The Honourable Mr Justice Barling:
Introduction
1.There are before me five applications in three separate claims. One
of the applications, which is not opposed, is for joinder of additional
claimants in one of the claims, pursuant to CPR Rule 19.2(2). The
remaining four applications are contentious. I heard them over four days,
with an additional day for reading. Each is a Part 11 application seeking,
in effect, to stay the relevant claim. At the end of the hearing Mr de Garr
Robinson QC, who appeared for two of the three respondents to the
applications, stated that it would be helpful if in due course I felt able to
give an indication of the outcome of the applications in advance of my
providing a reasoned judgment. This request was renewed in a letter
dated 16 June 2009 which was copied to leading counsel for the other
parties. None of those parties raised any objection. Accordingly I indicated
by letter dated 25 June 2009 that, subject to the appropriate caveat,
I proposed to dismiss all the Part 11 applications, for reasons which I
would set out in a judgment to be delivered in due course. This judgment
contains the reasons.
2.All the Part 11 applications are based on forum conveniens grounds,
reliance being placed in particular upon the existence of corresponding
proceedings between the same parties in another jurisdiction (Utah, USA).
Each application raises amongst other issues an important question of
law, namely whether this court has power to decline jurisdiction or to
grant a stay on such grounds in favour of the courts of a non-EU country
in respect of proceedings of which this court is admittedly properly seised
under Article 2 of Council Regulation (EC) No 44/2001 on Jurisdiction and
the Recognition and Enforcement of Judgments in Civil and Commercial
Matters (“the Regulation”). This question involves an examination of
whether the decision of the Court of Justice of the European Communities
(“ECJ”) in Case C-281/02 Owusu v. Jackson [2005] QB 801, applies to
a case such as the present ie. where there is a lis alibi pendens. In that
decision the ECJ held that, where a court which is subject to what is
now the Regulation (for convenience “an EU court”) is properly seised of
proceedings under Article 2 of the Regulation, the EU court cannot decline
its jurisdiction on forum non conveniens grounds in favour of the courts of
a non-EU country. In the specific case before the ECJ there was no lis alibi
pendens and the ECJ expressly declined to answer the national court’s
question as to whether its ruling applied in such a case.
3.The Part 11 applications fall into two groups. The first group consists of
the defendants’ application in claim HC08 CO3241 and the defendants’
parallel application in claim HC08 C03618. The claimants in the first of
these actions are Catalyst Investment Group Limited (“Catalyst”) and Mr
Tim Roberts (“Mr R”). The claimant in the second is ARM Asset-Backed
Securities S.A. (“ARM”). In both these actions the defendants are Mr Max
Lewinsohn (“Mr L”) and Maximillian & Co. Throughout the hearing counsel
referred to these two actions collectively as “the Declaratory Proceedings”.
I will adopt the same approach. Where it is necessary to refer to them
separately I will use “the Catalyst Declaratory Proceedings” or the ARM
Declaratory Proceedings” as the case may be.
4.The second group of Part 11 applications consists of two applications
in action HC08 C03158, namely the application by two of the defendants
(Mr L and Maximillian & Co) and a corresponding application by the third
defendant Micropower Global Limited (“Micropower”). The sole claimant in
this action is Catalyst. This action was called “the Noteholder Proceedings”
during the hearing.
The Part 11 applications
45.Each of the Part 11 applications seeks an order that this Court should
not exercise any jurisdiction in the relevant proceedings “as the most
appropriate forum is the Utah Court USA”, and an order that the relevant
claim form should be set aside or stayed. Exceptionally the application
notice dated 13 February 2009 issued on behalf of the third defendant
(Micropower) in the Noteholder Proceedings seeks, in addition, an order
declaring that the English court “has no jurisdiction”. (An earlier notice
dated 21 January 2009 was issued in the same matter on behalf of the
first two defendants in those proceedings.) This additional wording may
be connected with the fact that at one point there was an intention to
raise a number of separate arguments in relation to Micropower, based
on the fact that it is not domiciled in an EU Member State. For example
it was said that Catalyst failed to discharge its duty of full and frank
disclosure on the ex parte application at which permission to serve
outside the jurisdiction was granted and that service of the proceedings
on Micropower should be set aside on that ground.
46.However by the time the applications came on for hearing before me
these discrete points were no longer being pursued by Micropower, and it
was accepted that if the Noteholder Proceedings were to continue against
Mr L/Maximillian then Micropower would be a proper party to them. In
other words Micropower’s Part 11 application stands or falls with that of
Mr L/Maximillian.
47.The issues which I have to determine were further narrowed in the
course of the hearing. It is common ground that the Regulation applies to
both the Noteholder Proceedings and the Declaratory Proceedings. Article
2 provides:
“Subject to this Regulation, persons domiciled in a Member State shall,
whatever their nationality, be sued in the courts of that Member State.”
48.Mr Phillips accepted that the effect of Article 2 is that Mr L/Maximillian
must be sued in this jurisdiction, subject to the other provisions of the
Regulation. At the start of the hearing he submitted in relation to the
Noteholders Proceedings, in addition to other arguments, that the effect
of Article 23 of the Regulation was that an exclusive jurisdiction clause
in an agreement prevailed over what would otherwise be the mandatory
provisions of Article 2, even where the exclusive jurisdiction was that
of the courts of a non-EU country. For this submission he relied upon a
number of authorities and certain passages from Dicey, Morris & Collins
on The Conflict of Laws (14th edition). It followed that in relation to
the Noteholder Proceedings it would be necessary for me to decide
whether the parties had agreed that the disputes in that action were
to be subject to the exclusive jurisdiction of the Utah courts, and if so
whether this Court had the power to stay these proceedings on that
ground, and finally whether I should exercise my discretion to stay the
proceedings so as to give effect to that agreement. The first of these
questions would have required me to decide whether the Intercreditor
Agreement, which is central to the issues in the Noteholder Proceedings
but which does not contain an exclusive jurisdiction clause in favour of
the Utah courts, should nevertheless be construed as a whole with the
Secured Loan Agreements and the Notes, which do contain such a clause.
