On 10 December 2020, the London Circuit Commercial Court (Mr Stephen Houseman QC, sitting as a Deputy Judge of the High Court) handed down judgment in the case of Ness Global Services v Perform Content Services Limited, which considers a number of issues of general importance arising in relation to the Brussels Recast Regulation, with members of Essex Court Chambers representing both parties.
The case concerned the Court’s power to grant a stay under Article 33 and Article 34 of the Regulation in circumstances where the courts of a third state were first seised and two concurrent bases for the jurisdiction of the Member State court existed, one of which was referred to in Articles 33 and 34 (Article 4 i.e. domicile), and one of which was not (Article 25, in that case a non-exclusive jurisdiction clause). There was no CJEU or domestic authority on the point.
Articles 33 and 34, which address the power of a Member State court to stay its proceedings in favour of a court of a third state where the courts of that third state are first seised, were first introduced by the Recast Regulation (with no equivalent in its predecessors) and address the second question, which the CJEU declined to answer, in Owusu v Jackson.
The parties had entered into contract containing an express choice of English law and a non-exclusive submission by all parties to the jurisdiction of the Courts of England and Wales. Perform commenced proceedings in New Jersey seeking damages and declaratory relief, and Ness subsequently commenced proceedings against Perform in England, serving the proceedings on it as of right as a defendant domiciled within the jurisdiction.
The main issues before the Court were:
(i) whether Articles 33 or 34 applied where jurisdiction was available under Article 25 by reason of a non-exclusive jurisdiction agreement as well as by reason of the defendant’s domicile under Article 4 (the “Applicability Issue”);
(ii) if not, whether Articles 33 and 34 could be applied instead by analogy or ‘reflexively’, including whether ‘reflexivity’ had any role to play where those Articles governed the question of lis alibi pendens in a third state (the “Reflexivity Issue”); and
(iii) if Article 33 or 34 applied directly or reflexively, whether the Court should stay the proceedings on the basis that a stay was necessary for the proper administration of justice, and what factors were relevant in that respect, including the extent of any overlap with forum non conveniens considerations.
On the Applicability Issue, the Court found that the opening words of Articles 33 and 34 which provided that those Articles applied: “where jurisdiction is based on Article 4 or Articles 7, 8 or 9”, precluded the application of Article 33 and Article 34 where jurisdiction exists or ‘is based upon’ a non-exclusive jurisdiction agreement, even where jurisdiction is (also) conferred by one of the four specified articles e.g. domicile. The existence of jurisdiction based on domicile did not trump or otherwise prevent jurisdiction being based on Article 25 where the parties had entered into a non-exclusive jurisdiction agreement.
In so deciding the Court (a) rejected Perform’s arguments that the opening words of Articles 33 and 34 incorporated the internal hierarchy of provisions within Chapter II of the Regulation, such that while exclusive prorogated jurisdiction out-ranks domiciliary jurisdiction so that such jurisdiction is not ‘based on’ Article 4, the same cannot be said of non-exclusive prorogated jurisdiction, which ranks alongside and enjoys parity of status with domiciliary jurisdiction; and (b) rejected any distinction between exclusive jurisdiction agreements and non-exclusive jurisdiction agreements in this context, since Article 25 confers mandatory jurisdiction in either case, and Articles 33 and 34 do not incorporate or yield to the “somewhat amorphous” distinction between exclusive and non-exclusive prorogated jurisdiction.
On the Reflexivity Issue, the Court found that there was no precedent or principled basis for extending the concept of reflexivity beyond its established limits (i.e. applying the provisions of the Regulation by analogy where they would not otherwise apply), and where Articles 33 and 34 themselves represent a form of ‘codified reflexivity’. To do so would undermine the fundamental principles of predictability and legal certainty that underpin the Regulation and re-write the jurisdictional gateway wording in Articles 33 and 34.
Those conclusions meant that the Court was not required to consider whether it should exercise its discretion to stay under Articles 33 or 34. While not rejecting the statements made in a number of recent first instance decisions as well as Dicey to the effect that the discretionary exercise to be carried under Articles 33 and 34 was similar to the application of common law forum non conveniens principles, the Court was clearly not persuaded that such statements were correct, indicating that the factors identified in Recital (24) of the Regulation mandated a consideration of connecting factors with the third state, not the Member State.
In the event and had the point arisen for decision, the Court would have declined to grant a stay because it was not necessary: the parties had accepted the risk of a multiplicity of proceedings by entering into the non-exclusive jurisdiction clause, the English Court was best placed to apply English law and, while there were relevant connections to New Jersey, the centre of gravity of the dispute was not New Jersey or indeed England, but rather Slovakia.
Further and while the Court did not place such importance on the existence of a non-exclusive jurisdiction clause as does the common law, it did indicate that the existence of a such an agreement was relevant in that it enabled the Court to sense-check its overall evaluation as to the proper administration of justice.
Both parties were represented by members of Essex Court Chambers:
Anna Dilnot, instructed by Cleary Gottlieb Steen & Hamilton LLP, acted for the Claimant.
Ricky Diwan QC, instructed by Addleshaw Goddard LLP, acted for the Defendant.
A copy of the Judgment can be found here.
