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Canada Trust Company & Ors v Stolzenberg & Ors [1997] EWCA Civ 2592 (29th October, 1997)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1997/2592.html
Cite as:
[1997] EWCA Civ 2592,
[1998] 1 All ER 318,
[1998] CLC 23,
[1998] ILPr 290,
[1998] WLR 547,
[1998] 1 WLR 547
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CANADA TRUST COMPANY and Others v. WOLFGANG OTTO STOLZENBERG and Others [1997] EWCA Civ 2592 (29th October, 1997)
IN
THE SUPREME COURT OF JUDICATURE
CHANI
97/0811/B
COURT
OF APPEAL (CIVIL DIVISION)
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY
DIVISION
(Mr
Justice Rattee)
Royal
Courts of Justice
Strand,
London WC2
Wednesday,
29th October 1997
B
e f o r e :
LORD
JUSTICE NOURSE
LORD
JUSTICE PILL
and
LORD
JUSTICE WALLER
---------------
THE
CANADA TRUST COMPANY
Plaintiffs
and
Others
-v-
WOLFGANG
OTTO STOLZENBERG
and
Others
Defendants
---------------
Handed
Down Judgment prepared by
Smith
Bernal Reporting Limited
180
Fleet Street London EC4A 2HD
Tel:
0171 421 4040 Fax: 0171 831 8838
(Official
Shorthand Writers to the Court)
---------------
MR
A HOCHHAUSER QC
,
MR
M GRIFFITHS
and
MR
V FLYNN
(instructed by Messrs Richards Butler, London EC3) and on 29.10.97
MR
C SALTER
(instructed by Messrs Colman Coyle, London N1) appeared on behalf of the
Appellant Second, Fifth, Seventh, Tenth, Fifteenth and Sixteenth Defendants (RB
Defendants).
MR
T IVORY
(instructed by Messrs Rakisons, London WC2) appeared on behalf of the Appellant
Fourth Defendant.
MR
C CARR QC
,
MR
P MARSHALL
and
MR
A LENON
(instructed by Messrs Denton Hall, London WC2) appeared on behalf of the
Respondent Plaintiffs.
---------------
J
U D G M E N T
(As
Approved by the Court)
Crown
Copyright
Wednesday,
29th October 1997
LORD
JUSTICE WALLER:
This is an appeal by the Second, Fifth, Seventh, Tenth, Fifteenth and
Sixteenth defendants, on behalf of whom Mr Hochhauser Q.C. presented the
appeal, and of the Fourth defendant, for whom Mr Ivory presented separate but
supporting arguments. The appeals are from the judgment of Mr Justice Rattee
delivered on 27 May 1997. That judgment was concerned with the question of the
jurisdiction of the English court over the defendants. The Plaintiffs assert
that the First defendant (“Mr Stolzenberg”) has at all material
times been domiciled in England, and it is on that basis that they assert that
the English court has jurisdiction over him, and indeed it is on that basis
alone (as will appear) that they assert that the English court has jurisdiction
over the other defendants. It is the plaintiffs’ case that Mr
Stolzenberg is the principal defendant, and responsible with other defendants
for inducing them by fraud to make investments in a Group of Companies called
the Castor Group. The plaintiffs have accordingly commenced these proceedings
against Mr Stolzenberg in England, and have sought to join as parties those
whom they assert partook in the fraud together with certain entities or persons
whom they assert hold assets into which the plaintiffs claim to trace their
investment.
The
plaintiffs assert that the English court has jurisdiction over the Second,
Sixteenth and Fourth defendants on the basis that they were domiciled in
Switzerland, a contracting state under the Lugano convention, relying on
Article 6.1 of that convention which provides as follows:
"A
person domiciled in a Contracting State may also be sued-
1. Where he is one of a number
of defendants, in the courts for the place where anyone of them is domiciled."
The
Lugano convention was incorporated into English law by Section 3A of the Civil
Jurisdiction and Judgments Act 1982 inserted by the Civil Jurisdiction and
Judgments Act 1991. The plaintiffs desired to serve the above defendants in
Switzerland, and, by Ord.11 r.1(2) were entitled so to do without leave of the
court provided that prior to issue of the same they could in compliance with
Ord.6 r.7 indorse the writ with a statement that the court had power under the
Civil Jurisdiction and Judgments Act 1982 (the 1982 Act) to hear and determine
the claim, and that no other proceedings involving the same cause of action
were pending in another contracting state or in another part of the United
Kingdom. Prior to issuing the writ the plaintiffs so indorsed the same in
relation to the above defendants. These defendants were served with the
proceedings, but applied under Ord.12 r.8 for declarations that the English
court had no jurisdiction over them on the ground that the English court did
not have jurisdiction to hear and determine the claim because Mr Stolzenberg
was not domiciled within the United Kingdom at the material time. It is that
declaration which the Judge refused to grant from which refusal these
defendants (“the Convention Defendants”) appeal.
As
regards the Fifth, Seventh, Tenth and Fifteenth defendants (entities domiciled
in Panama, Liechtenstein and Netherlands Antilles i.e. non-contracting states)
the plaintiffs needed leave under Ord.6 r.7(1) to issue the writ or a
concurrent writ for service out of the jurisdiction. The grounds on which they
sought leave were that those defendants were necessary and proper parties
within Ord.11 r.1(1)(c) i.e. necessary or proper parties to a claim brought
against a person duly served (whether within or out of England). The
plaintiffs sought that leave prior to having served any defendants, and these
defendants accordingly applied to set aside leave. It was accepted before the
judge that before leave to serve out of the jurisdiction could be granted in
reliance on Ord.11 r.1(1)(c), at least one other defendant should have been
served, and that thus prima facie leave had been wrongly granted. However, the
judge having ruled that Mr Stolzenberg was domiciled in the United Kingdom at
the material time, and that the Convention Defendants had been duly served, was
prepared to validate service retrospectively on these “non-Convention
Defendants” following the guidance given in
Kuwait
Oil Tanker Co. S v. Al Bade [1997] 2 All ER 855.
The
non-Convention Defendants challenge the judge’s decision to validate, but
they do so simply by reference to the point which arises in relation to the
Convention Defendants. Their submission is that the judge was wrong to conclude
that Mr Stolzenberg was domiciled in England at any material time, and was
wrong thus to conclude that the English court could ever have any jurisdiction
over any defendant. Thus, it is submitted, since such service as has taken
place must be set aside there could never be a basis for leave under Ord.11
r.1(1)(c), and obviously thus no foundation for any validation.
Various
matters were raised before the judge and have been raised on the appeal which
may need further consideration; for example the judge, when the matter was
before him, was asked to consider whether Mr Stolzenberg had been served within
the United Kingdom, and there is a respondents’ notice on that aspect of
the case. There are further applications to adduce fresh evidence from both
sides, the application from the defendants seeking to put in further evidence
to challenge whether Mr Stolzenberg was ever domiciled within the United
Kingdom at any material time, but we have been asked to deal at this stage with
certain points of principle decided by the judge against the appellants in the
hope that that will dispose of the appeal or at least curtail the same.
Those
points of principle are as follows.
(1) What is the correct standard of proof to apply to the question whether a
defendant is domiciled in England on an application under Ord.12 r.8 involving
issues arising under Article 6?
(2)
What is the correct date for determining whether or not a defendant is
domiciled in England for the purpose of determining whether the court has
jurisdiction under Article 6?
(3)
Should Article 6 on its true construction require the defendant domiciled
within England to have been served prior to issue or service of the proceedings
against defendants in other contracting states?
The
relevant Standard of Proof
The
judge held that the Convention Defendants’ applications to set aside
service would fail if the plaintiffs had shown a good arguable case that the
requirements of Article 6.1 had been satisfied. He refused to accept the
submission made on behalf of those defendants that the standard of proof
required was what he described as “the ordinary civil standard of proof,
that is to say, on the balance of probabilities.”
We
have had a full and helpful citation of authority. What can be gleaned from
those authorities can in some instances be summarised, but also calls for some
comment.
(1)
There is no doubt that where the English court is considering whether any of
the sub-paragraphs under Ord.11 r.1(1) apply in relation to leave to serve out
of the jurisdiction, the relevant question is whether the plaintiff has
established a good arguable case: see
Seaconsar
Ltd. V Bank Markazi [1994] 1 AC 438 .
