Crown Copyright ©
Mr Justice Simon:
Introduction
1. On 21 February 2011 the Claimant ('WMS Inc'), a company
incorporated in the State of Delaware (USA), began proceedings in
the Commercial Court against the Defendant ('B Plus'), a company
incorporated in England ('the English Action'). The proceedings sought
declarations in relation to two commercial transactions. The first was the
termination of a contract in March 2010 ('the Supply Contract Claim'). The
second was the ending of negotiations between the parties in March 2010
('the Negotiation Claim'). In each case WMS Inc sought declarations that
it was entitled to act as it did and had no liability to B Plus.
2. The claims arise out of discoveries which WMS Inc contends it made
during the course of due diligence enquiries into the business of B Plus.
WMS Inc says that these discoveries gave rise to serious concerns about
dealing with B Plus. The allegations are contested.
3. The Supply Contract Claim arises out of a contract between WMS Inc
(as seller) and B Plus (as buyer) entered into in late November 2009,
by which WMS Inc agreed to supply 250 second-hand gaming machines
for the payment of US$2m by B Plus ('the Supply Contract'). WMS Inc
contends that it contracted on its standard terms which provided for a
process of due diligence investigations designed to ensure the suitability
of those with whom it contracted. It is WMS Inc's case that it made
discoveries about the beneficial ownership of B Plus which justified its
termination of the contract under Clause 14 of its standard terms. In
its Defence, dated 25 April 2011, B Plus has denied that WMS Inc was
entitled to act as it did and has counterclaimed. No figure has yet been
pleaded but it is reasonable to assume that the sum claimed will be many
millions of Euros.
4. The Negotiation Claim concerns WMS Inc's decision in February/March
2010 to end negotiations ('the European Negotiations') which took place
with B Plus in relation to a potential future supply of gaming machines for
the Italian market. B Plus has not pleaded to this claim since it is subject
to the present jurisdiction challenge.
5. On 1 April 2011 B Plus issued an application in relation to the
Negotiation Claim seeking orders from the Court (a) declining jurisdiction
under Articles 27.2 or 28.2 of EC Regulation 44/2001 ('the Brussels
Regulation'), or alternatively, (b) a stay under Article 28.1. The basis of
the application is that at the time the claim was issued B Plus had brought
proceedings before the Italian Court in Rome claiming in respect of losses
arising out of the breakdown in the negotiations for a contract to supply
the Italian Market ('the Italian Proceedings'). It is important to note that
B Plus brought a claim not against WMS Inc, but against an affiliated
company, WMS Gaming International S.L ('WMS Spain'). B Plus has never
brought a claim against WMS Inc before the Italian Courts.
6. Before turning to the Italian Proceedings it is convenient to mention a
recent application made by B Plus. This application, dated 16 June 2011,
seeks an order from the Court staying the Supply Contract Claim under
Article 28.1 of the Brussels Regulation, or in the exercise of the Court's
case management powers.
The Italian Proceedings
7. On 21 April 2010 B Plus commenced the Italian Proceedings against
WMS Spain in the Rome Court. Initially the claim was for breach of
the Supply Contract and for damages under Article 1337 of the Italian
Civil Code for WMS Spain's unjustified interruption of the European
Negotiations ('the Article 1337 claim'). As will appear later, the first of
these claims is no longer pursued, although its status for the purposes of
the Brussels Regulation is in issue.
8. WMS Spain's primary defence to the Article 1337 claim was that it was
not involved in its own right in the European negotiations, but only on
behalf of WMS Inc, which was the appropriate defendant to such a claim.
9. On 16 June B Plus filed a Motion against WMS Spain, requesting
attachment of all of its property up to an amount of €141,860,135 (the
sum of its then claim for breach of the Supply Contract - €14,503,377,
and its claim under Article 1337 - €127,254,758).
