“(…) Mrs. Justice Black:
Townroe Ltd is a defendant in an action brought by Miles Platts Ltd in
respect of electro-plating work that it allegedly carried out for Miles Platts
("the English proceedings").
This appeal by Townroe is from the order of HHJ Graham Jones QC on 3
July 2002 allowing Miles Platts' appeal from the Master and removing the
stay of the English proceedings that the Master had imposed under Article
21 of the 1968 Brussels Convention on Jurisdiction and Enforcement
of Judgments in Civil and Commercial Matters ("the 1968 Brussels
Convention").
Issues under the Brussels Convention had arisen because there has been
litigation in France which touches upon the same subject matter as the
English proceedings and substantive proceedings are currently pending
there. Miles Platts wishes to litigate against Townroe in England. Townroe
resists this and says that any litigation there is should be in France.
Townroe asserts that the Master was correct to hold that Article 21 of
the 1968 Brussels Convention was applicable or alternatively that a stay
should have been imposed under Article 22. Miles Platts seeks to uphold
the decision of the Judge that neither Article 21 nor Article 22 applied.
The 1968 Brussels Convention applies to the litigation despite the new
regime under Council Regulation (EC) 44/2001 (sometimes referred to as
"the Brussels-I Regulation") which came into force on 1 March 2002. The
Brussels-I provisions apply only to proceedings instituted after the entry
into force of that Regulation.
The facts
Sagem SA is a French company. Amongst other things, it manufactures
television sets. A number of the sets manufactured in 1997 overheated
and caught fire. Sagem says that this resulted from defects in electrical
coils which it built into the television sets. In particular, it is said that pins
used in the manufacture of the coils were defectively electro-plated which
meant that they could not be adequately soldered with the result that
arcs of electricity occurred within the television sets causing overheating
and fire. French consumers suffered damage from the fires and Sagem
alleges it suffered loss and damage in a number of ways, including not
only the cost of compensating the consumers and recalling or replacing
the televisions but also loss of commercial reputation.
Sagem purchased the coils from Lecerf SARL, a French electrical
wholesale company registered in Nanterre. It is asserted that the coils
had been made by Miles Platts and Miles Platts says that the pins in the
coils were electro-plated by Townroe which therefore bears responsibility
for any defects in them.
i) Proceedings in France
Proceedings in France
On 17 April 1998, a writ of summons was served at the suit of Sagem on
Lecerf to attend the Commercial Court in Nanterre for the appointment
of a judicial expert (described in French as "une mesure d'expertise
judiciaire" and termed in this judgment "the judicial expertise process")
to investigate and report on the cause of the problem with the television
sets. In due course, M. Thuault was appointed.
The judicial expertise process thereafter expanded to include other
parties. In September 1998, an order was made extending it to Miles
Platts and in March 1999 Miles Platts applied for an extension to include
Townroe which was granted. Townroe appealed against the order involving
it but its appeal was dismissed by the Versailles Court of Appeal in June
2000 which ordered Townroe to pay the appeal costs.
M. Thuault's terms of reference are set out clearly in the order appointing
him and include investigating in a number of ways, providing "all technical
and factual information apt to permit the competent court to rule on the
liability possibly incurred" and quantifying "together the direct and indirect
prejudice sustained by the Sagem Company, including the costs of various
disbursements necessitated by the campaigns implemented by the Sagem
Company to remedy or prevent such disorders". He has produced a very
detailed report.
In February 1999, during the currency of the judicial expertise process,
Sagem issued substantive proceedings against Lecerf and Miles Platts in
France. Very little information has been provided to this court or to the
courts below about the substantive French proceedings. What there is
derives from the Particulars of Claim in the English proceedings and a
copy of the French writ.
The French writ asserts that it is established that the source of the trouble
experienced with the television sets manufactured by Sagem is a defect in
products supplied by Lecerf and seeks a ruling that Lecerf and Miles Platts
are responsible for the damage thereby caused and jointly and severally
liable to make good the entire loss suffered by Sagem and to pay Sagem
the amounts it is liable to have to pay out to compensate third parties for
loss and injury. Neither Miles Platts nor Lecerf has sought to make any
claim against the other in the French proceedings. There has been no
suggestion by Miles Platts that they will seek to do so.
The English Particulars of Claim say of the French proceedings that
Miles Platts dispute liability, causation, loss and damage and also claim
contributory fault on the part of Sagem. They allege that the cause of
such damage as Sagem may prove was Sagem's defective soldering of
the pins and inadequate supervision of the manufacturing process.
The English proceedings
The English proceedings began in September 2001.
Miles Platts' claim against Townroe is in essence for damages for breach
of contract and/or negligence in supplying defective electro-plated pins
which Miles Platts allege were incorporated into Sagem's television sets.
