SCHIEMANN LJ:
BACKGROUND
The background to the present case is as follows. A Swiss creditor has
put in a claim in the liquidation of a Jordanian Bank which claim has been
accepted but has not yet been paid. The creditor got tired of waiting and
assigned its rights to the English Plaintiff and the Plaintiff now seeks to
bypass the liquidator and obtain a judgment against the Bank in England.
Having done so then, according to the letter before action, the plaintiff
will seek to enforce that judgment against whatever assets the Bank
has in the UK or in the signatory countries of either the Brussels or the
Lugano convention. If this plan works, the Plaintiff will have succeeded in
benefiting itself but at the cost of depriving the liquidator of some assets
to the detriment of the queue of creditors in the liquidation.
The crucial facts are these. The P. Bank ("the guarantor") is domiciled
in the kingdom of Jordan. On 15.7.90 the Economic Security Committee
– the appropriate body under Jordanian law – resolved to liquidate the
guarantor with effect from 21.7.90. Three years earlier, on 5.9.87, the
guarantor had guaranteed payment of a sum ("the primary debt") in
excess of SFR 6 million owed by A.' ("the principal debtor") to a Swiss
corporation M. AG ("the creditor"). The primary debt was repayable by the
principal debtor to the creditor by 10 instalments the last one of which
was due on 21.9.92. The principal debtor paid the first three instalments.
On 26.11.90, long before the last instalment was due, the creditor made
demand on the liquidator of the guarantor in respect of the whole of the
remainder of the primary debt ("the unpaid primary debt"). The liquidator
accepted liability. The distribution of such assets as the liquidator has
gathered in so far has not yet taken place. It may well be that there will
not be enough to satisfy all the creditors and that the unpaid primary
debt will remain unpaid in whole or in part. The guarantee expired in
October 92. The Plaintiff alleges that on 15.12.92 the creditor assigned
to the plaintiff all rights against the principal debtor and the guarantor.
On 1.2.93 the Plaintiff in a letter before action made demand on the
guarantor for the unpaid primary debt plus interest which was not met.
On 5.3.93 it issued a writ here against the guarantor claiming the unpaid
primary debt. The writ asserted that the claim was one which the court
had power to hear under the Civil Jurisdiction and Judgments Act 1982 as
amended ("the Act"). The guarantor was served but sought to dispute the
jurisdiction of this court and applied to the court under RSC 12 r.8 to set
aside the writ or service of the writ. Master Eyre refused to do so. There
was a successful appeal to Mrs Justice Ebsworth who held that the claim
was not one which fell within the Act and who refused to give leave under
O 11 for service out of the jurisdiction. Leave to appeal was refused by
Hobhouse LJ but granted by Balcombe and Simon Brown LJJ. The plaintiff
now appeals to this court.
Two main questions fall for decision:
1. Is the claim one in respect of which leave is required for service out of
the jurisdiction?
2. Should this court interfere with the judge's discretionary decision not to
allow this action to proceed?
The first of these questions it seems to me must be answered by
reference to the Statement of Claim. The Plaintiff may not be able to
establish all that it seeks to establish but, for present purposes it must
be assumed that it can make good the assertions of fact in the Statement
of Claim. On the other hand, while the Plaintiff might have been able
to advance facts other than those pleaded in the Statement of Claim,
the decision as to whether or no leave to serve out of the jurisdiction is
required must depend on what is pleaded in the Statement of Claim. Any
other rule puts an impossible burden on the Central Office which issues
writs and is grossly unfair to defendants.
The relevant paragraphs of the statement of claim read as follows:-
"2. The Defendant (...) was (...) a corporation organised under the laws
of (...) Jordan carrying on business as bankers. By its decision numbered
4/90 dated 15 July 1990 (...) ("The Liquidation Decision") the Economic
Security Committee of said kingdom decided that the Defendant be
liquidated in accordance with the rules stipulated for such decision, and
that such liquidation should start with effect from 21 July 1990.
3. By a credit agreement dated 19 December 1986 between A.' (...) and
(...) M., M. agreed to lend the sum of 5,000,000 Swiss Francs to A.'. The
credit agreement provided that the loan to be repaid with interest over 5
years by 10 instalments at half-yearly intervals following payment of the
said loan to the Defendant. (...)
