MANCE J: The Brussels and Lugano Conventions on Civil jurisdiction
and Judgments implemented in this country by the Civil Jurisdiction and
Judgments Act, 1982 as amended and the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards to which the
Arbitration Acts, 1950-1979 give effect contemplate the early assignment
of cases to a proper forum and tribunal for their substantive resolution.
In practice, the resolution of issues relating to forum and tribunal has
often proved complex, costly and not without at least some delay. In
this country such issues are determinedly decided at the outset of
proceedings. In some countries, Italy being one, this is not automatically
so. On any view, it is desirable that parties should define their positions
on jurisdiction and arbitration at as early a stage as possible. They should
not be encouraged to see how they fare in one forum before seeking to
invoke or force resort to another. There was a fair measure of agreement
between the parties that this represents the modern view in these Courts.
But the plaintiffs before me, who I shall call T., submit that in relation
to applications to enjoin foreign proceedings it is only recently that the
English Courts have expected a defendant in foreign proceedings to
act promptly if he wished to take any steps in England to enjoin the
foreign proceedings. Previously, they say, the English Courts would in the
interests of comity have expected a foreign defendant first to exhaust any
remedies which he might have in the foreign jurisdiction.
In the present case the defendants before me, M., have since Oct 14,
1988 been pursuing proceedings in Ravenna, Italy arising out of the
delivery to Venice in February, 1988 of some 11,120 tonnes of Chinese
soya meal under a contract for sale cif Ravenna and/or Venice by T.
to M. made on terms incorporating GAFTA 100 in January, 1988. M.
have two claims, a small claim for short delivery worth US $41,287 and
a larger claim for an allowance which they say was agreed to reflect
excessive urease activity of the cargo as shown by certificates of Salamon
& Seaber. This latter claim is in the sum of US $4O7,467.71. In each case
substantial interest is probably to be added. In the Italian proceedings,
T. have made three responses: (i) that the Italian Courts lack jurisdiction
to hear the case under the Brussels Convention since the place of
contractual performance for the purposes of art 5 was outside Italy; (ii)
that GAFTA 100 provides for arbitration of any dispute arising out of or
under the contract in London in accordance with GAFTA 125, and (iii) as
a subordinate submission, which in T.'s submission is made unnecessary
by points (i) and (ii), that M.'s claims should be rejected on the merits.
In submissions dated Dec 15, 1989 and Oct 5, 1990 T. specifically sought
from the examining Judge, Dr Cognani, an early determination of points
(i) and (ii) by the College of Three Judges. The examining Judge evidently
acceded to the request, and Nov 10, 1992 was fixed for the hearing
before the College. This date was on Sept 1, 1992 postponed to Apr 12,
1994 when Dr Cognani was transferred to other duties and replaced by
Dr Coco. In the meantime M. must have had at least some doubt about
their prospects on points (i) and (ii) in Italy, and sought extensions of
time for arbitration in London first from GAFTA under their rules and then
from me, sitting in November, 1992 as a Deputy Judge in the Commercial
Court, under the Arbitration Act, 1950, s 27. In each case M. were
unsuccessful, and the Court of Appeal refused leave to appeal against my
refusal of an extension. I refused the extension sought although in the
course of my judgment I concluded that the small shortage claim was
unanswerable and that the larger urease claim was "extremely strong".
Shortly before the date for hearing before the College, both parties
exchanged long and detailed submissions and replies on all three points.
In vigorous submissions dated Mar 25, 1994 T. not only pointed to M.'s
unsuccessful attempt to arbitrate in London as a sign of lack of faith in
its case in Italy, but also asked rhetorically (and somewhat inconsistently
with their own previous stance) why there was so much exertion on
points (i) and (ii) without even a nod in the direction of the substantive
merits. T. went on to suggest that M. had failed to bring any proof of their
claims. M. submitted also at length on Apr 1, 1994 that they had never
intended to agree to arbitrate and that their signature of a broker's form
of contract confirmation after the event did not amount to a relevant
written agreement to arbitrate under Italian law. On the merits, they said
that T. had never contested the documents on which their two claims were
based. In a reply dated Apr 8, 1994 T. compared M.'s attitude before the
Italian and English Courts.
