England and Wales High Court (Commercial Court) Decisions

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

		Royal Courts of Justice 7 Rolls Building, Fetter Lane London, EC4A 1NL
		11/04/2014

The Hon. Mr Justice Popplewell:

Introduction

1. This is an application by the Defendant ("MMGR") for a declaration that the court does not have jurisdiction over it in respect of the subject matter of the claim and for an order setting aside service of the Claim Form. It raises a question of the scope and application of Article 5(3) of the Judgments Regulation (Council Regulation (EC) No. 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters).
2. The Claimant ("AMT") is a company incorporated under the laws of England and Wales. It provides financial services in the United Kingdom and has at all material times been regulated by the appropriate regulatory authority under the Financial Services Act 1986. This case is concerned with its derivatives business in which it acted as a broker on an execution only basis for the buying and selling of derivative investments on behalf of clients.
3. MMGR is a company incorporated under the laws of Germany and carries on business as a firm of lawyers in Germany, regulated by the Munich Bar Association.

The Claim

4. The claim arises out of AMT being sued in Germany by numerous former clients, at MMGR's instigation, between 2004 and 2013, asserting causes of action under German tort law. Such claims are said by AMT to have been brought in breach of the terms of the agreements between AMT and its former clients which provided for English law to govern such disputes and for the English Courts to have exclusive jurisdiction over them. In these proceedings AMT claims that MMGR wrongfully induced 70 of these former clients to breach their contracts by persuading them to bring such claims in Germany and acting for them in those proceedings, resulting in financial losses in excess of £2 million, including the cost of defending and settling such claims. AMT also seeks an injunction to restrain MMGR from inducing clients or former clients to bring further claims in Germany asserting causes of action under German law in breach of their applicable client agreements.
5. AMT was introduced to each of the clients by one of several independent brokers, who in each case was based and regulated in Germany. AMT contracted directly with the clients and charged the clients commission per transaction in respect of the execution only services it provided. AMT also paid commissions to the German introducing brokers.
6. The claims brought by the former clients of AMT in Germany were commenced in the local courts of either Duisburg or Düsseldorf. Of the 70 claimants, 12 were resident in Austria, Belgium or Switzerland. The remaining claimants were resident in Germany, but all in other parts of Germany than that falling within the domestic jurisdiction of the local courts of Duisburg or Düsseldorf. AMT alleges that the claims were deliberately brought in the local courts in Duisburg and Düsseldorf because those jurisdictions were known to be sympathetic to investors who had suffered investment losses.
7. The claims followed a standard model which was marketed by MMGR as a basis on which claims could be successfully pursued against solvent execution only brokers in Germany, including AMT amongst others, without having to seek recourse against the local introductory brokers who were responsible for the investment advice. The primary complaint was addressed to the conduct of the relevant independent broker in advising the client to make the investments or failing to advise of the risks, but AMT was alleged to have encouraged this conduct by "kickbacks" to the independent brokers from the fees it was earning on the transactions so as to owe a duty directly to the client in tort to prevent any transactions being undertaken contrary to the client's interests, and a duty to brief the client about what was characterised as "fee churning". The claims against AMT were in essence based on an accessory liability ancillary to that of the introducing broker. The introducing brokers were not, however, made defendants (it was said that some or all had become insolvent) so that the claims were advanced against AMT alone.
8. The agreements containing the contractual terms between the clients and AMT were not all in precisely the same form, the terms varying over time. Each provided for English law and the exclusive jurisdiction of the English courts. The earliest relevant client agreements were on the SFA Terms (1991) which provide that:

"33.1 This Agreement and all rights and obligations arising in respect of your Account shall be governed by, performed and construed in accordance with the laws of England and … you irrevocably submit to the exclusive jurisdiction of the English courts in relation to such dispute, without prejudice to our right to seek enforcement of any arbitration award or judgment in any other jurisdiction."

9. The SFA Terms (1991) also incorporated the terms of the Netting Agreement annexed to those terms, which provides at clause 12 as follows:

"12.1 These terms shall be governed by and construed in accordance with, the laws of England and Wales.

12.2 With respect to any Proceedings each Party irrevocably (i) agrees that the courts of England shall have exclusive jurisdiction to determine any Proceedings and irrevocably submits to the jurisdiction of the English courts…"

The term "Proceedings" is defined under clause 13.1 of the Netting Agreement as

"Any suit, action, or other proceedings relating to this agreement".

