JUDGMENT
EVANS L.J.:
[1] The question raised by this appeal is the extent of the Court's
jurisdiction over the eight defendants, who are four German companies
and four German nationals. All of them are domiciled in Germany. The
first and second defendants acknowledge that they have submitted
in writing to the jurisdiction of the English court in respect of certain
disputes, but an issue arises as to the extent of their submissions. The
remaining defendants dispute that the Court has jurisdiction over them in
respect of any of the plaintiffs' claims. If there is jurisdiction in respect of
these defendants, then the same exists in respect of the first and second
defendants also.
[2] The defendants' applications were dismissed by Millet J. on 21 January
1994, and they now appeal against his ruling.
[3] The detailed circumstances of the case are somewhat complicated,
but as the learned judge said, "The action is a straightforward action
for breach of confidence". This remains true, although since the hearing
before him the plaintiffs have served a document described as the "draft
statement of claim" which sets out in considerable detail the precise
allegations made by the plaintiffs and the various causes of action upon
which they rely.
[4] The basic facts were concisely stated by the learned judge, as follows:
The underlying technology relates to a novel pipe and the process of
making it. The pipe is made of a tube of aluminium coated on either side
with plastic material. It is light, very strong, easily bent and capable of
lasting for more than 50 years. It is claimed to possess great commercial
advantages over conventional metal or plastic pipes. The machinery on
which, and the method by which the pipe is made, is alleged to be a
closely guarded secret of the plaintiffs."
[5] The plaintiffs may be described collectively as the K. group of
companies. They are incorporated respectively in Holland, England,
Liberia and Germany. The relevant know-how was first developed by
a French Company Nadia SA and in part it was patented by them. In
early 1986 the third plaintiff, the Liberian company then known as S.
International Corporation, was negotiating to purchase the relevant
product rights from Nadia, and this was done. The third plaintiff is a
wholly owned subsidiary of the first plaintiff, the Dutch company, and the
rights were assigned to the first plaintiff on 10 May 1988.
[6] Since 1986 the second plaintiff, the English company, has carried on
business as a manufacturer and supplier of composite pipe in this country
and, as is alleged and accepted for the purposes of this application, it
has at all material times been engaged in research and development in
relation to the piping and the processes for its manufacture and testing.
[7] In 1987, the fourth plaintiff, the German company, was given an
exclusive licence to manufacture, sell and distribute the piping in West
Germany and Switzerland. This company was established jointly by the
third plaintiff and by Herr Wolfgang H. and a company controlled by him.
Mr H. is now the sixth defendant in this action. He was employed as
managing director (Geshaftsfuhrer) of the fourth plaintiff under a service
agreement dated 27 April 1987, with effect from 1 September 1986,
and he was party to a Confidentiality and Non-Competition Agreement
between himself and his companies on the one hand, and the third
plaintiffs on the other hand, dated 6 March 1986.
[8] The service agreement was terminated on 6 January 1994 in the light
of the events which have given rise to these proceedings.
[9] The plaintiffs further allege that since early 1986 both the second
plaintiff (England) and the fourth plaintiff (Germany) have continued
the work of development and testing and have added to the body of
confidential technical information which they seek to protect in these
proceedings.
[10] In June 1988, when the second plaintiff was carrying on the business
of manufacture in England, the second defendant, Herr Horst R., became
interested in acquiring the right to manufacture the pipe on behalf of
his company, the first defendant. He signed an agreement in writing
dated 16 June 1988 which is a standard form of agreement for visitors
to the English company's factories. It is described as the "Visitors
Acknowledgment and Undertaking of Confidentiality", and the undertaking
is given expressly "in consideration of [the English company and the third
plaintiff] allowing them to enter into its plant and to have access to the
CONFIDENTIAL INFORMATION" (clause 4). This agreement includes a
non-exclusive jurisdiction clause in the following terms:
7. This agreement shall be governed and construed in all respects in
accordance with the laws of England and the parties hereto hereby submit
to the non-exclusive jurisdiction of the English Court.
