Neutral Citation Number: [2014] EWHC 2782 (Ch ) 
  Case No: HC13F01241 7 
IN THE HIGH COURT OF JUSTICE  
CHANCERY DIVISIO N 
  Royal Courts of Justice  
Rolls Building,  
Fetter Lane, London, EC4A 1N L 
  06/08/201 4 
B e f o r e :  
MR JUSTICE DAVID RICHARD S 
____________________  
Between:  
 
 Lehman Brothers Finance A.G.  
(In liquidation)  Claimant  
 - and -  
 Klaus Tschira Stiftung GmbH  
Dr H C Tschira Beteiligungs GmbH & Co 
KG Defendants  
____________________  
Hugh Mercer QC and Jessica Wells (instructed by Simmons & Simmons LLP) 
for the Defendants  
Alexander Layton QC and Malcolm Jarvis (instructed by Field Fisher 
Waterhouse LLP) for the Claimant  
Hearing dates: 4 and 5 June 2014   
____________________  
HTML VERSION OF JUDGMENT
 
____________________  
Crown Copyright ©  
Mr Justice David Richards :   
Introdu ction  
1. The defendants apply for a stay of these proceedings on the grounds that 
proceedings involving the same cause of action and between the same parties 
were commenced in the Swiss courts before the issue of the claim form in the 
present proceedings. Acc ordingly, the Swiss courts were first seised in respect 
of the proceedings and the English court is required to stay the present 
proceedings under article 27(1) of the Lugano Convention of 30 October 2007 
until such time as the Swiss courts determine their  jurisdiction.  
2. The issue is whether the procedure initiated in Switzerland constituted 
"proceedings" before a "court" within the meaning of article 27(1) of the 
Lugano Convention. The procedure in question was ein Schlichtungsversuch 
vor einer Schlichtung sbehörde, translated for the purposes of this application 
as "an attempt at conciliation before a conciliation authority" (conciliation 
procedure) pursuant to article 197 of the Swiss Civil Procedure Code.  
3. The claimant, Lehman Brothers Finance AG (LBF) is  a Swiss -incorporated 
subsidiary of Lehman Brothers Holdings Inc (LBHI). The defendants are two 
entities established under German law (the KT parties).  
Claims  
4. The claims between the parties arise out of an International Swaps and 
Derivatives Association ( ISDA) Master Agreement (Multicurrency -Cross 
Border; 1992 version) between the parties dated as of 16 May 2007 and 
subsequent agreements. It is common ground that the filing by LBHI of 
proceedings under Chapter 11 of the US Bankruptcy Code on 15 September 
2008 gave rise to the automatic early termination (as defined) of the 
agreements in accordance with their terms. This required the KT parties to 
calculate Loss (as defined) in accordance with the terms of the agreements. 
The ISDA Agreement is governed by En glish law and contains an English 
jurisdiction clause.  
5. It is the KT parties' case that the calculation of Loss results in an aggregate 
amount of €411,130,000 due to them. It is the case of the liquidators of LBF, 
appointed in Switzerland, that the calcula tion of Loss leads to an aggregate 
amount of €186,120,000 owing to LBF.  
Proceedings  
6. In the English proceedings, LBF claims the amount of Loss which it asserts is 
due to it from the KT parties. The claim advanced in Switzerland by the KT 
parties is for a negative declaration that nothing is due from the KT parties to 
LBF in respect of Loss. No agreement was reached before the conciliation 
authority and the KT parties commenced adjudicative procee dings in the 
District Court of Zurich for a negative declaration. The District Court declined 
to hear the actions on the basis that jurisdiction lay with the Commercial Court 
in Zurich. The KT parties appealed and in a judgment handed down on 4 July 
2014 t he Supreme Court of Zurich dismissed the appeal. The basis of the 
Supreme Court's decision was that, by the express terms of the ISDA 
Agreement, the English courts had exclusive jurisdiction and therefore, LBF 
having taken the point, the actions were right ly dismissed.  
7. The present position is that there are no extant Swiss proceedings and 
therefore, subject to what follows, no basis for a stay of the English 
proceedings. The KT parties have, however, stated their intention to appeal the 
decision to the Swi ss Federal Tribunal and to apply for an order in the 
meantime that the appeal is to have suspensive effect. The issues arising on the 
present application may not therefore be academic and I have been requested 
by both parties to deliver judgment.  
8. As well as initiating proceedings for negative declarations, the KT parties filed 
claims in the Swiss insolvency proceedings for the respective amounts of their 
claims. They had no alternative, if they wished to assert their claims in the 
liquidation of LBF. In Ap ril 2013, the liquidators rejected the KT parties' 
claims in full. The rejection was binding in the liquidation of LBF unless the 
KT parties filed challenges in accordance with Swiss insolvency law within 20 
days. They filed the requisite challenges in the  designated court, the Single -
Judge for DEBA (Debt Enforcement Bankruptcy Act) Actions of the Zurich 
District Court, on 22 April 2013. The purpose of such a challenge is to 
determine the claims, if any, of the KT parties solely for the purposes of proof 
in the liquidation of LBF. The court is required to consider not only the 
underlying claim but also any specific issues arising under insolvency law, 
such as insolvency set -off. A decision of the court on their claim in the 
insolvency is not binding under Sw iss law on any other court or for any other 
purpose. A claim by LBF against the KT parties does not arise for decision in 
these insolvency proceedings. It is common ground that the challenge filed by 
the KT parties are "proceedings relating to the winding -up of insolvent 
companies" within article 1(2)(b) of the Lugano Convention and that therefore 
the Convention does not apply to them: see Fondazione Enasarco v Lehman 
Brothers Finance SA  [2014] EWHC 34 (Ch) .  