Against Lecerf, the claim as set out in the Particulars of Claim is for
an indemnity, based on contract, against all Miles Platts' liabilities in
respect of the defective coils and arising from the French proceedings or
alternatively, if Lecerf is not liable to indemnify Miles Platts, a declaration
limiting the heads of damage in relation to which, in the event that Lecerf
is liable to pay Sagem, Lecerf has a claim for an indemnity or contribution
from Miles Platts.
The application of the 1968 Brussels Convention
The following provisions of the 1968 Brussels Convention are material to
the appeal:
Article 21
Where proceedings involving the same cause of action and between the
same parties are brought in the courts of different Contracting 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.
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 22
Where related actions are brought in the courts of different Contracting
States, any court other than the court first seised may, while the actions
are pending at first instance, stay its proceedings.
A court other than the court first seised may also, on the application of
one of the parties, decline jurisdiction if the law of that court permits the
consolidation of related actions and the court first seised has jurisdiction
over both actions.
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 24
Application may be made to the courts of a Contracting State 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
Contracting State have jurisdiction as to the substance of the matter.
When a stay is sought under Article 21 and Article 22 as alternatives,
it is logical to consider the application of Article 21 first. Article 21 is a
mandatory provision by virtue of which, if the conditions set out in the
article are satisfied, the court is obliged to order a stay. As the Master
rightly held in this case, therefore, if it is established that the proceedings
must be stayed under Article 21, there is no need to go on to consider
Article 22 which is a provision incorporating a degree of discretion.
The Article 21 argument
The Master held that Article 21 applied and stayed the English
proceedings. The Judge overturned his finding. Townroe submits that the
Judge was incorrect to do so. He should, they say, have taken the view
that the judicial expertise process amounted to proceedings involving
the same cause of action and between the same parties as the English
proceedings and that a stay had to be imposed. Townroe did not, and
could not, seek to argue that the substantive French proceedings were
material for Article 21 because the parties were not the same, Townroe
not being a party at all to those proceedings.
Townroe submits that the Judge had to look at the substance of the
judicial expertise process and that if he had evaluated that properly,
he would have found it to be a component of the substantive French
proceedings. It points to the fact that the expert's job was not only to
gather evidence but also to reach conclusions and quantify loss and says
that in pursuance of that he went into every aspect that was relevant to
the final resolution of the dispute.
I cannot accept Townroe's submission. The Judge's conclusion that the
existence of the expertise proceedings did not bring the case within Art 21
was correct.
It is common ground that the expert could not impose any final solution
of the dispute upon the parties. If matters were not settled as a result of
the report, there would have to be a separate substantive action where it
appears that the expert's report would probably carry very considerable
weight but in which the court would have to arrive at an independent
decision as to the merits of the case.
The role of the expert and the preliminary nature of the judicial expertise
process can be seen clearly from the documents relating to that process,
not least from the initial order appointing the expert which contains this
preamble:
"Whereas legitimate grounds exist for preserving or establishing, prior
to any court action, the proof on which the solution of the dispute may
rely…"
before requiring the expert to provide "information apt to permit the
competent court to rule on the liability possibly incurred"
Whilst it is, of course, the decision of the English court whether a
particular foreign court process falls within the terms of Article 21, the
English court is entitled to take into account, in forming its view, how
the French court characterises its own procedure. The Judge therefore
properly took account of way in which the Versailles Court of Appeal
described the expertise process when it heard Townroe's appeal against
the extension of the process to it. It can be seen from the terms of
that Court's judgment that it did not see the expertise process as
substantive proceedings but as interim proceedings in which there was an
"investigative measure ordered, before any lawsuit, to protect evidence
of facts on which might depend the resolution of a dispute" and that it
classed the process as a protective or provisional measure within Article
24.
In the circumstances, the Judge was right to conclude that the French
courts were never seised of a substantive dispute between Miles Platts
and Townroe and that the expertise process was in fact within Article 24.
Townroe accept that if proceedings are within Article 24 they cannot be
relevant for Article 21. It therefore follows, as the Judge rightly found,
that no stay fell to be imposed under Article 21 and the appeal against
this ruling must fail.
The Article 22 point
It is helpful, in my view, to separate a consideration of Article 22 into
two stages although in practice similar considerations may apply at both
stages.
Consideration should first be given to whether the case falls within
Article 22 at all. This depends upon there being related actions pending
at first instance in the courts of different contracting states. There are
undoubtedly first instance actions pending in France (the substantive
French proceedings) and England. The relevant issue is therefore whether
they are "related".
Article 22 provides that 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. Townroe argues that the French and English
proceedings fall within this description.
Miles Platts submits that there will be little duplication of issues in the
two sets of proceedings. In the French proceedings, the only issue will
be whether the pins are defective and what damages are payable. In the
English proceedings, the issue will be whether Townroe defectively carried
out the electro-plating of the pins concerned and what, if any, damages
are payable. It suggests that the only overlap between the proceedings
will be that the damages payable by Miles Platts in the French proceedings
will effectively cap the damages claimable in the English proceedings.