10. On 2 December, following a hearing on 14 October, Judge Izzo issued
an Order on the motion application. She dismissed the Motion on three
bases. First, she found that there was no jurisdiction in respect of B Plus's
claim against WMS Spain for breach of the Supply Contract. Secondly she
held that there was provisional and conditional jurisdiction in respect of
the Article 1337 claim against WMS Spain. Thirdly, and significantly, she
found that WMS Spain had no status or standing in respect of such claim
because it was not the proper defendant. In short, WMS Spain's defence
that it was the wrong party 'must be upheld'.
11. On 20 January 2011, Judge Izzo refused the application of B Plus
to join WMS Inc in the Italian proceedings, and ordered that a further
hearing was to take place on 27 April to consider issues of evidence and
disclosure.
12. On 16 February B Plus lodged its First Additional Brief, in which it
waived its claim for breach of the Supply Contract,
... reserving the right to propose again such a claim in the competent
jurisdictions vis-a-vis the mother company [WMS Inc] with offices in
Illinois (USA).
13. On 7 April B Plus lodged its Third Additional Brief in which it set
out the basis of its case that WMS Spain was the correct party to the
claim under Article 1337. It also referred to the English proceedings and
concluded,
The fact that [WMS Inc] filed a claim to obtain a negative declaration
in the UK against B Plus is not relevant for the purposes of these
proceedings, with regards to the separation (acknowledged also by
counterparty) between the two companies.
14. On 25 May, following a hearing on 27 April, Judge Izzo ordered that
the documentation served by the parties was sufficient to come to a
conclusion as to the party with whom B Plus was conducting the European
Negotiations: it was WMS Inc and not the defendant in the proceedings,
WMS Spain. It is unnecessary for the purposes of this judgment to set out
the four reasons the Judge gave for reaching this conclusion. However her
Order ended,
B Plus's request for witness evidence is therefore held unnecessary.
On these grounds the applications for judicial enquiry are rejected and the
hearing for summing up closing arguments is adjourned on 10 July 2013,
9.30 am.
15. In the light of the history of the Italian Proceedings, I have concluded
that this Court is entitled to reach the following conclusions. First, as a
matter of timing, there will be no decision from the Rome Court until after
closing arguments (at the earliest) late 2013. Secondly, the Rome Court
now has all the admissible evidence relevant to its determination of the
Article 1337 Claim against WMS Spain. Thirdly, there is no immediate
prospect of WMS Inc being 'joined' into the Italian Proceedings in the
light of the refusal of that application on 20 January 2011. Fourthly, there
is no realistic prospect of Judge Izzo coming to a different view in 2013
about the merits of WMS Spain's defence that B Plus has sued the wrong
party ('the wrong party defence'). She reviewed all the evidence which
was admissible and concluded that she had enough evidence to come to a
decision. I note in this context that she refused to admit expert evidence
on the quantification of B Plus's damages.
16. I accept Mr Houseman's submission that in this case it is possible to
predict the likely outcome of the Italian Proceedings. Even if there were
an appeal from her decision, this cannot take place until after July 2013.
I also accept his argument that B Plus would not be able to consolidate
a claim against WMS Inc in the Italian Proceedings prior to the July 2013
hearing.
17. These matters are relevant to the existence or magnitude of any risk
of irreconcilable decisions as between the English Action and the Italian
Proceedings.
18. On this basis of the above, I have reached the following factual
conclusions. (1) If WMS Inc's claims were to proceed to a trial in the
Commercial Court the trial would be likely take place in the Autumn of
2012 (with a realistic time estimate of 2-3 weeks) and with judgment
being given in the Autumn. (2) It follows that the issues in the English
Action are likely to be determined a year before the first instance decision
in the Italian Proceedings. (3) The Rome Court would be bound to take
into account such prior judgment, in so far as relevant to the issues it had
to determine. (4) As a matter of commonsense, it is to the highest degree
unlikely that, if the Negotiation Claim proceeds in England, B Plus would
fail to counterclaim for its alleged loss against WMS Inc under Article 1337
and would instead stick obdurately to its position that only WMS Spain
was engaged in the negotiations. The allegations which B Plus is likely to
make in relation to the Negotiation Claim in the English Action will not
require the English Court to make findings to the effect that WMS Spain is
or is not liable in respect of such matters. All of this is relevant to the risk
of inconsistent outcomes.