[11] Negotiations continued, and on 19 October 1988 Mr R. signed on
behalf of the first defendants a so-called "Look-See Agreement" which
described the first defendant as "the Potential User" of the confidential
information as defined therein. This too contained a jurisdiction clause in
the following terms:
9. PROPER LAW
This Agreement shall be governed and construed in all respects in
accordance with the law of England and the parties hereto thereby submit
the exclusive jurisdiction of the English Courts.
[12] The plaintiffs allege in general terms that "One or more of
the Plaintiffs possess and at all material times possessed a body of
confidential technical information and know-how relating to Piping
and processes for its manufacture and testing" (para. 16 of the draft
statement of claim). One of the points taken by Mr Donaldson Q.C. for the
defendants is that the plaintiffs should distinguish between the respective
rights and claims of the individual plaintiffs, but it is unnecessary to
pursue this matter further for the purposes of this appeal.
[13] The draft statement of claim then proceeds to itemise a large
number of individual claims against the different defendants, before
proceeding to what I understand is the central allegation of primary fact.
This is that the first, third and fourth defendants, all of them companies
controlled by Mr R., the second defendant, either alone or jointly with
others, have used the plaintiffs' confidential information in order to
develop and manufacture equipment for the manufacture of composite
pipe (the first and third defendants), to manufacture composite pipe
(the third defendant) and to deal in such pipes (the third defendants and
fourth defendants). These allegations are contained in paragraph 42 of
the draft statement of claim. There is a further claim against the fifth
defendant, alleged to be another of Mr R.'s companies. Mr Donaldson
has told us that this allegation is factually incorrect, but in any event no
separate issue arises with regard to this defendant. Finally, there is an
allegation that these defendants have disclosed the plaintiffs' confidential
information "by supplying equipment embodying the whole or part
thereof to third parties" (para. 42(e)). It seems that there may have been
negotiation between these defendants and Chinese interests, but again
Mr Donaldson tells us that no sales or deliveries have taken place outside
Germany.
[14] These various activities are alleged to constitute breaches of duties
of confidence owed to the plaintiffs by each of the company defendants,
and that they were done pursuant to a common design and therefore an
unlawful conspiracy involving all of the defendants. The part played by
the seventh and eighth defendants appears to have been limited but it is
not suggested that they are in any different position from Mr H., the sixth
defendant. Like him they are former employees of the fourth plaintiff, the
plaintiffs' German company, and shareholders in two of the four company
defendants.
[15] The remaining allegations may be summarised as follows. The first
defendant and Mr R., the second defendant, are alleged to have acted
in breach of the contracts to which respectively they were parties, i.e.
the Look-See Agreement and the Visitor's Agreement. The four company
defendants are alleged to have procured the breach by Mr R. of the
Visitor's Agreement, and he and the remaining company defendants
are alleged to have procured the first defendant's breaches of the Look-
See Agreement. Mr H. also is alleged to have procured the breach by Mr
R. of the Visitor's Agreement. Mr R., Mr H. and in addition the seventh
and eighth defendants are alleged to have acted in breach of duties of
confidence independently of any contract between them and the plaintiffs,
and the company defendants likewise are alleged to have acted in breach
of non-contractual duties of confidence owed to them. There are general
allegations that individual defendants have procured breaches by other
defendants of their various breaches of duty towards the plaintiffs (para.
44 and 45), and claims that the defendants hold on constructive trust for
the plaintiffs all items of property in their possession which have been
acquired as a result of their breaches of confidence (para. 48) and that
the defendants have been unjustly enriched by reason of their unlawful
conduct (para. 49).
[16] The relief claimed by the plaintiffs centres upon an injunction claimed
against each of the defendants to prevent them from manufacturing
piping, or equipment for the manufacture of piping, or supplying, etc.,
such equipment or piping, or disclosing any confidential information or
otherwise acting in breach of confidence.
