„(…) LORD JUSTICE WALLER:
This is an appeal by the Second, Fifth, Seventh, Tenth, Fifteenth and
Sixteenth defendants, on behalf of whom Mr Hochhauser Q.C. presented
the appeal, and of the Fourth defendant, for whom Mr Ivory presented
separate but supporting arguments. The appeals are from the judgment
of Mr Justice Rattee delivered on 27 May 1997. That judgment was
concerned with the question of the jurisdiction of the English court over
the defendants. The Plaintiffs assert that the First defendant (“Mr S.”) has
at all material times been domiciled in England, and it is on that basis
that they assert that the English court has jurisdiction over him, and
indeed it is on that basis alone (as will appear) that they assert that the
English court has jurisdiction over the other defendants. It is the plaintiffs’
case that Mr S.S. is the principal defendant, and responsible with other
defendants for inducing them by fraud to make investments in a Group
of Companies called the Castor Group. The plaintiffs have accordingly
commenced these proceedings against Mr S.S. in England, and have
sought to join as parties those whom they assert partook in the fraud
together with certain entities or persons whom they assert hold assets
into which the plaintiffs claim to trace their investment.
The plaintiffs assert that the English court has jurisdiction over the
Second, Sixteenth and Fourth defendants on the basis that they
were domiciled in Switzerland, a contracting state under the Lugano
convention, relying on Article 6.1 of that convention which provides as
follows:
"A person domiciled in a Contracting State may also be sued- 1. Where
he is one of a number of defendants, in the courts for the place where
anyone of them is domiciled."
The Lugano convention was incorporated into English law by Section 3A
of the Civil Jurisdiction and Judgments Act 1982 inserted by the Civil
Jurisdiction and Judgments Act 1991. The plaintiffs desired to serve the
above defendants in Switzerland, and, by Ord.11 r.1(2) were entitled so
to do without leave of the court provided that prior to issue of the same
they could in compliance with Ord.6 r.7 indorse the writ with a statement
that the court had power under the Civil Jurisdiction and Judgments
Act 1982 (the 1982 Act) to hear and determine the claim, and that no
other proceedings involving the same cause of action were pending in
another contracting state or in another part of the United Kingdom. Prior
to issuing the writ the plaintiffs so indorsed the same in relation to the
above defendants. These defendants were served with the proceedings,
but applied under Ord.12 r.8 for declarations that the English court had
no jurisdiction over them on the ground that the English court did not
have jurisdiction to hear and determine the claim because Mr S.S. was
not domiciled within the United Kingdom at the material time. It is that
declaration which the Judge refused to grant from which refusal these
defendants (“the Convention Defendants”) appeal.
As regards the Fifth, Seventh, Tenth and Fifteenth defendants (entities
domiciled in Panama, Liechtenstein and Netherlands Antilles i.e. non-
contracting states) the plaintiffs needed leave under Ord.6 r.7(1) to
issue the writ or a concurrent writ for service out of the jurisdiction. The
grounds on which they sought leave were that those defendants were
necessary and proper parties within Ord.11 r.1(1)(c) i.e. necessary or
proper parties to a claim brought against a person duly served (whether
within or out of England). The plaintiffs sought that leave prior to having
served any defendants, and these defendants accordingly applied to set
aside leave. It was accepted before the judge that before leave to serve
out of the jurisdiction could be granted in reliance on Ord.11 r.1(1)(c), at
least one other defendant should have been served, and that thus prima
facie leave had been wrongly granted. However, the judge having ruled
that Mr S.S. was domiciled in the United Kingdom at the material time,
and that the Convention Defendants had been duly served, was prepared
to validate service retrospectively on these “non-Convention Defendants”
following the guidance given in Kuwait Oil Tanker Co. S v. Al Bade [1997]
2 All ER 855. The non-Convention Defendants challenge the judge’s
decision to validate, but they do so simply by reference to the point which
arises in relation to the Convention Defendants. Their submission is that
the judge was wrong to conclude that Mr S.S. was domiciled in England
at any material time, and was wrong thus to conclude that the English
court could ever have any jurisdiction over any defendant. Thus, it is
submitted, since such service as has taken place must be set aside there
could never be a basis for leave under Ord.11 r.1(1)(c), and obviously
thus no foundation for any validation.
Various matters were raised before the judge and have been raised on
the appeal which may need further consideration; for example the judge,
when the matter was before him, was asked to consider whether Mr S.S.
had been served within the United Kingdom, and there is a respondents’
notice on that aspect of the case. There are further applications to adduce
fresh evidence from both sides, the application from the defendants
seeking to put in further evidence to challenge whether Mr S.S. was ever
domiciled within the United Kingdom at any material time, but we have
been asked to deal at this stage with certain points of principle decided by
the judge against the appellants in the hope that that will dispose of the
appeal or at least curtail the same.
Those points of principle are as follows.
(1) What is the correct standard of proof to apply to the question whether
a defendant is domiciled in England on an application under Ord.12 r.8
involving issues arising under Article 6?
(2) What is the correct date for determining whether or not a defendant
is domiciled in England for the purpose of determining whether the court
has jurisdiction under Article 6?
(3) Should Article 6 on its true construction require the defendant
domiciled within England to have been served prior to issue or service of
the proceedings against defendants in other contracting states?
The relevant Standard of Proof
The judge held that the Convention Defendants’ applications to set aside
service would fail if the plaintiffs had shown a good arguable case that the
requirements of Article 6.1 had been satisfied. He refused to accept the
submission made on behalf of those defendants that the standard of proof
required was what he described as “the ordinary civil standard of proof,
that is to say, on the balance of probabilities.”
We have had a full and helpful citation of authority. What can be gleaned
from those authorities can in some instances be summarised, but also
calls for some comment.
(1) There is no doubt that where the English court is considering whether
any of the sub-paragraphs under Ord.11 r.1(1) apply in relation to leave
to serve out of the jurisdiction, the relevant question is whether the
plaintiff has established a good arguable case: see Seaconsar Ltd. V Bank
Markazi [1994] 1 AC 438.
