„(…) C. Simmons Q.C.:
1 This is a claim brought by the claimant L. O. and I. B. SL (LOIB) against
the defendant M. A. H. Limited (M.) for 18,036,000m Ptas in respect of
the supply of a chemical called Clostanel 10% oral solution (the chemical)
delivered to M. in February and March 1998. The chemical is used in the
treatment of liver fluke in sheep and lambs. LOIB is domiciled in Spain.
M. is domiciled in England and is in the business of the sale and supply of
veterinary health products.
2 Proceedings were started in England by a claim form issued and served
on 10 August 1999. On 29 July 1999 M. had issued a petition to the
Spanish court at Mataro Barcelona requesting that court to certify that
M.'s petition should be joined to criminal and civil proceedings which had
commenced in that court in February 1998. M. now seeks to persuade
the Engish court, on a number of grounds, that the English proceedings,
brought by LOIB for the price of the goods sold, should be stayed pending
the outcome of the Spanish proceedings.
The Facts
(i) The contract
3 LOIB is alleged to carry on business, inter alia, in the sale and supply of
the chemical. A company called L L. SAL (L.) is alleged by LOIB to be the
manufacturer of the chemical (paragraph 1.1 of the amended particulars
of claim) allegedly with the knowledge and consent of M.. This is disputed.
M. allege that it at all times believed that it was contracting with L. It
argues that it was deliberately misled by the principals of LOIB, who were
at the material time also officers of L, into believing that LOIB was merely
a division of L and not a separate company. That will be one of the issues
in any trial of this matter.
4 The sale was the subject of a purchase order dated 2 March 1998 No.
1304 from M. addressed to LOIB. Payment terms were 60 days from date
of collection. Delivery terms were "Ex works L". LOIB was required by
M. to "supply certificates of analysis showing batch numbers and other
details. Delivery was to be in two batches, the first by 10 March latest
and the second by 20 March at the latest. On the back of that order
were printed M.'s "General Terms and Conditions of Purchase". The order
was accepted by LOIB who in due course supplied the chemical. LOIB's
invoices Nos 98027 and 98028 related to the two batches and recited
M.'s order number and other contractual terms. Notwithstanding that
acceptance M. dispute that their own conditions attached to the order.
The significance of that dispute is the existence of a choice of law and
jurisdiction clause within those conditions in the following terms:
This order shall be construed in all respects in accordance with English
law and the seller hereby submits to the non-exclusive jurisdiction of the
English courts.
5 After the initial batch of the chemical M. agreed to supply the raw
material for the remainder of the order and as a result the rest of the
chemical was to be supplied at a reduced price.
6 Two consignments of the product were allegedly collected by M. from
LOIB in March 1998. M. has failed to pay for those consignments. Messrs
Eversheds, solicitors for LOIB, wrote letters before action to M. on 15 July
1998 and 29 January 1999 but no payment was forthcoming and hence
LOIB has brought this action to recover the sum they allege is due and
owing.
(ii) The English proceedings
7 The English proceedings were commenced by issue of a claim form
on 10 August 1999 out of the Cambridge District Registry of the High
Court. In their acknowledgment of service dated 17 August 1999 M.
ticked the box notifying LOIB of their intention to contest jurisdiction. M.'s
application to stay the proceedings, which is now before me, was issued
on 8 September 1999.
8 M. seek an order from this court staying the action on the grounds:
(i) This court has no jurisdiction to deal with the case;
(ii) Alternatively, if it has jurisdiction, in the court's discretion it should not
exercise that jurisdiction;
(iii) Alternatively, the Court should await the decision of the current
proceedings in Spain and in the meantime grant extension of time for
serving and filing service of the defence.
9 M. submits that were the matter to proceed in the English courts at this
time they would have a number of genuine defences to the action. These
include:
A. M. contracted with a party other than the claimant ("LOIB"), that party
being L;
B. LOIB is estopped from denying that the contract was with L, LOIB
having (mis)used the licences, get-up, name, etc, of L in order to obtain
the business of M.;
C. The contract with M. was obtained by misrepresentation (including
fraudulent misrepresentation) and/or under a mistake by M. as to the
identity of the seller which was known to LOIB, and if the contract is
avoided, then LOIB ought not to be entitled to recover monies from M.;
D. The directors of LOIB have been conducting an unauthorised laboratory
without the required permissions of the relevant Spanish authority. The
production itself (and the sale of the product) is illegal and LOIB is thus
seeking to enforce an illegal contract;
E. M. would have (and will assert if required) a counterclaim for
substantial damages (being a defence also by way of set-off) arising out
of:
(i) sums to be paid out to those to whom the product was sold on by M.,
to compensate for the poor quality of the products;
(ii) LOIB's late delivery of the product causing M. to incur additional cost;
(iii) substantial damage caused to M.'s business and loss of profits
(including the loss of the business of the United Nations, who were the
end user of this consignment of the product);
(iv) direct expenses incurred in trying to try to sort out the repercussions
of the position.
F. Given that the product actually sold was not produced at an authorised
laboratory, it may be necessary to recall products sold on. To that extent
the consideration provided by LOIB will have partly failed (and may well
have failed entirely).
10 Miss Jane Louise de Lozey, a solicitor with Eversheds, has filed a
witness statement on behalf of LOIB. LOIB deny the allegations being
made by M.. This is not the time for the issues which arise in this action
to be determined and I merely note that M. appear to have raised
arguable defences based on the material which is before me. Nothing that
I say in the course of this judgment should be taken to be pre-judging
any of these issues which will need to be determined by evidence, tested
in the appropriate way, at trial. Similarly nothing said in this judgment
is intended to pre-judge any of the matters which will require to be
determined by the Spanish courts.