4. The credit agreement provided that A.' would repay M. by way of
ten promissory notes to a total value of 6,195,242.60 Swiss Francs
as follows:- (there are then set out particulars of notes, all issued on
05.09.87 and maturing at six monthly intervals starting on 21.03.88 and
continuing until 21.09.92).
5. By a letter of guarantee dated 5 September 1987 (...) the Defendant
irrevocably and unconditionally guaranteed the payment by A.' to M. of
the sum of 6,195,243.10 Swiss Francs and of each of the said promissory
notes.
7. On or before 21 March 89 A.' paid M. the sum of 1,175,798.65 Swiss
Francs in satisfaction of the first three instalments due under the credit
agreement. (...) Following such payments, there remained outstanding
and due to M. as at 21 March 1989 a balance in respect of principal
4,375,000 Swiss Francs, upon which interest continued to accrue. The
Defendant has not since paid the said sum or any part of it to M. or its
order.
8. By paragraph 8(a) of the Liquidation Decision, it was provided that
the maturity of the debts due to or from P. Bank should lapse and all
debts due to or from P. Bank should become due. Accordingly, the sum
of 4,803,203.13 Swiss Francs became due to M. as at 20 July 1990.
(Particulars are then given including an interest at the contractual rate of
7.25% per annum from 21 March 89 to 20 July 1990).
9. By letter to the Defendant dated 26 November 1990 from its Jordanian
lawyers (...) M. demanded payment of the full outstanding balance under
the credit agreement. Notwithstanding such demand no payment was
made by the Defendant.
10. By Decision 992/91 of 25 September 1991 ("The Capitalisation
Decision") the liquidation committee for the Defendant acknowledged M.'s
claim up to the alleged value of the withdrawals on 20 July 1990 in the
sum of 4,794,955.23 Swiss Francs and registered that sum as a credit to
M..
11. By a deed of assignment dated 15 December 1992 M. assigned to the
Plaintiff all its rights, title and interest in and to the following:-
(1) All debts due from A.' to M. under the credit agreement
(2) All interest and entitlement under the said promissory notes
(3) The guarantee
(4) The Capitalisation Decision.
12. By a letter to the Defendant dated 1 February 1993 from its solicitors,
the Plaintiff notified the Defendant of the said assignment and made
demand of the Defendant pursuant to the guarantee for the sum of
4,803,203.13 Swiss Francs plus interest from 20 July 1990 to the date of
payment.
13. In the premises, the Defendant is indebted to the Plaintiff in the sum
of 4,803,203.13 but despite the said demand has failed to, or refused to
pay the Plaintiff the said sum or any part thereof.
14. The plaintiff claims interest pursuant to s. 35A of the Supreme Court
Act 1981 on the said sum of 4,803,203.13 Swiss Francs at 15% per
annum from 20 July to the date hereof in the sum of 1,892,989.28 Swiss
Francs and continuing (...); alternatively pursuant to the guarantee and
credit agreement at 7.25% per annum from 20 July 1990 to the date
hereof in the sum of 917,009.88 Swiss Francs and continuing (...)"
The careful reader will have noticed that the acknowledgement of liability
by the liquidator related to a sum marginally less than the sum claimed.
Neither party was able to explain this difference which appears to be one
of arithmetic rather than principle and to concern much less than 1% of
the claim. The parties I think accepted that in the context of this case it is
legitimate to ignore it and I do so.
IS LEAVE REQUIRED TO SERVE OUT OF THE JURISDICTION?
The Plaintiff's primary argument is that the leave of the court was not
required for service out of the jurisdiction because the claim falls within
RSC Ord 11 r 1(2). That states:-
"Service of a writ out of the jurisdiction is permissible without the leave of
the court provided that each claim made by the writ is either:-
(a) a claim which by virtue of the Civil Jurisdiction and Judgments Act
1982 the Court has power to hear and determine, made in proceedings to
which the following conditions apply -
(i) (...) and
(ii) either -
(...) or
(...) the Defendant is a party to an agreement conferring jurisdiction to
which Article 17 of Schedule 1 (...) to that Act applies.