[…]The civil standard of proof has itself a flexibility depending on the issue
being considered and the concept "good arguable case" has a similar
flexibility. It is natural for example in a case concerned with a contract
where the jurisdiction depends on whether the breach took place within
the jurisdiction, but where the issue to be tried will be whether there
was a contract at all, not to wish to give even the appearance of pre-
trying the central issue, even though the concept of being satisfied must
apply both to the existence of the contract and the place of the breach.
It is equally natural for the court in the process of being satisfied to
scrutinise most jealously that factor which actually provides jurisdiction.
It is equally natural that where the foundation of jurisdiction is domicile
i.e. an issue that will not arise at the trial, that particular scrutiny of the
material available takes place in the context of the limitations applied to
an interlocutory process.
(3). Under sub-paragraph (a) of Ord.11 r.1(2), where the question is
whether the defendant is domiciled within the jurisdiction, domicile in that
sub-paragraph has the same meaning as under the 1982 Act (see Ord.11
r.1(4)), and in Dubai Bank Ltd v Fouad Haji Abbas and Another Transcript
17th July 1996 (page 6) one can see Saville L.J., in a judgment with which
Simon Brown and Aldous LJJ agreed, applying the test of “good arguable
case” to the issue of domicile, but, as appears from the judgment, Saville
L.J. scrutinised the material which was before the court before concluding
that the plaintiffs had failed to make out a good arguable case for the
defendant being domiciled in England. His approach is I believe to be
consistent with what I have suggested above.
(4) On a reference from the House of Lords in relation to Article 5(3) of
the Brussels Convention the European Court of Justice in Fiona Shevill
and others v Presse Alliance S[1995] ECR 1-415 ruled that in relation
to the standard of proof required before a national court was entitled to
conclude that it had jurisdiction, the question was one for the national
courts. The court held that the "criteria for assessment" were governed
by national law "provided that the effectiveness of the convention is not
thereby impaired." It is perhaps right to recognise that we are concerned
with the Lugano Convention in relation to which the European court does
not have jurisdiction. This is reflected in Sections 3 and 3B of the 1982
Act as amended by the 1991 Act, Section 3 making the decisions of the
European Court determinative in interpreting the Brussels Conventions,
and Section 3B simply requiring the English court to take account of any
relevant decision of any other Lugano contracting state. But this is a
distinction without a difference having regard to the fact that the Brussels
Convention and Lugano Convention are in identical terms and the English
court must accordingly follow the interpretation of the European court. In
any event, in declarations signed between Member States of the European
Community and the EFTA member states, the EFTA member states
have declared that they consider it appropriate that their courts, when
interpreting the Lugano Convention, pay due regard to the case law of
the European court and the courts of the member states of the European
communities in respect of provisions of the Brussels Convention. (see
Dicey and Morris 12th edition p.288/9).
(5) The English court has had to consider the standard of proof to be
applied to Convention and in particular Brussels Convention cases. The
two most important decisions are decisions of the court of appeal in
Tesam Distribution v Schuh Mode Team [1990] I.L.Pr. 149 and Molnlycke
AB v Procter & Gamble [1992] 1 W.L.R. 1112. They held that the standard
of proof to be applied to the question whether a plaintiff had established
whether, in the one case, the English court had jurisdiction under Article
5(1), and in the other whether it had jurisdiction under Article 5(3) was
the same as for the establishment of whether a plaintiff had brought
himself within one of the sub-paragraphs of Ord.11 r.1(1). Paragraph 49
of the judgment of Stocker L.J. in Tesam with which O’Conner L.J. agreed,
says as much, and Dillon L.J. (with whose judgment on this aspect Woolf
and Leggatt LJJ agreed) also refers to the test being “ a good arguable
case” (see 1120F) in Molnlycke. However, both decisions were prior to
Seaconsar, and it is possible that some of the language used might have
been different after that decision.
In Tesam, the issue between the parties was whether a contract existed
at all, it being clear that if it did performance would have been in London
and that thus Article 5(1) would have applied. Nicholls L.J. having, it is
right to emphasise, referred to the passage in the Schlosser Report, much
relied on by Mr Hochhauser before us, to the effect that “... a court may
assume jurisdiction only if it is completely satisfied of all the facts on
which such jurisdiction is based...” said in relation to the issue relating to
the existence of the contract as follows:
"This is not to say that the bare assertion of the existence of a contract
is the end of the matter on an interlocutory application such as this.
Far from it. The English court has ample powers of its own to see that
the jurisdiction which it is given by Article 5(1) of the Convention is
not abused. […]Jurisdiction under the Convention is not a matter of
discretion. Nevertheless, bearing in mind that jurisdiction under Article
5 is an exception to the general rule under Article 2, the English court
will be astute to see that frivolous or vexatious claims for the existence
of a contract are stopped summarily at the outset, either under Order
18, rule 19 or under the inherent jurisdiction of the court. There must
be evidence establishing a genuine and real dispute. The court should
be satisfied that there is a serious question which calls for a trial for its
proper determination."
The phrase "serious question which calls for a trial" reflects the language
of which Lord Goff in Seaconsar would have approved in relation to the
merits of the dispute after a good arguable case has been established
for bringing the case within one of the sub-paragraphs of Ord.11 r.1(1).
Nicholls L.J.’s language could be said to be a little different when he
turns to deal with the actual point which established jurisdiction i.e. in
that case where the contract was to be performed. At paragraph 26 he
said “The national court has to be satisfied that it has jurisdiction. For
example, if the defendant is sued in the court of the state in which he is
not domiciled.... where the claim is for breach of contract the court must
be satisfied as to the place of performance...”
Stocker L.J. put the matter this way:-
"There must be evidence adduced from which a conclusion could properly
and genuinely be drawn that a contract existed and that the place of
performance was the country in which the action was brought. Once
jurisdiction can be properly established on this basis then the effect of
Article 5(1) in the light of the Effer v Kaniner decision is that the court has
jurisdiction finally to determine the issues between the parties. If after full
trial the conclusion is that no contract existed, then since the court had
jurisdiction to determine the issue, that determination is final and binding
upon the parties.”
Later he made clear that the standard he was applying was the “Ord.11 –
viz a good arguable case”.