11 Mr Michael Baxendale, an assistant solicitor with Messrs Blakemores
(solicitors for M.), has filed three witness statements in support of this
application. In his first statement Mr Baxendale said:
5. A further ground for defending this action is that the claimant has
been under investigation by the Spanish Police and/or revenue/customs
authorities on the ground that it was trading without the appropriate
licence to supply products such as 'Clostanel', which is a medicinal
product intended for animal use. Essentially, the allegation is that the
claimant was operating an illegal business masquerading under the guise
of being merely a division of the said company. L L SAL.
6. The criminal proceedings which are presently on foot in the Spanish
courts have been the forum within which interested parties have had
the opportunity under Spanish law to make their appearance in order to
state an intention to proceed in the future with regard to civil claims. In
this context, the company under the guise of which it is alleged that the
claimant was masquerading, namely L L SAL, has stated its intention to
present a civil complaint as has also the defendant to this action by its
Spanish director, Mr Fermando [sic] Mirapeix.
7. It is the procedure before the courts in Spain that the civil charges are
pursued subsequent to the criminal charges and indeed at the present
time the substantial evidence which would be required in connection with
the civil claim is being used for the criminal proceedings and is retained
by the court.
8. The substance matter of the civil proceedings to be heard in the
Spanish courts subsequent to the criminal proceedings is of course
entirely material to the defences which will be raised in this case. It
is material, because it will go first, to the question of the confusion in
identity between the claimant to these proceedings, LOIB, and L. and,
secondly, because it will deal with the question of fraud/misrepresentation
and/or illegality of any contract which might otherwise be deemed to exist
between the defendant and the claimant.
9. It will be the defendant's intention in the civil proceedings before the
Spanish court to allege that if and in so far as there is any contractual
arrangement with the claimant, LOIB, it was induced by fraud and/or
misrepresentation of Miss Ana Ca., who set up the organisation 'LOIB' and
further that any such contract/dealings were illegal.
12 If the proceedings are not stayed then Mr Jeremy Callman, counsel for
M., argues that this will have a number of practical effects. These can be
summarised as:
(i) Duplication of time and expense by litigating in Spain and England;
(ii) Need to call in English proceedings evidence of Spanish criminal law;
(iii) Danger of inconsistent decisions between the Spanish and English
courts;
(iv) It would be disproportionate and a misuse of court time, contrary to
the overriding objective, to undertaking a trial of the issues in England in
advance of the trial in Spain;
(v) Possible clash of hearings with witnesses giving evidence at both
hearings.
(ii) The Spanish proceedings
13 I did not have any formal Spanish law evidence before me. Since
the monetary claim in this case is very modest the parties very properly
did not want to incur the additional expense of instructing independent
Spanish lawyers. Both parties agreed that I could have regard to the
judgment of Mance J. in Gruppo Torras S.A. v. Al Sabah to assist me
to understand the nature of the Spanish proceedings with which I am
concerned. Mance J. said:
Spanish law provides for a civil action ('acción') to be brought as part of
criminal proceedings. Such an acción may in due course lead to a civil
judgment, although (subject to a few exceptions) only in the event of
a conviction. The establishing of civil liability in criminal proceedings is
facilitated by article 19 of the Spanish Criminal Code whereby:
'Every person criminally responsible for a crime or misdemeanour is also
civilly responsible.'
Article 100 of the Spanish Procedural Law states:
'All offences and misdemeanours engender a criminal action (acción)
for the punishment of the culprit and may also engender a civil action
(acción) for restitution and compensation for damages arising from the
punishable act ...'
Criminal proceedings may be commenced in Spain in three different
ways: (i) By querella or complaint, in which the complainant, whether
he be the public prosecutor or, as here, a private person, is a party,
(ii) By denuncia or denunciation to the court in which case the person
making the denunciation is not a party and need play no further part-- it
appears that such proceedings will be pursued by the public prosecutor
who may go on to prepare a querella--and (iii) though in practice rarely,
by a court of its own motion. Both the first two methods are subject
to the 'filter' of admission (admisión a trámite): c.f. Gimeno Sendra,
The Querella. A requirement of admission applies in civil proceedings
as well as in proceedings begun by querella. In the context of criminal
proceedings, it involves the Spanish court considering not only the
formal regularity of the proceedings but also whether the facts stated
in the querella constitute an offence known to law. If (and only if)
admitted, the proceedings go ahead with the investigatory stage under
the authority of the investigating judge. The investigating judge has a
file in which one section is for matters relating to civil responsibility. The
facts investigated may be relevant to both the criminal and civil liability.
The investigating judge is not limited in his investigations to any facts set
out, or indeed to any accused identified, in the querella. The investigatory
stage concludes when the investigating judge takes a decision whether
the facts disclose any potential criminal offences against any particular
individual which should go to trial. If the investigating judge decides that
there are matters justifying a criminal trial, the file passes to a different
judge and the matter enters a new phase, in which the first step is the
preparation of a provisional qualification (calificatión provisional) (or
in lesser cases, an escrito de acusación) in which the parties set out,
provisionally, the charges for trial. Oral evidence is then taken, leading to
a final qualification which states the charges finally and without departing
substantially from those mentioned in the provisional qualification unless
there are exceptional circumstances. Thereafter the trial judge gives his
verdict.
14 Mance J. concluded that a civil acción within the criminal proceedings
can properly be said to exist under Spanish law when the querella is filed
by the civil claimant and expressly purports to make a civil claim. I also
note while passing, that the learned judge in that case took the view
that an acción brought in this way may constitute a relevant action for
the purposes of Articles 21 and 22 of the E.C. Judgments Convention
(Brussels) 1968. Mance J. then went on to consider at what stage the
Spanish proceedings could be considered to be "definitively pending".
I shall come back to consider that matter when I turn to the issues
which arise under the Brussels Convention. Suffice it to say at this stage
that Mance J. was of the view that the action in Spain is not definitively
pending, merely because the complaint or querella is filed with the court.
