Peter Smith J:
INTRODUCTION
1.This appeal has been extremely well argued by both parties on this
appeal. It is the Claimant's appeal with permission from Master Moncaster
against his decision dated 9th February 2010 when he granted the
Defendant's application for a stay of these proceedings pursuant to
Article 27 of the Council Regulation (EC) no 44/2001 ("the Judgment
Regulations").
BACKGROUND
2.The Claimant is a company registered and domiciled in England and
Wales. Until 1st February 2009 it provided holiday accommodation in
(amongst other countries) Cyprus. Until 25th February 2009 it operated
under the name of Med Hotels Ltd. In this judgment I shall call it "Med".
3.The Defendant (EA Traveller Ltd) ("Traveller") is registered and
domiciled in Cyprus. At all material times Traveller operated as
Med's agent in Cyprus under two written agreements ("the Agency
Agreements") the first dated 12th April 2006 and the second ("the 2007
Agreement") dated 18th September 2007.
4.Clause 14 of the 2007 Agreement provided "this Agreement shall be
governed by and construed in accordance with English Law and the
parties irrevocably submit to the non-exclusive jurisdiction of the English
courts to settle any disputes that may arise in connection with this
Agreement".
5.Traveller's obligations under the Agency Agreements included making
hotel bookings on Med's behalf and acting as a local point of contact for
holidaymakers.
6.On 1st February 2009 Med sold its business assets including the name
Med Hotels Ltd to Thomas Cook. From that date onwards it ceased to
operate in Cyprus and no longer had any need for Traveller's services.
7.The contractual period of the 2007 Agreement was from 1st May 2007
to 30th April 2012. Following the sale of its assets as I have said Med has
not required Traveller's services under that Agreement. It is not clear at
the moment what is the position about the 2007 Agreement. By that I
mean Med's stance as to whether it terminated the same pursuant to any
contractual right or whether its non use of Traveller before the expiration
of the term covered by the 2007 Agreement is a breach of some express
or implied term has not yet been ventilated.
8.It should be noted however that clause 12.3 provided: -
"in the event the volume of business (measured by passenger numbers
and financial turnover) decreases by greater than 20% over the previous
full season, measured by the company's data, then both parties reserve
the right to review the exclusive nature of this Agreement and may
consider contracting with third parties"
9.Although this is not a part of the claim brought by Traveller in Cyprus
(see below) it is not inconceivable that that clause with its contemplated
minimum percentage might lead to an implied term that neither party
should by its action take any step to prevent the maintenance of the
minimum level contemplated by clause 12.3. It is therefore capable of
being argued that by unilaterally disposing of its business Med has in
effect broken the Agreement which contemplated that for the period of its
duration a certain minimum level of business would be achieved.
10.That is not currently a claim but the position of any claims under the
2007 Agreement is at a very early stage relatively speaking.
PROCEEDINGS
11.There was an exchange of correspondence between the parties'
respective lawyers following the sale of the assets. It is fair to say in
my view that Med kept Traveller in the dark about what was going on;
Traveller only found out about the sale from the press. It instituted
proceedings in Cyprus in the Limassol District Court of Cyprus on 13th
March 2009. The endorsement of claims in those proceedings states the
claim is for: -
"Euro 3,000,000 for damages for breach of the terms of the Agreement
between the Plaintiff and Defendant 1) that was signed on 18th
September 2007 which Agreement is supplemented and/or amended
by arrangements and/or agreements, partly in writing and partly orally,
effected between the Plaintiff and Defendants 1 and 2 and which resulted
in the Plaintiff suffering damages and losses"
12.The witness statement of Franklin Price on behalf of Traveller states
that the claim is for damages for breach of the terms of the Agreement
on the basis that Med has placed its business with other Agents in Cyprus
prior to the sale of its business and has suffered loss. It is submitted on
behalf of Med that the claim is speculative. In my view it is impossible to
evaluate the claim `at this stage.
13.However it does not (despite its generalised form) apparently make
any claim arising out of the failure to continue with the 2007 Agreement.
This appears at least partly to be based on a misconception that Med is
acting in breach of the exclusivity clause when in fact Med having sold its
business is not carrying on any business in Cyprus. The former business
owned by it is now being operated by Thomas Cook which has of course
no contractual liability to Traveller.
14.On 14th May 2009 Med issued the present proceedings in England
claiming an account in respect of all sums held by Traveller on its behalf
and the payment of the sums found to be due on taking the account.
