J U D G M E N T
LORD JUSTICE MUMMERY:
Introduction
The sole question for the decision of the Court is whether the provisions of
the Lugano Convention on Jurisdiction and the Enforcement of Judgments
in Civil and Commercial Matters, 16 September, 1988 (the Lugano
Convention) are applicable to a case such as the present where all the
relevant legal proceedings in the two Contracting States (United Kingdom
and Austria) were instituted before the entry into force of the Convention
between them. The answer to the question depends on the interpretation
of the transitional provisions of the Lugano Convention in the light of the
ruling and the reasoning of the European Court of Justice in Von Horn -v-
Cinnamond (Case C-163/95) [1998] 2 WLR 104, a decision of 9 October
1997 on equivalent transitional provisions in Article 29(1) of the San
Sebastian Convention. (That convention was made on 26 May 1989 on
the accession of Spain and Portugal to the Brussels Convention of 27
September 1968.)
This appeal is against the decision of May J on 28 October 1997 that (a)
the Lugano Convention does not apply to this case as all the proceedings
were instituted before the entry into force of the Convention and that
accordingly (b) Article 21 of the Convention does not require the English
courts to stay the proceedings instituted in England and served on
Austrian domiciled Defendants, who had instituted Austrian proceedings
involving the same parties and the same cause of action.
The Lugano Convention
The Lugano Convention, concluded between members of EFTA in
1988,is very closely modelled on the provisions of Brussels Convention
which allocate jurisdiction among the Courts of Member States of the
European Community. It has had the force of law in the United Kingdom
with effect from 1 May 1992 by virtue of the amendments made by
the Civil Jurisdiction and Judgments Act 1991 to the Civil Jurisdiction
and Judgments Act 1982 and the insertion of the text of the Lugano
Convention in a new Schedule 3C to the 1982 Act.
The Lugano Convention came into force between the United Kingdom and
Austria on 1 September 1996.
The material Convention provisions are:-
Article 5
"A person domiciled in a Contracting State may,in another Contracting
State, be sued:.
3. In matters relating to tort, delict or quasi-delict, in the courts for the
place where the harmful event occurred."
Article 21
"Where proceedings involving the same cause of action and between the
same parties are brought in the courts of different Contracting 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.
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."
It is common ground that (a) the English courts and the Austrian courts
become seised of proceedings when those proceedings are served and
that (b) it is for the national court to determine when proper service
occurs.
It is also agreed for the purpose of this appeal that, if the Convention
applies, (a) the English proceedings and the Austrian proceedings are
between the same parties and involve the same cause of action and that
(b) the Austrian court would be the court first seised.
Article 27
"A judgment shall not be recognised:
3. If the judgment is irreconcilable with a judgment given in a dispute
between the same parties in the State in which recognition is sought."
Article 54
"1. The provisions of this Convention shall apply only to legal proceedings
instituted and to documents formally drawn and registered as authentic
instruments after its entry into force in the State of origin and, where
recognition or enforcement of a judgment or authentic instrument is
sought, in the State addressed.
2. However, judgments given after the date of entry into force of this
Convention between the State of origin and the State addressed in
proceedings instituted before that date shall be recognised and enforced
in accordance with the provisions of Title III if jurisdiction was founded
upon rules which accorded with those provided for either in Title II of
this Convention or in a convention concluded between the State of origin
and the State addressed which was in force when the proceedings were
instituted.
If the parties to a dispute concerning a contract had agreed in writing
before the entry into force of this Convention that the contract was to be
governed by the law of Ireland or of a part of the United Kingdom, the
courts of Ireland or of that part of the United Kingdom shall retain the
right to exercise jurisdiction in the dispute."
It is common ground that judgments given in each set of these
proceedings would be entitled to recognition in accordance with Article
54.2.
Von Horne
In Von Horn (supra) at p.130G-131A the European Court of Justice
gave the following answer to a question referred to it by the House of
Lords under Article 177 of the Treaty of Rome on the interpretation of
the similarly worded transitional provisions in Article 29(1) of the San
Sebastian Convention:-
"Article 29(1)....must be interpreted as meaning that where proceedings
involving the same cause of action and between the same parties are
pending in two different contracting states, the first proceedings having
been brought before the entry into force of the...Convention between
those states and the second proceedings after that date, the court
second seised must apply Article 21 of the...Convention if the court first
seised has assumed jurisdiction on the basis of a rule which accords with
the provisions of Title II of that Convention or with the provisions of a
convention which was in force between the two states concerned when
the proceedings were instituted,and must do so provisionally if the court
first seised has not yet ruled on whether it has jurisdiction..."