The Article 27 Application
19. Articles 27 and 28 come under the heading of section 9 of the
Brussels Regulation, 'Lis Pendens – related actions.'
20. Article 27 provides:
1. Where proceedings involving the same cause of action and between
the same parties are brought in the courts of different Member States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established.
2. Where the jurisdiction of the court first seised is established, any court
other than the court first seised shall decline jurisdiction in favour of that
court.
21. It is convenient to note two uncontroversial points about the
application of Article 27. First, the approach to the question whether
the cause of action in proceedings in the two jurisdictions is the same
reflects the general underlying policy of avoiding at the outset the
possibility of irreconcilable judgments. It is for this reason that Article 27
should be interpreted 'broadly so as to cover, in principle, all situations
of lis pendens before the courts' of Member States, see Underwriting
Members of Lloyd's Syndicate 980 and others v Sinco SA [2008] EWHC
1842 (Comm), Beatson J at [22], citing Case C-351/89 Overseas Union
Insurance Ltd etc v New Hampshire Insurance Co[1991] ECR I-3317,
[16]. Secondly, Article 27 also has a secondary aim, namely to minimise
the possibility of concurrent proceedings i.e. to discourage a multiplicity
of proceedings: Recital (15) of the Brussels Regulation; see alsoEvialis SA
v SIAT and others [2003] EWHC 863 (Comm), Andrew Smith J at [127],
citing the dictum of Saville LJ in 'The Happy Fellow' [1998] 1 Lloyd's Rep
13 at 17-18.
22. The parties agreed that six issues arose on this part of the
Application. I shall deal with these issues in the order in which the parties
presented them, although it will be apparent that some of the issues may
not arise in view of the answers on prior issues.
(1) Is the Rome Court still seised of the Supply Contract Claim by B Plus
against WMS Spain?
23. Mr Brent (for B Plus) acknowledged that on 16 February 2011 B
Plus had taken the decision to waive the Supply Contract Claim in the
Italian Proceedings, while reserving its right to advance such claim in
the competent jurisdiction against WMS Inc, which the English Action
gives B Plus the opportunity to do. However he submits, by reference to
the evidence of Avv Riccardo Troiano that, notwithstanding the waiver,
by reason of Articles 306 and 308 of the Italian Code of Civil Procedure
(ICCP) the Italian Court remains seised of the claim until WMS Spain has
accepted the waiver and there has been a formal declaration from the
Court. The evidence of Avv Roberta Falciai served on behalf of WMS Inc is
to the directly contrary effect. Her evidence is that Articles 306 and 308
only apply to the renunciation of the entire proceedings, and that since B
Plus did not discontinue the entire claim those articles were not engaged.
All that happened was that B Plus modified its claim.
24. The conflict of evidence raises a common problem in this type of case.
The Court is faced with directly conflicting evidence of foreign law given,
not by experts owing duties to the Court, but by lawyers articulating
views on behalf of their clients.
25. Nevertheless, one matter is clear: when B Plus waived its Supply
Contract Claim against WMS Spain it did not purport to renounce or
discontinue under Article 306. On this basis it seems to me inherently
unlikely that the Supply Contract Claim continued even technically to exist
in some form of forensic limbo until formally pronounced on by the Italian
Court for the purposes of Article 27. I therefore conclude that the Supply
Contract Claim is no longer part of the Italian Proceedings, and the Rome
Court is not seised of this claim.
(2) If not, can this Court nevertheless apply Article 27 on a 'claim by
claim' basis to the Negotiation Claim?
26. The argument of B Plus is that, although the Supply Contract Claim
is not before the Italian Court, the Negotiation Claim is before that Court
and therefore the English Court is bound to stay the Negotiation Claim.