In Molnlycke Dillon L.J. when saying the test should be “good arguable
case” went on to say “as interpreted by Nicholls L.J.”in Tesam. He then
quoted the passage in the judgment of Nicholls L.J. in Tesam suggesting
the test of “serious question which calls for trial ”. He then dealt with
Stocker L.J.’s reference to Ord.11, and said that he had no doubt that
Stocker L.J. was using the phrase “good arguable case” in the sense used
by Nicholls L.J.
In the light of Seaconsar it seems to me that in the Ord.11 context it
can now be seen that it was probably inappropriate to use the phrase
"serious question to be tried" as if it was equated with "good arguable
case". Seaconsar demonstrates that what has to be sufficiently shown for
the purpose of establishing jurisdiction both in relation to the argument
as to whether the contact existed or not (which may arise more fully
at the trial) and as to where the breach took place, (which will not),
has to be shown to the standard of a “good arguable case”. As further
appears from Seaconsar, that is a threshold below “proved on a balance
of probabilities”, because that is the civil burden after a full trial, but
higher than “serious question to be tried” which relates of the plaintiff’s
claim relative to the contract. But, as I have sought to stress, "good
arguable case” is a concept with some degree of flexibility depending on
the issue. Accordingly, although at first sight there may in the judgment
of Nicholls L.J. appear to have been some elision between the “good
arguable case” and “the serious issue to be tried” when considering at
the jurisdiction stage, a question ultimately also to be in issue at the trial
i.e. the existence of the contract, I do not think he was in fact eliding the
concepts Lord Goff had in mind in the use of the different phrases "good
arguable case" and "serious issues to be tried". The judgment is merely
consistent with the flexibility in the concept of "good arguable case" to
which I have referred. In any event it is clear in my view (1) that the
Court of Appeal intended that the test in relation to convention cases
should be the same as in the context of Ord.11 r.1(1); and (2) that in
relation to points that went to jurisdiction they intended “good arguable
case” as interpreted in the Ord.11 context to be the standard of proof.
(6) There is a further point to have in mind. In relation to Ord.11, the
court is of course exercising a discretion which gives it an additional basis
for ensuring that the spirit of that rule is complied with. No discretion
is being exercised so far as the Convention is concerned, but even in
relation to the Convention there is a further protection for a defendant to
which I have already made a passing reference. The court will be anxious
to see that the Convention is not abused and that its effectiveness is not
impaired. In the Article 6 context in particular, despite the notion that the
court has no discretion where the Convention is concerned, one sees that
the court has formulated what are in essence terms to be implied into
Article 6 e.g. that there must be a connection between the claims made
(see e.g. Gascoigne v Pyrah The Times 26/11/91); it must not be the
sole object of joining a defendant to oust the jurisdiction of the court of
the domicile of other defendants (see the additions to note 75 in the 4th
Cumulative supplement to Dicey & Morris 12th Edition and the reference
to an Irish case Gannon v B&I Steampacket Co.Ltd [1993] 2 I.R. 359)
and it would be an abuse of Article 6 to join a defendant simply to obtain
discovery (see Molnlycke 1117B). Thus in approaching the question
whether the court is satisfied that it should take jurisdiction under Article
6 for example, it will certainly have in mind the implications in relation to
prevention of abuse.
(7) I ought finally to refer to a decision of my own relied on by Mr
Hochhauser – I.P.Metal v Ruote [1993] 2 LL 60, and to the ruling of the
Court of Appeal refusing leave to appeal from that decision reported at
[1994] 2 LL 560. That case was concerned with Article 17 (agreements
as to jurisdiction) and as to whether that Article, if applicable, in effect
overrode Articles 21 and 22. I expressed the view that Article 17 did
override, but that the English court would want to be as clear as possible,
and at least form the view that it was highly likely that if the matter were
tried out the plaintiff would succeed in his argument on the jurisdiction
clause, before concluding that Article 17 applied. I was referred to Tesam
and Molnlycke and Mr Gaisman for the plaintiffs in that case was seeking
to persuade me that “a good arguable case” was the appropriate test. I
rejected “good arguable case” as the appropriate test when dealing with
Article 17, and preferred what I conceived to be a higher test because the
question of whether there was a consensus within the terms of that Article
was likely only to be of relevance when jurisdiction was being decided.
In addition, I applied what I conceived to be a higher test, because I was
dealing with a situation in which another court was seised and where it
was being argued that it was that court which should decide the question
of jurisdiction, not the English court. When leave to appeal was refused
Saville L.J. referred to my formulation “highly likely”, but I do not read the
judgment as approving or disapproving of the words I used.
I too was dealing with the matter without the benefit of Lord Goff’s
analysis in Seaconsar. I think I was probably wrong to reject “good
arguable case” as being the appropriate test. I say probably because
the court may be in a slightly different position when faced with whether
Article 17 should apply and override Article 21 or 22, than it is when
considering whether it has jurisdiction under Articles 5 or 6. But I rather
suspect that in truth “good arguable case” is the appropriate standard
which I should have adopted, and that I failed to appreciate that that
language would have enabled me to take the attitude that I did.
Conclusion
In the result in my view the judge was right to rule that the relevant
standard of proof on the domicile issue was “good arguable case”, and
there is no indication that he did not apply that concept correctly.
Time for testing domicile under Article 6
The relevant words of Article 6 are as follows:-
A person domiciled in a Contracting State may also be sued- 1. Where he
is one of a number of defendants, in the courts for the place where any
one of them is domiciled. 2. As a third party in an action on a warranty
or guarantee or in any other third party proceedings, in the court seised
of the original proceedings, unless these were instituted solely with the
object of removing him from the jurisdiction of the court which would be
competent in his case.
The relevant words of Article 2 are as follows:-
"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. Persons who are not nationals of the State in which they
are domiciled shall be governed by the rules of jurisdiction applicable to
nationals of that State.
There is no issue between the parties that, as the European Court of
Justice held in Case 189/87 Kalfelis v Schroder [1988] ECR 5565 at para
19:
"... the ‘special jurisdictions’ enumerated in Articles 5 and 6 of the
Convention constitute 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".
But this helps very little in solving the problem as to the time at which
the domicile of “any one of the defendants” must exist under Article 6
because it would seem obvious that the relevant time must be the same
under Article 2 as under Article 6.
