England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBCMI 1999/0081/3

COURT OF APPEAL (CIVIL DIVISION )

(MR JUSTICE MOORE-BICK )

Royal Courts of Justice

The Strand

London

Monday 28 June 1999

B e f o r e:

THE LORD CHIEF JUSTICE OF ENGLAND AND WALES

(Lord Bingham of Cornhill )

LORD JUSTICE OTTON

and

LORD JUSTICE ROBERT WALKER

B E T W E E N:

(1) REICHHOLD NORWAY ASA

(2) REICHHOLD CHEMICALS INC

Claimants/Appellants

and

GOLDMAN SACHS INTERNATIONAL

Defendant/Respondent

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(Computer Aided Transcription by

Smith Bernal, 180 Fleet Street, London EC4A 2HD

Telephone 0171 421 4040

Official Shorthand Writers to the Court)

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MR CHRISTOPHER CARR QC and MR JOHN McCAUGHRAN (instructed by Messrs Charles Russell, London EC4A 1RS) appeared on behalf of THE APPELLANT

MR GORDON POLLOCK QC and MR DAVID FOXTON (instructed by Messrs Freshfields, London EC4Y 1HS) appeared on behalf of THE RESPONDENT

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J U D G M E N T

(As Approved by the Court )

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THE LORD CHIEF JUSTICE: On 25 November 1998 Moore-Bick J sitting in the Commercial Court ordered, on the application of the defendants in these proceedings, Goldman Sachs International, that all further proceedings in the action should be stayed under the inherent jurisdiction of the court preserved by section 49(3) of the Supreme Court Act 1981 pending the final determination of the arbitration proceedings commenced by the plaintiffs in these proceedings, Reichhold Norway ASA and Reichhold Chemicals Incorporated, against Jotun AS in Norway on 17 September 1998. Reichhold appeal against that order which Goldman Sachs seek to uphold.

Before the judge the issues between the parties were whether on the facts the judge had jurisdiction to stay the proceedings as he did and, if he did, whether he could properly exercise his discretion so as to make such an order. On appeal the central issue is whether the order which the judge made was one which he could properly and lawfully make.

The facts are summarised in the judgment and may for present purposes be briefly stated. Towards the end of 1996 Jotun AS wished to explore the possibility of selling one of its subsidiary companies named Jotun Polymer Holding AS. It engaged Goldman Sachs to act on its behalf to investigate the commercial possibilities of sale, to arouse interest among potential bidders, to handle the negotiations and to give financial advice. This engagement was the subject of an agreement made between Jotun AS and Goldman Sachs on 20 December 1996, which contained an indemnity clause in these terms:

"The Company [Jotun AS] also will indemnify and hold Goldman Sachs harmless against any losses, claims, damages or liabilities to any person arising out of or in connection with the engagement or any matter referred to in the attached letter or this Annex A, except to the extent that any such loss, claim, damage or liability results from the gross negligence or bad faith in performing the services that are the subject of the attached letter or this Annex A of Goldman Sachs or any of its affiliates to which it may delegate any of its functions hereunder."

Reichhold Chemicals became interested in exploring the possibility of purchase and entered into negotiations. For that purpose, understandably, Reichhold needed access to detailed information about the business of Polymer, such information being known between the parties as the evaluation material (so-called no doubt because it assisted Reichhold to evaluate the benefits of the purchase and to value the business).

There was accordingly a confidentiality agreement entered into between Jotun AS and Reichhold Chemicals which contained a term to this effect. It was addressed to Reichhold and read:

".... you understand and accept that neither the Company [Jotun AS], nor any of its respective directors, officers, employees, agents, representatives and advisors have made or make any representation or warranty expressed or implied as to the accuracy or completeness of the Evaluation Material. You agree that none of them shall have any liability to you or any of your representatives or advisors resulting from the use of the Evaluation Material."

Negotiations and investigations were entered into and a draft sale agreement was exchanged containing a number of warranties concerning the usual operation of the business, the absence of material adverse change since the date of the last accounts, the absence of any material reduction in the assets or increase in the liabilities and so on.

