“(…) Mr Justice Andrew Smith
Introduction
1. This is an action brought by Mr Dinkha L. in which he claims to be
entitled to payment for work by way of architectural services pursuant
to contracts with the first defendant, G. M. H. SA ("GMH"), in relation to
three projects and pursuant to a contract with Mr A. in relation to a fourth
project. All four projects were for the development of sites in Morocco,
projects one and two both being for a new hotel on the site of the derelict
Hotel Villa F. in Tangiers, project three being the development of the Old
English Tennis Club at the Emmsalla Gardens in Tangiers and the fourth
project being, according to Mr L., in respect of a new private villa for
Mr A. in Tangiers. It is in evidence before me, and is not disputed, that
the development of the hotel and of the Old English Tennis Club ran into
planning difficulties, and none of the four developments in fact proceeded.
2. Mr L.'s claim, as pleaded, is that the contracts were made orally in
1994 and 1995, and the work was completed by August 1996. He claims
£223,807 from GMH and £17,906 from Mr A..
3. GMH is a company incorporated and registered in Luxembourg. Mr A. is
the Chairman and Managing Director of GMH.
4. The defendants contend that the Court has no jurisdiction over GMH,
and that the action against both defendants should be stayed on the
grounds of forum non conveniens, and in their applications before me
they seek orders accordingly.
5. The claimant contends that the Court has jurisdiction over GMH
under the terms of the Brussels Convention, and also contends that the
action should not be stayed. The provisions of the Brussels Convention
which the claimant relies upon are Article 2, Article 5(5) and Article
6(1). The claimant through his counsel, Mr David Lewis, abandoned
his contention that the Court has jurisdiction under Article 5(1) of the
Brussels Convention.
6. Before turning to the issues which I have to decide on this application,
I refer to the evidence on three points: firstly, the evidence about the
claimant; secondly, the evidence concerning the organisation of the
defendants and their business; and thirdly, the evidence about the
contracts alleged by Mr L..
The Claimant
7. Until 1998 the claimant worked and lived in Isleworth, West London,
although Mr A.'s evidence is that "at the time" he understood Mr L. lived
in Morocco. In 1998, according to his witness statement, he "re-located"
to Dubai, where he now works. He retains an address in Chiswick High
Road, London. His evidence is that he is an architect trading as Dinkha
L. Associates. In his original pleading and witness statement he states
that he has been an associated member of the R. I. of B. A. ("RIBA")
since 1973. In fact it is not in dispute that he has not been registered with
RIBA since 1994, his evidence being that his membership lapsed due to
non-payment of his membership fees, and that his registration with the
Architects Registration Board lapsed for the same reason at the same
time. The defendants' evidence is that Mr L. did not and does not possess
a licence to practice in Morocco, and this is not denied by him.
The Defendants
8. Mr A. resides in London, and is domiciled in England and Wales. As for
GMH, I refer first to a witness statement of Ms Anna Zoumaras, a solicitor
employed by DLA, who act for the defendants. Having stated that GMH
is incorporated in Luxembourg, she describes it as an "investment group
with interests in, for example, banking and finance, pharmaceuticals,
hotel ownership and management, project management, trading,
aviation, power generation and advertising." Its business also includes
real estate dealing and development, and it is involved in hotel and leisure
operations. Ms Zoumaras explains that "the Company operates through a
series of offices belonging to its subsidiary/associated companies in many
parts of the world, for example United States of America, Canada, Egypt,
Lebanon, Jordan and France".
9. It is said by Ms Zoumaras that the "central management and control of
the company is not in London", but Luxembourg, where it has employees,
meeting rooms and facilities for clients. She also says that all board
meetings are held in Luxembourg, although it is right to point out that Mr
A.'s evidence is that board meetings are usually held there, and that no
board meeting has been held in London. (The inference is, as I interpret
Mr A.'s evidence, that no board meeting had been held in England and
Wales, although that is not quite what he says.) There is no evidence
as to how frequently board meetings are held. Ms Zoumaras also states
that GMH does not operate in England, but there is in London an office
of General Mediterranean Holding UK Ltd ("the UK subsidiary"). The UK
subsidiary has a registered office at 364-366 High Street Kensington, and
Ms Zoumaras' instructions are that the UK subsidiary has no connection
with any of the matters in dispute in this action. Mr A. is its Managing
Director.
10. Another director of GMH is Mr Hisham Said A.-J., who is descibed
as an "Operational Executive" and has since 1994 been responsible for
real estate projects in Morocco. He has also been since 1994 the General
Manager of R., a Moroccan subsidiary of GMH being owned by it as to
80%. Mr A.-J. resides in Morocco.
11. As for Mr A.'s activities, he regularly travels overseas for business
meetings, and travels to the Luxembourg offices on average once a month
to meet with a number of fellow directors of the company and to discuss
matters appertaining to the company. Mr A.'s work for the company is
"predominantly carried out overseas".
12. As I have indicated, Mr A. has also provided a witness statement,
which answered evidence put in by and on behalf of the claimant. He
says that GMH is controlled from Luxembourg. He also refers to evidence
that he undertook most of his work from "the company's London offices"
and refutes it saying: "The Company does not have an office in London. I
travel widely, regularly travelling overseas for business meetings and do
not consider London as the base of the company. I travel on business as
the need arises, this is sometimes up to seven days per month. The time
spent depends on the need".
13. The claimant has put in statements from himself and his solicitor,
Mr Sturge, a partner in Lawrence Graham, but understandably he has
not been able to give much direct evidence about the organisation and
operations of GMH. Mr L.'s evidence is that it was never indicated to him
that the company was managed and controlled from Luxembourg, the
only reference to Luxembourg in his discussions with Mr A. being about
the possibility of fees being paid from a bank account from Luxembourg.