This was the question with which Judge Lindberg grappled in the anti-suit
injunction application in the Utah State court to which I have referred.
She found that Mr L had not satisfied her that he was “likely” to succeed
in establishing that the exclusive jurisdiction clause was incorporated in
the Intercreditor Agreement. However, at the beginning of the second
day of the hearing Mr Phillips indicated that he was no longer seeking to
establish or rely upon the existence of an exclusive jurisdiction clause
in the Intercreditor Agreement and that therefore I did not need to
determine this issue. Nevertheless, as will be seen, in putting forward his
remaining arguments based on Article 27 of the Regulation Mr Phillips
sought some support from Article 23.
49.Article 27 provides:
“1. Where proceedings involving the same cause of action and between
the same parties are brought in the courts of different Member States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established.
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.”
50.Mr Phillips’ submissions can be summarised as follows. Just as, by
analogy with Article 23 of the Regulation, the English court may stay
proceedings otherwise properly founded on Article 2 in order to give
effect to an exclusive jurisdiction clause in favour of the courts of a non-
EU country, so Article 27 (which on its face only has effect as between
Member States) applies by analogy so as to enable the English court to
decline jurisdiction or stay its proceedings where the same issues are
pending in proceedings between the same parties in a non-EU country
ie on lis alibi pendens grounds. This was referred to as a “reflexive”
application of Article 27, and was said not to be precluded by the decision
of the ECJ in Owusu because that decision did not cover a case where
there was a lis pendens in the non-EU country. Mr Phillips acknowledged
that it was necessary for him to get home on this part of his argument if
the Part 11 applications were to have any chance of success. For if Article
2 could not be disapplied by reference to this argument its mandatory
provisions would prevail and the stay applications were doomed to failure.
51.Mr Phillips argued that it was necessary to consider two alternative
approaches. His primary submission was that where there was a lis
pendens in a non-EU country, the appropriate “reflexive” application
of Article 27 was for this Court to apply its national rules on forum
conveniens in order to decide whether to stay proceedings in favour of
the non-EU court on the basis that the latter was the more appropriate
or natural forum for the dispute. Such an approach, he submitted, gave
effect to the scheme and purpose of Article 27 in avoiding concurrent
proceedings and the risk of conflicting judgments, which could well
arise on an application of Article 2. Nor was this approach in any way
inconsistent with the Regulation or its overall aims.
52.In his oral submissions, as opposed to in his skeleton arguments,
Mr Phillips seemed to put forward his primary submission as applying
whether or not this Court was the court first seised. If this Court was
first seised the forum conveniens principles came into play because,
according to the argument, the court first seised must decide by analogy
with Article 27 whether its jurisdiction “is established”. Mr Phillips argued
that this Court should make that decision by applying its own rules of
forum conveniens.
53.If, in the light of Owusu or for other reasons, this Court was not able to
apply the forum conveniens criteria then Mr Phillips’ alternative, “fallback”,
submission was that one should apply the analogy of Article 27 more
strictly, and simply give effect to its preference for the court “first seised”.
54.On the assumption that his primary submission was correct and the
forum conveniens criteria were applicable, Mr Phillips submitted that
under the Spiliada principles the natural and appropriate forum for both
the Declaratory Proceedings and the Noteholder Proceedings was not in
England but in the Utah courts where the corresponding proceedings were
now in train. He accepted, however, that his clients’ case for a stay on
forum conveniens grounds was stronger in the Noteholder Proceedings
than in the Declaratory Proceedings. He also acknowledged that if the
alternative stricter approach to the Article 27 analogy were the right
one, he was bound to lose in relation to the Noteholder Proceedings as
these were commenced before the Utah Noteholder Proceedings. But
by the same token he should succeed in the applications relating to the
Declaratory Proceedings, which were commenced after the Utah Fraud
Proceedings.
55.Mr de Garr Robinson QC, appearing for Catalyst and Mr R, and Mr
Wolfson QC appearing for ARM, submitted that in neither the Declaratory
Proceedings nor the Noteholder Proceedings does this Court have the
power to stay proceedings or decline jurisdiction on these grounds;
alternatively they submitted that if contrary to their primary submission
forum conveniens grounds (with lis alibi pendens) can in principle be
relied upon by the defendants, those grounds have not been established
in relation to any of these proceedings so as to justify this Court granting
a stay in favour of the Utah courts.
Does the Court have the power to stay the proceedings here?
56.It is common ground that each of the proceedings constitutes a “civil”
or “commercial matter” within the meaning of Article 1 of the Regulation,
and that accordingly the Regulation applies. As seen, the Regulation’s
general rule, in Article 2, is that a defendant must be sued in the courts of
the state in which he or she is domiciled. Article 3 then provides:
“1. Persons domiciled in a Member State may be sued in the courts of
another Member State only by virtue of the rules set out in Sections 2 to
7 of this Chapter.”
57.Thus claimants in civil and commercial matters can only institute
proceedings other than in the courts of the defendant’s domicile if they
can point to an exception within the Regulation itself. Absent such
exception Article 2 prevails. The question here is whether Article 2 is
capable of being displaced by the existence of proceedings pending in the
courts of a non-EU country.
58.Mr Phillips recognised that his opponents would place considerable
reliance on the decision of the ECJ in Owusu. This was a reference by
the Court of Appeal for a preliminary ruling under Article 234 of the EC
Treaty. Mr Owusu had brought a claim in England against Mr Jackson and
certain Jamaican companies in respect of injuries which he had suffered at
a holiday villa in Jamaica which he had hired from Mr Jackson and which
was owned by one of the Jamaican companies. Both Mr Owusu and Mr
Jackson were domiciled in England. The defendants asked the English
court to decline jurisdiction in favour of the Jamaican courts on forum
conveniens grounds. The court refused and the defendants appealed
to the Court of Appeal. In its reference to the ECJ the Court of Appeal
asked two questions relating to the interpretation of the Regulation’s
predecessor, namely the Convention of 27 September 1968 on Jurisdiction
and the Enforcement of Judgments in Civil and Commercial Matters
(as amended) (“the Brussels Convention”). Other than a difference in
some of the numbering the Brussels Convention is, for present purposes,
materially indistinct from the Regulation. I shall therefore refer to the
Brussels Convention and the Regulation interchangeably.