What the Convention Defendants submit is that the words “be sued”
wherever they appear in Articles 2, 3, 5, 6, 8 and 9 refer to the service
of proceedings and not to the mere issue of proceedings. In his reply Mr
Hochhauser suggested that sued really meant “summonsed” and that
a defendant was not summonsed until he had been served. The most
formidable argument of Mr Hochhauser was that unless “sued” bore that
meaning there would be an inconsistency with Articles 19, 21, 22 and 23.
In relation to Articles 19, 21, 22 and 23 where the Convention is
attempting to resolve situations where courts of Member States might be
competing for jurisdiction, the concept which the Convention uses is of
courts being “seised”. Thus by Article 19 it is provided that a court of a
Contracting State “seised” of a claim which is principally concerned with a
matter over which the courts of another Contracting State has exclusive
jurisdiction by virtue of Article 16, it shall, of its own motion, declare it
has no jurisdiction. Article 21 deals with proceedings involving the same
cause of action and between the same parties being brought in different
Contracting States, and imposes an obligation on any court other than
the one first “seised” (1) to stay its proceedings until the jurisdiction of
the court first “seised” is established, and (2) where it is established, to
decline jurisdiction in favour of that court. Article 22 deals with related
actions giving a discretion to courts other than the one first “seised”
to stay proceedings. Article 23 deals with actions which are within the
“exclusive jurisdiction of several courts” and imposes an obligation on all
courts other than the one first “seised” to decline jurisdiction.
The concept seised has been considered by the Court of Appeal on two
occasions, firstly in Dresser v Falcongate [1991] 1 LL 557; and then
further in The Sargasso [1994] 2 LL 6. Those cases have established that
the English court is not “seised” of proceedings until the proceedings have
been actually served. […]
The argument of Mr Hochhauser is that there is no reason in principle or
logic for applying a different test when considering Article 6, particularly
as the policy lying behind both provisions (in relation to which it should
be said there is no issue) is of avoiding inconsistent judgments. Mr
Hochhauser accepts Mr Carr Q.C.'s submission that the phrases used in
Articles 2, 3, 5 and 6 and the phrase used in Articles 11, 12 and 14 "bring
proceedings” involve the same concept, one viewed from the defendant’s
point of view, and the other from the plaintiff’s point of view, but he says
that the word “seised” is dealing with the same concept simply from the
court’s point of view. How, he would ask rhetorically, can a court not be
seised, if either a defendant has been sued or a plaintiff has brought
proceedings? But he submits Mr Carr’s submissions involve that being
possible.
When pressed to demonstrate how, as a matter of language he suggested
that the Convention should be read so as to give effect to his submissions,
Mr Hochhauser showed us during the course of his reply a passage from
Briggs on Civil Jurisdiction and Judgments 2nd edition page 16
[…]He further showed how, in addition to the phrases “be sued”, “bringing
Proceedings”, and “seised”, the Convention also used the concept of
proceedings being “instituted”
(e.g. Article 6(2)), and of the document “instituting” (Article 20) or which
“instituted” (Article 27(2)). He relied both in his original argument and in
reply on Article 52 which provides as follows:-
"In order to determine whether a party is domiciled in the Contracting
State whose courts are seised of a matter, the Court shall apply its
internal law. If a party is not domiciled in the State whose courts are
seised of the matter, then, in order to determine whether the party is
domiciled in another Contracting State, the court shall apply the law of
that State."
Mr Hochhauser submitted that the use of the present tense, and the
reference to the court being seised, showed that the court was only
intended to consider domicile after service.
I have to say that at the end of the day I did not find the use of other
phrases in other Articles and/or Article 52 of any particular assistance.
What was clearly a powerful point however was that at first sight it may
seem strange if the concept under Articles 21 and 22 of a court being
seised involves service, but being sued or bringing proceedings does
not. But even if the point is a powerful one, I could not follow why, as Mr
Hochhauser submitted, Articles 21 and 22 could not operate if “be sued”
and “bring proceedings” meant commence the proceedings by issuing a
writ. As Mr Carr forcefully pointed out, those Articles are concerned with
a different stage i.e. a stage when a tie break has to operate. That tie
break will only operate as between courts which actually have jurisdiction
under the provisions of the Convention. There is accordingly actually no
reason why the point of time at which that tie break operates should not
be different from the point of time for deciding whether the court should
be entitled to take jurisdiction originally even if at first sight it may seem
surprising that it should be so.
Accordingly, (with the above passage of Briggs in mind), the question
is ultimately one of construction of the relevant Articles. But I would
stress that by using the word construction I do not intend to confine
myself slavishly to the language. Obviously, if it is necessary to imply
terms so that the Convention achieves its objectives, it appears from
the illustrations already given that such terms will be implied. Strict
construction will not necessarily supply the answer if the objectives of the
Convention would thereby be frustrated.
The starting point is Article 2. The Article is concerned to establish the
courts in which a person or company “shall” be sued. It is not concerned
with the country in which a person or company shall be served. It is
not in issue however that whether or not in one sense the courts of a
country can be said to have jurisdiction over the people who live there,
the in personam jurisdiction of the court is only achieved by service of the
court process (see Rule 22 of Dicey & Morris page 270). In this sense it
seems to me that point (7) of Bingham L.J.’s points in Dresser (despite
Mr Carr’s protest to the contrary) is right. If the proceedings are ones to
which Article 2 of the Convention applies, in order to sue in the courts of a
defendant’s domicile, a writ or other document instituting the proceedings
will have to be issued in the relevant court, and then served either within
the Contracting State of the relevant court or in any other Contracting
State.
It must in fact be rare for it to be a relevant question to ask whether it
is at the time of the issue of the process in the relevant court or time
of service of the process, that the defendant should be domiciled in
the Contracting State of the court that has issued the process. Article
2 reflects the fundamental principle – defendants should be sued in
their home state. Normally a person whose home is in a certain state
will be both sued and served there, and if he were served elsewhere
it would be because of some temporary visit to another state. In the
instant case it would seem that Mr S.S. may (and we know little about
the facts and so I stress may) be seeking to change his domicile from
the United Kingdom so as to avoid the jurisdiction of the English Court.