He says that he did not know that offices in Kensington High Street were
the offices for the UK subsidiary only, and that they were elegant and
affluent with a large reception and a number of offices on either side of
the reception, and that he had all his meetings with Mr A. "in his office,
which had a conference table". He also says that, "Mr A. always acted as
though he was in the offices of the" first defendant, and that all he, Mr L.,
knows is that all of the first defendant's business in relation to the project
was conducted at the London offices. All decisions about the project were
referred to Mr A. in London. Moreover, it is Mr L.'s pleaded case, and is
not refuted by the defendants, that in July and August 1999 Mr A.-J. had
meetings at the London offices at which he offered payments to Mr L. of
US$8,000 and US$10,000, offers which, according to Mr L., he rejected as
"derisory".
14. It is to be observed that, although it is not admitted how many
meetings there were or what was discussed, the defendants do not
dispute that Mr L. and Mr A. had meetings at the London offices. Mr
Sturge states in his witness statement that there were at least seven
other subsidiaries of GMH at the offices at High Street Kensington, and
not only General Mediterranean Holdings (UK) Ltd. He produces the 1999
accounts for GMH, which he observes were audited by a London firm of
accountants.
The alleged contracts
15. Next, the evidence about the contracts alleged by the claimant:
the claimant in his statement gives evidence about how he came to be
doing the work in respect of which he sues. He refers first to project two,
which curiously was the earlier of the two plans for the Hotel site: the
so-called "project one" was a subsequent "up-graded" plan that the new
hotel should be a five star establishment. Of project two, Mr L. (referring
to GMH as "the Company") says this: "In April 1994 I first attended a
meeting with Mr A. at the company offices at …, London ("the London
offices"). The Company had acquired property in the centre of Tangiers
and Mr A. told me that they were planning to redevelop a derelict hotel
in Tangiers called the Hotel Villa F.. Mr A. had used Moroccan architects
in the past for the Company's developments but with very poor results.
Therefore he decided to go to a London architect for this project."
16. Mr L. goes on to say that he agreed to produce an initial feasibility
study for a hotel on the site, and that this agreement was "on the
understanding that if the initial design sketches, which were to take about
two weeks work, were not accepted and I was not to continue, then I
would not charge for these sketches. However, if my design sketches were
accepted, I would then produce detailed designs for the redevelopment of
the hotel, for which I would be paid." He also gives evidence of discussion
about the method and payment of his fees at the initial meeting. Payment
was to be in Pounds Sterling or US Dollars, apart from a small amount
to be paid in Moroccan Dirham that he would need to pay the fees to a
local architect in Morocco. The Sterling or Dollar element of his fees was
to be paid from bank account in the United Kingdom or in Luxembourg.
Following the meeting, according to Mr L., he visited Tangiers, a visit
lasting about a week, and thereafter worked in London preparing sketch
plans and design ideas, which were submitted to Mr A. at GMH's London
offices. These, he says, were approved by Mr A., and he was instructed to
proceed with detailed designs. He continued to work further on the design
in London, and made further visits to Mr A. at GMH's London offices. His
work also involved a further visit to Tangiers for a meeting with Mr A.-
J. and the "resident architect" of R.. He also visited Tangiers to assist
the local Moroccan architect, his design being annotated in Arabic for
submission to the planning authorities, but not amended.
17. In February 1995 Mr A.-J. asked the claimant to meet him at R.'s
office in Tangiers. He was told that the project was to be upgraded and
a five-star hotel was to be built. Mr L.'s evidence is "when I returned to
London, I was instructed to carry out the re-design". As I have already
indicated, this stage of the work is referred to as "project one", but in
reality it was a continuation of the original "project two".
18. The claimant gives evidence of him requesting payment of his fees for
project two, and continues as follows: "Project 1 was completed in around
March 1996 and I again requested payment of my fees for project two
from Mr A. and Mr A.-J.. Mr Al-J. calculated my total fees for the project
as $100,000 and said that I was entitled to 40% of this sum on the terms
of the Moroccan scale of payment for architects. I disagreed with his
calculation of my fees because Mr A.-J. based it on a combination of the
cost of designing one floor of the hotel only and on the usual Moroccan
percentages for stage payments. Following my return to London I had a
meeting with Mr A. at the company's London offices. I explained to him
that $40,000 was totally inadequate payment for the work I had put into
the project. Mr A. agreed that I should be paid and telephoned Mr A.-J. in
my presence and told him to sort my fees out with him. However nothing
came of his telephone call."
19. With regard to project three, the redevelopment of the Old English
Tennis Club, Mr L.'s evidence is that Mr A. made mention of this at a
meeting at GMH's London offices, and as a result of Mr A.'s suggestion
he had a discussion with Mr A.-J. in Tangiers on 3 June 1994: "he gave
me the plans for the site of project 3. He briefed me on the planned
re-development which included the retention of tennis facilities and an
office block and the building of an office block and concert hall. Mr A.
and Mr A.-J. asked me to produce an initial study and then the designs
for the redevelopment". He gives evidence in relation to this project of
meetings with Mr A. at GMH's London offices and Mr Al-J. in Tangiers.
Again, as with the Hotel site, Mr L. refers to the need to submit plans to
the Moroccan planning authorities, but his evidence is that it was not for
him to communicate with the Moroccan authorities to obtain planning
permissions.