Townroe does not agree with this analysis. It points out the similarities in
the parties to the two sets of proceedings (although, of course, Sagem is
not a party to the English proceedings and Townroe is not a party to the
French proceedings). It submits that all or most of the relevant factual
history on which the Court must rule is common to both proceedings and
it is said that there is considerable scope for inconsistent rulings as to the
underlying facts if the dispute is to be subject to litigation in both France
and England. It is Townroe's submission that the French court will have
to identify the entire nature of any defects in the pins in order to rule
on whether they are defective. It is submitted that this will necessarily
bring into issue Townroe's workmanship, if these were in fact pins they
supplied.
Townroe went so far as to submit that if Miles Platts were to win its
action in England, there would inevitably be irreconcilable judgments in
England and France. This argument has its foundation in the forecast
that the French court is very likely to adopt the expert's report which it
is said exonerates Townroe from blame with regard to the pins whereas
success against Townroe in the English court would mean blame did
attach to Townroe. In evaluating that argument, it is important, however,
to note precisely what the expert says about Townroe which is that on the
evidence he had received about Miles Platts' arrangements for having pins
plated, the defective pins did not come from Townroe in the recent past
so, the expert concluded, the product supplied by Miles Platts to Lecerf
either incorporated Townroe pins which were beyond their guarantee
period and for which Townroe could not therefore be held responsible or
the pins had come from somewhere else.
In my view, Article 22 is not concerned with the technicalities of litigation
and the issues which theoretically may arise but with the likely reality
of the proceedings which are pending. In this respect, I accept (as did
the Judge) the submission of Miles Platts that the issue in the French
proceedings is not likely to go further than whether, as a matter of fact,
the pins supplied to Sagem by Lecerf (and to Lecerf by Miles Platts)
were defective. It will not be necessary to examine how they came to
be defective, whether as a result, for example, of the plating process or
overlong storage on the shelves of Miles Platts or Lecerf. It is apparent
that there may be a further argument between Sagem on the one hand
and the other parties on the other in respect of Sagem's contribution
to the problem, for example by failure of their quality control, and one
can see that there may possibly also be argument about the extent of
Sagem's resulting damage and the liability of Miles Platts and Lecerf for
that.
I observe that in relation to the broad issue of whether the pins were
defective and, if so, the role that played in the television fires and the
amount of Sagem's resulting loss, Miles Platts, Lecerf and Townroe have a
complete unity of purpose. It is in the interests of all three companies that
liability to Sagem is restricted as far as possible and that will be the focus
of the French proceedings. Where their interests divide is when it comes
to the attribution of blame as between Miles Platts, Lecerf and Townroe.
This argument appears likely to focus upon whether the defective pins
were handled by Townroe at all and, if so, the condition they were in on
leaving Townroe and what happened to them between that point and
being supplied to Sagem as well as involving, no doubt, an examination
of the contractual arrangements between Townroe and Miles Platts. Those
are the matters raised by the English proceedings.
In the circumstances, the Judge was right in my view to conclude that
an Article 22 stay should not be imposed. Analysed closely, the reason
for this is that the proceedings are not so closely connected that it is
expedient to hear and determine them together to avoid the risk of
irreconcilable judgments and so discretionary issues never arose. The
Judge appears to have reached his conclusion on a broader basis in
which he evaluated together the issue of whether the proceedings were
"related" and the factors relevant if the court went on to consider a stay
as a matter of discretion. I can see that in some cases this may lead
the court into error but in this case, in my view, it did not invalidate the
conclusion the Judge reached. He did not need to consider the question
of discretion at all but, having done so, it is not surprising that it led him
to conclude that a stay should be refused given that the factors relevant
to the issue (which is not, I emphasise, tantamount to an exercise in
considering which is the convenient forum for this litigation) included the
following:
i. Townroe and Miles Platts are both English companies.
ii. They contracted in England and the contract is governed by English
law.
iii. The pins, if plated by Townroe, were plated here.
iv. The essential issue of tracing whether the pins were plated by Townroe
was a matter in which the French courts were not interested and one
which was far more easily capable of resolution in England.
v. Both parties in their contractual terms contemplate a resolution of any
issues between them in England, albeit that Townroe's conditions impose
arbitration and Miles Platts' do not.
vi. As to the argument that Townroe had already expended £83,000
on the French expertise proceedings which was said to be a factor in
favour of a stay, on the evidence before him the judge was entitled to
express himself as unsatisfied that that sum was all necessarily incurred
in relation to the expertise process in France and to point out that, on
any view, it was Townroe's choice to appeal to the Court of Appeal at
Versailles.
It follows that the appeal against the Judge's refusal of a stay under
Article 22 must also be refused.
For these reasons, I would dismiss Townroe's appeal in its entirety.
Lord Justice Laws: I agree
Lord Justice Tuckey: I also agree (…)”