9. The chronology of the English proceedings and the conciliation procedure in 
Switzerland is as follows. On 18 March 2013, LBF's English solicitors sent a 
letter of claim to the KT parties seeking payment of th e sums alleged to be due 
from them. Following receipt of that letter, on 25 March 2013 the KT parties 
submitted requests for conciliation to the conciliation authority in Zurich in 
relation to their claims for negative declarations. On 2 April 2013 LBF iss ued 
the claim form, together with particulars of claim, in the present proceedings 
in the Chancery Division of the High Court in London. On 23 May 2013, a 
conciliation meeting was held in Zurich in accordance with the provisions of 
the Swiss Civil Procedur e Code. The minutes of the meeting record that no 
settlement was reached and the KT parties were granted "permission to file a 
complaint pursuant to article 209 CPC with the competent court". On 23 
August 2013 the claim form in the English proceedings was served on the KT 
parties in Germany, pursuant to an order dated 16 July 2013 giving LBF 
permission to serve out of the jurisdiction. Although permission to serve a 
claim form in Germany would not ordinarily be required, it was sought by 
LBF because of the existence of the Swiss conciliation proceedings as 
arguably pending proceedings. On 13 September 2013 the KT parties filed an 
acknowledgment of service indicating an intention to dispute jurisdiction.  
10. On 20 September 2013, the KT parties filed joint state ments of claim before 
the same court in which they had commenced their challenge to the schedule 
of claims in the insolvency proceedings, and filed a procedural motion 
requesting an order joining its claim to its challenge to the schedule of claims. 
On 27 September 2013, the KT parties filed the present application for a stay 
of the English proceedings. On 5 November 2013, the Zurich District Court 
held that it lacked subject -matter jurisdiction to determine the KT parties' 
claims and it rejected their proc edural motion, on the basis that joinder of the 
two actions was not possible. The court stated its view that the court with 
jurisdiction over the KT parties' claims was the Zurich Commercial Court, 
rather than the District Court. On 9 December 2013 the KT parties filed an 
appeal against this decision to the Superior Court of Zurich. As earlier 
mentioned, the appeal was dismissed on 4 July 2014.  
Expert evidence  
11. The parties have filed expert reports on the relevant provisions of Swiss law. 
The KT parties' ex pert, Professor Felix Dasser, and LBF's expert, Professor 
Paul Oberhammer, are the co -editors of a leading Swiss commentary on the 
Lugano Convention, the second edition of which was published in 2011. 
Professor Dasser is also a practicing lawyer and a part ner in a law firm based 
in Zurich where he is the head of its litigation and arbitration practice group. 
Professor Oberhammer is currently a professor in the department of civil 
procedure at Vienna University but from 2003 until 2011 was a professor of 
Swiss and international civil procedure at Zurich University and since 2012 he 
has been a visiting professor at St Gallen University in Switzerland. He is co -
editor of one of the leading commentaries on the Swiss civil procedure code. 
LBF had originally relie d on a memorandum prepared by its Swiss lawyers 
(the Vischer Memorandum) which Professor Oberhammer confirms as giving 
a true and correct record of the relevant law relating to conciliation 
proceedings in Switzerland.  
Swiss civil procedure  
12. The expert evid ence establishes that formal conciliation proceedings have for 
some centuries formed an important feature of Swiss civil law. The ultimate 
aim of its civil law being to maintain a peaceful society, conciliation has been 
seen as a better means of achieving that result than a contested hearing. Until 
recently, many features of civil procedure were a matter for the individual 
cantons. Most cantons provided that conciliation was mandatory, but some 
made it optional. In enacting the Civil Procedure Code in 2008,  which came 
into force on 1 January 2011, the Swiss legislature incorporated mandatory 
conciliation as part of the Civil Procedure Code which was to apply 
throughout Switzerland. Except for the Swiss Federal Tribunal, the 
organisation and jurisdiction of t he civil courts and conciliation authorities 
have, so far as relevant, remained the responsibility of each canton.  
13. The structure of the Civil Procedure Code (CPC) contains, first, general 
provisions that are intended to apply to all civil proceedings, fol lowed by a 
second part containing special provisions. Article 1 defines the subject matter 
of the CPC:  
"This Code governs the proceedings before the cantonal authorities for:  
a. contentious civil matters;  
b. court orders in non -contentious matters;  
c. court orders in matters of debt enforcement and bankruptcy law;  
d. arbitration. " 
The claims of the KT parties fall within the first of those categories.  
14. Title II (articles 4 -51) is principally concerned with the jurisdiction of the 
courts. The remaining Titles of Part 1 (General Provisions) deal with such 
matters as procedural principles and requirements, lis pendens , parties and 
third party participation, types of actions by reference to the re medy sought, 
costs and legal aid, and evidence.  
15. Part 2 contains the Special Provisions. Title I (articles 197 -212) deals with the 
conciliation procedure and contains the majority of provisions most directly in 
point on the present application. Title II de als with mediation. Title III deals 
with ordinary proceedings, containing detailed provisions for the procedural 
steps in such proceedings, while Titles IV -VIII deal with different types of 
proceedings. Titles IX and X deal with appeals and enforcement of decisions 
respectively. Part 3 is concerned with arbitration.  
16. Title I of Part 2, dealing with conciliation, starts with article 197 which, as 
translated by Professor Dasser, provides:  
"The adjudicative procedure shall be preceded by an attempt at concili ation 
before a conciliation authority. " 
"Adjudicative procedure" is a translation of the German term 
Entscheidvefahren , which can literally be translated as "decision procedure". 
The "semi -official translation" of the CPC into English available on the Swis s 
Federation's official website translates this word as "litigation". Professor 
Oberhammer laid some stress on this translation as indicating that conciliation 
and litigation were entirely separate processes, but I am satisfied on the 
evidence that Profess or Dasser's translation is more accurate.  