20. With regard to the fourth project, which is the basis for the claim
against Mr A. personally, Mr L. says that he received instructions to
prepare plans for the private villa when he met Mr A. in GMH's London
offices in November or December 1995. He saw the site on a visit
to Tangiers and then returned to London to produce first and initial
design and then fuller designs. Again, there were visits to Tangiers and
discussions at the London offices.
21. The defendants' case, as explained by Ms Zoumaras in her evidence,
is that Mr L. is one of a number of architects and designers who would do
work "on a speculative basis hoping to impress the Company [sc. GMH]
and to be engaged by them. The Company does on occasions co-operate
with these architects and designers by providing them with information
about their properties". However, the understanding was, according to
Ms Zoumaras, that the architects and designers had no right to payment.
Ms Zoumaras continues that "The Claimant approached the Defendant
eager to make proposals". It seems clear from the context in which this
statement is made that the reference to "the Defendant" is a reference to
GMH, and it is of some significance that it appears to be common ground
that Mr L.'s approach (whether or not to do speculative work or to do paid
work) was to GMH and that it was GMH who co-operated by providing
information about properties (although it is right to point out that Mr A.
denies giving Mr L. the plans of the existing building at the Hotel Ville de
France site and there is dispute as to what information was given).
22. Mr A. disputes this account of his meetings with Mr L. both in detail
and in general. He does, however, acknowledge that he had meetings
with Mr L. at the offices at High Street Kensington, and says that Mr L.
did visit him "on a number of occasions with investment proposals for
me to consider". He says that these meetings were not "regular" and
"never took place at my invitation". Other architects produced plans for
possible building projects in Morocco, including the Tennis Club site and
the site of the Hotel Villa de France, and that those plans were produced
speculatively for R.. With regard to the private villa in Tangiers, Mr A.
says that Mr L. volunteered to produce plans for the site on a speculative
basis, and that the site did not belong to him but to R.. He sums up the
position as follows: "Mr L. undertook the Projects of his own volition.
It was a speculative venture in the hope of being engaged by either
the Company or R.. There was never any intention to enter into any
contractual relations. I did not, either on a personal basis or on behalf
of the Company, seek or retain Mr L.'s services; nor was there any
agreement as to the payment of Mr L.'s fees".
23. Mr A. asserts in his evidence that "If, which is denied, Mr L. had any
contract for undertaking the design work which he allegedly undertook,
that contract would have been with [R.]... Neither myself not the
[First Defendant] would have had authority to make any arrangements
concerning payment on behalf of R., much less to decide in which
currency it would be made". He does not, however, give evidence that he
told Mr L. of R. owning the properties, and I do not understand the vague
reference to Mr L. hoping to be engaged by GMH or R. to suggest that he
did.
24. I should point out two other matters that the defendants emphasise
with regard to Mr L.'s contentions that he entered into contracts with
them. First, Mr L. has produced no documents evidencing the alleged
contracts that antedate the letter that he wrote in October 1998 referring
to the "hotel project", stating that he had done a considerable amount
of work for a number of years without receiving any payment and asking
for his account to be settled. Further letters were written in March 1999.
Secondly it is to be observed that when these letters were written they
were not addressed to GMH. The initial letter of October 1998 was
addressed to Mr A. at "I." at …. The other letters are simply addressed to
Mr A. at that address.
25. This being the evidence, I must now consider whether the Court has
jurisdiction over GMH and whether the action should be stayed.
Does the court have jurisdiction over GMH under Article 2?
26. Article 2 of the Brussels Convention provides that "Subject to the
provisions of this Convention, persons domiciled in a Contracting State
shall, whatever their nationality, be sued in the courts of that State.
Persons who are not nationals of the State in which they are domiciled
shall be governed by the rules of jurisdiction applicable to nationals of
that State." Article 52 provides that "In order to determine whether a
party is domiciled in the Contracting State whose courts are seised of a
matter the Court shall apply its internal law." Accordingly, the question
whether GMH is domiciled in England and Wales is governed by the
provisions of section 42 of the Civil jurisdiction and Judgments Act 1982.
27. Section 42(1) provides: "For the purposes of this Act the seat of
corporation or association (as determined by this section) shall be treated
as its domicile." Sub-section (3) provides: "A corporation or association
has its seat in the United Kingdom if and only if -- (a) it is incorporated or
formed under the law of part of the United Kingdom and has its registered
office or some other official address in the United Kingdom; or (b) its
central management and control is exercised in the United Kingdom." I
need not cite sub-section (4), which is concerned with the question in
what part of the United Kingdom a corporation or association has its seat,
because it is not in dispute that if GMH has a seat in the United Kingdom,
it is in England and Wales. GMH being incorporated and formed under the
law of Luxembourg, the question is whether its central management and
control is exercised in the United Kingdom.