In that case proceedings were brought in Portugal in August 1991; the
Convention entered into force between Portugal and the United Kingdom
in July 1992; and proceedings involving the same cause and between
the same parties were brought in the High Court in England in November
1992. The Court of Justice held that the Convention applied to such a case
with the result that the English proceedings had to be stayed. The Court
rejected the argument that both sets of proceedings must have been
brought after the entry into force of the convention. It observed (para.11)
that the convention:-
"....does not specify whether.....where several actions are pending
before the courts of different contracting states, it is necessary that all
proceedings should have been instituted after the date of entry into force
or whether it is enough that the proceedings pending before the court last
seised were so instituted."
The Court of Justice referred to different language versions of the
convention (German and Dutch) and commented that the two competing
interpretations are
"both capable of leading to consequences which are unsatisfactory and
contrary to the aims of the Brussels Convention.." (para.13).
In the light of the structure and aims of the convention,the Court
favoured an interpretation which would reduce "the danger of
irreconcilable judgments being delivered" (para 17) and "the production of
parallel, potentially conflicting judgments which might prevent recognition
and enforcement will thereby be avoided" (para 19).
The Court of Justice did not determine, let alone discuss, a case such as
this where both sets of proceedings were brought before the entry into
force of the relevant convention. Counsel are agreed that, in the light of
the decision of this court in Agnew -v- Lansforsakringsbolagens AB [1997]
4 All.ER 937 at 945 f-g, it is not open to them to request a reference by
this court on the interpretation of the Lugano Convention to the Court of
Justice under Article 177 of the Treaty.
Factual Background
A. The English Plaintiffs
The Plaintiffs in the two sets of proceedings instituted in England
(1996 No 321 and 1996 D 369) are members of a group of engineering
companies. The first plaintiff, D. International Limited, specialises in
engineering, design, construction, manufacturing and services for mining,
metals and other industries on a world wide basis. Until 1995 it had
a manufacturing facility at Poole in Dorset, but then transferred it to
Sheffield. The second plaintiff, D. Corporation Limited, is the holding
company of D. International Limited and, until 25 September 1995, it was
the employer of Mr Roy T., Chief Executive of D. International Limited.
The third plaintiff, Trafalgar House Services Limited, is a service company
in the group and was the employer of all the employees working for D.
International Limited, except Mr T..
The companies in the D. group were acquired in 1991 by T. House PLC,
which was in turn acquired in April 1996 by a Norwegian group, K. ASA,
with consequential changes in the names of the two D. companies. In this
judgment they will be called by the names which they had at the date of
the relevant events.
B. The English Defendants
Four Defendants to the proceedings are domiciled in the United Kingdom.
Mr Roy T. was the Chief Executive of D. International Limited. His
employment was terminated in September 1995. He was replaced by Mr
F.. In April 1996 he became the Chief Executive Officer for the defendant
company, VAI Industries (UK) Ltd. He has been a director of that company
since 21 October 1996.
The two other individual English Defendants are Mr H. and Mrs H., who
were formerly employed by D. Corporation Limited and rendered their
services to D. International Limited.
The corporate English defendant, VAI Industries (UK) Ltd, is a wholly
owned subsidiary of an Austrian company, VAI GmbH. In late February
1996 it acquired offices in Poole and began to operate in competition with
D. International. All the directors, other than Mr T., are resident in Linz,
Austria. The English VAI company is alleged to have over 50 employees.
C. The Austrian Defendants
There are three Austrian Defendants to the English proceedings. VAI
GmbH, based in Linz, is a member of an Austrian conglomerate group
which designs and builds iron and steel production plants. It has no
offices in the United Kingdom and does not carry on business here.
In November 1995 it made an offer to acquire the business of D.
International Limited at Poole.That offer was rejected. It is in competition
with D. International. VAI (UK) Limited is its wholly owned subsidiary. Dr
Richard G. is the Chief Financial Officer of VAI GmbH and a member of its
managing board. Mr Horst W. is the Chief Executive Officer of VAI GmbH
and chairman of the managing board. Neither of the individual Defendants
have any residence or office accommodation in the United Kingdom.