Mr Brent relied on the decision of the Court of Justice in Case C-406/92
'The Tatry'. In that case the Court considered whether Article 21 of
the Brussels Convention (the predecessor to Article 27 of the Brussels
Regulation) required a 'complete identity' of parties between the two
relevant sets of proceedings before the national court was bound to stay
the second set of proceedings. The Court concluded that the requirement
of identity meant that the court which was seised second should only
decline jurisdiction 'to the extent to which the parties to the proceedings
pending before it are also parties to the action previously started
before the court of another Contracting State; it does not prevent the
proceedings from continuing between the other parties' [33]. Although
this resulted in the 'fragmentation of proceedings', this could be mitigated
by staying the other proceedings under Article 22 of the Convention (now
Article 28 of the Brussels Regulation). The aim of avoiding irreconcilable
judgments superseded the aim of avoiding fragmentation of proceedings.
27. Mr Brent relied on 'The Tatry' as an authority by analogy for the
proposition that the English Court is obliged to treat claims separately
and apply Article 27 to each claim, just as it is obliged to treat the parties
separately. He also drew attention to two decisions which he submitted
supported this proposition. The first was the decision of Mance J in
Toepfer International GmbH v Molino Boschi SRL [1996] 1 Lloyd's Rep
510 at 513 where the Judge adopted a claim by claim analysis when
considering Toepfer's claims in the English proceedings for injunctive
relief and for a declaration (albeit concluding in both cases that the
English proceedings did not involve the same cause of action as the
Italian proceedings). In the second decision, Bank of Tokyo-Mitsubishi
Ltd v Baskan Gida Sanayi ve Pazarlama [2004] EWHC 945 (Ch) Lawrence
Collins J stayed the contractual claims in the English proceedings under
Articles 27 and 28, but not the tortious claims: see [243]. Mr Brent also
referred to Briggs & Rees, Civil Jurisdiction and Judgments, 5th edition,
§2.30.
28. For WMS Inc, Mr Houseman submitted that the starting point was that
Article 27 referred to staying 'its proceedings' and not claims. Although
'The Tatry' was analogous, there was no binding authority on the point;
and although Lawrence Collins J in the Bank of Tokyo-Mitsubishi case
assumed that the Courts could adopt this course, it was not a live issue
in that case. Furthermore, there were two other cases Evialis SA v SIAT
(above) andUnderwriting Members of Lloyd's Syndicate 980 and others v
Sinco SA (above) in which Andrew Smith and Beatson JJ concluded that a
claim by claim approach was not appropriate.
29. It seems to me that Mr Houseman is right to say that the starting
point is that Article 27 refers to 'proceedings' and that the use of such
a word does not envisage parts of proceedings being the subject of a
stay or an order declining jurisdiction. Although in the 'The Tatry' the
ECJ held that proceedings might be stayed against some parties but not
others it considered that such fragmentation of proceedings was, even
to that extent, a disadvantage. In my judgment this is a rather slight
basis for requiring a claim by claim analysis involving further potential
fragmentation in every case where there is more than one claim. Whether
such an approach is justified is likely to depend on the application of the
broader principles of avoiding irreconcilable judgments and minimising the
number of legal proceedings. For these reasons, although I am doubtful
about approaching the Negotiation Claim on a claim by claim basis, I have
not reached a concluded view on this issue.
(3) Depending on the answers to (1) and (2), do the Italian Proceedings
and the English Action involve the same cause of action?
30. At this stage of the argument, the Court has to consider whether the
Negotiation Claim (in the English Action) and the Article 1337 Claim (in
the Italian Proceedings) are or involve the 'same cause of action'. In order
for this to be so it is common ground that the two sets of proceedings
must involve both (1) the same cause (i.e. they have the same facts and
rule of law as their basis); and (2) the same objet (i.e. they have the
same view in end). The claims themselves need not be identical and,
in making the assessment, the Defences are to be disregarded, see the
summary in Underwriting Members of Lloyd's Syndicate 980 and others
v Sinco SA (above) [24]. Substantive claims for liability and claims for
declarations of non-liability are capable of having the same 'cause' and
'objet', see [25] of the same case.