(2)
There are however points in and arising from the speech of Lord Goff of
Chievely in
Seaconsar
which
establishes the above proposition
and
in his analysis of
Vitkovice
Horni a Hutni Tezirsto v Korner [1951] A.C. 869,
on
which I should expand a little:
a.
first, he makes clear that under Ord.11 r.4(2) the words “No such leave
shall be granted unless it shall be made sufficiently to appear ... ” are
directed to whether the plaintiff has established that the case falls within
one of the heads of jurisdiction specified in r.1. In this he is following
Lord Davey in
Chemische
Fabriik vormals Sandos v Badische Anilin und Soda Fabriks (1904) 90 L.T. 733 at
735
where
he said in relation to similar words under the former rule “The words at
the end of the order do not, I think, mean more than that the court is to be
satisfied that the case comes within the class of cases in which service abroad
may be made under the first rule of the order.”
b.
second, he demonstrates through his analysis of
Korner
that
the House of Lords in that case rejected the civil standard of proof in
relation to establishing that a case fell within one of the relevant
sub-paragraphs. In
Korner
the
question that arose was whether a breach of contract had occurred within the
jurisdiction. Slade J, purporting to follow Lord Goddard in
Malik
v NarogniBanka [1946] 2 All E.R. 663,
had
distinguished between the questions (1) whether there was a contract; (2)
whether there had been a breach of contract; and (3) whether such breach had
been committed within the jurisdiction and had applied the civil burden of
proof to the third question. Lord Goff’s summary is as follows:
"This
House took the view that Lord Goddard’s statement of the law in
Malik,
or at least Slade J’s understanding of it, was erroneous in so far as it
required that the plaintiff must satisfy the court on the civil burden of proof
that his case fell within one of the heads of jurisdiction in Ord. 11, r. 1(1).
The applicable standard was laid down in Ord. 11 r. 4(2), which required no
more than that it should be made sufficiently to appear to the court that the
case was a proper one for service out of the jurisdiction, a requirement that
was inconsistent with a standard of proof “which in effect amounted to a
trial of the action or a premature expression on its merits:” see per
Lord Simonds, at p. 879. Equally, the expression “prima facie case”
was rejected as inappropriate, because a conflict may arise on the material
before the court, which has to reach a conclusion on all the materials then
before it. In an endeavour to assist on the degree of sufficiency required by
rule 4(2) Lord Simonds (with whom Lord Normand, at p. 881, agreed) said, at p.
880, that “the description ‘a good arguable case’ has been
suggested [by counsel for the plaintiff] and I do not quarrel with it;”
and Lord Radcliffe ( with whose statement of principle Lord Tucker, at p. 890,
agreed) used the expression “ a strong argument,” at pp. 883 and
885, and “a strong case for argument,” at p. 884. There is no
reason to suppose that there is any material difference between these various
expressions, from which is derived the “good arguable case” test
which has been applied in innumerable cases since. At all events, the House of
Lords held unanimously that, on that test, the plaintiff was entitled to
succeed, and so dismissed the appeal.
For present purposes, it is relevant to consider to which
elements in what is now paragraph (e) of Ord. 11 r. 1(1) the House of Lords
concluded that the “good arguable case” test should be applied.
Lord Radcliffe, at pp. 883-884, was of the opinion that he was unable to be
“satisfied as to where a breach of contract had taken place without being
at any rate as much satisfied that the contract existed and had been
broken.” On this approach (with which, as I understand it, Lord Tucker
was in agreement) it will be necessary for the purpose of establishing
jurisdiction under paragraph (e) not merely to show (to the extent required by
rule 4(2)) that, if there was a contract and it had been broken, such breach
was committed within the jurisdiction (which had been the view of Lord Goddard
C.J. in
Malik)
but so to establish all three elements of contract, breach and place of breach.
Likewise, Lord Simonds considered, at p.879, that the plaintiff's prospects of
establishing the existence of the oral agreement on which he relied were
relevant to the question of jurisdiction. Lord Normand agreed generally with
Lord Simonds; and Lord Oaksey expressed no opinion on the point. It follows
that four members of the Appellate Committee must be taken to have decided
that, when considering what is now paragraph (e), all three elements of
contract, breach and place of breach must be established, to the extent
required by rule 4(2), before the plaintiff can successfully invoke the
jurisdiction of the court under that paragraph. It also follows that, under
that paragraph, no separate issue will arise on the merits of the plaintiff's
claim to which a lower standard of proof might be applied; and for that reason
no question arose directly as to the standard of proof applicable to the merits
of the plaintiff's claim in
Korner's
case, though the point was adverted to by Lord Tucker. I wish to record in
parenthesis my suspicion that a failure to appreciate this point has led to a
belief that the "good arguable case" test established in
Korner's
case is as applicable to the merits of the plaintiff's case as it is to the
question of jurisdiction under Ord. 11, r. 1(1) - as indeed has been stated in
successive editions of The Supreme Court Practice: see the 1993 edition, para
11/1/6, p.85.
c.
third, by necessary implication Lord Goff must have rejected the notion of
there being any different standard of proof depending on whether or not a point
will only arise at the jurisdiction stage. This point has now been affirmed by
the Court of Appeal in
Agrafax
Public Relations Ltd v United Scottish Society Inc [1995] CLC 862
(see
in particular the passage in Henry L.J.’s judgment at 869E with which
Ward and Russell LJJ agreed). Accordingly, insofar as in
Attock
Cement v Romanian Bank for Foreign Trade [1989] 1 WLR 1147
Staughton
L.J.
could
be taken to be suggesting a different standard of proof in relation to an issue
which relates to jurisdiction and which will not be an issue at the trial he is
not to be followed. But Lord Goff was not concerned to explore in
Seaconsar
the application of the standard "good arguable case" to all the various factors
that can arise. It is I believe important to recognise, as the language of
their Lordships in
Korner
demonstrated,
that what the court is endeavouring to do is to find a concept not capable of
very precise definition which reflects that the plaintiff must properly satisfy
the court that it is right for the court to take jurisdiction. That may
involve in some cases considering matters which go both to jurisdiction and to
the very matter to be argued at the trial e.g. the existence of a contract, but
in other cases a matter which goes purely to jurisdiction e.g. the domicile of
a defendant. The concept also reflects that the question before the court is
one which should be decided on affidavits from both sides and without full
discovery and/or cross examination, and in relation to which therefore to apply
the language of the civil burden of proof applicable to issues after full
trial, is inapposite. Although there is power under Ord.12 r.8(5) to order a
preliminary issue on jurisdiction, as Staughton L.J. pointed out in
Attock,
at p.1156D it is seldom that the power is used because trials on jurisdiction
issues are to be strongly discouraged. It is also important to remember that
the phrase which reflects the concept "good arguable case" as the other phrases
in
Korner
“a
strong argument” and “a case for strong argument” were
originally employed in relation to points which related to jurisdiction but
which might also be argued about at the trial. The court in such cases must be
concerned not even to appear to express some concluded view as to the merits,
e.g. as to whether the contract existed or not. It is also right to remember
that the "good arguable case" test, although obviously applicable to the ex
parte stage, becomes of most significance at the inter partes stage where two
arguments are being weighed in the interlocutory context which, as I have
stressed, must not become a "trial". "Good arguable case" reflects in that
context that one side has a much better argument on the material available. It
is the concept which the phrase reflects on which it is important to
concentrate i.e. of the court being satisfied or as satisfied as it can be
having regard to the limitations which an interlocutory process imposes that
factors exist which allow the court to take jurisdiction.
The
civil standard of proof has itself a flexibility depending on the issue being
considered and the concept "good arguable case" has a similar flexibility. It
is natural for example in a case concerned with a contract where the
jurisdiction depends on whether the breach took place within the jurisdiction,
but where the issue to be tried will be whether there was a contract at all,
not to wish to give even the appearance of pre-trying the central issue, even
though the concept of being satisfied must apply both to the existence of the
contract and the place of the breach. It is equally natural for the court in
the process of being satisfied to scrutinise most jealously that factor which
actually provides jurisdiction. It is equally natural that where the
foundation of jurisdiction is domicile i.e. an issue that will not arise at the
trial, that particular scrutiny of the material available takes place in the
context of the limitations applied to an interlocutory process.