D. The Hadeed Contract
The competition between the D. Group and the VAI Group was intense
between 1994 and April 1996 when both were seeking the award of a
contract (the Hadeed Contract) to build a steel production plant in Saudi
Arabia. That contract, which required the successful tenderer to provide
a financial package for the construction of the plant, was estimated to
be worth $1bn. In April 1996 the D. Group learned that the contract had
not been awarded to them. It had been placed with VAI GmbH. At about
that time the D. Group believed that they had reasonable grounds for
suspecting that the VAI group had acquired and made use of confidential
information gained from their former employees.
On 24 May 1996 the D. Group obtained in the High Court an Anton Piller
Order against the English Defendants. The order was executed at the
Poole offices of VAI UK Ltd on 28 May 1996. Thousands of documents
were seized. On the same day, a writ was issued by the D. companies and
served on the English Defendants.
On 8 and 9 August 1996 Mr T. and VAI (UK) Ltd made an unsuccessful
application to Langley J. to discharge the Anton Piller Order on the
grounds of abuse of process and material non-disclosure. There were later
contempt proceedings before May J, resulting in the imposition of a fine of
£125,000 on VAI (UK) Ltd.
The Legal Proceedings
There are now three sets of proceedings between the English Plaintiffs,
the English Defendants and the Austrian Defendants.
A. 1996 No 321
This writ was issued on 28 May 1996 against the English Defendants.The
English Plaintiffs claim injunctions restraining the destruction, defacing,
hiding or parting with the Plaintiffs' documents and computer disks or
copies containing information belonging to the Plaintiffs. They also claim
an injunction restraining the disclosure and use of information derived
therefrom and from inducing present or past employees of the Plaintiffs
or any director, officer or employee of VAI (UK) Ltd to make use of or
disclose such information. Further relief is claimed by way of delivery up
of documents, account of profits and damages for breach of confidence,
breach of contract and conspiracy.
On 26 July 1996 the writ was amended, pursuant to leave of Master
Murray granted on 25 July, to join the Austrian Defendants and to serve
the proceedings on them out of the jurisdiction. Additional relief was
claimed in the form of a declaration that the business of VAI Industries
(UK) Ltd is held upon a constructive trust for the Plaintiffs and an order
that Defendants, to the extent that they are shareholders in VAI (UK),
should transfer their respective share holdings to the Plaintiffs or transfer
such part of the business as the court may determine as attributable to
the misconduct complained of. The amended proceedings were served
in Austria on the Austrian Defendants on 1 and 2 August 1996. The
proceedings were re-amended with leave on 23 March 1998 by the joinder
of four more Defendants.
B. 1996 No 369
The writ in this action was issued on 14 June 1996. The only Defendants
were the Austrian Defendants. The relief claimed against the Austrian
Defendants was substantially the same as the relief claimed in action No
321. The writ was served on the Austrian Defendants on 19 June 1996
and an acknowledgment of service was served on 4 July 1996. The leave
of the court for service out of the jurisdiction was not sought and obtained
under Order 11 Rule 1. The writ was endorsed with a certificate under the
Civil Jurisdiction and Judgments Act 1982 in the following terms:-
"We certify that the High Court of England and Wales has powers under
the Civil Jurisdiction and Judgments Act 1982 to hear and determine this
claim and that no proceedings involving the same course of action are
pending between the same parties in Scotland, Northern Ireland or other
convention country of any contracting state as defined by section 1(3) of
the said Act."
Such a certificate is appropriate where the country in which the
Defendants are domiciled is a party to, or has ratified, the Brussels
Convention or the Lugano Convention. The position was that Austria had
not, at the date of the issue and service of that writ, ratified or brought
into force either the Brussels Convention or the Lugano Convention.
Austria, which was formerly a member of the EFTA and is now a member
of the EU, signed the Lugano Convention on 26 February 1992, but did
not ratify it until 27 June 1996 and it did not come into force in Austria
until 1 September 1996. Leave to serve out of the jurisdiction was
therefore required, but was not obtained.On 25 July 1996 Master Murray
set aside the writ and service of it under Order 12 rule 8 on the ground
that the necessary leave had not been obtained.