31. In my judgment neither the 'cause' nor the 'objet' are the same.
32. The cause is not the same because, although the factual basis of
the claim is the same, the rule of law is not. If one looks at the claim
documents in each set of proceedings, the applicable law of the relevant
tort claim is different: B Plus contends in the Italian Proceedings that
Italian Law is the applicable law; and in the English Action WMS Inc
contends probably that Illinois law, or possibly that English law, is the
applicable law. These involve different inquiries in deciding any liability
for breaking off pre-contractual negotiations, and it is unlikely that both
courts will apply the same substantive law to such allegations.
33. Nor is the objet the same. The respective proceedings have different
views in end. The objective of the Italian Proceedings is to fix liability to
pay compensation upon WMS Spain and no other party. The objective of
the English Action is to establish that WMS Inc has no liability for having
ended the European Negotiations. As already noted, both sides have
accepted that these are not the same parties.
(4) If so, are the two sets of proceedings between the same parties?
34. The parties are agreed that this is the key issue. Mr Houseman took
the initial point that B Plus has in effect accepted that the two sets of
proceedings are not between the same parties. In the English Action only
WMS Inc is involved, and in the Italian Proceedings only WMS Spain is
involved. He relied on the acknowledgement in B Plus's 3rd Additional
Brief of 7 April ([13] above) that the two companies were separate. He
also drew attention to a passage from the 1st statement of Avv. Dott.
Troiano at §24.
If B Plus brought fresh proceedings in the Court of Rome against WMS
Inc alone the proceedings would be regarded as related and as falling
therefore within Article 274 rather than Article 273. This is because, as
I explain further below, the same relief would be sought and the same
cause of action would be relied on, but the claim would not be between
the same parties.
35. Although Mr Houseman was entitled to advance these points as an
advocate's flourish, the issue calls for answers to two specific questions:
(a) Is there a privity of interest between WMS Inc and WMS Spain,
and (b) are the interests of WMS Inc and WMS Spain indissociable or
indivisible?
36. Mr Brent submitted that the term 'party' had an autonomous
European meaning. In particular, identity could exist where the parties
involved were separate legal entities. It would depend on whether there
was 'such a degree of identity between the interests of the entities that
a judgment against one of them would have the force of res judicata
as against the other', see the summary of principles set out in Kolden
Holdings Ltd v Rodette Commerce Ltd and another (above) at [85]. He
also argued that it was in principle possible for a parent company and its
subsidiary to be regarded as the same party for the purposes of Article
27. In Berkeley Administration Inc v McClelland[1995] I.L.Pr 201 at [13]
and [30], Dillon LJ regarded it as 'wholly unreal' for an English parent
company and a French subsidiary to be treated as separate parties.
Although the French subsidiary (which had commenced the French
proceedings) had never been a party to the English proceedings, the
English parent company (which was a party to the English proceedings
and was subject to an injunction) 'could not conceivably have evaded
its obligations' under the injunction 'by bringing in its wholly owned
subsidiary ... to do those things in France' which it was prohibited from
doing by the English injunction. He submitted that in the present case
too, it was 'wholly unreal' for WMS Inc and WMS Spain to be treated as
separate parties. The relevant person was an employee of both WMS Inc
and WMS Spain.
37. Mr Houseman accepted that the Berkeley Administration case gave
some limited support for the proposition that a parent and its subsidiary
company could be treated as the same party, but submitted that the
case was concerned with a subsidiary which had no independent role
or function and was simply used by the parent to carry out its activities
abroad. He submitted that WMS Inc and WMS Spain were separate
entities incorporated in different jurisdictions, subject to different regimes
of corporate governance, and that the evidence showed that they were
subject to different management control. The fact that there may have
been some overlap in terms of executive personnel did not mean that the
interests of the two companies were indissociable or indivisible. There was
no identity of interest similar to that sometimes found, for example, in
cases of an assignor/assignee or insured/subrogated insurer; and there
was no evidence or reason to suppose that WMS Inc was controlling or
seeking to benefit from the Italian Proceedings. Those proceedings were
brought against WMS Spain and it was that entity which was defending
them. In any event, WMS Inc and WMS Spain were running different
cases as to the applicable law of any tort claim.