15 In February 1998, as a result of an accusation made by Mr Roberto Cr,
a partner in and a director of L., criminal proceedings were commenced
in Mataro in Spain against various individuals from LOIB (namely, Mr F de
R and Ms Ll) and L. (namely, Mr G Mo Ma and Mrs F Li N). The substance
of the allegations concern the alleged wrong doing of shareholders in
L. against other shareholders in the company itself and, secondly, an
offence regarding the breach of certain intellectual property rights. LOIB
itself is not a party to these proceedings. The "plaintiffs" in the Mataro
proceedings are the public prosecutor (to protect the "public" interest)
and various employees of L. who were joined because of their private
interest in the proceedings. At this stage, M. was not a party to these
proceedings.
16 M.'s first complaint or querella (in fact translated as a petition) to the
Spanish court was made on 29 July 1999 prior to the issue of the claim
form in this action (10 August 1999). The document was lodged by the
lawyer acting for M. who declared (and I quote from that document in
translation):
That from the matters recorded in proceedings and declared and ratified
by its legal representative in Spain, Mr R. Fe. Mi., M. A. H. LIMITED, has
suffered damages both economically and commercially due to the action
of all of the accused, A. M. Ca. Ll., J. A. Ru.-Fa. Ro., G. Mo. Ma. and F. Li.
Na., and that the said accused, in addition to being precisely perpetrators
of company offences and of an offence against industrial property, could
also be allegedly perpetrators of an offence of fraud committed against
my principal, in having deceived it and caused important economic
damages, making it believe that its commissions and orders were
produced in a laboratory with a due and mandatory administrative
authorisations, when in reality they were forwarded to a secret laboratory
which lacked the slightest level of control and supervision.
That as a consequence of the matters already declared and in occupying
the position of injured party, by means of the present petition, I request
that I be recorded as having appeared and stood as private prosecution
in the present proceedings, exercising all of the civil and penal actions
which may be proper in law, in accordance with article 110 of the
Criminal Procedure Code, reserving the right to request the execution of
proceedings addressed to the total clarification of the facts.
By virtue thereof,
I REQUEST THE COURT to record this petition as having been submitted
and myself as having appeared in the present proceedings and stood as
private prosecution in this representation, in order to exercise all of the
actions, both civil and penal which may be proper in law.... I REQUEST
THE COURT that it resolve in approval.
In Mataró on 23 July 1999.
17 That petition came before the Spanish court on 2 September 1999.
Again I quote from the document in translation issued by the Spanish
court on that day:
ACTION: In Mataró on 2 September 1999.
To place on public record that on this date I inform His Honour of the
petitions of 29 July 1999 and 2 September 1999 submitted by the
barrister ... in representation of M. ... of which I inform His Honour, which
I certify.
ORDER OF THE SUBSTITUTE MAGISTRATE
MR JAVIER MAULEON ALVAREZ DE LINERA, in Mataró on 2 September
1999.
Account rendered: the abovementioned petitions are to be attached
to their causative proceedings and the barrister ... is recorded as
having appeared in representation of the Mercantile Company of British
nationality (M. ...) as the injured party.
In view of the petition of the second of this month, the requested
certificate is issued by the secretary.
His Honour so orders and signs. I certify.
ACTION: The order is to be carried out forthwith. I certify.
18 The complaint was duly certified and despite an appeal is to proceed.
There is a hearing fixed in Spain for 10 April 2000 to appoint a court
expert.
19 It can be seen from the extract quoted above from the Gruppo Torras
case that there are several steps which need to be taken before the
offences are identified and the relevant defendants charged. At the
present time it is not possible to know which, if any of the potential
defendants will be charged nor to what those charges will relate.
Interviews took place in the context of the criminal proceedings in Spain
with both Ana Ca. and J. Ru.-Fa. and both were asked questions about
the supply of chemicals to M.. Thus while the original criminal complaint
does refer to the M. contract it is clear that the Spanish authorities are
investigating the matter.
20 The likely timetable of the criminal proceedings is that they will be
completed in about two years or maybe a little less. If the criminal
proceedings result in charges being laid, and one or more of the
defendants are convicted, the Spanish court will then proceed to consider
the civil claims. If one of the "claimants" in the civil proceedings can show
that it, or they, have suffered loss caused by the criminal offences which
have been proved then it is open to the Spanish court to compensate
those losers. Some documents which may be important for the civil trials
are presently in the hands of the Spanish criminal court.
21 It is alleged by M. that those civil actions will cover the same ground
as the defences being raised in this action. It will be apparent from what
I have said that whether that is in fact the case will depend on whether
the prospective defendants are (i) charged and (ii) convicted of an offence
(iii) which has caused loss and (iv) that those defendant(s) are liable to
compensate M.. As I have said LOIB, the claimant in this matter before
the English court, is not a party to the Spanish proceedings.
22 Before turning to the law and legal arguments I should record the fact
that in correspondence between the parties prior to the commencement
of these proceedings M. made certain assertions about the Spanish
proceedings. On 17 July 1998 M. wrote to Messrs Eversheds acting for
LOIB and said:
Your client is being charged in the criminal court for manufacturing
products under brand names registered by third parties without
authorisation.
...
Our lawyers in Spain are suing LOIB's directors in respect of this
deception (a reference to the allegation that the chemical was produced in
a clandestine laboratory by LOIB and not, as it should have been, by L.)
23 Neither of those statements was correct. LOIB were not a party to the
criminal proceedings and no civil proceedings against LOIB directors had
been commenced.
24 On 21 May 1999 M. again wrote to Messrs Eversheds, who were
pressing for payment on behalf of their clients:
There is under process in Spain criminal action against LOIB for fraud and
related offences.
...
