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Mr. Justice Teare :
This is another dispute as to where claims between parties should be heard. The Claimants wish the claims to be heard in England. The Defendant wishes the claims to be heard in France. The Defendant has issued an application seeking an order that the proceedings issued in England by the Claimants should be stayed. Any such stay is opposed by the Claimants.
The Claimants have also issued an application to amend its Claim Form. That application is opposed by the Defendant.
The background
The Claimants (two French companies) and the Defendant (an English company) are involved in the development, production and sale of medical devices such as syringes and feeding tubes. For some 10 years the parties were in an ongoing business relationship involving the production, distribution and certification of such medical devices. In late 2014 the Claimants were acquired by another company, Corpak. As a result of what the Claimants say were breaches of contract by the Defendant the relationship came to an end. The breakdown of that relationship has given rise to litigation in France and in England.
On 21 December 2014 Medicina France, a subsidiary of the Defendant, commenced proceedings against the Claimants in the Marseilles Commercial Court based upon Article L.442-6 of the French Commercial Code which imposes liability in tort for terminating a business relationship without reasonable notice, notwithstanding anything to the contrary in the contract. The proceedings commenced in December 2014 were an action en référé seeking emergency relief, in particular an order that the Claimants resume their business relationship with Medicina France. An order to that effect (ordering the Claimants to resume their business relationship for two months) was made on 10 February 2015. The evidence tendered by the Defendant to this court is to the effect that the action en référé is "finished" and not subject to appeal.
Also on 10 February 2015 Medicina France filed a motion before the Commercial Court in France seeking disclosure of documents in relation to an allegation of unfair competition. An order to that effect was granted on 17 February 2015. The evidence tendered by the Defendant is again to the effect that this proceeding is "finished".
On 19 March 2015 the Claimants issued the present proceedings in the English Commercial Court. The claim form alleged a repudiatory breach of contract by the Defendant which was accepted by the Claimants. Declaratory relief was sought, in particular, that the contract between the parties was governed by English law and subject to a non-exclusive jurisdiction clause in favour of the English courts, that the Claimants were entitled to cease to supply medical products to the Defendant and that the Claimants had no liability to the Defendant. The Claim Form was not served immediately.
On 30 March 2015 Medicina France commenced an action au fond against the Claimants before the Commercial Court in Marseilles in relation to the unlawful submission of a business partner to obligations creating a significant imbalance in the rights and obligations of the parties and also in relation to the unlawful termination of a contractual relationship without proper notice. The latter complaint was, like the action en référé, based upon Article L.442-6 of the French Commercial Code. However, there was unchallenged evidence from the Claimants' avocat that an action au fond and an action en référé are distinct and separate from one another. The action au fond concerns substantive proceedings on the merits which proceed to trial in the normal way, whereas the action en référé is a summary procedure most often used to prevent imminent harm, danger or unlawful activity. An action en référé does not become an action au fond. In the present case the action au fond is due for trial in February or March 2016.
I mention at this stage something which is not common ground but which is disputed. Evidence was adduced by the Defendant that on 13 March 2015 the Claimants' avocat called the Defendant's avocat and asked him not to serve the action au fond because she would be on holiday during the week 16-22 March 2015. The Defendant's avocat said that he acceded to that request and did not send the action au fond to the bailiff for service until 23 March 2015. It is further alleged that "in order to avoid litigating the case before the French jurisdiction" the Claimants "have organised the postponement of the service" of the action au fond "in order to prior seise the English court and then claim that the French Court should decline its jurisdiction". This serious allegation has been denied. The Claimants' avocat has said that she did not ask the Defendant's avocat to postpone service and was not aware of any intention by the Claimants to issue proceedings in England. There is a clear conflict of evidence. It is not possible for the court to resolve this matter on this application. It was raised for the first time on 1 October 2105, shortly before the hearing and long after the application to stay the English proceedings was issued on 11 August 2015.
On 17 April 2015 the Claimants served their Claim Form on the Defendant and on 20 April 2015 the Defendant acknowledged service. There was no challenge to the jurisdiction.