On 5 June 1997, as it appears, a report was forwarded by Polymer to its parent, Jotun, indicating a significant decrease in profitability for the year 1997 as compared with 1996. On the following day, 6 June, a memorandum was addressed by Goldman Sachs to Reichhold in the course of which it was said:

"Management does not currently foresee any reason to adjust the budget for 1997."

On 11 July 1997 an agreement was made for the sale of the shares. The agreement is a very lengthy document. It contained warranties to very much the same effect as in the draft agreement. It provided in clause 5.3 that the buyer's only remedy for any breach of warranty or of any provision of the agreement should be damages and that there should be no right to rescission. It contained in clause 5.4.1 an agreement between the seller and the buyer that the seller should pay to the buyer on demand the amount necessary to put the buyer into the position in which it would have been if the warranties in the agreement had been true and accurate in all respects.

Clause 6.5 contained a provision that claims should be unenforceable unless pursued within nine months of notification of the relevant claim.

Clause 17 contained a Norwegian law clause and a provision that any difference or disagreement between the parties should be resolved by arbitration in Oslo.

The agreement was duly completed in September 1997 and the shares were transferred into the name of Reichhold Norway AS, although nothing turns on any distinction between the two plaintiffs.

On 22 December 1997 Reichhold gave notice to Jotun of a possible claim under the sale agreement. That notification was followed in March by a letter before action addressed to Goldman Sachs. On 30 March 1998 the writ was issued in these proceedings by the plaintiffs against the defendants. It is enough to say that the claim made in the writ was a Hedley Byrne claim based on the Goldman Sachs memorandum of 6 June, to which I have already referred. The damage claimed by the plaintiffs was some US $40m.

On 19 May 1998 Goldman Sachs issued this summons seeking a stay of the proceedings. Later, on 17 September 1998 Reichhold began arbitration proceedings against Jotun under the arbitration clause in the agreement, this action, it would seem, being prompted by the time provision in the sale agreement. At the end of October the suggestion was made by lawyers acting for Reichhold that the arbitration proceedings should be treated as dormant, with no steps being taken to complete the establishment of the tribunal and with each party waiving any relevant time limit, but to that invitation lawyers acting for Jotun gave a non-committal reply.

Evidence was filed relating to the Goldman Sachs summons to stay the proceedings and the matter came in due course before the judge.

At page 6 of his judgment the judge gave a summary of the argument addressed by Mr Pollock QC on behalf of Goldman Sachs. He drew attention to these points: First, since the substance of Reichhold's complaint was that it had paid too much for Polymer, the natural and most efficient way of pursuing a remedy was by arbitration against Jotun in Norway under the sale agreement seeking damages. Second, it was suggested that that was a relatively straightforward claim in legal terms and any difficulty about the quantum of damage would be inevitable wherever the claim was pursued. Third, it was suggested that the proceedings in the arbitration could be expected to reach a conclusion quickly and relatively cheaply. Fourth, it was urged that Reichhold could expect to recover in full against Jotun in the arbitration if it had a good claim, and there was no reason to think that Jotun would be unable to honour any award. By that route it was urged, fifth, that Reichhold could expect to obtain justice in a speedy and efficient manner. By contrast, sixth, the present action against Goldman Sachs was more complex, more difficult as a matter of law and was inconsistent with the method contemplated by all parties for resolving disputes of this kind. In those circumstances Mr Pollock argued that the court could and should stay all further proceedings in the action until the completion of arbitration proceedings in Norway.

In the judge's assessment Mr Pollock's argument rested essentially on three propositions: first, that a plaintiff was no longer entitled to exercise unfettered control over the conduct of proceedings, even when they had been commenced in this country as of right; secondly, that the court should take an active role in managing proceedings before it in order to ensure that justice was achieved as between the parties, while at the same time safeguarding the interests of other litigants; and thirdly, that when considering how justice could best be done between the parties, the court should view the matter objectively in order to assess how that might be achieved at least inconvenience and expense to all involved.