JURISDICTION OF THE ENGLISH AND CYPRIOT COURTS
15.Both Cyprus and the United Kingdom are member states for the
purposes of the Judgment Regulations. It is common ground that, subject
to Articles 27 and 28, both the English and Cypriot courts have jurisdiction
to determine both Med's and Traveller's claims. The English court has
jurisdiction by virtue of the jurisdiction clause and article 23 of the
Judgment Regulations and the Cypriot court has jurisdiction by virtue of
article 5 because Cyprus was the place for the performance of the 2007
Agreement.
16.Either court was appropriate because the jurisdiction clause was non
exclusive. Thus both parties contemplated the possibility that in the event
of a dispute the proceedings could be commenced in either Cyprus or the
United Kingdom.
17.One further factor I should mention is that the 2007 Agreement is
governed by English law.
TRAVELLER'S APPLICATION
18.On 18th June 2009 Traveller applied for a stay of the English
proceedings on the basis that the English proceedings and the Cyprus
proceedings involve the same cause of action under Article 27 of the
Judgment Regulations and that the Cyprus court was first seized.
19.Its application was initially put on the basis that the two sets of
proceedings involve the same cause of action because they were between
the same parties and arose out of the same contractual relationship. That
argument was not pursued before the Master and has not been pursued
on the appeal before me.
20.During the hearing Traveller submitted that its claim in the Cyprus
proceedings could as a matter of law be set off against Med's claim in the
English proceedings so that both sets of proceedings would necessarily
involve the same cause of action for the purposes of Article 27.
21.That stance was accepted by Med before the Master (see paragraph
5 of the Master's judgment). Miss Edge who appeared before the Master
and who appears for Med accepted that was the position below.
22.In Med's Appellant's Notice (ground 2) it sought to resile from that
stance and to argue that there was no right of set off in the hands of
Traveller against Med's claim for an account in England and Wales. That
technically was a new matter but after hearing submissions I determined
that it was appropriate to allow, in the justice of the case, Med to
withdraw the concession it made so that that issue could be fully argued
on the appeal. I could see no discernable prejudice being suffered by
Traveller in response to that. The only possibility is that it could have been
said by Traveller that it might have needed to call evidence to address the
issue raised by Med in paragraph 2 of its Notice of Appeal. That issue was
as to whether or not the causes of action respectively were sufficiently
connected so as to be an equitable set off. In the event Mr Warwick who
appears for Traveller (and who appeared below) decided that there was
no need for fresh evidence and that therefore the matter was simply a
question of responding to a new argument.
23.Similarly the Master determined that he did not have enough material
before him to decide whether or not he should exercise his discretion
under Article 28 (paragraph 20 of his judgment). During the course of
argument it seemed to me to be clear that there was sufficient material
for that discretion in my judgment to be exercised, contrary to the
learned Master's indication.
24.Traveller had not sought permission to appeal that determination
nor had it served a Respondent's Notice seeking to affirm the Master's
judgment on Article 28 grounds in the event that the appeal by Med was
successful in respect of the Article 27 determination. The observations of
the Master were strictly obiter because he decided the hearing on Article
27. Thus he had no need to consider Article 28.
25.In those circumstances it was appropriate in my view despite the lack
of permission to appeal and Respondent's Notice to allow Traveller to
maintain a fall back argument under Article 28. Once again no prejudice
was identified and Med did not seek to call any evidence as to whether or
not there were any other factors that might be available to put before the
court in considering an exercise of a discretion under Article 28.
26.Thus in my view all arguments were fully ventilated on the appeal
before me despite the technical failings on both sides.
THE JUDGMENT REGULATIONS
27.The relevant regulations are Articles 27 and 28 which provide as
follows: -
"Lis pendens - related actions
Article 27
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.
Article 28
1. Where related actions are pending in the courts of different Member
States, any court other than the court first seised may stay its
proceedings.
2. Where these actions are pending at first instance, any court other than
the court first seised may also, on the application of one of the parties,
decline jurisdiction if the court first seised has jurisdiction over the actions
in question and its law permits the consolidation thereof.
3. For the purposes of this Article, actions are deemed to be related where
they are so closely connected that it is expedient to hear and determine
them together to avoid the risk of irreconcilable judgments resulting from
separate proceedings".