38. I am very doubtful about treating the Berkeley Administration case
as establishing any broad principles extending beyond the facts of the
case. Any attempt by a parent company to hide behind the identity of
a subsidiary in order to avoid its liabilities is likely to be looked at with
close attention. In the present case the identity of the negotiating party
and whether it was WMS Inc or WMS Spain has always been at the heart
of the dispute. B Plus has recognised the distinct identities of WMS Inc
and WMS Spain throughout the course of the Italian Proceedings, by (a)
suing only WMS Spain, (b) attempting unsuccessfully to join WMS Inc,
(c) waiving its contractual claim as against WMS Spain, (d) threatening to
sue WMS Inc elsewhere on such claim, and (e) pursuing a positive factual
case as against WMS Spain and not WMS Inc on the Article 1337 Claim.
The two companies are plainly not indissociable and indivisible; and a
judgment against one would not have the force of res judicata against the
other. It seems to me that the Court needs to be cautious about treating
parent and subsidiary companies as the same parties for the purposes of
Article 27, since it would potentially expand the scope of Article 27 (the
mandatory rule) at the expense of Article 28 (where a discretion can be
exercised in an appropriate case). For these reasons I conclude that it is
unrealistic to treat WMS Inc and WMS Spain as the same parties. On 7
April 2011 B Plus acknowledged, and more importantly in its Order of 25
May 2011 the Italian Court proceeded on the basis, that they are not.
(5) Has jurisdiction over the Article 1337 claim been accepted by the
Rome Court?
39. This matter can be dealt with shortly as B Plus acknowledged that
the Rome Court has not accepted jurisdiction in relation to this claim and
therefore the terms of Article 27.2 is not engaged,
(6) In the light of the conclusions (1)-(5) above, must this Court: either
(a) stay the English Action, or (b) stay the Negotiation claim pending the
outcome of the Italian Proceedings?
40. Again, the question can be answered shortly. In the light of the
conclusions that I have already reached, it follows that this Court is not
bound to stay the English Action either indefinitely or until the jurisdiction
of the Rome Court is 'established.'
The Article 28 Application
41. Article 28 provides:
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 action
in question and the 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.
42. The parties agreed that four further questions arose under Article 28.
(7) Are the English Action and the Italian Proceedings related actions?
43. Mr Brent submitted that the test of 'relatedness' is intended to be a
straightforward test, see for example, Lord Saville in Sarrio SA v Kuwait
Investment Authority [1999] 1 AC 32, 38H-42F. The underlying purpose
of Article 28 is to avoid the risk of irreconcilable judgments; and there
should be a 'broad commonsense approach' to the question of whether
there are related actions. Article 28 should not be applied mechanically,
Research in Motion UK Ltd v Visto Corporation [2008] EWCA Civ 153,
[37], what is required is,
... an assessment of the degree of connection, and then a value judgment
as to the expediency of hearing the two actions together (assuming they
could be so heard) in order to avoid the risk of inconsistent judgments.
It does not say that any possibility of inconsistent judgments means
that they are inevitably related. It seems to us that the Article leaves it
open to the court to acknowledge a connection, or a risk of inconsistent
judgments, but to say that the connection is not sufficiently close, or the
risk is not sufficiently great, to make the actions related for the purpose
of the Article.
44. Mr Brent accepted that there were difficulties with his argument over
the Supply Contract Claim against WMS Inc (not least that B Plus had
served a Defence to the claim and had issued its application for a stay
out of time); but he submitted that the Court should stay the claim,
so as to permit B Plus to 'consolidate' this potential claim in the Italian
Proceedings. So far as the Negotiation Claim was concerned, he submitted
that the Italian and English claims were 'mirror images' of each other,
where the grounds relied on for terminating the negotiations were similar,
and that it was appropriate to stay the English Action.
45. Mr Houseman drew attention to the terms of Article 28.3 and the
importance of the test of expediency, and the principle that claims should
be heard and determined together so as to avoid the risk of irreconcilable
judgments. He submitted the risk of irreconcilable judgments should be
evaluated before the Court considered whether the actions were related
for the purposes of the Article; and that if this were done in the present
case, it was clear that there was no appreciable risk of irreconcilable
judgments. So far as the Supply Contract Claim was concerned, there
was no such claim before the Italian Courts. So far as the Negotiation
Claim was concerned, there was no appreciable risk of irreconcilable
judgments since in the Italian Proceedings the issue would be whether
WMS Spain was liable for ending the discussions, whereas in the English
proceedings the issue would be whether WMS Inc was responsible for
ending discussions.