That produces one circumstance where the point in time becomes of
importance. Mr Hochhauser stressed that it was important not to construe
the Convention on the basis that the reason why there might be a
difference in domicile between date of issue and date of service was
through an attempt to evade service, and suggested that it might well
happen that a writ had been issued and not served and a defendant
without any knowledge of proceedings moved and changed his domicile
prior to service. In such a case he submitted that to give effect to the
fundamental principle such a defendant should be entitled to have
proceedings issued in the Contracting State to which he had moved, and
to have the first proceedings set aside.
I reject the notion that date of service is the relevant date under Article
2, either as a matter of language or as a matter of implication. I accept
that the court is searching for one moment in time i.e. either the issue
of proceedings or the service of the same, but not both. The language of
Article 2 is only consistent with that moment being the issue, because it
contemplates taking action “in the courts”. It furthermore seems to me
that since the issue of proceedings is a step that the plaintiff is bound to
take and incur cost in taking, it is important that a plaintiff can identify
easily the court before which he can bring his action before he launches it.
Support for this being the plaintiff’s right is provided by a passage in the
judgment of the European Court in Mulox IBC Ltd v Hendrick Geels [1993]
ECR1-4075 where it is said as follows:-
"It is settled case-law that, as far as possible, the Court of Justice will
interpret the terms of the Convention autonomously so as to ensure
that it is fully effective having regard to the objectives of Article 220
of the EEC Treaty, for the implementation of which it was adopted.
That autonomous interpretation alone is capable of ensuring uniform
application of the Convention, the objectives of which include unification
of the rules on jurisdiction of the Contracting States, so as to avoid as
far as possible the multiplication of the bases of jurisdiction in relation to
one and the same legal relationship and to reinforce the legal protection
available to persons established in the Community by, at the same time,
allowing the plaintiff easily to identify the court before which he may bring
an action and the defendant reasonably to foresee the court before which
he may be sued." (my emphasis).
Mr Hochhauser emphasises that the above quotation also refers to the
defendant being able “reasonably to foresee the court before which he
may be sued”. But if the choice is between a court which the plaintiff
was absolutely right in thinking was the defendant’s home court when
he issued the proceedings and a court which has only recently become
the defendant’s home court after the issue of proceedings, I am not
sympathetic to the view that the plaintiff should be disadvantaged. On
any view the court chosen was one which the defendant would, for a
considerable period of his life, have been happy to have been sued in; his
disadvantage is therefore very small.
Furthermore, if the above were not the correct view there are much
greater disadvantages to which the plaintiff will be put. First, he will
have been put to the cost and expense of preparing for and issuing the
first proceedings. Second, if he has issued proceedings in the courts
of the defendant’s domicile just prior to the limitation period expiring,
and the defendant changes his domicile either innocently or with some
more devious motive, if time of service is the relevant moment in time,
the defendant can not only insist on being sued in his newly acquired
domiciliary, but can insist on the original proceedings being set aside
on the basis that that original court had no jurisdiction. He would thus
obtain the advantage of a limitation defence. Third, if by chance the
defendant is one who would wish to evade service of proceedings, he
would on the defendants’ construction, be able to change domicile once
he appreciated that proceedings in what was then his state of domicile
had been commenced. I follow Mr Hochhauser’s submission that the
Convention should not be construed with persons evading service as the
only defendants in mind, but nevertheless it has to be recognised that
defendants are not always willing litigants. It does in fact seem to me that
a change or attempted change in domicile between issue and service is
more likely to come from an unwilling defendant. A plaintiff accordingly
should be entitled not to have proceedings set aside where they have
been issued in the courts of a defendant’s domicile at the time of issue,
and in my view under Article 2 time of issue is the relevant time.
I have spent some time on Article 2 and addressed the arguments in
relation to that Article because it is difficult to see how the point in time
could be different when Article 6 comes to be considered. But before
turning to Article 6 it is worth mentioning Article 5. Article 5 provides the
first exceptions to Article 2, and allows a person “to be sued” “in another
Contracting State” in certain situations. The language is not consistent
with allowing “service” in another Contracting State, indeed clearly once
again the contemplation is of proceedings issued in the State to which
one of the exceptions applies, with service in any Contracting State. The
exceptions do on the whole either exist as at the date of issue or not
at all, but little assistance can be gained from that fact. But exception
(6) allows a defendant to be sued in his capacity as “settlor, trustee or
beneficiary of a trust.... in the courts of the Contracting State in which
the trust is domiciled”. The whole purpose is to allow a defendant to
be sued in a country where he is not domiciled but where the trust is
domiciled. It seems again that it would be an unnatural construction
to place on that provision that would allow a plaintiff perfectly properly
to form the view that the trust was domiciled in country X, incur the
expenditure of consulting lawyers and getting proceedings issued, but
find because it took time to locate the relevant defendant in some other
Contracting State so as to serve him, that because in the meanwhile the
trust had moved its domicile, the plaintiff had to start again elsewhere.
Furthermore, what it might be asked if there were more than one trustee
being sued? Unless date of issue is the correct point in time there could
be a needless uncertainty as to the way in which Article 5(6) was to
operate. Assume proceedings started against three trustees in the place
where the trust was domiciled; assume one served immediately, but
the others not for some period during which period the trust moved its
domicile. Assume the trustee first served wanted the proceedings to
remain in the court where they were started but the others applied to set
the same aside on the basis that they must be sued in the country of their
domicile, or the country of the trust’s new domicile. Suffice it to say the
solution would not be easy if date of service were the relevant date.
Now to Article 6 itself. In Article 6(2) the concept seised is referred to in
relation to third party proceedings. In that context seised would appear
to have the same meaning as in Articles 21 and 22, but since prior to
the taking of any such proceeding there must have been service on the
defendant I do not myself think that any assistance is gained either way
from the use of that term in that context. If anything it could be said to
contrast with the expression sued.