28.It seems to me also that parts of the preamble to the regulations are
relevant to the issues before me and I set those out: -
"Whereas:
(1) The Community has set itself the objective of maintaining and
developing an area of freedom, security and justice, in which the free
movement of persons is ensured. In order to establish progressively
such an area, the Community should adopt, amongst other things,
the measures relating to judicial cooperation in civil matters which are
necessary for the sound operation of the internal market.
(2) Certain differences between national rules governing jurisdiction and
recognition of judgments hamper the sound operation of the internal
market. Provisions to unify the rules of conflict of jurisdiction in civil and
commercial matters and to simplify the formalities with a view to rapid
and simple recognition and enforcement of judgments from Member
States bound by this Regulation are essential.
(15) In the interests of the harmonious administration of justice it is
necessary to minimise the possibility of concurrent proceedings and to
ensure that irreconcilable judgments will not be given in two Member
States. There must be a clear and effective mechanism for resolving cases
of lis pendens and related actions and for obviating problems flowing from
national differences as to the determination of the time when a case is
regarded as pending. For the purposes of this Regulation that time should
be defined autonomously."
29.It will be seen that a major purpose behind the regulations was to
unify the rules of conflict of jurisdiction in civil and commercial matters
to simplify the formalities with a view to rapid and simple recognition and
enforcement of judgments from member states bound by the regulations.
Recital (15) is particularly significant because a fundamental principle
behind the regulations was to minimise the possibility of concurrent
proceedings and to ensure that irreconcilable judgments would not be
given in two member states. The purpose of the regulations was to
provide clear and effective mechanisms for resolving cases of lis pendens
and related actions and for obviating problems from national differences
as to the determination of the time when a case is regarded as pending.
30.The difficulties created by international regulations like this is well
exemplified by the case of Phillips v Symes [2008] UKHL 1 a case under
the Lugano Convention where similar problems arose.
DUPLICATION OF PROCEEDINGS
31.Miss Edge acknowledged that if the appeal was successful there will
be two parallel sets of proceedings in Cyprus and the United Kingdom.
She submitted that the proceedings in Cyprus would be dealt with by that
court adjudicating on Traveller's claim for damages against Med whereas
the UK court would simply address the question of the account of sums
found due to Med from Traveller.
32.This seems to me to be unreal. As Miss Edge acknowledged in
argument I have no control over the Cyprus proceedings and nothing
in this jurisdiction can stop those proceedings continuing. It may be
possible of course for Med to make an application for a stay in the Cyprus
proceedings but that was most unlikely to be made and even more
unlikely to be successful (it would involve Med standing on its head the
arguments they maintain before me).
33.Similarly, if not stayed, the English proceedings for an account will
also continue. Even if (which for reasons I set out below I do not accept)
Miss Edge is correct in submitting that Traveller has no right of set off
against the account it could nevertheless maintain a counter claim for
any damages due to it as against the claim for an account. Equally in the
Cypriot proceedings Med (assuming it adopts the same stance as before
me of no set off) could maintain a counter claim in those proceedings
as against the claim for damages. It seems to me inevitable that both
parties will have to raise their respective claims in response to the claims
brought against them. It would take a brave party not to raise matters in
diminution of the liabilities to which it is exposed. If for example Traveller
did not raise its damages claim (assuming it is a good one) against the
account then the taking of the account and (significantly) the order for
payment of the sums found due on that account will lead to a judgment
against it not reduced by its damages claim. That judgment could then
be enforced in Cyprus as against it. An attempt to raise the claim at the
enforcement stage might well be resisted by Med on the grounds that by
failing to raise it in the English proceedings and the judgment it is too
late to raise it in a separate action. The converse could equally apply as
regards Med not raising the account in Cyprus.
34.Miss Edge sought to address that by suggesting that one or other of
the judgments could be stayed until the other claim is fully determined.
That to my mind demonstrates the difficulty of Med's resistance to
Traveller's application.
35.Even if neither party chooses to raise defensively its claim in the
proceedings brought against it there nevertheless will be the need to
address the fact that proceedings are taking place in parallel in different
jurisdictions. Miss Edge submitted that the proceedings will be different
and the evidence will be different. With respect to Miss Edge I think
that submission is premature on the basis of the information currently
available to me. Further if both parties choose to use their respective
claims defensively both sets of proceedings will be determining both
claims. That will necessarily lead to the potential for conflicts which recital
(15) of the Judgment Regulations says the regulations were designed to
avoid. It would lead to both courts adjudicating the identical issues.
