„(…) Mr Justice Gross:
INTRODUCTION
1. Applications: There are before the Court applications by the Defendants
seeking a stay of the Claimants' claims for the arbitration already
proceeding between the First Claimant and the Eighth and Ninth
Defendants in Paris ("the Paris arbitration"), challenging the Court's
jurisdiction in respect of any claims not so stayed, alternatively striking
out or staying in the exercise of the Court's case management powers any
claims not stayed for arbitration.
2. For their part, the Claimants contend that the Paris arbitration has a
narrower scope than that suggested by the Defendants. …The Claimants
further apply to amend the Claim Form, so as, inter alia, to add the Sixth
and Seventh Claimants to the proceedings.
3. It will already be apparent that a convenient approach to these bitterly
fought applications is as follows:
i) What is the true scope of the Paris arbitration and, accordingly, which
claims should be stayed for arbitration? ("Issue (I): The scope of the Paris
arbitration");
ii) In respect of any claims not stayed for the Paris arbitration, can they
proceed here or must the Court decline jurisdiction or ought such claims
to be struck out? ("Issue (II): The fate of the remaining claims");
iii) In respect of any surviving claims, should they be stayed in the
exercise of the Court's case management powers pending the outcome of
the Paris arbitration? ("Issue (III): Case Management Stay").
4. Dramatis Personae: In neutral terms, the Claimants may be described
as a group of companies who, pursuant to a contract ("the contract") with
the Eighth and Ninth Defendants (together, "T.") market and sell tickets to
freight clients, in both Eastern and Western European countries, for use of
the T. truck shuttle service. The First to Fifth Claimants are incorporated
respectively in Luxembourg, England and Wales, the Netherlands, France
and Spain. The First to Fifth Claimants are subsidiaries of the (intended)
Sixth and Seventh Claimants; in effect, the First Claimant is a joint
venture vehicle established by the Sixth and Seventh Claimants to carry
out the contract. The Sixth Claimant is incorporated in Italy and the
Seventh Claimant in Luxembourg.
5. The First to Fifth Defendants (collectively, "the E. Defendants") were
formerly directors of or employed by one or other of the Claimant
companies and, as is common ground, have all now been recruited by T.
So, on the undisputed evidence before me:
i) The First Defendant ("Mr. W"), domiciled in Italy, was employed by the
Sixth Claimant, an Italian company, as the E. Group Finance Director and
was also a director of the First, Second and Third Claimants. …
ii) ii) The Second Defendant ("Mr.B"), domiciled in the Netherlands, was
employed by the Third Claimant, a Dutch company, as a commercial
director. …
iii) iii) The Third Defendant ("Mr.D"), domiciled in France, was President
and a director of the Fourth Claimant, a French company. He was not an
employee of the Fourth Claimant.
iv) The Fourth Defendant ("Ms. B"), domiciled in England, was employed
by the Second Claimant, an English company, from September 2004 as its
Commercial Director. …
v) The Fifth Defendant ("Mme V"), domiciled in Spain, was employed by
the Fifth Claimant, a Spanish company, as its office manager. …
As will be apparent, the Sixth and Seventh Defendants are likewise
individual Defendants – but throughout, if it may be expressed that way,
in the T. "camp". Again, on the undisputed evidence:
i) The Sixth Defendant ("Mr. M."), domiciled in England, is employed by
the Eighth Defendant, a company incorporated in England and Wales, as
Senior Legal Adviser.
ii) The Seventh Defendant ("Mr. O."), domiciled in the Netherlands, was
employed by a French employment services company set up by T., as
Commercial Freight Director (until July 2005).
Insofar as it may be relevant, both Mr. M. and Mr. O. worked or worked
mainly in France.
7. As already foreshadowed, the Eighth Defendant ("G.") is a company
incorporated in England and Wales. The Ninth Defendant ("F.") is
incorporated in France. …
9. The Contract: …In summary, in 1994, T. began commercial operations,
managing the infrastructure of the Channel Tunnel. T. itself operated
various freight, car and coach services and also obtained revenue from
train operators using the Channel Tunnel. As for freight business, T. sold
tickets directly to customers and, after a time, also through the Sixth and
Seventh Claimants. In early 2002, at the instigation of T., the Sixth and
Seventh Claimants created a single brand name, "T.P"; the intention was
that by joining forces and using a single brand name, they would together
generate increased T. truck shuttle business. T. would itself continue
to market and sell tickets to around 150 freight customers, referred to
as "key accounts"; that apart, T. would leave the marketing and selling
of such tickets to the Sixth and Seventh Claimants who were to enjoy
exclusivity in their respective territories. In late 2002, certain customer
details were transferred from T. to the Sixth and Seventh Claimants,
pursuant to these developments. Various contractual arrangements then
followed, resulting (inter alia) in the incorporation of the Second to Fifth
Claimants as national subsidiaries of the Sixth and Seventh Claimants.
Following discussions in 2003, the First Claimant came to be incorporated
as a joint venture vehicle of the Sixth and Seventh Claimants, with a view
to the replacement of the previous contracts by a new contract, to which
the parties would be the First Claimant ("E.") and T. That new contract,
i.e., the contract, was entered into on the 4th March, 2004. In one sense,
the description (employed at the hearing) of the Claimants' business
commencing as a "carve out" from T.'s existing business, can be seen
to be accurate; whether this description assists in the resolution of the
disputed issues between the parties, is another matter. …
11. In the event, relations soured between the parties and, following, it
would appear, some board or management changes, T. purported in June
2004 to give notice that the contract would not be renewed for Western
Europe and Italy/Balkans at the end of its term for those zones on 30th
June 2005. The question of whether the notice was effective to bring the
contract to an end for these zones is very much in dispute between the
parties and undoubtedly forms part of the Paris arbitration, commenced
by E. in March 2005. For completeness, it may be noted that E. does not
dispute that notice was validly given by T. in September 2004, bringing
the contract to an end as regards Eastern Europe on 31st December,
2005.
12. It should be noted that termination of the contract will not prevent
the Claimants from purchasing T. truck shuttle tickets and on-selling
them to their own freight clients; there is no dispute that as a matter
of competition law, T. would not be entitled to refuse to sell such tickets
to the Claimants. However, after termination, the Claimants will not be
entitled to make use of the "T.P" brand. Moreover, after termination of the
contract, the Claimants and T. will or may be direct competitors for the
same freight clients.