(3).
Under sub-paragraph (a) of Ord.11 r.1(2), where the question is whether the
defendant is domiciled within the jurisdiction, domicile in that sub-paragraph
has the same meaning as under the 1982 Act (see Ord.11 r.1(4)), and in
Dubai
Bank Ltd v Fouad Haji Abbas and Another Transcript 17th July 1996
(page
6) one can see Saville L.J., in a judgment with which Simon Brown and Aldous
LJJ agreed, applying the test of “good arguable case” to the issue
of domicile, but, as appears from the judgment, Saville L.J. scrutinised the
material which was before the court before concluding that the plaintiffs had
failed to make out a good arguable case for the defendant being domiciled in
England. His approach is I believe to be consistent with what I have suggested
above.
(4)
On a reference from the House of Lords in relation to Article 5(3) of the
Brussels Convention the European Court of Justice in
Fiona
Shevill and others v Presse Alliance S[1995] ECR 1-415
ruled
that in relation to the standard of proof required before a national court was
entitled to conclude that it had jurisdiction, the question was one for the
national courts. The court held that the "criteria for assessment" were
governed by national law "provided that the effectiveness of the convention is
not thereby impaired." It is perhaps right to recognise that we are concerned
with the Lugano Convention in relation to which the European court does not
have jurisdiction. This is reflected in Sections 3 and 3B of the 1982 Act as
amended by the 1991 Act, Section 3 making the decisions of the European Court
determinative in interpreting the Brussels Conventions, and Section 3B simply
requiring the English court to take account of any relevant decision of any
other Lugano contracting state. But this is a distinction without a
difference having regard to the fact that the Brussels Convention and Lugano
Convention are in identical terms and the English court must accordingly follow
the interpretation of the European court. In any event, in declarations signed
between Member States of the European Community and the EFTA member states, the
EFTA member states have declared that they consider it appropriate that their
courts, when interpreting the Lugano Convention, pay due regard to the case law
of the European court and the courts of the member states of the European
communities in respect of provisions of the Brussels Convention. (see Dicey and
Morris 12th edition p.288/9).
(5)
The English court has had to consider the standard of proof to be applied to
Convention and in particular Brussels Convention cases. The two most important
decisions are decisions of the court of appeal in
Tesam
Distribution v Schuh Mode Team [1990] I.L.Pr. 149
and
Molnlycke
AB v Procter & Gamble [1992] 1 W.L.R. 1112.
They
held that the standard of proof to be applied to the question whether a
plaintiff had established whether, in the one case, the English court had
jurisdiction under Article 5(1), and in the other whether it had jurisdiction
under Article 5(3) was the same as for the establishment of whether a plaintiff
had brought himself within one of the sub-paragraphs of Ord.11 r.1(1).
Paragraph 49 of the judgment of Stocker L.J. in
Tesam
with
which O’Conner L.J. agreed, says as much, and Dillon L.J. (with whose
judgment on this aspect Woolf and Leggatt LJJ agreed) also refers to the test
being “ a good arguable case” (see 1120F) in
Molnlycke.
However, both decisions were prior to
Seaconsar,
and
it is possible that some of the language used might have been different after
that decision.
In
Tesam,
the issue between the parties was whether a contract existed at all, it being
clear that if it did performance would have been in London and that thus
Article 5(1) would have applied. Nicholls L.J. having, it is right to
emphasise, referred to the passage in the Schlosser Report, much relied on by
Mr Hochhauser before us, to the effect that “... a court may assume
jurisdiction only if it is completely satisfied of all the facts on which such
jurisdiction is based ...”
said
in relation to the issue relating to the existence of the contract as follows:
"This
is not to say that the bare assertion of the existence of a contract is the end
of the matter on an interlocutory application such as this. Far from it. The
English court has ample powers of its own to see that the jurisdiction which it
is given by Article 5(1) of the Convention is not abused. When leave to serve
a writ out of the territorial jurisdiction of the English court is needed under
Order 11, rule 1(1), leave is not granted unless it is made sufficiently to
appear to the court that the case is a proper one for service out of the
jurisdiction (see Order 11, rule 4). To satisfy that requirement a good
arguable case must be made out : see Lord Simonds in
Vitkovice
v Korner
.
Order 11, rule 1(1) does not apply in the present case. Jurisdiction under
the Convention is not a matter of discretion. Nevertheless, bearing in mind
that jurisdiction under
Article
5
is an exception to the general rule under
Article
2,
the English court will be astute to see that frivolous or vexatious claims for
the existence of a contract are stopped summarily at the outset, either under
Order 18, rule 19 or under the inherent jurisdiction of the court. There must
be evidence establishing a genuine and real dispute. The court should be
satisfied that there is a serious question which calls for a trial for its
proper determination."
The
phrase "serious question which calls for a trial" reflects the language of
which Lord Goff in
Seaconsar
would
have approved in relation to the merits of the dispute after a good arguable
case has been established for bringing the case within one of the
sub-paragraphs of Ord.11 r.1(1). Nicholls L.J.’s language could be said
to be a little different when he turns to deal with the actual point which
established jurisdiction i.e. in that case where the contract was to be
performed. At paragraph 26 he said “The national court has to be
satisfied that it has jurisdiction. For example, if the defendant is sued in
the court of the state in which he is not domiciled .... where the claim is for
breach of contract the court must be satisfied as to the place of performance
...”
Stocker
L.J. put the matter this way:-
"There
must be evidence adduced from which a conclusion could properly and genuinely
be drawn that a contract existed and that the place of performance was the
country in which the action was brought. Once jurisdiction can be properly
established on this basis then the effect of Article 5(1) in the light of the
Effer
v Kaniner
decision is that the court has jurisdiction finally to determine the issues
between the parties. If after full trial the conclusion is that no contract
existed, then since the court had jurisdiction to determine the issue, that
determination is final and binding upon the parties.”
Later
he made clear that the standard he was applying was the “Ord.11 - viz a
good arguable case”.
In
Molnlycke
Dillon
L.J.
when
saying the test should be “good arguable case” went on to say
“as interpreted by Nicholls L.J.”in
Tesam.
He then quoted the passage in the judgment of Nicholls L.J.
in
Tesam
suggesting
the test of “serious question which calls for trial
”.
He then dealt
with
Stocker L.J.’s reference to Ord.11, and said that he had no doubt that
Stocker L.J. was using the phrase “good arguable case” in the sense
used by Nicholls L.J.
In
the light of
Seaconsar
it
seems to me that in the Ord.11 context it can now be seen that it was probably
inappropriate to use the phrase "serious question to be tried" as if it was
equated with "good arguable case".
Seaconsar
demonstrates that what has to be sufficiently shown for the purpose of
establishing jurisdiction both in relation to the argument as to whether the
contact existed or not (which may arise more fully at the trial) and as to
where the breach took place, (which will not), has to be shown to the standard
of a “good arguable case”. As further appears from
Seaconsar,
that is a threshold below “proved on a balance of probabilities”,
because that is the civil burden after a full trial, but higher than
“serious question to be tried” which relates of the
plaintiff’s claim relative to the contract. But, as I have sought to
stress, "good arguable case” is a concept with some degree of flexibility
depending on the issue. Accordingly, although at first sight there may in the
judgment of Nicholls L.J. appear to have been some elision between the
“good arguable case” and “the serious issue to be
tried” when considering at the jurisdiction stage, a question ultimately
also to be in issue at the trial i.e. the existence of the contract, I do not
think he was in fact eliding the concepts Lord Goff had in mind in the use of
the different phrases "good arguable case" and "serious issues to be tried".
The judgment is merely consistent with the flexibility in the concept of "good
arguable case" to which I have referred. In any event it is clear in my view
(1) that the Court of Appeal intended that the test in relation to convention
cases should be the same as in the context of Ord.11 r.1(1); and (2) that in
relation to points that went to jurisdiction they intended “good arguable
case” as interpreted in the Ord.11 context to be the standard of proof.
