Stolzenberg test and ask who has the better argument on the point. If the answer is that the claimant does, that person may be able to sue where he or she is domiciled, even if at trial it is held that the individual was not an employee. 23.11 In fact, it may not be necessary for the person in that example wishing to bring a claim in England to claim to be an employee, because under Article 7 jurisdiction in the case of contracts for the provision of services is conferred on the place where the services are provided or should have been provided. That may help such a person but is not as good as being able to sue in the state of one’s domicile. 23.12 It is easy to consider a minor variation to the above example which makes a big difference. In this example, the person providing services, whilst domiciled in England, does so principally in France. But also in this example the claim is brought not by the employee/provider of services but by the recipient of services against the provider. In that case there might be a strong incentive on the person to claim to be an employee in order to resist being sued anywhere other than the place of the would-be employee’s domicile. 23.13 With that digression, one may return to the rules applicable to jurisdiction in cases concerning contracts for services and then, below, choice of law questions. The selection of those rules depends on both the nature of the claim and the legal basis on which the claim is advanced. A distinction was drawn above between cases in which, for example, a service provider fails to provide services or a customer to pay for them and what might be described as professional negligence cases. The nature of the claim has consequences for how the claim falls to be characterised and therefore for the legal issues which arise. 23.14 In cases where, for example, a service provider fails to do the work or does not carry out all the services provided by the contract (a non-performance case) or the purchaser of the services fails to pay, then the claim arises – and can only arise – in contract. 23.15 So far as EU-domiciled defendants are concerned, they may, of course, be sued in the state in which they are domiciled. Under Article 7(1)(b) of the Brussels Recast Regulation the provider of services can also be sued in the courts 509

23.16  Contracts for services

of the place of performance of the obligation in question which, in the case of the provision of services, means the place where the services were provided or should have been provided. It seems that this would be the jurisdiction rule in the case where the breach is the failure to provide services. But where the cause of action is based on a failure to pay, it seems that the requirement to pay should be the obligation in question for the purposes of Article 7. That is consistent with Custom Made Commercial Ltd v Stawa Metallbau GmbH9, where it was said that where a claim was brought on the basis of a failure to pay, the place where payment was required was to be determined by the law governing the contract. That case was decided under the Brussels Convention 1968, rather than the later Regulations which contain provision for cases concerning provision of services. Yet it is thought that the analysis remains sound. A case concerning non-payment is not a case about the provision of services even if the contract under which the party fails to pay is a services contract. In the event that the contract is governed by English law, the rule is that the debtor must seek out the creditor and pay at the place where the creditor is located: see The Eider10. 23.16 In relation to non-EU domiciled defendants, the English court would have jurisdiction if the contract was made in England or was governed by English law or there was a breach in England. The governing law would decide what constituted a breach of contract and it would be necessary to work out where that had occurred. On the face of it, where there was a failure to provide services, that would be the place where the services were due to be performed. The contract would provide where payment was due to be made. In a contract governed by English law that would require the purchaser of services to seek out the provider. 23.17 What of a claim of negligence in the provision of the service? Dealing first with EU-domiciled defendants, at least when English law applies or would apply to characterise the claim, such a claim could be brought in contract or tort, following Henderson v Merrett. The jurisdiction position for a contract claim would be as above. In the case of an EU-domiciled defendant, a claim for negligence in the provision of services could be brought in the state of the defendant’s domicile or the place where the services were or should have been provided under Article 7(1)(b) of the Brussels Recast Regulation insofar as the claim is brought in contract. 23.18 But if, and as would be the case if English law applied, an alternative claim could be brought in tort, then it seems that the places which have jurisdiction could expand because the claim could also be brought in the place either where the tortious act was committed or where damage was suffered. The place where the tortious act occurred would probably again be the place where the services were provided. But the place where damage was suffered could, in the case of the provision of services which have an international element, be far away from that place. Imagine the situation in which an adviser provides 9 C-288/92 [1994] I LPr 516. 10 [1893] P 119.

510

Governing law 23.21

negligent advice in place A about the purchase of an asset in place B. The client receives the advice in place A and although the adviser did fieldwork in place B, the advice was put together and submitted in place A. On that basis, it might be said that the advice was given and the negligence committed in place A. As a result of that advice, the recipient decides to make an investment in place B. The investment turns out to be worthless. It seems that the person advised could say that damage was suffered in B where the investment proved to be worthless and on that basis sue in either A  or B. That was the analysis in Kronhofer v Maier11, in which an Austrian paid monies to an account in Germany from which sums were paid to invest in financial markets in London. Although that diminished the investor’s assets in Austria, the loss was suffered in Germany where the investment was made. 23.19 In relation to tort claims against non-EU domiciled defendants, the jurisdiction position is similar because under CPR PD 6B the place where the wrong is committed – where the negligence takes place – and where damage is suffered both have jurisdiction.

GOVERNING LAW 23.20 The next issue is the governing law. In many cases involving the provision of services the contract will contain an express choice of law clause. In the absence of an express choice, it might be possible to imply a choice from the terms of the contract and the circumstances of the case. Might it be said that if both parties are nationals of the place where the services are to be performed, then it is to be implied that they have chosen that the law of that place should govern their contract? A difficulty with this is that one is looking for the system of law which the parties have impliedly chosen. That is not the same as the system with which (objectively) the contract has the closest connection, even if in practice the two are often elided – see Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd12. The question was there put as whether it went without saying that the contract was governed by a particular system of law. That may in many cases make it hard to say that there is any implied choice. 23.21 Even in the case of an express choice of law, if all the other features of the case are located in a country other than that whose law has been chosen, then the provisions of that law which cannot be derogated from by agreement would apply. Thus, if one had a situation where nationals of country A contracted for the provision of services in that country but agreed that their contract would be governed by the law of country B, those provisions of the law of A which could not be departed from by agreement would prevail. Hence, if the law of A contained provisions which governed the provision of services and parties were not free to depart from that, then those provisions would still bind the parties. 11 12

C-168/02 [2005] 1 Lloyd’s Rep 284. [2013] EWCA Civ 365, [2013] 2 Lloyd’s Rep 98.

511

23.22  Contracts for services

23.22 If the parties have not provided an express choice of law, the applicable law in accordance with Article 4 of the Rome I Regulation is the law of the place where the service provider is habitually resident. It might be thought that this would undermine the suggestion made above as to implied choice based on the place where services were provided and the parties located. But that may highlight a difference between what might be referred to as the implied choice of law under Article 3, where the facts of the case and terms of the contract are capable of indicating a choice, and the default position under Article 4. The purpose of Article 4 is to ensure that there is a system of governing law: the contract must be governed by some law and what Article 4 does is to step in and provide a default answer in the absence of a spoken or discernible choice. 23.23 Matters do not stop there, of course. Because, as has been indicated, professional negligence claims may be advanced in tort as well as in contract, it is necessary to consider also the tort choice of law rules. In a tort claim, the governing law is the law of the place where damage is suffered. One might have a situation in which negligent advice is provided in one place but relied upon and in consequence damage is suffered in another. The governing law will be the law of the place where damage is suffered, regardless of where the tortious act is done. 23.24 The applicable law in a tort claim means that the law may differ as between contract and tort claims. One might have a contract governed by the law of one place which would be relevant in a claim of breach of contract but in a tort claim arising from the same facts the law of the place where damage had occurred would be relevant. As with other consequences of a party’s ability to sue in tort or contract, it may be that considerations of the governing law could compel a party to take one or other course of action.

CASE STUDIES Case 1 23.25 An individual domiciled in England wishes to buy a house in France and for that reason instructs a surveyor to provide a survey of the house. The surveyor is domiciled in France but for the last few years has been living in Germany from where the surveyor travels throughout Europe to conduct surveys. The contract does not contain a choice of jurisdiction clause. The survey is performed negligently, missing serious subsidence. On the basis of the survey the English-domiciled claimant pays money from an English account to buy the property. May the claimant sue in England? 512

Case studies 23.31

23.26 The characterisation of the claims will be conducted by English law and that would mean that the buyer has potential claims in contract and tort, each of which may be considered separately. As to contract, in the absence of a choice of jurisdiction clause, jurisdiction will be governed by Article  7(1)(b) of the Brussels Recast Regulation and will be the place where the services should have been provided, in this case France. Could the claimant say this was a consumer contract, enabling a claim to be brought in the country of the consumer’s domicile under Article 18? 23.27 Jurisdiction for the tort claim would cover the place where the tort is committed and the place where damage is suffered. As to that, the wrongful act is committed in France because it is there that the negligent survey was conducted. It seems likely that France is also the place where the buyer suffers harm because on the basis of the negligent advice the buyer purchases a property in France. Whilst the claimant would wish to say that harm was suffered in England because sums were paid from the buyer’s bank account in England, it seems that the better analysis is that harm is suffered in France because it is there that the buyer has acquired an asset which is of lower value than the sums the buyer has paid. 23.28 So far as the governing law is concerned, that varies according to the cause of action. In the absence of any express choice of law it seems unlikely that a choice of law is likely to be implied, which means that the provisions in Article 4 of the Rome I Regulation apply. That article states that the default choice of law is that of the place where the person providing the services habitually resides. In this example, that will be German law. 23.29 As to the tort claim, then unless the parties make a choice of law, the governing law will be the law of the place where damage is suffered. In this example, that will be France. The effect of this is that it seems unlikely that our English buyer will be able to sue in England, unless this can be treated as a consumer contract case.

Case 2 23.30 The same facts as in Case 1 above but the contract to carry out the survey is governed by English law. 23.31 The same analysis applies to jurisdiction because, despite the governing law, the place where the services are provided is again France. By the same token the place where the tort is committed and the place where damage occurs is France. But English law now governs the contractual claim. 513

23.32  Contracts for services

Case 3 23.32 The same facts as in Case 1 above but the property to be purchased is in the US and the surveyor is domiciled in the US. Assume for this example that there is no choice of English law. 23.33 The underlying issue in this example is the same. What differs, of course is the geographical location of the defendant and therefore the rules relevant to the jurisdiction and choice of law issues. The first question is whether there is a jurisdictional gateway to justify service out. Once again both contract and tort can be considered. It is assumed that the contract was not made in England and there is no English choice of law clause. On the face of it, the breach of contract is committed in the US because the survey which fails to comply with the requirement of reasonable competence is conducted there. Thus so far as contract is concerned there does not seem to be a jurisdictional gateway. 23.34 As to the tort claim, the tortious act is done in the US because it is there that the survey is conducted. So far as damage is concerned, the claimant can say that money is paid from England to buy property in the US, but the damage in terms of the purchase of an asset of reduced value arises in the US. Imagine this situation. A person domiciled in England sells an asset in France in order to buy the US property. Would it be said that the loss had been suffered in France where the value of the asset was realised in order to purchase the property? That seems wrong. If that is not so, then it is hard to see on what basis the mere location of the funds from which the purchase price is obtained can be relevant to – let alone determinative of – the place where damage is suffered. The claimant’s best argument is that it is sufficient if some damage was sustained within the jurisdiction: see Metall und Rohstoff AG v Donlandson Lufkin & Jenrette Inc13, but that does not look promising. The governing law for the contract claim, in the absence of choice, will, under Article 4(1)(b) of the Rome I Regulation be the law of the place where the service provider is habitually resident, ie  the US. As to the tort claim, the governing law will be the law of the place where damage is suffered, which appears to be the US.

13

514

[1990] 1 QB 391.

Case studies 23.39

Case 4 23.35 An English-based bank proposes to lend an English-domiciled buyer money with which to buy a property in Spain. Before doing so, it instructs a surveyor domiciled in Spain to value the property. The contract is governed by Spanish law. The survey is negligently conducted and when the buyer defaults the bank is unable to recover the full amount of the money it has loaned. 23.36 Once again, it is possible to consider both contractual and tortious causes of action. It seems that they have different outcomes in this example. As a matter of contract, jurisdiction in the absence of a jurisdiction clause is governed by the law of the place where the services were provided. Here the negligent work was done in Spain, so the Spanish court has jurisdiction. 23.37 As to tort, the tortious act is done in Spain because it is there that the negligent survey is conducted. But the bank may say that it suffered loss in England because it lent money in England: (a) which it would not have lent at all but for the negligent survey; and (b) because the money which it did lend was not adequately secured. 23.38 The governing law for the contract claim would be the chosen law of Spain. But for the purposes of a claim in tort, the law would be the law of the place where damage was suffered. If the English-based bank can say it has suffered damage in England because it paid money in England to an English-based buyer then it could say that the governing law for the tort claim should be English law. There might, perhaps, be an argument that the damage is in Spain because it is there that the value of the security is lower than it should have been. But it seems that the true loss is lending the money in the first place: if the negligent survey had not been provided, the money would not have been lent at all.