Article 6 is concerned to avoid irreconcilable judgments being handed
down in different Contracting States, and so far as Article 6.1 is concerned
it does fulfil a function similar to the “necessary or proper party”
provisions of Ord.11 r.1(1)(c) (see Dicey & Morris page 369). But it is
in my view not necessarily to be equated with that provision alone. The
Rules of the Supreme court recognise by other provisions the convenience
of enabling connected issues being determined between all parties
interested before the same tribunal; see for example in relation to joinder
of defendants Ord.15 r.4(1) and if the proceedings are already in being
the joinder of other parties Ord.15 r.6(2). Article 6.1 simply recognises
that principle, and seeks to provide a solution for the situation in which
defendants from different domiciles should be defendants in the same
proceedings in accordance with that principle. Mr Hochhauser stressed in
relation to the construction of Article 6.1 that it should be construed in his
clients' favour because it was being sought to deprive his clients of their
fundamental rights under Article 2. That factor would seem to me rightly
to be material in relation to whether the proceedings are sufficiently
connected or whether Article 6 is being abused. However, I do not think
it assists in determining the relevant date at which a defendant has to
be domiciled. The relevant date must be the same for Article 6 as for
Article 2. A plaintiff faced with wishing to sue defendants in proceedings
connected in the sense required for Article 6 purposes has to take the
same decisions as a plaintiff seeking to sue one defendant in the courts
of his domicile under Article 2. What in fact Article 6 allows him to do is
to comply with Article 2 so far as one or more defendants are concerned,
and join others who are domiciled in other Contracting States. It is Article
6 that provides the power to issue the process in the court of the domicile
of one defendant, and that court then allows service on the defendants so
joined. It must once again be as at the date when the writ is issued that
the relevant domicile must be tested for all the reasons already given in
relation to Article 2.
Mr Hochhauser in his reply laid emphasis on the fact that the plaintiffs
in this case had a choice and chose a less stable defendant for founding
the jurisdiction of the English court. This was to support his argument
that it was not unjust for the relevant date to be the date of service of
the proceedings. But there are two comments to make. First, it has not
been submitted, nor as I understand the allegations made by the plaintiffs
could it be submitted, that Mr S.S. was made a defendant simply to oust
the jurisdiction of Contracting States where others were domiciled. If that
were an allegation that could be made and was well founded, as already
indicated by process of some implication into Article 6 of words similar
to those appearing in Article 6.2, the court would have jurisdiction to
stay such proceedings. Second, there is no question that the plaintiffs do
have to establish the domicile of Mr S.S. to the standard of proof already
indicated, and it is for them to chose whether they wish to take on that
burden (if they appreciated there might be doubt about the matter),
or continue with attempting to discharge that burden once they did
appreciate there was a contest.
Article 6 also itself supports the construction I have placed on Article
2 in this way. Unless the defendants’ further argument to which I am
about to turn is right, i.e. that service on Mr S.S. was required before
issue or at least service of the proceedings under Article 6 vis a vis the
Convention Defendants, date of service produces great uncertainty
and possible frustration of the objectives of Article 6.1. The argument
presumably has to be that the date for ascertaining Mr S.S.’s domicile is
the date of service on each individual defendant. If again one assumes a
multiplicity of defendants a domicile in England at the date of issue and
some defendants served before the change in domicile, and if one then
assumes a change of domicile and service on others; assume again the
defendants first served wish to fight the proceedings in England and not
in the place of the new domicile, but the other defendants want either
the places of their own domicile or the courts of the new domicile. How
does the court resolve the problem? If one point in time is appropriate in
multiple defendant cases that point has to be issue if grave uncertainty
and possible frustration of the objectives of the Convention is to be
avoided.
I should finally on this aspect refer to certain other points.
1. Reliance was placed by Mr Hochhauser and Mr Ivory on Ord.11 r.1(2)
their emphasis being placed on the fact that that rule concentrated
on service. I cannot myself see how that rule helps to construe the
Convention albeit I suppose it might assist in demonstrating what
the English court contemplated in the concept “sued” or “bringing
proceedings”. All I need say is that even if it is right to construe “sued”
and the “bringing of proceedings” from the English court’s point of
view, (and in the light of Zelger v Salinitri (no 2) [1984] ECR 2397 that
may be right), as those representing the defendants emphasised, the
English court will still in the context of the Convention “have regard to
the international purpose which the Convention was made to achieve.”
see Bingham L.J. in Dresser p.564, and the similar words of Steyn L.J.
in The Sargasso p.10. The court's perspective is accordingly unlikely
to be assisted by textual analysis of its own rules of court. But in any
event, of equal relevance would then be Ord.6 r.7 which requires the
indorsement on the writ prior to issue that the court has the power to
hear and determine the claim under the 1982 Act.
2. Article 20 sub paragraph 2 could be said to give support to the
view I have expressed in that it could be said to be contemplating a
court dealing with the matter before service. Mr Hochhauser sought to
demonstrate that it was in fact dealing with situations in which there had
been service but too little time for the defendant to arrange his defence.
I do not think Mr Hochhauser's submission is well founded, but I do not
think the point is of any great influence.
3. Mr Ivory referred us to Rule 36 of Dicey & Morris 12th Edition
concerned with the recognition by the English Courts of foreign
judgments, and to the first case where such judgments are recognised
being “If the judgment debtor was at the time the proceedings were
instituted, present in the foreign country”. This reflects the general rule
that “the plaintiff must sue in the court to which the defendant is subject
at the time of suit...” He then sought to persuade us that albeit the court
of Appeal in Adams v Cape Industries [1990] Ch 433 had ultimately left
the point open, because they had referred to dicta in earlier cases and
said “It would appear that date of service of process rather than the date
of issue of the proceedings is to be treated as the “time of suit”...” this
should influence our approach to the construction of the Convention.
In my view the starting point, i.e. that time of suit is time of service, is
not very firmly based, but in any event the point does not persuade me
that the construction which seems to me to flow from the words and the
objectives of the Convention should be any different from that I have
suggested.
Does Article 6 require there to have been service on the defendant
domiciled in the State of the courts in which the proceedings have been
brought?
Ord.11 r.1(1)(c) expressly requires the claim to have been brought
against a person “duly served within or out of the jurisdiction”, as well
as the intended defendant to be a necessary or proper party. There
is nothing in the wording of Article 6 which equates with that specific
requirement in Ord.11 r.1(1)(c).
The reason for the express requirement in Ord.11 r.1(1)(c) flows from the
original rule which required service on a defendant within the jurisdiction
before a further defendant could be made a necessary and proper party.