17. The first stage is a request for conciliation. Article 202(1) provides:  
"Proceedings are initiated by the request for conciliation. The application may 
be filed in the forms provided for by article 130 or orally for the record before 
the conciliation authority. " 
The content of the request is governed by article 202(2) which provides:  
"The application for conciliation must identify the opposing party and include 
the prayers for relief and a description of the matte r in dispute. " 
This is an important provision because it is not open to a claimant to introduce 
in the adjudicative proceeding any claim which has not been the subject of a 
conciliation procedure. While a claimant will not be rigidly bound by the 
formulati on of the prayers for relief in the request for conciliation, Professor 
Dasser comments that they are significantly more precise than is commonly 
found in claim forms issued in English proceedings. The requests for 
conciliation lodged by the KT parties set  out in precise terms the declarations 
which are sought and contain a statement in formal terms of their cases, 
exhibiting the documents principally relied on, much as might be found in a 
statement of case in English proceedings.  
18. Claims made in the prayer s for relief can be withdrawn at any stage of the 
conciliation proceedings without prejudice. This is in contrast to the rule 
prevailing in adjudicative proceedings where a withdrawal of a claim in the 
course of the proceedings precludes the claimant from commencing 
proceedings on the same claim in the future: article 65 of the Civil Procedure 
Code.  
19. In accordance with article 202(3), the conciliation authority serves the other 
party or parties with the request for conciliation immediately after its receipt  
and at the same time summons the party to a conciliation hearing. The hearing 
must take place within two months after the receipt of the request for 
conciliation. Participation by the parties in the hearing is mandatory and, while 
generally parties have t o appear personally, in certain circumstances they can 
be represented by counsel.  
20. The conciliation hearing is conducted in private and in an informal manner. It 
is confidential and no detailed record is made of it. The statements of parties 
may not be use d in subsequent adjudicative proceedings.  
21. In small claims, where the amount in dispute is not more than 2000 Swiss 
francs, the conciliation authority can impose a decision, which can be the 
subject of an appeal. In disputes involving sums up to 5000 Swiss  francs, as 
well as disputes concerning gender equality, tenancies and leases, the 
conciliation authority can propose, but cannot impose, a decision to the 
parties. In all other cases, the task of the conciliation authority is to seek to 
reach agreement be tween the parties.  
22. The conciliation will result in the final disposal of the dispute if the parties 
reach a settlement or if the defendant acknowledges the claim or if the 
claimant withdraws the claim with prejudice. If agreement is reached, the 
conciliat ion authority records the terms of settlement. A settlement may also 
include contentious matters that are not part of the proceedings. Similarly, if 
the claim is accepted or withdrawn, it will be recorded by the conciliation 
authority. In any of those case s, the record is signed by the parties and each 
party receives a copy. Article 208(2) provides that the settlement, acceptance 
or unconditional withdrawal has the effect of a binding decision. It can be 
enforced in the same way as the judgment of a court a nd in particular the 
relevant provisions of the Debt Enforcement and Bankruptcy Act apply to it as 
it would to a judgment following the adjudicative procedure. It is common 
ground that such a record constitutes res judicata , between the parties, 
precluding  any subsequent action for the same relief.  
23. If the conciliation fails, including where the defendant does not attend the 
conciliation hearing, the conciliation authority issues an authorisation to 
proceed under article 209(1). The authorisation contains, amongst other things, 
the names and addresses of the parties and their representatives, the prayers 
for relief, a description of the matter in dispute, and any possible counterclaim. 
Article 209(3) provides:  
"The plaint iff is entitled to file the action in court within 3 months of 
authorisation to proceed being granted. " 
If the claimant misses the deadline of 3 months, he will have to institute new 
conciliation proceedings. Mr Layton QC, on behalf of LBF, stresses the us e of 
the word "court" as the forum for an action, in contrast to the conciliation 
authority.  
24. The adjudicative procedure is commenced by the filing of the statement of 
claim with the appropriate court. If a claimant initiates the adjudicative 
procedure wit hout first going through the conciliation procedure, the court 
dismisses the case without further enquiry.  
25. Under Swiss law, limitation is a matter of substantive, not procedural, law. 
The Swiss Code of Obligations provides in article 135(2) that any appli cable 
limitation period is interrupted by a request for conciliation, among other 
circumstances. Article 135(2)(b) provides that the relevant circumstances are:  
"Debt enforcement proceedings, a request for conciliation, submission of a 
statement of claim or defence to a court or arbitral tribunal, or a petition for 
bankruptcy."  
26. The applicable law on lis pendens  depends on whether the context of the facts 
is international or domestic. Domestic cases are governed by article 62(1) of 
the Civil Procedure Code:   
"A case becomes pending when a request for conciliation, an action, a request 
or a joint application for divorce is filed. " 
If the context of the facts is international, but no international convention or 
treaty is applicable, the issue is governed by th e Private International Law Act, 
article 9(2) of which provides:  
"In order to determine when an action became pending in Switzerland, the 
time of the first procedural act necessary to introduce the action is decisive. 
The commencement of the conciliation p rocedure is sufficient for that. " 
Accordingly, both in domestic cases and in international cases governed by the 
Private International Law Act, a case becomes pending when a request for 
conciliation is filed.  
27. In cases governed by the Lugano Convention, the issue of lis pendens  is 
governed by the provisions of the Convention.  
28. There are some exceptions to the mandatory requirement for a conciliation 
procedure before an adjudicative procedure. In particular, an e xception exists 
if a court of sole cantonal instance has jurisdiction. In the Canton of Zurich, 
the commercial court generally has jurisdiction as a court of sole cantonal 
instance for commercial disputes with a value of at least 30,000 Swiss francs. 