On 20 May 2015 the Claimants provided the Defendant with a proposed Amended Claim Form and with Particulars of Claim. The Amended Claim Form seeks, in addition to declaratory relief, the remedy of damages. Further, the remedy of damages is sought not only for breach of contract but also for passing off and conversion.
On 5 June 2015 Medicina France served a civil complaint seeking the enforcement of penalties granted by the Court on 10 February 2015 in the event that the Claimants did not resume their business relationship with Medicina France. It was accepted by counsel for the Defendant that this was a separate proceeding. That concession was consistent with the evidence that the action en référé commenced on 21 December 2014 was "finished".
Also on 5 June 2015 the Claimants issued an application to amend its Claim Form.
The submissions of counsel
Counsel for the Defendant made 4 submissions. First, he submitted that the sole purpose of the Claimants' proceedings in England was to frustrate the Defendant's proceedings in France and that they should therefore be stayed. Second, he submitted that it would not be just to grant the declarations sought by the Claimants and therefore the Claim Form issued and served by the Claimants seeking certain declarations should be stayed. Third, he submitted that pursuant to Article 30 of Regulation (EU) No 1215/2012 (to which I shall refer as the Judgments Regulation) the courts of France were first seised and that therefore the English court should stay the proceedings before it. Fourth, he submitted that the proposed Particulars of Claim have no real prospect of success and should be struck out.
Counsel for the Claimants submitted that permission to amend the Claim Form should be granted. He submitted that this court was the court first seised and that therefore this court had no discretion to stay the proceedings in this court pursuant to Article 30 of the Brussels Regulation. Finally, he submitted that the proceedings should not be stayed on any of the other grounds relied upon by the Defendant.
Abuse of process
It was submitted that the sole purpose of the English proceedings was to obstruct the French proceedings commenced by the Defendant in the Marseilles Commercial Court. This was said to be an illegitimate purpose with the result that proceedings should be stayed pursuant to the principles set out in JSC BTA Bank v Ablyazov [2011] 1 WLR 2996, especially at paragraphs 22-23.
The evidential basis of this submission is that in his witness statement Mr. Catterall, the solicitor acting for the Defendant, said at paragraph 10:
"It seems that the purpose of this claim was to obstruct the anticipated substantive proceedings in France under French law, instead of defending them in the French courts."
That evidence has not been denied.
In addition, reliance was placed on a letter dated 20 April 2015 in which the Defendant's solicitor asked the Claimants' solicitor why the proceedings had been issued. In response the Claimants' solicitors said in their letter dated 22 April 2015 that the English court was the court first seised and therefore that it was expected that the French court would stay the proceedings before it.
These matters support the case that at least one purpose of the Claimants in issuing proceedings in England was to cause the French court to stay the proceedings before it. However, the Claimants' solicitors also referred in their letter dated 22 April 2015 to the fact that the Claimants had made complaints of the Defendant's conduct. That must have been a reference to the matters upon which the Claimants relied to justify their termination of the relationship between the Claimants and the Defendant. The Claimants have a legitimate interest in establishing that their termination of the relationship was justified. In circumstances where it is the Claimants' case that the applicable law for the determination of disputes between the Claimants and the Defendant is English law it is not surprising that the Claimants wished to obtain a declaration to that effect from the English court together with a declaration that the Claimants were entitled to cease to supply products to the Defendant and that they had no liability to the Defendant in that regard. This is not therefore a case where the sole purpose in issuing proceedings is an illegitimate purpose. In JSC BTA Bank v Ablyazov it was held that where a claimant had two purposes for commencing proceedings, one legitimate and the other sufficiently collateral as to be illegitimate, their commencement would not be an abuse of the process of the court, even if the illegitimate purpose were the Claimants' predominant purpose. It follows that there is no cause to stay the Claimants' proceedings in this court as an abuse of process.