The College of Three, Drs Coco, Agnoi and Picaroni, met on May 6,
1994. They confirmed the relevance of M.'s evidence as to the date of
signature of the broker's confirmation and, as I understand it, although
the translation is obscure, they also confirmed the relevance of the issue
of arbitration and indicated that they would decide that issue, fixing June
7, 1994 for the hearing of the evidence before Dr Coco. Certainly, when
the matter came back before the Court on June 7, 1994, the evidence
heard related to that issue and the matter was adjourned for T.'s lawyer
to file copies of the documents used in the English proceedings under s
27. These documents were filed on Oct 18, 1994 and on Dec 13, 1994
a further hearing was fixed before the College for Feb 13, 1996. On the
same day T. filed a further brief relying on points (i), (ii) and (iii).
By originating summons dated Oct 12, 1995 T. now seeks from this Court
(a) a declaration that M. --
... are entitled and obliged, pursuant to an arbitration agreement
contained in [the] contract of sale... concluded on 26th January 1988...,
to refer to arbitration by [GAFTA] the disputes the subject of... the
Ravenna proceedings...
and (b) injunctions restraining [M.] from taking any further step or in
any way participating further in the Ravenna proceedings, requiring
M. to discontinue the Ravenna proceedings and restraining them from
commencing any proceedings in respect of the claims the subject of
such proceedings otherwise than by GAFTA arbitration in London. In
reality T. would object to any such arbitration as time barred, both under
GAFTA rules and now under the Limitation Act. Leave to serve these
proceedings out of the jurisdiction was sought and on Oct 10, 1995
granted by Mr Justice Waller under RSC, O 11, r 1(1)(d)(i), (ii) and (iv).
T.'s justification for proceeding under O 11, r 1(1) rather than O 11, r
1(2) was that the case fell outside the Brussels Convention because it
concerned arbitration within art 1(4) of that Convention. M. submit that
was wrong, but take no specific point on the failure to act under O 11, r
1(2); if the matter had arisen for consideration, it may well be that T.'s
originating summons would have fallen to be regarded as relating to the
performance of an alleged obligation to arbitrate in England, within art
5(1) of the Convention.
M. have however issued a summons under O 12, r 8 taking different
points. Those which are live are that, since the Italian Court was
unquestionably first seized of proceedings, the English Court must or
should decline or stay jurisdiction under arts 21 or 22 of the Convention,
or that, if the Convention does not apply, that leave should not have been
granted under O 11, r 1(1) as a matter of discretion. If this originating
summons fails, then M. submit that T. should be refused the declaratory
and injunctive relief sought because there was and is no "dispute" falling
within the GAFTA arbitration agreement and/or as a matter or discretion
and/or in the light of the lapse of time in issuing the originating summons.
Logically, the summons under O 12, r 8 comes first, but, in view of the
shortness of time before the next hearing in Ravenna and the overlap in
some of the matters arising, I have heard argument on the summons and
originating summons in open Court together.
Does the Brussels Convention apply to the claims made in the originating
summons?
The originating summons contains a claim for a declaration and claims
for three injunctions, and it is necessary here, as in other contexts in
this judgment, to bear in mind that the same considerations may not
apply to each. A declaration that a defendant is entitled and obliged to
arbitrate a particular dispute or disputes might be regarded as more
closely related to arbitration than injunctions requiring him not to pursue
and to discontinue foreign proceedings. Even so such a declaration is
not integral to the arbitration process in the same way as an application
to the Court to appoint an arbitrator (cf Marc Rich & Co AG v Societa
Italiana Impianti PA. (The Atlantic Emperor), [1992] 1 Lloyd's Rep 342
(Eur Ct)). It may be designed to do no more than to establish the basis
for a claim for damages for breach of contract in failing to arbitrate or for
an issue estoppel in relation to foreign proceedings. In the former case, a
claim for such a declaration would not seem to me to fall within art 1(4)
of the Convention. In the latter case, if the decision in Partenreederei
m/s "Heidberg" and Another v Grosvenor Grain and Feed Co Ltd and
Others (The Heidberg), [1994] 2 Lloyd's Rep 287 is right, it would also
not fall within art 1(4). The claims for injunctions, although based on
the asserted existence of binding and applicable arbitration clauses,
are also directed to stopping foreign proceedings rather than actually
bringing any arbitration into existence. As I have said, T.'s response to
any suggestion that there could actually be any effective arbitration would
be time bar. For present purposes, I shall proceed on the basis that the
Brussels Convention does apply to all the claims made by T.'s originating
summons.