[17] Notwithstanding the care which has been taken to particularise the
individual allegations in this way, it is helpful in my view to summarise
them as follows. Mr H., the sixth defendant, was employed by the
plaintiffs' German company from 1986 until 1994 in the senior position
of managing director. The seventh and eighth defendants were also
employed there. The second defendant, Mr R., and his company, the first
defendant, were given access to the plaintiffs' manufacturing processes
and other confidential information in 1988/9 pursuant to the express
contracts which they were required to sign. It seems that no licence
was granted as a result of those negotiations, but in 1990 the fourth
defendant, another of Mr R.'s companies, was given an exclusive right
to sell in Germany piping made by the fourth plaintiff. What is alleged,
in essence, is that Mr R. and his companies have begun the manufacture
of equipment for the manufacture of piping, and manufacture of the
piping itself, at their factories in Germany, and that they have done this
in collaboration with Mr H. and the seventh and eighth defendants. These
are the essential facts which are relevant to the jurisdiction issues raised
by the defendants' application and by this appeal.
Agreed submission--Article 17
[18] The first ground of jurisdiction relied upon against the first and
second defendants in Article 17 of the Brussels Convention 1968, given
statutory force in England by the Civil Jurisdiction and Judgments Act
1982. The scheme of the Convention is important. The general rule is
found in Article 2 under the heading "General Provisions":
Article 2
Subject to the provisions of this Convention, persons domiciled in a
Contracting State shall, whatever their nationality, be sued in the Courts
of that State.
[19] Article 17 appears in section 6, which is headed "Prorogation of
jurisdiction". It reads:
Article 17
If the parties, one or more of whom is domiciled in a Contracting State
have agreed that a court of the courts of a Contracting 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 exclusive jurisdiction. Such an agreement conferring
jurisdiction shall either be in writing or evidenced in writing...
[20] As I have already stated, the first and second defendants do not
dispute the plaintiffs' contention that they have submitted to the exclusive
jurisdiction of the English courts by reason of the express agreements
contained in the Look-See Agreement and in the Visitor's Agreement
respectively. But the scope of their submission is in issue, because the
plaintiffs contend that it extends to all aspects of the "particular legal
relationship" between themselves and those two defendants, including
non-contractual claims for breach of confidence as regards both the
confidential information imparted to them pursuant to the contract in
1988/9 and their alleged activities in conjunction with other defendants
since that date.
[21] Mr Donaldson Q.C. submits that the exclusive jurisdiction conferred
by Article 17 is coextensive with the scope of the agreement between the
parties; that is to say, it is defined by the true construction of the express
clause in each of the two contracts.
[22] Millet J. found it unnecessary to express a concluded view on this
issue, because of his conclusion that all of the defendants were subject
to the jurisdiction of the English court under Article 5(3). It is, however,
desirable that this Court should do so, for reasons which will appear
below.
[23] In my judgment, Mr Donaldson's submission is correct. Indeed, it is
supported by a decision of the European Court upon which Mr Laddie Q.C.
for the plaintiffs relied, Nikolaus Meeth v. Glacetal. The Federal Court of
Justice in Germany had referred a question to the court as to the scope
of an exclusive jurisdiction clause in relation to a set-off defence raised
by the defendants. The European Court held that nothing in Article 17
prevented the national court from determining that the clause conferred
jurisdiction "if such court considers that course to be compatible with the
letter and spirit of the clause conferring jurisdiction".
[24] The sole question, in my judgment, is whether the clause on its true
construction does include the claims or causes of action upon which the
plaintiff relies. In its reply to the question raised by the German court, the
European Court referred to "a set-off connected with the legal relationship
in dispute", but in my view this does not mean that the jurisdiction
conferred by the agreement between the parties can be any wider than
they intended it to be, as demonstrated by the true construction, i.e. the
"letter and spirit" of the clause which they agreed.
[25] Although clause 7 of the Visitor's Agreement gives exclusive
jurisdiction to the English court, whereas clause 9 of the Look-See
Agreement does not, there is no difference between them as to the
scope of the jurisdiction thereby conferred. Each is phrased simply as a
submission to the jurisdiction, and there is no express definition of the
kinds of disputes and difference which are agreed to be referred.