Howev er, the KT parties wished their claims for negative declarations to be 
heard by the District Court of Zurich, being the same court as deals with their 
challenge to the rejection of their proofs in the liquidation of LBF. They could 
not issue a claim in the  District Court without first invoking the conciliation 
procedure. The conciliation procedure could have been waived in this case, 
being a financial dispute with a value in dispute of at least 100,000 francs, if 
all parties had agreed: article 199(1). The KT parties' application to join their 
claim for negative declarations with the insolvency proceedings was rejected 
by the District Court, and their appeal was dismissed on 4 July 2014.  
29. The conciliation procedure is to be contrasted with mediation. Article s 213 -
218 of the CPC make provision for mediation. The Vischer Memorandum at 
[28] describes mediation as:  
"A voluntary process in which the parties, assisted by a mediator, 
independently attempt to settle their dispute. The parties are in charge of the 
outcome while the mediator solely facilitates the process. While conciliation 
aims at settling a dispute in accordance with the law, mediation focuses more 
on solving a dispute as a whole along with the underlying problems which 
caused the conflict between t he parties in the first place. " 
Mediation may take place instead of conciliation or during court proceedings. 
The parties are responsible for the organisation and conduct of the mediation 
and the mediation proceedings are confidential and kept separate fro m the 
conciliation authority and the court.  
30. The composition of conciliation authorities is a matter for each canton. They 
are not obliged to designate a judicial authority, but it is essential that the 
authority is independent of the legislature and the e xecutive. The conciliation 
authority in the Canton of Zurich is the Friedensrichter (justice of the peace), 
an office introduced into Switzerland in 1800 following the French occupation 
and replicating the office introduced in France in 1790. Both the offi ce of 
justice of the peace and its role in the mandatory conciliation of disputes was 
introduced into the Canton of Zurich in 1803. Neither judges nor justices of 
the peace in Zurich, or indeed in the rest of Switzerland, are required to be 
lawyers. Few, i f any, of the justices of the peace are legally qualified. As 
regards judges in the Canton of Zurich, a minority of district judges (21 out of 
190) and a majority of commercial judges (54 out of 70) are not legally 
qualified. This is by no means unusual in  continental Europe. As with judges 
of the Tribunaux de Commerce in France, commercial judges in Zurich are 
required to be senior business people and are not for the most part legally 
qualified.  
31. The evidence establishes that the justices of the peace are a state authority and 
part of the judicial system, but are not a court for the purposes of the Court 
Organisation Statute of the Canton of Zurich, which deals separately with 
courts in Part 2 headed " Gerichte ", while the conciliat ion authorities are 
separately dealt with in Part 3.  
Lugano Convention  
32. The distribution of jurisdiction and the mutual enforcement of judgments in 
civil and commercial matters among European states is governed by Council 
Regulation (EC) No 44/2001 of 22 D ecember 2000 (the Judgments 
Regulation) and the Lugano Convention of 30 October 2007 (the Lugano 
Convention). The Judgments Regulation replaced the Brussels Convention of 
27 September 1968 applicable to member states of the European Community, 
while the Lu gano Convention replaced the earlier Lugano Convention of 16 
September 1988 (the Lugano Convention 1988) which extended the 
application of the rules of the Brussels Convention to certain member states of 
the European Free Trade Area, including Switzerland.  The Lugano 
Convention is designed to extend the principles of the Judgments Regulation 
to its contracting parties, which include Switzerland. It came into force in 
Switzerland on 1 January 2011, the same day as the CPC took effect.  
33. Recital (4) to the Cou ncil Decision of 15 October 2007 approving the signing 
of the Lugano Convention on behalf of the European Commission referred to 
"the parallelism" between the regime of the Brussels Convention and the 
Lugano Convention 1988 and the need to align the rules of the Lugano 
Convention with those of the Judgments Regulation in order to achieve the 
same level of circulation of judgments among the states concerned. The 
revised text of the Lugano Convention was based on the revised text of the 
Brussels Convention in corporated into the Judgments Regulation. In order to 
achieve as far as possible a uniform interpretation of the Judgments 
Regulation and the Lugano Convention, Protocol 2 to the Lugano Convention 
provides in article 1 that any court applying and interpret ing the Lugano 
Convention shall pay due account to the principles laid down by any relevant 
decision concerning equivalent or similar provisions in the Lugano 
Convention 1988, the Brussels Convention and the Brussels Regulation, 
rendered either by the cour ts of states bound by the Lugano Convention or by 
the Court of Justice of the European Communities.  
34. Title II (articles 2 -31) contains the provisions determining the distribution of 
jurisdiction among the states governed by the Convention. Because there is  
scope for proceedings in more than one state, priority as between proceedings 
in the courts of different states is given to the proceedings in "the court first 
seised". This priority is imposed by article 27 which provides:  
"(1) Where proceedings involvi ng 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 motion stay 
its proceedings until such time as the jurisdiction of the  court first seised is 
established.  
(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."  
35. Some definition of "the court first seised" is given b y article 30:  
"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 faile d 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 pl aintiff has not subsequently failed to take the steps he was required to 
take to have the document lodged with the court."  
36. Article 30 represented an important change to the regime originally 
established by the Brussels Convention and the Lugano Convention 1988. 
While article 27 largely reproduces article 21 of the Brussels Convention and 
of the Lugano Convention 1988, those Conventions contained no definition of 
when a court was first seised. It was left to be determined by the procedural 
laws of the states  concerned, which were not uniform across Europe.  