Two questions arise under this head which can be encapsulated thus:-
A. Do the Conventions apply?
B. Is the Defendant a party to an agreement to which Article 17 applies?
I shall address these in turn.
Do the Conventions Apply?
Strictly the first question which falls for determination is whether the
Plaintiff's claim is one which the court has power to hear and determine
by virtue of the 1982 Act. The Act provides in its second section that
the Brussels and Lugano Conventions are to have the force of law in the
UK. [It is common ground that for present purposes the two conventions
are the same and I shall therefore in future simply refer to the Brussels
convention.] The English text of this is set out in the first Schedule to the
Act.
Article 1 of the Convention provides:-
This convention shall apply in Civil and Commercial matters whatever
the nature of the court or tribunal. (...) The convention shall not apply
to: (...) bankruptcy, proceedings relating to the winding up of insolvent
companies or other legal persons, judicial arrangements, compositions
and analogous proceedings."
In the context of the present case we have to consider whether the
proceedings started in this country by the Plaintiff are
"proceedings relating to the winding up of insolvent companies".
If they are then they are not within the scope of the Brussels convention.
The reason for that exclusion is well known. It was the intention of the
signatories to the Brussels Convention that there should be an insolvency
convention which would regulate potential conflicts arising between States
in the field of insolvency in the same way as the Brussels convention
seeks to regulate potential conflicts in civil and commercial matters. The
agreement of the text of such a convention has taken a very long time, no
doubt partly because an ever increasing number of states have joined the
European Union. It has now been initialed in a very different form from
that envisaged at the time of the conclusion of the Brussels convention. It
is, as such, of no relevance to the present proceedings.
The Brussels convention was originally concluded between non English
speaking countries and Mr Layton QC who appeared for the Plaintiff has
drawn our attention to the ruling of the ECJ in Gourdain v Nadler [1979]
ECR 733 that:-
"As far as concerns bankruptcy, proceedings relating to the winding-up
of insolvent companies or other legal persons, judicial arrangements,
compositions and analogous proceedings, according to the various laws of
the contracting parties relating to debtors who have declared themselves
unable to meet their liabilities, insolvency or the collapse of the debtor's
creditworthiness, which involve the intervention of the courts culminating
in the compulsory "liquidation des biens" in the interest of the general
body of creditors of the person, firm or company, or at least in supervision
by the courts, it is necessary, if decisions relating to bankruptcy and
winding up are to be excluded from the scope of the convention, that they
must derive directly from the bankruptcy or winding up and be closely
connected with the proceedings for the "liquidation des biens" or the
"reglement judiciaire".
Mr Layton's principal argument has been that the Statement of Claim is a
claim under a guarantee and not a claim derived directly from the winding
up. If that be right then the claim could be one which the court by virtue
of the Act has jurisdiction to hear. However in my judgment it is not right.
There are a number of points which can be made in relation to the
statement of claim:
1. It is not expressly alleged that the principal debtor has not paid any
sum when it was due. Nor is it alleged that demand has ever been made
on the principal debtor. The nearest one gets to such an allegation is
paragraph 9.
2. The claim against the Defendant is manifestly primarily formulated
on the basis that the principal of 4,375,000 Swiss Francs which was
outstanding on 21.3.89 but was not repayable in full until 21.09.92,
nevertheless became due in July 1990, was not paid then and therefore
gave rise to a liability on that date in the Defendant. The only facts
pleaded as giving rise to such an acceleration are the liquidation decision
and the capitalisation decision.
Mr Layton has sought to meet this objection in two ways:-
1. He submits that the principal debtor has defaulted, that this default
constituted a repudiation, that this repudiation was accepted by the
creditor, that thereupon the unpaid primary debt became payable, that
it was not paid and that thereupon the guarantor became liable for the
unpaid primary debt as damages for the failure of the principal debtor to
honour his obligations. He relies on Moschi v LEP Services [1973] AC 331,
[1972] 2 All ER 393.
The short answer to this submission is that none of this is alleged in the
pleading. I am prepared to assume that the Plaintiff need only plead
the relevant facts and need not plead the legal consequences which he
seeks to attribute to those facts. However, in the present pleading those
relevant facts are not pleaded.