[26] At the very least, these must include disputed claims for breaches of
the contract in question. Mr Donaldson submits that the clause is limited
to disputes of this kind, there being no additional words such as are
often included in clauses of this kind, for example, "arising out of or in
connection with" the contract, or performance of it.
[27] Mr Laddie helpfully referred us to Continental Bank NA v. Aekos
Comp. Nav. SA where an exclusive jurisdiction clause was effectively in
the same form as the present case ("... hereby irrevocably submits to
the jurisdiction of the English Courts"). Steyn L.J., giving the judgment
of the Court of Appeal, applied to that clause the principles which
have been developed in relation to arbitration clauses, including what
Hoffmann L.J. has described as "the presumption in favour of one-stop
adjudication". The Court held that all disputes in connection with the
contract in question, which was a loan facility given by the plaintiff bank,
were covered by the clause. These included claims in tort, when "the
contractual and tortious claims were so closely knitted together on the
facts that an agreement to arbitrate on one can properly be described as
covering the other."
[28] By this route, therefore, in my judgment, one arrives at the
conclusion that the express jurisdiction clauses in the present case include
not only claims for breach of the relevant contract, but also other claims
which are so closely connected with them that the parties can properly be
taken to have intended that they should be decided by the same tribunal.
Regard must be had, as was said in Meek's case, to the "letter and spirit"
of the jurisdiction agreement. But all such claims must be connected with
the contract, rather than with any "legal relationship" between the parties
other than the relationship established by the contract itself.
[29] Applying this test in the present case, the English court clearly
has jurisdiction over claims alleging misuse of confidential information
obtained by the first and second defendants during the course of the visits
to the plaintiff's place of business or otherwise pursuant to the Look-See
Agreement in 1988/9, regardless of whether the claims are formulated
in contract or otherwise. More difficult is the question whether the
submissions also extend to claims made in respect of these defendants'
alleged dealings with Mr H. and the seventh and eighth defendants, and
with other employees of the fourth plaintiffs. Any such dealings seem
likely to have taken place some years later.
[30] The terms of the Visitor's Agreement, which it is unnecessary
to set out in full, are such, in my judgment, that it is difficult if not
impossible for the plaintiffs to argue that the protection given by the
agreement extends beyond the body of confidential information which the
plaintiffs possessed at the date of the visit or visits in question. Clause
4 refers expressly to "any information obtained from the [second and/
or third plaintiffs] and/or which became available during or as a result
of my visit to the [second plaintiff's plant, including the CONFIDENTIAL
INFORMATION [as defined]".
[31] The Look-See Agreement, on the other hand, purports to have a
wider effect. The definition in clause 1.1 includes "all information or know-
how in the possession of [the first plaintiffs] or developed henceforth
referring to the System", and clause 1.4 includes:
...[the first defendants] shall neither approach nor receive the
Confidential Information from any third parties who are in possession
of the Confidential Information as a result of a contractual relationship
between any such third party and [the first plaintiffs] with a view to
obtaining such disclosure.
[32] These provisions may enable the plaintiffs, strictly the first plaintiff,
to argue that any subsequent dealings between the first defendant, who
obtained know-how from the first plaintiffs, and the other defendants
amounted to breaches of this obligation and that claims in respect of or
in connection with such breaches are within the scope of the submission
to jurisdiction in clause 9. But there are formidable arguments to the
contrary effect. Is it to be said that the first defendants are restricted for
all time from approaching any licensee of the first plaintiffs, even if future
development of "the system" means that the processes are completely
transformed? Is such contractual protection any wider than the plaintiffs,
as owners and processors of confidential know-how, would enjoy in any
event? Does the contractual obligation extend to third parties who are not
themselves in contractual relationship with the first plaintiffs as distinct
from other plaintiffs, from time to time?
[33] The underlying issue, in my judgment, is the scope of the protection
provided to the plaintiffs by the two contracts in question. Is it limited to
the body of confidential information which was made available to the first
and second defendants in 1988/9, or do the contracts cover all further
developments which may have taken place since that date? If the latter,
then the contractual submission in the Look-See Agreement appears to
include all the claims made against the first defendant, because of the
undertaking with regard to future dealings in clause 1.4, quoted above.