46. Having considered these arguments and the cases to which I have
been referred, I have come to the conclusion that the relevant actions
pending in the Courts of England & Wales and Italy are not related
actions. The Negotiation Claim in the former and the Article 1337 in
the latter are similar: the names of the parties are alike and there is an
overlap in the subject matter of the dispute. However, on analysis they
are not related in the sense described in Article 28. To adopt the words
of the Court of Appeal in Research in Motion UK Ltd v Visto Corporation
(above), there is a 'connection,' but there is little risk of inconsistent
judgments and such risk is not sufficiently great to make the actions
related for the purpose of Article 28. If B Plus were to achieve everything
it seeks in the Italian Proceedings against WMS Spain (which at the
moment seems highly unlikely, in the light of the presently stated views
of Judge Izzo that WMS Spain is the wrong party to be sued in the Article
1337 claim) B Plus would be entitled to a judgment against WMS Spain to
the effect that it was responsible for the breakdown in negotiations. It is
not obvious how a judgment in this country as to whether WMS Inc was
or was not responsible for the breakdown would be inconsistent with such
a judgment.
47. I have not overlooked Mr Brent's argument that I should take into
account the possibility that his client would be entitled to consolidate its
Supply Contract Claim against WMS Inc in the Italian Proceedings. This
however is a matter which can be considered at the discretion stage (ie
under issue (9))
(8) If not, can this Court nevertheless apply Article 28 on a 'claim by
claim' basis so as to consider whether (a) the Negotiation claim and the
Article 1337 claim are related actions, and/or (b) the Supply Contract
claim and the Article 1337 claims are related actions?
48. I have already dealt with a similar argument under Article 27 (see
issue (2) above), and for similar reasons do not decide the point under
Article 28. However, in any event and for reasons which have already
appeared and which appear below, such an approach would not assist B
Plus in the present case.
(9) Was the application to stay the Supply Contract claim made out of
time and, if so, should the court grant an extension of time to remedy
this?
49. I have already recorded the circumstances in which B Plus applied
to stay the Supply Contract Claim. That application was made some
11 weeks after the expiry of the 28 day deadline for making such an
application. By that stage B Plus had served a 28-paragraph Defence and
Counterclaim to the Supply Contract Claim and a 21-paragraph Request
for Further Information (which was answered on 13 June 2011).
50. Before extending time to allow this further stay application to be
made, the Court would need to be satisfied that there were good reasons
for it being made late. No good reason has been advanced. There has
been no factual change of circumstance which might justify the lateness
of the application. B Plus had every opportunity to apply for a stay in
relation to the Supply Contract Claim. Not only did it fail to do so, its
solicitor (Mr Cockshutt) accepted that the English Court had jurisdiction in
relation to the Claim.
51. I do not accept the suggestion that there is any conduct by WMS
Inc which justified this change of approach by B Plus or entitled it to the
relief it now seeks. In any event, the suggestion that the Supply Contract
Claim should be stayed, until a possible joinder to the Italian Proceedings
(of a claim which B Plus have already specifically abandoned against the
only party to the Italian Proceedings) at an uncertain date, is a slight and
unsubstantial basis for relief, and provides a further and potent reason for
refusing the application.
(10) In the light of the answers to (7)-(9) should the Court exercise its
discretion either (a) to decline jurisdiction in respect of the Negotiation
Claim, or (b) to stay the Negotiation Claim pending the outcome of the
Italian proceedings, or (c) to stay the Supply Contract Claim pending the
outcome of the Italian proceedings?
52. I have already answered sub-issue (c) on the basis that it requires
an application which I am not prepared to allow. Sub-issues (a) and (b)
proceed on the basis of an affirmative answer to issues (7) and/or (8).