I observe in passing that the factual material placed before the court
leaves me far from persuaded that the guarantor would be liable on this
basis.
2. Mr Layton submits alternatively, that even if the primary pleaded claim
is based on the liquidation decision, careful analysis of the Statement of
Claim reveals a secondary claim which is independent of the liquidation
decision. He sought to demonstrate this by blue pencilling the Statement
of Claim so as to excise the second sentence of paragraph 2, the whole
of paragraphs 8 and 10, subpara 4 of paragraph 11 and the references to
SFR 4,803,203.13 and to 20 July 1990 in the rest of the pleading.
One answer to this exercise is that O.11 r2 requires that each claim made
by the writ is a claim which falls within the Act. Mr Layton seeks to meet
this point by submitting that the court could notionally delete the blue
pencilled part of the Statement of Claim and allow the proceedings to
continue thus castrated.
The answer to that is that the castrated claim does not reveal a cause
of action at all. There is no pleaded claim that the principal debtor has
defaulted nor that any conditions have arisen which render the guarantor
liable under its guarantee.
Further, on the assumption that it is permissible for this purpose to look
at documents to which reference is made in the Statement of Claim,
it appears that, in so far as the claim can be regarded as based on an
allegation that the principal debtor had not repaid the last 7 instalments
and thus a sum was outstanding on 21.9.92, both the assignment of
15.12.92 and the first pleaded demand on the guarantor of 1.2.93 were
made at a time when the guarantee had expired. That conclusion would
follow from the wording of the guarantee, namely,
"The liability under this guarantee is reducing by the face amount of each
promissory note on the date of its payment or 30 days after its maturity
whichever may occur first. Aggregate liability shall stand so reduced and
is non-cumulative.
This guarantee becomes null and void one month after maturity date of
the last promissory note."
On the question whether the conventions apply, I conclude that the claim
disclosed in the Statement of Claim is one which, in the words of the ECJ
in Gourdain v Nadler, derives directly from the winding up and is closely
connected with the proceedings for the "liquidation des biens". It follows
that it is not a claim to which the Brussels Convention applies and is
therefore not one which falls within O11 r.2. Leave to serve out of the
jurisdiction is therefore required.
That is a conclusion which the judge reached by an alternative route.
She found that the original rights of the parties had been modified by
the liquidation of the guarantors, the action of the creditor in proving
in the liquidation and the unappealed acceptance of the decision of the
liquidation committee to accept the substance of the creditor's claim
(which decision was communicated to it in April 1992 in a document
specifically stating " If you do not appeal the decision within the specified
period, it shall be considered as a final judicial judgment"). She relied
on some words of the Advocate General in Gourdain v Nadler. Mr Layton
submits, rightly, that those words were not adopted by the court and,
arguably, that they should not be determinative of the present case. For
my part, I would prefer not to lengthen this judgment by commenting
either way on this alternative route to the conclusion that leave is
required to serve out of the jurisdiction.
Is the defendant a party to an agreement conferring jurisdiction to which
art 17 applies?
If I am right in my conclusion that the claim in the present case is not
based on the guarantee and that the conventions do not apply to the
present case then strictly speaking this question does not arise. This is for
two reasons:-
1. The claim would not be one which satisfies the opening words of Ord
11 r 1(2)(a)
2. The only agreement relied on in this context by Mr Layton is the
guarantee of 5.9.87. If, as I find, the claim is not based on the guarantee,
then the guarantee is irrelevant.
The judge, who, in my view rightly, held that the conventions did not
apply, recognised this. However, understandably and helpfully, she gave
her views on the art 17 point on the assumption that she was wrong in
her conclusion that the conventions did not apply. She concluded that the
defendant was a party to an agreement conferring jurisdiction to which
art 17 applies. Since the matter has been ably argued before us it is right
that I should set out my views shortly.
Article 17 provides:-
"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. Such an agreement conferring
jurisdiction shall be either -
(a) in writing or evidenced in writing, or
(b) in a form which the parties have established between themselves, or
(c) in international trade or commerce, in a form which accords with a
usage of which the parties are or ought to have been aware and which
in such trade or commerce is widely known to and regularly observed
by, parties to contracts of the type involved in the particular trade or
commerce concerned.