Article 21
Again it is necessary to bear in mind possible differences between the
claims for declaratory and injunctive relief. The claims for injunctive relief
do not in my judgment have the same object or cause of action as the
proceedings in Italy. The object means "the end which the action has in
view": see The Maciej Rataj, [1995] (ECJ) 1 Lloyd's Rep 302 at p 308, par
41. M. must show that T.'s originating summons has the same end in view
as M.'s action in Italy. It does not. M. in Italy are seeking to recover sums
allegedly due on an examination of the terms and performance of the
contract. T. in England are seeking to stop any such examination taking
place in Italy at all. By the same token the cause of action (described
in The Maciej Rataj par 39 as "the facts and the rule of law relied on as
the basis of the action") is not the same in the two countries. In Italy
the terms regarding delivery and urease and the parties' performance in
that regard fall for determination, whereas in England the only issue is
whether the Italian claims should be being determined by arbitration in
London. It is true that T. have also raised in Italy the preliminary objection
that the claims should be being arbitrated in London. But that is, at most,
only one aspect of the Italian proceedings, and, although this is not
critical, because of the differences between the English and Italian law
regarding arbitration agreements it raises very different considerations
in the two countries. It does not make it possible to view the two sets of
proceedings as having the same cause of action.
The claim for a declaration also has a different object and cause of action
in my view from the Italian proceedings. Its object is less clear-cut. In
so far as it is to try to oblige or influence the Italian Court to accede
to T.'s defence in Italy that the matter falls within a binding arbitration
agreement, the object is to prevent the determination by the Italian Court
of the claims which it is M.'s aim in Italy to pursue. In so far as it is to
resist enforcement in third countries such as Germany or to base a later
claim for damages for breach of the arbitration proceedings, the object
is again distinct from any at which M.'s suit in Italy is aimed. The cause
of action in the sense identified above is also not the same for reasons
similar to those identified in considering the claims to injunctions.
In my judgment therefore art 21 is of no assistance to M..
Article 22
This article applies "where related actions are brought in the courts of
different Contracting States". For the purposes of the 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.
The Court second-seised may then, while the actions are pending at first
instance, stay its proceedings. The European Court in The Maciej Rataj
pars 51-53 emphasized that, to achieve proper administration of justice,
the interpretation must be broad and cover all cases where there is a risk
of conflicting decisions, even if the judgments can be separately enforced
and their legal consequences are not mutually exclusive.
That there is a connection between the Italian and English proceedings
is beyond doubt. The question is whether they are "related" in the sense
envisaged in art 22 and, if so, whether the Court's discretion should be
exercised to grant a stay. Taking the injunctive claims first, their purpose
is, as explained, to stop M. pursuing the Italian proceedings (or any
other proceedings, save arbitration). It would be quite contrary to that
purpose, and inexpedient, to require the present claims to be heard and
determined together with the Italian proceedings which it is their very
object to stop. Further, it is not to be envisaged that M. would disobey any
such injunction, if granted. (Indeed, in parenthesis, it would itself appear
likely to be entitled to recognition abroad under the Brussels Convention.)
If and when an injunction is granted, the Court must assume that there
will be no further Italian proceedings. If no injunction is granted, caedit
quaestio. Either way, the problem of irreconcilable judgments should not
arise. Thirdly, if the Italian action were pursued to a successful judgment
by Molino despite an English injunction, there would appear to be every
reason to think that the Italian judgment would not be recognized in
England: cf art 27(1) of the Brussels Convention. The evidence of Frau
Drobnig of the German law-firm, Hasche & Eschenlohr, suggests that a
like result could apply in Germany.