But this could have some surprising results--it might mean that the
plaintiffs could claim protection even for totally new information relating
to the kind of products in question, which could not be said to have been
disclosed under the contract in 1988/9.
[34] If, on the other hand, the contractual submissions cover only claims
in respect of the confidential information disclosed in 1988/9, as it
appears to do under the Visitors Agreement where there is no undertaking
with regard to future dealings, then it must be necessary for the plaintiffs
to allege misuse of information in fact disclosed under the contract in
question.
[35] In these circumstances, in my judgment, it is undesirable to express
any concluded view on the precise scope of the contractual submissions,
except that they are not limited to claims for breach of contract but also
include connected tort claims as stated above. This was the only issue
argued before us. The first and second defendants do not object to the
Court's jurisdiction under the contracts. They seek in effect a declaration
as to its width. I do not consider it appropriate to make such a declaration
except by reference to specific pleaded claims, and the "draft statement
of claim" does not indicate which particular claims are made by reference
to the express submissions and to Article 17. No question arises of
striking out the writ or the whole of the plaintiff's claims against these
defendants, and the proper course in my judgment is for the plaintiffs to
serve the statement of claim drafted in the light of this Court's judgment
and for the defendants to object to particular claims included within it
if so advised. Any further issues which may arise as to the scope of the
submissions must therefore await another battle on another day.
Procurement
[36] It is possible that special consideration will have to be given at
that stage to allegations that the first and second defendants procured
breaches by others, or by each other, of contractual duties owed to the
plaintiffs under other contracts. These are tort claims and by definition
the contract which is alleged to have been broken is not one to which
the defendant, against whom the allegation is made, is a party. (It is
not alleged that any of the contractual obligations was jointly owed.)
Nevertheless, it might be argued that when two contracts are directly
related to each other, then a caim in tort alleging procurement of a breach
of one contract is connected with the other. This is a particular example of
the general considerations to which I have referred above.
Matters relating to tort, delict or quasi-delict: Article 5(3)
[37] Article 5 contains the first categories of what is called "Special
Jurisdiction" in the heading to section 2 of the Brussels Convention. It
is, therefore, supplementary to the general rule in Article 2 that persons
domiciled in a Contractual State shall be sued in the courts of that state.
All the defendants in the present case are domiciled in Germany. Each
of them accepts that proceedings may properly be brought against them
there. The plaintiffs, however, assert that all of their claims against each
of the defendants, excluding only the contractual claims made against the
first and second defendants (and excluding for present purposes certain
additional contractual claims which appear in the draft statement of claim
but which were not before Millet J. and are not before us on this appeal),
are within the particular category of Special Jurisdiction listed in Article
5(3). For the purpose of considering the application of Article 5(3), it is
necessary to have regard to paragraphs (1), (4) and (6) also, and these
may conveniently be quoted together:
Article 5
A person domiciled in a Contracting State may, in another Contracting
State, be sued;
(1) in matters relating to a contract, in the courts for the place of
performance of the obligation in question;...
(3) in matters relating to tort, delict or quasi-delict, in the courts for the
place where the harmful event occurred;
(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;...
(6) as settlor, trustee or beneficiary of a trust... in the courts of the
Contracting State in which the trust is domiciled;...
[38] The plaintiffs rely only upon Article 5(3). They do not contend, for
example, that any of the non-contractual claims is nevertheless within
Article 5(1) as being a matter "relating to a contract", perhaps because
they do not seek to assert that any relevant contractual obligation fell
for performance in this country. Their contention is that all the non-
contractual claims are "matters relating to tort, delict or quasi-delict" and
that England is properly to be regarded as "the place where the harmful
event occurred".
[39] The scope of the phrase "tort, delict or quasi-delict" was considered
by the European Court in a leading case, Athanasios Kalfelis v. Bankhaus
Schroder. I shall refer to this decision as "Kalfelis". There, two questions
were referred by the Federal Court of Justice of Germany. The first is
directly relevant and it received a clear answer. The question was:
Must the term "tort" in Article 5(3) of the EEC Convention be construed
independently of the Convention or must it be construed according to the
law applicable in the individual case...?