Case 5 23.39 A firm of solicitors advises a UK-based client in relation to the purchase of shares in a company in Belgium. The sale and purchase agreement is drafted and signed in Belgium. Lawyers for the buyer, domiciled in Belgium, fail to spot that the effect of an amendment which they agree without instructions increases the purchase price three fold. The English company remits funds from England to Belgium to purchase the company. The buyer wishes to sue the lawyers in England for the increase in price they were obliged to pay. 515

23.40  Contracts for services

23.40 So far as jurisdiction is concerned, it is assumed that the agreement with the Belgian lawyers is governed by Belgian law and that there is no choice of English jurisdiction. That means that the lawyers could be sued in Belgium, being domiciled there. Since this is a contract for services, the courts of the place where the services are provided, in this example Belgium, have jurisdiction. 23.41 As to a claim in tort, the place where the wrongful act is committed is Belgium. Where does the claimant suffer damage? It would wish to say England, because the effect of the negligent advice is that sums are paid from England to buy the company. But in Universal Music International Holding BV v Schilling14 it was held that in such a case loss is suffered in Belgium, where the shares are purchased, and the fact that the purchase monies come from an English bank account does not invalidate that conclusion. 23.42 As to the applicable law, it is assumed that the contract is governed by Belgian law, so that would apply. It seems also that, if it is correct to say that Belgium is the place where damage is suffered, the law of Belgium would apply.

Case 6 23.43 An English-domiciled accountant is engaged to advise as to the value of a company situated in Germany which a German national wishes to purchase. Assume the contract is governed by the law of England but that the contract contains a non-exclusive choice of German jurisdiction. The accountant provides a report but is not paid and wishes to sue for the fee. 23.44 The defendant to the claim is domiciled in Germany and would wish to be sued there. The defendant also has the benefit of the jurisdiction clause, albeit this is non-exclusive so the claimant cannot be required to sue in Germany. The services were provided in Germany and the law governing the contract is German. As a contract for services, the defendant would say that since the services were provided in Germany, therefore the German court has jurisdiction under Article 7 of the Brussels Recast Regulation. 23.45 However, the obligation in question in this case is the obligation to pay. The place where payment is due will be decided by English law as the law applicable to the contract. In the absence of any express term, the English court would apply its rule, that it is for the debtor to come to the creditor and on that basis payment is due in England, meaning that the place for performance of the obligation in question is England.

14

516

C-12/15 [2016] QB 967.

Case studies 23.48

Case 7 23.46 An English investor instructs an Italian architect to design a building in London. The contract is governed by English law and contains an exclusive choice of the jurisdiction of Italy. Some years after it is constructed, it becomes apparent that the building design had numerous defects and has to be pulled down. 23.47 The formulation of the problem in this example is designed to show how different time limits may be relevant to claims in contract or tort. Article 12 of the Rome I  Regulation states that limitation of actions is a matter for the law governing the contract – here, English law. The architect would say that the error leading to the defects in the building were to be treated as breaches of the implied term of reasonable care and skill but were committed at the time when the work was done. Insofar as time runs from breach, it is too late to sue in breach of contract by the time the building has to be pulled down. There may be scope for argument as to when damage was suffered but the claimant would hope to be in a better position to say that that arose at the time that the defects made it apparent that remedial work would be required. Hence for the purposes of a tort claim, time runs from the later date of damage. Damage has been suffered in England so English law governs the tort claim. The governing law in a tort case also covers limitation: Rome II, Article 15. Because of the exclusive jurisdiction clause, the Italian courts would in any event have jurisdiction over the breach of contract claim. 23.48 Since the contract is governed by English law, it would be a question of English law whether the effect of that clause was that the claimant was under a contractual obligation to bring even tort claims in the courts of Italy. In Fiona Trust v Privalov15 the House of Lords held, of an arbitration clause, that the parties to a contract who chose to arbitrate would be expected to intend that all their disputes be sent to arbitration. If one were to apply the same approach to a jurisdiction clause, that would take a similarly expansive approach and hold that even tortious disputes were required to be brought in the forum selected by the parties. There is also force in the point that in this situation, where the breach of contract and tort claims are different legal means of putting the same point, the jurisdiction clause should apply to both. If, however, the claimant could sidestep this argument, it could contend that loss had been suffered in England such that the English court had jurisdiction.

15

[2007] UKHL 40, [2008] 1 Lloyd’s Rep 254.

517

23.49  Contracts for services

23.49 As indicated above, English law governs the contract because that is the law chosen by the parties. It is a nice question whether it would be said that for that reason English law should apply to the tort claim. But that does not seem correct. The tort claim has a different legal foundation and so should have its own choice of law rule. But in any event it would be said that damage had been suffered in England, and thus English law applied to the tort claim.

518

CHAPTER 24

Economic torts 24.01 This category of cases is identified by a legal title – economic tort – although the simple title conceals a wide range of cases. The economic torts will be live in fraud cases, team move cases and potentially any situation in which a third party is involved in a breach of contract committed by a party to the contract. It may be that the breach was induced by a third party who has deeper pockets than the contracting party and therefore against whom one would wish to act. But perhaps the most significant category of case is conspiracy. In a case where, for example, multiple parties act in breach of contract it may be possible to formulate a claim in conspiracy, arguing either that the parties have agreed to act together to use unlawful means or that they have acted in order to harm the claimant. Whatever advantages there may be in advancing the case on the basis of conspiracy – or indeed any of the economic torts – is likely to have impacts on the jurisdiction and choice of law rules. 24.02 The text below begins with a summary of domestic law relevant to the economic torts. This is in part because it will be relevant when it comes to the characterisation of a claim but also because where one is dealing with domestic law, it may be helpful to have a brief summary of the principles. It is also capable of showing the sheer range of cases which could be advanced as economic tort cases. The torts considered are: (i) procuring a breach of contract; (ii) unlawful interference or causing loss by unlawful means; and (iii) conspiracy.

PROCURING A BREACH OF CONTRACT 24.03 It is a tort knowingly and intentionally to procure or encourage or cause another to act in breach of contract. The law in this area was comprehensively re-stated by the House of Lords, in particular by Lord Hoffmann, in OBG Ltd v Allan1, a group of appeals which all raised questions as to the component elements of the tort of inducing breach of contract. 24.04 Lord Hoffmann said that liability for inducing breach of contract, which he traced back to Lumley v Gye2, was a tort of accessory liability. The party 1 2

[2007] UKHL 1, [2008] 1 AC 1. (1853) 2 E&B 216.

519

24.05  Economic torts

primarily liable was the party to the contract who had acted in breach. But the person procuring the breach was ‘liable as accessory to the liability of the contracting party’. A key element of the tort, of course, is that a person who is party to a contract has acted in breach of it: there must be a breach and without that there can be no liability for inducing breach. It is possible that the person who seeks to encourage another to act in breach of contract but is unsuccessful might be liable for causing loss by unlawful means. That tort is considered at para 24.08. But there can be no liability for inducing breach of contract without a breach; liability for the tort depended on the contracting party having itself committed an actionable wrong. 24.05 In order to be liable, the person said to have committed the tort must know that what is being induced is a breach of contract. It is not enough to know that what is being encouraged amounts, as a matter of the construction of the contract, to a breach. The alleged inducer must know that what is being induced is a breach. The knowledge is subjective – the person must know this thing. It is not enough that the person ought reasonably – or, as it might be put, objectively – know that there would be a breach. The individual defendant must know. Lord Hoffmann gave the striking example of British Industrial Plastics Ltd v Ferguson3, in which an employee offered a competitor information about a process which the employee had himself invented. Whilst he knew that there was a contractual obligation not to reveal confidential information, he held the ‘eccentric opinion’ that if an invention was patentable it belonged to the employee, not the employer, so there would be no breach of confidence were the employee to reveal it. As was strikingly said, the defendant ‘vindicated his honesty … at the expense of his intelligence’, but that also meant he could not be liable for inducing a breach of contract. This is an important limitation because it means that there may be cases, perhaps particularly concerning the express terms of contracts, where a party may with justification say that it was not known that certain actions would be in breach of contract. If that is the case, no liability can attach for inducing breach of contract. But in many cases concerning implied terms, that will be a far harder argument. Everyone (apart from Mr Ferguson) knows that employees may not reveal their employers’ confidential information. No defendants appear yet to have argued in a team move case that they did not know that an employee was not entitled to encourage colleagues to leave. However, the point could no doubt arise. Take the case where the new employer knows that a workforce is miserable and says to one employee – please encourage your colleagues to join you and leave. Could the employer say that because of the particular circumstances of the case that it was not realised that encouraging employees to engage with one another was a breach? What may be said is that there is at least a theoretical possibility for a defendant to escape liability. 24.06 Although it was said that it was not enough that a person ought reasonably to know of the breach of contract, Lord Hoffmann approved a line of cases which said that a person who had the means of knowledge but deliberately disregarded it – what has been described in other contexts as ‘Nelsonian knowledge’ – would 3

520

[1940] 1 All ER 479.

Causing loss by unlawful means 24.08

suffice. Thus a conscious decision not to enquire is treated as equivalent to knowledge. But negligence is not enough – that was what was present in Ferguson and did not cloak the defendant with the necessary knowledge. 24.07 As well as knowing of the breach of contract, the defendant must intend to procure the breach. A person can still intend to procure a breach of contract even if that is a route to achieving something else: that there is another, ulterior goal does not diminish the fact that the intention is to procure a breach of contract to achieve that other end. Thus the fact that the ‘ultimate’ aim is something else will not serve as a defence. That a person procured a breach of contract in order to achieve another goal is no defence to having procured that breach. However, and this may cause difficulty, if the breach of contract is not an end in itself or a means to an end but ‘merely a foreseeable consequence’, then there would not be the requisite intention. As ever, it can sometimes be difficult to identify cases that lie behind these statements of general principle, but Lord Hoffmann first said what he meant by this and then gave a helpful example. He said that there would only be the necessary intention when a person’s actions were aimed at or targeted at a third party. If the defendant’s actions were not so aimed, the mere fact that the party was harmed would not be enough. The example he gave was Millar v Bassey4. In that case, the singer Shirley Bassey had contracted to sing for a record company. The claimant was a producer, who was to work for the record company to produce an album. Shirley Bassey acted in breach of contract because she declined to sing. The producers, who lost out on their work as a result of her not working on the album, sued her for inducing breach of their contract with the record company. A judge struck out the claim but the Court of Appeal reinstated it. Lord Hoffmann said that it had been wrong to do so because Shirley Bassey did not intend to bring about the breach of the contract between the producer and the record company. That would be the consequence of her action; she might have foreseen it. But it was not what she intended to bring about; her conduct was not focused on the producers. They were – my language, not Lord Hoffmann’s – collateral damage. The breach of the producers’ contract was not Bassey’s desired end nor was it a means to that end.

CAUSING LOSS BY UNLAWFUL MEANS 24.08 This tort, too, was considered in detail in OBG Ltd v Allan. Lord Hoffmann explained that it differed from the tort of inducing breach of contract in at least four respects: (i) it was a tort of primary liability. A person was liable because of things done by that person. It did not depend on anyone else doing anything unlawful. That distinguished it from the tort of inducing breach of contract where a key element was that a person had acted in breach of contract. The tort of unlawful interference did not depend on a third party acting wrongly; it was solely the acts of the defendant that were relevant; 4 [1994] EMLR 44.

521

24.09  Economic torts

(ii) in order for the loss to be caused by unlawful means, the means used had to be ‘independently unlawful’, that is to say unlawful under some other rule (this led to a debate about courier drivers or people delivering pizza breaking the speed limits, discussed below); (iii) there was no requirement for the existence of any contract; (iv) in this tort the defendant must have intended to cause damage to the claimant. 24.09 But an intention to cause damage is, by itself, not unlawful. There must be the use of unlawful means. To take an example from one of the earliest cases, there was unlawful interference when a party drove away the claimant’s customers ‘by threatening them with mayhem and vexatious suits: Garret v Taylor5. The threat to the customers was the unlawful interference. Other examples included intimidation, something often relevant in disputes concerning strikes. 24.10 The essence of the tort is the wrongful interference with the acts of a third party in which the claimant has an economic interest (so the customers in the case of the threat of mayhem) and an intention to cause loss to the claimant. Lord Hoffmann said that the act in question had in general to be actionable by the third party affected, save for the case in which damage was the essence of the cause of action, and the conduct would not be actionable because the third party has suffered no loss. For example, an act of intimidation would be actionable because intimidation is a wrong. And it would not cease to be a wrong for the purposes of the tort of unlawful interference merely because the person intimidated could not show loss. Thus the question is whether the conduct was actionable at the behest of the third party if the third party had suffered loss. This is important in any case of unlawful interference. It is not enough just to say that whatever was done has interfered with a third party. The interference must have legal consequences in the sense that the act of interference is independently unlawful at the behest of a third party. Lord Nicholls appeared to take a wider view. He said that any wrong, whether civil or criminal, could be unlawful means for the purposes of the tort – ‘all acts a defendant is not permitted to do, whether by the civil law or the criminal law’6. But the act had to be something done against the claimant, not just something that was in general wrongful. 24.11 The act must also be one which affects the third party’s right to deal with the claimant. As Lord Nicholls put it, the claimant is harmed through the instrumentality of the third party with whom the defendant interferes. To the extent that there is a difference between Lord Hoffmann and Lord Nicholls, the former was in the majority, meaning that the limiting criterion of the unlawful means being actionable by the third party represents the law. That was again present in the example of customers being subjected to mayhem: they could have taken action in response to the intimidation. So far as the claimant was concerned, customers were less likely to deal with the claimant; they were being inhibited 5 6

522

(1620) Cro Jac 567. [2007] UKHL 1, [2008] 1 AC 1 at para 162.