The judge then turned to consider the counter-arguments addressed by Mr McCaughran on behalf of Reichhold. The judge recorded his primary submission as being that a plaintiff with a genuine claim against a defendant within the jurisdiction (not being a claim liable to be stuck out as in any way abusive) had an absolute right to bring proceedings against the defendant here. That, it was submitted, was so regardless of whether he might have a claim against anyone else in respect of the same or a similar loss elsewhere. The judge said:

"In other words, Mr McCaughran submitted that the claimant is entitled to choose whom to sue and when and the court has no right to interfere with the exercise of his choice, whatever may be the motive behind it. Alternatively, [Mr McCaughran] submitted that if the court does have jurisdiction to interfere in the claimant's choice of defendant and forum, it can do so only in exceptional circumstances ...."

which were not present in this case.

On the issue of jurisdiction the judge expressed himself briefly in these terms:

"The court's power to stay proceedings is part of its inherent jurisdiction which is expressly preserved by section 49(3) of the Supreme Court Act 1981. It is exercised under a wide range of circumstances to achieve a wide variety of ends. Subject only to statutory restrictions, the jurisdiction to stay proceedings is unfettered and depends only on the exercise of the court's discretion in the interests of justice. I am in no doubt, therefore, that I do have jurisdiction to stay the present proceedings; the question is whether it would ever be right to do so in a case such as the present, and if so under what circumstances."

The judge then turned to consider at some length the matters which he regarded as relevant to the exercise of his discretion. At the outset he accepted that in principle a plaintiff who had claims against a number of different people was entitled to choose for himself whom to sue and whom not to sue. He is entitled, the judge said, to take proceedings against some and not others for whatever reasons seem best to him, and subject only to the need to control abuse of its process the court is not concerned with the reasons for his choice or the motives that lie behind it. The judge observed that hitherto this had been well accepted, although he did not wish to rule out the possibility that the orthodox view on this question might change. He went on, however, to say:

".... choosing whom to sue is one thing; choosing in what order to pursue proceedings against different defendants may be another, especially when two related sets of proceedings are being, or could be, pursued concurrently."

He observed that in such a case the court itself had a greater interest, not only because there might be undesirable consequences if concurrent proceedings were pursued, but also because the outcome of one set of proceedings may have an important effect on the conduct of the other. As an illustration of the court's power to manage and to prioritise the actions proceeding before it, he made reference to the well-known management rules which were laid down and followed in the Commercial Court in the Lloyd's litigation. The judge said:

"In such circumstances the parties to the individual actions no longer enjoy the unfettered right (if indeed they ever did) to determine how the proceedings should be conducted: it is recognised that the court is entitled to impose on them procedures which it considers appropriate in the light of the nature and content of the litigation as a whole."

He made reference to Ashmore v Corporation of Lloyd's [1992] 1 WLR 446 and Thermawear Ltd v Linton (CA, unreported, 17.10.95). He added:

"However, it may be less easy to justify active management of that kind in a case where proceedings between different parties are taking place in other forums, for example, in arbitration or proceedings in other jurisdictions. That is one of the questions raised by this application."

The judge then pointed out that, since the court's jurisdiction to stay proceedings was discretionary and the circumstances in which an application for a stay might be made were almost infinitely variable, he found it difficult to accept Mr McCaughran's submission that it would never be proper for the court to grant a stay of an action pending the outcome of proceedings. But he did accept that such a step should only be taken if there were very strong reasons for doing so and the benefits which were likely to result from doing so clearly outweighed any disadvantage to the plaintiff. He said:

"Ultimately, however, it must be a matter for the court to consider the circumstances of the case before it and come to its own conclusion.One factor of importance is likely to be the relationship between the parties to the proceedings both here and abroad.

The judge then gave what is in my judgment an important and helpful summary of the commercial effect of the relationships between the parties in this case. He said:

"In the present case that relationship arises out of the three agreements to which I have already referred. Whether or not Goldman Sachs as a third party to the Confidentiality Letter is entitled to invoke its terms against Reichhold, or whether they are apt to cover the particular facts of this case are not matters which can be decided on this application. However, I think it is reasonably clear from the Confidentiality Letter and from the draft Sale Agreement that the commercial basis on which Reichhold pursued the negotiations with Jotun was that it should have no recourse against Jotun or anyone acting on its behalf, including Goldman Sachs, in respect of the accuracy of any of the material disclosed during the negotiations but instead would obtain under the Sale Agreement warranties of the accuracy of the accounts and of the development of the business in the period since the most recent audited accounts. In commercial terms that seems to me to make perfectly good sense because a warranty of that kind could be expected to provide a straightforward remedy against the seller which should adequately protect the buyer's position while leaving it to the seller to make whatever arrangements he thought fit with those acting on his behalf. In the present case the third side of the triangle, that is, the relationship between Goldman Sachs and Jotun, was covered by the Engagement Letter under which Jotun agreed to indemnify Goldman Sachs against any liability to Reichhold. Viewed as a whole, therefore, there was a coherent arrangement under which Reichhold would have its remedy under the Sale Agreement for any misleading or inaccurate information, but would be limited to that remedy, and Jotun alone would be liable to provide that remedy. Any dispute between them was to be decided in arbitration in accordance with the contract."

The judge then returned to his summary of Mr Pollock's submissions to the effect that, as Mr Pollack argued, in the circumstances which had arisen, there was every practical reason for Reichhold to pursue a claim against Jotun under the sale agreement and no sensible reason for its proceeding against Goldman Sachs in this country. The judge considered there was a lot of force in that argument. He considered that if, in truth, Reichhold's complaint was well-founded it would certainly appear to have had a good claim under the warranties in the sale agreement. The claim against Goldman Sachs, on the other hand, the judge regarded as more complicated for the reasons which he had already indicated.

He considered that Mr Pollock was right in saying that there was likely to be substantial argument about whether Goldman Sachs owed Reichhold a duty of care at all, let alone as to whether it was negligent. For that reason alone, in the judge's opinion, the proceedings here would seem to represent a more difficult route to success for Reichhold than the arbitration in Norway. The judge observed:

"In these circumstances it is not easy to see why Reichhold should wish to pursue these proceedings in preference to the arbitration and no explanation of any kind has been offered. Mr McCaughran simply fell back on the proposition that Reichhold is entitled to take that course if it so wishes and the court should not interfere."

The judge considered at some length the interrelationship between the arbitration proceedings and the court proceedings, discussing the possibility, if the action went ahead, that Goldman Sachs, as defendant, would join Jotun as a third party seeking an indemnity under the terms of its engagement and that Jotun would then seek to rely on its agreement with Reichhold to restrain the bringing of proceedings against Goldman Sachs. The judge also considered the possibility that the arbitration might be left in abeyance.

At page 12 the judge said:

"It is important to emphasise that the question which has to be decided on this application is not whether Reichhold should be required to pursue a claim which it does not wish to pursue at all, but whether it should be required to pursue its pending claim against Jotun before it proceeds further with this action. If Reichhold had abandoned or compromised its claim against Jotun this application would not have been made, or if made, would have had no prospect of success. But the fact is that the claim against Jotun is still pending. Reichhold wishes to maintain its claim against Jotun and will pursue it if necessary. In the absence of any explanation for its desire to pursue this action in preference to the arbitration the most recent exchange of correspondence between the parties' Norwegian lawyers looks like nothing more or less than a tactical move on Reichhold's part. Viewed objectively there is, on the material before me, no advantage to Reichhold in taking that course; on the contrary, it appears to be the less favourable option. In those circumstances the only prejudice which Reichhold is likely to suffer if this action is stayed is a delay of about a year. Since delay of that kind can be compensated by an award of interest if Reichhold is ultimately successful, that might be considered a small price to pay for the prospect of avoiding complex and costly litigation."

The estimate of a year derived from opinions offered as to the likely course of the arbitration in Norway. Since the judge's order, we are told, the arbitration has indeed been progressed and it has not been suggested that that estimate was in any way unreliable.