37. In Zelger v Salinitri (Case C -129/83) [1984] ECR 366, proceedings involving 
the same cause of action and the same parties were brought in Germany and 
Italy. The document initiating the German proceedings w as lodged with the 
court before any proceedings in Italy were commenced but not served until 
after the Italian proceedings had been both lodged with the court and served 
on the defendant. Under German law, proceedings were not considered as 
pending or brou ght until served on the defendant. In giving its judgment on the 
meaning of article 21, the European Court of Justice (ECJ) said at [14]:  
"It may properly be inferred from Article 21, read as a whole, that a court's 
obligation to decline jurisdiction in f avour of another court only comes into 
existence if it is established that proceedings have been definitively brought 
before a court in another State involving the same cause of action and 
between the same parties. " 
This decision therefore introduced into the concept of the court first seised a 
requirement that proceedings should have been "definitively" brought. 
Whether this requirement was in any particular case satisfied was a matter for 
the domestic law of the state concerned.  
38. The requirement that proce edings be "definitively" brought or pending was 
brought to an end by the inclusion of article 30 in the Judgments Regulation 
and the Lugano Convention 2007. There is no dispute that the issue in England 
of the claim form on 2 April 2013 was the lodging of a document initiating 
proceedings with a court for the purposes of article 30(1). The issue is whether 
the earlier lodging of the request for conciliation with the justices of the peace 
in Zurich also satisfied article 30(1) with the result that the court in Zurich was 
first seised. This in turn requires consideration of the meaning of "a document 
initiating proceedings" and of a "court" for the purposes of the Lugano 
Convention and the Judgments Regulation. They are to be given an 
autonomous meaning, as re cital (15) to the Judgments Regulation makes clear.  
39. The term "proceedings" is not defined but its meaning can be deduced from 
the purpose of the Lugano Convention and the context in which it is used. The 
purpose of the convention is stated in the Preamble to be to strengthen in the 
territories of the Contracting States the legal protection of persons therein 
established and, for that purpose:  
"… to determine the international jurisdiction of the courts, to facilitate 
recognition, and  to introduce an expeditious procedure for securing the 
enforcement of judgments, authentic instruments and court settlements. " 
The enforcement of authentic instruments and court settlements is separately 
dealt with in Title IV (articles 57 -58) and is not directly in point.  
40. Title II, which includes articles 27 -30, deals with jurisdiction in most instances 
by identifying the national courts in which persons may be "sued" (see articles 
2-3, 5-6, 9-10 and 19) or in which proceedings may be brought against a 
defendant (see articles 11 -12, 15 -17, 20 -21). It is in part designed to protect 
parties against the burdens of parallel proceedings but it is also closely linked 
with Title III dealing with the recognition of judgments. Proceedings brought 
in accordance with  Title II will be within the provisions for recognition and 
enforcement under Title III. This is not to say that Title III may not extend to 
judgments entered other than in proceedings to which Title II applies, but it is 
to say that it is of the essence o f proceedings brought in accordance with Title 
II that they can result in such a judgment.  
41. That the fundamental purpose of Title II, and in particular articles 27 -30, is to 
avoid parties being subject to parallel proceedings and to avoid conflicting 
judgm ents, with the consequential difficulties of recognition and enforcement, 
was stated by the ECJ in Gubisch Maschinenfabrik KG v Palumbo (Case C -
144/86) [1987] ECR 4861 . Article 21 of the Brussels Convention (now article 
27 of the Judgments Regulation and of the Lugano Convention)  
"…is intended, in the interests of the proper administration of justice within 
the Community, to prevent parallel proceedings before the courts of different 
Contracting States and to avoid conflicts between decisions which might result 
therefrom. Those rules are therefore designed to preclude, insofar as is 
possible and from the outset, the possibility of a s ituation arising such as that 
in [article 34(3)], that is to say the non -recognition of a judgment on account 
of its irreconcilability with a judgment given in a dispute between the same 
parties in the State in which recognition is sought. " 
42. In the later ca se of Erich Gasser GmbH v MISAT srl  (Case C -116/02) [2005] 
QB 1 , the ECJ said at [41], after referring to Gubisch , that the article  needed to 
be interpreted broadly if it was to achieve its object:  
"It follows that, in order to achieve those aims, article 21 must be interpreted 
broadly so as to cover, in principle, all situations of lis pendens before courts 
in Contracting States, ir respective of the parties' domicile. " 
43. "Judgment" is defined in article 32:  
"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."  
44. The same definition appeared as article 25 of the Brussels Convention which 
was considered by the ECJ in Solo Kleinmotoren v Boc h (Case C -414/92) 
[1994] ECR I -2337, where the issue was whether a settlement bringing court 
proceedings to an end was a "judgment". The court held that it was not, stating 
that "judgment" referred "solely to judicial decisions actually given by a court 
or tribunal of a Contracting State". At [17] the Court stated:  
"It follows from the foregoing that in order to be a "judgment" for the 
purposes of the Convention the decision must emanate from a judicial body of 
a Contracting State deciding on its own autho rity on the issues between the 
parties. " 
45. The reference to "a judicial body" may require some modification in the light 
of the definition of "court" now contained in the Lugano Convention and the 
connotations associated with the phrase "deciding… on the iss ues between the 
parties" may now be more limited, but nonetheless the essence of a judgment 
for the purposes of the Convention in proceedings to which Title II applies 
remains a decision by a body on its own authority on the claim put to it by A 
against B.   
46. Proceedings for the purposes of article 27 must be brought in a "court" and a 
judgment for the purposes of article 32 must be given by "a court or tribunal". 
Express reference to a tribunal in article 32 creates no tension between these 
provisions becaus e a "court" is defined by article 62:  
"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 Conventi on." 
This definition refers back to article 1(1) which provides that the convention 
applies "in civil and commercial matters whatever the nature of the court or 
tribunal."  