No prospect of success
It was submitted that the claim for declaratory relief had no real prospect of success and that it should therefore be stayed. The basis of this submission was that in considering whether to grant a declaration the court should take into account justice to the Claimants, justice to the Defendant, whether the declaration would serve any useful purpose and whether there are any other special reasons why or why not the court should grant the declaration: see Financial Services Authotity v Rourke [2002] CP Rep 14 per Neuberger J. It was submitted that in the present case justice requires that the Claimants should defend the Defendant's claim (brought in the Claimants' own country) on its merits and that that claim should not be obstructed by the procedural device of claiming declarations that have no useful purpose other than obstruction. However, as I have already said the suggestion that the proceedings are merely a "procedural device" with no purpose "other than obstruction" is mistaken. I therefore see no grounds for being able say that the claim for declarations has no prospects of success.
Article 30
Article 30 of the Judgments Regulation provides as follows:
"1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
…….
3. 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."
Counsel for the Defendant submitted that the proceedings in England and in France are "related actions" and the French court was the court first seised. He relied upon two arguments in this regard. It is convenient to take the second first because it concerns events in their chronological order.
The submission was that the French court was first seised in December 2014 when Medicina France, a subsidiary of the Defendant, commenced proceedings against the Claimants in the Marseille Commercial Court based upon Article L.442-6 of the French Commercial Code which imposes liability in tort for terminating a business relationship without reasonable notice, notwithstanding anything to the contrary in the contract. The English court was not seised until March 2015 when the Claimants commenced proceedings in this court.
Counsel for the Claimants submitted that since the action en référé commenced in December 2014 is "finished" those proceedings do not count because they are no longer pending. He further submitted that they were between different parties having been brought by Medicina France rather than by Medicina Limited and were of "a provisional kind".
Counsel for the Defendant submitted that the French proceedings should be looked at in the round. Adopting that approach the action en référé commenced in December 2014 and the action au fond commenced on 30 March 2015 should be regarded, for the purposes of the Judgments Regulation, as "of a piece", a "single procedural unit".
It is now established that the court should first ask whether the actions are related at the time of the hearing for the application for the stay and, if they are, ask which court was first seised; see Starlight Shipping v Allianz Marine & Aviation [2014] Bus L R 873 at paragraphs 75-76 per Lord Clarke.
As at the time of the hearing of the Defendant's application for a stay the action commenced in England and the action au fond in France were, it is common ground, related. That is no doubt because 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.
When deciding which court was first seised for the purposes of Article 30 there can be no doubt that a broad common sense approach is appropriate. In FKI Engineering Limited v Striborg Limited [2011] 1 WLR 3264 at paragraph 125 Rix LJ referred to the approach of Lord Saville in earlier cases that:
"the Convention/Regulation rules for lis pendens were designed to be approached in a broad commonsense way, free of over-sophisticated analysis or encouragement to satellite litigation. That approach is plainly supported by the Regulations' preamble. Rules should in general be highly predictable and the rules relating to lis pendens should provide a clear and effective mechanism for resolving relevant cases."
In applying Rule 30 in a broad commonsense way the purpose of the lis pendens rules as expressed in the preamble must be borne in mind. They are designed to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two member states. This is also apparent from the definition of related actions in Article 30(3).
The action en référé is a separate proceeding from the action au fond. It was not a proceeding designed to resolve the substantive dispute between the parties as to whether the Claimants' termination of the contract between the parties was justified or not but was designed to provide emergency relief. Thus the action en référé and the proceedings in this court were not parallel proceedings which gave rise to a risk of inconsistent judgments as to whether the Claimants were entitled to terminate the relationship between the parties. By contrast, when the action au fond was commenced that action and the action in this court were parallel proceedings which gave rise to a risk of inconsistent judgments.
This understanding of the respective proceedings suggests that when deciding which court was first seised it is not appropriate to have regard to the action en référé. When one has regard to the purpose of the lis pendens rules in Article 30 the action en référé does not appear to be relevant because it was not designed to produce a judgment on the merits. By contrast, the English action and the French action au fond were designed to produce a judgment on the merits. Thus, adopting a broad and purposive approach, the court first seised of the substantive dispute in relation to which there was a risk of parallel proceedings with a risk of inconsistent judgments was the English court. The action in England was commenced on 19 March 2014 whereas the French action au fond was commenced on 30 March 2014.