C. The Austrian Proceedings
On 5 July 1996 the Austrian Defendants started their proceedings in the
Commercial Court of Vienna. The Defendants to those proceedings are the
two D. companies, T. House PLC, Mr Trond A., Communications Director
of K. ASA, and K. ASA. The claim is for commercial defamation. The
relief sought includes declarations that allegations of industrial espionage
which had appeared in an Austrian newspaper published in Austria on
27 June 1996 are untrue. An injunction is sought to restrain repetition
of the defamation and damages. Those proceedings were served by the
Austrian court on the two D. companies in England on 26 July 1996. The
D. companies challenge the jurisdiction of the Austrian Court. No final
decision has been made, though it appears that the Austrian court is
satisfied that jurisdiction is sufficiently established for the court to hear
the merits of the dispute. Complaint is of a tort committed in Austria.
The Austrian proceedings have been in abeyance pending the decision of
the English court on the jurisdictional issue. The hearing of the English
proceedings was deferred pending decision by the European Court of
Justice in the case of Von Horn -v- Cinnamond (supra).
The Appeals
In the words of May J, against whose orders these appeals are brought,
the essential practical question is whether the claims of the English
Plaintiffs against the Austrian Defendants are to proceed in England.
That question was posed for his decision in connection with 3 applications
before him:-
(1) A summons by the Austrian Defendants to set aside the amended writ
in Action No 321 and the service of it on them in Austria.
(2) An application by the English Plaintiffs to apply out of time against an
order made by Master Murray on 25 July 1996 setting aside the writ in
Action No 369 on the grounds that no leave had been obtained for it to be
issued and served.
(3) A summons by the English Plaintiffs for an anti-suit injunction
restraining the Austrian Defendants from pursuing the Austrian
proceedings
against them.
May J made the following orders now under appeal:-
A. Action No 321
The Austrian Defendants appeal against May J's order of 31 October 1997
(sealed on 20 November 1997) under which he dismissed their application
under Order 12 Rule 8 of the Rules of the Supreme Court that these
proceedings against them be dismissed. The Austrian Defendants seek
an order from this court dismissing those proceedings. They contend
that May J was wrong in holding that the claim against them was not
required to be dismissed or stayed pursuant to Article 21 of the Lugano
Convention. They challenge the judge's interpretation and application
of Article 54 of the Lugano Convention in the light of the decision in Von
Horn v Cinnamond (supra). They submit that the judge ought to have
held that the decision in Von Horn requires the English proceedings to be
stayed or dismissed under Article 21: the claim against them in this action
is the same cause of action as that made in proceedings pending between
the same parties in the Commercial Court in Vienna, which was seised of
the issue earlier in time than the English court.
B. Action No 369
This appeal is by the English Plaintiffs against the order of May J made on
their application on 20 November 1997. He made no order on the English
Plaintiffs' application to appeal out of time against the order of Master
Murray on 25 July 1996, by which Master Murray had set aside the writ in
this action. If they obtain leave to appeal out of time the English Plaintiffs
will seek an order setting aside Master Murray's order and allowing the
issue of the writ and allowing the service of it on the Austrian Defendants
on 19 June 1996 to stand.The English Plaintiffs contend that May J ought
to have granted leave to appeal out of time and ought to have held that
the issue of the writ and service of it were irregularities, not nullities.
Those irregularities could, it is submitted, be cured under Order 2 Rule
1 of the Rules of the Supreme Court with the effect that leave to serve
on the Austrian Defendants in Austria was retrospectively granted. The
consequence of curing the irregularity would be that the issue and service
of the writ in this action would stand, so that the English court was
seised of the proceedings on 19 June 1996, before the institution of the
Austrian proceedings. They contend the judge ought to have exercised his
discretion to cure the irregularity and that it should be declared that the
English court was seised of the proceedings before the Austrian court was
seised of its proceedings.