The judge referred to two further submissions which were made by Mr McCaughran for Reichhold. The first drew attention to the House of Lords' decision in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 dealing with forum non conveniens. Mr McCaughran submitted, by analogy, that in a case such as the present the court should not lightly interfere with the exercise by the plaintiff of its right to pursue proceedings here, save in the most exceptional circumstances. The judge observed that he recognised the burden on the defendant who sought a stay on grounds of forum non conveniens, but regarded that situation as somewhat different from that which arose in the case with which he was dealing. He said:

"In the case where a stay is sought on the grounds of forum non conveniens the availability of an alternative forum for the determination of the dispute means that the court is effectively being asked to decide in which of two competing forums the action shall proceed. In practical terms it is not a question of when but whether the plaintiff should be allowed to pursue the action here. To that extent the exercise of the court's discretion to stay the proceedings involves a greater interference with the plaintiff's rights than the order sought in this case."

The judge accepted that there was a very real burden on the defendant in the case before him to satisfy the court that the ends of justice would be better served by granting a stay, but did not accept that there was any heavier a burden than would arise on an application based on grounds of forum non conveniens. The judge also referred to a second argument of Mr McCaughran's based on the Brussels and Lugano Conventions and the priority given to the court first seised. The judge recognised the value of a simple and clear rule of that kind, but pointed out that the case before him fell outside the Conventions and therefore enabled the discretion of the court to be exercised in a way which seemed best on the particular facts. The judge summarised his conclusion in this way:

"I come then to weigh up the factors for and against granting a stay in this case. The fact that Reichhold has commenced proceedings here as of right is in my view an important factor in its favour, but apart from that there is little of a positive nature to be said against granting a stay. The existence of concurrent proceedings in Norway would ordinarily be a powerful factor in favour of doing so, especially in a case where those proceedings overlap to such a significant degree and could be expected to reach a conclusion within a relatively short space of time. However, that factor inevitably loses some of its force in the light of the steps which have been taken to put the arbitration in abeyance. Unless Reichhold changes its mind (which, in the absence of any agreement, it may) it seems quite possible that the arbitration may remain dormant for some time, but it remains in being and I do not think one can discount the possibility that Reichhold may change its mind or that it may be necessary at some point for it to revive the arbitration in order to ensure that the right to pursue it is not lost altogether. If that were to occur one would be faced with all the undesirable consequences of concurrent proceedings. Moreover, the very fact that Reichhold is maintaining the proceedings against Jotun must I think be a factor to be taken into account since it shows that Reichhold is minded to pursue those proceedings, if necessary, in the longer term. One therefore comes back to the broader question of the manner in which the dispute involving all three of these parties is to be resolved. In the somewhat unusual circumstances of the present case I do not think that the court is obliged to give undue weight to the mere preference of one party. Considerations of cost and convenience and of the interests of justice generally seem to me to weigh heavily in favour of granting a stay. As to that, the primary consideration as far as Reichhold is concerned is that it should receive such compensation as it is entitled to for whatever loss it has suffered as quickly as possible and with the minimum of inconvenience and expense. No other factor has been suggested. In particular it is worth emphasising that Mr McCaughran did not seek to argue that Reichhold had some legitimate reason, over and above obtaining compensation, for pursuing Goldman Sachs rather than Jotun. As far as Goldman Sachs and Jotun are concerned, the interests of justice require that they should have a full and proper opportunity to meet the claims against them, also at a minimum of inconvenience and expense and, in the case of Jotun, in the agreed forum. If Reichhold wishes to pursue a claim against Jotun at all, then, for the reasons I have given, all these ends are in my judgment most likely to be achieved if the arbitration takes priority. Of course one cannot be absolutely certain of that because whichever claim is pursued first there is the possibility that Reichhold will wish to pursue the other if it is not wholly successful in the first, but I have to decide this application on the basis of the evidence before me making the best assessment I can of the likely outcome. Against all that very little has been put forward by way of counter-argument. It is very striking that Reichhold has not sought to support its case for allowing these proceedings to continue by putting forward any reasoned grounds as to the practical advantages of pursuing the action here in advance of the arbitration, nor has it sought to suggest that it would suffer any prejudice if the action were stayed other than a relatively brief delay which could be adequately compensated by an award of interest. The risks which attend litigation everywhere are not said to be greater in Norway than England; if anything the difficulties attaching to the claim against Goldman Sachs here are greater than those which affect the claim against Jotun. In these circumstances I have reached the conclusion that the right course in this case is to stay these proceedings pending the final determination of the arbitration in Norway."