53. Both parties referred to and adopted the approach indicated by
Advocate General Lenz in Case C-129/92 Owens Bank Ltd v Bracco [1994]
QB 509 at [76-79], in which he indicated the importance of three factors:
first, the extent of the relatedness and the risk of mutually irreconcilable
decisions; secondly, the stage reached in each set of proceedings, and
thirdly, the proximity of the courts to the subject matter of the case.
54. In my judgment the application of these (non exclusive factors)
militates strongly against allowing the present application.
55. So far as the first factor is concerned, (as already noted) there is
no serious or appreciable risk of irreconcilable outcomes. The focus
and objectives of the two actions are not the same: the Article 1337
Claim in Italy is concerned with whether WMS Spain is liable for ending
the discussions, whilst the Negotiation Claim in London (including the
counterclaim which B Plus will be entitled to make against WMS Inc) is
concerned with whether WMS Inc is liable for ending such discussions
with B Plus. These are different questions. However, even if (which is
highly unlikely) both were to be answered affirmatively, this would simply
mean that WMS Spain and WMS Inc were jointly and severally liable
for the same tort/delict. These would not be irreconcilable outcomes.
Further and in any event, the Court has sufficient material from which
it can properly conclude that the most probable outcome in the Italian
Proceedings is a finding that WMS Spain is not liable. This result has been
clearly foreshadowed by Judge Izzo in her 2 December Order and again in
her 25 May Order. There is to be no new evidence in those proceedings,
so her firm view is unlikely to change. There will be, as Mr Houseman put
it, 'a procedural vacuum' in the Italian Proceedings. I take into account
the argument of B Plus that it will seek to re-open Judge Izzo's ruling on
the evidence and appeal her first instance decision. However that is a
matter which impacts on the next factor.
56. So far as the second factor is concerned (the stage at which both
actions have reached), the strong likelihood is that the trial here
would determine all the relevant issues between the two real parties
to the dispute (WMS Inc and B Plus) well before any first instance
determination of the Italian Proceedings. The present realistic estimate
is for a Commercial Court trial in the autumn of 2012. This will result
in findings of fact binding upon B Plus which may (if relevant at all) be
accommodated by the Rome Court in its subsequent determination in
relation to WMS Spain. Mr Brent submits that this Court should not be
critical of the way in which other Member Courts conduct their business.
I accept that submission. However two matters of fact stand out starkly.
First, as is common ground, the confined issues with which Judge Izzo
is concerned will not be determined at first instance until July 2013.
Secondly, the admirable concision with which Judge Izzo made her rulings
may be compared favourably with the length of the present Judgment.
It follows that an English judgment would be available at least a full year
before the first instance determination in the Italian Proceedings, and long
before any hypothetical future consolidated Italian Proceedings.
57. So far as the third factor is concerned (the proximity of the courts to
the subject-matter of the case), Mr Houseman accepted that some, but
not all, of the underlying factual circumstances of the Negotiation Claim
took place in Italy. However, he submitted that this did not mean that the
Italian Court was a more, still less the most, appropriate or expedient
forum for determination of the issues at the heart of this case. He relied
on the domicile of B Plus, the reliance on events which took place in
England in January 2010 and the trial of the Supply Contract claim in the
jurisdiction. There are factors which militate each way, but even if the
full weight of this factor is weighed in B Plus's favour, I do not regard it
as outweighing the other considerations in favour of letting the English
Action proceed to trial.
58. I therefore refuse to exercise the Court's discretion either to decline
jurisdiction in respect of the Negotiation Claim, or to stay that claim
pending the outcome of the Italian Proceedings.
Conclusion
59. For these reasons the applications of B Plus are refused. I will hear
the parties on the form of directions which should be made in the light of
this judgment. It is to be understood that I intend that the case should
proceed to a 2-3 week trial in the Michaelmas term of 2012.
60. In Kolden Holdings (above) at [96] Lawrence Collins LJ expressed the
hope that the parties, having spent a large amount of money on what he
regarded as a sterile exercise, would now turn their attention to dealing
with the substance of their dispute. I repeat the expression of that hope
in the present case