THE PRESENT PROCEEDINGS: HISTORY AND BACKGROUND
13. The factual background preceding the commencement of proceedings
is certainly striking.
14. Concerted resignations: On the same day, the 1st April, 2005, Mr.B,
Mr.D and Ms. B all gave notice to terminate their employment with effect
from the 30th June, 2005, i.e., the date when T. maintained that the E.
exclusive distributorship would be at an end.
15. The First T. Letter: On the 19th April, 2005, T. circulated a round robin
letter to E. customers ("the First T. Circular"). The body of this circular
read as follows:
"Dear Customer,
I am delighted to inform you that with effect from 1 July 2005 T. will be
moving to a sale distribution channel across Europe. Our contract with the
current distributor for your T. business expires on 30 June 2005.
Your business is very important to us. We will make every effort to ensure
a smooth transition and will be in touch again in the coming weeks with
details of the changes and how they will affect you. At the same time we
will also provide more information on the benefits that the change will
bring."
The circular is signed by Mr. O..
16. Drafting and translation: Plainly the First T. Circular does not canvass
the possibility that customers might continue to obtain their freight
tickets from the Claimants; manifestly, the object of the letter was to
attract or entice business away from the Claimant companies. Still more
significantly, for present purposes, is the fact that this circular was drafted
and translated into French, English and Spanish by the Third to Fifth
Defendants – at a time when each of these Defendants remained a
senior executive of the respective Claimant companies. That much at
least is clear from the April e-mail traffic, disclosed by an examination
of Mr.D's and Ms. B's laptops. It is further alleged (but denied by him)
that Mr.B translated this circular into Dutch or was at any rate complicit
in its production. From the e-mails, it appears that Mr. W was likewise
implicated in the production of the circular, though it is to be borne in
mind that he had by then resigned from his positions with the Claimant
companies. …
I database in T.'s possession: By way of explanation, information relating
to the Second to Seventh Claimants' freight clients was and is contained
on a single database ("the I database"). This database contains the
names, addresses and individual contact details of all the E. clients in
the various European countries. It also contains information about the
volume of T. truck shuttle business transacted through E. by each client
and information about the prices (or average prices) charged to each such
client by E. for freight tickets. …
The Claimants assert that the information on the I database was and is of
a sensitive commercial nature and that the database constitutes a highly
confidential compilation.
19. Examination of Mr.B's and Mrs. B's laptops in late April, revealed that
the contents of I database files covering at least 2059 of the Claimants'
freight clients in the United Kingdom, France, Benelux and Spain, had
been disclosed to T. Though the precise mechanics of disclosure remain
unclear, computer analysis is said by the Claimants to suggest that
disclosure of these files to T. was the work of Mr. W, Mr.B and Ms. B or
that each was (at the least) complicit in such disclosure and that the
files had been worked on by T. E-mails before the Court show that on the
13th April, 2005, an analysis of "E. price/volume distribution" was for
discussion on the next day, between (amongst others) Mr. W and Mr. O.
and, on the 18th April, Mr. W asked Ms. B to "see the file with analysis of
range and price for country."
20. Use of the I database: Nor do matters end there. It is apparent or at
least strongly arguable that the First T. Circular was sent to customers,
whose names, addresses and individual contact details were taken directly
from the I database. Indeed, it would appear that Mr. W accepts this.
Instructively, one of the copies of the First T. Circular contains identical
misprints to those found on the I database.
The indemnity: Examination of Mrs. B's laptop further revealed that in
March 2005 (i.e., before she had tendered her resignation), she had been
in negotiation with T. concerning the provision to her of an indemnity
against any liability which she might incur for breach of contract and/or
fiduciary duty towards the Second Claimant. …
22. Provision of staff information: On the 4th March, 2005, Ms. B supplied
Mr. W with contact details and salary information concerning the Second
Claimant's staff. It is not apparent what legitimate reason she had for
doing so; by this time, Mr. W had resigned from his positions held with the
Claimant companies.
23. The Claim Form: On the 3rd May, 2005, the First to Fifth Claimants
commenced proceedings in this Court. The Claim Form claimed the
following relief against the Defendants:
i) An injunction restraining the Defendants from making any use of the
Claimants' confidential information as listed in the attached schedule,
namely: (1) Names of Claimants' customers; (2) Value of business
provided in 2004 from Claimants' customers; (3) Prices and credit ratings
relating to Claimants' customers; (4) Commercial information relating to
Claimants' customers and business operations.
ii) Damages for unlawful interference with the Claimants' business and/
or conspiracy to injure the Claimants' business and/or conspiracy to use
unlawful means.
iii) Damages against the First to Fourth Defendants for breach of contract
and/or breach of fiduciary duty.
iv) Damages against the Sixth to Ninth Defendants for procuring breach of
contract and/or breach of fiduciary duty by the First to Fourth Defendants.
The Claim Form stated that this Court has power under the Civil
Jurisdiction and Judgments Act 1982 ("the CJJA 1982") to hear this claim
and that no proceedings concerning the same cause of action are pending
in Scotland, Northern Ireland or another Convention territory of any
contracting state.
24. The Second T. Circular: Following the issue of the Claim Form,
on or about the 11th May, solicitors acting on behalf of T. offered an
undertaking that any confidential information belonging to the Claimants,
received by it from the other Defendants and within the categories set
out in the schedule to the Claim Form, would not be used ("the 11th May
undertaking"). That undertaking was not accepted.
25. On the 20th May, 2005, Mr. O. sent out another circular ("the Second
T. Circular"). It read as follows:
"Dear T. Customer,
Important Changes at T. effective 1 July 2005
Further to our letter dated 19 April 2005, T. would like to remind you that
the new sales distribution channel comes into operation on 1 July 2004.
In order for us to provide you with the best possible service from this date
please amend the attached form and fax it back by 1 June 2005….
T. will contact you during the week commencing 23 May 2005, to enable
you to provide us with commercial data necessary to open an account and
to also answer any queries you may have…."…
26. Particulars of Claim ("the PoC"): These were issued on or about
the 27th May, 2005 and served on the 31st May. The PoC set out the
history of wrongdoing on the part of the Defendants (as perceived by the
Claimants) and then go on to identify the causes of action relied upon
against each Defendant. In summary, the Claimants complain of:
i) As against the First, Second, Fourth, Sixth and Seventh Defendants
and T., the misuse of confidential information; this charge relates to the
disclosure of material from the I database to T. and its use in the First
and/or Second T. Circulars.
ii) As against the First to Fifth Defendants, breach of their respective
contracts of employment and/or fiduciary duty. The substance of this
charge varies as between these individual Defendants, some but not all
of whom were involved in the alleged misuse of confidential information.