The European Court interpreted this question as asking whether the
phrase "must be given an independent meaning or be defined in
accordance with the applicable national law". The Court's answer was as
follows:
15... it must be observed that the concept of "matters relating to tort,
delict or quasi-delict" serves as a criterion for defining the scope of one of
the rules concerning the special jurisdictions available to the plaintiff...
and, after referring to earlier decisions with respect to Article 5(1),
it is important that... that concept should not be interpreted simply as
referring to the national law of one or other of the States concerned. 16.
Accordingly, the concept of matters relating to tort, delict or quasi-delict
must be regarded as an autonomous concept which is to be interpreted,
for the application of the Convention, principally by reference to the
scheme and objectives of the Convention in order to ensure that the latter
is given full effect.
[40] Later, the Court's judgment described the "Special Jurisdiction"
enumerated in Articles 5 and 6 as "derogations from the principle that
jurisdiction is vested in the Courts of the State where the defendant is
domiciled and as such must be interpreted restrictively". Understandably,
therefore, it is common ground in the present case that Article 5(3) must
be given what is described as an "autonomous" or "Convention" meaning
and that the classification of the plaintiffs' claims in English law as tort or
otherwise is therefore not decisive. Nevertheless, the claims are brought
in England and they are formulated according to English principles of law,
and so their classification under English law must be at least the starting
point for consideration of whether they fall within Article 5(3) or not. The
submissions before us have concentrated upon the non-contractual claims
for injunctive and other relief in respect of breaches of confidence, and
the defendants submit that these cannot properly be regarded as claims
in "tort, delict or quasi-delict" either in English law or for the purposes of
the Convention. It is clear, in my view, that such claims do not arise in
tort, and the remaining words "delict or quasi-delict" have no separate
meaning in English law. These claims are certainly non-contractual: see
for example Seager v. Copydex Ltd:
The law on this subject does not depend on any implied contract, it
depends on the broad principle of equity that he who has received
information in confidence shall not take unfair advantage of it.
Similarly, in Metall und Rohstoff v. Donaldson Lufkin, the Court of Appeal
judgment quoted Salmond & Heuston on Torts as follows:
No civil injury is to be classed as a tort if it is only a breach of trust or
some other merely equitable obligation. The reason for this exclusion
is historical only. The law of torts is in its origin a part of the common
law, as distinguished from equity, and it was unknown to the Court of
Chancery.
[41] That the jurisdiction to restrain and, if necessary, award damages for
breach of confidence was an equitable jurisdiction is clear beyond doubt:
see generally the speeches in the House of Lords in Attorney-General v.
Guardian Newspapers.
[42] The plaintiffs' contention is that the autonomous meaning which
should be given to Article 5(3) is not limited to matters which may strictly
be classified as tort, delict or quasi-delict, but rather that Article 5(3)
should be read in its context as being complementary to Article 5(1),
which applies to "matters relating to a contract". The complementary
meaning, Mr Laddie submits, is all species of civil liability which do not
relate to a contract. This interpretation of Article 5(3) is supported, he
submits, by a later passage in the judgment of the European Court in
Kalfelis, which reads "it must be recognised that the concept of 'matters
relating to tort, delict or quasi- delict' covers all actions which seek
to establish the liability of a defendant and which are not related to a
'contract' within the meaning of Article 5(1)".
[43] Unfortunately, however, this part of the Kalfelis judgment is not easy
to reconcile with paragraph 19, which on one view should be interpreted
as excluding a claim for unjust enrichment, which was one of the
contentious claims in Kalfelis, from the scope of Article 5(3). The resulting
uncertainty has been noted by Hirst J. and the Court of Appeal in Barclays
Bank Plc v. Glasgow City Council and the question whether Article 5(3)
does have an extended meaning, in relation to restitutionary claims, has
been referred to the European Court in those proceedings. The plaintiffs'
submission in the present case, although it relates to claims for breach
of confidence rather than restitutionary claims, is indistinguishable in
principle, and for this reason it is impossible to express a concluded view
at this stage of these proceedings. Mr Laddie Q.C. acknowledges this,
and he does not suggest that these proceedings should be stayed or that
there should be a further reference to the European Court. Rather, we
were invited to consider whether the defendants' alternative submission
is correct; namely, that even if the non-contractual claims are properly
categorised as tort, nevertheless the present case is not within Article
5(3) because the plaintiffs cannot show that the, or a, harmful event has
occurred in England.