The Judgment
The reasons given by May J. for holding that the Lugano Convention does
not apply to this case are trenchantly stated in the following passage of
his judgment:-
"In my judgment, the Von Horn case should not be extended to a
case such as the present where the proceedings in both contracting
states were instituted before the Convention came into force. I reach
this conclusion for two principal reasons. Firstly, a robust, purposive
application of Article 54(1) to Article 21 of the Convention (with the
assistance of the German and Dutch language versions) was possible
where the proceedings in the court second seised were instituted after the
entry into force of the Convention in the State first seised. But it would
be, in my view, rewriting Article 54(1) entirely and unacceptably if Article
21 were to apply even where neither proceedings were instituted after
the entry into force of the Convention as between the two Contracting
States. Secondly,I do not read the European Court's decision in the Von
Horn case as saying that the aim of avoiding two irreconcilable judgments
in two Contracting States is to dictate the application of the Convention
notwithstanding and even in defiance of all other considerations. The
European Court in the Von Horn case implicitly acknowledged that the
aim of reducing the risk of irreconcilable judgments could not be achieved
in every case. To say that"...it is essential to interpret Article 29(1) of
the San Sebastian Convention in the light of the structure and aims of
that Convention and the Brussels Convention" does not, I think, mean
that in cases more extreme than the Von Horn case itself we have to
shut our eyes completely to other considerations than those considered
in that case. One such consideration in cases where the competing
proceedings were both instituted before the Convention came into force
is the possibility to which I have referred that, if the court second seised
were obliged of its own motion to apply Article 21, it could be required
to do so at a stage in those proceedings which was in practical terms
nonsensically inconvenient."
Earlier in his judgment May J. described the effects of what Counsel
for D. called the "unacceptable retrospectivity" of an interpretation
unjustified by the language or common sense application of the policy of
the Convention:-
"The mere coming into force of the Lugano Convention would mean that
a certain class of pending proceedings in one State would have to be
stayed, whatever stage they had reached, in favour of other proceedings
in another State whatever stage those proceedings had reached. The stay
would have to be imposed by the court second seised of its own motion.
In theory, such a stay would have to be imposed part way through a final
hearing (or even part way through an appeal?) in favour of proceedings
in another State which might have got nowhere although they had been
instituted earlier. Such a problem could scarcely arise in a case, such
as the Von Horn case, where the proceedings before the court second
seised were instituted after the Convention came into force. Those second
proceedings would have been instituted in the face of the Convention in
force and the court's obligation to stay these proceedings would arise at
the outset."
For these reasons the judge concluded that the Lugano Convention
does not apply here and that there is no obligation on the English court
to stay its proceedings. The judge added that he was not invited to
exercise any discretion to stay the English proceedings (eg under Article
22). Those conclusions made it unnecessary for him to determine D.'s
application for leave to appeal Master Murray's order out of time or to
decide the substantive appeal, if leave were granted. D.'s application for
an injunction to stay the Austrian action was refused and is not pursued
on appeal.
The Appellants' Submissions
The Appellants' main submissions are founded on the judgment in Von
Horne. It is submitted that the Court of Justice applied a purposive (or
"muscular") and not a literal construction of the transitional provisions of
that convention so that, if the judgment of the court first seised would
be entitled to recognition, Article 21 should apply and the court second
seised should decline jurisdiction in favour of that court.
Mr Sumption QC argued, on behalf of the Austrian parties, that the
judge's reasons for distinguishing and not following Von Horn are
unsatisfactory. The Court of Justice identified the fundamental principles
underlying Article 54 as the avoidance of conflicts of jurisdiction and
the recognition of judgments between courts in different Contracting
States where each may give a judgment entitled to recognition under the
Convention. Those animating considerations are precisely applicable in
this case: they are as valid in the case of both actions instituted before
the entry into force of the Convention as on the particular facts of Von
Horn where only one of the actions was instituted before the Convention
came into force. No extension of Von Horn would occur on the application
of its essential reasoning to this case. The court should view the actions,
which were pending at the time when the Convention entered into force,
in this light and as at the date when it has to rule on the challenge to
jurisdiction.
This approach is consistent with an established principle of EC Law
that the Treaty of Rome is, on its coming into force, binding on a newly
acceding state and applies to the future effects of situations existing prior
to its accession: Saldanha v. Hiross (Case C-122/96; 2 October 1997).
It was submitted that the judge's concerns about the inconvenient
consequences of applying the Lugano Convention are fanciful and
misconceived in the context of the short life span of transitional
provisions.
Further, decisions of the Court of Justice establish that the Brussels
Convention, although it harmonises the rules on jurisdiction and on the
recognition of judgments, does not harmonise internal national rules of
procedure: it is accordingly open to Contracting States to that convention
and to the Lugano Convention to prescribe rules of procedure determining
the stage of an action at which a challenge to jurisdiction must be made,
as in Order 12 rule 8. Challenges under national procedures could thereby
be confined to an early stage in the proceedings. The inconvenient
consequences relied on by the judge to distinguish Von Horn could only
affect a very small number of cases and do not arise in this case where
the Convention had already been ratified by Austria at the date of the
application to join the Austrian Defendants and was bound at that stage
to come into force on 1 September 1996. The wider interest in avoiding
inconsistent judgments of courts in different States is more important
than a possible temporary practical inconvenience in a small number of
cases.