10. Over time, the terms of the law and jurisdiction clauses came to be drawn more widely. It is not necessary to set out the various versions. It is sufficient for present purposes to record that subject to an argument that the jurisdiction clauses are unenforceable because the clients were consumers, which I address and reject below, it was common ground that AMT have a good arguable case that the German proceedings commenced by each of the 70 former clients constituted a breach of the exclusive English jurisdiction terms of his client agreement with AMT; and was a breach of the English law provisions, because it was framed as a claim under German tort law which was not known to English law.
11. The allegation that MMGR induced such breaches of contract is not confined to their having acted on behalf of the former clients in bringing the proceedings. MMGR is alleged to have conducted a campaign to find such former clients and persuade them to bring the claims in accordance with a standard model it had developed, and in doing so to have acted unlawfully and in breach of its professional obligations by making use of stolen client lists, and taken an improper financial interest in the funding arrangements so as to circumvent the prohibition under German law on lawyers charging performance related fees.
12. A challenge to the jurisdiction of the German courts was made by AMT in a number of the cases brought by former clients, but for the most part unsuccessfully. In one such case, for example, a claim brought by a Dr Kramp, the Duisberg Court dismissed the challenge on the grounds that the jurisdiction clause was not wide enough to cover the cause of action framed in German tort law. Some cases reached a judgment against AMT and there have been no successful appeals, although the cases in which liability was determined by the German Courts are not included within the present claim.
13. Of the 70 German claims which are the subject matter of the present proceedings, 51 have been settled and 19 remain pending. The losses claimed by AMT in these proceedings fall under four headings:

(1) The sums paid to clients by AMT in settlement. The net settlement amounts comprise the equivalent of almost £1.5 million (net after associated recovery from the German introductory brokers), and this forms much the largest element of the claim. These sums were paid in Euros by AMT's German lawyers from an account in Germany to the claimants in Germany. The funding came from AMT's bank account in London.

(2) Legal and investigatory costs incurred by AMT as a result of the claims being brought in Germany. The German legal costs paid to German lawyers together with court fees, translation costs and expert witness costs, amount to the equivalent of approximately £550,000. The legal costs were incurred in Germany, and insofar as they constituted disbursements in court fees and other expenses, were paid by AMT's German lawyers in Germany. Again the funding came from AMT's bank account in London, although it is unclear the extent to which the funding occurred before the expenses were incurred or discharged or the fees incurred. There is also a claim for legal costs paid to UK solicitors and counsel, and UK expert witness costs, amounting to £85,000, which were presumably paid in England. There is additionally a claim for sums paid to corporate investigators of some £66,000.

(3) There is an unquantified claim that as a result of the German claims AMT has lost significant management time in having to respond to them.

(4) There is an unquantified claim that by reason of the German claims, AMT has ceased to undertake business with clients introduced or to be introduced by German introductory brokers and has thereby lost profit.

The Article 5(3) issue

14. Article 2 of the Judgments Regulation provides:

"Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State."

15. It is common ground that MMGR is domiciled in Germany and that these proceedings can only be brought here if AMT can bring itself within Article 5(3).
16. Article 5 provides:

"A person domiciled in a Member State may, in another Member State, be sued:

…

(3) In matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur."

17. It is well established that the words of Article 5(3) are to be given an autonomous meaning and are not to be interpreted by reference to any particular national law. It is also well established that in Article 5(3) "the place where the harmful event occurred" must be understood as being intended to cover both the place where the damage occurred and the place where the event giving rise to it occurred; the defendant may be sued at the option of the claimant either (i) in the courts of the place where the damage occurred or (ii) in the courts of the place where the harmful event giving rise to the damage occurred: Handelskwekerij GJ Bier NV v. SA Mines de Potasse d'Alsace (Case C-21/76) [1978] QB 708 at [24]-[25].
18. AMT relies on the first of these alternatives, and says that the place where the damage occurred was England for one or both of two reasons:

(1) The relevant damage occurred at the place where it was deprived of the contractual benefit to which it was entitled as a result of MMGR's wrongful inducement. That was in England because the wrongful conduct by MMGR has denied AMT the contractual benefit for which it contracted with its former clients, namely the determination of disputes in England, in accordance with English law. The obligation whose breach has been induced was the obligation of each former client to sue AMT, if at all, in England under English law.