36.Even if that is not correct and that the English proceedings determine
the account and the Cyprus proceedings determine the damages claim
it does not follow that there might not be differences in evidence that
might lead to differing and contradictory conclusions on the evidence. It is
impossible at this stage to say what evidence will be led in both claims.
37.Finally in respect of these complicating factors the parties will be
forced to instruct lawyers in two jurisdictions arising out of the disputes
under the 2007 Agreement. This seems to me to be precisely the type of
duplication once again that the regulations were designed to avoid.
38.I accept Miss Edge's submission that as the 2007 Agreement is
governed by English law there will be a greater effort in Cyprus because
expert evidence will have to be given in Cyprus as to the English law
applicable to the 2007 Agreement. However that will not go away if the
stay is lifted. All that will happen is that the English courts will adjudicate
on the account with its knowledge of English lawbut the Cyprus action will
still carry on and if there are English law issues expert evidence will have
to be adduced. However given the historical background of Cyprus and its
affinity to UK law rather than continental law I suspect this is a problem
that is more theoretical than actual. However once again lifting the stay
exacerbates the problem.
39.By way of contrast as a matter of practicality if the stay remains in
place all the issues arising under the 2007 Agreement will be litigated
and determined in one court only. This appears to be what the courts
considered was a significant point to conventions like this see for example
The Tatry [1999] QB 515 at 534 C.
CLOSE CONNECTION
40.It is submitted by Med that the two different causes of action are not
closely connected for the purposes of an equitable set off within the well
known decision of Hanak v Green [1958] 2 QB 9. There is no question of
a legal set off nor any question of mutual set off of debts.
41.For an equitable set off to be maintained there must be a sufficiently
close connection between the two demands. It involves a consideration of
the circumstances of the particular case and a close connection may not
suffice to impeach the title if there are other discretionary factors which
mitigate against equitable relief see generally Derham, The Law of Set Of
(3rd edition) paragraphs 4.03 4.4 and 4.47.
42.It seems to me that if one looks at Med's claim for an account that
involves an enquiry as to what sums are due to it and the payment of
the sums found due to it on taking such enquiry. The claim therefore
necessarily involves drawing an account between the parties' dealings. If
Med has committed a breach of contract when that account is taken any
losses that flow from that will necessarily be forming part of the account
which is designed to settle the ultimate balance. Hence the prayer for
relief for payment of the sums found due on the taking of such account.
43.Similarly in the Cyprus proceedings the statement of claim when
addressing the loss and damage sustained by reason of the alleged
breaches and the quantification of that will necessarily have to take into
account and give credit for monies which it holds on account for Med.
44.Thus both claims in my view are sufficiently connected as they both
have to be determined in the respective primary claim so that each
claim is available as a set off against the other claim. Both proceedings
therefore in my view (unless one or other of the partners is sufficiently
bold not to put its set off in issue) involve precisely the same issues.
THE DECISION OF MASTER MONCASTER
45.I have already observed that the Master in paragraph 5 recited that
the parties acknowledged that each would have a set off against the
other's claim. That has been challenged in this appeal but the challenge is
unsuccessful for the reasons set out above.
46.He has referred to the key decision of Gantner Electronic v Basch KC
111/01 which determined that in that case defences must be disregarded
in the application of Article 27 so that admitted set off is irrelevant. He
accepted Mr Warwick's submissions that the Gantner case did not apply
to an equitable set off under English law. That was Mr Warwick's stance
repeated before me in response to Med's appeal (see paragraph 10 of
the judgment). He pointed to difficulties when a set off is required to
be disregarded as outlined in paragraphs 51 – 53 of the opinion of the
Advocate General in theGantner case and concluded (paragraph 17)
that the decision ought to be confined to cases where the set off only
arises by acts of the party rather than by operation of law. He concluded
that theGantner decision addressed matters that have to be raised
subsequently in defence. Thus he concluded that it did not apply to claims
which arise by operation of law. Accordingly he did not accept theGantner
decision applied.
47.He then concluded as I have said that he did not have sufficient
evidence to consider an exercise of discretion under Article 28.
ARTICLE 27 A DISCUSSION
48.I have set out the recital to the regulation and Article 27 above. It
is useful to contrast the wording in Article 27 from that in Article 28.
Article 27 applies where proceedings involve the same cause of action and
between the same parties. Where such proceedings are brought in the
different courts of the Member States any court other than the court first
seized shall of its own motion stay the proceedings until such time as the
jurisdiction of the court first seized is established.