That was a requirement to ensure that someone within the jurisdiction
was not simply made a party to obtain jurisdiction. Now the requirement
is there in order to ensure that an action is genuinely brought against
a defendant in relation to whom jurisdiction can be established by
some other means. It is further a requirement to swear an affidavit in
accordance with Ord.11 r.4(1)(d) stating the grounds for belief that there
is between the plaintiff and the person on whom the writ has been served
a real issue which the plaintiff may ask the court to try. But the rule is
dealing with a situation in which leave to issue and serve is required from
the court. That leave is obtained ex parte, and one can see that insistence
on service on another defendant prior to obtaining leave may provide
some practical safeguard.
There is no requirement for the obtaining of leave before the issuing of
proceedings in reliance on Article 6. The concept is thus possibly more
akin to Ord.15 r.4 under which there are safeguards against the abuse
of the power to join co- defendants in the same proceedings, but an
insistence that one should have been served before issue against, or
service on another, is not one of them.
It is in my view not surprising that Article 6 does not provide for the
service of proceedings on one defendant before the issue and joinder of
others, because no practical safeguard would be provided by so insisting.
The first time that a court will review the question of whether Article
6.1 provides jurisdiction is on an inter partes application contesting that
jurisdiction. At that stage sufficient protection is available to a defendant
and the order in which defendants have been served or whether one was
served before the issue of proceedings against another has no materiality
whatever. The proper question at that stage under Article 6.1 is simply
whether a defendant domiciled within the jurisdiction is a party and a
genuine party, and whether the Convention is in any way being abused.
I accordingly do not construe Article 6 as requiring service on the
defendant domiciled within the country of the relevant court prior to issue
or service of proceedings on other defendants. Furthermore I can see no
necessity for implying a term to that effect.
Answers to points of principle
I would accordingly answer the points of principle as follows.
(1) "Good arguable case" is the appropriate standard of proof to apply
to the question whether a defendant is domiciled in England on an
application under Ord.12 r.8 involving issues arising under Article 6.
(2) The correct date for determining whether or not a defendant is
domiciled in England for the purpose of determining whether the court
has jurisdiction under Article 6, is the date of issue of the proceedings
against the defendant domiciled in England.
(3) Article 6 does not require service on the defendant domiciled in
England prior to issue or service of the proceedings against other
defendants.
LORD JUSTICE PILL:
I gratefully adopt Waller LJ’s statement of facts. I also agree that the
judge’s approach to the relevant standard of proof was correct.
The respondents seek to sue the appellants by relying upon Article 6.1 of
the Lugano Convention and the first defendant’s domicile in England. The
second issue, stated by Waller LJ, is as to the correct date for determining
whether or not a defendant is domiciled in England for the purpose of
determining whether the court has jurisdiction by virtue of Article 6. Is it
the date on which the English writ was issued or the date of service?
That question requires a consideration of Article 2 of the Convention
which, insofar as is material, provides that “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”. That is a general rule
and, if it applies, the appellants cannot be sued in England.
Article 6 of the Convention creates a special jurisdiction which provides
for a derogation from the general rule. Article 6.1 provides that “a person
domiciled in a contracting state may also be sued – where he is one of a
number of defendants, in the courts of the place where any one of them is
domiciled.” The judge held that, a writ having been issued against the first
defendant, in England, at a time when for present purposes it is assumed
he was domiciled in England, Article 6.1 operates to permit the appellants
to be sued in England. The appellants contend that, because the writ was
not at a material time served upon the first defendant, Article 6.1 does
not operate so as to permit them to be sued in England. […]
Morritt LJ reflected that language in A B Jarrett v Barclays Bank [1997]
2 All ER 484 at 492, when considering the language of Article 16 which
also creates jurisdictions regardless of domicile and Rix J reflected it in
the Trade Indemnity case.
It is common ground that one moment in time must be chosen to apply
the test of domicile for the purposes of Articles 2 and 6. “Sued” must
have the same meaning in the two Articles. It must in my judgment also
be accepted that it is possible conceptually for a court to be seised of
a matter for the purposes of Article 22 of the Convention only when a
writ has been served but for a defendant to be sued under Articles 2
and 6 upon issue of a writ against him. The “tie-break rule”, to quote
the expression used by Bingham LJ in Dresser UK Ltd v Falcongate Ltd
[1992] 1 QB 502 at 514C, operates at a point in time different from that
for deciding whether the court is entitled to take jurisdiction originally.
The expression “sued” should be considered in its context and having
regard to the purposes of the Convention. Reference has been made
to the expression “bring proceedings” in Articles 11, 12 and 14, to
proceedings being “instituted” in Article 6.2 and to a “document instituting
the proceedings” in Articles 20 and 27. A writ is a document instituting
the proceedings but I do not regard the presence of the expression
“may bring proceedings” as determinative of the present issue in the
respondents’ favour. It begs the question whether proceedings are
brought upon issue of the writ or upon service.
The appellants understandably rely upon the decision of this court in
Dresser. The leading judgment was given by Bingham LJ, with whom
Sir Stephen Brown P and Ralph Gibson LJ agreed. In considering, for
the purposes of Article 22, whether the English court or the Dutch court
was first seised of the matter, the court held that the High Court did not
become seised of the matter until the writ had been served. Bingham LJ
stated seven reasons why it was wrong to hold that the English court was
seised of proceedings upon mere issue of proceedings. These are:
“(1) the Court’s involvement has been confined to a ministerial act by a
relatively junior administrative officer; (2) the plaintiff has an unfettered
choice whether to pursue the action and serve the proceedings or not,
being in breach of no rule or obligation if he chooses to let the writ
expire unserved; (3) the plaintiff’s claim may be framed in terms of the
utmost generality; (4) the defendant is usually unaware of the issue of
proceedings and, if unaware, is unable to call on the plaintiff to serve the
writ or discontinue the action and unable to rely on the commencement
of the action as a lis alibi pendens if proceedings are begun elsewhere;
(5) the defendant is not obliged to respond to the plaintiff’s claim in
any way, and not entitled to do so save be calling on the plaintiff to
serve or discontinue; (6) the Court cannot exercise any powers which,
on appropriate facts, to could not have exercised before issue; (7) the
defendant has not become subject to the jurisdiction of the Court.”
[…]Jurisdiction and seisin are intimately connected and the considerations
set out by Bingham LJ in Dresser appear to me to have considerable
weight in the present context and weigh heavily in favour of the
conclusion that the defendant is not sued upon mere issue of the writ.