28. Mr Lewis accepts that the burden is upon the claimant to establish
this. There is dispute, however, as to the standard of proof. Mr Jonathan
Lee, who appeared for the defendants, submitted that the matter is
to be decided on the balance of probabilities. Mr Lewis submitted that
the claimant has to establish a good arguable case. Both counsel made
submissions on the point without reference to any authority. It seems
to me, however, that the starting point is the decision in Canada Trust
Company and other v Stolzenberg and other. The case directly concerned
whether jurisdiction was established under Article 6 of the Convention,
but the reasoning adopted in both the Court of Appeal and in the House of
Lords is of more general application. In the Court of Appeal [1998] 1 WLR
547, Waller LJ considered the question of the relevant standard of proof
and fully analysed the relevant authorities. His judgment was approved in
the House of Lords: [2000] 3 WLR 1376. It was decided that the standard
of proof to be applied was whether the claimant had established a good
arguable case. Lord Steyn, endorsing the judgment of Waller LJ, says
this (at p1387 C-E): "In a purely English case the test of a good arguable
case had been laid down by the House of Lords as applicable... in respect
of domicile as a ground of jurisdiction: Seaconsar Far East Limited v
Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438. The question is
whether in the context of article 6 the more stringent test of a balance of
probabilities should apply. The adoption of such a test would sometimes
require the trial of an issue or at least cross examination of deponents
to affidavits. It would involve great expense and delay. While it is true
that the jurisdictional issues under the Conventions are very important,
they ought generally to be decided with due despatch without hearing oral
evidence." I observe that Cheshire and North's Private International Law
(13th Edition, 1999, published after the decision in the Court of Appeal
but before the decision of the House of Lords in Canada Trust) says this
at p.198: "When the issue comes to trial in England, it is well established
in cases where reliance is placed on special jurisdiction (Articles 5 and
6) that the claimant has to show a good arguable case that the terms of
Article 5 or 6 are satisfied. Common sense would suggest that the same
standard and burden of proof apply with other bases of jurisdiction."
Dicey and Morris, The Conflict of Laws (13th Edition) at paragraph 11-063
fn.51 states that the claimant must establish a good arguable case that
the defendant is domiciled in the jurisdiction citing Canada Trust in the
Court of Appeal(this work too being published before the case went to the
House of Lords).
29. The only argument advanced by Mr Lee for distinguishing the
approach to be adopted under the Articles conferring special jurisdi0ction
and Article 2 is that typically, as he suggested, questions concerning the
special jurisdiction might be matters which will arise for consideration at
trial. This suggested distinction (possibly echoing Staughton LJ in Attock
Cement Company Limited v Romanian Bank for Foreign Trade (1989) 1
WLR 1147) was rejected by Waller LJ in the Canada Trustcase (at page
555B). Moreover Waller LJ in Canada Trust (at page 556B) refers to
the Court of Appeal decision of Dubai Bank Limited v Abbas [1996] CA
transcript 978, where Saville LJ, in a judgment in which Simon Brown and
Aldous LJJ agreed, applied the test of "good arguable case" to the issue of
domicile.
30. Although I have not had the advantage of submissions based on the
authorities, it seems to me that Mr Lewis is right in his contention as to
the standard of proof to be applied.
31. However, Waller LJ in the Canada Trust case also observes that
the concept of "good arguable case" is a flexible one. "It is natural, for
example, in a case concerned with a contract where the jurisdiction
depends on whether the breach took place within the jurisdiction, but
where the issue to be tried will be whether there was a contract at all, not
to wish to give even the appearance of pre-trying the central issue, even
though the concept of being satisfied must apply both to the existence of
the contract and the place of the breach. It is equally natural for the Court
in the process of being satisfied to scrutinise most jealously that factor
which actually provides jurisdiction. It is equally natural that where the
foundation of jurisdiction is domicile, i.e. an issue that will not arise at the
trial, that particular scrutiny of the material available takes place in the
context of the limitation applied to an interlocutory process." (at p555H-
p556A). Having cited the Dubai Bank case, Waller LJ observes that Saville
LJ "scrutinised material which was before the court before concluding
that the plaintiffs had failed to make out a good arguable case for the
defendant being domiciled in England."
32. The approach that I adopt, therefore, is to consider whether the
claimant has established a good arguable case that GMH's central
management and control is exercised in the United Kingdom, while
observing that the evidence presented on this question is to be scrutinised
carefully.
33. It is said in Cheshire and North (cit sup) at page 189 that "In
ascertaining where a company has its central management and control
it is relevant to look at where the directors are resident, hold meetings
and decide major policy issues", citing the Rewia [1991] 1 Lloyd's Rep
69 at 74 and observing that this part of Sheen J's judgment was not
questioned in the appeal which overruled the decision on other grounds:
[1991] 2 Lloyd's Rep 325. As far as these criteria are concerned, the only
consideration indicative of central management and control in England
which the claimant has proved is that Mr A. resides here. As I have
stated, the evidence about board meetings is that most of them are held
in Luxembourg and that none has, as I have interpreted Mr A.'s, ever
been held in England. There is no evidence that any meeting between
directors has been held here.
34. Mr Lewis submits that a company can exercise its central
management and control in more than one jurisdiction. He points out, as
is undoubtedly the case, that it was established in the Deichland [1990] 1
QB 361 that a company can have more than one seat within the meaning
of section 42 of the 1982 Act, and so more than one domicile.That,
however, was a case in which a company had one seat by reason of
its place of incorporation or formation and another by reason of the
place where its central management and control was exercised. As far
as I am aware, it has never been decided in the context of section 42
that corporation can have more than one seat by virtue of its central
management and control being exercised in more than one jurisdiction.
I have reservations whether section 42 of the Act contemplates that one
could, but need reach no concluded view about this.
35. Mr Lewis cites the decision of the House of Lords in Swedish Central
Railway Company Limited v Thompson [1925] AC 495, a case about a
company's residence for tax purposes. In that case Viscount Cave said
at page 501 that "the central control and management of a company
may be divided". Cheshire and North (cit sup at p.174), pointing out that
this decision has to be considered in light of the subsequent decision of
the House of Lordsin Egyptian Delta Land Investment Company v Todds
[1929] AC 1, conclude that "the joint effect of the Swedish and Egyptian
decisions seems to be that, if the control is so evenly divided between two
or more countries as to preclude the possibility of identifying one place of
central control, then the company must be regarded as resident in each
country in which to a substantial degree control is in fact exercised". Lord
Radcliffe said in Unit Construction Company Limited v Bullock, [1960] AC
351 at 369, "the 1925 decision of the House was no more than a decision
on that special class of case... where the facts themselves are genuinely
such as not to admit of a finding that central management and control are
exercised in or from any one country".