All of these Defendants, however, are charged in respect of the First T.
Circular. Finally, there are additional allegations relating to the (alleged)
wrongdoing of Ms. B (summarised above).
iii) As against the Sixth and Seventh Defendants and T., procuring
breaches of contract on the part of the First to Fifth Defendants. The
allegation is that the First to Fifth Defendants were caused and/or
encouraged to act as they did by the Defendants who are the subject
of this complaint. As will become apparent, there is now a dispute as
to whether this allegation encompasses a claim for procuring a breach
of fiduciary duty. For convenience, I will simply refer to the claim for
procuring breaches of contract and I will later address the issue of
whether it encompasses a claim for breach of fiduciary duty.
iv) As against T., breach of Art. 82 of the EC Treaty; it is alleged that T.
has a dominant position in the market, which it has abused through its
conduct towards the First to Fifth Defendants and in bringing about the
publication of the First and/or Second T. Circulars.
v) As against the Eighth and Ninth Defendants and the First to Fifth
Defendants, breach of Art. 81 of the EC Treaty. The gravamen of this
complaint is that the relevant parties' actions constituted an agreement
between undertakings with the object or effect of distorting competition
on the market for the supply of T. Truck Shuttle Service tickets to freight
truck customers, which may affect trade between Member States.
vi) As against all the Defendants, unlawful interference with the
Claimants' businesses. The complaint relates back to the (alleged)
wrongdoing already summarised and alleges deliberate interference,
unlawful means and the intention of inflicting injury on the Claimants.
vii) As against all the Defendants, tortious conspiracy.
By way of relief, the Claimants seek injunctions, damages and/or
equitable compensation and interest. …
28. In two respects, however, the PoC must be subjected to further
scrutiny. First, only the First to Fifth Claimants were listed in the Claim
Form. The PoC purport to add the Sixth and Seventh Claimants. Secondly,
the PoC purport to add claims under Arts. 81 and 82 of the EC Treaty. …
29. The application for an injunction: By Application Notice dated 6th
June, 2005, the Claimants sought interim "springboard" injunctive relief
(see, Bullivant v Ellis [1987] FSR 172), i.e., relief designed to prevent the
Defendants from taking advantage of their (alleged) misuse of confidential
information belonging to the Claimants and the (alleged) breach(es) of
fiduciary duty by former employees or officers of the Claimants …
30. Developments in the Paris arbitration: In the events which happened,
a hearing took place on the 21st June, 2005, before the Paris ICC
arbitration tribunal ("the arbitration tribunal"), which had also been
approached by the Claimants with a view to interim relief. By its order
dated 6th July, 2005 ("the 6th July order") the arbitration tribunal (inter
alia) ordered T. to continue to perform the contract for the Western
Europe and Italy/Balkans Zones until the question of the possible renewal
of the contract has been determined in the Paris arbitration. …
31. The 15th July letter further contained an expression of the arbitration
tribunal's views as to which claims and counterclaims were before it. In
summary, these include the following:
i) Renewal, abrupt breaking-off and termination of the contract;
ii) Rebates and tariffs;
iii) Bank guarantee and credit-risk cover;
iv) T.'s counterclaim concerning the scope of cl. 5 of the contract;
v) Analysis of French law, including interpretation of the contract;
vi) T.'s counterclaim for loss arising out E. bringing proceedings before
this Court.
32. Against the background of – or certainly following – the 6th July order,
the Claimants have accepted the 11th May undertaking. Accordingly, the
Claimants' application for an interim injunction is no longer effective. …
33. The Defendants' stance: The Defendants dispute the confidentiality
of any information supplied by the First, Second or Fourth Defendants to
T., not least on the basis that T. (they say) was the source of most of it;
they assert that T. was in any event entitled to such information under the
contract. …
34. ISSUE (I): THE SCOPE OF THE PARIS ARBITRATION
34. The parties to the arbitration: Obviously, the Paris arbitration cannot
encompass claims other than those between the parties to it. Those
parties are E. and T. (i.e., the Eighth and Ninth Defendants). …
36. Accordingly, the true focus of the debate on the present issue
concerns the question of whether all, some or none of the E. claims
against T., advanced in these proceedings, come within the scope of the
Paris arbitration. …
39. Pausing here, it is convenient to reflect on the impact of the rival
submissions on the proceedings as a whole. First, save by consent, there
is no possibility of trying all the disputes in a single forum, given the
provision for Paris arbitration in the contract. Secondly, the Defendants'
case postulates that all the E. claims against T. are to be arbitrated
in Paris, whereas the Claimants' case envisages a far more limited
Paris arbitration, essentially confined to contractual disputes between
E. and T.. Thirdly, as will be seen below, the Claimants' case entails
bringing together both the corporate and all (or almost all) the individual
defendants in litigation in this country in respect of the E. tortious claims;
by contrast, the Defendants' case involves the fragmentation of the
proceedings against individual Defendants, with each individual Defendant
to be pursued (if at all) in the jurisdiction of his/her domicile, while all
claims against T. proceed in the Paris arbitration. Fourthly, it may be
observed that neither proposed solution is without some complexity,
not least given the applicable mandatory rules of law as to stay(s) for
arbitration and jurisdiction (see below), which may preclude any tidy split.
The true construction of cl.24 of the contract …
41. Accordingly, simply as a matter of language, the scope of cl.24 covers
any potential disputes concerning the performance or non-performance
or construction of the contract. If this is right, then there is no warrant
as a matter of language for excluding tortious claims, provided they
are sufficiently connected to the performance or non-performance of
the contract so as to satisfy the requirement contained in the word
"regarding"; i.e., the language of the clause extends to disputes going
beyond the four corners of the contract. There is thus no basis in the
language for concluding that the clause covers contractual claims between
E. and T. regarding non-performance of the contract but not closely
connected tortious claims relying on the same facts. Furthermore, with
reference to the present matter, a dispute regarding or concerning the
construction of the contract will plainly encompass an issue as to the
scope of cl. 5 thereof.