Causing loss by unlawful means 24.13

from doing so. Hence third parties – or the threat inflicted on them – was a means by which the defendant was seeking to take action which could harm the claimant. This can lead to hard cases. In RCA Corpn v Pollard7, the defendant was producing bootleg Elvis Presley records. Proceedings were brought by the company with the exclusive right to sell the real thing. The bootlegging gave Presley a cause of action but, it was said, the wrongdoing did not affect Presley’s dealings with the distributor and so the distributor could not sue for unlawful interference. Perhaps it could have been said that the bootlegger’s activity affected Presley’s agreement to give rights of exclusivity, and therefore affected relations between Presley and the distributor. 24.12 The need for this closeness between the wrongdoing and the effect on the third party is shown by Lonrho Ltd v Shell Petroleum Co Ltd (No 2)8, where the allegation was that Shell was committing a criminal offence by breaching sanctions. It was said that this did not affect any third party nor, specifically, the third party’s ability to deal with the claimant and so could not count as unlawful interference. Hence the elements of unlawful interference were not present. This requirement that the defendant’s actions affect a third party, are unlawful at the behest of third parties and affect the third party’s ability to deal with the claimant, are what might be described as ‘control mechanisms’. They prevent the tort expanding too widely. It is not enough that a defendant commits a wrongful act, if that does not satisfy these criteria. A competitor who gained an advantage by exploiting a third party’s intellectual property would not have committed a tort actionable at the behest of a rival. The competitor has committed a wrong but not one that affected the third party’s ability to deal with the claimant. The wrong would be actionable by the owner of the intellectual property, but not the competitor. It might be different if the claimant was a distributor of products created using that intellectual property because then the claimant’s dealings with the third party could be affected. It is here that pizza delivery drivers and couriers become relevant. If one were to focus solely on unlawful conduct as an unlawful means of interference, one might say that the pizza delivery company or the courier firm whose drivers regularly break speed limits unlawfully interfered with competitors because they committed an unlawful act – speeding – which gave them an unfair advantage over their rivals. But this would not constitute the tort because speeding does not involve an act which is actionable at the behest of a third party and does not affect the third party’s ability to deal with the claimant9. 24.13 Causing loss by unlawful means, in common with inducement of breach of contract, is a tort which requires intention. The intention in the unlawful means tort is an intention to cause loss. Again, it is not enough for a defendant to say that loss caused was merely as a means to secure some other end at which the defendant’s conduct was aimed. If what a person ultimately intends means that, in order to get there, one has to cause loss to the claimant, that is enough. But, as in the Millar v Bassey case, it is not enough that the defendant merely 7 [1983] Ch 135. 8 [1982] AC 173. 9 OBG Ltd v Allan, Lord Nicholls at para 160, Lord Walker at para 266.

523

24.14  Economic torts

foresees that loss will occur where that is not what is intended (whether as an end in itself or en route to that end). Lord Hoffmann gave the example of Barretts & Baird (Wholesale) Ltd v Institution of Professional Civil Servants10. That was a case about a strike, as many economic tort cases are. In that case the union called a strike amongst civil servants which would have had an effect on an abattoir, as it would not have been able to obtain the certificates it needed because of the civil servants not working. The abattoir sought to enjoin the strike because of the effect on its business. But there was not the necessary intention. The strike was called to put pressure on the government to increase pay. An effect of the strike was that third parties, such as the abattoir would be affected. But causing harm to the abattoir was neither the union’s intention in terms of its ultimate aim nor something which it intended as a means to that end. It would have been different if, for example, in support of a pay claim against employer A, a union placed pickets at employer B so that it could not conduct its business. In that case, the union would have intended to cause harm to B as part of its means of securing a remedy against A. The Baird case is a Millar v Bassey type situation. A person might see that certain conduct (in breaching a contract or calling a strike) will affect third parties, but that is not the person’s aim or intention. However, it is not enough to defeat the requisite intention for a person to say that the reason for a particular course of action was to advance that person’s own business. If, by taking the steps in question for that reason, the claimant will necessarily be harmed, that is enough to found the intention. This is an example of where the harm is intended as a means of securing another end; and that is enough.

CONSPIRACY 24.14 Conspiracy is a rather odd tort, if for no other reason than that it renders unlawful things done by a group of people which would not be unlawful if done by one. The rationale for that is elusive, though various cases have attempted to provide one. In JSC BTA Bank v Ablyazov11, it was described as an anomalous tort for the very reason that it rendered unlawful acts which, apart from the element of combination, would not be unlawful. It was said there that traditionally acts done in combination were ‘inherently more coercive than those done by a single actor’ but Lords Sumption and Lloyd-Jones rightly said that this was not persuasive, especially bearing in mind that the single actor could be a powerful corporation. 24.15 There are two types of conspiracy: conspiracy to do an unlawful act; and conspiracy to injure. Both types of conspiracy share the common feature that liability depends on an agreement by parties to act in a certain way. It is that agreement which is the essence of the conspiracy. But the scope of the two causes of action differs in important ways. In an unlawful means conspiracy, the conspirators must agree to do an unlawful act and then act on that agreement with the intention of causing damage to a third party. In a conspiracy to injure, 10 [1987] IRLR 3. 11 [2018] UKSC 19, [2020] AC 727.

524

Conspiracy 24.18

the defendants agree to take action. the predominant purpose of which is to injure the claimant and which the conspirators then act on and which causes harm to the claimant. This is neatly summarised in Baxendale-Walker v Middleton12. 24.16 A conspiracy to injure requires a predominant purpose to injure: indeed it is that purpose which is the essence of the tort. A conspiracy to use unlawful means does not. In the latter case, it is the unlawful means which provides the basis for the tort. In unlawful means cases, it is no defence to say that the actors’ primary purpose was to advance their own cause. That they have used unlawful means is enough to found liability. This was said in Lonrho plc v Fayed13 and applied in the JSC BTA Bank case14. 24.17 Conspiracy is a tort of primary liability. It is the agreement either to do the unlawful act or to act so as to damage the claimant which gives rise to the liability. In JSC BTA the Supreme Court said that it was useful to think of the tort as being based on the absence of just cause or excuse. People have the right to advance their own interests by lawful means even if a foreseeable consequence of doing so is to harm others. Indeed, to take an example from OBG v Allan, on one view every person engaged in business who, for example, cuts prices so as to steal a march over competitors might be said to act in a way which will harm competitors by taking business from them. But the act of using more competitive or lower prices is (absent something such as predatory pricing or unlawful competition) lawful and gives rise to no liability at the behest of a third party. But those who seek to advance their cause by using unlawful means, or, in the sphere of conspiracy, to agree to do so, or those who set out to agree with others to act with the predominant purpose of harming others, do not have a just cause for their acts. (This does not quite, of course, answer the question why it is not a tort for an individual – perhaps particularly a powerful corporation – to act with the predominant purpose of harming another.) 24.18 Conspiracy also requires intent. In the unlawful means case, it appears that it is the intent to use those means. The defendant must also know that injury is likely to result. In the conspiracy to injure case, the intent must be to harm the claimant and that must be the defendants’ purpose. The requirements of intention were considered in Lonrho plc v Fayed15. The suggestion in that case prior to the House of Lords was that in both types of tort – unlawful means and conspiracy to injure – it was necessary to show a predominant intention to harm the claimant. However, the House of Lords held that the requirements for intention were different. In a conspiracy to injure case, it is necessary to show that the defendants’ intention – their predominant purpose – was to injure the claimant. But in an unlawful means case, it is enough that the defendants use unlawful means. In the unlawful means case, it is no defence for a defendant to say that its primary purpose was to protect its own interests. In the JSC BTA case, the unlawful means were a criminal contempt of court in concealing a person’s 12 13 14 15

[2011] EWHC 998 at paras 59–60. [1992] 1 AC 448 at 465–466. At para 8. [1992] 1 AC 448.

525

24.19  Economic torts

assets in breach of a freezing order. The reason for doing so was to protect that person. But that was not a defence to a conspiracy to use unlawful means. 24.19 The core of the tort – of whichever type – is the agreement. The agreement is the conspiracy. It must then be an agreement to do one or other of the things referred to, but the starting point is that the defendant must agree. Sometimes the language of combination is preferred to agreement to avoid the risk that it be suggested that the agreement must be contractually binding; it need not be – the fact that persons agree together is enough. 24.20 As to unlawful means, the Supreme Court in JSC BTA Bank rejected the narrower approach to the meaning of that concept which had been applied in the context of unlawful interference with business in OBG v Allan. It was thus not necessary that the unlawful act be actionable by a third party. All that was required was the unlawful act. That could include a criminal act or a breach of statutory duty and was held in that case to include a criminal contempt. Thus, a wider range of unlawful acts could establish liability in conspiracy than in unlawful interference. That followed Revenue and Customs Commissioners v Total Network SL16, where it was held that criminal acts could be relied on for the purposes of a conspiracy claim. In consequence it was not necessary that the unlawful means be actionable at the suit of the claimant. A conspiracy to do a tortious act, such as an agreement to induce another to breach a contract, would be enough to establish unlawful means, as would a conspiracy to harm a third party which also harmed the claimant. It seems also that an agreement whereby one party would act in breach of contract would suffice. But in that case, of course, there would also be primary liability for breach of contract by the party in breach and for inducing breach by the other conspirators. 24.21 Turning to conflict of law questions, all economic torts are, of course, torts. Therefore, in cases where the Brussels Recast Regulation applies, jurisdiction is conferred on the courts of the place where the harmful act is done or where damage occurs. In the case of inducing breach of contract, it appears that the wrongful act would be done in the place where the act of inducement is carried out. In the case of unlawful interference with business it seems that the place would be where the act said to be the unlawful interference is done: see for example AMT  Futures Ltd v Marzillier17, where the alleged tort was inducing customers in Germany to commence proceedings in Germany against the claimant and it was held that the inducement occurred – and so the tortious act was committed – in Germany. In the case of a conspiracy, it seems that the tort would be committed where the agreement was reached. There may be some, albeit not direct, support for that in AB flyLAL-Lithuanian Airlines v Starptautiska18, in which it was held that where parties were alleged to have engaged in an anti-competitive agreement, the place where the wrong was committed was the place where the agreement was definitively concluded. 16 17 18

526

[2008] UKHL 19, [2008] 1 AC 1174. [2017] UKSC 13, [2018] AC 439. C-27/17 [2019] 1 WLR 669.

Case studies 24.26

In the alternative, of course, a claimant could found jurisdiction on the basis of the place where damage was suffered. 24.22 At common or law, or, more accurately, under CPR PD  6B when the Brussels Recast Regulation does not apply, jurisdiction will similarly be conferred on the courts of the place where the tortious act was committed and where damage was suffered. 24.23 One big advantage of reliance on the economic torts, as emerges from some of the examples below, is that they provide great flexibility to a claimant to formulate a claim in a particular way and so to confer jurisdiction on the claimant’s preferred court. 24.24 As to choice of law, the law governing the tort will be the law of the place where damage was suffered. The economic torts, and in particular conspiracy, are fertile territory for claims to be brought in all sorts of situations, as the examples below seek to show.

CASE STUDIES Case 1 24.25 A  US-based company sues a UK-domiciled defendant and other individuals domiciled in the US for a conspiracy to commit a large fraud against the US entity. The conspiracy was said to have been hatched in the US. The US company sues in New York and the English defendant seeks an anti-suit injunction. 24.26 The conspiracy in this case was committed in the US and it is assumed damage was suffered there. On that basis, the English court would regard the US courts as having jurisdiction. In those circumstances, it is not vexatious to sue in that jurisdiction. Further, England is not obviously the forum conveniens. Since the events took place in the US and at least some parties are there, the US is the more obvious forum. As things stand, it is not open to an English-domiciled defendant to secure an anti-suit injunction on the basis that claims should be brought in the state of the English defendant’s domicile. In those circumstances, the case is properly before the US court and no injunction should be granted. This example is loosely based, with one or two large omissions, on Donohue v Armco Inc19. 19

[2001] UKHL 64, [2002] 1 Lloyd’s Rep 425.

527

24.27  Economic torts

Case 2 24.27 Senior employees of a company are alleged, along with others, to have conspired to defraud it and are sued by the company in England. The employee defendants are domiciled in other EU countries. They say that the claims against them relate to their employment, with the consequence that they may only be sued in the state of their domicile. Assume that either the agreement said to constitute the conspiracy was made in England or that damage was suffered in England. May the defendants be sued in England? 24.28 This case is a good example of how reliance on the economic torts is capable of enabling a claimant to formulate a cause of action in a particular way and, by reliance on the manner in which it is pleaded, to claim jurisdiction on wider grounds than might otherwise be the case. Whilst this case might have been advanced as a breach of contract claim and, if so, it might have been difficult to avoid the conclusion that the contract in question was a contract of employment, so engaging Article  22 of the Brussels Recast Regulation and requiring the employees to be sued in the state of their domicile, it has in fact been put only on the basis of conspiracy, since the core of the claim is that the parties agreed to commit a fraud and some of the alleged fraudsters are not employees. It did not matter that that case could be pleaded as breach of contract. What mattered was how it had in fact been advanced. Once it was recognised that the claimant’s claim was put in fraud and conspiracy it was of necessity a tort claim, with the consequence that tort jurisdiction rules applied and the defendant employees were not able to say that this was in truth an employment claim such that they should have been sued in the place where they were domiciled. The question was not the ‘mechanistic’ one of how could the claim be formulated but rather how had it in fact been advanced: what was the legal basis for the claim? The fraud alleged was not part of the employees’ employment but was something they did outside their roles. Thus this was a pure tort claim and so the tort rules and not the rules applicable to employees applied. The tortious acts – the conspiracy to defraud – were done in England and damage was suffered in England, thus giving jurisdiction for a tort claim. This example is derived from Bosworth v Arcadia20.