36. Even if the notion of divided central control is relevant to questions
under section 42 of the 1982 Act, I do not think that the evidence
establishes a good arguable case that in the case of GMH its central
management and control was exercised either partly or wholly in this
country. The burden of Mr Lewis' submission is that Mr A. takes day to
day business decisions in London. That is in dispute, but it does not seem
to me to go to the real question. The question of a corporation's seat or
domicile is concerned not with its day to day operational decisions, but
its central control and management. No instance of a major controlling
decision having been taken in London has been put in evidence. There
is no evidence, in the words of Lord Loreburn in De Beers Consolidated
Mines Ltd v Howe, [1906] AC 455 at 458, that England is where the GMH
"keeps house and does its real business". Mr Sturge asserts in his witness
statement that "the reality is that the Second Defendant is a dominant
figure in the day to day operation of the First Defendant and that he was
personally and closely involved in all of the discussions, meetings, and
matters in general, which give rise to the four claims...". However, Mr
Sturge and his client could have no basis for their view about Mr A.'s
role in GMH other than how he dealt with these particular projects. No
evidence has been adduced as to the nature and extent of the activities
of directors other than Mr A. and Mr A.-J., nor evidence about where they
resided or where they worked.
37. Although the defendants' evidence could be said to be somewhat
vague, I do not think that there is any proper reason to reject Mr A.'s
evidence that control is not exercised in this country. I conclude that the
claimant has not satisfied the requirement of establishing a good arguable
case under Article 2.
Special Jurisdiction
38. In approaching the special jurisdiction conferred by Articles 5 and 6
of the Brussels Convention there is a threshold requirement which the
claimant has to satisfy before the defendant can be subject to jurisdiction
that he must establish there is a serious issue on the merits to be tried:
Cheshire and North cit sup at p.199. As I have explained, the defendants'
case is that Mr L.'s work was done on a speculative basis, and that it
was understood by both Mr L. and the defendants that the work gave no
right of payment. Mr L. responds that the amount of work which he did
was such that it is unrealistic to suppose that he was not to be paid. The
defendants submit that I should reject Mr L.'s contentions as not giving
rise to a serious issue to be tried on its merits. Here I should refer to four
points made by Mr Lee.
39. First he says, and it is certainly the case, that the claimant was wrong
to assert in his particulars of claim and in his witness statement that he is
an Associate Member of the Royal Institute of British Architects. This error
has not, in my view, been fully explained by Mr L., but I do not consider
it of such significance as to cast sufficient doubt on his whole case as to
prevent it from being a serious claim to be tried.
40. Secondly, it is remarked that if there were contracts as alleged by
Mr L., it would be strange that there is no written record of them. Again
there is undoubtly some force in the point, but it is also the case on the
evidence which I have before me that Mr L.'s letters requesting payment
have remained unanswered. Although Mr A.'s evidence is that he does
not recall receiving any of the letters, this goes some way, in my view,
to redress the balance. Moreover, on the evidence before me Mr A.-J.
offered to make payment to Mr L. in 1999, and these offers have not been
explained by the defendants.
41. Thirdly, Mr Lee observes certain discrepancies between Mr L.'s
pleaded case and his evidence in response to these applications. He
points out that with regard to project two Mr L. pleads that he designed
the structural grid of the hotel whereas in his evidence he says "I got
to the point of designing the structural grid". Secondly, Mr Lee observes
that in his pleading Mr L. does not acknowledge that he did some initial
speculative work, although in his evidence he does do so. Thirdly, he
points out that in the pleading it is said that a 3D model was produced
during the project two stage of the hotel design, whereas in his evidence
he refers to it being made in the course of project one. Finally, with
regard to the instructions for the re-design of a five-star hotel (project 1)
the pleading suggests that these were given inTangiers, whereas Mr L.'s
evidence is that while the project was canvassed in Tangiers, instructions
to design the project were given later in London. These four points might
provide material for cross-examination of Mr L. at trial, but do not seem
to me, either individually or taken together, so telling as to lead me to the
view that the claims do not raise serious issues which should properly be
tried on their merits.
42. Finally, Mr Lee refers to R., and submits that any contract that
was made was with that company. In particular, with regard to project
three he observes that Mr L. refers to R.'s plans for redeveloping that
Tennis Club rather than those of GMH. However, Mr A. does not give
evidence that he ever referred to R. when meeting Mr L.. Moreover, as I
understand Ms Zoumaras' evidence, the defendants' contention is that Mr
L. approached GMH, not R..
Protocol
43. Article 1 of the protocol annexed to the Brussels Convention provides
that, "Any person domiciled in Luxembourg who is sued in a Court of
another Contracting State pursuant to Article 5(1) may refuse to submit
to the jurisdiction of that court. If the defendant does not enter an
appearance the Court shall declare of its own motion that it has no
jurisdiction". Mr Lee submits that this Article prevents Mr L. from relying
upon Articles 5(5) and 6. As I understand the argument, it is that any
Luxembourg domiciliary who is sued pursuant to Article 5(1) may refuse
to submit to the jurisdiction of a foreign Court under any of the provisions
for special jurisdiction in the Convention. This, he says, is the meaning
and effect of the first sentence of the Article of the Protocol.