Separate to, but linked to the criminal court action, is a civil action by M.
on LOIB in the Spanish courts for losses both direct and consequential as
a result of the activities of LOIB.
25 As I have said LOIB was not, and is not, a party to the criminal
proceedings. More important there was no civil action against LOIB in
the civil courts in May 1989. Since LOIB are not a party to the criminal
proceedings there is in fact no purely civil action against LOIB in Spain
even today. In so far as M. were referring to their complaint in the
criminal proceedings that was still two months away at the time this letter
was written.
26 It appears that M. has paid over some money in respect of the
chemical to L.. In fact on 31 March 1998 the principals of LOIB wrote to
M. asking it not to pay L. but to pay LOIB. It may be that this will give rise
to issues and arguments at the trial of this matter but I do not need to
decide those at this time.
27 With that summary of the facts I now turn to the legal issues which
have been raised before me.
The legal issues
(i) Do M.'s terms and conditions apply to the contract?
(ii) Do the provisions of Article 17 of the 1968 Brussels Convention give
exclusive jurisdiction to the English court?
(iii) Does the penultimate paragraph of Article 17 affect that jurisdiction?
(iv) Does Article 2 of the Convention give the English court jurisdiction?
(v) Does Article 21 of the Convention require the English court to stay the
proceedings?
(vi) Should the court stay the proceedings under Article 22 of the
Convention?
(vii) Does section 49 of the Civil Jurisdiction and Judgments Act 1982 give
the court power to stay the proceedings?
(viii) Should the court stay the proceedings on the grounds of forum non
conveniens?
(ix) Is the court empowered to adjourn or stay the proceedings as part of
its case management powers? Should the court stay the proceedings in
the exercise of its case management powers?
(i) Do M.'s terms and conditions apply to the contract?
29 M.'s terms and conditions were set out on the reverse of the order
which I have referred to above. It is correct to say that there was no
reference to those terms and conditions on the front of the order. There
is no doubt, in my judgment, that the reason for M. putting their terms
and conditions on the reverse of the order was to make those terms and
conditions terms of the contract. The order was accepted by LOIB and
in accepting that order that company referred to the order number and
to certain other terms which appeared on the face of the order. LOIB
thereafter acted upon that order and supplied the chemical which M.
accepted.
30 The idea that these terms and conditions did not form part of the
contract appears to have been something of an afterthought. The point
was not dealt with in evidence and only saw the light of day in counsel's
skeleton argument. It was not suggested that I should apply anything
other than English law to determine whether the terms and conditions of
contract were incorporated. I was referred to various authorities including
Credit Suisse Financial Products v. Societe Generale D'Entreprises;
Case 24/76, Estasis Salotti Di Colzani Aimo et Gianmario Colzani v.
Rüwa Polstereimaschinen GmbH and to Chitty on Contracts (28th ed.)
paragraph 12-014. Neither those authorities nor the extract from Chitty
assist M. in their argument.
31 A contracting party who is sent terms and conditions by the other
contracting party sometimes argues that those terms and conditions
were not sufficiently brought to its attention to be incorporated into the
contract. It is also sometimes argued that that other contracting party
has not consented to the terms and conditions which it has been sent. No
such argument can be raised by a party who has itself sent the terms and
conditions which it wished to have included as part of the contract. Had
LOIB in this case not accepted the order, or had it not accepted part of
that order, there might be some argument as to whether the terms and
conditions were to be incorporated. No such argument is available to M.
here. In my judgment, M.'s terms and conditions were incorporated into
the contract. It follows, therefore that the jurisdiction clause formed part
of the contract between the parties which, I repeat was in these terms:
This order shall be construed in all respects in accordance with English
law and the seller hereby submits to the non-exclusive jurisdiction of the
English courts.
(ii) Do the provisions of Article 17 of the 1968 Brussels Convention give
exclusive jurisdiction to the English court?
32 By section 2(1) of the Civil Jurisdiction and Judgments Act 1982, the
Brussels Convention has the force of law in the United Kingdom.
33 Article 17 of the Brussels Convention, so far as material, is in the
following terms:
If the parties, one or more of whom is domiciled in a Contracting State,
have agreed that a court or the courts of a Contracting State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connection with a particular legal relationship, that court or those courts
shall have exclusive jurisdiction.
...
If an agreement conferring jurisdiction was concluded for the benefit
of only one of the parties, that party shall retain the right to bring
proceedings in any other court which has jurisdiction by virtue of this
Convention.
34 In the case of Continental Bank NA v. Aeakos Compania Naviera S.A.,
Steyn L.J. said this about Article 17:
Article 17 has mandatory effect. When Article 17 applies it follows
that the jurisdiction agreement prorogates (confers) jurisdiction on
the courts of the Contracting State chosen by the parties, and the
jurisdiction agreement deprives the courts of other Contracting States
of jurisdiction. Indeed, it is the duty of the courts of other Contracting
States of their own motion to consider whether Article 17 applies and
to decline jurisdiction if it does. Schlosser Report (Official Journal 1979
No C.59, page 81, paragraph 22). There is no discretionary power in
the Convention itself to override the conclusive effect of an exclusive
jurisdiction agreement which conforms with the requirement of Article 17.
It follows that if Article 17 applies its provisions take precedence over the
provisions of Articles 21 and 22.
35 It was argued by Mr Callman on behalf of M. that Article 17 does not
apply in this case because the clause in the contract was not an exclusive
jurisdiction clause but a non-exclusive jurisdiction clause. It is to be noted
that for Article 17 to apply the parties merely have to have agreed that
the courts of the Contracting State are to have jurisdiction. It is not a
requirement that the parties should have agreed that the courts of a
Contracting State should have exclusive jurisdiction. The argument now
advanced on several occasions before the English courts is that that
Article, by providing that the courts shall have exclusive jurisdiction when
the Article applies, is effectively turning non-exclusive jurisdiction clauses
into exclusive jurisdiction clauses. In my judgment, it is no longer open
to litigants to advance such an argument before a court of first instance.