The declaratory claim raises different considerations. It is aimed at
determining inter partes the issue whether the claims being made in Italy
should have been pursued in London arbitration. That is the same issue
as one of the defences raised by T. in the Italian action, although the legal
principles regarding the validity of arbitration agreements in England and
Italy are very different. In Italy, the topic is apparently regarded as one
of procedure, subject to Italian law, which treats art II of the New York
Convention for its domestic purposes as requiring some form of specific,
and (normally at least) separately and contemporaneously signed,
agreement on arbitration. If there is a binding arbitration agreement,
then it seems in Italy that the Italian action is incompetent and would
fail for that reason. In parenthesis, M. do not appear in Italy to have the
benefit of the argument that exists in the context of English proceedings
for summary judgment, namely that, even if there would otherwise be an
arguable dispute which ought on its face to go to arbitration, where the
claim can on examination be shown to be incapable of serious dispute,
judgment should be given and a stay refused. In England, whether
there is a valid arbitration agreement is a matter to be determined by
the proper law of the contract, here, according to English principles,
unquestionably English. Nonetheless, the basic issue whether the Italian
claims should be being arbitrated is the same in both countries, and for
the purposes of art 22 differences which would exist between national
laws are not decisive. The Heidberg indicates that, if the Italian Courts
were to determine that the Italian claims are not subject to arbitration,
the English Courts would prima facie be bound by that determination,
despite art 1(4) of the Brussels Convention. Neither party suggested that
The Heidberg was wrong before me. On that basis, it would presumably
follow that, if the English Court were now to determine, either way, that
the Italian claims are or are not arbitrable, the Italian Court would be
bound thereby in its current proceedings. In my view T.'s claim in this
country for a declaration is related to the issue of arbitration which arises
in Italy in a way which does make it potentially expedient to hear and
determine it together with the same issue in Italy to avoid the risk of
irreconcilable judgments. In the present case, the aim may be, as I have
said, not so much to achieve any irreconcilable judgments, as to pre-
empt the Italian Court's decision as to the existence of any arbitration
agreement. Since the English Court is second seised, it should thus look
closely at the suggestion that it should as a matter of discretion fulfil
any such role. T. can say that the treatment by Italian law (so far as it
has been explained to me) of the validity of arbitration agreements as a
matter of procedure and its apparently rigid attitude to the nature of the
written agreement contemplated by art II of the New York Convention
are on their face unexpected and out of line with general trends. But
there would in the present case be a number of other factors which would
bear strongly on any question whether the English Court should, in the
exercise of any discretion under art 22, countenance the continuation of
the present declaratory claim. I need say no more on these here because
my conclusions on the next point mean that there is another reason why
art 22 does not anyway apply.
Article 17 -- exclusive jurisdiction agreement
There is Court of Appeal authority that, if art 17 applies, then it has
precedence over arts 21 and 22: Continental Bank NA v Aeokos Compania
Naviera SA, [1994] 1 Lloyd's Rep 505; [1994] 1 WLR 588. Here, in
addition to the arbitration clause, GAFTA 100 includes a clause (cl 30)
conferring exclusive jurisdiction on the English Courts over all disputes
which may arise under this contract. M., while reserving their right to
challenge the correctness of that decision at an appropriate level, raised
only one answer before me to its application to the present claims for a
declaration and injunctions. That was that T. had voluntarily submitted
on the merits in the Italian litigation, so that art 17 was itself trumped
by art 18. In my judgment that is wrong viewing the facts of this case
in the light of the guidance given as to the legal conception of voluntary
submission in the European Court in Elefanten Schuh GmbH v Pierre
Jacqmain, (Case 150/80) [1981] ECR 1671 and by the Court of Appeal in
The Atlantic Emperor (No 2), [1992] 1 Lloyd's Rep 624, where at p 633
Lord Justice Neill explained the Elefanten case as saying that --
... provided the defendant makes it clear in his first defence rather than in
some subsequent defence that he is contesting the jurisdiction, that will
not amount to a submission to the jurisdiction even though there is some
additional material which constitutes a plea to the merits of the case.