47. The background to this definition of "court" is that, although the Lugano 
Convention 1988 contained no definition of court, article Va of Protocol 1 
provided that administrative authorities in Denmark, Iceland and Norway in 
matters relating to maintenance and the regional chief enforcement au thority 
in Finland were deemed to be courts. The broad definition of "court" in article 
62 is intended to include bodies of this type. In the official Explanatory Report 
on the Lugano Convention prepared by Professor Pocar, it is said as regards 
article 62  at [175]:  
"In some systems, if the term were to be understood in the narrower sense of 
an authority formally integrated into the judicial structure of the State, it 
might not include all of the authorities that perform one or other of the 
functions that the Convention assigns to a "court"… the Convention now 
adopts a more general rule, giving a broader meaning to the term "court", 
which is to include any authority in a national system having jurisdiction in 
the matters falling within the scope of the Conv ention. In this formulation the 
"courts" that are to apply the Convention are identified by the function they 
perform, rather than by their formal classification in national law. " 
48. The Judgments Regulation does not contain a definition of "court" but 
provid es by article 62 that in summary proceedings concerning orders to pay 
and assistance the Swedish enforcement service is a court. It would also fall 
within the definition of court in article 62 of the Lugano Convention.  
49. I said earlier that the concept of a  "judgment" might require some modification 
in the light of this definition of "court". A decision of a relevant authority 
exercising the jurisdiction conferred on it will be a judgment, but in the case of 
those authorities with a summary jurisdiction only , there is no longer any 
connotation that the authority has jurisdiction to rule on the merits of the 
dispute between the parties.  
Swiss views on the application of articles 27 -30 to conciliation proceedings  
50. Whether the initiation of conciliation proceedi ngs under Swiss law constitutes 
the institution of proceedings in a court for the purposes of articles 27 -30 of 
the Lugano Convention and the predecessor provisions has been the subject of 
extensive consideration by courts and commentators in Switzerland. The issue 
is of course one of the proper interpretation of the Lugano Convention, read 
with the Judgments Regulation, and is not essentially a question of Swiss law. 
Nonetheless, the views of the Swiss courts and expert commentators carry 
particular weight  both because the issue concerns a Swiss procedure and 
because the Lugano Convention forms part of Swiss law, just as it forms part 
of the law of the other states bound by it.  
51. In 1997, the Swiss Federal Tribunal, the highest court in Switzerland, issued a  
decision (DFT123 III 414) that the initiation of conciliation proceedings under 
the law as it then stood did not mean that the Swiss courts were seised of 
proceedings. This was a decision on the Lugano Convention 1988 which, as 
previously mentioned, did n ot contain a provision equivalent to article 30 of 
the Lugano Convention. In reaching its decision, the tribunal relied on the 
requirement established in Zelger v Salinitri  that a case became pending for 
the purposes of the Lugano Convention 1988 only when  the claim was 
"definitively" brought. The Swiss court interpreted this as requiring "a certain 
attachment of the claimant to the filed claim or, respectively, a certain duty to 
proceed." As the claimant lodging a request for conciliation would not be 
required subsequently to issue and pursue his claim in the adjudicative 
process, it followed that he was not under a duty to proceed and no 
proceedings had been "definitively" brought.  
52. In the light of the introduction of article 30 into the Lugano Convention,  which 
renders redundant the concept of proceedings being "definitively" brought, 
Professor Dasser expresses the view that this decision can no longer be relied 
on. While Professor Oberhammer does not positively assert the contrary, he 
draws attention to t he mixed views in the writings of commentators and to the 
similarities between the current status and legal incidents of conciliation 
proceedings under the CPC and under the prior cantonal law of Zurich. I 
accept the evidence of Professor Dasser that the i ssue must be looked at afresh 
in the light of the important changes to the Lugano Convention.  
53. There has not as yet been any decision of the Swiss courts on this issue as it 
arises under the Lugano Convention 2007. However, in a decision issued in 
July 200 7, three months before the revised Convention was signed, the Swiss 
Federal Tribunal has expressed the obiter  view that a request for conciliation 
would be likely to be sufficient to satisfy article 30. It said:  
"In particular, a change is provided for th e suspension of the procedure in the 
case that actions are introduced before courts of different member states for 
the same claim … hence forward, the priority of a claim should be determined 
according to the first act which is relevant for the introductio n of an action, 
for which the introduction of the conciliation procedure is sufficient. " 
54. This was also the view expressed by the Swiss Federal Council in its 
commentary ( Botschaft ) of 18 February 2009 on the Lugano Convention to the 
Swiss legislature. Such  commentaries are a regular feature of legislative 
proposals and are drafted by the officials who have been responsible for the 
preparation of the relevant legislation or the negotiation of the relevant treaty. 
These commentaries are regarded as authoritat ive and are regularly referred to 
by the Swiss Federal Tribunal. The commentary stated:  
"Even though Article 30 does not explicitly mention the conciliation 
procedure, a request for conciliation can, also against the backdrop of the 
preparatory work on Ar ticle 30, be a document instituting the proceedings in 
the terms of Article 30. In all cases where the conciliation procedure is an 
obligatory procedural pre -phase (see Articles 197 et seq. CPC), the 
conciliation request triggers lis pendens pursuant to Ar ticle 30(1), such effect 
being, however, conditional in the sense that the requesting party has to take 
any later steps that may be necessary for the continuation of the proceedings 
in time. This legal situation corresponds to the conception in the CPC (Ar ticle 
62), according to which the filing of the request for conciliation also triggers 
lis pendens. " 
55. I am satisfied by the evidence of Professor Dasser that for the most part Swiss 
expert commentators take the same view, while at the same time naturally 
warning practitioners that the point has not been finally decided and that 
therefore it may be prudent to approach proceedings on the basis that a request 
for conciliation may not be sufficient for the purposes of article 30.  
Submissions and discussion  
56. In opposing the application for a stay of the English proceedings, Mr Layton 
QC, on behalf of LBF submitted that the conciliation authority is not a "court" 
for the purposes of the Lugano Convention and that conciliation proceedings 
are not "proceedings" w ithin the contemplation of articles 27 and 30.  