(6)
There is a further point to have in mind. In relation to Ord.11, the court is
of course exercising a discretion which gives it an additional basis for
ensuring that the spirit of that rule is complied with. No discretion is being
exercised so far as the Convention is concerned, but even in relation to the
Convention there is a further protection for a defendant to which I have
already made a passing reference. The court will be anxious to see that the
Convention is not abused and that its effectiveness is not impaired. In the
Article 6 context in particular, despite the notion that the court has no
discretion where the Convention is concerned, one sees that the court has
formulated what are in essence terms to be implied into Article 6 e.g. that
there must be a connection between the claims made (see e.g.
Gascoigne
v Pyrah The Times 26/11/91);
it must not be the sole object of joining a defendant to oust the jurisdiction
of the court of the domicile of other defendants (see the additions to note 75
in the 4th Cumulative supplement to Dicey & Morris 12th Edition and the
reference to an Irish case
Gannon
v B&I Steampacket Co.Ltd [1993] 2 I.R. 359)
and
it would be an abuse of Article 6 to join a defendant simply to obtain
discovery (see
Molnlycke
1117B).
Thus in approaching the question whether the court is satisfied that it should
take jurisdiction under Article 6 for example, it will certainly have in mind
the implications in relation to prevention of abuse.
(7)
I ought finally to refer to a decision of my own relied on by Mr Hochhauser -
I.P.Metal
v Ruote [1993] 2 LL 60,
and
to the ruling of the Court of Appeal refusing leave to appeal from that
decision reported at
[1994] 2 LL 560.
That case was concerned with Article 17 (agreements as to jurisdiction) and as
to whether that Article, if applicable, in effect overrode Articles 21 and 22.
I expressed the view that Article 17 did override, but that the English court
would want to be as clear as possible, and at least form the view that it was
highly likely that if the matter were tried out the plaintiff would succeed in
his argument on the jurisdiction clause, before concluding that Article 17
applied. I was referred to
Tesam
and
Molnlycke
and Mr Gaisman for the plaintiffs in that case was seeking to persuade me that
“a good arguable case” was the appropriate test. I rejected
“good arguable case” as the appropriate test when dealing with
Article 17, and preferred what I conceived to be a higher test because the
question of whether there was a consensus within the terms of that Article was
likely only to be of relevance when jurisdiction was being decided. In
addition, I applied what I conceived to be a higher test, because I was dealing
with a situation in which another court was seised and where it was being
argued that it was that court which should decide the question of jurisdiction,
not the English court. When leave to appeal was refused Saville L.J. referred
to my formulation “highly likely”, but I do not read the judgment
as approving or disapproving of the words I used.
I
too was dealing with the matter without the benefit of Lord Goff’s
analysis in
Seaconsar.
I
think I was probably wrong to reject “good arguable case” as being
the appropriate test. I say probably because the court may be in a slightly
different position when faced with whether Article 17 should apply and override
Article 21 or 22, than it is when considering whether it has jurisdiction under
Articles 5 or 6. But I rather suspect that in truth “good arguable
case” is the appropriate standard which I should have adopted, and that I
failed to appreciate that that language would have enabled me to take the
attitude that I did.
Conclusion
In
the result in my view the judge was right to rule that the relevant standard of
proof on the domicile issue was “good arguable case”, and there is
no indication that he did not apply that concept correctly.
Time
for testing domicile under Article 6
The
relevant words of Article 6 are as follows:-
A
person domiciled in a Contracting State may also be sued- 1. Where he is one of
a number of defendants, in the courts for the place where any one of them is
domiciled. 2. As a third party in an action on a warranty or
guarantee or in any other third party proceedings, in the court seised of the
original proceedings, unless these were instituted solely with the object of
removing him from the jurisdiction of the court which would be competent in his
case.
The
relevant words of Article 2 are as follows:-
"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.
Persons who are not nationals of the State in which they are
domiciled shall be governed by the rules of jurisdiction applicable to
nationals of that State.
There
is no issue between the parties that, as the European Court of Justice held in
Case
189/87 Kalfelis v Schroder
[1988] ECR 5565 at para 19:
"
... the ‘special jurisdictions’ enumerated in Articles 5 and 6 of
the Convention constitute derogations from the principle that jurisdiction is
vested in the courts of the State where the defendant is domiciled and as such
must be interpreted restrictively".
But
this helps very little in solving the problem as to the time at which the
domicile of “any one of the defendants” must exist under Article 6
because it would seem obvious that the relevant time must be the same under
Article 2 as under Article 6.
What
the Convention Defendants submit is that the words “be sued”
wherever they appear in Articles 2, 3, 5, 6, 8 and 9 refer to the service of
proceedings and not to the mere issue of proceedings. In his reply Mr
Hochhauser suggested that sued really meant “summonsed” and that a
defendant was not summonsed until he had been served. The most formidable
argument of Mr Hochhauser was that unless “sued” bore that meaning
there would be an inconsistency with Articles 19, 21, 22 and 23.
In
relation to Articles 19, 21, 22 and 23 where the Convention is attempting to
resolve situations where courts of Member States might be competing for
jurisdiction, the concept which the Convention uses is of courts being
“seised”. Thus by Article 19 it is provided that a court of a
Contracting State “seised” of a claim which is principally
concerned with a matter over which the courts of another Contracting State has
exclusive jurisdiction by virtue of Article 16, it shall, of its own motion,
declare it has no jurisdiction. Article 21 deals with proceedings involving
the same cause of action and between the same parties being brought in
different Contracting States, and imposes an obligation on any court other than
the one first “seised” (1) to stay its proceedings until the
jurisdiction of the court first “seised” is established, and (2)
where it is established, to decline jurisdiction in favour of that court.
Article 22 deals with related actions giving a discretion to courts other than
the one first “seised” to stay proceedings. Article 23 deals with
actions which are within the “exclusive jurisdiction of several
courts” and imposes an obligation on all courts other than the one first
“seised” to decline jurisdiction.
The
concept seised has been considered by the Court of Appeal on two occasions,
firstly in
Dresser
v Falcongate [1991] 1 LL 557;
and
then further in
The
Sargasso [1994] 2 LL 6.
Those
cases
have
established that the English court is not “seised” of proceedings
until the proceedings have been actually served. Bingham L.J. in
Dresser
at p.569 summarised the matter in this way:-
"With
genuine respect to the contrary opinions of Mr. Justice Hirst and Mr. Justice
Hobhouse, it is in my judgment artificial, far-fetched and wrong to hold that
the English Court is seised of proceedings, or that proceedings are decisively,
conclusively, finally or definitely pending before it, upon mere issue of
proceedings, when at that stage (1) the Court's involvement has been confined
to a ministerial act by a relatively junior administrative officer; (2) the
plaintiff has an unfettered choice whether to pursue the action and serve the
proceedings or not, being in breach of no rule or obligation if he chooses to
let the writ expire unserved; (3) the plaintiff's claim may be framed in terms
of the utmost generality; (4) the defendant is usually unaware of the issue of
proceedings and, if unaware, is unable to call on the plaintiff to serve the
writ or discontinue the action and unable to rely on the commencement of the
action as a lis alibi pendens if proceedings are begun elsewhere; (5) the
defendant is not obliged to respond to the plaintiff's claim in any way, and
not entitled to do so save be calling on the plaintiff to serve or discontinue;
(6) the Court cannot exercise any powers which, on appropriate facts, it could
not have exercised before issue; (7) the defendant has not become subject to
the jurisdiction of the Court. It would be wrong, at this
early stage in the life of the Convention (in so far as it affects the United
Kingdom), to attempt to formulate any rule which will govern all problems which
may arise in the future. I am, however, satisfied that the English Court
became seised of these proceedings, which first became definitively pending
before it, when the defendants were served on July 13, 1989. The plaintiffs
and the defendants then became bound by the Rules of Court to perform the
obligations laid on them respectively or suffer the prescribed consequences of
default. The defendants became subject to the Court's jurisdiction unless they
successfully challenged or resisted it which they were required to do then or
not at all. In the ordinary, straightforward case service of proceedings will
be the time when the English Court becomes seised. I would, however, stress
the qualification, because that is not an invariable rule. The most obvious
exception is where an actual exercise of jurisdiction (as by the granting of a
Mareva
injunction or the making of an
Anton
Piller
order or the arrest of a vessel) precedes service: plainly the Court is seised
of proceedings when it makes an interlocutory order of that kind. Further
exceptions and qualifications may well arise in practice, but they do not fall
for consideration in this case."