49.Pausing there it is accepted that the Cyprus court was the first seized.
Thus if the two sets of proceedings involve the same cause of action then
the English proceedings must be stayed. That follows from paragraph 2 of
Article 27.
THE GANTNER CASE
50.It is interesting to see first what the Advocate General said. In
paragraphs 6 and 7 of the Advocate's opinion the following is set out: -
"6. In order to understand the case, it is appropriate to set out the
principles of the Austrian law on set-off. As regards the concept of set-off,
suffice it to note that it is a form of extinguishment of obligations. It has
the effect of simultaneously extinguishing different obligations between
two persons who are debtors of each other, to the extent of the lower
debt.
7. According to Austrian law, set-off occurs by the unilateral declaration
of one of the parties to the other. (4) Further types of set-off found in
other European national laws, such as legal set-off (by operation of law)
and judicial set-off (by order of a court), do not exist. The declaration
may be made either extrajudicially or in proceedings. The declaration
of set-off has the same effect whether it was made in an extrajudicial
declaration or in proceedings. It is always retroactive - both debts are
deemed to be extinguished on the date on which the requirements for
set-off are satisfied, not on the date of the declaration of set-off, and the
court merely makes a finding that the set-off has occurred."
51.Mr Warwick submits that those paragraphs show that the only matter
being considered are statutory set offs under Austrian law. Express
reference is made to other types of set off by operation of law or judicial
set off. It is pointed out that such rights do not exist in Austria.
52.In the Gantner decision itself this is referred to again in paragraph 7: -
"Under Netherlands and Austrian law set-off always requires a unilateral
declaration by one party to the other. Statutory set-off, characterised by
the extinction of mutual claims by operation of law, which is well known in
other European national laws, does not exist in Netherlands and Austrian
law. The declaration may be made either extra-judicially or in the course
of proceedings. It has retroactive effect: the two claims are considered
to be extinguished on the day on which the conditions for set-off are met
and not on the day on which set-off is declared, and the court confines
itself to making a declaration that set-off has been effected."
53.Once again the difference between the statutory nature of the set
off in Netherlands and Austrian law is set out. Both require a unilateral
declaration by one party to the other. The other form of European set offs
(including the English right of equitable set off) are referred to.
54.The relevant parts of the decision are in paragraphs 25 and 26 where
the following is said: -
"In that regard it must be observed, first of all, that according to its
wording Article 21 of the Convention applies where two actions are
between the same parties and involve the same subject-matter (see
Gubisch Maschinenfabrik, cited above, paragraph 14). Furthermore, the
subject-matter of the dispute for the purpose of that provision means the
end the action has in view (The Tatry, cited above, paragraph 41). "
It thus appears from the wording of Article 21 of the Convention that
it refers only to the applicants' respective claims in each of the sets of
proceedings, and not to the defence which may be raised by a defendant."
55.It seems to me that is reflected in the different wording in Article 27
and Article 28. Article 27 refers to the same cause of action whereas
Article 28 refers to merely related actions.
56.The conclusions are somewhat brief and somewhat bereft of
reasoning: see paragraphs 30-32 as follows: -
"Finally, the objective and automatic character of the lis pendens
mechanism should be stressed. As the United Kingdom Government
correctly points out, Article 21 of the Convention adopts a simple method
to determine, at the outset of proceedings, which of the courts seised will
ultimately hear and determine the dispute. The court second seised is
required, of its own motion, to stay its proceedings until the jurisdiction
of the court first seised is established. Once that has been established, it
must decline jurisdiction in favour of the court first seised. The purpose of
Article 21 of the Convention would be frustrated if the content and nature
of the claims could be modified by arguments necessarily submitted at
a later date by the defendant. Apart from delays and expense, such a
solution could have the result that a court initially designated as having
jurisdiction under that article would subsequently have to decline to hear
the case. "
It follows that, in order to determine whether there is lis pendens
in relation to two disputes, account cannot be taken of the defence
submissions, whatever their nature, and in particular of defence
submissions alleging set-off, on which a defendant might subsequently
rely when the court is definitively seised in accordance with its national
law.
In the light of the foregoing, the answer to the first two questions is
that Article 21 of the Convention must be construed as meaning that, in
order to determine whether two claims brought between the same parties
before the courts of different Contracting States have the same subject-
matter, account should be taken only of the claims of the respective
applicants, to the exclusion of the defence submissions raised by a
defendant.