(...)"
The Plaintiff relies only on the guarantee as constituting the agreement
conferring jurisdiction. It is common ground that the assignee was not a
party to that guarantee. At first blush, one might be forgiven for thinking
that there was no room for further discussion of the point. However, the
judgment of the ECJ in The Tilly Russ [1983] ECR 2417 establishes that
there can be circumstances in which someone is treated as being party to
an agreement to which he was strictly speaking not a party. It therefore
becomes necessary to look at that case and another which preceded it
Gerling Konzern Speziale Kreditversicherungs AG v Amministrazione del
Tesoro dello Stato [1983] ECR 2503, [1984] 3 CMLR 638.
The convention, of course, was drafted primarily to deal with cases where
the defendant was domiciled in a contracting State. The normal rule under
the convention is that a defendant domiciled in a Contracting State is
to be sued in the courts of that State. The convention provides various
exceptions. One of those exceptions is art 17. This article can apply to
cases where the defendant is not domiciled in a Contracting State as well
as to cases where the defendant is domiciled in a Contracting State. Mr
Layton submits that it applies to the present case.
Both in Tilly Russ and in Gerling the defendant was domiciled in a
Contracting State but the Plaintiff wished to sue it in a court in another
Contracting State, namely the plaintiff's.
Gerling was a case where
1. a contract of insurance had been entered into between an insurer and a
policy holder
2. under that contract the insured stipulated that it was insuring for the
benefit of third parties
3. as between insurer and insured the policy complied with art 17.
The ECJ held that a third party could rely on a clause inserted for its
benefit. It said:-
10. "The Corte di Cassazione is asking the court basically to clarify
whether the Convention, and in particular art 17 thereof, may be
interpreted as meaning that under a contract of insurance a person in
whose favour the contract is made but who is not a party to the contract
and is separate from the insured, is entitled to rely on a clause extending
jurisdiction inserted for his benefit although he has not himself signed it,
albeit the insurer and the insured have duly done so.
14. Moreover art 17 of the Convention in requiring writing between the
parties does not have either the object or the effect of subjecting a third
party benefiting from the requirement imposed on others to the same
requirement of writing where the clause conferring jurisdiction is made for
his benefit and he seeks to rely on it in proceedings between him and the
insurer.
15. In such circumstances it appears to the Court that the insurer, if his
original consent has been made clear in the provisions of the contract,
cannot object to such an exclusion of jurisdiction on the sole ground that
the party benefiting from the requirement imposed on others, not being a
party to the contract, has not himself satisfied the requirement of writing
prescribed by art 17 of the Convention."
The Court held:-
"The first paragraph of Article 17 of the Convention (...) must be
interpreted as meaning that where a contract of insurance, entered into
between an insurer and a policyholder and stipulated by the latter to
be for his benefit and to enure for the benefit of third parties to such a
contract, contains a clause conferring jurisdiction relating to proceedings
which might be brought by such third parties, the latter, even if they
have not expressly signed the said clause, may rely upon it provided
that, as between insurer and the policyholder the conditions as to
writing laid down by Article 17 of the Convention have been satisfied and
provided that the consent of the insurer in that respect has been clearly
manifested."
The Tilly Russ was a case where
1. the Belgian plaintiff buyer was the holder of a bill of lading issued by
the German carrier to the shipper
2. the bill of lading provided that any disputes were to be decided in
Hamburg
3. the goods were damaged on board ship
4. The Belgian plaintiff sought to sue in Antwerp but the defendant carrier
wished to enforce the Hamburg jurisdiction clause.
5. The ECJ ruled that the carrier was entitled to do so notwithstanding
that the buyer had not signed the Bill of Lading.