(2) The immediate financial consequences of MMGR's wrongdoing were felt by AMT in England because that was where it had to provide funds to finance the costs of the proceedings and the settlement of the claims, and where it has suffered the loss of management time and loss of profit in its business.

19. In order to address these arguments it is necessary to consider the European and English jurisprudence on Article 5(3) in a little detail.

The jurisprudence on Article 5(3)

20. In Bier, the Court was concerned with a claim for damage to property caused in the Netherlands by the wrongful act of pollution in France. The rationale for interpreting Article 5(3) as covering either the place where the harmful event occurred or the place where the damage occurred was explained as follows:

"15. As regards this, it is well to point out that the place of the event giving rise to the damage no less than the place where the damage occurred can, depending on the case, constitute a significant connecting factor from the point of view of jurisdiction.

16. Liability in tort, delict or quasi-delict can only arise provided that a causal connection can be established between the damage and the event in which that damage originates.

17. Taking into account the close connection between the component parts of every sort of liability, it does not appear appropriate to opt for one of the two connecting factors mentioned to the exclusion of the other, since each of them can, depending on the circumstances, be particularly helpful from the point of view of the evidence and of the conduct of the proceedings.

18. To exclude one option appears all the more undesirable in that, by its comprehensive form of words, article 5 (3) of the Convention covers a wide diversity of kinds of liability.

19. Thus the meaning of the expression "place where the harmful event occurred" in article 5 (3) must be established in such a way as to acknowledge that the plaintiff has an option to commence proceedings either at the place where the damage occurred or the place of the event giving rise to it."

21. In Kalfelis v Bankhaus Schroder (Case C-189/87) [1988] ECR I-5565 one of the questions referred to the Court of Justice was whether Article 5(3) conferred jurisdiction over non-tortious claims where it was engaged for tortious claims. The Court answered the question in the negative, saying at paragraph 19:

"19. With respect to the second part of the question, it must be observed, as already indicated above, that 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. It must therefore be recognized that a court which has jurisdiction under Article 5 (3) over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based."

22. In Dumez France v Hessische Landesbank (Helaba) (Case C-220/88) [1990] ILPr 299, the European Court was concerned with a case of pure economic loss. French companies sued a German bank in quasi-delict alleging that it had wrongly withdrawn financing support from a construction project in Germany. The interest in the construction project was not that of the French companies themselves but of two German subsidiaries. The claim by the French companies was therefore for indirect loss. This was treated as falling outside Article 5(3). The Court said:

"[16] On this point the Convention, in laying down the system for conferring jurisdiction in Title II, sets out the general rule in Article 2 that the courts of the State of the defendant's domicile shall have jurisdiction. In addition the Convention shows that it is not in favour of the courts of the plaintiff's domicile having jurisdiction by stating, in Article 3(2), that national provisions to that effect shall not apply as against defendants domiciled in the territory of a contracting State.

[17] Only by way of exception to the general rule that the courts of the State of the defendant's domicile have jurisdiction does Section 2 of Title II provide for a number of special jurisdictions, which include that of Article 5(3). As the Court has already held, these special jurisdictions, which can be chosen at the plaintiff's option, are based on the existence of a particularly close connection between the dispute and courts other than those of the defendant's domicile, which justifies conferring jurisdiction on those courts on grounds of the efficient administration of justice and proper organisation of the action.

[18] To achieve this object, which is of fundamental importance in a convention which should promote the recognition and enforcement of judgments outside the State in which they are made, it is essential to avoid the multiplication of competent courts, which increases the risk of irreconcilable judgments, which is a ground for refusing recognition or enforcement pursuant to Article 27(3) of the Convention.

[19] Furthermore this object precludes any interpretation of the Convention which, apart from the cases expressly provided for, could lead to recognising the jurisdiction of the courts of the plaintiff's domicile and which would thus enable the plaintiff to determine the competent court by choosing his own domicile.