20 [2016] EWCA Civ 818.

528

Case studies 24.32

Case 3 24.29 A  Swedish company sues an employee alleged to have misused the employer’s confidential information and breached its intellectual property rights and to have done so as part of a conspiracy with an Englishdomiciled third party and an English-domiciled company. The employee is domiciled in Poland but the claimant brings proceedings against all parties in England. May it do so against the employee, or must the employee be sued in Poland? 24.30 This is another good example of the significance of the way in which the case is advanced. In this case, the claim against the employee is based on implied duties of good faith and breaches of the contract of employment requiring the employee to comply with assorted instructions given by the employer. The misuse of confidential information alleged is, or should be, put as a breach of the contractual obligations. Because the case always came back to the employment contract, the claim against the Polish employee related to the contract of employment and could only be brought in Poland. Although the claimant may be able to sue other defendants in England for misuse of confidential information and conspiracy – tort claims where the tort was committed in England and damage suffered in England – it would not be able to rely on Article 8 to add the employee. It may be well advised to start the claim here first and start a later claim against the employee in Poland which it invites that court to stay under Article 30 of the Brussels Recast Regulation. 24.31 This example is based on Alfa Laval Tumba AB  v Separator Spares International Ltd21, a case referred to but distinguished in Bosworth. It is given as an example because of the importance one can derive from it as to how one pleads the case. This is a very salutary warning to prospective claimants that, when there are international elements in a case, parties must be very careful how they formulate the claim: the claim should be fashioned in the way most likely to be helpful for jurisdiction purposes. This applies not only to the formal task of pleading the claim but also to how the case is advanced in correspondence.

Case 4 24.32 An English provider of financial services products has contracts with numerous German-domiciled clients, each of which is governed by English law and has an English choice of jurisdiction clause. A German professional services firm encourages the clients to sue the English 21

[2012] EWCA Civ 1569, [2013] 1 WLR 1110.

529

24.33  Economic torts

company in Germany, alleging mis-selling. The German court takes the view that the underlying contracts are consumer contracts such that it has jurisdiction over such claims based on the consumers’ domicile. The English company wishes to sue the German professional services company for inducing the customers to act in breach of their contracts. May it do so in England? 24.33 This is undoubtedly, so far as it is to be characterised in English law, an economic tort case. The argument is that the German company has induced customers to act in breach of their contracts with the English company by suing in Germany. The English court would have jurisdiction against the inducer based either on the place where the tortious act is done or the place where damage is suffered. However, the wrong is committed in Germany because it is there that clients are encouraged to bring proceedings. Since the tortious act is the inducement, it takes place in Germany. The next question is where damage is suffered. The English company would wish to say that it has suffered or will suffer damage in England because it is in England that its assets will be diminished as a consequence of the claims and it is the English company which will have to pay the costs of defending the German claims. However, damage is suffered in Germany because it is there that the company has to defend claims which, but for the breach of contract, it ought not have defended. It suffers loss in Germany because it has to expend fees in Germany. The company might wish to say that there is ultimately a loss in England because those fees will in the end be expended from its English-based funds. It might also wish to say that there was damage to its business model, and that it sought to preserve its focus in London. But in both cases, these are indirect losses and thus not a form of loss which falls to be taken into account for the purposes of determining loss under Article 7 of the Brussels Recast Regulation. This reflects the rule of EU law that the exceptions to the right of a defendant to be sued in the state of that person’s domicile should be narrowly construed. Nor is there any particular rule to be developed in cases of inducement of breach of contract. The case is a tort case and so the jurisdiction rule has to be applied according to its categorisation as a tort claim rather than suggesting that there is any different rule for this particular type of tort. 24.34 It would seem to follow also that the law applicable to the tort claim for inducing breach would be the law of Germany (unless, which would no doubt be unlikely, the parties agreed to choose some other applicable law). This example is based on AMT Futures v Marzillier22 which, despite its rather particular circumstances, is a good indication of how the conflict of law rules apply to cases of inducement of breach of contract and, perhaps by extension, to other economic tort cases.

22

530

[2017] UKSC 13, [2018] AC 439.

Case studies 24.36

Case 5 24.35 The claimant is the liquidator of a now insolvent company over which the defendants were appointed as administrative receivers. The administrative receivers are domiciled in the US. Having been appointed, the receivers terminated the relationship with a number of sub-contractors based in a range of countries. The claimant claimed damages for loss consequent on the unlawful interference with the company’s contractual relations with its sub-contractors. May the proceedings be brought in England. 24.36 The claimant’s claim is in tort. Its cause of action is based on unlawful interference with the contracts with the sub-contractors. It seems that the torts were likely committed in the place where the contracts were terminated. Since the claim is based on the terminations, which were said to be the acts of unlawful interference with business or, perhaps, inducement of breach if the sub-contractors terminated their contracts in breach, it seems that those acts were done in the place or places where the sub-contractors were based. That gives rise to the unhappy situation that jurisdiction could be conferred on numerous places. Hence the company might be better placed to rely on the place where damage was suffered. It ought to be possible to say that damage was suffered in England. This example is a much-varied version of one of the appeals in OBG v Allan23.

23

[2007] UKHL 1, [2008] 1 AC 1.

531

Index [All references are to paragraph number.]

A Anti-suit injunction anti-enforcement injunction, 9.42, 17.07 application for— arbitration, 9.40, 9.41, 17.09 case studies see case studies below generally, 17.01–17.09 jurisdiction, defendant subject to, 17.08 see also grant below arbitration, 9.40, 9.41, 17.09 availability, 17.01 Brexit, effect, 9.35–9.39 Brussels Recast Regulation— Brexit, effect, 9.35–9.39 generally, 9.04, 9.08–9.10, 9.14, 9.16 case studies— English arbitration clause, party commencing proceedings elsewhere, 17.73, 17.74 English arbitration clause, proceedings in China, delay in seeking injunction, 17.75, 17.76 English choice of jurisdiction clause, party wishing to sue in Canada, 17.13–17.16 English choice of jurisdiction clause, proceedings in Germany, 17.10– 17.12 English employee suing Englishdomiciled company, Spanish associated company suing employee in Spain, 17.17, 17.18 English employee suing Englishdomiciled company, US associated company suing employee in US, 17.19, 17.20 English employee suing Englishdomiciled company under contract for services, US associated company suing employee in US, 17.21, 17.22

Anti-suit injunction – contd case studies – contd English-domiciled employee of Australian employer working in England post-Brexit, wishing to sue employer, 17.41, 17.42 English-domiciled employee of German employer working in England post-Brexit, wishing to sue employer, 17.39, 17.40 English-domiciled employees of English company with US parent, bid to restrain parent pursuing claim in US, 17.23–17.31 English-domiciled employees of English company with US parent, bid to restrain parent pursuing claim in US post-Brexit, 17.33– 17.36 English-domiciled employees of English company with US parent, right to sue in England or other place of residence,  17.38 German-domiciled employee of English company sued postBrexit in England, whether able to rely on Brussels Recast Regulation, 17.43–17.48 investment company wound up in England, investor’s application for injunction to enforce attachment of assets order, 17.49, 17.50 Lebanese company suing UK-based company in Lebanon and ignoring injunction, 17.77, 17.78 parties agreeing to determine disputes in England, bid to rely on earlier judgment in another country, 17.79, 17.80 533

Index Anti-suit injunction – contd case studies – contd parties to contract for work in US agreeing arbitration in England, no express choice of law clause in contract, application for injunction in England, 17.71, 17.72 recipient of services suing in England and US, defendant’s attempt to enjoin US proceedings, 17.66, 17.67 Russian company engaging company for work in Russia, arbitration clause making London seat of arbitration, 17.53–17.56 Spanish-domiciled employee of Spanish company working in England, bid to restrain English proceedings after declaratory relief application, 17.57–17.59 Spanish-domiciled employee of Spanish company working in England, bid to restrain proceedings in England prior to declaratory relief application, 17.60, 17.61 US company suing English-domiciled defendant in US, effect of US jurisdiction clause, 17.62–17.65 US company suing parties to agreement with English jurisdiction clause, attempt to restrain US proceedings, 17.51, 17.52 US hedge fund suing German bank in US, counterclaim by bank in England under contested jurisdiction clause, 17.68–17.70 comity, 9.05, 9.06, 9.22, 9.33, 9.42 discretion to grant— amenability to English court, 9.21 cautious approach, 9.21 comity, 9.22 disadvantages, right to identify, 9.27 ends of justice, to meet, 9.21 England as natural forum, 9.22 factors, relevant, 9.25 generally, 9.04, 9.05 just and convenient in the circumstances, whether, 9.20, 9.24, 9.25 punitive damages, waiver of right to, 9.27 rights of party, threat of interference with, 9.23 unconscionability test, application, 9.26 domestic law— agreement as to forum, where, 9.12 534

Anti-suit injunction – contd domestic law – contd alternative and single forum cases distinguished, 9.19 arbitration clause, where, 9.12 court’s jurisdiction— establishing, 9.14, 9.15 powers flowing from, 9.17, 9.18 subject matter jurisdiction, 9.15 generally, 9.11–9.19 issues for consideration, 9.13 separate claim, no need to identify as, 9.17 service, 9.14, 9.16 effect, 17.01 enforcement, 9.01 English court as natural forum, need to show, 17.03 grant— debts situated in UK, where, 17.07 discretion see discretion to grant above enforcement of foreign judgment, to restrain, 17.07 grounds for, 17.04 intellectual property rights, breach, 17.07 jurisdiction, 17.08 reasons for, 17.02, 17.04–17.07 right to be sued in England, where, 17.05 vexatious or oppressive foreign proceedings, 17.06 historical background, 9.02, 9.03 ignoring, consequences, 17.01 issue— appropriateness of forum, 9.05, 9.06 discretionary nature see discretion to grant above forum non conveniens grounds, 9.05 principles underpinning, 9.05 protection of English jurisdiction, for, 9.07 reasons for, 9.04, 9.05, 9.18 restriction on, 9.04, 9.08 jurisdiction— generally, 3.24 subject matter, 9.42 nature, 9.01–9.03 personal remedy, 9.01 power to grant, 9.01 public policy reasons for, 17.04 purpose, 17.02 right to be sued in particular forum— breach of defendant’s rights, risk,  9.28 Brussels Regulation, and, 9.28–9.34 case law criticisms, 9.31

Index Anti-suit injunction – contd right to be sued in particular forum – contd cause of action in third state not available in EU court, 9.34 clash of court views, 9.29 comity, importance, 9.33 domicile, right to be sued in, 9.34 generally, 9.28–9.34 ineffective jurisdiction clause, 9.30, 9.32, 9.33 statutory authority, 9.02 subject matter jurisdiction, 9.42 types, 9.04–9.07, 17.01 vexatious or oppressive proceedings, 9.05, 9.06, 9.21 Applicable law agreement between parties, 1.08 comity, 1.09, 1.11 conflict of law see Conflict of law determining, 1.06–1.12 European element, 1.06, 1.07, 1.11 questions to be addressed, 1.07 statutory supremacy, 1.10 B Breach of confidence case studies— English-domiciled employee and French-domiciled company, 16.37–16.41 French-domiciled employee, claim against English-domiciled third party, 16.65–16.71 German defendant with assets in England, claimant seeking freezing order, 16.63, 16.64 German in joint venture with English company providing information to French company, 16.49–16.57 German in joint venture with English company providing information to US company, 16.58–16.62 US-domiciled employee and Frenchdomiciled company, 16.42–16.48 choice of law— contractual claim, 16.35 generally, 16.34–16.36 non-contractual claim, 16.36 third party recipient, 16.36 confidential information— meaning, 16.04–16.07 see further Confidential information constructive dismissal, effect on obligations, 16.23 customer details, access to, 16.25 defences, 16.22, 16.23

Breach of confidence – contd detriment, need to show, 16.20 freedom of expression and right to privacy, 16.22 generally, 16.01–16.03 human rights violation, 16.20 iniquity, disclosure, 16.22 jurisdiction— Brussels Recast Regulation, under, 16.28 EU-domiciled defendant, 16.28–16.31 generally, 16.27 non-EU domiciled defendant, 16.32, 16.33 obligation of confidence, where arising— contract, in see under Confidential information equity, in see under Confidential information statute, under, 16.21 public interest, whether disclosure in, 16.22 remedies— conflict of laws, 16.26 damages, 16.24 generally, 16.24–16.26 injunction, 16.24, 16.25 restraint on use or disclosure, 16.20, 16.24 springboard relief, 16.25 test to be applied, 16.20 third party, by, 16.18, 16.26, 16.31, 16.34 tort, claim in, 16.26 Breach of contract case studies— employee in England, US-domiciled employer, contract governed by US law, 18.13, 18.14 English-domiciled claimant working in Germany for French-domiciled employer, forum where English choice of jurisdiction clause, 18.30–18.32 English-domiciled claimant working in Germany for French-domiciled employer, suit for wrongful dismissal, 18.28, 18.29 English-domiciled claimant working in Germany for US-domiciled employer, forum with or without choice of jurisdiction clause, 18.33, 18.34 English-domiciled employee working in England for Dutch-domiciled employer, application for declaratory relief, 18.54, 18.55 535