[44] Millet J. rejected this contention, holding that the alleged activities of
the defendants have caused damage to an interest of the plaintiffs which
is situated in England and that it is sufficient for the purposes of Article
5(3) that some damage has been caused here, relying on the judgment
of the European Court in Handelskwekerij GJ Bier BV v. Mines de Potasse
D'Alsace SA ("Bier"). There, the relevant harm was damage to the plaintiff
company's seed beds in the Netherlands caused by pollution of the
Rhine. The place of the event which gave rise to it was Alsace, where the
defendant discharged saline waste into the Rhine. The European Court
held that under Article 5(3) the defendant may be sued, at the option of
the plaintiff, either in the courts for the place where the damage occurred
or in the courts for the place of the event which gives rise to and is the
origin of such damage.
[45] As the later case of Dumez France and Tracoba v. Hessische
Landesbank makes clear, it is necessary to distinguish between damage
directly and indirectly caused. Indirect damage is not within Article
5(3), which thus precludes consideration of the place where financial
loss resulting from the damage complained of is sustained or felt by the
injured plaintiff. If indirect or consequential loss of this kind was included
within Article 5(3) then it could often, even invariably, be shown to have
occurred wherever the plaintiff has its principal place of business, with the
result that Article 5(3) would enable the plaintiff to establish jurisdiction
almost as matter of course in his own country of domicile, contrary to
the general rule stated in Article 2. The concept of the place or country
where damage is "felt" has its place in English law, for example, where
the currency of loss has to be ascertained: see Att.-Gen. of the Republic
of Ghana v. Texaco Overseas Tank Ships Ltd (the Texaco Melbourne). But
that does not make it the place where the relevant injury, or damage, was
suffered. The issue in the present case is whether the alleged damage, or
any of it, has occurred in England.
[46] There is no evidence that any of the alleged activities of the
defendants which are complained of has taken place in England, nor was
there any evidence before the learned judge that they had had any direct
repercussions in this country. The plaintiffs' evidence before us included
a further affidavit suggesting that the plaintiff has grounds for supposing
that pipes or machinery produced by the defendants in Germany, as is
alleged in breach of confidence, either have been or may be imported
into England, but the affidavit acknowledges that there is no evidence
to support this suggestion, nor do the plaintiffs claim relief on any quia
timet basis. This evidence, therefore, does not advance their case for
present purposes. The plaintiffs contend that damage has been suffered
in England and that it is sufficient for the purposes of Article 5(3) that at
least some such damage has occurred, whether or not other and possibly
more substantial damage has occurred elsewhere. The damage alleged is
that the confidentiality of the plaintiffs' information has been breached.
The plaintiffs carry on business here, and in particular their research
and development activities are situated here. Their business consists
either of exploiting the information or of licensing its use to other parties.
Therefore, it is submitted, the plaintiffs have been damaged in England.
[47] This argument succeeded before the learned judge. He
acknowledged that it comes close to treating the body of confidential
information as a form of property which has its physical location in this
country, even though the concept of property is metaphysical rather
than real in this context. He does not refer, however, to a fact which
Mr Donaldson emphasised before us; namely, that there is no evidence
and no suggestion that the defendants have publicised the information
either in England or elsewhere, or that they have breached the alleged
confidentiality otherwise than by exploiting it in Germany as they are
alleged to have done.