In challenging that judgment Mr Christopher Carr QC for Reichhold accepts that the court has a very wide discretion to grant a stay. He does not challenge, as I understand, the existence of a power to make an order such as the judge did. But he submitted with considerable vigour that it was a power which could never properly be exercised in a case such as this. His argument proceeded by a number of steps. First, he said, this is not a case in which the plaintiffs' suit in this country can be stigmatised as abusive, oppressive, or in any way vexatious or brought in bad faith. That is accepted; Mr Pollock makes no contrary submission. Secondly, Mr Carr submitted that there is no reported case before the present in which a judge has made an order precisely analogous with the order which the judge made here. That also is accepted. Mr Pollock accepts that the present order represents an advance on previous precedents. Thirdly, and most importantly, Mr Carr submitted that the judge's order violated a fundamental principle that a plaintiff making a bona fide claim, not tainted with abuse, oppression or any vexatious quality, may sue in the English court any defendant over whom the court has jurisdiction. He submitted that the court has no role to decide whom a plaintiff may or may not sue here or, as he put it, a plaintiff does not have to obtain a passport from the court to sue a defendant in this country over whom the court has jurisdiction.

In support of these submissions Mr Carr relied, in particular, on two citations from authority. He relied, first, on Abraham v Thompson [1997] 4 All ER 362, 374, where Potter LJ said:

"In my view, the starting point in any case where a stay is sought in circumstances which are not provided for by statute or rules of court, should be the fundamental principle that in this country an individual (who is not under a disability, a bankrupt or a vexatious litigant) is entitled to untrammelled access to a court of first instance in respect of a bona fide claim based on a properly pleaded cause of action, subject only to the sanction or consideration that he is in peril of an adverse costs order if he is unsuccessful, in respect of which the opposing party may resort to the usual remedies of execution and/or bankruptcy if such order is not complied with. This principle is of course subject to the further proviso that, if the court is satisfied that the action is not properly constituted or pleaded, or is not brought bona fide in the sense of being vexatious, oppressive or otherwise an abuse of process then the court may dismiss the action or impose a stay whether under the specific provisions of the rules of court or the inherent jurisdiction of the court."

Our attention was also drawn to a passage in the judgment of Millett LJ at page 377.

Secondly, Mr Carr drew our attention Molnlycke AB and Another v Procter & Gamble Ltd and Others [1992] 1 WLR 1112, at page 1124, where Dillon LJ, in a judgment with which the other members of the court agreed, said:

"It is long established that a plaintiff who has been injured by a number of joint tortfeasors can choose which he will sue. He does not have to sue all of them. But the defendants have no right whatsoever to dictate which the plaintiff shall sue or to make the choice for him."

In argument Mr Carr also placed reliance on the current doctrines governing cases on lis alibi pendens and forum non conveniens, both of which, he submitted, depended on showing disadvantage to the defendant from suit in this jurisdiction.

In resisting Mr Carr's argument, Mr Pollock took issue not so much with the general thrust of the argument as with the absolute nature in which it was expressed. Thus Mr Pollock did not assert that a plaintiff had to obtain a passport from the court in order to sue a particular defendant, and he pointed out that the judge had never lent support to any such statement of principle. But Mr Pollock did assert that forensic practice was changing and developing and that the movement was very clearly towards greater control by the courts over the course of proceedings. The Court of Appeal should, he argued, be very slow to interfere with procedural directions of a judge unless those directions were vitiated by error of law or manifest error, neither of which were demonstrable here. Mr Pollock placed reliance on Ashmore v Corporation of Lloyd's [1992] 1 WLR 446, and in particular to strong statements of principle by Lord Roskill and Lord Templeman, both of them emphasising the extent to which it was now accepted that judges should manage the proceedings before them. Observations to a similar effect in Thermawear Ltd v Linton and another (CA, unreported, 17.10.95) were referred to.

With reference to Abraham v Thompson , Mr Pollock submitted that the observations of Potter LJ were somewhat wider than could be justified if account was taken of the various circumstances in which the court would restrain the conduct of proceedings before it. It is, however, plain that that decision was obviously correct since what the defendant was trying to do was to obtain security for costs against a plaintiff in a manner for which the Rules of the Supreme Court which govern applications for security make no provision at all. Had a stay been granted pending the provision of security by the third party in that case, and had security not been provided, the effect would have been to stifle proceedings in this country effectively for ever. That, Mr Pollock submits, is not the case here.