59.The questions posed by the Court of Appeal were:
‘1. Is it inconsistent with the Brussels Convention …, where a claimant
contends that jurisdiction is founded on Article 2, for a court of a
Contracting State to exercise a discretionary power, available under its
national law, to decline to hear proceedings brought against a person
domiciled in that State in favour of the courts of a non-Contracting State:
(a) if the jurisdiction of no other Contracting State under the 1968
Convention is in issue;
(b) if the proceedings have no connecting factors to any other Contracting
State?
2. If the answer to question 1(a) or (b) is yes, is it inconsistent in all
circumstances or only in some and if so which?’
60.The ECJ answered the first question as follows:
In the light of all the foregoing considerations, the answer to the first
question must be that the Brussels Convention precludes a court of a
Contracting State from declining the jurisdiction conferred on it by Article
2 of that Convention on the ground that a court of a non-Contracting
State would be a more appropriate forum for the trial of the action even if
the jurisdiction of no other Contracting State is in issue or the proceedings
have no connecting factors to any other Contracting State.
61.The ECJ declined to answer the second question on the ground that
it was aimed at circumstances other than those which pertained to
the instant case, including circumstances where identical or related
proceedings were pending before a court of a non-contracting state, and
that it was not the function of the preliminary ruling procedure for the
ECJ to give advisory opinions on hypothetical questions. In other words,
because there were no relevant proceedings pending in the Jamaican
courts the second question was not pertinent to the effective resolution of
the dispute between the parties.
62.Mr Phillips relies upon the fact that in the present case there are
pending proceedings in Utah, and upon the ECJ’s failure to answer the
second question, in order to argue that Owusu is not an obstacle to his
submissions. Mr de Garr Robinson and Mr Wolfson submit that Owusu
precludes a court from declining jurisdiction upon forum conveniens
grounds in cases where jurisdiction is founded on Article 2 of the
Regulation, and that lis alibi pendens is not a free-standing doctrine but
merely one of the factors relevant to a forum conveniens assessment.
Accordingly, they argue, the reasoning in Owusu applies equally in the
present case, with the result that this Court cannot decline jurisdiction
founded on Article 2.
63.It is therefore necessary to examine the reasoning in Owusu. In its
judgment the ECJ first decided that Article 2 was applicable where the
relevant relationship was between the courts of a single contracting state
and the courts of a non-contracting state. Then the Court went on to
consider the main issue and said:
37. It must be observed, first, that Article 2 of the Brussels Convention
is mandatory in nature and that, according to its terms, there can be no
derogation from the principle it lays down except in the cases expressly
provided for by the Convention (see, as regards the compulsory system
of jurisdiction set up by the Brussels Convention, Case C-116/02 Gasser
[2003] ECR I-0000, paragraph 72, and Case C-159/02 Turner [2004]
ECR I-0000, paragraph 24). It is common ground that no exception on
the basis of the forum non conveniens doctrine was provided for by the
authors of the Convention, although the question was discussed when the
Convention of 9 October 1978 on the Accession of Denmark, Ireland and
the United Kingdom was drawn up, as is apparent from the report on that
Convention by Professor Schlosser (OJ 1979 C 59, p. 71, paragraphs 77
and 78).
38. Respect for the principle of legal certainty, which is one of the
objectives of the Brussels Convention … would not be fully guaranteed if
the court having jurisdiction under the Convention had to be allowed to
apply the forum non conveniens doctrine.
39. According to its preamble, the Brussels Convention is intended to
strengthen in the Community the legal protection of persons established
therein, by laying down common rules on jurisdiction to guarantee
certainty as to the allocation of jurisdiction among the various national
courts before which proceedings in a particular case may be brought
(Besix, paragraph 25).
40. The Court has thus held that the principle of legal certainty requires,
in particular, that the jurisdictional rules which derogate from the
general rule laid down in Article 2 of the Brussels Convention should be
interpreted in such a way as to enable a normally well-informed defendant
reasonably to foresee before which courts, other than those of the State
in which he is domiciled, he may be sued (GIE Groupe Concorde and
Others, paragraph 24, and Besix, paragraph 26).
41. Application of the forum non conveniens doctrine, which allows the
court seised a wide discretion as regards the question whether a foreign
court would be a more appropriate forum for the trial of an action, is
liable to undermine the predictability of the rules of jurisdiction laid
down by the Brussels Convention, in particular that of Article 2, and
consequently to undermine the principle of legal certainty, which is the
basis of the Convention.
………………………………………………………...
43. Moreover, allowing forum non conveniens in the context of the
Brussels Convention would be likely to affect the uniform application of
the rules of jurisdiction contained therein in so far as that doctrine is
recognised only in a limited number of Contracting States, whereas the
objective of the Brussels Convention is precisely to lay down common
rules to the exclusion of derogating national rules.
64.Similarly Advocate General Leger in his Opinion had concluded:
“… by allowing the court seised the opportunity to decline – in a purely
discretionary manner – to exercise the jurisdiction which it derives from
a provision of the Convention, such as Article 2, the doctrine of forum
non conveniens seriously affects the predictability of the effects of the
jurisdiction rules laid down by the Convention, in particular the rule in
Article 2. As already pointed out, that predictability of the jurisdiction
rules constitutes the only way of ensuring observance of the principle
of legal certainty and ensuring greater legal protection for people
established in the Community, in accordance with the objectives pursued
by the Convention. Any impact of that kind on the predictability of the
jurisdiction rules laid down by the Convention, in particular in Article 2
(which is a general jurisdiction rule) thus ultimately detracts from the
effectiveness of the Convention.” (Paragraph 263)
65.Thus, principles of legal certainty and uniform application of the
rules of jurisdiction were decisive, and, as the ECJ went on to indicate,
outweighed any “negative consequences” both practical and procedural
which it conceded might well ensue as a result of the English court being
required to accept jurisdiction in a case relating to an accident which had
taken place in Jamaica, and with some of the defendants being domiciled
in Jamaica.