Index Breach of contract – contd case studies – contd English-domiciled employee working in England for US-domiciled employer, contract governed by US law, 18.56, 18.57 German-domiciled claimant, Japanese-domiciled employer with UK office, right to sue in England, 18.15–18.27 German-domiciled employer mainly based in France, Englishdomiciled employee wishing to sue in England, 18.58, 18.59 Italian-domiciled employer, Englishdomiciled employee in Denmark, forum for claim, 18.11, 18.12 Italian-domiciled employer, Englishdomiciled employee in England, forum for claim, 18.09, 18.10 Italian-domiciled employer, Englishdomiciled employee working in England, appropriate forum, 18.64, 18.65 Italian-domiciled employer, Englishdomiciled employee working in Italy, appropriate forum, 18.62, 18.63 UK-domiciled employer’s suing French-domiciled employee working in UK and Germandomiciled recruiting sergeant company, 18.35–18.39 UK-domiciled employer’s suing French-domiciled employee working in UK and Germandomiciled recruiting sergeant company, previous claim brought in UK court, 18.40, 18.41 US-based employer bringing suit against English-domiciled employees working worldwide, no choice of law in contract, 18.48–18.50 US-based employer bringing suit against European-domiciled employees working worldwide, no choice of law in contract, 18.51– 18.53 US-domiciled parties, employee wishing to work for English competitor, whether employer able to sue in England, 18.60, 18.61 US-domiciled parties in dispute over contract governed by US law, threatened unlawful act in England, appropriate forum, 18.42–18.47 536

Breach of contract – contd case studies – contd different jurisdictions, claim involving— case studies see case studies above EU-domiciled employee, 18.02 EU-domiciled employer, 18.03 generally, 18.01–18.08 issues arising, 18.01 non-EU-domiciled employer— branch etc in EU, 18.04 necessary or proper party provisions, use, 18.07 outside EU, 18.05 post-Brexit, 18.05, 18.06 service outside jurisdiction, 18.05, 18.06 public policy considerations, 18.08 types of claim, 18.01 procuring see under Economic tort Breach of fiduciary duty case studies— Dutch-domiciled non-executive director of English company, bribery by, 20.31–20.37 English-domiciled senior employee of English company, breach of confidentiality, 20.19–20.21 Italian-domiciled senior employee of English company, EUdomiciled third parties, breach of confidentiality, 20.25–20.30 US-domiciled non-executive director of English company, bribery by, 20.38–20.40 US-domiciled senior employee of English company, breach of confidentiality, 20.22–20.24 conflict of laws see jurisdiction below contract rules, applicability, 20.15 examples, 20.04, 20.08, 20.11 fiduciary duty, nature of see Fiduciary duty generally, 20.09 joint venture partner, by, 20.04, 20.11 jurisdiction— acts committed within, rule covering, 20.15 appropriate forum, 20.15, 20.16 assets within, rule covering, 20.15 Brussels Recast Regulation, 20.15, 20.16 case law, 20.16 choice of law, rules as to, 20.17, 20.18 contract of employment, relevance, 20.16, 20.17 director, appropriate forum, 20.16 fraud, company officials, 20.16

Index Breach of fiduciary duty – contd jurisdiction – contd generally, 20.14–20.18 third parties, involving, 20.16 negligence not comprising, 20.09 persons owing duty, 20.01 remedies— account of profits, 20.10–20.13, 20.15 generally, 20.10–20.14 third party, availability against, 20.13 C Challenge to jurisdiction Brussels Recast Regulation— claims governed by, 4.03–4.05 claims not governed by— acknowledgement of service, filing, 4.09 application to stay proceedings, 4.06, 4.09 basis for lack of jurisdiction, 4.07 disputing court’s jurisdiction, 4.09 forum non conveniens test see forum non conveniens test below generally, 4.06–4.09 procedure, 4.98 cases based on choice of jurisdiction see under forum non conveniens test below cases other than those based on choice of jurisdiction see under forum non conveniens test below forum non conveniens test— cases based on choice of jurisdiction— Brussels Recast Regulation, 4.28, 4.29 criteria, relevant, 4.23 generally, 4.20–4.29 jurisdiction clause— breach, right to damages, 4.27 giving effect to, 4.25–4.27 legislation preventing right to choose, 4.21 non-EU domiciled defendant, 4.22 non-EU Member State court, 4.20– 4.29 related foreign proceedings, where, 4.24 cases other than those based on choice of jurisdiction— burden of proof, 4.11 criticism of foreign forum, 4.19 factors determining suitability, 4.12, 4.13 generally, 4.11–4.19 human rights risk, 4.19 injustice, risk, 4.19

Challenge to jurisdiction – contd forum non conveniens test – contd cases other than those based on choice of jurisdiction – contd judicial authority, 4.11 legal aid, availability, 4.18 refusal of stay, 4.15, 4.16 time bars, 4.17 whether stay unfair to claimant, 4.14 generally, 4.10 generally, 3.65, 4.01, 4.02 Choice of law arbitration agreement, 7.66 breach of confidence, 16.34–16.36 characterisation of claim, 6.04, 6.05 contract, in— breach— consequences, 7.59, 7.61–7.63 damages, 7.60, 7.63 capacity to contract, 7.64, 7.65 closest and most real connection test, 7.66 common law, 7.66–7.68 consent, challenges to, 7.49 contractual relationship— denial of contract by one party, 7.10 how arising, 7.08 defective performance, 7.56 duress, 7.45 English statutory law, under, 7.05, 7.06 EU law— continued use, 7.01 European Court of Justice decisions, 7.07 existence of contract, dispute, 7.48, 7.49 formal validity— meaning, 7.52 consumer contract, 7.50 generally, 7.50 rights in rem in immovable property, 7.51 unilateral acts, 7.54 generally, 7.01–7.12 governing law, 7.02 mandatory provisions, 7.39–7.46 no selection, where see no selection, where below party choice see party choice below performance, 7.56–7.58 proper law, application, 7.23, 7.66–7.68 public policy, importance, 7.44, 7.45, 7.46 restraint of trade, 7.44 Rome Convention see Rome Convention below 537

Index Choice of law – contd contract, in – contd Rome I Regulation see Rome I Regulation, rules under below scope of applicable law, 7.47–7.63 unlawful contract, 7.42, 7.68 domestic law— applicability, narrow scope, 8.77 appropriateness of forum, 8.74, 8.76 defamation, 8.70–8.77 double actionability, 8.71, 8.73 evidence, pleading and practice, 8.75 generally, 8.69–8.77 heads of damage, recoverability, 8.77 law of another country, whether appropriate to follow, 8.74 place tort committed, identifying, 8.72, 8.73 statutory authority, 8.73–8.77 torts pre-11 January 2009, 8.69 EU law, post-Brexit use, 6.06 foreign law, where effect not given to— acts of foreign states, passing judgment on, 6.18 duress, contract procured by, 6.10 foreign public law, 6.16 generally, 6.07, 6.08 human rights, breach, 6.09 international law, breach, 6.11 judicial analysis of rule, 6.19 national security, 6.17 penal, revenue or public law, nonenforcement, 6.12–6.19 public policy, incompatibility with, 6.09–6.11 restraint of trade, 6.10 sovereign authority, judicial abstention, 6.19 generally, 6.01–6.06 identification process, 6.03 multiple choices in single case, 6.02 no selection, where— consumer contract, 7.34 contract closely connected with country, where, 7.28 contract of carriage, 7.32, 7.33 general rules, 7.25–7.30 habitual residence, importance, 7.26, 7.27 immovable property, rights in, 7.30 individual employment contract, 7.36– 7.38 insurance contract, 7.35 Rome Convention, applicability, 7.29, 7.30 Rome I Regulation, rules under, 7.25, 7.31 538

Choice of law – contd non-contractual obligations— meaning, 8.02, 8.03 breach of confidence, 8.05 domestic law see domestic law above equity-derived obligations, 8.04 fiduciary duties, 8.04 generally, 8.01–8.06 governing law, 8.06 Rome II Regulation see under Rome II Regulation, rules under below party choice— absolute, not, 7.18 applicable law, power to change, 7.19, 7.20 autonomy, importance, 7.14, 7.24 commercial or professional activity in more than one state, 7.17 consent, lack of, 7.15, 7.23 determining existence of clause,  7.15 domestic law, applicability, 7.13 duress, 7.23 express, 7.13, 7.14 freedom of choice— generally, 7.13 limits on, 7.16, 7.17, 7.22 generally, 7.13–7.24 identifying choice, factors in, 7.21, 7.22 insurance contracts, 7.17 lack of see no selection, where above mandatory rules, binding nature of, 7.18, 7.24 manner of, 7.13 retained EU law, application, 7.18 possible scenarios, 6.01 Rome Convention— applicability, 7.04, 7.06 effect under English law, 7.05 Rome I Regulation, rules under— applicability, 7.08, 7.12 Brussels Regulation, and, 7.08 contractual relationship— denial of contract by one party,  7.10 how arising, 7.08 exceptions to operation, 7.11 generally, 7.03 party choice see party choice above scope, 7.47–7.63 Rome II Regulation, rules under— applicability— agent, liability for, 8.55 burden of proof, 8.56 damage and damages, 8.53–8.55 duty of care, 8.51

Index Choice of law – contd Rome II Regulation, rules under – contd applicability – contd effect, 8.51 evidence and procedure, 8.60 extensive nature, 8.50 formal validity, 8.57 generally, 8.02, 8.07–8.13, 8.50–8.60 liability, 8.51, 8.52 limitation periods, 8.55 mandatory law of forum, and, 8.59 mitigation, 8.53 presumptions of law, 8.56 public policy, effect, 8.60 transfer of right to damages, 8.54 varying effect of applicable law, 8.58 vicarious liability, 8.55 breach of confidence, exclusion, 8.05 cases falling outside see domestic law above competition, unfair and acts restraining, 8.37–8.44 culpa in contrahendo, 8.63, 8.64 domestic law, and see domestic law above effect under English law, 8.01 environmental damage, 8.45 exclusions, 8.08–8.11 freedom of choice, 8.14–8.17 governing law— apart from choice— generally, 8.18 tort/delict see tort/delict below generally, 8.06 industrial action, 8.47 insurance claim, 8.48 intellectual property, infringement, 8.46 multiple liability, 8.49 negotiorum gestio, 8.61, 8.62 post-Brexit, 8.01 privacy claims, exclusion, 8.05 product liability, 8.31–8.36 scope see applicability above special rules, 8.30–8.49 tort/delict— applicable law, 8.20 damage— meaning, 8.21 after-effects, 8.26 direct, 8.25, 8.27 indirect consequences, and, 8.25 death in car accident, 8.25 financial loss, where occurring, 8.23 general rule, 8.20 generally, 8.19–8.29 negligence, 8.24 place of damage—

Choice of law – contd Rome II Regulation, rules under – contd tort/delict – contd both parties in same country,  8.27 case law, 8.24–8.26 close connection with another country, 8.29 financial loss, where occurring, 8.23 focus on, 8.20 habitual residence, 8.28 locating, 8.22 misrepresentation, 8.23 substantive law, 8.19 unfair competition, 8.37–8.44 unjust enrichment, 8.65–8.68 Confidential information meaning, 16.04–16.07 breach see Breach of confidence categories, 16.13 contract, in— agreement as to what constitutes,  16.09 breach, example, 16.26 categories of information, 16.13 ‘confidential information’, reference to, 16.10 conflict of laws, 16.26 examples, 16.12 generally, 16.09–16.16 good faith, duty, 16.12 implied obligation not to misuse— generally 16.11, 16.12 termination of contract, following, 16.12 inner counsels, proximity to, 16.15 objective knowledge, need to establish, 16.16 post-termination restraint, 16.13, 16.16 skill etc of employee, 16.16 trade secret, 16.12–16.16 equity, in— breach of equitable duty, 16.26 examples, 16.17 failed joint venture, 16.18 generally, 16.17–16.20 human rights, protection, 16.19, 16.20 notice of confidentiality, 16.17 privacy, 16.19, 16.20 third party’s duty, 16.18, 16.26 skill etc of employee, distinction, 16.16 statute, under, 16.21 Conflict of law Brexit, effect— Brussels Recast Regulation, 2.04–2.06, 2.08, 2.10 539

Index Conflict of law – contd Brexit, effect – contd Brussels Regulation, 2.03 choice of law, 2.09 generally, 1.06, 2.01 Hague Convention, 2.07 jurisdiction and recognition of judgments, 2.02–2.08 Lugano Convention, 2.04, 2.05, 2.10 Rome Regulations, 2.09 Table of equivalences, 2.11 generally, 1.12 team moves, 15.25 Conspiracy agreement between parties, need for, 24.15, 24.19 anomalous tort, as, 24.14 arising, where, 24.17 case studies see under Economic tort conflict of law, 24.21 criminal acts, reliance on, 24.20 generally, 24.01, 24.14–24.24 injury, to cause, 24.15, 24.16, 24.18 intention, need for, 24.18 jurisdiction— Brussels Recast Regulation, 24.21 common law, at, 24.22 conferring, flexibility in, 24.23 generally, 24.21–24.24 governing law, 24.24 place where agreement reached, 24.21 place where damage suffered, 24.21, 24.22, 24.24 nature of, 24.14 primary liability, 24.17, 24.20 rationale behind, 24.14 types, 24.15 unlawful act, to do— generally, 24.15, 24.16, 24.18, 24.20 see also Economic tort (loss by unlawful means, causing) Contract for services breach, 23.08 case studies— England-based bank losing money after negligence by Spain-domiciled surveyor, contract governed by Spanish law, 23.35–23.38 England-domiciled claimant suing negligent France-domiciled surveyor living in Germany, appropriate forum, 23.25–23.29 England-domiciled claimant suing negligent France-domiciled surveyor living in Germany, appropriate forum where governed by English law, 23.30, 23.31 540