42. Contractual clauses are not of course to be construed in a vacuum.
Cl. 24 is an arbitration clause. As a matter of English Law, there is in
this context a presumption in favour of "one-stop adjudication". In other
words, the Court should be slow to attribute to reasonable commercial
parties "…an intention that there should in any foreseeable eventuality be
two sets of proceedings" between the same parties: see, Continental Bank
v Aeakos [1994] 1 WLR 588, esp. at p.593, together with the authorities
there cited; see too, the attractive new work by David Joseph QC,
Jurisdiction and Arbitration Agreements and their Enforcement (Sweet &
Maxwell, 2005) (hereafter, "Joseph"), at pp. 110 and following. Effectively,
such "presumptions" merely apply what is taken to be the intention of a
reasonable businessman. It follows that the context serves to reinforce
the view of the scope of the clause to which, as indicated, I am inclined
to come on the language alone; namely, as between E. and T., there
should not be one set of proceedings for contractual claims regarding non-
performance of the contract and a second set of proceedings for tortious
claims regarding non-performance of the contract.
43. In this field, there are a number of commonly used wordings, which
are generally taken to have wider or narrower scope (see, Joseph, at pp.
113 and following). The present clause does not employ any of these
industry-standard wordings. Instead, it contains pointers going both
ways. So, for instance, the reference to "interpretation" of the contract
suggests a narrow focus on the construction of the contract, perhaps not
extending to extra-contractual claims. Conversely, however, the clause
extends (as already discussed) to disputes "regarding" non-performance
of the contract; that, to me, suggests a wider scope, especially if it is
correct to read "regarding" as synonymous with "concerning": Joseph, at
pp.116-117.
It is not to be forgotten that, as is undisputed, by virtue of cll. 23 and
24 of the contract, the scope of cl. 24 must be determined as a matter
of French Law. In this regard, first, there has been no suggestion that
French Law would view the scope of the arbitration clause differently or
more restrictively than English Law. …
45. Pulling the threads together, I construe cl. 24 of the contract in the
manner already provisionally indicated; namely, the clause extends
beyond the four corners of the contract; it will cover disputes as to
its true construction and it will further extend to both contractual and
tortious claims, provided these are sufficiently connected to the non-
performance of the contract so as to satisfy the test encapsulated in the
word "regarding".
46. The E. claims in tort against T.: I must now apply my conclusions as
to the scope of cl. 24 of the contract to the various claims made by E.
against T., set out in the Claim Form and the PoC. …
47. First, as to the misuse of confidential information. As will already be
apparent, a key issue here concerns the scope of cl.5 of the contract;
if the information in question was …information to which it was entitled
under the contract, then there is or may well be a complete defence to
this claim. In these circumstances, it would be at least curious for the
English (or some other) Court to enter on the issue of (alleged) misuse
of confidential information, while the arbitration tribunal proceeded
to rule as between the same parties on the anterior question of the
true construction of cl. 5. In my judgment, the claim as to misuse of
confidential information is inextricably bound up with the interpretation of
the contract and, hence, is plainly one "regarding" the "interpretation" of
the contract. In any event, as it seems to me, any such claim must be one
"regarding" the non-performance of the contract, given the factual basis
relied upon by E..
48. Secondly, there is the claim that T. procured the breach(es) of
contract of the First to Fifth Defendants.
i) As it seemed to me, this claim is closely connected to the non-
performance of the contract; instead of performing the contract with
E., the allegation is that T. procured breaches of contract (as already
summarised) on the part of senior executives of the Claimant companies.
If established, it is difficult to postulate conduct more likely to undermine
performance of the contract.
ii) I was accordingly minded to stay this claim for the Paris arbitration,
pursuant to s.9 of the 1996 Act. Indeed, I indicated as much in the draft
judgment sent to the parties.
iii) Before hand-down, I received a Note from Mr. Englehart QC, saying
that, in summary, this claim could not be stayed for arbitration pursuant
to s.9 of the 1996 Act, because E. had no relevant cause of action;
the causes of action against T. for procuring breaches of the respective
employment contracts and fiduciary duties were vested and vested only,
in the respective employer companies and companies of which the E.
Defendants were directors (set out above). It is obvious (as already
noted) that there can be no stay pursuant to s.9 in respect of any parties
not party to the Paris arbitration. The importance of this point is the
disclaimer that E. has a relevant cause of action.
iv) This point was neither raised nor flagged at the hearing. Insofar as it is
suggested that it was raised in post-hearing inter-solicitor correspondence
copied to me, I am wholly unable to accept that that was an appropriate
mode of doing so; certainly, on a brief glance at the correspondence
(which tended to be prefaced by an apology for troubling the Court with
inter-solicitor skirmishing), the point eluded me.
v) …There cannot be a stay for the Paris arbitration in respect of entities
who are not parties to it. Moreover, it must be appropriate to proceed on
the assumption that Mr. Englehart's concession in respect of E. is rightly
made; certainly, in the context of this case, I would not be minded to
compel parties to go to arbitration in respect of a claim disclaimed by
the only claimant entity which is a party to the arbitration in question.
It follows that there will be no stay under s.9 in respect of any claim by
any Claimant that T. procured the breach of contract of the First to Fifth
Defendants. The fate of these claims is addressed below.
49. Thirdly, as to unlawful interference and conspiracy, claims which
may be taken together for present purposes. …I have no real hesitation
in viewing these claims as giving rise to disputes "regarding" the
"performance" of the contract; instead of performing the contract with E.,
T. was (for example) conspiring with others to use unlawful means against
the Claimants.
50. In the circumstances, all the E. claims in tort against T. with which I
have so far dealt must be stayed for the Paris arbitration, pursuant to s.9
of the 1996 Act. …
51. The Arts. 81 and 82 claims: There is no realistic doubt that such
"competition" or "anti-trust" claims are arbitrable; the issue is whether
they come within the scope of the arbitration clause, as a matter of its
true construction. …I have reached the conclusion that these claims – as
against T. – must likewise be stayed for the Paris arbitration, pursuant to
s.9 of the 1996 Act. I am bound to observe, further, that my provisional
inclination was that these claims were tenuous in the extreme, so that
had I not stayed them, I may well have proved sympathetic to Mr.