With reference to the case of Molnlycke, Mr Pollock pointed out that the question was whether the plaintiff should be allowed to pursue a German company in the United Kingdom in addition to American and British companies which it was already suing. It was in that case a once and for all decision, and the principle as already quoted was that the court would not tell a plaintiff whom he might sue. Mr Pollock, however, suggested that in this case the court was not seeking to do so. There was no question of precluding Reichhold from suing Goldman Sachs. All that had happened was that the judge had delayed the action for a period estimated to be about a year.

In seeking to justify the making of the present application and the order made by the judge, Mr Pollock posed a series of examples. Supposing, he said, Reichhold issued proceedings in England against Jotun and separately against Goldman Sachs; the court could order that the action against Goldman Sachs should await the outcome of the proceedings against Jotun. Similarly, he said, suppose Reichhold gave notice of arbitration against Jotun in England pursuant to an English arbitration clause and also sued Goldman Sachs in court proceedings, in that case also, he suggested, the court could order that the action against Goldman Sachs should await the outcome of the arbitration reference against Jotun. He did not submit that in either of those cases the court would necessarily make that order, but only that on appropriate facts it properly could. If those propositions were correct, then he posed the bull question: what difference does it make in principle that the arbitration is in Norway instead of this country? Mr Pollock contrasted the effect of the judge's order in this case with an order staying actions on grounds of lis alibi pendens or forum non conveniens. In those cases the stay would in all probability be permanent and the plaintiff would be driven from the judgment seat. That was not, he argued, the case here. Reichhold's claim against Goldman Sachs remains alive and well, but delayed for a year to await the outcome of the arbitration in Norway and in the expectation (on the part of the judge) that the action might then not be effective at all.

I would for my part accept the submissions made by Mr Pollock, subject to all the qualifications which were inherent in them. Mr Carr went on to submit that to uphold the judge's order would open the door to a flood of applications, some successful and some unsuccessful, would involve the court in trying to adjudicate on matters which were barely justiciable, would introduce a new dimension of uncertainty and would give a charter to evasive and manipulative defendants. He suggested that the court would run a risk, if it made such orders, of infringing Article 6 of the European Convention on Human Rights. In reliance on all these matters he suggested that the court should draw back from taking the first and fatal step.

Mr Pollock did not suggest that this would be the only such application of its kind if the judge's order were upheld, and he would have had difficulty making such a submission since another application has already been successfully made. He did, however, suggest that the court was well able to control its own business, and he accepted that the grant of stays such as this would be a rarity, account always being taken of the legitimate interests of plaintiffs and the requirement that there should be no prejudice to plaintiffs beyond that which the interests of justice were thought to justify. It is plain that in exercising this jurisdiction the court would have to be mindful of the effect of Article 6.

I for my part recognise fully the risks to which Mr Carr draws attention, but I have no doubt that judges (not least commercial judges) will be alive to these risks. It will very soon become clear that stays are only granted in cases of this kind in rare and compelling circumstances. Should the upholding of the judge's order lead to the making of unmeritorious applications, then I am confident that judges will know how to react.

It remains to consider the judge's exercise of his discretion here. I have endeavoured to summarise his judgment fully, without quoting all of it verbatim. It is in my judgment evident that he assessed and evaluated the factors which he was called upon to consider. Although it is suggested in Reichhold's skeleton argument that the judge misdirected himself in approaching the various factors which he had to consider, I for my part am persuaded that he left nothing out of account, took account of nothing of which he should not have taken account, and gave a fair and judicious summary of all the matters properly to be considered. I find no misdirection of law. This was, therefore, a decision within the discretion of the judge, not vitiated by misdirection or manifest error. I would dismiss the appeal.

LORD JUSTICE OTTON: I agree.

LORD JUSTICE ROBERT WALKER: I also agree.

ORDER: Appeal dismissed with costs; leave to appeal refused.

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