It
is that last aspect with which the Court of Appeal in
The
Sargasso
disagreed
holding that service in all cases was required.
The
argument of Mr Hochhauser is that there is no reason in principle or logic for
applying a different test when considering Article 6, particularly as the
policy lying behind both provisions (in relation to which it should be said
there is no issue) is of avoiding inconsistent judgments. Mr Hochhauser
accepts Mr Carr Q.C.'s submission that the phrases used in Articles 2, 3, 5 and
6 and the phrase used in Articles 11, 12 and 14 "bring proceedings”
involve the same concept, one viewed from the defendant’s point of view,
and the other from the plaintiff’s point of view, but he says that the
word “seised” is dealing with the same concept simply from the
court’s point of view. How, he would ask rhetorically, can a court not
be seised, if either a defendant has been sued or a plaintiff has brought
proceedings? But he submits Mr Carr’s submissions involve that being
possible.
When
pressed to demonstrate how, as a matter of language he suggested that the
Convention should be read so as to give effect to his submissions, Mr
Hochhauser showed us during the course of his reply a passage from Briggs on
Civil
Jurisdiction and Judgments 2nd edition page 16
"The
Conventions are European texts, designed and drafted by civil lawyers trained
in the continental legal tradition; and they are interpreted by judges who are,
by a large majority, civilian lawyers. The texts have to be understood, and
interpreted, according to the European style, at least if they are to be
understood in a way which will conform, to the views of the Court of Justice.
The English custom of interpreting, more or less literally, the precise
relevant words, following the prior decisions of earlier courts, is not the
European way. Instead, the Conventions are interpreted "teleologically"; that
is to say, with a view predominantly given to the overall purposes of the
Convention as a whole, as distinct from simply seeking to ascertain the natural
meaning of a single provision in isolation from the rest of the text. For this
reason, attention to the general principles underpinning the Convention, as the
Court of Justice has declared them and as set out here, is the proper first
step in the interpretation of any individual provision: they must be taken as
read in all cases. A sound teleological argument may well defeat a good
literal one."
He
further showed how, in addition to the phrases “be sued”,
“bringing Proceedings”, and “seised”, the Convention
also used the concept of proceedings being “instituted”
(e.g.
Article 6(2)), and of the document “instituting” (Article 20) or
which “instituted” (Article 27(2)). He relied both in his original
argument and in reply on Article 52 which provides as follows:-
"In
order to determine whether a party is domiciled in the Contracting State whose
courts are seised of a matter, the Court shall apply its internal law.
If a party is not domiciled in the State whose courts
are seised of the matter, then, in order to determine whether the party is
domiciled in another Contracting State, the court shall apply the law of that
State."
Mr
Hochhauser submitted that the use of the present tense, and the reference to
the court being seised, showed that the court was only intended to consider
domicile after service.
I
have to say that at the end of the day I did not find the use of other phrases
in other Articles and/or Article 52 of any particular assistance. What was
clearly a powerful point however was that at first sight it may seem strange if
the concept under Articles 21 and 22 of a court being seised involves service,
but being sued or bringing proceedings does not. But even if the point is a
powerful one, I could not follow why, as Mr Hochhauser submitted, Articles 21
and 22 could not operate if “be sued” and “bring
proceedings” meant commence the proceedings by issuing a writ. As Mr
Carr forcefully pointed out, those Articles are concerned with a different
stage i.e. a stage when a tie break has to operate. That tie break will only
operate as between courts which actually have jurisdiction under the provisions
of the Convention. There is accordingly actually no reason why the point of
time at which that tie break operates should not be different from the point of
time for deciding whether the court should be entitled to take jurisdiction
originally even if at first sight it may seem surprising that it should be so.
Accordingly,
(with the above passage of Briggs in mind), the question is ultimately one of
construction of the relevant Articles. But I would stress that by using the
word construction I do not intend to confine myself slavishly to the language.
Obviously, if it is necessary to imply terms so that the Convention achieves
its objectives, it appears from the illustrations already given that such terms
will be implied. Strict construction will not necessarily supply the answer if
the objectives of the Convention would thereby be frustrated.
The
starting point is Article 2. The Article is concerned to establish
the
courts
in
which a person or company “shall” be sued. It is not concerned
with the
country
in which a person or company shall be served. It is not in issue however that
whether or not in one sense the courts of a country can be said to have
jurisdiction over the people who live there, the in personam jurisdiction of
the court is only achieved by service of the court process (see Rule 22 of
Dicey & Morris page 270). In this sense it seems to me that point (7) of
Bingham L.J.’s points in
Dresser
(despite
Mr Carr’s protest to the contrary) is right. If the proceedings are ones
to which Article 2 of the Convention applies, in order to sue in the courts of
a defendant’s domicile, a writ or other document instituting the
proceedings will have to be issued in the relevant court, and then served
either within the Contracting State of the relevant court
or
in any other Contracting State.
It
must in fact be rare for it to be a relevant question to ask whether it is at
the time of the issue of the process in the relevant court or time of service
of the process, that the defendant should be domiciled in the Contracting State
of the court that has issued the process. Article 2 reflects the fundamental
principle - defendants should be sued in their home state. Normally a person
whose home is in a certain state will be both sued and served there, and if he
were served elsewhere it would be because of some temporary visit to another
state. In the instant case it would seem that Mr Stolzenberg may (and we know
little about the facts and so I stress may) be seeking to change his domicile
from the United Kingdom so as to avoid the jurisdiction of the English Court.
That produces one circumstance where the point in time becomes of importance.
Mr Hochhauser stressed that it was important not to construe the Convention on
the basis that the reason why there might be a difference in domicile between
date of issue and date of service was through an attempt to evade service, and
suggested that it might well happen that a writ had been issued and not served
and a defendant without any knowledge of proceedings moved and changed his
domicile prior to service. In such a case he submitted that to give effect to
the fundamental principle such a defendant should be entitled to have
proceedings issued in the Contracting State to which he had moved, and to have
the first proceedings set aside.
I
reject the notion that date of service is the relevant date under Article 2,
either as a matter of language or as a matter of implication. I accept that
the court is searching for one moment in time i.e. either the issue of
proceedings or the service of the same, but not both. The language of Article
2 is only consistent with that moment being the issue, because it contemplates
taking action “in the courts”. It furthermore seems to me that
since the issue of proceedings is a step that the plaintiff is bound to take
and incur cost in taking, it is important that a plaintiff can identify easily
the court before which he can bring his action before he launches it. Support
for this being the plaintiff’s right is provided by a passage in the
judgment of the European Court in
Mulox
IBC Ltd v Hendrick Geels
[1993] ECR1-4075 where it is said as follows:-
"It
is settled case-law that, as far as possible, the Court of Justice will
interpret the terms of the Convention autonomously so as to ensure that it is
fully effective having regard to the objectives of Article 220 of the EEC
Treaty, for the implementation of which it was adopted. That
autonomous interpretation alone is capable of ensuring uniform application of
the Convention, the objectives of which include unification of the rules on
jurisdiction of the Contracting States, so as to avoid as far as possible the
multiplication of the bases of jurisdiction in relation to one and the same
legal relationship and to reinforce the legal protection available to persons
established in the Community by, at the same time,
allowing
the plaintiff easily to identify the court before which he may bring an action
and the defendant reasonably to foresee the court before which he may be sued."
(my emphasis).
Mr
Hochhauser emphasises that the above quotation also refers to the defendant
being able “reasonably to foresee the court before which he may be
sued”. But if the choice is between a court which the plaintiff was
absolutely right in thinking was the defendant’s home court when he
issued the proceedings and a court which has only recently become the
defendant’s home court after the issue of proceedings, I am not
sympathetic to the view that the plaintiff should be disadvantaged. On any
view the court chosen was one which the defendant would, for a considerable
period of his life, have been happy to have been sued in; his disadvantage is
therefore very small.