This conclusion and reasoning is supported by the approach of Saville J. in Rank Film v Lanterna [1992] I L Pr 58. In that case Saville J. was concerned with, amongst other matters, Article 22 of the Judgments Convention (a predecessor of Article 30 of the Regulation) in circumstances where Lanterna had sought temporary relief from the Italian court on 22 November 1990 and one week later Rank had commenced an action against Lanterna in the Commercial Court in England. On 21 December 1990 Lanterna applied to the English court for an order staying the English action pursuant to the Judgments Convention. Ten days later Lanterna commenced further proceedings in Rome (in a different court from its first proceedings) claiming damages for Rank's alleged breach of contract. Saville J. rejected the application for a stay pursuant to Article 22. First, the November 1990 proceedings and the English action were not related because there was no risk whatsoever of irreconcilable judgments resulting if the proceedings remained. The temporary relief ordered by the Italian court was not a final order or judgment on the merits. Second, "the proposition that under Article 22 this court should stay Rank's claims on the merits in London because there is a pre-existing action in Rome in which it is not possible to hear and determine Rank's claims on the merits has only to be stated to be rejected."
Saville LJ, as he had become, applied the same approach in Boss Group v Boss France [1997] 1 WLR 351 in which case a company had terminated its relationship with another company. The defendants had commenced proceedings in France of a provisional nature on 8 July 1994 and the French court ordered the claimants to continue to trade with the defendants. On 28 September 1994 the claimants commenced proceedings in England seeking a declaration that they were under no obligation to trade with the defendants and that their relationship had been lawfully terminated. The defendants then applied to the English court on 29 November 1994 for an order that the English court had no jurisdiction. Saville J. referred to Articles 21-23 (on which no application had been based) and observed:
"In the present case it is important to note that it is not suggested that the French court was the court first seised of the matters in issue in the present case. It appears from the material put before us that the proceedings in France were of a provisional kind where the court did not seek to adjudicate finally upon the substantive merits of the case, which would, if heard in France be considered by another court altogether. "
Before reaching a final conclusion on this matter it is necessary to consider the decision of the European Court in Case C-296/10 Purrucker v Perez [2010] ECR I-11163. That case concerned rights to the custody of a child and was governed by Regulation (EC) No 2201/2003 concerning jurisdiction, recognition and enforcement in matrimonial matters and matters of parental responsibility (to which I shall refer as the Family Regulation). Article 19(3) of the Family Regulation is similar to Article 30 of the Judgments Regulation in that it provides that where the jurisdiction of the court first seised is established, the court second seised shall decline jurisdiction in favour of that court. Article 20 of the Family Regulation concerns provisional measures and provides that in urgent cases the provisions of the Regulation shall not prevent the courts of a Member State taking provisional or protective measures even though the courts of another Member State has jurisdiction as to the substance of the matter. It seems to me that notwithstanding the similarities between the Judgments Regulation and the Family Regulation caution is required when using the decision in Purrucker v Perez to interpret and apply the Judgments Regulation.
In Purrucker v Perez three sets of proceedings were commenced. The first was brought by the father in Spain concerning provisional measures relating to custody of the parties' children. The second was brought in Germany by the father concerning the enforcement of provisional measures ordered by the Spanish court. The third was brought in Germany by the mother and concerned the award of rights of custody. The Spanish and German courts differed as to which court was first seised (see paragraphs 49 and 50) and so questions were referred to the Court of Justice for a ruling (see paragraph 51) as to the meaning of Article 19(2) of the Family Regulation which provided that where proceedings relating to the same child and involving the same cause of action are brought before the courts of different Member states the court second seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. The first question that was referred to the Court of Justice was: "Is Article 19(2) ….applicable if a court of a Member State first seised by one party to resolve matters of parental responsibility is called upon to grant provisional measures and a court of another Member State is called upon to rule on the substance of the matter."