44. It was drawn to my attention that Dicey and Morris, cit sup at
para 11- 240, says, "This provision was originally designed to protect
Luxembourg domiciliaries from the jurisdiction of the Belgian Court and
it is not easy. to understand its continued justification". I was referred to
no other authority. I observe that in the Jenard Report it is said that "The
special position of Luxembourg justified, as in the Benelux Treaty, the
inclusion of a special provision in the protocol (Article 1)", but I have not
been shown the terms of the Benelux Treaty, and no submissions were
made to me about the special position of Luxembourg referred to in the
report.
45. I do not accept that the Protocol is to be interpreted as widely as
Mr Lee suggests. His argument proves too much. Understandably, he
draws back from a submission that the Protocol would preclude. Mr L.
from relying upon Article 2 if GMH were domiciled in England (as well
as Luxembourg). However, his argument based on the literal wording.
of the Protocol would apply to a claim brought under Article 2 as much
at to one under Article 5(5) or 6. I consider that the natural and proper
interpretation of the Protocol is that Article 1 precludes reliance upon
Article 5(1) to bring proceedings against a Luxembourg domiciliary, and
that only.
46. If I had not formed this view of the proper interpretation of the
Protocol, I should have invited submissions as to whether GMH is entitled
to rely upon the Protocol once the claimant has abandoned any argument
that he is relying upon article 5(l) to establish jurisdiction. It seems to me
that it would be surprising if he could do so, but since I have not heard
argument on the point, I shall say no more about this question.
Article 5(5)
47. Article 5(5) reads as follows: "A person domiciled in a Contracting
State may, in another Contracting State, be sued... As regards a
dispute arising out of the operations of a branch, agency or other
establishment, in the courts for the place in which the branch, agency
or other establishment is situated." Mr L.'s argument that the court has
jurisdiction under this article raises two questions:
i) Was there a branch, agency or other establishment of GMH in London?
ii) If so, does the dispute arise out of the operations of it?
48. Both counsel directed much of their submissions on the first of
these questions to whether or not the UK subsidiary operated as a
branch, agency or other establishment of GMH. Undoubtedly a subsidiary
company can so operate within the meaning of the Article: see SAR
Schotte GmbH v Parfums Rothschilds SARL [1987] ECR 4905. However,
if the matter is approached in this way, it does not seem to me that the
requirements of Article 5(5) can possibly be satisfied by the claimant. Mr
L., on his own case, was dealing with Mr A. as an officer of GMH whom he
met in the office at Kensington High Street. Mr L. does not assert that he
considers that Mr A. was acting on behalf of the UK subsidiary, or that his
discussions with Mr A. were in any way connected with the UK subsidiary
or its operations. The realquestions, therefore, do not involve the UK
subsidiary, but are whether Mr L. has shown a good arguable case that
Mr A. was acting on behalf of GMH in London and whether his activities
were such that GMH is to be regarded as having a branch, agency or
establishment in London for the purposes of Article 5(5).
49. Here too, as on other issues, the evidence is less than complete.
However, it is not disputed that Mr L. had a number of meetings with Mr
A. at the London offices. Mr L. has put forward evidence that in those
meetings Mr A. presented himself as acting for GMH. According to Mr L.'s
evidence, Mr A. was dealing with business of GMH from an office which he
had in this country and was doing so over a substantial period on time,
indicating a degree of permanence in Mr A.'s activities on behalf of GMH
there. Although this is a matter of dispute between the parties, that is
not a matter that I can judge at this stage in the proceedings. It seems
to me that Mr L. has established a sufficient case that Mr A.'s presence at
a series of meetings in the offices evidences the operations of a branch,
agency or establishment for the purposes of Article 5(5).
50. I therefore turn to the question whether the dispute arises out of the
operation thereof. Here I refer to the case of Somafar v Saar Fern Gas AG
[1978] ECR 2183, in which it was decided that a dispute might be said
to arise out of the operations of a branch, agency or other establishment
in one of three ways. First, there are "actions relating to rights and
contractual or non-contractual obligations concerning the management
properly so-called of the agency, branch or other establishment itself
such as those concerning the situation of the building where such
entity is established or the local engagement of staff to work there".
Secondly, it was said that the concept "also comprises those relating to
undertakings which have been entered into at the above mentioned place
of business in the name of the parent body and which must be performed
in the Contracting State where the place of business is established".
In thesubsequent case of Lloyd's Register of Shipping v Campernon
Bernard (1995) ECR 1-961 it has been held that, despite the wording of
the Somafar decision, it is not a pre-- condition of the jurisdiction under
Article 5(5) that the obligations entered into by the branch in the name
of the parent body were to be performed in the contracting state in which
the branch is situated. Thirdly, Somafer establishes that the concept
comprises "actions concerning non-contractual obligations arising from
the activities in which the branch, agency or other establishment... has
a engaged at the place in which it is established on behalf of the parent
body."
51. The first and third of the concepts identified in Somafer clearly do
not apply here. Mr Lewis' argument is that this case is one in which the
dispute relates to undertakings that have been entered into at the place
of business in the name of the parent body. On the basis of the evidence
before me that requirement is satisfied in the case of the contracts
alleged for projects one and two. I had some doubt as to whether it
could be said that to be established with the same degree of certainty in
the case of the claim relating to project three, where it seems from the
claimant's evidence that the contract was made in Tangiers. However, in
the course of his oral submissions Mr Lee acknowledged that the project
three claim should not be treated differently from those concerning
projects one and two, and was content that I should consider the claim
for jurisdiction under 5(5) on the basis of whether it was established
in respect of projects one and two. I conclude that the claimant has
established this jurisdiction.