In para 7 of its judgment the court said of the question submitted to it -
"That question must be construed as asking whether the jurisdiction
clause contained in the bill of lading satisfies the conditions laid down in
Article 17 of the Convention as regards, first, the relationship between the
shipper and the carrier and, secondly, the relationship between the carrier
and a third party holding the bill"
The court said later on -
Paragraph 24
"Insofar as a jurisdiction clause incorporated in a bill of lading is valid
under Article 17 of the Convention as between the shipper and the carrier,
and insofar as a third party, by acquiring the bill of lading, has succeeded
to the shipper's rights and obligations under the relevant national law, the
fact of allowing the third party to remove himself from the compulsory
jurisdiction provided for in the bill of lading on the ground that he did not
signify his consent thereto would be alien to the purpose of Article 17,
which is to neutralise the effect of jurisdiction clauses that might pass
unnoticed in contracts".
Paragraph 25
"In fact, in the circumstances outlined above, acquisition of the bill of
lading could not confer upon the third party more rights than those
attaching to the shipper under it. The third party holding the bill of lading
thus becomes vested with all the rights, and at the same time becomes
subject to all the obligations, mentioned in the bill of lading, including
those relating to the agreement on jurisdiction."
The Judge saw no reason of principle or fact to distinguish those
decisions.
Mr Burton QC who appears for the defendant asks the court
1. to distinguish Gerling on the basis that in that case, unlike the present,
the agreement had expressly been made for the benefit of the third party
and that therefore the original parties must have contemplated that the
third party would be able to rely on the jurisdiction clause
2. to distinguish The Tilly Russ on the basis that bills of lading are in a
class of their own justifying a departure from the normal rules. As the
Advocate General pointed out in the last paragraph of his opinion
"The bill (...) was specifically declared to be consigned to the order of the
shipper. Moreover it is clear that a substantial number of disputes over
bills of lading involve indorsees and the carrier rather than the original
parties to the bill, and the holders can be seen to be within the ambit of
the clauses included in the bill including the jurisdiction clause."
In my judgment, it is clearly possible to distinguish Gerling and The
Tilly Russ on that basis. However, after considerable hesitation, I have
come to the view that, on the facts of the present case, principle does
not require us to distinguish them; on the contrary, the facts of the
present case seem to me to fall within the principle behind those cases.
In my judgment, if, contrary to my opinion, the subject matter of these
proceedings falls within the Convention, in the present case the assignee
is properly regarded as a party to an agreement conferring jurisdiction.
He would thus be bound by and could take advantage of the jurisdiction
clause.
In coming to this conclusion, I have been motivated by the combination of
the following considerations:-
1. a bank guarantee of repayment under an international loan agreement
is the sort of document the benefit of which is frequently assigned.
In consequence the parties can be regarded as having contemplated
assignment.
2. No disadvantage to the guarantor in being sued by an assignee rather
than the assignor in the courts of the country chosen by the agreement
has been identified by the guarantor.
3. Conversely, although the point does not arise in the present case,
there would be nothing unreasonable in holding the assignee bound by a
jurisdiction clause of which he had knowledge and which was clearly set
out in the agreement the benefit of which has been assigned to him.
DISCRETION
The court's discretion could come into this case in two different contexts:
1. If, contrary to my opinion, the case fell within the Brussels Convention,
the court would still have a discretion to stay the action;
2. If, as I hold, the case falls outwith the Convention, the court has a
discretion to permit service out of the jurisdiction.
Formally, there is no application by the Defendant to stay. All the
arguments in favour of refusing to permit service out of the jurisdiction
can be redeployed in the context of a stay albeit that in that context the
burden would be on the defendant. Given my conclusion that the case
falls outwith the Convention I propose to look at the submissions in the
context of an application to serve out of the jurisdiction.
Order 11 r.1(1) so far as presently relevant reads:-
"Provided that the writ (...) is not a writ to which paragraph (2) of this
rule applies, service of a writ out of the jurisdiction is permissible with the
leave of the court if in the action begun by the writ -
(...)
(d) the claim is brought to enforce, rescind, dissolve, annul or otherwise
affect a contract, or to recover damages or obtain other relief in respect of
the breach of a contract, being (in either case) a contract which -
(...)
(iii) is by its terms, or by implication, governed by English Law, or
(iv) contains a term to the effect that the High Court shall have
jurisdiction to hear and determine any action in respect of the contract."