The position has now been reached where this point has been considered
on at least five occasions by very experienced judges and the answer has
been the same in each case. Even if I were minded to depart from those
eminent judges, which I am not, I would not do so. It should now be left
to the Court of Appeal to reach any different conclusion.
36 The first reported case in which this argument was considered was
Kurz v. Stella Musical Veranstaltungs GmbH. In that case there was a non-
exclusive submission to the jurisdiction of the English courts. Hoffmann J.
said:
Both parties are domiciled in Contracting States and they have agreed,
with the formality required by the second sentence, that the courts for the
Contracting State, namely, England, are to have jurisdiction over disputes
arising out of the subscription agreement. But Miss Dohmann says that
that is not good enough, because the jurisdiction of the English court
is said to be 'non-exclusive' and the effect of Article 17 is to make the
jurisdiction of the chosen courts exclusive. It follows in her submissions
that unless the court is willing to say that a jurisdiction expressly stated
to be non-exclusive has by force of statute become exclusive, a non-
exclusive choice does not qualify for validity under Article 17 at all. Miss
Dohmann says that this is in accordance with the general policy of the
Convention, which is to ensure that among the Contracting States there
is a single jurisdiction for the resolution of all disputes. Nor is there
anything unusual about apparently overriding the intention in this way:
for example, the second sentence of Article 17 means that the intention
of the parties will inevitably be ignored unless expressed in the prescribed
form.
This argument, in my judgment, misinterprets what Article 17 means
when it says that the chosen or 'prorogated' jurisdiction is to be exclusive.
It does not mean 'unique', that the parties are limited to choosing a single
jurisdiction. It means only that their choice, whatever it is, shall (subject
to the exceptions made in the fifth sentence) have effect to the exclusion
of the jurisdictions which would otherwise be imposed on the parties
by the earlier articles of the Convention. Once the parties have availed
themselves of Article 17, by the prescribed method, jurisdiction becomes
a question of the intention of the parties. But (subject always to the fifth
sentence) the Article does not limit their choice or the language in which
it can be expressed. Nor does it prevent them from including in their
choice, expressly or by implication, courts which would otherwise have
had jurisdiction under the Convention. Jurisdiction thus conferred is still
based exclusively on the intention of the parties rather than imposed by
the general law and is therefore within the terms of Article 17.
37 The learned judge then considered the case of Case 23/78, Meeth v.
Glacetal and continued:
But the important principles are, first, that Article 17 should be
interpreted to give effect to the intention of the parties, and secondly, that
the parties may if they choose confer jurisdiction on two or more courts
and their choice may include or exclude courts which would otherwise
have had jurisdiction under the earlier Articles of the Convention.
38 That case was followed by the judgment of Waller J. in I.P. Metal Ltd
v. Ruote Oz SpA where the learned judge in that case adopted Hoffmann
J.'s dicta at page 67. The matter was considered by Potter J. in the case
of Gamlestaden Plc v. Casa de Suecia S.A. Counsel in that case sought
to persuade the learned judge that Hoffmann J. was wrong to reject the
argument, but without success. The matter came before Moore-Bick J.
last year in the case of Mercury Communications Ltd v. Communication
Telesystems International. At page 37 counsel reserved the right to argue
the point in another court but did not seek to persuade Moore-Bick J. to
depart from Hoffmann J.'s decision. Just for good measure, the dicta of
Hoffmann J. was cited with approval by Rix J. in the case of Hough v. P. &
O. Containers Ltd.
39 The learned authors of Dicey and Morris The Conflict of Laws (13th
ed.) at paragraph 12-107 refer to the common sense of the approach
adopted by the English court and point out that the Article is shortly to be
amended to take account of non-exclusive jurisdiction clauses.
40 Subject to the application of the penultimate paragraph of Article 17
quoted above, in my judgment the provisions of Article 17 give this court
exclusive jurisdiction over this dispute. But even if that is not the case, it
seems to me that the non-exclusive jurisdiction clause in this contract is
sufficient to retain the exclusive jurisdiction of this court when challenged
in the way that M. seeks to do before me. If I am right, and Article 17
applies, the effect of that clause is mandatory and it would mean that
any other court should decline jurisdiction. It would also mean that this
court has no discretionary power to override the mandatory effect of that
Article. The Court of Appeal authority of Continental Bank NA v. Aeakos
Compania Naviera S.A. makes it clear that Article 17 takes precedence
over Articles 21 and 22. Thus, if I am right in my conclusion, and subject
to the penultimate paragraph in Article 17, then Articles 21 and 22 cannot
assist M..
(iii) Does the penultimate paragraph of Article 17 affect that jurisdiction?
41 The argument put forward by Mr Callman on behalf of M. is that the
jurisdiction clause was concluded for the benefit of M. since it required
the Seller, LOIB, to submit to the non-exclusive jurisdiction of the English
courts. The clause therefore expressly states the name of the party for
whose benefit the clause was agreed and gave M. a wider choice of court
than they would otherwise have had. The clause therefore falls within
the words used in the judgment of the European Court of Justice in Case
22/85, Anterist v. Credit Lyonnais. Mr Goodall points to paragraph [16] of
that judgment in these terms:
The designation of a court or the courts of the Contracting States in which
one of the parties is domiciled is not sufficient in itself, having regard to
the wide variety of reasons which may have led to the choice of such a
clause, to support the conclusion that the common intention of the parties
was to confer an advantage on that party.
42 However, the clause in the Anterist case was in these terms:
The court within whose jurisdiction that branch is situated shall have
exclusive jurisdiction to adjudicate upon all matters concerning the
performance of this agreement, irrespective of who is the defendant.