66.It has not been suggested that the position under the Regulation
would be any different. Recital 11 to that instrument states:
“The rules of jurisdiction must be highly predictable and founded on the
principle that jurisdiction is generally based on the defendant’s domicile
and jurisdiction must always be available save in a few well-defined
situations in which the subject-matter of the litigation or the autonomy of
the parties warrants a different linking factor.”
67.It is generally accepted, and is common ground between the parties in
this case, that the effect of Owusu was comprehensively to overrule the
decision of the Court of Appeal in Re Harrods (Buenos Aires) [1992] Ch
72. In that case the Court of Appeal, itself overruling two first instance
decisions, had held that the Brussels Convention was only concerned with
the position as between contracting states, and did not preclude the grant
of a forum non conveniens stay in favour of a non-contracting state.
68.Mr Phillips submits that the existence in the present case of parallel
proceedings in the non-EU jurisdiction in question takes us outside
Owusu. Mr Phillips does not, at least in his primary submission, rely upon
lis pendens in Utah as a free-standing ground for a stay. Rather he argues
that because of the existence of those parallel proceedings Article 27,
interpreted “reflexively”, triggers this Court’s ability to apply conventional,
discretionary, forum conveniens principles. In other words, provided
only that one of the factors in a case is the existence of such parallel
proceedings, this Court can exercise its discretion to stay proceedings of
which it is properly seised under Article 2, by applying conventional forum
conveniens criteria.
69.This seems to me to be too heavy a weight to place on Article 27.
It is a bold step to seek to import into the Regulation a wide forum
conveniens discretion, which has been held by the ECJ to be inimical to
the fundamental aims of the Regulation, and to seek to do so on the back
of a mechanistic (timing-based) rule for establishing the hierarchy where
different courts, all bound by the Regulation, are seised of the same
dispute. In his Opinion Advocate General Leger emphasised the profound
difference between Article 27 and the forum conveniens doctrine:
“Furthermore, as the Court recently held in paragraph 47 of Gasser,
that procedural rule ‘is based clearly and solely on the chronological
order in which the courts in question are seised’. It does not therefore
leave room for any discretion as to whether one of the courts seised is
better placed than the other to deal with the substance of the case. It
follows that, contrary to the view sometimes put forward, the mechanism
provided for by the Convention in relation to lis pendens reflects a logic
profoundly different from that associated with the doctrine of forum non
conveniens since, as we have seen, the latter implies a discretion enjoyed
by the court seised as to whether a foreign court would be a clearly more
appropriate forum for dealing with the substance of the case.”(Paragraph
250 of his Opinion)
70.I did not understand Mr Phillips to contest the submission of Mr de
Garr Robinson and Mr Wolfson that under the forum conveniens principles
the fact of proceedings already pending in another jurisdiction was no
more than a factor relevant to the determination of the appropriate
forum. In that connection I was referred to Spiliada Maritime Corp v
Cansulex Ltd, The Spiliada [1987] AC 460, The Abidin Daver [1984] AC
398, and to the following passage in Dicey, Morris & Collins at paragraph
12.036:
“Although it was once thought that there were special factors in cases
of lis alibi pendens, it is now clear that the existence of simultaneous
proceedings is no more than a factor relevant to the determination of the
appropriate forum. … [T]he principles enunciated in Spiliada Maritime
Corp v Cansulex Ltd apply whether or not there are other proceedings
already pending in the alternative forum: …… the foreign proceedings
may be of no relevance at all, for example, if one party has commenced
them for the purpose of demonstrating the existence of a competing
jurisdiction, or if the proceedings have not passed beyond the stage of
initiating process. But if genuine proceedings have been started and
have had some impact on the dispute between the parties, especially if
it is likely to have a continuing effect, then this may be a relevant (but
not necessarily decisive) factor when considering whether the foreign
jurisdiction provides the appropriate forum.”
71.Although Mr Phillips submits that a reflexive use of Article 27 so as to
import a forum conveniens discretion would be perfectly consistent with
the aims of the Regulation, that submission is difficult to maintain in the
light of the reasoning relied upon by the ECJ and the Advocate General
in Owusu. It is hard to see how conventional forum conveniens criteria
would assume a different character, so as no longer “seriously [to affect]
the predictability of the effects of the jurisdiction rules laid down by the
Convention”, simply because they had been imported via Article 27. It
seems to me that the ECJ’s reasoning would equally apply to the situation
envisaged by Mr Phillips’ primary submission, namely where one of the
relevant factors in the application of the standard forum conveniens test
is the existence of parallel proceedings in the non-Regulation country. If
Mr Phillips were right the defendants in Owusu could have bypassed the
effect of that decision, and activated the court’s power to stay on forum
conveniens grounds, by the simple expedient of commencing proceedings
in Jamaica at any time.
72.The problems with Mr Phillips’ primary submission are thrown into
high relief in a case where the EU court is the court first seised of the
relevant dispute. In such a case the only question for that court applying
the Article 27 analogy would be whether its “jurisdiction….is established”.
But this is a question that can only be determined by reference to
the Regulation, and in particular by reference to the provisions which
objectively establish jurisdiction in accordance with criteria which are not
discretionary. In neither Article 27 nor Article 28 is the court first seised
entitled to stay its proceedings or decline jurisdiction in favour of another
EU court. Yet Mr Phillips’ primary submission would require the relevant
decision to be made by reference to criteria (forum conveniens) which
are not only absent from the Regulation but which are discretionary and
have been found by the ECJ to be inimical to the Regulation’s aims. If the
courts of each Member State applied their own private international law
rules in deciding whether, as the court first seised, its jurisdiction was
“established” for the purposes of an Article 27 analogy, the result would
obviously not be the harmony and predictability of approach intended by
the Regulation, but quite the reverse. The same result would ensue where
the EU court was second seised: on the proposed approach instead of the
obligatory stay in favour of the court first seised required by Article 27,
some courts would be applying discretionary forum conveniens criteria,
and others would apply different national rules.