In that case, the Court of Appeal proceeded on the basis that --
... it may well be that it was not necessary for Marc Rich [the defendant]
to lodge an alternative defence on the merits in October, 1988, but they
made it abundantly clear in the pleading that the primary purpose of the
document was to challenge the jurisdiction of the Genoa Court.
Here, T. have clearly made submissions on the merits, and there is
nothing to show that they were required to do this. However, they did so
at each stage as a subsidiary and precautionary matter. Their primary
case was that the issues regarding jurisdiction and arbitration should
be resolved in their favour. The request that those issues should be
addressed first in Italy appears to have been accepted and to be being
implemented, albeit slowly. Even T.'s most enthusiastic reference to the
substantive merits, when they asked rhetorically on Mar 25, 1994 why
there was so much exertion on points (i) and (ii) "without even a nod
towards the issue of substance" and suggested that M. had failed in
their proof, followed lengthy submissions on the primary issues. I see
nothing to constitute any submission on the merits. It is notable also that
no submission has been made by M. in Italy to the effect that T. have
voluntarily submitted there within art 18.
Discretion
Apart from the context of art 22, this does not arise if the Convention
applies. Since I am prepared to proceed on the basis that the Convention
does apply, it is unnecessary for me to consider any issue of discretion
which would have arisen under O 11, r 1(1).
Conclusions relating to M.'s summons under O 12, r 8
My conclusions in relation to arts 21 and 22 indicate that these articles
would anyway create no obstacle to the pursuit of the claims for injunctive
relief, quite apart from art 17. M.'s summons under O 12, r 8 therefore
fails in relation to the claims for injunctive relief. As to the claim for
declaratory relief, art 21 would anyway be inapplicable to M.'s summons.
Article 22 would on the other hand be potentially applicable, but for the
existence of the exclusive jurisdiction clause and application of art 17.
M.'s summons under O 12, r 8 will thus be dismissed in its entirety.
The originating summons
Claims for both injunctive and declaratory relief are discretionary. The
present claims in the originating summons are made very late in the
course of the Italian proceedings. M suggested that this might make
them subject to a defence of laches. Initially, this was disputed by T.
in relation to the claim for a declaration, with reference to Chapman v
Michaelson, [1909] 1 Ch 238 at pp 241-242 and 243, although I doubt
whether that authority has the effect suggested. Ultimately it was in any
event accepted that the discretionary nature of the relief makes the point
academic, unless I were to treat the claims for declaratory and injunctive
relief as founded on events occurring more than six years ago and were
to apply to them some rigid six year limit analogous to that governing
causes of action within the Limitation Act. That would not in my judgment
be appropriate. M. have, on T.'s case, pursued the Ravenna proceedings
in breach of agreement up to this very date, and the declaration and
injunctions are sought to prevent that current and continuing breach.
Leaving aside that point therefore, it was also conceded by T. that all the
factors which could be taken into account on a plea of laches could also
be taken into account in the exercise of the Court's general discretion.
Lindsay Petroleum Co v Hurd and Others, (1874) LR 5 PC 221 shows the
width and flexibility of the considerations relevant on laches. Laches and
the exercise of discretion merge into one another.
As I have said, T. have never accepted the legitimacy of M.'s pursuit
of the Italian action, and both the declaration and the injunction are
sought in respect of what is said to be a current and continuing breach
by M.. Despite this, it seems to me that, in a more general sense, delay
is an extremely relevant factor in the exercise of any discretion whether
to grant relief as sought by the originating summons. T.'s actual state
of mind was dealt with in a number of affidavits, which were certainly
capable of giving differing impressions about it. At the end of the day,
the position appears to be that T. did not actually take any relevant legal
advice or think about the possibility of any English relief until after a
seminar in Hamburg in May, 1995.