43 In my judgment, what the European Court was saying in that case was
that merely stating which court both parties would bring their proceedings
is not enough in itself to determine the intention of the parties. In this
case, there is a specific reference to the seller, LOIB, submitting to the
non-exclusive jurisdiction of the English courts thus conferring a benefit
on M. that they could sue LOIB in the English court which would be an
advantage over having to sue LOIB in their court of domicile. It is of
course ironic in this case that LOIB have chosen to bring proceedings
in the English court, where M. are domiciled, and in accordance with
the jurisdiction clause and yet it is M. who takes exception to this
jurisdiction. Nevertheless, I am satisfied, for what it is worth, that this
is a jurisdiction clause which is for the benefit of one of the parties and
therefore preserves the right of M. to bring proceedings in another court.
If I am right about that, that deprives the first part of Article 17 of its
mandatory consequences and, all other things being equal, would permit
M. to bring proceedings in Spain. What that part of the Article does not do
is determine that the English court should not retain jurisdiction. It does
mean that M. does not fall at the first hurdle.
(iv) Does Article 2 of the Convention give the English court jurisdiction?
44 Article 2 of the Convention (so far as relevant) is in the following
terms:
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.
But for the jurisdiction clause in this case, had M. wished to start
proceedings against LOIB it was required to bring those proceedings
in Spain by reason of Article 2 of the Convention. Article 5, which is
discretionary, would also give the Spanish court jurisdiction on the basis
that the characteristic performance of the contract was to be in Spain.
However, so far as LOIB is concerned, once it had decided to bring
proceedings against M., it seems to me that it never had any choice
but to bring the proceedings in England. It was required to do that by
the jurisdiction clause and by Article 17 of the Convention and so the
English court has jurisdiction as it would also have had by Article 2 of
the Convention. However, in my judgment since I have held under Article
17 that the jurisdiction clause was for the benefit of M., if M. can bring
themselves within Articles 21 or 22, then neither Article 2 nor Article 17
will defeat their application for a stay.
(v) Does Article 21 of the Convention require the English court to stay the
proceedings?
45 Article 21 is in the following terms:
Where proceedings involving the same cause of action and between the
same parties are brought in the courts of different Contracting States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established. Where the jurisdiction of the court first seised is established,
any court other than the court first seised shall decline jurisdiction in
favour of that court.
46 Mr Goodall has advanced an argument before me, in a gentle fashion,
that the proceedings in Spain are not in reality civil proceedings at all
and therefore there are no proceedings in a different Contracting State.
In the light of the Gruppo Torras judgment and in the absence of any
expert evidence, that is a difficult submission to make as Mr Goodall
realised. I am prepared to assume that the proceedings in Spain are civil
proceedings and are therefore capable of being such proceedings within
the terms of Articles 21 and 22. In the light of my decision in this case, it
is unnecessary for me to finally decide that matter.
47 To bring himself within the terms of Article 21, Mr Callman has to
overcome three difficulties. First he has to prove that the Spanish court
was the court first seised. Secondly, he has to show that the proceedings
in Spain involved the same cause of action and finally he has to prove
that the same parties are involved in each set of proceedings. In my
judgment he fails at every stage.
48 The court "first seised" is the one before which the requirements for
the proceedings to become "definitively pending" are first fulfilled. This
requirement is to be determined in accordance with the national law of
each of the courts concerned. The question which I have to determine,
as a matter of Spanish law, is therefore at what date was M.'s complaint
before the Spanish court definitively pending? It was argued on behalf
of M. that the action became definitively pending when the complaint
in Spain was first submitted on 29 July 1999. Reliance was placed on
the fact that thereafter the matter was being dealt with internally by
the court. Quite apart from the judgment of Mance J. in Gruppo Torras
which I have set out above, it seems to me that until such time as the
complaint of M. had been before the judge, it was not "accepted". It
appears to me that the petition to the Spanish court is a request to that
court to "be recorded as having appeared", a request which the court can
either accept or reject. In my judgment, it is clear from the court order
of 2 September 1999, that prior to the court being fully seised of this
matter it was necessary for the court to "accept" M.'s complaint which,
once accepted, became parasitic upon the criminal proceedings. Doing
the best I can on the material before me I am satisfied that that "action"
was not definitively pending, under Spanish law, until at the earliest 2
September 1999 when it was "accepted" by the Spanish court. That view
is supported by the judgment of Mance J. in the Gruppo Torras case. I am,
therefore, satisfied that the Spanish court was not the court first seised of
this matter. Whether the action by M. was in fact definitively pending as
early as 2 September 1999, I do not need to decide.
49 The next problem that M. faces is that the claimant in the action
before the English court is not a party to the Spanish proceedings. It has
been held by the European Court of Justice in Case C-406/92, The Owners
of the Cargo Lately Laden on Board The Ship "Tatry" v. The Owners of The
Ship "Maciej Rataj" that the correct test to apply in deciding whether a
cause of action is between the same parties is to see whether the parties
to the two actions are identical. In this case, it is perfectly apparent that
that test is not complied with.
50 It was urged upon me that I should look upon the principals of the
company LOIB as being in effect the same as LOIB. I was urged to
remove the corporate veil. That would involve me making findings of
fact, and forming a view, on the conduct of those principals at this
interlocutory stage. That would be a wholly inappropriate thing for me to
do. I therefore conclude that the Spanish proceedings are not between
the same parties as the proceedings before this court.
51 Neither are the Spanish proceedings in relation to the same cause of
action. There is no claim by LOIB for the price of the chemical. There is
no claim for a declaration by M. of non-liability in relation to that sale. The
European Court in Case 144/86, Gubisch Machinenfabrik K.G. v. Palumbo
held that two actions relating to the same contractual relationship,
one seeking to enforce the contract and the other being an action for
rescission were effectively the same cause of action. However, that is
not this case. The case of The Tatry is to the same effect. Indeed, at the
present time there is no specific claim being made by M. in the Spanish
proceedings relating, in terms, to the specific contract. It follows that the
English action does not involve the same cause of action as the Spanish
proceedings. This court cannot therefore decline jurisdiction under Article
21.