73.I do not think that too much should be read into the fact that the ECJ
declined to answer the second question posed by the Court of Appeal.
The Advocate General had advised that that question was inadmissible
as being hypothetical, which seems to have been the case. The ECJ, like
most courts, is understandably reluctant to resolve questions that do not
arise in the case before it.
74.In fact, as I have already mentioned, Advocate General Leger, in
the course of his long and careful analysis of the Brussels Convention,
touched on the nature and purpose of the provision which is now Article
27. As well as pointing out the profound differences between the nature
of that provision and forum conveniens principles, the Advocate General
drew attention to the fact that neither that provision nor what is now
Article 28 could be applied unless the parallel or related proceedings had
been commenced before the courts of different contracting states. (See
paragraphs 247-256.) He underscored this point by postulating a scenario
where related proceedings brought by another holidaymaker who had
suffered a similar accident to Mr Owusu’s were continuing in Jamaica:
he stated that because those proceedings were before the courts of a
non-contracting state Article 28 could not be applied so as to enable the
defendants to apply for a stay in favour of the Jamaican proceedings
(paragraph 254). Logic requires the same analysis in respect of Article
27 (see paragraph 146). If the learned Advocate General considered that
those Articles could nevertheless be applied by analogy in the case of
proceedings pending in a non-contracting state, one would have expected
him to say so in the context of his wide-ranging advisory Opinion.
75.Nor does Mr Phillips derive any support for his primary submission
from the English case-law. Although the question does not seem to
have been considered in this jurisdiction since the judgment in Owusu,
reliance is placed by Mr de Garr Robinson and Mr Wolfson upon, in
particular, the judgment of Potter J (as he then was) in Arkwright Mutual
Insurance Co v. Bryanston Insurance Co Ltd [1990] 2 QB 649. In that
case it was argued that what are now Articles 27-30 of the Regulation
were “signposts” indicating that the grant of a stay in favour of a non-
EU court on grounds of lis alibi pendens was legitimate. It was contended
that although on their face Articles 27-30 only dealt with parallel actions
pending as between contracting states, those Articles were evidence that
the Regulation was concerned with avoiding inconsistent judgments and
the expense of parallel proceedings. Accordingly the court should assume
that the power to stay for lis alibi pendens in non-contracting states was
authorised by the Regulation notwithstanding that the broader power to
stay for forum non conveniens had been abolished.
76.Potter J dismissed these arguments. He first referred to the decision of
Hobhouse J in S & W Berisford plc v New Hampshire Insurance Co [1990]
2 QB 631. In that case, which did not involve any parallel proceedings,
the learned judge had said:
“It is clear that the Convention is designed (subject to art 4) to achieve
uniformity and to 'harmonise' the relevant procedural and jurisdictional
rules of the courts of the contracting states. The Convention leaves
no room for the application of any discretionary jurisdiction by the
courts of this country; the availability of such a discretion would destroy
the framework of the Convention and create lack of uniformity in the
interpretation and implementation of the Convention.”
77.Hobhouse J therefore held, in a prescient foreshadowing of the ECJ’s
Owusu judgment, that the exercise of a forum non conveniens power to
stay proceedings properly brought in England and to which the Brussels
Convention applied, would be inconsistent with the mandatory provisions
of that Convention.
78.Having referred to that judgment Potter J then stated that in his view
its logic applied equally where there was a lis alibi pendens, and that the
effect of the Brussels Convention was to remove the power to grant a
stay also where that factor was present, except in cases involving only
the courts of contracting states, where what is now Article 27 applied.
In an important passage for present purposes (in which I have replaced
Brussels Convention article numbers with the Regulation’s numbering) he
said:
“I do not consider that [Article 27] is to be regarded in a similar light
to [Articles 22 and 23] as 'signposts' in favour of a discretion to stay.
In the case of [Articles 22 and 23] the Convention deals with particular
features of the action concerned in respect of which it recognises as
a matter of principle that (a) the status and/or nature of the subject
matter of the action and (b) the free agreement or consent of the parties
as to forum, transcend the otherwise mandatory system and structure
of the Convention founded on the defendant's domicile and make it
appropriate for one particular jurisdiction only to hear the case. In the
case of [Article 27] (lis pendens) the Convention does not identify the
peculiar suitability of any particular court to hear the action by reference
to its subject matter or the choice of the parties; nor does it identify
any discretion based on cost, convenience or 'real connection'. It simply
requires any Community court to decline jurisdiction or stay an action
where another Community court is already seised of it. This seems to
me no more than a simple order of priority, imposed as a necessary
aspect of the certain and orderly regime of jurisdiction and enforcement
in and between the courts of the Community. It does not seem to me
a persuasive reason for holding that the Convention contemplates or
legitimises an additional and discretionary power, based largely on cost
and convenience, to stay in favour of a non-Community court against a
plaintiff who has come to a court within the Community to try his dispute
in accordance with a right apparently given and a requirement apparently
imposed by the Convention on the basis of the defendant's domicile. In
this respect I construe the Convention as less concerned with comity than
with certainty.
Given the view of the English courts, and of the Schlosser report, that lis
alibi pendens is to be regarded as no more than one aspect or feature
of the forum non conveniens doctrine, and that it appears that the
continental members of the Community did not (in general at least)
prior to the Convention, enjoy discretion under their domestic laws to
decline jurisdiction, I do not consider that [Article 27] can be read as
more than a circumscribed and necessary component of the scheme of
the Convention to simplify enforcement in relation to judgments of the
courts of contracting states, rather than as a signpost to an exception to
the provisions of that scheme.”
79.The learned judge then went on to deal with a further argument raised
by the defendant that what is now Article 34(4) was a further signpost
to the existence of a discretion to stay on this ground in favour of a non-
contracting state already seised of the dispute, in order to avoid the risk
of later inconsistent judgments. Potter J held that that provision did not
support a power to grant a stay: it was simply an acknowledgement of
the widely recognised doctrine of res judicata which arises once a cause of
action has actually been determined between the same parties in a forum
to which they have submitted their dispute. It should not be regarded
as indicating that the Convention had a wider purpose of authorising
discretionary stays in order to avoid the situations to which Article 34(4)
was directed.