Smouha's submissions that they should be struck out (as will become
apparent when I return to the Art. 81 claim against the E. Defendants,
where no question of a stay for the Paris arbitration arises). That,
however, is not a reason for declining a stay in respect of the Art. 81 and
82 claims against T. and it will be for the arbitration tribunal to decide
finally on the merits of these claims. …
ISSUE (II): THE FATE OF THE REMAINING CLAIMS
53. Introduction: With the E. claims against T. stayed for the Paris
arbitration, the remaining claims in the litigation are advanced (1) by
Claimants other than E. against T. or (2) by Claimants, including E.,
against individual Defendants.
54. In addressing the claims against the individual Defendants it will be
convenient to keep in mind (as already noted) that they fall into two
distinct categories: (1) the First to Fifth Defendants, comprising the E.
Defendants; (2) the Sixth and Seventh Defendants, both employees
of T.. Although Mr. Smouha sought to criticise the Claimants' pursuit of
the individual Defendants, the claims against the E. Defendants cannot
occasion real surprise in a dispute of this nature; to put it neutrally, these
are Defendants who have transferred their allegiance from the Claimant
companies to T. Different questions arise with regard to the Sixth and
Seventh Defendants. …
55. Of all the individual Defendants, only Ms. B and Mr. M. are domiciled
in this country. There are thus no jurisdictional issues in connection with
the proposed claims against them; the Defendants' stance is instead that
the claims against them are unsustainable and should be struck out.
56. The other individual Defendants (viz., the First, Second, Third, Fifth
and Seventh Defendants) are not domiciled in this country but are
all domiciled in Member States, parties to Council Regulation (EC) No
44/2001 ("the Regulation"), in effect the successor to the Brussels
Convention. The general rule under Art. 2 of the Regulation is that
persons domiciled in a Member State are to be sued in the courts of
that Member State. It follows that the Claimants need to be in a position
to establish jurisdiction in this country against these Defendants, in
accordance with some other provision(s) of the Regulation. If they do not,
that is an end of the matter; if they do, there remains the question of
whether any surviving claims are unsustainable and should be struck out.
57. So far as concerns the First, Second, Third, Fifth and Seventh
Defendants, the sole ground advanced by the Claimants for this Court
exercising jurisdiction, is Art. 6(1) of the Regulation, which provides as
follows:
" Article 6
A person domiciled in a Member State may also be sued:
1. where he is one of a number of defendants, in the courts for the place
where any one of them is domiciled, provided the claims 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."
It follows that the position of the English Defendants will require particular
scrutiny; the English Defendants serve as "anchor" Defendants, as,
self evidently, without claims against them, there would be no basis for
invoking Art. 6(1) against the foreign Defendants. In the light of the stay
for the Paris arbitration, the Eighth Defendant can no longer fulfil any
such role; accordingly, Ms. B and Mr. M. are the only potential candidates
to serve in this capacity.
58. Before proceeding further, it is appropriate to note a concession
helpfully made by Mr. Englehart. By virtue of Art. 20(1) of the Regulation:
"An employer may bring proceedings only in the courts of the Member
State in which the employee is domiciled."
As is plain from Art. 18(1) of the Regulation, the rule in Art. 20(1) is
mandatory, subject only to irrelevant exceptions and overrides Art. 6(1).
Against this background, Mr. Englehart rightly accepted at the hearing
that "pure" employment claims (i.e., claims for breach of contracts of
employment) against the First, Second, Third and Fifth Defendants could
not be pursued in this Court. Mr. Englehart further accepted that, as a
result, the proceedings could not continue against the Fifth Defendant at
all, notwithstanding the range of the allegations made against her in the
PoC. It follows that Mme V departs from the proceedings and that nothing
further need be said of the claims for breach of contracts of employment
made in the PoC against the First, Second and Third Defendants.
59. Art. 6(1) of the Regulation: There was some debate at the hearing as
to the correct approach to Art. 6(1) of the Regulation. As it seems to me:
i) The text now contained in Art. 6(1) of the Regulation, codifies the effect
of the earlier decision of the Court of Justice of the European Communities
("the European Court") on the Brussels Convention in Kalfelis v Schroeder,
Muenchmeyer, Hengst & Co. [1988] ECR 5565, at p.5584 (para. 12),
namely: whether there is such a connection between the claims at the
time when they are instituted that it is expedient to hear and determine
them together to avoid the risk of irreconcilable judgments resulting from
separate proceedings ("the Kalfelis test"). The risk of irreconcilability may
arise from potential conflicting findings of fact or from potential conflicting
decisions on questions of law: Gascoine v Pyrah [1994] I.L. Pr. 82, at 93.
While Art. 6(1) constitutes an exception to the general rule contained in
Art. 2 (that the defendant's domicile governs jurisdiction) and must not be
abused, it does not follow that Art. 6(1) is so subservient to Art. 2 that it
could only be invoked in special circumstances: Gascoine v Pyrah, at 94.
ii) In applying the Kalfelis test, a "broad commonsense approach" is to
be adopted and an "over sophisticated analysis" is to be avoided: Casio v
Sayo [2001] I.L.Pr. 43, at paras. [32] – [37], together with the authorities
there cited. In my judgment, this decision of the Court of Appeal furnishes
the approach to Art. 6(1) to be followed, certainly in this country and it
would not be right to be deterred from it by observations of the European
Court, in Reunion Europeenne SA v Spliethoff's Bevrachtingskantoor BV
[1998] ECR I-6511, esp. at I-6549, para. 50. In Reunion, the European
Court appeared to favour a rigid test – so much so, that the mere fact
that one claim was in contract whereas the other was in tort meant
that the two could not be sufficiently connected for the purposes of Art.