Contract for services – contd case studies – contd England-domiciled claimant suing German-domiciled defendant with benefit of German jurisdiction clause, contract governed by English law, 23.43–23.45 England-domiciled claimant suing negligent US-domiciled surveyor, appropriate forum where property in US and no English choice of law, 23.32–23.34 English investor suing Italian architect over work on UK building, contract governed by English law with Italian jurisdiction clause, 23.46–23.49 UK-based client suing Belgian lawyers for loss in purchase of shares in Belgium, appropriate forum, 23.39–23.42 employee, service provider claiming to be, 23.09 generally, 23.01 governing law— choice of law clause, 23.20, 23.21 close connection with country, 23.21 contract or tort, differing law, 23.24 generally, 23.20–23.24 implied choice of law, 23.22 lack of choice of law clause, 23.20, 23.22 place where damage suffered, 23.18, 23.23 Rome I Regulation, 23.22 jurisdiction— Brussels Recast Regulation, under, 23.11, 23.15, 23.17 case studies see case studies above damage suffered, where, 23.18, 23.23 employee, service provider claiming to be, 23.09, 23.10, 23.12 English court, where arising, 23.16, 23.18 EU-domiciled defendant, 23.15, 23.16, 23.17 factors determining relevant rules, 23.13 negligence, where, 23.17, 23.18, 23.19, 23.23 non-EU domiciled defendant, 23.19 non-payment, where, 23.14, 23.15 non-performance, where, 23.14, 23.15 place where services provided, 23.11, 23.15, 23.16, 23.17 recipient of services, claim by, 23.12

Index Contract for services – contd jurisdiction – contd suing employer out of, under CPR 6.33 (2), 23.10 tortious act committed, where, 23.18, 23.19 liability— contract, in, 23.02, 23.03, 23.07 damages, 23.07 limitation period, 23.07 reasonable contemplation test, 23.07 reasonable foreseeability, 23.07 tort, in see tortious liability below limitation period in contract and tort, 23.07 non-payment for, 23.14, 23.15 non-performance, 23.14, 23.15 professional negligence, 23.13, 23.23 reasonable care and skill, implied terms, 23.02, 23.03, 23.06 retainer— construction, 23.03 duties flowing from, 23.02 solicitor’s duty, 23.02, 23.03 tortious liability— advice given in professional context, 23.04 contract, where, 23.05, 23.07, 23.24 generally, 23.04–23.07 imposition by general law, 23.05 limitation period, 23.07 negligent misstatement, 23.05 professional negligence, 23.13, 23.23 reasonable care and skill, implied terms, 23.02, 23.03, 23.06 reasonable contemplation test,  23.07 reasonable foreseeability, 23.07 surveyor’s duty, 23.04 underwriting agents’ duty, 23.05 E Economic tort case studies— English company suing EUdomiciled employee defendants for conspiracy, appropriate forum, 24.27, 24.28 English company suing German company for inducing breach of contract with German-domiciled clients, appropriate forum, 24.32– 24.34 for unlawful interference causing loss, appropriate forum, 24.35, 24.36

Economic tort – contd case studies – contd Swedish company suing Polishand English-domiciled parties for conspiracy, appropriate forum, 24.29–24.31 US-based claimant suing UK- and USdomiciled parties for conspiracy, appropriate forum, 24.25, 24.26 conspiracy see Conspiracy generally, 24.01, 24.02 loss by unlawful means, causing— actionable conduct, 24.10 bootlegger, 24.11 case law, leading, 24.08 case studies see case studies above contract, no need for, 24.08 damage, intention to cause, 24.08, 24.09 generally, 24.08–24.13 independently unlawful means, use, 24.08, 24.09 inducing breach of contract distinguished, 24.08 intention, nature and importance,  24.13 intimidation, 24.10 legal consequences, interference having, 24.10 primary liability, 24.08 third party, act affecting or interfering with, 24.10–24.12 wrongful interference where claimant having economic interest, 24.10 occurring, where, 24.01 procuring breach of contract— accessory liability, 24.04 actionable wrong, need for, 24.04 case law, leading, 24.03 case studies see case studies above deliberate disregard of knowledge of breach, 24.06 foreseeable consequence, but no intention, 24.07 generally, 24.03–24.07 intention, need for, 24.07 knowledge of breach, need for, 24.05 ‘Nelsonian’ knowledge of breach, 24.06 primary liability, 24.04 Employment tribunal case studies— British employee working in Dubai for British-domiciled company, 19.48, 19.49 British employee working in Dubai for US-incorporated company, 19.51, 19.52 541

Index Employment tribunal – contd case studies – contd British government department sued by teachers in European schools, 19.46, 19.47 England-domiciled employee working across Europe suing Germandomiciled employer in UK, 19.27, 19.28 England-domiciled employee working for English company in France owned by US-based company, 19.36, 19.37 England-domiciled employee working for English company in UK owned by US-based company, 19.33, 19.35 England-domiciled employee working for English company in UK owned by US-based company, appropriate forum post-Brexit, 19.38, 19.39 England-domiciled employee working in Dubai suing Australiandomiciled employer, contract governed by English law, 19.31, 19.32 England-domiciled employee working in Dubai suing Austrian-domiciled employer, 19.29, 19.30 England-domiciled employee working in UK suing Brazil-domiciled employer, 19.23, 19.24 England-domiciled employee working in UK suing Brazil-domiciled employer post-Brexit, 19.25, 19.26 Hong Kong-based employer, UK-based employee working in different places, whether habitual place of work in England, 19.40–19.42 UK-domiciled employee in UK suing English-domiciled parties domiciled in EU Member State, 19.21, 19.22 UK-domiciled employee in UK suing UK-domiciled employer and USdomiciled agencies, 19.14–19.18 UK-domiciled employee in UK suing US-domiciled employer and USdomiciled agencies, 19.19–19.20 UK-resident employee working in Libya for British-based USsubsidiary company, rights under Employment Rights Act 1996, 19.43–19.45 foreign employers and related parties, claims involving— case studies see case studies above conflict of laws issues, 19.04, 19.05 542

Employment tribunal – contd foreign employers and related parties, claims involving – contd generally, 19.01–19.13 jurisdiction— basis for claiming, 19.01, 19.02 Brussels Recast Regulation, 19.06, 19.10 case studies see case studies above challenging claim to, 19.03 connection with British law etc, 19.12, 19.13 decision-maker, claim against, 19.03 employer, claim against, 19.03, 19.06, 19.07 England, employee working in, 19.06 England, respondent carrying in business in, 19.07 expatriate employees, 19.11, 19.12 legislation, territorial extent, 19.11 peripatetic employees, 19.11, 19.12 protected employees, 19.11, 19.12 Rules of Procedure, 19.08, 19.09 third parties, involving, 19.03 worldwide, 19.01 see also jurisdiction below service, statutory authority for, 19.01 jurisdiction in— agents and employees of respondent employer— at least one respondent domiciled in UK, 14.28 Brexit, effect, 14.41 Brussels Recast Regulation, 14.21– 14.41 closely connected claims, 14.26 CPR, applicability, 14.36–14.40 discrimination claim, 14.30–14.32 generally, 14.21–14.41 hearing all claims together, 14.25 irreconcilable judgments, risk, 14.27 non-applicability of rule 8, 14.35 parties not domiciled in EU, 14.33, 14.34 place where harmful event occurs, court’s jurisdiction, 14.29, 14.32 whistle-blowing claim, 14.30–14.32 foreign employers and related parties see under foreign employers and related parties, claims involving above generally, 14.01 international see rule 8 below more than one defendant, where, 14.25–14.29

Index Employment tribunal – contd jurisdiction in – contd rule 8— Brussels Recast Regulation, and, 14.16–14.20 connection with Great Britain, existence, 14.13 content, 14.03 determining jurisdiction, 14.08– 14.10, 14.12–14.15 generally, 14.02 geographical extent of UK legislation, 14.05 international see international above judicial approach to jurisdiction, 14.06 non-applicability, 14.35 service of claim, 14.08 scope, 14.04 statutory origin, 14.11 territorial scope of legislation, whether claim within, 14.06, 14.07 tribunal or High Court, hearing in, 14.06 unlimited extra-territorial jurisdiction, 14.04 whether court having jurisdiction, 14.06, 14.08 territorial scope of legislation— appropriate choice of law Brexit, effect, 14.58, 14.60 case law, 14.45–14.47,14.51–14.62 close connection to Britain, 14.51 contract rather than location, focus on, 14.62 employment in Great Britain— Brexit, effect, 14.58, 14.60 British enclave abroad, 14.50 close connection to Britain, 14.51, 14.52, 14.53, 14.57 domestic law, promise of protection, 14.52 employee, 14.48 employer based in Great Britain, 14.50 expatriate employee, 14.50 no close connection to Britain, 14.54 peripatetic employee, 14.49 question of fact, close connection as, 14.57 working or based abroad, rare protection for, 14.55 EU Member State, employment in, 14.59 European Schools, teachers in, 14.51 generally, 14.42–14.43

Employment tribunal – contd territorial scope of legislation – contd limits, 14.42–14.44 prima facie territoriality, 14.47 principles, 14.46, 14.48 question of law, as, 14.57 sex discrimination, 14.59 statutory provisions as to, 14.61, 14.62 unfair dismissal, 14.47–14.50, 14.59 whistle-blowing, 14.56 F Fiduciary duty meaning, 20.02 arising, where, 20.01, 20.02 breach see Breach of fiduciary duty conflict of interest, where, 20.02, 20.06 contract as starting point for, 20.01, 20.14 contractual duty distinguished, 20.02 core duties, 20.02, 20.05 directors’ duties, 20.03, 20.06, 20.08 employee not necessarily owing, 20.02 equitable obligations and remedies, 20.01 examples of persons owing, 20.01, 20.03, 20.04 generally, 20.07 joint venture party, 20.04 legal and equitable principles, 20.07 origin, 20.04 own misconduct, whether duty to reveal, 20.08 statute, under, 20.03 trusts and trustees, 20.01, 20.04 Foreign judgment Brussels Recast Regulation— appeal— measures to enforce, suspension, 13.106 stay of enforcement proceedings, 13.98, 13.99 arbitration, exclusion, 13.83 authority and effectiveness, duty to accord, 13.101 Brussels Regulation 2001, and, 13.78 conflicting judgments in different states, 13.96 court’s powers, 13.105 default of appearance, judgment given in, 13.89 domicile and nationality, irrelevance, 13.79 England procedure in, 13.103 EU judgments, registration, 13.103 European Enforcement Order, 13.107, 13.108 general rule, 13.77 generally, 13.76–13.108 543

Index Foreign judgment – contd Brussels Recast Regulation – contd human rights legislation, compliance with, 13.92, 13.93, 13.94 improper service, where, 13.89, 13.90 irreconcilable judgments, 13.95 judgment in default, without consideration of merits, 13.94 judgments covered by, 13.80, 13.81, 13.82 jurisdiction clause, effect, 13.81 limited grounds for nonrecognition, 13.84 Member States, enforceability in, 13.102 public policy, where contrary to, 13.85– 13.88, 13.91, 13.92 purpose, 13.77 refusal of enforcement, 13.105 registration— application to set aside, 13.103 effect, 13.104 enforcement by, 13.103 substance, judgment not reviewed as to, 13.97 suspension of proceedings, reasons for, 13.100 cause of action, whether extinguishing, 13.08, 13.09 conditions for recognition and enforcement— Brussels Recast Regulation see Brussels Recast Regulation above common law— approach at, 13.14 criminal damages, award, 13.37 default provision, 13.13 definite sum, judgment for, 13.36 English judgment, enforcement, 13.14, 13.15 estoppel precluding enforcement, 13.49, 13.51 exclusions see no enforcement at common law, where below final and conclusive judgment, 13.35 foreign judgment, recognition, 13.16, 13.17 fraud see fraud, no enforcement where below generally, 13.13 judgment in personam, 13.38 judgment in rem, 13.38–13.40 jurisdiction see jurisdiction below multiple damages, for, 13.71, 13.72 penalty or tax demand, 13.37 prohibition on enforcement, 13.32 two competing judgements, where, 13.51 544

Foreign judgment – contd conditions for recognition and enforcement – contd European Enforcement Order, 13.107, 13.108 fraud, no enforcement where— case law establishing, 13.44, 13.45 estoppel, effect, 13.49, 13.51 fraud: meaning, 13.47 ‘fraud unravels everything’,  13.46 generally, 13.44–13.51 issue of fraud binding English court, 13.48 judicial approach, 13.46 matters not litigated, effect, 13.50 reasonable bounds, allegations to be kept within, 13.46 reasonable diligence requirement, 13.46 reconsideration of court’s judgment, involving, 13.45, 13.46 two competing judgements, where, 13.51 Hague Convention, under, 13.109– 13.111 jurisdiction— comity or reciprocity, 13.33 contesting, whether amounting to submission, 13.25, 13.26 corporate body’s presence, 13.19, 13.20 counterclaim as submission,  13.28 international sense, in, 13.17–13.22, 13.34 jurisdiction clause as submission, 13.29, 13.30, 13.31 need for, 13.16 non-national of court giving judgment, 13.33 presence, need for, 13.18 submission to, 13.21–13.31 Lugano Convention— generally, 13.76 see also Brussels Recast Regulation above no enforcement at common law, where— fraud, where see fraud, no enforcement where above generally, 13.41–13.43 public policy see public policy, no enforcement where contrary to below