80.Although Arkwright along with Berisford was overruled by the Court
of Appeal in Harrods, the latter has itself now been overruled by Owusu.
It was submitted by Mr de Garr Robinson and Mr Wolfson that in those
circumstances Potter J’s reasoning now stands restored, and that I should
follow it unless satisfied that it is clearly wrong. Whatever the precise
position in terms of precedent, far from being satisfied that the reasoning
of Potter J is wrong, I find it compelling and agree with it.
81.Although, so far as I am aware, there has been no post-Owusu case
on the point in this jurisdiction my attention was drawn by counsel to
Goshawk Dedicated Ltd v. Life Receivables Ireland Ltd [2008] IEHC
90, a case in which the Irish Commercial Court (Clarke J) has recently
grappled with the issue. The context was an action brought in Georgia,
USA for misrepresentations, and subsequent mirror image declaratory
proceedings brought in Ireland. The defendant in the Irish action applied
for a stay in favour of the earlier US proceedings arguing either (1) that
Owusu did not preclude a discretionary stay based on lis alibi pendens, or
alternatively (2) that a stay was possible or even obligatory where (a) the
non-EU country’s court was first seised and (b) the judgment of that court
was such that it would be recognised in the EU state on the basis of the
Regulation. In each case Article 27 was prayed in aid by analogy.
82.By the close of the hearing before Clarke J the first argument appears
to have been all-but abandoned by the defendant. The learned judge
therefore confined himself to commenting that, given the clear statements
in Owusu as to the impermissibility of broad discretionary powers for the
purpose of declining jurisdiction otherwise properly founded under Article
2:
“Having regard to Owusu, I am not satisfied that any doctrine of
lis alibi pendens which retained a significant discretion on the part
of the courts, is sustainable as being consistent with the Brussels
Regulation.” (paragraph 5.5 of the judgment)
83.Clarke J then turned to consider what he called the “more automatic”
alternative form of the defendant’s argument – an argument which
is strikingly similar to Mr Phillips’ “fallback” submission, which I shall
examine later in this judgment. Referring to Articles 27 and 34(4) he
accepted that there was acknowledgment in the Regulation of both
the principle of lis alibi pendens and the appropriateness of affording
precedence to an earlier judgment of a non-EU state which satisfied
the international law requirements of the Member State of recognition.
However in relation to the latter he distinguished priorities as between
judgments from priorities as between pending proceedings; the real
question, he said, was whether the fact that those matters were
acknowledged in the Regulation was sufficient to warrant a departure
from what he regarded as the clear mandatory language of Article 2
as interpreted in Owusu. He considered that one obstacle to such a
departure was the clear statement by the ECJ in a number of cases to the
effect that deviations or derogations from the underlying provisions of
the Regulation must be found in the Regulation itself, which enumerates
exhaustively the cases in which a person may be sued outside the State in
which he is domiciled.
84.He went on to state:
“There is, however, in my view, an even greater difficulty with what is
proposed. In the lis pendens regime specified in Article 27, the court
first seized of a case has to consider whether it has jurisdiction in
accordance with the terms of the Regulation itself. Thus, within the EU,
issues concerning priority are determined on a uniform basis. The court
first seized decides whether it has jurisdiction in accordance with the
Regulation. If that court does not have jurisdiction, then the court second
seized may activate litigation commenced before it, provided that the
second court itself does have jurisdiction in accordance with the terms of
the Regulation. Priority is determined by reference to the commencement
of proceedings, but also by reference to whether any competing litigation
is properly within the jurisdiction of the court concerned in accordance
with the terms of the Regulation rather than in accordance with the
private international law of the country concerned. This could not be
the case where any competing jurisdiction is a non Member State. In
that eventuality the non Member State would consider whether it has
jurisdiction in accordance with its own principles of private international
law. If, therefore, the courts of the competing Member State have to stay
proceedings pending a decision by the courts of a non Member State as
to whether that court has jurisdiction, the courts of the Member State
concerned will, in effect, be staying its proceedings in circumstances
where the decision as to whether the proceedings should be conducted
in the non Member State will be determined, not in accordance with the
provision of the Regulation, but rather in accordance with the terms of the
private international law of the non Member State concerned.
Thus, in my view, the analogy with Article 27 is just not available in the
case of a non Member State, because that non Member State will not be
bound by the terms of the Regulation in its consideration of whether it has
jurisdiction.”
85.On 30th January 2009, the Irish Supreme Court gave judgment in an
appeal from Clarke J’s decision. It did not criticise Clarke J’s reasoning
in any respect, or indeed express any provisional view on the rival
arguments other than to indicate that it did not regard the issue as acte
clair. On that basis it decided to refer an appropriate question to the ECJ
for a preliminary ruling. However it now seems that the request was not
in fact sent to the ECJ. In the course of the hearing before me I was told
that the matter had been resolved.
86.Mr Phillips does, however, receive some support for his submissions
from the distinguished authors of two leading textbooks in this field,
namely Dicey, Morris and Collins on The Conflict of Laws (14th edition),
to which I have already referred and of which Sir Lawrence Collins (now
Lord Collins of Mapesbury) is the General Editor, and Civil Jurisdiction and
Judgments (4th edition) by Professor Adrian Briggs, edited by Peter Rees.