Conclusion
In my judgment, May J. correctly held,for the reasons given by him, that
the Lugano Convention does not apply to this case so as to require the
English court to stay the English proceedings. I would dismiss the appeal
in action No 321.
The legal position is as follows:-
(1) Title VI of the Lugano Convention contains "Transitional Provisions"
governing the transition in Contracting States from the pre-Lugano
Convention world to the post-Lugano Convention regime. The purpose of
Article 54 in Title VI is to place limitations on the application of the new
regime to specified situations potentially affected by the process of legal
transition. The Article addresses three types of situation:-
(a) Legal proceedings instituted and documents formally drawn up or
registered after entry into force: the Convention "shall only apply to"
such proceedings and documents. It is implicit that the Convention does
not apply to other proceedings and documents i.e. proceedings and
documents pre-dating the entry into force of the Convention.
(b) Judgments given after the date of entry into force in proceedings
instituted before that date: such judgments are to be recognised and
enforced provided that they satisfy the specified requirements.
(c) Contracts in writing with the specified jurisdiction provisions agreed
between the parties before entry into force: the right to exercise
jurisdiction in the dispute is retained by the relevant courts as agreed.
(2) This is a transitional situation of the kind covered by the language of
Article 54.1. All the legal proceedings were instituted before the entry
into force of the Convention. As explained in paragraphs (1)(a) and (b)
above,the Convention" shall apply only to proceedings instituted...after
its entry into force...", although judgments given after entry into force
in proceedings instituted before that date are subject to the recognition
provisions of the Convention.
(3) The key question is whether the Convention can be construed as
applying to this case, notwithstanding the language of Article 54.1 which
expressly attributes legal significance, in the context of the applicability of
the Convention, to the time of commencement of legal proceedings. That
question is to be addressed as at the date when the Convention came into
force, not at the date of the hearing of the challenge to jurisdiction.
The arguments have naturally focused on the ambit of the decision of the
Court of Justice in Von Horn and its impact (if any) on a case where all
the proceedings are instituted before the entry into force of the Lugano
Convention. In my judgment, neither the ruling on the referred question
of interpretation nor the supporting reasoning of the Court of Justice
require a departure from the clear language of Article 54.1 that the
Convention applies only to proceedings instituted after entry into force.
In Von Horn there were proceedings instituted after entry into force (the
English proceedings) to which the Convention could (and did) apply, so
as to render them liable to a mandatory stay on the court's own motion
and to give priority to earlier proceedings instituted in Portugal before
that convention entered into force. That was the determinative factor
in that case. In this case there are no proceedings instituted after the
Convention came into force to which the Convention can apply or on
which the Convention can begin to bite or operate to achieve that result.
The position contended for by the Austrian parties could only be achieved
by re-writing Article 54.1 and by depriving the reference to the time of
the institution of the proceedings of all significance and the first paragraph
of the Article of all practical content as a transitional measure. The
result would be that the Convention would apply to all specified pending
proceedings, no matter when they were instituted.That result would carry
with it the risk of the inconvenient practical consequences described by
the judge. That "interpretation" goes so far beyond the text of the Article,
the context of the transitional provisions and the decision in Von Horn
that it is not possible to justify it, either specifically by the terms of the
Article, as interpreted in Von Horne, or generally by the central aim of
the Convention to avoid in the future the inconvenience of irreconcilable
judgments in the different proceedings in Contracting States.
For these reasons I would dismiss the appeal in action No 321. It follows
that the judge was entitled to make no order in action No 369 and that
the appeal in that action should also be dismissed. No useful purpose
would be served in this court reaching a decision on points which were not
decided by the judge and which are not necessary for the disposal of the
case.
SIR JOHN KNOX:
I agree with the reasons given by Mummery LJ for concluding that the
appeal against May J’s decision in relation to the action No. 321 should be
dismissed.