Index Foreign judgment – contd conditions for recognition and enforcement – contd public policy, no enforcement where contrary to— changing nature of public policy, effect, 13.52 flagrant denial of justice, where, 13.55 generally, 13.52–13.56 human rights violations, 13.55 restrictive interpretation, 13.53 statutory rule, 13.56, 13.71–13.75 substantial justice, offence to notions of, 13.54, 13.55 universal principles of morality, 13.52 statute under— Brussels Recast Regulation see above Commonwealth court judgments, 13.59–13.63 denial of registration, 13.70 domestic statutes, 13.58 estoppel, 13.60 exceptions to recognition, 13.71– 13.75 final and conclusive judgments, 13.64, 13.69 generally, 13.13, 13.30, 13.57–13.70 limitation period for registration, 13.65 multiple damages, for, 13.71, 13.72 Protection of Trading Interests Act 1980, under, 13.73–13.75 reciprocal enforcements, 13.64– 13.70 recovery of money, 13.68, 13.69 registered judgment, setting aside, 13.66, 13.67 enforcement— Brexit, effect, 13.12 conditions see conditions for recognition and enforcement above effect, 13.10 generally, 1.22, 13.10 means, 13.11 generally, 13.01–13.10 recognition and effect— cause of action merging into judgment, 13.07 consequences, 13.03, 13.04 defendant’s reliance on, 13.07 domestic judgments, 13.02 English court’s approach, 13.06 estoppel arising, 13.06

Foreign judgment – contd recognition and effect – contd generally, 1.02, 13.01 legislation requiring, 13.02, 13.05 recognition: meaning, 13.06 successful claimant bringing same claim in England, prohibition, 13.07 see also conditions for recognition and enforcement above refusal of enforcement, 13.105, 13.109– 13.111 Foreign law choice of law under Rome Regulations, proof, 12.04 matter of fact, as, 12.01, 12.02, 12.03 proof, 12.01–12.04 Fraud meaning, 21.03 case studies— Austrian suing for false statement in English-domiciled bank’s prospectus, appropriate jurisdiction, 21.27, 21.28 English company contracting with French company, false representations by Italian company, appropriate forum, 21.32, 21.33 English company purchasing rights from receivers of English company and assigning to another, latter suing other companies for false warranties, 21.34, 21.35 English-domiciled party renting cottage, unsuitable for third party due to false statement, appropriate forum, 21.29, 21.30 French national in England subject to fraud at auction in Monaco, appropriate forum, 21.23, 21.24 German bank’s fraudulent misrepresentation, Swiss bank suing for loss, choice of law and jurisdiction clause, 21.20–21.22 Portuguese company’s false statement, England-based claimant wishing to sue in England, 21.25, 21.26 share offer document with false statement published by US-based promoter, English-based investor suffering loss, 21.18, 21.19 share offer document with false statement published in England but available worldwide, EU investors suffering loss, 21.12– 21.17 545

Index Fraud – contd case studies – contd English company causing loss to latter, 21.36–21.39 common law, at, 21.04 conduct, implicit statement from, 21.03 contract, in, 21.01–21.03, 21.06–21.11, 21.17, 21.21, 21.22, 21.24, 21.39 culpa in contrahendo, 21.09, 21.10, 21.17, 21.21, 21.22 damage, need for, 21.04 examples, 21.01, 21.02 false statements encouraging course of action, 21.02 falsity and reliance, link between, 21.03 generally, 21.01–21.05 honest belief in truth of statement, 21.04 implicit statement, 21.03 judicial authority, leading, 21.03 jurisdiction and choice of law— Brussels Recast Regulation, 21.07 contractual claim, 21.07, 21.09 culpa in contrahendo, 21.09, 21.10, 21.17, 21.21, 21.22 English law governing, where, 21.08 generally, 21.06–21.11, 21.20–21.22 governing law, identifying, 21.08, 21.19 place where damage occurs, 21.09, 21.11, 21.14, 21.15, 21.16, 21.19, 21.21, 21.31 rescission, and, 21.09 Rome II Regulation, 21.09, 21.10, 21.17 misrepresentation to enter contract, 21.01 negligent misstatement, 21.05, 21.13 recklessness as to truth of statement, 21.04 remedies, 21.03, 21.05 tort, in, 21.01, 21.02, 21.06–21.09, 21.11, 21.13, 21.14, 21.15, 21.19, 21.21, 21.22, 21.24, 21.26, 21.28, 21.30, 21.33, 21.35, 21.37, 21.39 true statement: meaning, 21.03 Freezing order application for, 11.09 assets covered by, 11.09 breach, contempt, 11.11 Brussels Recast Regulation, under see Brussels Recast Regulation, under above courts best suited to making, 11.13 dissipation, risk, 11.22 domestic but not overseas assets, over, 11.22 effect, 11.08 enforcement by foreign court, 11.11, 11.16 546

Freezing order – contd factors relevant to making, 11.14 generally, 11.08–11.11 historical background, 11.08 international claims, 11.12–11.16 international co-operation, 11.12 living expenses, legal fees etc, allowance for, 11.10 Mareva injunction, 11.08 no disclosure as to foreign assets, 11.22 power to make, 11.08 principles for grant, 11.22 purpose, 11.18 real connecting link, need for, 11.19 scope, 11.09 set-off, 11.11 speed, need for, 11.19 substantive relief in support of foreign court, 11.25 unavailable in foreign court, 11,`5 worldwide order, 11.13, 11.14, 11.16, 11.19, 11.21, 11.22 I Injunction anti-suit see Anti-suit injunction Interim remedy application for, 11.05 Brussels Recast Regulation, under— case law, 11.22 conditions to be met for grant, 11.18 content of relief, 11.18, 11.20 generally, 11.01, 11.03, 11.05, 11.17– 11.22 interim payments, 11.17 jurisdiction, determining, 11.17, 11.19 real connecting link, need for, 11.19 service in England, effect, 11.17 substantive jurisdiction, court lacking, 11.17 case law on availability, 11.22 cross-border insolvency, 11.26 foreign proceedings, in, 11.03 freezing order see Freezing order generally, 11.01–11.07 purpose, 11.18 real connecting link, need for, 11.19 refusal to grant, 11.04 search order— abusive use, 11.24 Anton Piller order, 11.23 foreign court, no grant in support of, 11.25 generally, 11.23–11.27 guidelines, 11.24 historical background, 11.23 preconditions to grant, 11.23

Index Interim remedy – contd search order – contd purpose, 11.23 requirements, 11.24 statutory authority, 11.01, 11.03–11.07, 11.25–11.27 supportive measure for foreign court, as, 11.26 International element applicable law, determining see Applicable law arising, how, 1.01 examples, 1.18, 1.19 foreign judgment, recognition, 1.02 generally, 1.01–1.04 judgment see Judgment jurisdiction see Jurisdiction questions to be addressed— generally, 1.01–1.04 strategic, 1.17–1.22 J Judgment enforcement see under Foreign judgment Jurisdiction meaning, 3.01 agreement as to, 3.02 anti-suit injunction— generally, 3.24, 9.42 see also Anti-suit injunction branch or agency, operation— branch or agency: meaning, 3.95, 3.96 domicile, importance, 3.97, 3.98 generally, 3.94–3.98 nexus between branch and dispute, 3.98 rule as to, 3.94 time when claim arises, 3.96–3.98 breach of confidence see under Breach of confidence breach of fiduciary duty see under Breach of fiduciary duty Brussels Recast Regulation— applicability, 3.20, 3.21, 3.29 arbitration, 3.22–3.25 breach of fiduciary duty, 20.15, 20.16 forum shopping, 3.27 generally, 3.15, 3.16, 3.17 inapplicable, where, 3.21, 3.22 persons domiciled in EU Member State see persons domiciled in EU Member State, over below persons not domiciled in EU Member State, suing, 3.29, 3.35, 3.36 rules applied by, 3.26–3.29 scope, 3.20–3.25 challenging see Challenge to jurisdiction

Jurisdiction – contd clause— agreement to— dispute over, 3.181 need for, 3.174, 3.179 website box, by clicking on, 3.170, 3.176 court not of contracting state, where, 3.165 court’s discretion as to place of proceedings, 3.185 dispute, whether covered by,  3.180 domicile, irrelevance, 3.172 employment contract, 3.150, 3.151, 3.180 form of clause, 3.167, 3.168, 3.169 general conditions, within, 3.175 generally, 3.165–3.190 Hague Convention on Choice of Court Agreements, 3.191–3.194 insurance policy, third party beneficiary, 3.177, 3.179 lis alibi pendens, 3.186 loss of benefit of, 3.187 Member State court, need for, 3.173 misrepresentation, contract induced by, 3.181 more than one court, allowing for, 3.171 national law, effect, 3.180 non-Member State court, 3.188, 3.189 null and void agreement, in, 3.181– 3.184 public policy, effect, 3.190 reflexive effect, principle of, 3.173, 3.188, 3.189 settlement agreement, in, 3.179 several contracts, 3.171 successor to party agreeing, 3.178 supremacy, 3.186 third party, 3.177, 3.179 writing etc, need for, 3.167, 3.170 conspiracy see under Economic tort consumer contract— activities directed at states, 3.133, 3.134 Articles governing, 3.130 consumer: meaning, 3.130, 3.131 contracting out, 3.137 domicile, relevance, 3.132, 3.136 generally, 3.130–3.137 jurisdiction rules, 3.136, 3.137 nature of contract, 3.130 relevant contracts, 3.132 contempt, committal for, 3.264 547

Index Jurisdiction – contd contract claim— breach within jurisdiction, 3.248 claim that no contract exists, 3.248, 3.253, 3.254 claim to set aside contract, 3.72 conflict of laws rules, application,  3.247 different locations, delivery of goods to, 3.78 factors determining jurisdiction, 3.245 general rule, 3.68 generally, 3.245–3.256 jurisdiction clause, 3.249–3.252, 3.255, 256 matters relating to a contract: meaning, 3.69–3.72 obligations, more than one, 3.77 place for performance, 3.73–3.78 postal rule, 3.246 rescission etc, effect on jurisdiction clause, 3.252 void contract, where, 3.72 contract for services see under Contract for services domestic— persons not domiciled in EU— Brussels Regulation, inapplicability, 3.196 generally, 3.195–3.197 see also English court’s below domicile— ascertaining— corporations, 3.12, 3.13 generally, 3.08 individuals, 3.09–3.11 partnerships, 3.12 challenge to proceedings, restriction on, 3.28 consumer contract, 3.132, 3.136 English law, applicability, 3.06 EU states, legislation applicable to, 3.05, 3.07 importance, 3.03–3.07 insurance claim, 3.120, 3.127 multiple defendants, 3.100, 3.101 employment contract— after the dispute has arisen: meaning, 3.151 appropriate court, identifying, 3.145 Articles governing, 3.138 breach of copyright, 3.141 confidential information, misuse, 3.141 contracting out rules, inapplicability, 3.150 counterclaim, 3.148 disapplied provisions, 3.154 548

Jurisdiction – contd employment contract – contd domicile, place of— England, in, 3.144, 3.147 habitual work test, 3.148 Member State, in, 3.147 more than one, 3.154 non-EU, 3.152, 3.153 US employer with branch in England, 3.153 existence, determining, 3.139, 3.142 fraud, 3.142 generally, 3.138–3.154 habitual work test, 3.146, 3.149 incentive award arrangements, 3.140 jurisdiction clause, effect, 3.150, 3.151 matters relating to individual contracts, 3.140 employment tribunal, in see under Employment tribunal enforcement of judgment or arbitral award, 3.263, 3.264 England appropriate forum, whether— basis on which permission to serve out justified, 3.268 choice of jurisdiction, 3.276 discretion in claimant’s favour— case law as to, 3.277–3.282 caution, need for, 3.270 derivation, 3.269 exercise, 3.267 factors for court’s consideration, 3.270–3.275 first instance decision, reluctance to overrule, 3.282 judicial analysis, 3.272, 3.273 strong case on merits, need for, 3.271 factors determining, 3.274 first instance decision, reluctance to overrule, 3.282 generally, 3.267–3.282 irreconcilable judgments, risk, 3.280 judicial analysis, 3.272, 3.273 jurisdiction clause, 3.276 justice, as exercise in, 3.281 multiple proceedings, risk., 3.280 suitability, 3.275 see also English court’s below English court’s— acknowledgement of service, submission, 3.209 agreement to accept service, 3.211 authorising solicitor to accept service, 3.210 bases, 3.198 contract claim see contract claim above defence, service, 3.209