6(1). It is, however, at once to be noted that on the facts of the case
such observations were obiter, not least because (it would appear) no
defendant was being sued in the courts of his domicile. Further, the Court
of Appeal in Casio (at para. 33) treated the observations in Reunion
as doing no more than applying the principles of Kalfelis to the facts
before it; nothing in the judgment in Reunion "cuts down, qualifies or
explains" what was said in Kalfelis. Still further, in Watson v First Choice
Holidays [2001] 2 Lloyd's Rep 339, the Court of Appeal plainly doubted
the reasoning in Reunion, remarking (with respect, persuasively) that, but
for the observations in Reunion, it would have held that the fact that one
claim was based in contract and the other in tort was, at most, only one
factor to be considered in deciding whether the connection between the
claims was sufficient for the purposes of Art. 6(1); in the event, the Court
of Appeal in Watson, to which unfortunately Casio was not cited, went
on to order a reference to the European Court, on the basis that Reunion
could not be ignored – but the reference was withdrawn when the case
settled. Nor do any textbook commentaries shown to me lend any support
to Reunion. In Layton & Mercer, European Civil Practice (2nd ed.), there is
a reference to the suggestion that the full implications of Reunion may not
have been considered by the European Court. Robustly, Briggs & Rees,
Civil Jurisdiction and Judgments (3rd ed.) (hereafter, "Briggs") describes
the observations in Reunion as "extraordinary and…simply wrong". In the
circumstances, it is unnecessary and would be inappropriate for me to say
more; it suffices, as already indicated, that I simply follow the approach
laid down in Casio.
iii) As to the strength of the case against the "anchor" defendant,
there was no dispute of the need for the Claimants to establish a "good
arguable case" as to the facts essential for establishing jurisdiction
("jurisdictional facts"). In general, Mr. Smouha accepted that, as to
the merits of each claim, it was for the Claimants to establish that
there was at least a serious issue to be tried (as in the old RSC O.11,
authoritatively established by Seaconsar v Bank Markazi [1994] 1
AC 438 and as in the present CPR 6.20). However, with regard to the
merits of the claim against the anchor defendant, Mr. Smouha submitted
that this was a matter of jurisdictional fact; accordingly, the Claimants
needed to establish a good arguable case on the merits against the
anchor defendant. By contrast, Mr. Englehart submitted that all that was
necessary for the assertion of jurisdiction against foreign defendants
under Art. 6(1) was a real or serious issue to be tried against the anchor
defendant. In the view which I take of the matter (see below), it is strictly
unnecessary to resolve this difference. But my strong inclination is to
prefer Mr. Englehart's submission, for the reasons which follow. First, it is
plain that the domicile of the anchor defendant is a matter of jurisdictional
fact; so, the Claimants must here establish with regard to the relevant
anchor defendant at least a good arguable case that that defendant is
domiciled in England: see: Canada Trust v Stolzenberg (No. 2) [2002]
1 AC 1, at p.13. Secondly, I am minded to accept that the existence of
at least a serious or real issue to be tried against the anchor defendant
constitutes jurisdictional fact in the context of Art. 6(1) – if the claim
against the anchor defendant is entirely spurious, the Kalfelis test either
does not arise or cannot be satisfied: Briggs, at para. 2.165. But, thirdly,
it does not at all follow that the Claimant needs to establish anything
more than a serious or real issue to be tried on the merits against the
anchor defendant in order to invoke jurisdiction against other defendants
under Art. 6(1). The matter may be simply tested; provided there is a
real issue to be tried between claimant and anchor defendant, those
proceedings (at least ordinarily) cannot be struck out in this country and
will continue; if so, then the Kalfelis test is capable of being satisfied;
whether, in any given case, it will be satisfied on all the facts is, of course,
another matter. Insofar as the contrary was suggested, nothing in Canada
Trust v Stolzenberg (No. 2) suggests otherwise. See too, The Rewia
[1991] 2 Lloyd's Rep. 325, at 329.
60. Misuse of confidential information: I come to the individual claims,
beginning with the complaint as to misuse of confidential information.
This claim is advanced against the First, Second and Fourth Defendants,
of the E. defendants and against the Sixth and Seventh Defendants. The
anchor defendant is Ms. B (the Fourth Defendant). I therefore begin by
considering the claim against her.
61. In the light of the history and the matters set out in the PoC (all as
summarised above), the Claimants' position as against Ms. B is simplicity
itself. Given her role in the disclosure to T. of material from the I database
and its use in (at the least) the First T. Circular, Mr. Englehart submits that
there is a strong case against Ms. B.
63. …In my judgment, the position with regard to Ms. B under this head
of claim is as follows:
i) It is not disputed that she is domiciled in this country.
ii) Whatever the final outcome of the proceedings against her may be,
I have no doubt that there is, at the lowest, a good arguable case that
there was a misuse of confidential information to which she was a party;
a fortiori, there is a real or serious issue to be tried. Accordingly, the issue
(discussed above) as to the requisite strength of the case against the
anchor defendant is academic. On the factual material before me, in this
as in a number of other respects, Ms. B (as does T.) has much to answer
or at least explain. While there undoubtedly will be argument as to the
true scope of cll. 5 and 21 of the contract, it cannot begin to be said, not
least as a matter of commercial commonsense, that there is not at the
lowest a good arguable case that what was done here went way outside
and beyond those contractual provisions. Further, when considering the
information supplied from the I database, it is not to be forgotten that
it is the compilation which must be taken into account – not simply the
individual items of information: see, Bullivant v Ellis, esp. at p.181. Even
insofar as the information or some of it originated with T. (at the time of
the "carve out"), there is at least a good arguable case that by 2005, the
(relevant) Claimants had developed their business and the information in
question. Still further, there is a powerful case (whatever the later steps
as to "ring fencing") that the information was misused for the purpose
of the First T. Circular. Finally, the strength of the Claimants' case in this
regard is not, in my judgment, diminished even assuming Mr. Alberti to be
simply wrong in his views as to cl.5 of the contract. …
64. Having reached these clear conclusions with regard to Ms. B, I can
deal shortly with Mr. W and Mr.B. When considering their positions, I
have considered carefully the various denials and matters of exoneration
raised in their witness statements. Nonetheless, having regard to the
conclusions reached in respect of Ms. B to the extent that they are
applicable here, the e-mail traffic and, in Mr. W's case, the admissions
made in his witness statement, I am amply satisfied that there is at least
a real or serious issue to be tried against these two defendants on the
merits. For completeness so far as concerns Mr.B, it is to be kept in mind
that the Claimants' case under this heading extends to the misuse of
confidential information in the First T. Circular; in that regard, I readily
infer from the e-mail traffic that Mr.B was "in it together" with the other
Defendants with whom I am here concerned. It follows that even if Mr.B's
denial that he was at all involved in the initial disclosure of confidential
information was to be accepted, there would remain a real or serious
issue to be tried concerning his involvement in its use in the First T.
Circular.