The question whether Article 21 of the Lugano Convention (“the
Convention”) required the English Court to stay the action 321 is a
pure question of law and involves no exercise of discretion. I therefore
abstain from comment on the background or the merits of the dispute
between the parties. For the purpose of the appeal it is accepted that the
same cause of action between the same parties was involved in action
321 and in the proceedings in the Commercial Court in Vienna (“the
Austrian proceedings”). It is also clear that the Austrian proceedings were
instituted before action 321 because service of the Austrian proceedings
on 26 July 1996 preceded the service of the amended writ in action 321
joining the Austrian Defendants on the 1st and 2nd August 1996. The only
question on this appeal is whether the Convention, which came into force
on 1 September 1996, after both action 321 and the Austrian proceedings
had been instituted, requires the English court as the court second seised,
to stay action 321. Other grounds for such a stay originally advanced in
the Austrian Defendants’ summons have not been pursued.
Both parties accept that the European Court of Justice’s decision in Von
Horn v Cinnamond [1998] 2 W.L.R. 104 is of critical importance since
it is the only authoritative decision on the interrelation between Article
21 of the Brussels Convention and Article 29(1) of the San Sebastian
Convention which are for all practical purposes in the same terms as
Articles 21 and 54(1) of the Convention. The parties differ upon how
the impact of the Von Horn decision upon the present appeal should
be described. Mr Gross for the English Plaintiffs said that the question
before us was whether the Von Horn decision should be extended to cover
the case before us, whereas Mr Sumption for the Austrian Defendants
described it as whether the principles applied by the European Court of
Justice in Von Horn should be applied to cover the case under appeal.
In my view there are three principal reasons for concluding that May J
was right in the first of the two reasons he gave for reaching the decision
under appeal when he said “A robust, purposive application of Article
54(1) to Article 21 of the Convention (with the assistance of the German
and Dutch language versions) was possible where the proceedings in
the court second seised were instituted after the entry into force of the
Convention in the state first seised. But it would be in my view rewriting
Article 54(1) entirely and unacceptably if Article 21 were to apply even
when neither proceedings were instituted after the entry into force of the
Convention as between the two Contracting states”.
My reasons are as follows. First, I am of opinion that the area of
uncertainty in the limits of temporal application of Article 21 through
Article 54(1) is clearly and deliberately defined in para. 9 of the Von Horn
decision as uncertainty whether Article 21 applied.
(a) where the first proceedings were brought in a contracting state
before the date when the Convention came into force and the second
proceedings were brought after that date or
(b) only where both sets of proceedings were brought after the date when
the Convention came into force.
There is no suggestion that Article 54(1) does not impose any limits of
temporal application at all upon the scope of Article 21. That leads to
the conclusion that some temporal limits are imposed and there is no
material in the decision of the European Court of Justice which warrants
the identification of any other limit than the time when the second set of
proceedings were brought.
My second reason is that I am quite unable to accept Mr Sumption’s
argument that the point of time for testing whether or not Article 21
applies is the time when the court second seised decides the issue of
its jurisdiction. In my view when the European Court of Justice said
at para. 13, “Those rules are therefore designed to preclude, in so far
as possible and from the outset, a situation such as that referred to in
Article 27(3), namely the non-recognition of a judgment on account
of its irreconcilability with a judgment given between the same parties
in the state addressed” it was referring to the outset of the second
set of proceedings and not the subsequent date of a decision by the
court second seised on the issue of its jurisdiction. On that basis the
identification of the outset of the second set of proceedings lends strong
support to the argument that that is the critical time for testing the
applicability of the Convention and that in turn fits naturally with the
interpretation of Article 54(1) as causing Article 21 to become applicable
to proceedings brought after, and not to those brought before the date
when the Convention came into force.
My third reason is that had the European Court of Justice taken the view
that it did not matter when the second set of proceedings were instituted
for the purposes of deciding whether or not Article 21 was to be applied,
so long as the Convention was in force between the relevant contracting
States when the issue of the jurisdiction of the court second seised came
to be decided, it could not have failed to have expressed its reasoning
in a different and wider manner than that which it did adopt. No doubt
questions put to the European Court of Justice are, where possible,
habitually answered in the terms in which the questions are posed but
that explanation does not cover the terms in which the reasoning for the
conclusion is expressed.
I would therefore dismiss the appeal in the action 321 and that makes it
unnecessary to deal with the appeal in the other action in which the Judge
made no order.
LORD JUSTICE BELDAM: I also agree.
ORDER: In action 321, appeal dismissed with costs; in action 369,
no order as to costs; leave to appeal to the House of Lords refused;
proceedings stayed until determination of a petition to the House of
Lords; the Austrian proceedings also stayed pending determination of the
Petition. (This order does not form part of the approved judgment)