However in the meantime the Italian action has been proceeding
for between six and seven years. The parties have investigated and
exchanged exhaustive and no doubt costly memoranda under Italian
law and procedure on issues regarding jurisdiction, arbitration and the
merits. In the Italian action, T. appear to have been happy in the belief
that all was going well until, they say, May, 1994. The College of Three's
decision to call for evidence on, in particular, the dating and signing of
the broker's contract confirmation has apparently depressed T.'s view of
their prospects of success in establishing a binding arbitration agreement
under Italian law. A year later, in May, 1995, T.'s in-house lawyer, Dr
Katzorke-Weihe attended a seminar in Hamburg where the decision of
the English Court of Appeal in Aggeliki Charis Co Maritime SA v Pagnan
SpA. (The Angelic Grace) [1995] 1 Lloyd's Rep 87 (decided May 17, 1994)
was discussed. Dicta of Lord Justice Millett with which Lord Justice Neill
agreed in that case indicate that previous statements about the difference
with which an English Court will view applications to enjoin the pursuit
of foreign proceedings do not apply when the application is based on a
promise not to pursue such proceedings. In that case, as here, the foreign
proceedings were being pursued in Italy and it was said that they were
contrary to an agreement to arbitrate the claims in question in London.
T. thus got in touch once again with Middleton Potts who had acted for
them in the s 27 proceedings before me in 1992, and in September,
1995 the present application was intimated. T. say that they are not to
be blamed for any delay in making this application because English law
has developed and this only came to their attention in May, 1995. The
period of delay from May to September, 1995, which does not seem to me
entirely satisfactorily explained, is relatively short and should not they say
bar them from the relief claimed.
In my judgment the matter must be looked at more broadly. While I
accept that the Court of Appeal in The Angelic Grace put a new slant
on the exercise of the jurisdiction to enjoin foreign proceedings, it
has never been the law that a foreign defendant could with complete
impunity allow foreign proceedings to continue practically to judgment
and then seek at the last minute relief in England which would halt or
undermine. Lord Justice Millett was careful to qualify his statement that
the English Court should feel no diffidence in granting an injunction with
the caveat "provided that it is sought promptly and before the foreign
proceedings are too far advanced". The previous legal atmosphere
did not encourage foreign defendants to see how matters went in the
foreign proceedings over many years and then, if they felt that matters
were turning against them, to seek to prevent or pre-empt any foreign
determination by seeking an English injunction or declaration. Mustill &
Boyd on Commercial Arbitration (1989) (2nd ed) contained the following
paragraphs at p 460:
Where the case falls within the New York Convention, and possibly in
other cases as well, we suggest that the right course is for the aggrieved
party to exhaust his local remedies by seeking a stay or kindred relief
from the local courts, before asking the English Court to intervene. It is
only in cases where something has gone plainly gone badly wrong in the
local courts that the English Court should grant the extreme remedy of an
injunction.
An injunction is unlikely to be granted where the defendant has taken
active steps to defend the foreign proceedings. The Court is likely to
consider that the balance of convenience is in favour of allowing the
foreign proceedings to continue.
The former paragraph is tentative. Further, it is only relevant on an
assumption that a foreign decision will not preclude steps being taken
in England. Within the regime established by the Brussels Convention,
it must be contemplated, as cases like The Heidberg indicate, that it
is only steps prior to any foreign determination which will have any
potential efficacy at all. The latter paragraph in Mustill & Boyd contains
a warning. There are also similar warnings in analogous cases on claims
for injunctive relief to restrain pursuit of foreign proceedings in breach
of an exclusive jurisdiction clause: see Sohio Supply Co v Gatoil (USA)
Inc, [1989] 1 Lloyd's Rep 588 at p 592. I would also add that The Angelic
Grace itself also only eliminated some of the diffidence previously felt
about granting injunctive relief. It cannot, I think, be suggested that the
position relating to declaratory relief has been subject to any equivalent
change.
Both on authority and as a matter of commercial common sense, it
seems to me that if T. wished to enjoin or take other steps in England
affecting the present Italian proceedings, this was something that they
could and should have investigated with and pursued through English
lawyers long ago. T. are a substantial concern, accustomed no doubt to
taking legal advice on English law. Individually diligent as it was of T.'s
legal adviser to attend a seminar about English law in Hamburg in May,
1995, the matter must, I think, be viewed more generally. Faced with
what they have always submitted was a clear breach of an agreement
remitting any relevant disputes to English arbitration and giving exclusive
jurisdiction to the English Courts on matters not so remitted, it was in my
view incumbent on T. to investigate and raise the possibility of taking any
relevant steps in England to rectify the position long before September or
May, 1995, if they wished to take any such steps at all.