Furthermore,
if the above were not the correct view there are much greater disadvantages to
which the plaintiff will be put. First, he will have been put to the cost and
expense of preparing for and issuing the first proceedings. Second, if he has
issued proceedings in the courts of the defendant’s domicile just prior
to the limitation period expiring, and the defendant changes his domicile
either innocently or with some more devious motive, if time of service is the
relevant moment in time, the defendant can not only insist on being sued in his
newly acquired domiciliary, but can insist on the original proceedings being
set aside on the basis that that original court had no jurisdiction. He would
thus obtain the advantage of a limitation defence. Third, if by chance the
defendant is one who would wish to evade service of proceedings, he would on
the defendants’ construction, be able to change domicile once he
appreciated that proceedings in what was then his state of domicile had been
commenced. I follow Mr Hochhauser’s submission that the Convention
should not be construed with persons evading service as the only defendants in
mind, but nevertheless it has to be recognised that defendants are not always
willing litigants. It does in fact seem to me that a change or attempted
change in domicile between issue and service is more likely to come from an
unwilling defendant. A plaintiff accordingly should be entitled not to have
proceedings set aside where they have been issued in the courts of a
defendant’s domicile at the time of issue, and in my view under Article 2
time of issue is the relevant time.
I
have spent some time on Article 2 and addressed the arguments in relation to
that Article because it is difficult to see how the point in time could be
different when Article 6 comes to be considered. But before turning to Article
6 it is worth mentioning Article 5. Article 5 provides the first exceptions to
Article 2, and allows a person “to be sued” “in another
Contracting State” in certain situations. The language is not consistent
with allowing “service” in another Contracting State, indeed
clearly once again the contemplation is of proceedings issued in the State to
which one of the exceptions applies, with service in any Contracting State.
The exceptions do on the whole either exist as at the date of issue or not at
all, but little assistance can be gained from that fact. But exception (6)
allows a defendant to be sued in his capacity as “settlor, trustee or
beneficiary of a trust .... in the courts of the Contracting State in which the
trust is domiciled”. The whole purpose is to allow a defendant to be
sued in a country where he is not domiciled but where the trust is domiciled.
It seems again that it would be an unnatural construction to place on that
provision that would allow a plaintiff perfectly properly to form the view
that the trust was domiciled in country X, incur the expenditure of consulting
lawyers and getting proceedings issued, but find because it took time to locate
the relevant defendant in some other Contracting State so as to serve him, that
because in the meanwhile the trust had moved its domicile, the plaintiff had to
start again elsewhere. Furthermore, what it might be asked if there were more
than one trustee being sued? Unless date of issue is the correct point in time
there could be a needless uncertainty as to the way in which Article 5(6) was
to operate. Assume proceedings started against three trustees in the place
where the trust was domiciled; assume one served immediately, but the others
not for some period during which period the trust moved its domicile. Assume
the trustee first served wanted the proceedings to remain in the court where
they were started but the others applied to set the same aside on the basis
that they must be sued in the country of their domicile, or the country of the
trust’s new domicile. Suffice it to say the solution would not be easy
if date of service were the relevant date.
Now
to Article 6 itself. In Article 6(2) the concept seised is referred to in
relation to third party proceedings. In that context seised would appear to
have the same meaning as in Articles 21 and 22, but since prior to the taking
of any such proceeding there must have been service on the defendant I do not
myself think that any assistance is gained either way from the use of that term
in that context. If anything it could be said to contrast with the expression
sued.
Article
6 is concerned to avoid irreconcilable judgments being handed down in different
Contracting States, and so far as Article 6.1 is concerned it does fulfil a
function similar to the “necessary or proper party” provisions of
Ord.11 r.1(1)(c) (see Dicey & Morris page 369). But it is in my view not
necessarily to be equated with that provision alone. The Rules of the Supreme
court recognise by other provisions the convenience of enabling connected
issues being determined between all parties interested before the same
tribunal; see for example in relation to joinder of defendants Ord.15 r.4(1)
and if the proceedings are already in being the joinder of other parties Ord.15
r.6(2). Article 6 .1 simply recognises that principle, and seeks to provide a
solution for the situation in which defendants from different domiciles should
be defendants in the same proceedings in accordance with that principle. Mr
Hochhauser stressed in relation to the construction of Article 6.1 that it
should be construed in his clients' favour because it was being sought to
deprive his clients of their fundamental rights under Article 2. That factor
would seem to me rightly to be material in relation to whether the proceedings
are sufficiently connected or whether Article 6 is being abused. However, I do
not think it assists in determining the relevant date at which a defendant has
to be domiciled. The relevant date must be the same for Article 6 as for
Article 2. A plaintiff faced with wishing to sue defendants in proceedings
connected in the sense required for Article 6 purposes has to take the same
decisions as a plaintiff seeking to sue one defendant in the courts of his
domicile under Article 2. What in fact Article 6 allows him to do is to comply
with Article 2 so far as one or more defendants are concerned, and join others
who are domiciled in other Contracting States. It is Article 6 that provides
the power to issue the process in the court of the domicile of one defendant,
and that court then allows service on the defendants so joined. It must once
again be as at the date when the writ is issued that the relevant domicile must
be tested for all the reasons already given in relation to Article 2.
Mr
Hochhauser in his reply laid emphasis on the fact that the plaintiffs in this
case had a choice and chose a less stable defendant for founding the
jurisdiction of the English court. This was to support his argument that it
was not unjust for the relevant date to be the date of service of the
proceedings. But there are two comments to make. First, it has not been
submitted, nor as I understand the allegations made by the plaintiffs could it
be submitted, that Mr Stolzenberg was made a defendant simply to oust the
jurisdiction of Contracting States where others were domiciled. If that were
an allegation that could be made and was well founded, as already indicated by
process of some implication into Article 6 of words similar to those appearing
in Article 6.2, the court would have jurisdiction to stay such proceedings.
Second, there is no question that the plaintiffs do have to establish the
domicile of Mr Stolzenberg to the standard of proof already indicated, and it
is for them to chose whether they wish to take on that burden (
if
they appreciated there might be doubt about the matter), or continue with
attempting to discharge that burden once they did appreciate there was a contest.
Article
6 also itself supports the construction I have placed on Article 2 in this way.
Unless the defendants’ further argument to which I am about to turn is
right, i.e. that service on Mr Stolzenberg was required before issue or at
least service of the proceedings under Article 6 vis a vis the Convention
Defendants, date of service produces great uncertainty and possible frustration
of the objectives of Article 6.1. The argument presumably has to be that the
date for ascertaining Mr Stolzenberg’s domicile is the date of service on
each individual defendant. If again one assumes a multiplicity of defendants a
domicile in England at the date of issue and some defendants served before the
change in domicile, and if one then assumes a change of domicile and service on
others; assume again the defendants first served wish to fight the proceedings
in England and not in the place of the new domicile, but the other defendants
want either the places of their own domicile or the courts of the new domicile.
How does the court resolve the problem? If one point in time is appropriate
in multiple defendant cases that point has to be issue if grave uncertainty and
possible frustration of the objectives of the Convention is to be avoided.
I
should finally on this aspect refer to certain other points.
1.
Reliance was placed by Mr Hochhauser and Mr Ivory on Ord.11 r.1(2) their
emphasis being placed on the fact that that rule concentrated on
service.
I cannot myself see how that rule helps to construe the Convention albeit I
suppose it might assist in demonstrating what the English court contemplated in
the concept “sued” or “bringing proceedings”. All I
need say is that even if it is right to construe “sued” and the
“bringing of proceedings” from the English court’s point of
view, (and in the light of
Zelger
v Salinitri (no 2) [1984] ECR 2397
that
may be right), as those representing the defendants emphasised, the English
court will still in the context of the Convention “have regard to the
international purpose which the Convention was made to achieve.” see
Bingham L.J. in
Dresser
p.564,
and the similar words of Steyn L.J. in
The
Sargasso
p.10.
The court's perspective is accordingly unlikely to be assisted by textual
analysis of its own rules of court. But in any event, of equal relevance would
then be Ord.6 r.7 which requires the indorsement on the writ
prior
to issue
that the court has the power to hear and determine the claim under the 1982 Act.
2.
Article 20 sub paragraph 2 could be said to give support to the view I have
expressed in that it could be said to be contemplating a court dealing with the
matter before service. Mr Hochhauser sought to demonstrate that it was in fact
dealing with situations in which there had been service but too little time for
the defendant to arrange his defence. I do not think Mr Hochhauser's
submission is well founded, but I do not think the point is of any great
influence.