The court's reasoning and conclusions on this question are to be found in paragraphs 64-86. Rather than set out those paragraphs in their entirety I shall attempt to summarise the court's conclusions. The court considered that lis pendens within of article 19(2) arises where actions before different courts of Member States are directed at obtaining a judgment capable of recognition in a Member State other than that of the court seised with jurisdiction as to the substance of the matter (paragraph 72). In that regard no distinction is to be drawn between the nature of the proceedings, whether they are proceedings for interim relief or substantive proceedings. The same is true of the Judgments Regulation (paragraph 73). The crucial issue is whether the claim before the court is directed at obtaining a judgment as to the substance of the matter (paragraph 75). Therefore in each case it will be necessary for the claim before the court to be carefully examined to see whether, whatever the nature of the proceedings, there is an action as to the substance of the matter (paragraphs 77-80). For example, it may appear that although a court granted provisional relief that relief was only a preliminary step towards a subsequent judgment to be delivered by that court when there is no longer a need for an urgent decision. In such a case the claim for provisional measures and the subsequent claim relating to matters of substance may constitute "a procedural unit" (paragraph 80). In its formal ruling the Court referred to an action on the substance of the matter being "linked" to the action to obtain interim measures.
It therefore appears that under both the Family Regulation and the Judgments Regulation the mere fact that the court in country A granted provisional relief will not mean that the court in country B where substantive proceedings were later commenced will be the court first seised. If the proceedings before the court in country A can, although they commenced with the grant of provisional relief, proceed to a determination of the substantive issue between the parties (as in an English action) then the court of country A can be regarded as the court first seised. The approach of the English court in Rank Film v Lanterna and Boss Group v Boss France is consistent with this approach.
In the present case the evidence of the French proceedings is to the effect that the action en référé is separate and distinct from the action au fond. As it was put by counsel for the Defendant in his Skeleton Argument "under French procedure interim injunctions …………are obtained in separate proceedings from substantive claims…." There was no evidence that the court before which the action en référé had been commenced could proceed to a final judgment on the merits. On the contrary the evidence was that it was the court before which the action au fond had been commenced that would proceed to a final judgment on the merits. There was no evidence of any "link" between the action en référé and the action au fond.
I have therefore reached the conclusion, applying a broad purposive approach to Article 30, and assisted by the approach of the English court in Rank Film v Lanterna and Boss Group v Boss France and by the approach of the Court of Justice in Purrucker v Perez, that the English court was the court first seised. It follows that the English court has no jurisdiction to stay the action before it; see Starlight Shipping v Allianz Marine & Aviation at paragraph 74.
Counsel for the Defendant had a further argument to the effect that if the Claimants obtained permission to amend its claim, its "new claim" would not relate back to the date of issue and the English court would be deemed to be seised of it when the amended claim was lodged with the court for issue. That occurred after the commencement of the action au fond in France and accordingly the French court was the court first seised. This was an argument which required the court not to follow the approach of the Supreme Court in Starlight Shipping v Allianz Marine & Aviation and to refer a question to the Court of Justice.
The premise of this argument is that the Claimants' proposed amendment raises a "new claim". I am not persuaded that it does. The claim for declaratory relief remains (see the final sentence of the Amended Claim Form and paragraph 30 of the Particulars of Claim) but there is added a claim for damages for breach of contract. This is not a new claim but the addition of a further remedy. The facts and matters out of which the claim for damages and declaratory relief arises are one and the same. Further causes of action are relied upon, passing off and conversion, but these all arise out of the same alleged conduct of the Defendant which is said to be a breach of contract (see paragraph 23 of the Particulars of Claim). Where additional remedies or causes of action arise out of the same facts and matters there is no "new claim" as explained by Auld LJ in Lloyds Bank PLC v Rogers (No.2) [1999] 38 EG 83 in the context of an analogous limitation issue.
There being no new claim counsel's second argument on "first seised" is without foundation. The question whether the English court is to be regarded as seised of a new claim added by amendment does not arise for decision. It is unnecessary to consider whether this court should follow the approach of Lord Clarke in Starlight Shipping v Allianz Marine & Aviation at paragraphs 84-88 (to the effect that the court must ask which court is seised of an action rather than if it is seised of a cause of action or of an issue) or should, as Lord Clarke might have done had the point been critical to the decision, referred a question to the Court of Justice (see paragraph 90).