Index Jurisdiction – contd English court’s – contd non-submission, 3.208 pacta sunt servanda, 3.212 participation in claim, 3.207 service in jurisdiction, 3.199–3.204 service outside jurisdiction, permission for— generally, 3.213 jurisdictional gateways see jurisdictional gateways below not required, 3.214, 3.215 requirement for, 3.216–3.220 rules permitting service out, 3.221– 3.223 submission to jurisdiction, 3.205–3.212 tort see tort below voluntary submission, 3.206 exclusive— Article governing, 3.155 generally, 3.155 non-Member States, in, 3.163, 3.164 proceedings— constitution of companies, as to, 3.157–3.159 enforcement of judgments, as to, 3.162 patents, trade marks etc, as to, 3.161 public registers, as to validity of entries in, 3.160 rights in rem in immovable property, as to, 3.156 exorbitant, 3.02 forum conveniens see England appropriate forum, whether above forum shopping, 3.27 fraud see under Fraud generally, 1.05 Hague Convention on Choice of Court Agreements, 3.191–3.194 insurance claim— Articles governing, 3.118 beneficiary: meaning, 3.120 branch etc, where, 3.121, 3.122 co-insurer, suing, 3.121 contracting out, 3.128 domicile for suing in, 3.120, 3.127 generally, 3.118–3.129 insured: meaning, 3.120 joinder of parties, 3.125, 3.126, 3.27 jurisdiction agreement, effect, 3.129 liability insurance, 3.123, 3.124 matters relating to insurance: meaning, 3.119 policyholder: meaning, 3.120 reinsurance, 3.119 types of insurance, 3.123

Jurisdiction – contd jurisdictional gateways— applicable gateway, identifying, 3.230 arguable case test, 3.225–3.228 contract, claim in see contract claim above domicile in England, 3.231 flowchart, 3.229 further claims against same defendant, 3.239 generally, 3.230 injunction, claim for, 3.232, 3.233 interim remedies, claims for, 3.240– 3.244 interpretation, 3.224–3.229 jurisdictional fact, reliance on, 3.225 necessary or proper party— joinder, 3.234–3.237 Part 20 claim, to, 3.238 tort claim see tort below limits, 3.01 multiple defendants— anchor defendant: meaning, 3.100 Article 8, restriction on use, 3.107 attempt to oust jurisdiction, 3.103 claimant identifying, 3.102 counterclaim, 3.117 domicile, effect, 3.100, 3.101 expediency of hearing claims together, 3.105 generally, 3.100–3.117 initial defendant, claim discontinued against, 3.106 joinder, resisting, 3.103 one defendant domiciled in England, where, 3.100 piggy-backing on claim, prohibition, 3.104 third party claims, 3.108–3.116 persons domiciled in EU Member State, over— arguable case as to jurisdiction, need for, 3.40 conclusive effect of rules, 3.60, 3.61 consumer contract, 3.54 contract case, 3.46, 3.47 deemed domicile, 3.36 derogation from general rule— justification, 3.38 restrictive interpretation of provisions, 3.66 special jurisdiction see special below domicile rule raking precedence, 3.33 employment contracts, 3.55–3.57 English rules overridden, 3.34 exclusive jurisdiction case, 3.58 flowcharts, 3.62 549

Index Jurisdiction – contd persons domiciled in EU Member State, over – contd gateways, 3.37–3.41 general rule, 3.32–3.36 generally, 3.30, 3.31, 3.37–3.41 insurance claim, 3.49–3.53 jurisdiction agreement, 3.59 litigation, place for, 3.32 multiple defendants, 3.48 submission to jurisdiction, 3.43–3.45 tort, 3.46, 3.47 power to decline, 3.01 property claim in England, 3.265 restitution claim, 3.266 rules— Brussels Recast Regulation see Brussels Recast Regulation above focus on defendants, 3.19 generally, 3.14–3.17 location, relevance, 3.14 Lugano Convention, 3.16, 3.17 persons domiciled in EU Member State, as to see persons domiciled in EU Member State, over above sales contract see under Sales contract salvage or cargo, 3.99 special— contract see contract claim above generally, 3.66, 3.67 several causes of action, where, 3.67 subject matter, 9.42 submission to— challenging jurisdiction, none where, 3.65 choice of jurisdiction clause, where, 3.64 entering an appearance, by, 3.64, 3.65 generally, 3.43–3.45 team moves see under Team moves tort— breach of equitable duty, 3.80 causal connection, need for, 3.80 choice of jurisdiction, 3.82 contractual overlap, 3.81 copyright breach, 3.90 damage— meaning, 3.84 part only see under place arising below place arising see place arising below significant, 3.257, 3.258 defamation, 3.86, 3.91, 3.258 domicile, primacy of place, 3.260 generally, 3.79–3.93, 3.257–3.262 limiting rule, 3.84 liquidation, misconduct leading to, 3.92 550

Jurisdiction – contd tort – contd matter relating to: meaning, 3.80 negligent advice, 3.87–3.89 non-EU domiciled defendant, 3.257 place arising— advantages of choosing, 3.85 close connecting factor, need for, 3.83 company operating, where, 3.92 copyright breach, 3.90 determining, 3.82 difficulties in determining, 3.86 generally, 3.79 manufacture, place of, 3.93 misrepresentation claim, 3.93 part of damage only— death in another country, 3.259, 3.260 libel, 3.258 significant part of act in England, 3.261, 3.262 wrongful act, factors characterising, 3.91 L Lis alibi pendens applicability, 5.01, 5.10 Brussels Recast Regulation, stays under— applicability, 5.10 correct identification of cause, relevance, 5.20 court becoming seised of case: meaning, 5.07, 5.23–5.25 court having power to consolidate claims, 5.30, 5.34 domicile, jurisdiction based on, 5.08 duty to decline jurisdiction, 5.02, 5.06, 5.11 exclusive jurisdiction, 5.12, 5.13 freezing and search orders, application for, 5.09 generally, 5.02 interim remedies, right to grant, 5.11 jurisdiction clause in favour of second seised court, 5.12, 5.26 linked parties, 5.18 mandatory stays, 5.11–5.26 multiple defendants, 5.08 non-Member State courts, in favour of, 5.36–5.43 ongoing proceedings in non-Member State, 5.15 overlapping proceedings, where,  5.35 permissive stays, 5.27–5.35 power to decline jurisdiction, 5.34

Index Lis alibi pendens – contd Brussels Recast Regulation, stays under – contd proceedings in more than one Member State, 5.14 provisional or protective measures, application for, 5.09 purpose of provisions, 5.10 related actions in more than one Member State, 5.05, 5.27–5.35 right to determine jurisdiction, 5.11 same cause and same parties, 5.04, 5.11, 5.16–5.21 ships, proceedings pending in third state, 5.08 special provisions, 5.08 summary of relevant Articles, 5.03– 5.10 third state’s right to jurisdiction, 5.08 two sets of proceedings, 5.16 common law, stay under, 5.44–5.47 factors, relevant, 5.01 generally, 5.01 P Practice and procedure conduct of trial, 10.04 damages, assessment, 10.01 disclosure, issues, 10.03 evidence— governing law, use, 10.08, 10.09, 10.10 privileged document, 10.08, 10.09 proof, 10.08, 10.10 rule, 10.03, 10.08 generally, 10.01–10.11 injunction, application for, 10.19–10.21 interim relief, grant— classic guidelines, 10.07 English court, proceedings before, 10.07 form not available at trial, in, 10.07 freezing order, 10.07, 10.21 generally, 10.04–10.07 jurisdiction, 10.07 proceedings in any jurisdiction, where, 10.06, 10.07 scope of power to grant, 10.07 search order, 10.21 substantive proceedings, absence, 10.05, 10.06 see also Interim remedy interpretation of contract, governing law, 10.08 jurisdiction, challenges to, 10.16–10.18 law of forum, governed by, 10.01 limitation period, 10.11 parties, determining, 10.02

Practice and procedure – contd Regulations, effect, 10.01 service out, 10.13–10.15 S Sales contract arising, where, 22.02 bill of lading— effect of delivery, 22.08, 22.11 issue and purpose, 22.11 liability for mis-delivery of goods, 22.11 breach of contract, 22.06, 22.13 buyer’s duty to pay, 22.13 case studies— Belgian company as commercial agent for Italian company in two EU countries, appropriate forum for suit, 22.33, 22.34 Cypriot company buying from Scottish company, shipping from England to Cyprus, appropriate forum, 22.29, 22.30 English company suing Germandomiciled company for inaccurate reports on goods in China, appropriate forum, 22.31, 22.32 English-domiciled claimant suing German defendant, internet sale, appropriate forum, 22.41, 22.42 English-domiciled claimant suing US-domiciled defendant under contract governed by US law, appropriate forum, 22.39, 22.40 Saudi national suing fellow Saudi over agreement reached in London, appropriate forum, 22.35–22.38 consumer contract— meaning, 22.24 Brussels Recast Regulation, 22.24, 22.27 choice of law, 22.27, 22.28 connection to place of suit, 22.26 domiciles to bring suit, 22.26 governing law, 22.27 habitual residence, choice of law and, 22.28 instalment credit terms, involving, 22.24 non-EU domiciled defendant, 22.26 online businesses, 22.25 Rome I Regulation, 22.27 services, contract for supply, 22.28 delivery of goods— carrier, to, 22.15 duty, 22.12 place of see place of delivery below 551

Index Sales contract – contd document of title— meaning, 22.09 bill of lading see bill of lading above duty to pay on transfer, 22.08 sale or transfer, 22.08 domestic law, under, 22.05 factors to identify, 22.04 generally, 22.01 habitual residence— meaning, 22.19 exceptions to default choice of law, 22.28 governing law, effect on, 22.18 jurisdiction and choice of law— Brussels Recast Regulation, 22.15 close connection with country, 22.20, 22.21, 22.26 consumer contract see consumer contract above CPR PD 6B, 22.16 domicile other than in Member State, 22.16 express choice, 22.17 generally, 22.15–22.28 governing law, determining, 22.17, 22.18 habitual residence, relevance, 22.18, 22.19 implied choice, 22.17 online businesses, 22.25 place of delivery see place of delivery below place of performance, law of, 22.22 Rome I Regulation, 22.18, 22.20, 22.21, 22.22, 22.27 obligations— breach, 22.06 governing law determining, 22.23 performance, 22.06 payment— duty to pay, 22.13 electronic, 22.14 place of, 22.14 place of delivery— determining, 22.15 non-specific goods, 22.15 Sale of Goods Act 1979, under, 22.15 sale and installation of goods, 22.03 services, contract for, 22.02, 22.28 supply of goods and provision of services distinguished, 22.02 title in goods— dealings in documents, effect, 22.07 document of title see document of title above need for, 22.06 transfer of title under, 22.06 552

T Team moves breaches of duty, how arising, 15.03– 15.07 case studies— English-domiciled company suing parties domiciled in England and EU, 15.52–15.66 English-domiciled company suing parties domiciled in England and US, 15.67–15.73 foreign employee with English connections working for company domiciled in China,  15.42–15.51 parties domiciled in Spain, recruiting sergeant having English domicile, 15.76–15.85 parties domiciled outside EU, recruiting sergeant having English domicile, 15.86–15.89 US-based employer with subsidiary in UAE, UK-domiciled recruiting sergeant, 15.74, 15.75 choice of law— absence of choice, in, 15.38 contract, under, 15.38 direct damage, 15.39 foreign subsidiary of English-domiciled company, 15.39 generally, 15.38–15.40 governing law, 15.39 injunction, claim for, 15.40 interim relief, 15.40 public policy rules, subject to, 15.38 restraint of trade, 15.38 tort, claim in, 15.39 claims— breach of contract, 15.09, 15.16, 15.34, 15.35 conspiracy, 15.10, 15.12, 15.14–15.16, 15.33 employees, against, 15.32, 15.33 generally, 15.09–15.16 injunction, 15.09, 15.40 interim relief, 15.40 new employer, against, 15.11–15.16, 15.34–15.37 tortious nature, 15.16, 15.34, 15.39 competitor, assisting, 15.03 conflict of laws, 15.25 desk head’s duties, 15.03 employee’s right to leave employment, 15.02 English law governing, where, 15.01 factual situation, 15.01 generally, 15.01–15.08

Index Team moves – contd good faith, breach of duty, 15.03, 15.04 governing law not English, where, 15.01 group departure, problems arising from, 15.03 jurisdiction— Brussels Recast Regulation, under, 15.34, 15.35 choice of law see choice of law above domestic laws, applicability, 15.36 employees, claim against, 15.32, 15.33 English-domiciled defendants, 15.27, 15.28, 15.30, 15.35 EU-domiciled defendants, 15.26, 15.29, 15.31, 15.34, 15.35 generally, 15.26–15.31 new employer, claim against, 15.34– 15.37 no presence or place of business in England, where, 15.37 non-EU-domiciled defendants, 15.36 place where harmful act occurs: meaning, 15.34 service outside, so as to confer, 15.37

Team moves – contd mutual encouragement to leave, 15.06, 15.07 problems arising from, 15.03 recruiting sergeants, breach of duty,  15.05 remedies— damages, 15.18, 15.22–15.24 generally, 15.17–15.24 injunctions, 15.18, 15.19 restraining order— dealings with clients, as to, 15.20 joining new employer, as to, 15.21 springboard relief, 15.20, 15.21 right to leave, 15.02, 15.08 search for new employment, legality, 15.02 team leader encouraging colleagues to leave, 15.03 Tort contract for services see under Contract for services economic see Economic tort jurisdiction see under Jurisdiction

553