3.
Mr Ivory referred us to Rule 36 of Dicey & Morris 12th Edition concerned
with the recognition by the English Courts of foreign judgments, and to the
first case where such judgments are recognised being “If the judgment
debtor was at the time the proceedings were instituted, present in the foreign
country”. This reflects the general rule that “the plaintiff must
sue in the court to which the defendant is subject at the time of suit
...” He then sought to persuade us that albeit the court of Appeal in
Adams
v Cape Industries
[1990]
Ch 433 had ultimately left the point open, because they had referred to dicta
in earlier cases and said “It would appear that date of service of
process rather than the date of issue of the proceedings is to be treated as
the “time of suit” ...” this should influence our approach to
the construction of the Convention. In my view the starting point, i.e. that
time of suit is time of service, is not very firmly based, but in any event the
point does not persuade me that the construction which seems to me to flow from
the words and the objectives of the Convention should be any different from
that I have suggested.
Does
Article 6 require there to have been service on the defendant domiciled in the
State of the courts in which the proceedings have been brought?
Ord.11
r.1(1)(c) expressly requires the claim to have been brought against a person
“duly served within or out of the jurisdiction”, as well as the
intended defendant to be a necessary or proper party. There is nothing in the
wording of Article 6 which equates with that specific requirement in Ord.11
r.1(1)(c).
The
reason for the express requirement in Ord.11 r.1(1)(c) flows from the original
rule which required service on a defendant within the jurisdiction before a
further defendant could be made a necessary and proper party. That was a
requirement to ensure that someone within the jurisdiction was not simply made
a party to obtain jurisdiction. Now the requirement is there in order to
ensure that an action is genuinely brought against a defendant in relation to
whom jurisdiction can be established by some other means. It is further a
requirement to swear an affidavit in accordance with Ord.11 r.4(1)(d) stating
the grounds for belief that there is between the plaintiff and the person on
whom the writ has been served a real issue which the plaintiff may ask the
court to try. But the rule is dealing with a situation in which leave to issue
and serve is required from the court. That leave is obtained ex parte, and one
can see that insistence on service on another defendant prior to obtaining
leave may provide some practical safeguard.
There
is no requirement for the obtaining of leave before the issuing of proceedings
in reliance on Article 6. The concept is thus possibly more akin to Ord.15 r.4
under which there are safeguards against the abuse of the power to join co-
defendants in the same proceedings, but an insistence that one should have been
served before issue against, or service on another, is not one of them.
It
is in my view not surprising that Article 6 does not provide for the service of
proceedings on one defendant before the issue and joinder of others, because no
practical safeguard would be provided by so insisting. The first time that a
court will review the question of whether Article 6.1 provides jurisdiction is
on an inter partes application contesting that jurisdiction. At that stage
sufficient protection is available to a defendant and the order in which
defendants have been served or whether one was served before the issue of
proceedings against another has no materiality whatever. The proper question
at that stage under Article 6.1 is simply whether a defendant domiciled within
the jurisdiction is a party and a genuine party, and whether the Convention is
in any way being abused.
I
accordingly do not construe Article 6 as requiring service on the defendant
domiciled within the country of the relevant court prior to issue or service of
proceedings on other defendants. Furthermore I can see no necessity for
implying a term to that effect.
Answers
to points of principle
I
would accordingly answer the points of principle as follows.
(1)
"Good arguable case" is the appropriate standard of proof to apply to the
question whether a defendant is domiciled in England on an application under
Ord.12 r.8 involving issues arising under Article 6.
(2)
The correct date for determining whether or not a defendant is domiciled in
England for the purpose of determining whether the court has jurisdiction under
Article 6, is the date of issue of the proceedings against the defendant
domiciled in England.
(3)
Article 6 does not require service on the defendant domiciled in England prior
to issue or service of the proceedings against other defendants.
LORD
JUSTICE PILL:
I
gratefully adopt Waller LJ’s statement of facts. I also agree that the
judge’s approach to the relevant standard of proof was correct.
The
respondents seek to sue the appellants by relying upon Article 6.1 of the
Lugano Convention and the first defendant’s domicile in England. The
second issue, stated by Waller LJ, is as to the correct date for determining
whether or not a defendant is domiciled in England for the purpose of
determining whether the court has jurisdiction by virtue of Article 6. Is it
the date on which the English writ was issued or the date of service?
That
question requires a consideration of Article 2 of the Convention which, insofar
as is material, provides that “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”. That is a general rule
and, if it applies, the appellants cannot be sued in England.
Article
6 of the Convention creates a special jurisdiction which provides for a
derogation from the general rule. Article 6.1 provides that “a person
domiciled in a contracting state may also be sued - where he is one of a number
of defendants, in the courts of the place where any one of them is
domiciled.” The judge held that, a writ having been issued against the
first defendant, in England, at a time when for present purposes it is assumed
he was domiciled in England, Article 6.1 operates to permit the appellants to
be sued in England. The appellants contend that, because the writ was not at a
material time served upon the first defendant, Article 6.1 does not operate so
as to permit them to be sued in England.
In
Trade
Indemnity
v
Forsakringsaktiebolaget
Njord
[1995] 1 All ER 796 Rix J referred at p 815, to the “underlying
philosophy that jurisdiction is vested in the courts of the state where the
defendant is domiciled”. That reflects the language of the Jenard Report
on the 1968 Convention where it was stated in the commentary on Article 2:
“The
maxim ‘
actor
sequitur forum rei
’,
which expresses the fact that the law leans in favour of the defendant, is even
more relevant in the international sphere than it is in a national court. It is
more difficult, generally speaking, to defend oneself in the courts of a
foreign country than in those of another town in the country where one is
domiciled.”
In
Kalfelis
v
Schroder
[1988] ECR 5565 the European Court of Justice held, at paragraph 19:
“¼
the ‘special jurisdictions’ enumerated in Articles 5 and 6 of the
Convention constitute derogations from the principle that jurisdiction is
vested in the courts of the State where the defendant is domiciled and as such
must be interpreted restrictively.”
Morritt
LJ reflected that language in
A
B Jarrett
v
Barclays Bank
[1997]
2 All ER 484 at 492, when considering the language of Article 16 which also
creates jurisdictions regardless of domicile and Rix J reflected it in the
Trade
Indemnity
case.
It
is common ground that one moment in time must be chosen to apply the test of
domicile for the purposes of Articles 2 and 6. “Sued” must have the
same meaning in the two Articles. It must in my judgment also be accepted that
it is possible conceptually for a court to be seised of a matter for the
purposes of Article 22 of the Convention only when a writ has been served but
for a defendant to be sued under Articles 2 and 6 upon issue of a writ against
him. The “tie-break rule”, to quote the expression used by Bingham
LJ in
Dresser
UK Ltd
v
Falcongate
Ltd
[1992] 1 QB 502 at 514C, operates at a point in time different from that for
deciding whether the court is entitled to take jurisdiction originally.
The
expression “sued” should be considered in its context and having
regard to the purposes of the Convention. Reference has been made to the
expression “bring proceedings” in Articles 11, 12 and 14, to
proceedings being “instituted” in Article 6.2 and to a
“document instituting the proceedings” in Articles 20 and 27. A
writ is a document instituting the proceedings but I do not regard the presence
of the expression “may bring proceedings” as determinative of the
present issue in the respondents’ favour. It begs the question whether
proceedings are brought upon issue of the writ or upon service.
The
appellants understandably rely upon the decision of this court in
Dresser.
