England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/11/2005

Mr Justice Andrew Smith :

1. This judgment arises from an application made by Alexander G Tsavliris and Sons Maritime Company ("AGT Co") in what I called "the second action" in my judgment [2005] EWHC 2140 (Comm). In paragraph 70 of that judgment I said that I would invite further submissions about one issue before determining the application. I heard such submissions on 11 November 2005.
2. The issue was this: whether section 27 of the Brussels Regulation applies when the proceedings in the court first seised (here the Greek court: I use the terminology of my previous judgment) have proceeded to judgment at first instance (although there is still the possibility of an appeal) between the time when the proceedings were brought in the court second seised, this court, and the time when the court second seised determines whether it should decline jurisdiction.
3. The relevant dates are these. The proceedings in the Greek court were brought on 8 November 2001. The second action was brought by Mr Tavoulareas on 16 August 2004, and on 4 October 2004 AGT Co, the defendant in the second action, applied for a declaration under article 27 that this court has no jurisdiction. On 22 October 2004 the Greek court published its judgment. It is common ground that the time within which Mr Tavoulareas can appeal against that judgment has not yet expired.
4. The effect of my decision in [2005] EWHC 2140 (Comm) is that before 22 October 2004 this court would have been obliged under article 27 of the Brussels Regulation to decline jurisdiction in the second action. The question is whether that position altered when the Greek court gave judgment. Mr Shepherd, representing Mr Tavoulareas, submits that it did and, and Mr Irvin for AGT Co argues that the position remained the same.
5. Mr Shepherd's argument is that article 27 applies only when there are concurrent proceedings before the courts of different Contracting States, and that once there was judgment in the Greek proceedings there are current proceedings only in this court. He points out that article 27 is within Chapter II of the Regulation, which deals with Jurisdiction, and in section 9 of that Chapter, which deals with "lis pendens – related actions". Chapter III of the Regulation is headed "Recognition and Enforcement" and deals with the position after judgment has been given by a court or tribunal of a Member State. Mr Shepherd submits that the structure of the Regulation, reflecting that of the Brussels Convention, is that Chapter II directs the Court of a Member State if there is a related action still proceeding before a court of another Member State and Chapter III deals with the position if the related action has proceeded to judgment.
6. It is beyond argument, and Mr Irvin does not dispute, that this submission is broadly correct. The thinking behind article 21 of the Convention, reflected in article 27 of the Regulation, is described in the Jenard Report thus: "As there may be several concurrent international jurisdictions, and the courts of different States may properly be seised of a matter …, it appears necessary to regulate the question of lis pendens".
7. It is also clear that the judgment of the Greek court of 22 October 2004 is a "judgment" within the meaning of Chapter III notwithstanding Mr Tavoulareas is still entitled to appeal against it. Mr Irvin does not suggest otherwise and does not rely upon the fact that Mr Tavoulareas could bring an appeal.
8. Mr Irvin's argument is that the question whether or not there are concurrent proceedings is to be determined by reference to the position when the proceedings were brought before the court second seised. Mr Irvin accepts that if at that time the action in the court first seised has proceeded to judgment, article 27 has no application, but he submits that if at that time the proceedings in the court first seised have not proceeded to judgment and are still continuing, then any action in a court of another Member State to which article 27 applies is improperly brought and the obligation upon that court to decline jurisdiction does not evaporate if and when judgment is given by the court first seised. He argues that it would be odd and surprising if the court second seised were freed of its obligation to decline jurisdiction in proceedings improperly brought before it simply because judgment is given in other proceedings.
9. I cannot accept this submission. Indeed, the implications of Mr Irvin's submission are, to my mind, more surprising: that the court would be obliged to decline jurisdiction in the proceedings before it, notwithstanding it would be open to the claimants to start new and identical proceedings. It would be a pointless exercise for the court to decline jurisdiction unless it be suggested that there is merit in an inflexible rule that claimants should be required to waste time and costs in this way, in order to mark the fact that they should not have brought the proceedings. After all, if there were such a rule, it would operate even if the claimants were unaware of the proceedings in the court first seised when they brought their proceedings elsewhere. I decline so to interpret article 27.
10. Mr Irvin relies upon the way that the matter is put in Briggs and Rees, Civil Judgments and Jurisdiction, 4^th Ed (2005) at para 2-205: "If the foreign court was seised first, but is no longer seised when the English proceedings are instituted, there appears to be no bar to the exercise of jurisdiction by the English court" (emphasis added). Briggs and Rees cite two authorities in support of this. One is the decision of the Court of Appeal in Prudential Assurance Co Ltd v Prudential Insurance Co of America, [2003] 1 WLR 2295. There Chadwick LJ, with whom the other members of the Court agreed, said this (at para 26): "…I find nothing in article 21 [of the Brussels Convention] to suggest that that article is intended to require a court in one contracting state to stay its proceedings or decline jurisdiction unless there is a concurrente action involving the same cause of action and between the same parties pending in another contracting state; and nothing in article 22 to suggest that that article is intended to empower a court in one contracting state to stay its proceedings unless there is a concurrent related action … in another contracting state – or to decline jurisdiction unless the two related actions could proceed together in another contracting state. It is, I think, important to keep in mind that section 8 of Title II of the Convention is directed, specifically, to the position where, under the earlier sections of the same Title, an action involving the same cause of action and between the same parties – or a related action – has already been commenced in state A, a concurrent action ought not to be allowed to proceed in state B. Where, at the time an action is commenced in state A, one of the parties has already obtained a judgment in state B, section 8 of Title II is not in point. In such a case the relevant provisions of the Brussels Convention are those in section 1 ("Recognition") of Title III ("Recognition and enforcement")" (emphasis added).
11. Mr Irvin draws attention to the reference by Chadwick LJ to the commencement of the action in "state A". However, as far as I can tell from the judgment of Chadwick LJ, and indeed that of Laddie J at first instance [2002] IP&T 781, this case did not raise on the facts the question that I have to decide, and the point was not considered by Laddie J and the Court of Appeal. I cannot accept that Chadwick LJ intended his terminology to have the significance that Mr Irvin invites me to give it.
12. The other authority cited by Briggs and Rees is the decision of Morison J in Internationale Nederland Aviation Lease BV v CAA, [1997] 1 Lloyd's LR 80. In that case an aircraft had been detained at Bournemouth Airport by the Civil Aviation Authority ("CAA") acting on behalf of Eurocontrol, and on 9 November 1993 proceedings were brought in this country against the CAA and Eurocontrol for a declaration that the detention was unlawful and other relief in respect of its detention. On 1 August 1995 the claimants in the English proceedings commenced proceedings in respect of the seizure of the aircraft against Eurocontrol in Belgium, and applied to discontinue the English proceedings.
13. The application was refused by Morison J, who said that he would be prepared to permit discontinuance only on the basis that the claimants could not bring proceedings relating to the arrest and detention of the aircraft elsewhere. In his judgment he considered how discontinuance of the English proceedings would affect the impact of article 21 of the Brussels Convention upon the Belgian proceedings. He formulated the question thus (at p.93): "whether a Court which was first seised remains first seised even if the proceedings have been discontinued"; and concluded, having considered the decisions of Potter J in Gamlestaden plc and Casa de Suecia SA, [1994] 1 Lloyd's Rep 433 and of the Tribunal de grande instance de Dunkerque in Benoit and David v Decanter and Ternynck, [1985] European Digest 1-21/B8, that article 21 had no application when a party has properly discontinued the first set of proceedings.
14. I shall set out at some length the reasoning of Morison J (at pp.93-94) because I find it entirely convincing and it explains better than I could the basis of my decision in this case:

"The [Brussels] Convention established an enforcement procedure which, according to the [European] Court [Societe D'Informatique Service Realisation Organisation (SISRO) v Ampersand Software B.V., [1966] Q.B. 127 at p. 161 B-C]:

"… constitutes an autonomous and complete system independent of the legal systems of the contracting states and… the principle of legal certainty in the Community legal system and the objectives of the Convention in accordance with article 220 of the EEC Treaty, which is its origin, require a uniform application in all contracting states of the Convention rules and the relevant case law of the court."

The aim of the Convention was to promote the recognition and enforcement of judgments in states other than those in which they were delivered and it was "therefore indispensable" to limit the risk of irreconcilable decisions [the Overseas case]. To that end, the Convention lays down rules which determine the place or places where the [only] litigation should be commenced. If proceedings are commenced in more than one country, arts 21 and 22 enable the Courts to make orders which seek to ensure that different decisions are not given on the same issues: the second set of proceedings are stayed so as to permit the first in time to be brought to judgment. Once a judgment has been given, it is readily enforceable in other states, and the parties will be prevented by doctrines of res judicata or "issue estoppel" or their equivalent from re-litigating the same cause of action [used in the Convention sense]. Section 8 of the Convention is headed "Lis Pendens- Related Actions". The French text of art. 21 reads "lorsque des demandes ayant le meme objet et la meme cause sont formees entre les memes parties". One commentator has suggested that it is implicit from the text that there will be no "litispendance" unless "les demandes … soient formees" which I understand to mean "are currently being" advanced. This view was expressed in a commentary on the case relied upon by Mr. Justice Potter in support of his decision in Gamlestaden. It seems to me reasonably clear that, if arts. 21 and 22 are directed at the problems caused by lis alibi pendens, once the lis has ceased, so that the Court is no longer seised of the matter, the articles have no application. The proceedings must both be current so that they can be said to be concurrent. To that extent I am fully in agreement with what Mr Justice Potter decided. However, I agree with Mr Lydiard [counsel for the Internationale Nederlanden Aviation Lease BV], with respect, that the Judge's reasoning cannot be accepted. He said, at p 444:

"The second writ was not served on the CDS until Jan 30, 1992, the earliest date upon which the English Court became seised of the proceedings (see Dresser U.K. Ltd. V Falcongate Freight Marine Ltd., [1991] 2 Lloyd's Rep. 557; Q.B. 502). At that date, therefore, the Spanish proceedings were no longer "lis pendens". Article 21 requires a Court to decline jurisdiction "in favour of another court" when the jurisdiction of that other Court is "established". Where (as here) there have been, but are no longer, proceedings pending in another Court, the jurisdiction of the first Court is no longer "established" and the second Court need not decline jurisdiction in favour of such other Court. If authority is needed for such a straight-forward interpretation it may be found in the French case of Benoit and David v Decanter and Ternynck, [1985] European Digest 1-21 B8".

The question whether jurisdiction is "established" is not pertinent. The question is whether the Court is still seised. A Court may still be seised of a case although its jurisdiction is not established. The question whether jurisdiction is established will affect the question whether the second Court should decline jurisdiction or simply stay the matter pending the first Court's decision on whether its jurisdiction is established. Therefore I would respectfully suggest that the Judge obviously meant that where there are no longer proceedings in the first Court it is no longer seised of the matter and the second Court need not decline jurisdiction in favour of it. I am confident that the Judge intended this because the case on which he relied supported the conclusion. The authority is a decision of the Tribunal de grande instance de Dunkerque given on Apr. 18, 1984. The Digest report of the case reads as follows:

"Having decided that the Convention was applicable, the Tribunal de grand instance considered whether it should decline jurisdiction in favour of the Belgian court first seised. It noted that the same parties and the same cause of action, namely compensation for the harm suffered by the plaintiffs, were involved. The only outstanding question therefore was Article 21 of the Convention necessarily supposed that the court first seised was still seised. There would be a denial of justice if the court subsequently seised were to remit the case to the court first seised and that court no longer had jurisdiction. In order to avoid that negative outcome, the second court had to consider whether the court first seised was still seised of the matter. The question whether a Belgian court was still seised of a matter depended on Belgian procedural law alone. The Tribunal de grande instance held that under Belgian procedural law the Belgian court was no longer seised; first, since the plaintiffs had only applied for provisional damages, that court no longer had jurisdiction once it had made the award; secondly, the Belgian court was in any event no longer seised, since the plaintiffs had validly discontinued the proceedings under Belgian law. Since the foreign court was no longer seised, there was no lis alibi pendens, within the meaning of Article 21 of the Convention; consequently the Tribunal de grande instance, Dunkirk, rejected the objection of lis alibi pendens, stayed the proceedings and called for the parties' submissions on the merits."

I regard the decision of Mr Justice Potter and the French case on which he relied, as persuasive and compelling authority that arts. 21 and 22 are concerned with concurrent proceedings, and have no application when a party has properly discontinued the first set of proceedings.

The question arises, therefore, whether I should allow the plaintiffs to discontinue so as to remove this objection to the Brussels Court's jurisdiction"

15. Neither Morison J's decision nor his reasoning provide any support for Mr Irvin's argument that the question whether the court must decline jurisdiction under article 27 is determined entirely by reference to the position when the proceedings before it are instituted. On the contrary, the reasoning is inconsistent with that proposition. The citation of the decision of Morison J by Rees and Briggs confirms, I think, that in the sentence upon which Mr Irvin relies the authors did not have in mind this question.
16. I conclude that Mr Irvin's argument is not supported by authority and I reject it. I consider that article 27 applies where there are concurrent proceedings at the time that the court which was not first seised makes its determination.
17. I should add that Mr Irvin advanced a secondary argument that, even if article 27 no longer applies when the proceedings before the court first seised come to an end because they are discontinued, the position is different if they come to judgment. I see nothing in the Brussels Regulation or in the authorities that indicates this distinction, and see no reason to draw it.
18. It follows that, because judgment has been given in the Greek proceedings, I reject the application made by AGT Co in the second action that this court should decline jurisdiction under article 27.