Article 6
52. Article 6 of the Convention provides that "a person domiciled in
a Contracting State may also be sued... where he is one of a number
of defendants, in the Courts for the place where any one of them is
domiciled". The claimant says that Mr A. is undoubtedly domiciled in this
country, and so he is entitled also to sue GMH here.
53. Mr Lee relies upon two points in relation to Article 6: (i) first he says
that there is not a sufficient link between the claims against GMH and the
claims against Mr A.; and (ii) secondly he says that the claim. against Mr
A. is to be stayed on the grounds of forum non conveniens.
54. Mr Lewis accepts that if the claim against Mr A. is to be stayed on the
grounds of forum non conveniens, then he cannot rely upon Article 6. This
concession is undoubtedly correct. I refer to the judgment of Waller LJ
in the Canada Trust case (at page 558H): "The court will be anxious to
see that the Convention is not abused and that its effect is not impaired.
In the article 6 context in particular, despite the notion that the court
has no discretion where the Convention is concerned, one sees that the
court has formulated what are in essence terms to be implied into article
6, eg that there must be a connection between the claims made (see eg
Gascoigne v Pyrah (1991) The Times, 26 November 1991), it must not
be the sole object of joining a defendant to oust the jurisdiction of the
court of the domicile of other defendants (see the additions to note 75 in
the 4th Cumulative Supplement to Dicey and Morris on Conflicts of Laws
(12th Edition 1997) and the reference to an Irish case Gannon v British
and Irish Stem Packet Company Ltd [1993] 2 IR 359) and it would be
an abuse of article 6 to join a defendant simply to obtain discovery; see
the Molnlycke case [1992] 1 WLR 1112, 1117B). Thus in approaching the
question whether the court is satisfied that it should take jurisdiction.
under article 6 for example, it will certainly have in mind the implications
in relation to the prevention of abuse." (I observe that Waller LJ cites the
first instance decision in Gascoine v Pyrah, although that decision was
reversed by the Court of Appeal [1994] 1 L Pr 82, to which I shall refer
and which interpreted Article 6 less restrictively). It would undoubtedly
be an abuse for the claimant to rely upon the joinder of Mr A. if the action
against Mr A. were to be stayed. The matter is put thus by Leggatt LJ in
the Rewia [1991] 2 Lloyd's Rep 325 at 329: "To rely on art 6 the plaintiffs
would have to show that there is a real issue that the plaintiffs may
reasonably ask the Court to try" against the defendant domiciled within
the jurisdiction.
55. I turn to Mr Lee's first point: I consider that there is a sufficient link
between the claims against the two defendants for Mr L. to rely on article
6. The Civil Procedure Rules, at rule 7.3, provide that "A claimant may use
a single claim form to start all claims which can be conveniently disposed
of in the same proceedings". As far as the CPR are concerned, I do not
doubt that the claims against both defendants are properly brought in one
action.
56. However, this does not necessarily answer the question whether
there is a sufficient link between the claim for the purpose of Article 6. Mr
Lewis has referred me to the decision in Kalfelis v Bankhouse Schroder,
Munchmeyer, Hengst and Company [1998] ECR 5565: at paragraph 12
the court says "The rule laid down in Article 6(1) therefore applies where
the actions brought against the various defendants are related when the
proceedings are instituted, that is to say where it is expedient to hear
and determine them together in order to avoid the risk of irreconcilable
judgments resulting from separate proceedings. It is for the national court
to verify in each individual case whether that condition is satisfied".
57. The effect of the Kalfelis decision has been the subject of some
discussion. Briggs and Rees in Civil Jurisdiction and Judgments
(2ndEdition, 1997) at para 2.178 suggests, "The literal application of the
Kalfelis ruling may be difficult. The better approach is therefore to take a
broad view of the ruling. Kalfelis should be interpreted to mean that if the
claims made are so closely connected that it is expedient in the interests
of justice that they may be tried together, article 6(1) should give the
court jurisdiction".
58. In my opinion, there is no reason to take a narrow view as to when
claims against two defendants can properly be joined in an action, any
more than the court takes a narrow view of when judgments might be
irreconcileable for the purposes of article 22: see Sarrio SA v Kuwait
Investment Authority, [1999] AC 32. I agree with Briggs and Rees (cit
sup at para 2.178) that Article 6 applies if there is a risk of conflicting
or contradictory judgments, even though there is no risk of mutually
exclusive legal consequences -- provided, I would add the risk of
conflicting or contradictory judgments is a real risk and not a fanciful or
theoretical one.
59. This view is supported by the decision of the Court of Appeal in
Gascoine v Pyrah, [1994] IL Pr 82, in which Hirst LJ, having said that
"potential conflicting findings of fact are just as relevant for Article 6(1)
purposes as potential conflicting findings of law" adds this: "... the risk
of conflict in conclusions of law may be a serious matter, if they involve
a point of European law they may eventually be reconciled on appeal
tothe European Court of Justice. Conflicting findings of fact, on the other
hand, are virtually impossible to reconcile if different judges in different
jurisdiction within the EEC, hearing and seeing different witnesses,
reach different conclusions which have hinged on an assessment of the
reliability of individual witnesses; and of course the problem may be
compounded in cases where there are different procedures in the different
national courts in the way in which they hear the evidence and assess it.
Moreover, different findings of fact also lead to different conclusions of
law."