65. The Kalfelis test remains to be considered. On the face of it, there is
a strong case for saying that these claims against these three defendants
(Messrs. W. and B. and Ms. B) are such as readily to satisfy that test. It
is correct to say that insofar as this claim is based in tort, systems of law
other than English Law may in due course need to be taken into account.
That said, there is nothing in the material before the Court (beyond
assertion) which casts doubt on the apparent likelihood that to hear and
determine these claims separately would give rise to a very real risk of
irreconcilable judgments.
66. Accordingly, I conclude that the Claimants are entitled to proceed in
this country under Art. 6(1) of the Regulation against Messrs. W. and B.
in respect of the claim for misuse of confidential information. They are
of course as of right entitled to do so against Ms. B. Furthermore, with
regard to all three of these defendants, I dismiss the application to strike
out this claim.
67. I shall return later to the position of the Sixth and Seventh
Defendants.
68. Breach of contract: As already underlined, claims for breach of
contracts of employment, advanced against the First, Second, Third and
Fifth Defendants are no longer pursued in this jurisdiction. The claim
against Ms. B, for breach of her contract of employment, will proceed in
this jurisdiction, as is accepted by the Defendants.
69. Breach of fiduciary duty: Claims under this heading are advanced
against the First to Fourth Defendants. As a matter of English Law, as
explained by Mr. Gatt QC (who also appeared for the Defendants), such
claims are independent and distinct from claims for breach of a contract of
employment; see too, Nottingham University v Fishel [2000] IRLR 471.
For the Claimants to found jurisdiction in this country under Art. 6(1)
against the First to Third Defendants, Ms. B must again be considered
as the potential anchor defendant. In the light of the material already
summarised and my conclusions on the misuse of confidence claim, there
can be no doubt that there is, at the least, a good arguable case (and,
a fortiori, a real or serious issue to be tried) against Ms. B for breach of
fiduciary duty. …
71. The next question which arises relates to all of the First to Third
Defendants; namely, whether Arts. 18(1) and 20(1) of the Regulation
preclude the bringing of these proceedings against these Defendants in
this country, even if jurisdiction may otherwise be established pursuant
to Art. 6(1) of the Regulation. In my judgment, at least absent some
particular provision of the domestic law of a Member State equating the
position of a director with that of an employee (not applicable here and
which might require special consideration), I would not be minded to
extend the protection afforded by Art. 20(1) of the Regulation to claims
for breach of fiduciary duty. The rationale of Art. 20(1) is plain; it is to
afford protection to potentially vulnerable employees. I am not persuaded
that there is any need for such special protection in respect of claims
against directors for breach of fiduciary duty. It of course remains the
case that for such a claim to be brought against the director in a country
other than that of his/her domicile, a claimant will have to establish the
applicability of some exception to the general rule enshrined in Art. 2 of
the Convention. …
74. I am minded to think that the relevant test is whether there is a real
or serious issue to be tried of breach of fiduciary duty against the First
to Third Defendants. But again, in the view which I take of the matter,
I doubt that there will be any practical significance in the difference
between this test and that of a good arguable case.
75. As it seems to me, the Claimants are entitled to plead a case under
English Law, at least to begin with, on the presumption that there is no
difference between English and any other applicable system(s) of law.
If, however, some such relevant difference does appear on the evidence,
then I am entitled and bound to take it into account on an inter partes
hearing of this nature. In considering whether there is any such relevant
difference between English Law and another system of law, my concern
must lie with the substance of the duty in question. If the duty owed by
a director of a foreign company to his company is essentially analogous
to the fiduciary duty owed by the director of an English company to his
company, then it would be a triumph of form over substance to treat a
difference in label as by itself fatal to the exercise of jurisdiction. If the
substance of the allegation of breach of duty is plain from the Claim Form
and the PoC, then an amendment to add the appropriate provisions of the
foreign law relied upon would be appropriate but would not add a new
cause of action. Costs of course raise separate questions; in that context,
there may well be a sanction for any deficiency in the pleading.
76. I turn to apply this approach to the position of the First to Third
Defendants, considered individually. The only evidence has been adduced
by the Defendants, through the witness statements of Ms. Bateman of
their solicitors.
i) As regards Mr. W, he was a director of the First, Second and Third
Claimants. On the face of it, the objection, that the concept of an
equitable fiduciary duty is unknown to the relevant system of law, cannot
apply to him at least insofar as he was a director of the Second Claimant
– an English company. …I am (for present purposes) amply satisfied that
the substance of Mr. W's duties under Italian Law is closely analogous to
the fiduciary duty owed by a director of an English company under English
Law. Accordingly, while some tidying up of the pleadings may well be
appropriate, this objection to the claim against Mr. W fails.
ii) The position as to Mr.B is different and may safely be taken to be
governed by Dutch Law. …I cannot say that there is a real or serious issue
to be tried or a good arguable case against Mr.B for breach of fiduciary
duty. …
iii) As to Mr.D, Ms. Bateman's evidence, upon analysis, contains nothing
to suggest that the position under French Law as to the duty owed by
a director to his company, is in substance different from an English Law
fiduciary duty. This objection to the claim against Mr.D therefore fails.
77. …I am amply satisfied that, quite apart from any question(s) of legal
categorisation, there is at the least a real or serious issue to be tried on
the merits under this heading, against both Mr. W and Mr.D.
78. I come finally to the Kalfelis test, with regard to the position of Mr. W,
Mr.D and Ms. B. Although the complaints against Ms. B range considerably
wider than those made against Mr. W and (even more so) Mr.D, there is
a common core allegation of their acting in concert in relation to the First
T. Circular. In my judgment, the Kalfelis test is here readily satisfied and,
indeed, it would be unfortunate in the extreme if this allegation were not
disposed of in a single forum.
79. It follows that the claim for breach of fiduciary duty goes on against
these two Defendants. This claim cannot however be proceeded with
against Mr.B …
Procuring breach of contract: As foreshadowed, the need to deal here with
this head of claim arises from Mr. Englehart's post-hearing submission.
The claims in question all relate to procuring breaches of the respective
contracts of employment and are advanced against G. and F. …
81. …Mr. Smouha accepts – as I understood it and rightly in my judgment
– that these claims can proceed here. First, there is no jurisdictional
difficulty; G. is a company incorporated in England and Wales; with G.
as the anchor Defendant, Art. 6(1) of the Regulation plainly entitles the
relevant Claimants to found jurisdiction against F.. Secondly, the impact of
questions as to the jurisdiction, governing law and fate of the claims for
breach of contract against the individuals is not such so as to prevent the
claims for procuring the breach of these contracts from proceeding in this
jurisdiction.