57. In order to be a "court" within the definition contained in article 62, Mr 
Layton pointed to the requirement that it must have "jurisdiction" in the 
matters falling within the scope of the Lugano Convention. In his report, 
Professor Pocar identifies that, in view of the expansive definition to include 
authorities designated by states bound by the Lugano Convention, "courts that 
are to apply the Convention are identified by the function they perform, rather 
than by their formal classification in national law".  
58. Mr Layton submits that the function of a court for the purposes of the 
Convention is to determine disputes between the parties. In this context, he 
relies heavily on the decision of the ECJ in Solo Kleinm otoren v Boch  and in 
particular on paragraph 17 of the judgment, which I have earlier cited, where it 
is said that in order to be a judgment for the purposes of the Brussels 
Convention "the decision must emanate from a judicial body of a Contracting 
State deciding on its own authority on the issues between the parties." It is 
only such a decision which can constitute a "judgment" for the purposes of the 
Convention. As authoritative sources make clear, the purpose of articles 27 -30 
is to avoid parallel proce edings and inconsistent judgments, but it is only 
judgments as described in Solo at [17] that have the status to bring into effect 
the provisions of the Lugano Convention.  
59. Mr Layton accepts that the conciliation authority is a "court" for the limited 
purposes of small claims, but it does not follow that it is a court when its 
function is confined to conducting a conciliation hearing between the parties 
without any power to reach its own decision. Equally, Mr Layton does not 
dispute that if an agreement is reached at the conciliation hearing, the 
settlement which is placed on record by the conciliation authority has the 
effect of a binding decision by virtue of article 208(2) of the CPC. It does not 
however follow that it is a judgment. The settlement is an entirely consensual 
act, involving no decision or determination by the conciliation authority. 
While Mr Layton also accepts that a settlement as placed on record by the 
conciliation authority would be enforceable in other states under the Lugano 
Convention , it would not be enforceable as a judgment but as an authentic 
instrument to which article 57 applies.  
60. Mr Layton points to other features of the conciliation proceedings which, he 
submits, demonstrate that they are not proceedings, or any part of proceed ings, 
for the purposes of articles 27 -30. Under article 203(3) of the CPC the 
conciliation hearing is not open to the public, and under article 205(1) the 
statements of the parties may not be recorded or used subsequently in court 
proceedings. The applican t for conciliation is entitled to withdraw with a full 
reservation of rights. If the conciliation does not produce a settlement or other 
final disposal, the plaintiff may but is not required to commence the 
adjudicative process. This involves the lodging o f a new document with a 
different body, namely the court.  
61. Mr Layton accepts that the inclusion within the definition of "court" of bodies 
exercising a summary enforcement function, where it is empowered to issue 
an order only if there is no opposition fro m the defendant, represents a 
derogation from the general proposition stated in paragraph 17 of the 
judgment in Solo. Their inclusion stems from an express extension of the 
definition of "court" and they are bodies which on their own authority are 
empowere d to issue binding orders, not dependent on the consent of the 
parties. They are therefore distinguishable on both counts from the Swiss 
conciliation authorities.  
62. Mr Layton further submits that in order to qualify as a "court", a body must 
have the power to determine its own jurisdiction under article 27, as 
demonstrated by articles 25 and 26(1) which require the court seised of a 
claim to declare, in the circumstances there specified, of its own motion that it 
does not have jurisdiction.  
63. These are formid able arguments, but they rely for their force on focusing on 
the conciliation authority in isolation rather than as an integral part of Swiss 
civil proceedings. Not only are conciliation proceedings the subject of detailed 
provision within the CPC, they ar e a mandatory first step in the resolution of 
civil and commercial disputes within the court system. Save in those cases 
where conciliation is expressly inapplicable or may be waived, the 
adjudicative process in the District Court may not be commenced with out the 
authority issued by the conciliation authority under article 209 of the CPC. 
Under the express provisions of article 208, the dispute may be finally 
disposed of at the conciliation stage, including by a settlement which has the 
effect of a binding decision and is enforceable as such. LBF accepts that a 
disposal of the dispute under article 208 creates res judicata  between the 
parties.  
64. By article 62, the institution of conciliation proceedings creates lis pendens  
and suspends any applicable limitati on period. I accept that the creation of lis 
pendens  as a matter of domestic law does not lead to the conclusion that there 
is lis pendens  under the Lugano Convention. It clearly would not be open to a 
state bound by the Convention to attempt to steal a ma rch by declaring lis 
pendens  in circumstances where it would not otherwise exist. This is not 
however the position in Switzerland. It is an integral part of Swiss procedural 
law that, in all cases not covered by the Lugano Convention, the initiation of 
conciliation proceedings creates lis pendens . While not clearly determinative, 
this is, particularly when taken together with the other features to which I have 
referred, a significant feature of the procedural code.  
65. There is no difficulty in identifying the  conciliation authorities as bodies 
which may fall within the definition of "court". The justices of the peace in 
Zurich are a state authority which, though separate from the courts as a matter 
of Zurich cantonal law, are part of the judicial system. The d etailed procedure 
laid down in the CPC indicates that they operate very much more recognisably 
as a court than, for example, summary enforcement agencies. Conciliation 
before them is the first stage in the pursuit of a civil claim, which may lead to 
a judg ment enforceable under the Convention.  