(vi) Should the court stay the proceedings under Article 22 of the
Convention?
52 Article 22 of the Convention is in the following terms:
Where related actions are brought in the courts of different Contracting
States, any court other than the court first seised may, while the actions
are pending at first instance, stay its proceedings.
A court other than the court first seised may also, on the application of
one of the parties, decline jurisdiction if the law of that court permits the
consolidation of related actions and the court first seised has jurisdiction
over both actions.
For the purposes of this Article, actions are deemed to be related where
they are so closely connected that it is expedient to hear and determine
them together to avoid the risk of irreconcilable judgments resulting from
separate proceedings.
53 It will be apparent from what I have already said that this court has
no jurisdiction to stay these proceedings under Article 22 because I have
decided that the English court was the court first seised. However, it is
also clear in my judgment that the action in England and the action in
Spain are not related actions.
54 On a purely common sense approach, the English action is for the
price of goods sold and delivered. The Spanish proceedings on the other
hand are parasitic upon criminal proceedings and are essentially for
compensation in relation to damage caused by the allegedly fraudulent
conduct of certain named individuals. On that approach, the actions are
quite obviously not related. Furthermore, these actions could not be heard
together. The "civil proceedings" in Spain have no independent existence
of their own and are therefore not capable of being heard with other civil
proceedings. That, again, is fatal to their being related actions. The House
of Lords in the case of Sarrio S.A. v. Kuwait Investment Authority has
considered the meaning of related actions. In the speech of Lord Saville,
he said:
I am of the view that there should be a broad common sense approach to
the question whether the actions in question are related, bearing in mind
the objective of the Article, applying the simple wide test set out in Article
22 and refraining from an over-sophisticated analysis of the matter.
55 While it may be that the Spanish court will have to consider certain
issues which will also become relevant in the English proceedings, it can
never be expedient for the two proceedings to be heard together.
56 A similar conclusion was reached in the case of Haji-Ioannou v.
Frangos where Bingham L.J. said:
On the other hand, we agree with the judge that the fact that this claim in
Greece is tacked on as an appendage to criminal proceedings makes the
application of Article 22 wholly inappropriate and the action should not be
stayed on that ground.
57 For all these reasons, Article 22 has no application in this case.
(vii) & (viii) Does section 49 of the Civil Jurisdiction and Judgments Act
1982 give the court power to stay the proceedings and should the court
stay the proceedings on the grounds of forum non conveniens?
58 Section 49 of the Civil Jurisdiction and Judgments Act 1982 is in the
following terms:
Nothing in this Act shall prevent any court in the United Kingdom from
staying, sisting, striking out or dismissing any proceedings before it, on
the ground of forum non conveniens or otherwise, where to do so is not
inconsistent with the 1968 Convention or, as the case may be, the Lugano
Convention.
59 The Court of Appeal considered the relation of section 49 and the
Brussels Convention in the case of Re Harrods (Buenos Aires) Ltd. Dillon
L.J. said:
Against that background section 49 of the Act of 1982 provides that
nothing in the Act shall prevent any court in the United Kingdom from
staying, sisting, striking out or dismissing any proceedings before it
on the ground of forum non conveniens or otherwise where to do so
is not inconsistent with the Convention. It is implicit in that section in
my judgment, that the court cannot stay or strike out or dismiss any
proceedings on the ground of forum non conveniens when to do so
would be inconsistent with the Convention, and that covers all cases
where the defendant in proceedings in England is domiciled in England
and the conflict of jurisdiction is between the jurisdiction of the English
court and jurisdiction of the courts of some other Contracting State.
The crucial question in the present case is whether the English court
can stay, strike out or dismiss proceedings on the grounds of forum non
conveniens, where the defendant in the English proceedings is domiciled
in England, but the conflict of jurisdiction is between the jurisdiction of the
English court and the jurisdiction of the courts of a state which is not a
Contracting State, no other Contracting State being involved.
60 The Jenard Report states:
Moreover, the purpose of the Convention is also, by establishing common
rules of jurisdiction, to achieve in relations between the six and in the
field which it was required to cover, a genuine legal systematisation which
will ensure the greatest possible degree of legal certainty. To this end, the
rules of jurisdiction codified in Title II determine which State's courts are
most appropriate to assume jurisdiction, taking into account all relevant
matters; the approach here adopted means that the nationality of the
parties is no longer of importance.
61 That report was cited by Hirst J. in Aiglon Ltd v. Gau Shan Co Ltd. Hirst
J. went on to decide that it was not open to a party to invoke the forum
non conveniens doctrine where the Convention applied.
62 Dicey and Morris The Conflict of Laws (13th ed.) paragraph 12-015 is
to like effect:
... the predominant view is that where the Conventions confer jurisdiction
on the courts of the United Kingdom, there is no question of a discretion
to stay the proceedings in favour of the courts of another Contracting
State (or to enjoin the proceedings commenced in another Contracting
State) except in accordance with the specific rules relating to pending
actions in Articles 21 to 23 of each Convention.
63 In Halsbury's Laws of England Vol. 8 (4th ed. reissue) paragraph 1090
the learned authors deal with the inter-relationship between forum non
conveniens and the Convention:
The doctrine of forum non conveniens does not apply as between the
Contracting States to the Conventions. The court may not, therefore,
apply that doctrine as a general procedural principle in order to order a
stay of proceedings on the grounds that the natural forum is a court in
another Contracting State to one of the Conventions.