82. Procuring breach of fiduciary duty: …With some reluctance, given
the overwhelmingly technical nature of the objection, I conclude that Mr.
Smouha is right as to the state of the pleadings and the "dropping" of
this head of claim from the PoC. It follows that to reintroduce this head of
claim, a properly formulated amendment would be required. As there is
no application before me for permission to amend, there is nothing more
for me to do in this regard. It follows, as it seems to me, that there is
currently no extant claim for procuring a breach of fiduciary duty before
the Court. I say nothing to pre-judge the fate of any application to amend
or the reservation expressly made by Mr. Smouha.
84. Art. 81 of the EC Treaty: I return to matters which were before me at
the hearing and I can take this topic very shortly indeed. Given the stay
for the Paris arbitration, the Eighth and Ninth Defendants will no longer be
concerned with these proceedings. I am, however, prepared to proceed on
the footing that jurisdiction in this country for this claim could be founded
under Art. 6(1) of the Regulation against the First to Third Defendants
on the basis of the Fourth Defendant serving as anchor defendant.
Thereafter, difficulties arise. Essential to this claim is the allegation that
the First to Fourth Defendants constituted "undertakings independent of
their employers the Claimants in the light of the unauthorised nature of
their conduct" who entered into an agreement with the Eighth and Ninth
Defendants, contrary to Art. 81 of the EC Treaty. Accepting readily as I
do that an individual is capable of constituting an "undertaking", I regard
as fanciful the notion that the First to Fourth Defendants constituted
undertakings here; it is instructive that the examples given in Bellamy &
Child, European Community Law of Competition (5th ed.) are far removed
from the facts of the present case. In my judgment, this claim has no real
prospect of success and should be struck out.
85. Unlawful interference and conspiracy: While unlawful interference and
conspiracy constitute separate causes of action, for present purposes,
they may be taken together. For my part, I am satisfied that these claims
may be pursued against the First to Fourth Defendants. In summary:
i) Essentially for the same or similar reasons as those given before in
relation to the misuse of confidential information and breach of fiduciary
duty claims, there is jurisdiction to proceed against the First to Third
Defendants founded on Art. 6(1) of the Regulation. So far as concerns
conspiracy, there was force in Mr. Englehart's submission that it was likely
to amount to a "paradigm case" for the application of Art. 6(1).
ii) Granting that the substance of the matter will be hotly disputed at trial,
there is at least a good arguable case, a fortiori, a real or serious issue to
be tried, as to the merits, in the light of my conclusions so far as to the
misuse of confidential information and breach of fiduciary duty claims.
I take into account that no case of misuse of confidential information is
advanced against Mr.D and, of course, my conclusion in respect of Mr.B
and the claim for breach of fiduciary duty. Nonetheless, a glance at the
e-mail traffic and the briefest consideration of the First T. Circular serve
to demonstrate a sufficient case to go to trial on the Defendants acting in
concert. The question of unlawful means, turns on questions previously
discussed. So far as concerns the intention to injure the Claimants, this is
at least a good arguable inference on the material already considered; on
any view, it is not a matter properly the subject of an application to strike
out. If the Defendants wish to have further particularisation, they can of
course apply.
86. The position of the Sixth and Seventh Defendants: I come next to
Mr. M. and Mr. O.. There are allegations against these defendants of
misuse of confidential information, procuring breach of contract, unlawful
interference and conspiracy.
87. I take Mr. M. first. The mere fact that he is and was an in-house
lawyer rather than a commercial director (the position held by Mr. O.)
cannot confer any immunity on him. That said, I am simply unable to
detect, on the factual material available to me, any proper basis for a
claim against him with a real prospect of success. At its highest, the
case against Mr. M. is that he procured a breach of contract or duty in
that he was involved in the negotiation or drafting of the draft indemnity
agreement concerning Ms. B. Without any allegation that he caused or
encouraged Ms. B to act as she allegedly did, the claim against him must
be doomed; in any event, it would be unreal to suppose that an external
legal adviser could have been personally sued in tort on the same facts.
In my judgment, all the claims against Mr. Morison must be struck out.
88. The position of Mr. O. is somewhat different. On the evidence of the
e-mail traffic, the First T. Circular and his own witness statement (even
allowing for the denials and exculpatory material), it can fairly be said
that there is a good arguable case, a fortiori, a real or serious issue to be
tried, that he was closely involved with the activities of the First to Fourth
Defendants forming the subject of the claims against them discussed
above.
89. In the light of the position now reached, jurisdiction would not, by
itself, present particular difficulty in the way of pursuing claims against
Mr. O. in this jurisdiction pursuant to Art. 6(1) of the Regulation. So far
as concerns procuring a breach of contract, G. would serve as anchor
defendant. As to the remaining claims against him, Ms. B would fulfil that
role.
90. The real difficulty is whether all these claims are properly brought
against Mr. O. as an individual, rather than against T.. On behalf of T.,
Mr. Smouha accepted in terms, in Court in the course of the hearing,
that no point has been or would be taken on Mr. O. acting without
authority or otherwise than in the course of his employment. Having
anxiously considered the matter, the realistic prospect is that if these
claims are made good, liability will be established against T. (which will be
answerable for Mr. O.'s conduct), rather than against Mr. O. personally. I
therefore rule that these claims against Mr. O. should likewise be struck
out. I add only this; aside from any question as to costs, there is no more
than the most remote prospect that the Claimants will suffer any practical
disadvantage consequent upon this ruling.
ISSUE (III): CASE MANAGEMENT STAY
91. This Issue can be summarily dealt with. By the conclusion of the
hearing and the post-hearing submissions, there was no or no serious
dispute that all surviving claims should be stayed under the Court's
inherent jurisdiction, pending the outcome of the Paris arbitration, as a
matter of case management: see, Reichhold Norway v Goldman Sachs
[2000] 1 WLR 173. I agree entirely. In my judgment, the central dispute
in this matter lies between E. and T.. To proceed in tandem with the
English Court proceedings and the Paris arbitration would be wasteful of
costs. Whether or not the Paris arbitration is ultimately decisive of the
surviving claims, it will at the very least clarify the landscape. I grant this
stay accordingly. (…)“