[48] I for my part find it impossible to hold that the plaintiffs, on the
material before us, have shown that there has been a "harmful event"
in England, in the sense of damage directly caused to them here by the
alleged activities of the defendants in Germany. There is no evidence
that their commercial interests have suffered in England, as might be
the case, for example, if the defendants were alleged to have imported
into this country pipes or machinery which they had produced in
breach of confidence in Germany or elsewhere. Nor, in the absence of
such evidence, can it be said that the value of the plaintiffs' rights as
licensor or otherwise in England has been reduced as a result of the
defendants' activities. Moreover, if the plaintiffs, submission was correct,
it would enable them to establish jurisdiction in any country where
they could show that they were entitled to protect the confidentiality of
the information, regardless of whether or not the defendants' alleged
activities had any effect upon their commercial interests there. This would
be a major derogation from the general rule stated in Article 2.
[49] For these reasons, Article 5(3) in my judgment does not enable
the plaintiffs to found jurisdiction in the present case. It is unnecessary
to consider further questions which were raised in argument before us,
including the possibility that if the plaintiffs, in the interests of including
all their claims within one set of proceedings, bring their contractual
claims against the first and second defendants in Germany, they will be
met by the objection that Article 17, if not the contract itself in the case of
the Look-See Agreement, gives exclusive jurisdiction to the English courts
and thereby precludes the right to bring such proceedings in Germany.
We have no means of knowing what the attitude of the German courts
would be to such an application, but it has to be said that, if there are
non-contractual claims against those defendants which are not within the
terms of the express submissions to jurisdiction, and if the contractual
claims cannot be brought in Germany, then the need to bring proceedings
in both jurisdictions is the inevitable result of the terms of the Convention.
As Mr Donaldson Q.C. emphasised before us, jurisdiction under the
Convention either exists or does not exist as a matter of law, and there is
no scope for the exercise of discretion as regards related claims except as
between those countries where jurisdiction is established in accordance
with its rules.
Interlocutory relief
[50] The learned judge also held that, even if he had ruled against the
plaintiffs, he would not have set aside the writ, since they are entitled to
apply for injunctive relief pending the determination of the substantive
dispute in Germany, under Article 24 of the Convention. This alternative
claim was maintained by Mr Laddie Q.C. before us.
[51] Article 24 reads:
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 the Convention, the courts of another
Contracting State have jurisdiction as to the substance of the matter.
[52] The "protection available under the law of [England]" depends upon
the jurisdiction given by section 25(1) of the 1982 Act (Civil Jurisdiction
and Judgment Act 1982). Section 25(2) provides as follows:
(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.
[53] Millet J. contemplated that if the claims were struck out but the writ
was allowed to stand, then the plaintiffs would be permitted to amend so
as to include claims limited to interlocutory relief.
[54] Mr Donaldson Q.C. submitted that a claim for interlocutory relief can
only be brought by proceedings in the form of an originating summons
under R.S.C. Order 5, rule 3, and that the writ therefore should be struck
out in any event.
[55] Mr Laddie Q.C. drew out attention to R.S.C. Order 2, rule 1, which
provides that proceedings are not rendered a nullity merely because
of a defect in form. Rule 1(3) expressly provides that a writ shall not
be set aside merely because the wrong form of originating process was
employed.
[56] The plaintiffs have already issued a notice of motion in which they
seek interlocutory relief. This is due for hearing in the near future. The
proper course, in my view, is to permit the proceedings as presently
constituted to continue on the basis indicated by Millet J. This will mean
that both the writ and the terms of interlocutory relief sought by the
notice of motion will require amendment in the light of the judgment
of the Court, but it is unnecessary for the plaintiffs to commence fresh
proceedings in a different form.
Conclusion
[57] For these reasons I would allow the appeal to the extent I have
indicated and make the orders sought by the defendants, subject to
further submissions as to the form of order which is appropriate as
regards the first and second defendants in the light of the judgment of
this Court.
WAITE L.J.:
[58] I agree.
THE VICE-CHANCELLOR:
[59] I also agree.
Order: appeal allowed; plaintiffs to pay full cost of the defendants of the
court below; plaintiffs to pay half of the defendants' costs of the appeal,
such costs to be taxed if not agreed and to be paid forthwith.