60. It seems to me that the claims against the two defendants here are
properly joined. The nature of the claimant's case is that when he was
given instructions for project two, agreement was reached as to how he
was to be paid. Those arrangements applied to the other projects. The
claimant's pleaded case is that agreement was reached about payment of
his fees between Mr A. and himself "at their preliminary meeting in April
1994", that is to say the meeting when project two was first discussed,
and that agreement applied to all the projects. In these circumstances
it seems to me that if different courts are to determine what was said at
that meeting and the effect and efficiency of any agreements that were
made, they might bring different and conflicting conclusions. I conclude
that if the claim about project 4 were to be tried by a different Court from
that trying the claim about the other projects, there is a real risk that
they might reach decisions which are irreconcilable in the sense which I
have described.
61. Mr Lee observed that the amount claimed from Mr A. is much less
than the amount claimed from GMH. That is undoubtedly the case, but
the amount claimed against Mr A. is not so small that it is realistic to
regard that claim as frivolous or brought as a device to obtain jurisdiction
against GMH. This being so, I do not consider the amount of the claim to
be significant.
Forum non Conveniens
62. The claimant is content to accept before me that when dealing with
a Convention case, the Court retains a discretion to stay on the grounds
of forum non conveniens: see in Re Harrods Buenos Aires [1992] Ch 72
and Ace Insurance SA v Zurich Insurance Company [2001 ] 1 Lloyd's Rep
618. He points out, however, that if the decision in Ace is reversed in the
House of Lords and Re Harrodsis overturned, he might seek to have any
stay lifted.
63. I take the rule about when the Court has power to stay on this basis
from Dicey and Morris, cit sup, rule 31(2): "... an English Court has
power to order a stay of proceedings on the basis that England is an
inappropriate forum... if:
a) the defendant shows there to be another court with competent
jurisdiction which is clearly and distinctly more appropriate than England
for the trial of the action, and
b) it is not unjust that the claimant be deprived of the right to trial in
England".
The same considerations apply to the decision whether there should be
a stay of the claim against GMH as apply to the decision in relation to
the claim against Mr A.. Moreover it would not be appropriate to stay
the action against one defendant and not the other, because it would
not be convenient or appropriate for the action to proceed in different
jurisdictions.
64. The defendants contend that the courts of Morocco would be a
more appropriate forum. They have not adduced evidence that they are
available as a forum, but in any case I do not consider that they have
shown that Morocco would be a more appropriate forum than England.
65. One matter relied upon by Mr Lewis in resisting the application for
a stay is that the contracts are governed by the law of England and
Wales, and I should first consider this point. I take the view that Mr
Lewis is likely to be correct in his submission that the governing law is
English. There is no suggestion that the parties to any contract made
an agreement as to the law to govern it. The appropriate starting point
therefore is Article 4 of the Rome Convention, enacted into English law
by the Contract (Applicable Law) Act 1990. It provides that a contract
is to be governed by the law of the country with which it is most closely
connected and that "it shall be presumed that the contract is most
closely connected with the country where the party who is to effect the
performance which is characteristic of the contract has, at the time of
conclusion of the contract, his habitual residence, or, in the case of a body
corporate or unincorporated, its centre of administration. However, if the
contract is entered into in the course of that parties trade or profession,
that country shall be the country in which the principle place of business
is situated or, where under the terms of the contract the performance
is to be effected through a place of business other than the principle
place of business, the country in which that other place of business is
situated". The performance which is characteristic of these contracts is the
performance by the claimant of architectural work, and he was resident
in England at the relevant time. It seems to me probable, therefore, that
English law governs these (putative) contracts.
66. I acknowledge that at one point in his evidence Mr L. states that when
discussing payment with Mr A. at their initial meeting, he "was... given an
example of a local Moroccan architects contract with the understanding
that, with the exception of the clauses concerning the fees structure,
my contract with the company would be loosely based on it"; however
it seems to me to read too much into this evidence to conclude that the
prima facie effect of Article 4 is displaced, especially since Mr L.'s case is
that the fees were to be governed by the RIBA scales.
67. Other considerations which point to England being the governing law
are these: many of the meetings about the work took place in England.
Mr A. and Mr L., whose discussions are relied upon as creating the
contracts, were then both living in England. I have mentioned that the
claim is that fees were to be paid on the RIBA scales, and the defendants'
own evidence that Mr L. was not licensed to practice in Morocco. As far as
the evidence goes, it seems likely that the language in which discussions
took place and any documents were written was English.
68. Apart from the governing law, two other considerations in my view
make a trial in England more appropriate than one in Morocco. First,
that an English Court is more likely to be familiar with the RIBA scales
and how they are applied than a Moroccan Court. If expert evidence is
required about this, the witnesses are likely to be English. Secondly, Mr
A. is in England, and although Mr L. now lives in Dubai, he maintains
premises in London. Against this, I recognise that Mr A.-J. lives in
Morocco.
69. The defendants emphasise the connection of the work with Morocco
and refer to Moroccan planning requirements. However, there is no
reason to suppose that questions concerning negotiations or exchanges
with the Moroccan authorities or concerning compliance with Moroccan
regulations or planning requirements will be in issue between the parties
so as to need to be considered at trial. As far as I can see at this stage
in the proceedings, the defendants not having served a defence, the
central, perhaps the only, disputes are likely to be whether contracts
were concluded in London and if so between whom and on what terms;
and maybe how the RIBA scales are to be applied to the work that was
done by Mr L.. It does not seem to me in these circumstances that the
defendants have shown, still less shown clearly, that Morocco is a more
convenient forum than England for these proceedings.
Conclusion
70. I conclude therefore the claimant has established jurisdiction over the
first defendant and that the action should not be stayed either against the
first defendant or against the second defendant on the grounds of forum
non conveniens. (…)“