They could have taken such steps at any time from 1989 onwards. During
the s 27 proceedings before me in 1992, although T. always maintained
that the Ravenna proceedings were contrary to the London arbitration
agreement, one factor before me was that M. had voluntarily chosen to
take their chance on proceedings in Italy, in disregard of that arbitration
agreement. If no prior steps had been taken then, that would have been
an occasion when T. could have been expected, objectively, to consider
and seek to enjoin the Italian action. Whether it would at the end of the
day have made any difference or not, a claim by T. to an injunction at
that stage would have been a material factor which I would have needed
to evaluate and consider. Since no such claim was raised I dealt with the
matter on the basis that I had before me an attempt by M. --
... to change direction after having for so long sought to gain what they
must have perceived as the advantages of an alternative jurisdiction.
I also mentioned that M.'s prospects of establishing Italian jurisdiction
were presumably no worse in 1992 than they had been at any time since
1989.
M. say that, had T. taken or announced such steps at an early stage in
the Italian proceedings, then M. would have recognized that they should
after all protect their position in arbitration, before it was too late to seek
the appropriate s 27 extension. That seems to me, as a matter of fact,
quite possible, especially if T. had sought injunctive relief. However, I held
in 1992 that it was basically M.'s own fault in the circumstances as they
existed that they lost any right to s 27 relief by 1992. I do not therefore
accept that M. can attribute positive prejudice of this nature to T.'s failure
to seek the present relief then. If, for example, T. had countered the s
27 application with a claim for injunctive relief, the situation might still
have arisen where each side was saying that the other was acting too
late, and where each side was saying that, had the other acted earlier,
it would have realized that it needed to act itself. Neither party could in
that situation attribute to the other a failure which was in reality his own
separate fault.
T. say that they were happy until mid-1994 that they were going to
succeed in their procedural objections in Italy. An alternative route
to establishing these objections only became relevant or attractive in
mid-1994 when they detected that they might fail in Italy, although even
then it did not occur to them that any such route existed, and they did not
investigate whether it did until after the Hamburg seminar of May, 1995.
I accept that, on T.'s case, the underlying cause of the whole problem is
that M. have "flagrantly" ignored an arbitration agreement. But, even if
one accepts that premise for the moment, and notwithstanding the first
paragraph quoted above from Mustill & Boyd, there must still be some
end to litigation and to the extent to which and period over which parties
can switch between different forums in the hope of achieving what they
maintain to be the right result.
The suggestion that M. have "flagrantly" ignored an arbitration agreement
also requires examination. I held in the context of M.'s s 27 application
that the shortage claim "was effectively undisputed, although not formally
admitted by [then counsel for T.]". That remains the position. No doubt
the claim could have been submitted to arbitration, for reasons explained
in SL Sethia Liners Ltd v Naviagro Maritime Corporation (The Kostas
Melas), [1981] 1 Lloyd's Rep 18 at p 27, per Mr Justice Robert Goff (as
he was), as neither the party making nor the party resisting such a claim
in arbitration could have been heard to say that there was not even a
dispute. However, by the same token, if M. had pursued the claim by
action in this country and sought summary judgment, there would have
been no reason not to give summary judgment; in that situation it would
have been made clear, pragmatically, that there was no dispute and that
cl 31 of GAFTA 100 could not require a stay: see the same passage in
Mr Justice Robert Goff's judgment; and also SL Sethia Liners Ltd v State
Trading Corporation of India Ltd, [1986] 1 Lloyd's Rep 31 at p 33; [1985]
1 WLR 1398 at p 1401 per Lord Justice Kerr and Mayer Newman & Co
Ltd v Al Ferro Commodities Corporation SA (The John Helmsing) [1990]
2 Lloyd's Rep 290 at p 296 per Lord Justice Bingham. This being the
English attitude, it is difficult to see why the English Court should regard
it as inappropriate per se, or as a "flagrant" breach, for M. to take Court
proceedings to enforce this particular indisputable claim. It might be said
that under GAFTA 100 cl 30, any Court proceedings whatever should
have been brought in England. But that is not an objection which has
been raised by T. anywhere, nor is it one which has any attraction in the
context of the present summons seeking injunctive and/or declaratory
relief with a view to obstructing an indisputable claim in Italy.