66. Looking at the overall purposes of the Lugano Convention, it would in my 
view be contrary to the achievement of those purposes if the commencement 
of conciliation proceedings fell outside articles 27 -30. The principa l purpose 
of the Convention is to avoid the twin mischiefs of parallel proceedings and 
inconsistent judgments. In circumstances where conciliation proceedings are, 
or may arguably be, mandatory it is unrealistic not to regard them as part of 
the proceeding s which will or may lead to an enforceable judgment. The 
judgment may emerge consensually from the conciliation proceeding or it may 
result from the adjudicative process for which the conciliation proceedings is a 
necessary first step. The existence of con ciliation proceedings in Switzerland 
and High Court proceedings in England necessarily involve parallel 
proceedings and a decision that conciliation proceedings in Switzerland are 
not proceedings for the purposes of the Lugano Convention discriminates 
without good cause against those who legitimately wish to pursue their claim 
in Switzerland. It may be noted that judicial conciliation plays a part in some 
English proceedings, particularly in the family courts, but only after the 
commencement of proceedings in those courts.  
67. There would in my view be a significant inconsistency in including debt 
enforcement agencies within the definition of "court" but excluding the Swiss 
conciliation authorities. To distinguish them on the grounds that the former 
have author ity to issue a binding order in the absence of any opposition from 
the defendant, whereas the latter can do so only if a settlement is reached does 
not, in the context of the position of the conciliation authorities in Swiss civil 
procedure, represent a co nvincing distinction.  
68. I should mention a decision on which Mr Layton has placed some reliance. In 
a decision given on 6 June 2007, under reference 5 Ca 90/07, the fifth 
Chamber of the Labour Court in Mannheim held that conciliation proceedings 
in an employment dispute commenced in Spain did not constitute proceedings 
before a court for the purposes of the Judgments Regulation. The applicant for 
the institution of conciliation proceedings had been emplo yed in Spain by a 
company with its head office in Germany. Following the termination of his 
employment, the employee first submitted an application for conciliation 
proceedings in Spain and, five days later, submitted an action to the Labour 
Court in Mannh eim. Conciliation proceedings in Spain shared many of the 
features present in the case of conciliation proceedings under the Swiss Civil 
Procedure Code. They were a prerequisite for an action in a Labour Court, the 
limitation period was suspended, a consen sual decision of the conciliation 
committee had res judicata  effect and it could be enforced. It appears that in 
these respects they were similar to conciliation proceedings in employment 
cases in Germany. I have been provided with an article by a German 
commentator which is highly critical of this decision. In particular, the article 
cites a leading authority ( Jan Kropholler: European Code of Civil Procedure, 
8th ed., 2005)  that proceedings within the meaning of the Judgments 
Regulation are not "an action in the technical sense" but rather "the pendency 
of a claim under the procedural law of the relevant state." In any event, the 
decision is distinguishable because the conciliation authority in Spain was a 
department within a Government Ministry which could not in any event 
qualify as a court for the purposes of the Judgments Regulation.  
69. As regards the submission made by Mr Layton that the conciliation authorities 
cannot be a court for the purposes of the Lugano Convention because they 
cannot det ermine their own jurisdiction under article 27, the evidence is by no 
means clear. There appears to be some conflict in the decisions of the Superior 
Court of Zurich whether conciliation authorities can examine or decide their 
own jurisdiction. It also app ears from the evidence that, at any rate on case 
management grounds, the conciliation authorities can impose a stay.  
70. It is clearly important to the effective working of the Lugano Convention and 
the Judgments Regulation that there should be the opportunit y to challenge the 
jurisdiction of the court first seised as early as possible in the proceedings. I 
am not satisfied by the evidence that this is not possible in Switzerland. First, 
it appears that at least in obvious cases the conciliation authority can examine 
its own jurisdiction. The evidence does not establish that in less obvious cases 
the matter cannot be referred for decision by a court, which would have 
binding effect on the conciliation authority. It would be very surprising if this 
were not poss ible. I would not regard it as an impediment to recognising the 
conciliation authority as a "court" for the purposes of the Lugano Convention 
that in certain cases it was a superior court which decided on jurisdictional 
questions. It is not an explicit req uirement of article 27 that the jurisdiction of 
the court before which the proceedings have been initiated should itself be the 
court which determines the issue. It is surely sufficient for the proper working 
of the Convention that such a decision can be m ade and become binding on 
that court, even if made by a superior court in the system. It does not seem 
from the evidence that, for example, the Swedish debt enforcement agency 
could determine its own jurisdiction. I do not think that the existence or 
absen ce of a power vested in the conciliation authority to rule on its own 
jurisdiction can determine whether the initiation of conciliation proceedings 
brings articles 27 -30 into play.  
Conclusion  
71. I have reached the conclusion that the initiation of conciliati on proceedings by 
the lodging of a written request for conciliation falls within article 30 of the 
Lugano Convention, as being the first procedural step in a civil claim before 
the Swiss courts. The conciliation authorities fall within the definition of 
"court" given their place in Swiss civil procedure and given that they have 
jurisdiction, in small claims to decide the case on its merits and in other claims 
to deal with them with a view to their withdrawal, acceptance or settlement, 
failing which authorit y is given to the claimant to proceed to the adjudicative 
process. The need to give article 27 a broad interpretation, as required by the 
ECJ in Erich Gasser GmbH v MISAT srl , requires an examination of the role 
of the conciliation authorities in the conte xt of Swiss civil procedure.  
72. Were it not for the fact that the Swiss proceedings have been dismissed, I 
would grant the stay of the English proceedings sought by the KT parties. The 
dismissal of the Swiss proceedings has been affirmed on appeal and they s tand 
dismissed unless any appeal by the KT parties is allowed by the Swiss Federal 
Tribunal. The terms of the appropriate order to be made will be considered at a 
further hearing and I will invite the parties to file evidence as to the current 
state of pla y in Switzerland and to make submissions in the light of that 
evidence, if the terms of an order cannot be agreed.  
73. LBF submitted that if the court entertained any doubts on the issue, it should 
be referred to the Court of Justice of the European Union for  a preliminary 
ruling. In view of the position as regards the Swiss proceedings, this is not on 
any footing a suitable case for a referenc e