The judge held that the claim remained "fundamentally one which affects
a contract" and thus fell within Ord 11 r 1(1)(d). I accept, of course,
that there would never have been a claim under the liquidation and
capitalisation decisions had there not been a prior contract of guarantee
but, for reasons I have endeavoured to explain, I have formed the
view that this claim is based on the liquidation decision. If I am right
that this Statement of Claim is based on the liquidation decision then it
seems to me to follow that it does not fall within O 11 r 1(1)(d). It is not
"brought to..affect" the contract of guarantee or any other contract. So, in
respectful disagreement with the judge, I would hold that no question of
discretion under Ord 11 arises.
Nevertheless, it is appropriate to consider at this stage whether, had I
found, as did the judge, that there was room for discretion I would have
been minded to interfere with her exercise of that discretion against the
Plaintiff.
The points submitted by Mr Layton as telling in favour of allowing service
out of the jurisdiction are:
1. The guarantee has in it an agreement by the defendant that the place
of jurisdiction is London and that the guarantee is subject to the laws of
England.
2. The creditor and the assignor are, under Jordanian law, lower than
some others in the order of priority in the distribution of the liquidated
company's assets.
3. Assuming, contrary to the view which I have formed, that the present
claim is one on the guarantee then the substantial question which will
have to be decided in any proceedings is: what in English law is the effect
on the guarantee of the liquidation laws and events in Jordan. The English
Courts are a suitable forum for the resolution of this question.
These arguments are in my judgment met by the following:-
1. The Plaintiff is not suing on the guarantee but on the liquidation
decision; In any event the guarantee is now void; the defendant agreed to
be sued in England by the creditor – there was no agreement to be sued
in England by an assignee
2. The assignee can have no higher claim to priority than the creditor; the
creditor has chosen to contract with a company whose domicile is Jordan
and therefore has to take Jordanian law as governing the priorities in the
distribution of the company's assets; the system of priorities contains
nothing very surprising or at odds with English public policy; the creditor
has in fact claimed in the liquidation in Jordan and that claim has been
accepted in the liquidation proceedings; the creditor has then assigned
that claim and it would be wrong to permit separate parallel proceedings
in England whose only substantial purpose would be to obtain an English
judgment with the aid of which it is hoped to deprive the liquidator of
assets for distribution to the general body of creditors.
3. England would be a suitable forum for the resolution of the questions
arising in this case but it would be no more suitable than a Jordanian
forum. Whichever forum decides the question will need to have
familiarised itself with the law of the other. The point is a neutral one.
Notable facts in the present case are:-
1. The debtor is being wound up in the country of its incorporation
2. The creditor has claimed in that liquidation
3. That claim has been accepted by the liquidator
4. The creditor has assigned that claim to an assignee who has knowledge
of the liquidation
5. The claim in the present proceedings relies on the acceptance by the
liquidator of the claim.
If the primary judgment on discretion were mine I would exercise it
against the Plaintiff as did the judge. In those circumstances I do not
find it necessary to rehearse the careful submissions made by Mr Layton
to the effect that this court is entitled to use its own discretion because
the judge allegedly failed to consider some matters or gave them undue
weight. I agree with her conclusion.
I am conscious that I have not dealt with all the various arguments which
the ingenuity of the parties enabled them to advance on the basis of a
variety of possible findings. Given the approach adopted earlier in this
judgment I hope I have dealt with all those which remain relevant.
REFERENCE TO THE ECJ
As presently advised I do not consider that this is an appropriate case for
reference to the ECJ. The question of the applicability of the Convention
has been decided against the applicant essentially on the basis that the
Statement of Claim seeks to enforce the liquidation decision rather than
the guarantee. The appellant suggests a reference in the following form:-
"Whether, on a true interpretation of sub-paragraph (2) of the second
paragraph of Article 1 of the 1968 Convention, a claim such as that made
by the Plaintiff in the present action is excluded from the scope of the
Convention?"
I do not consider that the ECJ should be troubled with such a reference.
The facts of the present case and the way the claim has been advanced
are highly unusual and it would not be appropriate to occupy the time
of the ECJ with it to the detriment of other cases of more general
importance.
I would dismiss this appeal.