Article 25 of the Brussels Recast Regulation and the ‘Last Shot’ Doctrine

11 January, 2021

On 8 January 2021, the Queen’s Bench Division of the High Court (Mr Justice Kerr), handed down judgment in the case of TRW Ltd v Panasonic Industry Europe GmbH and Panasonic Automotive Systems Europe GmbH [2021] EWHC 19 (TCC), which raises a number of issues of general interest in relation to the Brussels Recast Regulation (“Regulation”).

The case concerned which of two sets of competing exclusive jurisdiction clauses, if either of them, applied to the supply of electronic resistors for use in the automotive industry by the Panasonic defendants (incorporated in Germany) to the UK-based claimant TRW Ltd, pursuant to Article 25 of the Regulation. The Panasonic defendants relied on customer files signed by various TRW entities in Europe, said to govern their business relationship, which expressly referred to general terms and conditions containing asymmetric jurisdiction clauses in favour of the courts of Hamburg, Germany. Those terms excluded any other standard conditions not expressly agreed in writing. TRW argued that those documents did not apply to the specific supply contracts at issue and, relying on the ‘last shot’ or ‘battle of the forms’ analysis, argued that its own terms in purchase forms applied because (a) they were acted on and (b) were said to be the subject of an agreement evidenced in writing by correspondence between related entities in the USA. Both parties accepted, in the alternative, that the Court may conclude that the matter was so finely balanced or that neither set of general terms was incorporated into the agreement between the parties that jurisdiction ought to be based on the place of delivery (Article 7 of the Regulation), in which case the Panasonic defendants sought a stay to avoid the risk of irreconcilable judgments by reference to related proceedings in Michigan, USA.

The case therefore also raised the unsettled question as to the scope of a ‘second seised’ court’s power to grant a stay under Article 34 of the Regulation where there were proceedings in a third state, i.e. where it would be desirable, even if not practicable, for the two sets of proceedings to be determined together.  This was said to be the subject of conflicting appellate authority. Prior-commenced proceedings in respect of alleged defects in the resistors, supplied under different contracts and to different but related entities, are afoot in Michigan. Those proceedings are due to go to trial in March 2021.

As to Article 25, Kerr J considered that he was in a position to decide which of the rival analyses is the stronger, rather than reach a ‘stalemate’, and concluded that the Panasonic defendants had the better of the argument by a comfortable margin, so as to confer jurisdiction on the courts of Hamburg, Germany pursuant to Article 25 of the Regulation. Crucially, the general terms protected Panasonic from falling victim to the ‘last shot’ doctrine by careful draftsmanship, also known as the ‘battle of forms’ issue.

Whilst Article 34 did not therefore arise, Kerr J considered the arguments advanced on the scope and application of Article 34. As to the scope, the issue was whether the word “expedient” in Article 34(1)(a) of the Regulation bears the meaning “desirable, even if not practicable” or “both practicable and desirable”. The Court considered recent decisions of the Court of Appeal and Commercial Court on this question: Kerr J agreed with Butcher J in the Nigeria case that the Court of Appeal in EuroEco referred to the earlier decision of the Court of Appeal in Kolomoisky (which became available the day before the hearing in EuroEco) and did not suggest it was not bound by Kolomoisky.

In any event, Kerr J did not seek to reconcile the decisions on the basis that in his discretion he would not have granted a stay on the basis that it was not necessary for the proper administration of justice: the risk of irreconcilable judgments could not be eliminated, the Michigan judgment would not be binding, and there was no scope for issue estoppel or abuse of process. Further, the Michigan jury’s assessment of the evidence of defects may not be the same as that of an English judge. In any event, the present claim could have proceeded towards a first case management conference without much expenditure of resources since the issues are said to be the same.

Accordingly, the Court granted the Panasonic defendants’ application, set aside service and declared that the Hamburg court had exclusive jurisdiction.

Andrew Legg, instructed by Kimberley Smith of McDermott Will & Emery UK LLP, acted for the Panasonic defendants.

A copy of the judgment can be found here.