The Convention is constructed around the principle stated in Article 2
and the phrase “sued in the courts” is to be considered in that context.
A defendant is sued in the courts of England upon service and not mere
issue. The writ being a writ of summons, I have no difficulty with that
use of language quite apart from the considerations (1) to (6) set out by
Bingham LJ in Dresser. Consideration (7) was that upon mere issue of
proceedings “the defendant has not become subject to the jurisdiction of
the court” which is consistent with his not being “sued”.
The European Court of Justice held in Kalfelis that Article 6 is to be
interpreted restrictively insofar as it constitutes a derogation from the
principle stated in Article 2. That restrictive interpretation requires,
in context, that a defendant cannot be sued out of the country of
his domicile by virtue of the issue of a writ in the country of another
defendant’s domicile. While conceptually possible, it would also be an odd
result if a defendant is held to be “sued” in England by virtue of Article 6
without the English court being “seised” of the action under Articles 21 to
23.
The wording of Article 20 of the Convention, which provides a degree of
protection to defendants sued in a state other than that of their domicile,
and Article 52 which provides how domicile is to be determined, appear
to me to fit comfortably with that approach to Articles 2 and 6. Article 20,
first paragraph, contemplates suing as including service by its reference
to entering an appearance, an act which could only follow service. The
second paragraph imposing obligations upon a court in the absence of
service and does not detract from that.
Further, I would construe the expression “bring proceedings” in Articles
11, 12 and 14 in the same way. To find that proceedings are brought, or
constituted, upon service and not mere issue, is in my view an acceptable
use of language. That finding is not necessary for the present decision but
I mention it in support of my view that the presence of the words “bring
proceedings” in other Articles does not adversely affect the appellants’
case on the meaning of “sued” in Article 2.
Waller LJ has stressed the advantages to a plaintiff of a date of issue
rule. I follow that there may be situations in which a plaintiff is at a
disadvantage upon the construction of Articles 2 and 6 which I favour.
There may be policy reasons for favouring a plaintiff and Waller LJ has set
out uncertainties, difficulties and possible frustration which may in some
cases arise for him. They should not however in my view be permitted
to weaken the protection provided for a defendant in Article 2, having
regard to the Dresser considerations. The principle in issue should not
be determined upon the possibility that a potential defendant may try to
arrange a change of domicile between issue and service in an attempt to
frustrate a plaintiff. Moreover, in a situation such as the present, in which
there is more than one potential defendant, a plaintiff may minimise
the risk to him of a change of domicile between issue and service by an
appropriate selection of forum. A result which, as in the present case,
would involve defendants coming to England, a country with which they
have no connection, to defend a claim in which no English defendant
had been served would defeat the purpose of Article 2. There would
be uncertainties for a defendant too, who upon contemplating a quite
legitimate change of domicile, would not know whether he was already
subject to a suit in the domicile he was planning to relinquish.
I do not consider that the general statement of the European Court of
Justice in Mulox IBC Ltd v Hendrick Geels [1993] ECR 1 – 4075, cited by
Waller LJ, with its reference to reinforcing “the legal protection available
to persons established in the community”, supports the respondents’
construction of Article 2. It recognises the interests of defendants as well
as those of plaintiffs.
I agree with Waller LJ that an analysis of the High Court’s own rules in
of limited assistance for present purposes but RSC O 11 r 1(1)(c) does
require valid service on the principal defendant as a pre-condition of
the grant of leave to serve out of the jurisdiction on other defendants.
Further, in giving the judgment of this court in Adams v Cope Industries
[1990] Ch 433, Slade LJ, while declining to express a final view on the
point, stated at p 518C that “it would appear that the date of the service
of process rather than the date of issue of proceedings is to be treated as
“the time of suit” for the purposes there in issue.
In my judgment the First Defendant has not been sued under Article 2
and the appellants cannot be sued under Article 6 of the Convention. It
follows that my answer to the question as posed in the Notice of Appeal,
would be that there was no valid service on the appellants under Article
6 in the absence of service of a writ upon the defendant domiciled in
England at the date of service upon him.
LORD JUSTICE NOURSE:
I agree with the judgment of Lord Justice Waller and would give the same
answers to the three questions which have been argued.
The relevant standard of proof
The authorities reviewed by Lord Justice Waller disclose that there may
at times have been a measure of confusion between "good arguable
case" and "serious question to be tried" or the like, perhaps because
these expressions can mean different things to different minds and,
to some at any rate, there cannot be a serious question to be tried if
the plaintiff does not have a good arguable case. Be that as it may, the
authorities disclose no confusion at all in rejecting the notion that the
balance of probabilities, the standard appropriate to a trial, is applicable
to a preliminary question of domicile such as that which has arisen in
this case. The balance of probabilities having been firmly rejected, the
authorities establish that "good arguable case" is the standard of proof
to be applied. It has not been suggested that Mr Justice Rattee did not
correctly apply that standard in this case.
Date for determining domicile under Article 6
The difficulty of this question is attested by the difference of opinion
which has arisen between Lords Justices Pill and Waller, each of whose
judgments makes a persuasive case for the conclusion to which it leads.
In agreeing with Lord Justice Waller, I do not suggest that the words "be
sued" are incapable of referring to the time at which process is served
as opposed to that at which it is issued. I acknowledge that it is well
possible to conceive of contexts in which someone could not be said to be
sued until he had been served. But the concern of Articles 2 and 6 of the
Lugano Convention is to identify the courts in which a person domiciled in
a contracting state is to be sued, in other words the courts in which the
process against him is to be issued, from which it seems necessarily to
follow that his domicile is to be determined as at the date of issue and not
service.
Time for service on the domiciled defendant
I do not wish to add anything to the reasoning of Lord Justice Waller on
this question.
Order: declarations made in accordance with the answers given at the end
of Lord Justice Waller's judgment; directed that appellants' application
to adduce fresh evidence and the further hearing of the appeal, if
appropriate, be adjourned to a date to be fixed and to come on before the
court as at present constituted (estimate – 1 day), with liberty to counsel
for the appellants to apply in regard to that date; all questions of costs to
be reserved to the further hearing. (…)“