At paragraph 12-021 of Dicey, Morris and Collins, after a reference to the
ECJ’s unanswered question in Owusu, the following is written:
“Where the dispute before the court concerns a question of title to land
in a non-Convention State or a non-Regulation State, or concerns the
validity of companies which have their seat in a non-Regulation State,
or the validity of their organs, or concerns a public register in a non-
Regulation State or the validity of certain forms of intellectual property
right conferred under the law of a non-Regulation State, or arises from a
contract which contained a jurisdiction agreement for a non-Regulation
State, or is already the subject of proceedings before the courts of a
non-Regulation State, it is most improbable that an English court, seised
with jurisdiction on the basis of Article 2, is obliged to exercise it if the
defendant applies for a stay on the ground that a non-Regulation State is
the forum conveniens.” (My emphasis)
87.The learned author goes on to state that in relation to these
cases Owusu is not of assistance, and that it is a matter of “plain
commonsense” that a stay should be permissible. Two further reasons
are put forward in support of the existence of a power to stay on forum
conveniens or equivalent grounds. First, the ECJ in Case C-387/98 Coreck
Maritime GmbH v Handelsveem BV [2000] ECR I-9337 (paragraph 19)
had approved the principle that a court may give effect to an agreement
conferring jurisdiction on the courts of a non-Convention State if the
agreement is valid under the law of the court seised in breach of contract.
Second, a learned jurist, Dr Georges Droz, had asserted as far back
as 1972 and had reiterated more recently, that where there was a
connection with a non-Convention State which in all other respects
was equivalent to those in what is now Article 22 of the Regulation, or
where a matter involved an exclusive jurisdiction agreement in favour
of a non-Convention State, it was open to a court to give a “reflexive
effect” to the corresponding provisions of the Brussels Convention so as
to enable the court to give jurisdictional relief. Why (Dr Droz is reported
as asking rhetorically), if a French judge was incompetent to adjudicate
on a German patent or German land, should he be better equipped to
adjudicate on an Argentine lease or a Japanese patent?
88.On this basis the learned author of Dicey, Morris and Collins concludes
that the argument for attributing such reflexive or analogous effect to
what are now Articles 22 and 23 of the Regulation is overwhelming.
Moreover, in such cases as occur under Articles 22 and 23 an English
court should not apply the analogy slavishly, nor regard itself as bound to
grant a stay, but should exercise its discretion in the ordinary way in the
absence of guidance from the ECJ. Further, if that was right there could be
no objection to an English court applying the forum conveniens doctrine
where there was a lis alibi pendens in a non-Regulation State. Therefore
Articles 27 and 28 could be applied by analogy as well.
89.Although I say so with some trepidation given the very distinguished
source of the views expressed, it seems to me that the propositions which
I have underlined in the quotation from the textbook, and which are
encapsulated in the last two sentences of the previous paragraph, do not
fully reflect the decision in Owusu nor represent the current state of the
law. I say nothing about what the law ought to be. I am well aware that
the decision in Owusu has been the subject of considerable comment,
and that the result is capable of giving rise in certain circumstances to
practical and procedural difficulties some of which were acknowledged
by the ECJ itself as being in its view the price which had to be paid for
the benefits of legal certainty and uniform application of the jurisdictional
rules (see for example paragraphs 44 and 45 of the judgment in Owusu).
It is also well known that there have been voices calling for amendment
to the Regulation to remedy some of the perceived problems.
90.I have already explained why I consider that the logic of the reasoning
in Owusu covers a case such as the present, and why it is hard to
conceive that, consistently with its judgment, the ECJ would regard the
application of a forum conveniens discretion permissible provided there
were parallel proceedings pending in a non-EU state.
91.It is true that in Coreck (above) the ECJ confirmed that, when faced
with an exclusive jurisdiction clause in favour of the courts of a non-EU
state, a Member State should “assess the validity of the clause according
to the applicable law, including conflict of laws rules, where it sits” and
referred to paragraph 176 of the report by Professor Schlosser on the
Convention of 9 October 1978 on the Accession of Denmark, Ireland
and the UK to the Brussels Convention. In that paragraph of his report
Professor Schlosser comments that the Brussels Convention neither
validates nor invalidates such clauses, and that an EU national court
seised of proceedings brought in breach of the clause must decide on
the validity of the clause, which deprives it of jurisdiction, in accordance
with its own rules (lex fori). If, when these are applied, the clause is
invalid “then the jurisdictional provisions of the [Brussels Convention]
become applicable.” The assumption of Schlosser appears to be that
if the clause is valid according to local rules then jurisdiction under
the Convention is displaced. In the light of this, English courts have
understandably concluded that there is no objection to the national court
not only determining validity but also where appropriate giving effect to
such a clause, including by granting a stay. (See, for example, Arkwright
(above), Konkola Copper Mines plc v Coromin [2005] EWHC 858 (Comm),
and Winnetka Trading Corporation v Julius Baer International Limited and
another [2008] EWHC 3146 (Chy).
92.However, as we have seen, there is no support in the authorities for
adopting a similar approach where there is a lis alibi pendens in a non-
Regulation country. Moreover it seems to me, for much the same reasons
as those expressed by Potter J in Arkwright (see paragraph 78 above),
that the fact of the parties having agreed that the courts of a particular
state should have exclusive jurisdiction over any dispute between them is
a ground for granting a stay of proceedings which is sufficiently distinct in
its nature from a case where there is a lis alibi pendens, for there to be no
compulsion in logic to assume that because the Regulation permits a stay
in the one, it should be taken also to authorise it in the other.
93.Further, in suggesting that enforcement of a jurisdiction clause was
permissible in favour of the courts of a non-contracting state, neither
the ECJ in Coreck nor Professor Schlosser appeared to be relying upon
a reflexive or analogous interpretation of the corresponding provision
relating to contracting states in the Convention (now Article 23 of the
Regulation).
94.In a case where there is a jurisdiction agreement the claimant has
commenced proceedings in breach of the agreement to litigate elsewhere.
It is a more or less universal principle that people should be held to
their compacts, freely entered into. A rule requiring a court to entertain
proceedings brought in breach of a valid agreement to sue in a different
jurisdiction could be seen as making the court complicit in a breach of
contract or even in an abuse of its own procedure. To enable the court to
give effect to such an agreement in the case of a non-Regulation state
does not compromise the legal certainty and uniform application of the
jurisdictional rules, which are at the heart of the Regulation. Rather it
enhances legal certainty by holding the parties to their agreement.