The leading judgment was given by Bingham LJ, with whom Sir Stephen Brown P and
Ralph Gibson LJ agreed. In considering, for the purposes of Article 22, whether
the English court or the Dutch court was first seised of the matter, the court
held that the High Court did not become seised of the matter until the writ had
been served. Bingham LJ stated seven reasons why it was wrong to hold that the
English court was seised of proceedings upon mere issue of proceedings. These
are:
“(1)
the Court’s involvement has been confined to a ministerial act by a
relatively junior administrative officer; (2) the plaintiff has an unfettered
choice whether to pursue the action and serve the proceedings or not, being in
breach of no rule or obligation if he chooses to let the writ expire unserved;
(3) the plaintiff’s claim may be framed in terms of the utmost
generality; (4) the defendant is usually unaware of the issue of proceedings
and, if unaware, is unable to call on the plaintiff to serve the writ or
discontinue the action and unable to rely on the commencement of the action as a
lis
alibi pendens
if proceedings are begun elsewhere; (5) the defendant is not obliged to respond
to the plaintiff’s claim in any way, and not entitled to do so save be
calling on the plaintiff to serve or discontinue; (6) the Court cannot exercise
any powers which, on appropriate facts, to could not have exercised before
issue; (7) the defendant has not become subject to the jurisdiction of the
Court.”
Bingham
LJ contemplated exceptions and qualifications to the rule but in
The
Sargasso
[1994] 2 Lloyd’s Rep 6, it was held in this court that there were no
genuine exceptions to the rule that the date of service of the writ marked the
time when the court becomes definitely seised of the proceedings (Steyn LJ at
pp 11 and 12.) Steyn LJ affirmed the rejection in
Dresser
of the date of issue of the writ solution and added that the adopted rule was
“a simple and practical rule which will readily be understood in England
and in other jurisdictions which have to grapple with the question when an
English court is seised of the proceedings. ¼ And it seems to me that a
‘date of service’ rule will be readily comprehensible not only in
England but also in other contracting states.” Peter Gibson LJ stated, at
p 12, that “the issue of a writ is not sufficient but service is required
as a general rule. It is too preliminary a step being one which would have no
consequences whatever if the plaintiff chooses not to serve the writ. Upon
issue of the writ proceedings might said to be pending, but surely not
definitively pending in the court”.
Having
set out the authorities and the relevant considerations in considerable detail
in
Dresser,
Bingham LJ stated that “the question is at root quite a short one”.
In my judgment, that is true also of the present issue. Jurisdiction and seisin
are intimately connected and the considerations set out by Bingham LJ in
Dresser
appear to me to have considerable weight in the present context and weigh
heavily in favour of the conclusion that the defendant is not sued upon mere
issue of the writ. The Convention is constructed around the principle stated in
Article 2 and the phrase “sued in the courts” is to be considered
in that context. A defendant is sued in the courts of England upon service and
not mere issue. The writ being a writ of summons, I have no difficulty with
that use of language quite apart from the considerations (1) to (6) set out by
Bingham LJ in
Dresser.
Consideration (7) was that upon mere issue of proceedings “the defendant
has not become subject to the jurisdiction of the court” which is
consistent with his not being “sued”.
The
European Court of Justice held in
Kalfelis
that Article 6 is to be interpreted restrictively insofar as it constitutes a
derogation from the principle stated in Article 2. That restrictive
interpretation requires, in context, that a defendant cannot be sued out of the
country of his domicile by virtue of the issue of a writ in the country of
another defendant’s domicile. While conceptually possible, it would also
be an odd result if a defendant is held to be “sued” in England by
virtue of Article 6 without the English court being “seised” of the
action under Articles 21 to 23.
The
wording of Article 20 of the Convention, which provides a degree of protection
to defendants sued in a state other than that of their domicile, and Article 52
which provides how domicile is to be determined, appear to me to fit
comfortably with that approach to Articles 2 and 6. Article 20, first
paragraph, contemplates suing as including service by its reference to entering
an appearance, an act which could only follow service. The second paragraph
imposing obligations upon a court in the absence of service and does not
detract from that.
Further,
I would construe the expression “bring proceedings” in Articles 11,
12 and 14 in the same way. To find that proceedings are brought, or
constituted, upon service and not mere issue, is in my view an acceptable use
of language. That finding is not necessary for the present decision but I
mention it in support of my view that the presence of the words “bring
proceedings” in other Articles does not adversely affect the
appellants’ case on the meaning of “sued” in Article 2.
Waller
LJ has stressed the advantages to a plaintiff of a date of issue rule. I follow
that there may be situations in which a plaintiff is at a disadvantage upon the
construction of Articles 2 and 6 which I favour. There may be policy reasons
for favouring a plaintiff and Waller LJ has set out uncertainties, difficulties
and possible frustration which may in some cases arise for him. They should not
however in my view be permitted to weaken the protection provided for a
defendant in Article 2, having regard to the
Dresser
considerations. The principle in issue should not be determined upon the
possibility that a potential defendant may try to arrange a change of domicile
between issue and service in an attempt to frustrate a plaintiff. Moreover, in
a situation such as the present, in which there is more than one potential
defendant, a plaintiff may minimise the risk to him of a change of domicile
between issue and service by an appropriate selection of forum. A result which,
as in the present case, would involve defendants coming to England, a country
with which they have no connection, to defend a claim in which no English
defendant had been served would defeat the purpose of Article 2. There would be
uncertainties for a defendant too, who upon contemplating a quite legitimate
change of domicile, would not know whether he was already subject to a suit in
the domicile he was planning to relinquish.
I
do not consider that the general statement of the European Court of Justice in
Mulox
IBC Ltd
v
Hendrick Geels
[1993]
ECR 1 - 4075, cited by Waller LJ, with its reference to reinforcing “the
legal protection available to persons established in the community”,
supports the respondents’ construction of Article 2. It recognises the
interests of defendants as well as those of plaintiffs.
I
agree with Waller LJ that an analysis of the High Court’s own rules in of
limited assistance for present purposes but RSC O 11 r 1(1)(c) does require
valid service on the principal defendant as a pre-condition of the grant of
leave to serve out of the jurisdiction on other defendants. Further, in giving
the judgment of this court in
Adams
v
Cope
Industries
[1990] Ch 433, Slade LJ, while declining to express a final view on the point,
stated at p 518C that “it would appear that the date of the service of
process rather than the date of issue of proceedings is to be treated as
“the time of suit” for the purposes there in issue.
In
my judgment the First Defendant has not been sued under Article 2 and the
appellants cannot be sued under Article 6 of the Convention. It follows that my
answer to the question as posed in the Notice of Appeal, would be that there
was no valid service on the appellants under Article 6 in the absence of
service of a writ upon the defendant domiciled in England at the date of
service upon him.
LORD
JUSTICE NOURSE:
I
agree with the judgment of Lord Justice Waller and would give the same answers
to the three questions which have been argued.
The
relevant standard of proof
The
authorities reviewed by Lord Justice Waller disclose that there may at times
have been a measure of confusion between "good arguable case" and "serious
question to be tried" or the like, perhaps because these expressions can mean
different things to different minds and, to some at any rate, there cannot be a
serious question to be tried if the plaintiff does not have a good arguable
case. Be that as it may, the authorities disclose no confusion at all in
rejecting the notion that the balance of probabilities, the standard
appropriate to a trial, is applicable to a preliminary question of domicile
such as that which has arisen in this case. The balance of probabilities
having been firmly rejected, the authorities establish that "good arguable
case" is the standard of proof to be applied. It has not been suggested that
Mr Justice Rattee did not correctly apply that standard in this case.
Date
for determining domicile under Article 6
The
difficulty of this question is attested by the difference of opinion which has
arisen between Lords Justices Pill and Waller, each of whose judgments makes a
persuasive case for the conclusion to which it leads. In agreeing with Lord
Justice Waller, I do not suggest that the words "be sued" are incapable of
referring to the time at which process is served as opposed to that at which it
is issued. I acknowledge that it is well possible to conceive of contexts in
which someone could not be said to be sued until he had been served. But the
concern of Articles 2 and 6 of the Lugano Convention is to identify the courts
in which a person domiciled in a contracting state is to be sued, in other
words the courts in which the process against him is to be issued, from which
it seems necessarily to follow that his domicile is to be determined as at the
date of issue and not service.
Time
for service on the domiciled defendant
I
do not wish to add anything to the reasoning of Lord Justice Waller on this
question.
Order: declarations
made in accordance with the answers given at the end of Lord Justice Waller's
judgment; directed that appellants' application to adduce fresh evidence and
the further hearing of the appeal, if appropriate, be adjourned to a date to be
fixed and to come on before the court as at present constituted (estimate - 1
day), with liberty to counsel for the appellants to apply in regard to that
date; all questions of costs to be reserved to the further hearing.
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