The other, more important urease claim I have previously described as
extremely strong. M. asked me to revise this description to put this claim
in the same indisputable category as the smaller claim. It may be right
that the categorization which I adopted under s 27 does not preclude a
more robust analysis if I am asked to say whether the claim would have
been one in respect of which an English Court would have been prepared
to give summary judgment, so obviating any question of arbitration. I
have reviewed the material bearing on the merits of this claim, and feel
some temptation towards a more robust analysis, particularly when I see
that in Italy T. have not in their lengthy 1994 submissions rehearsed any
of the arguments put before me in 1992 at all. Mr Matthews says that is
simply because T. wanted to be careful in Italy not to submit to Italian
jurisdiction on the substantive merits, and so restricted themselves to
putting M. to proof. I find that somewhat difficult to accept, when there is
no trace of any such restriction or of any reservation of other points in T.'s
Italian submissions. On the contrary, T. in their Mar 25, 1994 submissions
purported to invoke and pay respect to "the principle of comprehensive
coverage of a case".
At the end of the day, however, it is not necessary that I should do more
than repeat the view that the claim is indeed extremely strong. This
Court is not concerned with an application for summary judgment, and
it is in the Ravenna Court that the issue of the merits has been raised in
submissions over a substantial number of years along with the primary
procedural defences. So I say no more, save that even if I assume that
the claim should -- and should only -- have been arbitrated, its strength
and size still seem to me a matter of substantial weight in deciding
whether this Court should at the present very late stage seek to prevent
or pre-empt its resolution in the natural, although slow, course of the
proceedings which have been on foot between the parties for so long in
Italy.
Viewing the matter overall, I have no hesitation in concluding that this
is not a case where this Court should at this very late stage contemplate
issuing any injunction to prevent M. pursuing and seeking the ruling of the
Italian Court either on the issues of procedure which have been ventilated
before it exhaustively with oral evidence or on any substantive issues
which do arise thereafter
T. suggest that, even if I refuse an injunction, I should still make the
declaration sought regarding M.'s entitlement and obligation to arbitrate.
In so far as the object or effect of such a declaration would be or might
be to create some issue estoppel in the Italian proceedings, it again
seems to me inappropriate to contemplate making any such declaration
at this late stage. The parties have been litigating the position in Italy
under Italian principles for years. The claims are either indisputable or
extremely strong. If they were being litigated in England, the English
Court would in the case of the smaller claim and might well in the case
of the larger claim give summary judgment straightway and refuse any
stay pending arbitration. Italian law does not appear to recognize such a
possibility, but, if so, that is a possible advantage to T. in Italy. Whatever
the position if a prompt application had been made in this country, it is
not appropriate to contemplate issuing a declaration in an English action
brought at the last minute with the simple aim of pre-empting Italian
proceedings which have been on foot for years. In so far as the object or
effect of the declaration is simply to establish what English law is, that
seems of no direct relevance and has not been canvassed in the Italian
proceedings. As to any possible relevance of English law in the context
of resisting enforcement here or elsewhere, it is also difficult to see how
this could arise (see art 28 of the Brussels/Lugano Convention); further it
would anyway appear premature (and, since the matter could presumably
be raised in the context of enforcement, unnecessary) to contemplate any
such declaration in this context; similar objection applies, if and in so far
as any question arises of seeking a declaration to serve as a basis for a
claim for damages. T. anyway accept, as I understand it, that a claim for
damages would be difficult to mount in view of the strength of the claims.
Conclusion
For the reasons given, and in all the circumstances which I have outlined,
I consider it inappropriate to grant either the injunctive or the declaratory
relief sought by T.'s originating summons, which is dismissed accordingly