95.So, too, there are different, but equally compelling, reasons for
allowing a court to stay proceedings in order to enable disputes with
very specific subject matter, widely acknowledged as such, to be litigated
in the courts of the relevant jurisdiction. Therefore the availability of
a stay enabling a dispute with subject matter of the kind described in
Article 22 of the Regulation to be resolved in the non-Regulation state to
which the dispute relates, would not in my view assist the argument for
a “reflexive” interpretation of Article 27 of the Regulation in relation to lis
alibi pendens. (See also Konkola Copper Mines (above) per Colman J at
paragraphs 86–101, and Winnetka Trading Corporation (above) per Norris
J at paragraphs 22-26.)
96.As to the views of Dr Droz referred to in Dicey, Morris and Collins, I
was not shown any of the original material recording those views. In any
event, so far as one can glean from the references in the textbook, they
appear to have been restricted to the possibility of interpreting reflexively
what are now Articles 22 and 23 of the Regulation, and do not touch at
all on what is now Article 27 or lis alibi pendens. As such they do not take
the matter much further.
97.As to Briggs & Rees, it is to be noted that although the learned author
is of the view that a stay of proceedings is permissible if the same dispute
has been commenced at an earlier point in time and is still pending
before the courts of a non-Regulation state, that view is expressed more
tentatively than in Dicey, Morris and Collins. Whilst the author discounts
Owusu as not pointing clearly to the right answer, the availability of a
power to stay proceedings brought in a court with Article 2 jurisdiction on
grounds of lis alibi pendens is “less immediately clear” than in the case
of an exclusive jurisdiction agreement or of a dispute relating to title to
land and the other special subject matter cases. It is only “on balance”
that the author’s conclusion in favour of the existence of a power to stay
is reached, and possibly only where the proceedings pending in the non-
Regulation state are “well advanced”. (See paragraph 2.226.)
98.The author does not make it explicit that the English court would
apply the normal forum conveniens criteria once it had ascertained that
earlier proceedings were pending in a non-EU state. Presumably this
is implicit. In the corresponding discussion in Dicey, Morris and Collins
it is expressly so stated. There is a tension here, in that under forum
conveniens principles the ultimate test is the natural and appropriate
forum; whether the foreign court was first or second seised would not
normally be decisive. Yet the authors of both textbooks consider that the
power to stay is only available where the foreign proceedings are first in
time.
99.Notwithstanding this support for the availability of a power to grant
a stay in these circumstances, for the reasons already given it seems to
me that Mr Phillips’ primary submission must fail, and that it is not open
to me to interpret and apply Article 27 reflexively so as to enable me
to exercise a discretion to stay proceedings which have been properly
founded on Article 2, on the grounds that the same dispute is pending
between the same parties in the Utah courts and that the latter and not
this Court is the natural and appropriate forum. Such an interpretation
would introduce the wide forum conveniens discretion by the back door,
contrary to the ruling of the ECJ in Owusu. In my view the submission
fails whether this Court is the first or second seised.
100.I should say that Mr Wolfson accepted (and I did not understand
Mr de Garr Robinson to demur) that neither the Regulation nor Owusu
affects the discretion which has long existed at common law to stay
proceedings which are vexatious or oppressive or otherwise an abuse of
process. One example of such a case would be where a person submitted
to or participated in foreign proceedings and then sought to re-litigate
the dispute in this jurisdiction. Such a claim might well be dismissed
as an abuse. However I understand it to be common ground that the
mere fact of a lis alibi pendens would not normally be sufficient to found
such an application. In any event, in the present case none of the stay
applications is based on an allegation of abuse.
101.I now turn to Mr Phillips’ fallback submission, namely that Article 27
should be applied reflexively so as to authorise, or indeed require, this
Court to grant a stay in favour of a court in a non-EU state where the
latter court is the court first seised of the dispute. As I indicated earlier,
Mr Phillips acknowledges that even if correct this submission cannot assist
him so far as the Part 11 applications in the Noteholder Proceedings are
concerned, as this Court rather than the Utah State Court is the court first
seised in relation to that dispute. It could however assist the applications
in the Declaratory Proceedings where this Court is second seised.
102.As I understand it, the argument envisages that where the EU court
is the court second seised it would be required to stay its proceedings to
allow the non-EU court to decide whether it has jurisdiction. Mr Phillips
acknowledges, as he must, that in so deciding the non-EU court will not
pay any attention to the jurisdictional provisions of the Regulation, but
will determine its jurisdiction in accordance with its own national rules.
These rules could, for example, include forum conveniens. In such a case
the ultimate ability of the EU court to adjudicate on the dispute would be
determined by a non-EU court upon the basis of criteria which have been
held by the ECJ to be impermissible. In any event the jurisdictional rules
to be applied by the non-EU court first seised would not be predictable
nor of uniform application, as they are when Article 27 is applied directly
as between the courts of two or more competing EU states. A surrender
of Article 2 jurisdiction in application of Article 27 does not compromise
those principles because there is certainty that the court favoured by
the surrender would then also apply the Regulation rules in order to
determine its own jurisdiction.
103.There is the additional problem that, on a strict analogy with the
Article 27 approach, an EU court may be constrained to defer to the
courts of a foreign state where justice is likely to be unavailable or
impaired. Mr Phillips answered this last point by indicating that in such a
case there would be some residual discretion to refuse a stay, by analogy
with the duty to refuse recognition of judgments in certain cases under
the Regulation. But this answer again demonstrates the gap between
his proposed approach and the legal certainty and uniform application
of the jurisdictional rules for which the Regulation strives. Given that, in
my view, those aims would be significantly compromised by Mr Phillips’
fallback argument, it too falls foul of the reasoning in Owusu.
104.For these reasons I agree with Clarke J in Goshawk that the parallel
with Article 27 which the fallback argument seeks to draw is not valid.
That provision cannot therefore be applied in the way suggested where
the competing court is not subject to the Regulation. Its mechanisms
can achieve their purpose only as between competing courts of different
Member States. I believe that this was also the view being expressed
by Advocate General Leger in the passages to which I have referred at
paragraph 74 above.
105.It follows that this Court does not have power to stay the Declaratory
Proceedings or the Noteholder Proceedings on the grounds relied upon.