I must therefore dismiss the application for a stay pursuant to Article 30 of the Judgments Regulation.
It was also suggested that the court should grant a stay on case management grounds on the grounds that the action au fond in France was due for hearing in February or March 2016 and that a stay would prevent the risk of a duplication of proceedings. However, the Regulation, in particular Article 30, is designed to prevent such risk and the court, being the court first seised, has no jurisdiction pursuant to Article 30 to grant a stay for the purposes of avoiding duplication of proceedings.
No real prospects of success
Finally, it is said that the Claimants' claim should be struck out on the basis that the particulars of claim have no real prospects of success. This submission is based upon the suggestion that the Claimants' case that the agreement between the parties remained in force until 2014 has no prospect of success in circumstances where the express terms of the agreement provided that it would be for a period of one year. In response the Claimants' evidence is that the parties continued to deal with each other on the terms of the agreement. It is also noted that the Defendant has not suggested that any other terms governed the parties' relationship. I therefore find it impossible to say that the Claimants' case as to the continued applicability of the contractual terms has no real prospect of success. With regard to breach the Claimants' case is supported by evidence. That evidence is challenged but that is a long way from saying that the Claimants' case on breach has no real prospect of success. I therefore dismiss the application to strike out the Particulars of Claim.
Amendment
There remains the application by the Claimants to amend their claim form. This was opposed by the Defendant on the grounds that it may prejudice the Defendant by enabling the Claimants "to argue that the entirely new claims now sought to be raised should be deemed to be have been commenced when the Claim Form was originally issued (even though they were not in fact) – thereby potentially depriving [the Defendant] of the possibility of having them stayed in this Court under Article 30 of the new Brussels Regulation, and enabling [the Claimants] to contend that [the Defendant's] action in the Marseilles Commercial Court should be stayed." However, it will be apparent from this judgment that the amendment does not enable the Claimants to argue that the English court was first seised. The English court was the first seised regardless of the amendment. Since the amendment arises out of the same facts and matters as were originally alleged there can be no reason to refuse permission to amend. The grant of permission will enable the matters in dispute to be justly tried and will cause no prejudice to the Defendant.
It was also suggested that permission should be refused as a means of avoiding duplication of proceedings. However, since the court has no power to grant a stay for that purpose pursuant to Article 30 of the Regulation I do not consider that it would be appropriate to refuse permission to amend for that purpose.
Conclusion
The court dismisses the Defendant's application for a stay and/or strike out and grants the Claimants permission to amend the Claim Form. I shall ask the parties to prepare an agreed order giving effect to this judgment and to the agreed transfer of the claim to the Chancery Division (because of the passing off claim and the related intellectual property claim commenced by the Defendant against Corpak in that division). |
"The Honourable Mr Justice Flaux : \nIntroduction\n\tThe sole director and shareholder of the claima(...TRUNCATED) |
"Mr Justice Burton : \n\tThis application arises out of the freezing and then the purported terminat(...TRUNCATED) |
"Mr Justice Burton : \n\tThis has been a consolidated hearing of two arbitration claims under ss. 67(...TRUNCATED) |
"Mr Justice Males : \nIntroduction\n\tOn 31 March 2015 a worldwide freezing order was made by Eder J(...TRUNCATED) |
"HHJ WAKSMAN QC: \nIntroduction.\n\tThe 27 claimants in this action are all ex-employees of the fir(...TRUNCATED) |
"Mr Justice Phillips: \n\tOn 4 October 2014 process servers acting on behalf of the claimant (\"Mr T(...TRUNCATED) |
"The Honourable Mr Justice Flaux: \nIntroduction\n\tBy an Order dated 5 June 2015 (as varied by an O(...TRUNCATED) |
"Mr Justice Knowles : \n\tOn Tuesday 27 October 2015, after a period of pre-trial reading, I was due(...TRUNCATED) |
"MR JUSTICE PHILLIPS:\n\tIn June 2007 the Claimant, Claverton Holdings Ltd, a property holding compa(...TRUNCATED) |
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