57.The simple question to be answered is whether those paragraphs are
to be applied to all forms of set offs and not merely those actually before
the court. Master Moncaster accepted the latter submission which Mr
Warwick repeats before me.
58.In my view the Master was correct to accept that submission. In the
Med claims in the English proceedings the claim is for an account. The
account is to establish the net sum due to it on taking that account. That
involves assessing any cross liability due from it to Traveller. Nevertheless
it is part of the Claimant's action which seeks an enquiry as to the amount
of monies due to it which necessarily involves (as the prayer for relief
demonstrates) determining the net sum and an order for payment for that
net sum. Thus Med will have to deal in its own claim for an account with
any claims Traveller raises against it.
59.The same is true as regards Traveller's proceedings in Cyprus.
Although it is a claim for damages Traveller holds monies on behalf of
Med. In order to establish its loss in net terms it will have to give credit
for the sums that it is holding. Thus it is an integral part of its claim that it
will have to give credit for the account due from it to Med.
60.Thus when one looks at it both claims are identical because both
claims as part of establishing their entitlement necessarily require them
to give effect to sums that would be due from the other side. Both of
those requirements form part of their respective cause of action. The
only difference between the two of course is that the procedure in Cyprus
starts with a Traveller claim which needs to deal with a Med account
whereas the English action starts with a claim for an account which needs
to take into account any liability to Traveller. Apart from that reversal of
procedures they are both the same cause of action in my view. The cause
of action is to determine what is due to each under the contract.
61.In my view this is not the kind of set off contemplated by the Gantner
decision. I am reinforced in that view by the preamble to the regulations.
The purposes of the regulations are as far as possible to ensure efficient
and just disposal within the Member States and an avoidance of identical
actions proceeding in differing jurisdictions with the potential difficulties.
To allow the appeal would createprecisely the difficulties the regulations
are designed to avoid. If Gantner is to be interpreted to have that effect
in my view it is wrongly decided and I will decline to follow it for that
reason. However I have determined in my view the Gantner case is
confined solely to the unilateral form of set off identified in Austria and
the Netherlands. It is not in my view intended to have any application to
the forms of set off in English law identified in this judgment.
62.For all of those reasons I will dismiss the appeal.
ARTICLE 28
63.As I have said Master Moncaster felt unable to come to a decision on
Article 28 although it is clear if he had had further material he would have
exercised a discretion to stay the English proceedings.
64.Article 28 is in my view drawn to address precisely the difficulties that
would be caused by allowing the English action to continue. The difference
of course is that the actions have to be related but they do not have to
be identical. Further paragraph 3 shows that the actions are deemed to
be related where they are so closely connected and it is expedient to hear
and determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings.
65.It seems to me that the present situation falls precisely within Article
28. I have already set out earlier the consequences of allowing the
appeal. In my view it is inevitable that parallel proceedings will exist
in both jurisdictions with all the risks that that might cause. Even if
Traveller's action proceeds in Cyprus and Med do not raise their account
and the converse occurs there is still a duplication of effort because
both parties would have to address the same basic material i.e. the
contractual relationships how the contract is developed and how the
contract relationship of either ended and upon what basis. Thus a large
part of the material will be duplicated in both jurisdictions.
66.In any event it is difficult to see how that will in practice occur. I
cannot accept that either party would take the risk of finding itself non
suited by failing to raise its relevant set off. In any event as I have said I
cannot stop the Cyprus proceedings and I cannot stop Traveller raising a
set off in the English proceedings.
67.The only difference which was highlighted by Miss Edge is that the
English court might be slightly advantaged because the Agreement is
covered by English law. However that is not in my view a significant
justification for allowing the two actions to carry on. I have already
observed that English law experts will still be required in Cyprus to
evaluate Traveller's claim there and that will carry on irrespective of
any order I make. What will happen however is that English law will be
applied according to expert evidence there to the contract and English
law will be applied by English judges in relation to the accounts. It is in
my view another classic example of duplication which the regulations are
designed to avoid. It goes without saying that the actions are related
because they spring from the same contract and in view of the clear set
offs which I have determined either party has it is difficult to see that they
are not related and it is equally difficult to see that they are not closely
connected. It is expedient for all the reasons that I have set out above to
hear and determine them together as set out in Article 28.3.
68.Therefore if I am wrong on Article 27 I would unhesitatingly exercise
the discretion under Article 28 to stay the English proceedings.