64 Since I am satisfied that it would be wrong for the court to stay these
proceedings either under the Act or on the basis of forum non conveniens,
it is unnecessary for me to deal with this matter at any length. Where
the court is dealing with two parties who are signatories to the Brussels
Convention, then it is to the Convention that the court must look in
deciding which court should have jurisdiction. In this case, the court
first seised of the matter was the English court. English law applies to
the contract. The defendant to the English proceedings is domiciled in
England. The Spanish proceedings are at a very preliminary stage and
on one basis, it would be right to say that the civil proceedings have
not even started. I say that on the basis that the criminal proceedings
have to be concluded prior to the civil part of that action commencing.
The claimant in the English proceedings is not a party to the Spanish
proceedings. If there are charges laid against the directors and officers of
the LOIB in Spain they may or may not be found guilty of those charges.
In my judgment, it would be wholly wrong for this court to exercise any
power that it had either under section 49 or on the basis of forum non
conveniens.
65 While the jurisdiction clause in this contract has, as I have determined,
given the right of M. to sue LOIB in Spain, that does not detract in any
way from LOIB's right to sue M. in England. Since I have held that LOIB
started their action against M. in England prior to any action being
commenced by M. in Spain, it is not open to me, in my judgment, to
stay these proceedings in favour of the Spanish proceedings under the
Convention. In so far as it is necessary for me to decide this matter I do
not believe that the court has power to use section 49 or the forum non
conveniens principles in this case.
(ix) Is the court empowered to adjourn or stay the proceedings as part of
its case management powers and should the court stay the proceedings in
the exercise of its case management powers?
66 Mr Goodall for LOIB argued that the court had no jurisdiction to order
either a permanent or a temporary stay, by using the court's management
powers, in circumstances where that stay would be inconsistent with the
Brussels Convention. He argued that Part 3 of the CPR cannot have the
effect of a stay being granted on the grounds of jurisdiction if such a stay
has been refused under the Brussels Convention. He argues that if M.
has failed under Articles 21 and 22 it would be wholly inconsistent for the
court then to grant a stay using its case management powers. He accepts
that the court must be able to manage the case but he argues that it
must not do that if it has the effect of flying in the face of the Convention.
67 Mr Callman argues that the court has power under CPR Part 3 3.1(2)
(f) and/or (m) to stay these proceedings. He referred me to a number of
cases which were not cases to which the Brussels Convention applied. I do
not find those authorities to be helpful in deciding this matter. Mr Callman
urges the court to stay these proceedings since otherwise the English
court will have to determine questions of Spanish law in relation to the
legality of LOIB's operation in Spain. He says the English court is unsuited
to deal with those issues. There is a risk of inconsistent decisions. Many
of the witnesses are in Spain. Much of the evidence is in Spain. He argues
that it is uneconomic to have two sets of proceedings running together.
Apart from the expense, there is the inconvenience. There will be a
need for evidence to be translated. There will be a duplication of time
and resources. To stay the proceedings here would not be inconsistent
with the Convention if the court accepts that it would be procedurally
convenient to take that course.
68 Quite apart from whether the court has the power to order a stay of
the proceedings, on grounds that run contrary to the Brussels Convention,
I am quite satisfied that this court should not grant a stay if it would
undermine the jurisdictional regime established by the Convention. The
Convention provides certainty for the Contracting States as to which
court has jurisdiction to decide the cases which come before it. If a
Contracting State uses its case management powers either to circumvent
the provisions of the Convention or to make orders which conflict with
those provisions the certainty of the regime which has been established
will be eroded. This does not provide a difficulty for this court in managing
the cases which come before it. Thus, by way of example, in appropriate
circumstances if a party needs further time to obtain documents from
another Contracting State, the court has power to extend a litigant's time
to obtain such documents. The court will want to be satisfied that such
an application is not seeking to undermine the obligation of the English
court to proceed to hear the case as the court first seised of the matter.
No such situation has arisen in this case at this time.
69 I was referred to the case of Turner v. Grovit as an example of a
case where the English court was prepared to intervene to stop foreign
proceedings where the Brussels Convention applied. I do not believe that
case assists M. here. The Court of Appeal held that the English court
had inherent jurisdiction to prevent abuses and where appropriate to act
where an action was started in another Contracting State in bad faith. The
court also decided that it was the court first seised of that matter. That
was a very different case to the one before me.
70 The stay that is sought in this case by M. is to enable the Spanish
court to reach a conclusion in the proceedings before it prior to this
court proceeding. I do not believe that any such stay is open to the
English court nor do I believe that it would be appropriate. It would
conflict with the jurisdictional regime of the Convention. It would deprive
LOIB of their right to bring proceedings in this country, a forum which
is appropriate for such an action both under the contract and under
the Brussels Convention. It would delay for an indeterminate time any
decision in LOIB's action for the price of the chemical it has supplied
to M.. I say that because there is no such claim in Spain. The Spanish
criminal proceedings may not move even to the stage of charges being
laid let alone convictions which are a prerequisite for any civil remedy to
be obtained. The mere fact that there are parallel criminal proceedings
under way gives no right to a defendant for a stay even if the criminal
proceedings were in this country.
71 M. want the stay in the hope that the principals of LOIB are convicted
in Spain so that those convictions can be prayed in aid in this court. I do
not believe, in all the circumstances of this case, that such a stay would
be appropriate.
72 For all these reasons in my judgment the English court has jurisdiction
to hear this case. It would be inappropriate for the court to grant a
stay for any of the reasons advanced by M.. I will therefore hear any
submissions on the appropriate directions to be made for the future
management of this case. Hopefully they can be agreed between the
parties. I will hear any arguments on those directions, and on the costs of
this application, on handing down this judgment.
73 It merely remains for me to thank counsel for their written and oral
arguments which have greatly assisted me in grappling with the various
issues that arose. (…)“