[20] It follows from what has been said that although, according to the Court's case law, the phrase 'the place where the harmful event occurred' in Article 5(3) of the Convention may refer to the place where the damage occurred, the latter should be taken to mean only the place where the causal event, giving rise to delictual or quasi-delictual liability, directly produced the harmful effects in relation to the person who is the immediate victim.

[21] In addition, the place where the original damage was manifested normally has a close connection with the other elements creating liability, which is generally not the case with regard to the domicile of the indirect victim."

23. Marinari v Lloyds Bank Plc (Case C-364/93) [1996] QB 217 was also a case of economic loss. The Italian claimant deposited a set of suspicious looking promissory notes at a branch of Lloyds Bank in Manchester. The notes were sequestrated and the claimant was arrested. Following his release he commenced proceedings in Italy, where he was domiciled, for the value of the notes and damages for his arrest, including damage to his reputation allegedly suffered in Italy. In giving judgment the ECJ, having considered Bier and Dumez said:

"14. Whilst it is thus recognised that the term "place where the harmful event occurred" within the meaning of article 5(3) of the Convention may cover both the place where the damage occurred and the place of the event giving rise to it, that term cannot, however, be construed so extensively as to encompass any place where the adverse consequences of an event that has already caused actual damage elsewhere can be felt.

15. Consequently, that term cannot be construed as including the place where, as in the present case, the victim claims to have suffered financial damage consequential on initial damage arising and suffered by him in another contracting state."

….

19. There is no basis for interpreting article 5(3) of the Convention by reference to the applicable rules on non-contractual civil liability, as proposed by the German Government. That interpretation is also incompatible with the objective of the Convention, which is to provide for a clear and certain attribution of jurisdiction: see Röslier v. Rottwinkel (Case 241/83) [1986] QB 33, 59. para. 23, and Jacob Handte et Cie. G.m.b.H. v. Traitements mécano-chimiques des surfaces S.A. (TMCS) (Case C-26/91) [1992] E.C.R. 1-3967, 3995, para. 19. The delimitation of jurisdiction would then in fact depend on uncertain factors such as the place where the victim's assets suffered subsequent damage and the applicable rules on civil liability.

20. Finally, as regards the argument as to the relevance of the location of the assets when the obligation to redress the damage arose, it must be pointed out that the proposed interpretation might confer jurisdiction on a court which had no connection at all with the subject matter of the dispute, whereas it is such a connection which justifies the special jurisdiction provided for in article 5(3) of the Convention. It would be possible that the expenses and losses of profit incurred as a result of the initial harmful event might be established elsewhere and that, therefore, as far as effective taking of evidence is concerned, that court would be entirely inappropriate."

24. The Opinion of the Advocate General in Marinari is also instructive:

"26, That case [Bier] concerned a complex situation in which the causal event and the harmful consequences occurred, from the outset, in two different contracting states. Here, by contrast, as is rightly pointed out by the United Kingdom Government, both the causal event (namely the conduct imputed to the employees of Lloyds Bank) and the initial damage, (sequestration of the promissory notes and imprisonment) occurred in the United Kingdom. Only the alleged consequential damage (financial losses) could have been suffered in Italy.

27. We are thus dealing with a particular situation in which the causal event and the direct harmful consequences are located in a single territory and that initial damage adversely affected the victim's assets in another contracting state.

28. Although the court has not been called on to settle such a question directly, the basis for an answer is undeniably to be found in its judgments cited above since we are merely faced once more with the distinction which is of essential importance for the purpose of determining jurisdiction between the place where the damage arises and the place where it is suffered.

29. The court regarded as relevant to the determination of the court of competent jurisdiction, in the first of its judgments on the issue, only the damage that had occurred. More clearly still, in Dumez [19901 ECR 1-49 it displayed its hostility, it seems to me, to the taking into consideration of later financial consequences, by referring, at p. 80, para. 21, to "the place where the initial damage manifested itself," that is to say, the place where the damage occurred.

30. Now, to confer jurisdiction on the court in the place where the financial losses were ascertained would be tantamount to disregarding the specificity of the place of occurrence as the criterion for the conferment of jurisdiction by placing it on the same footing as the place where the damage is suffered.

31. That broader approach would thus uphold the forum actoris, since a victim generally suffers harm at the place where he is domiciled. Such a result would be manifestly contrary to article 5 of the Convention, which, as the court held, is intended to meet the requirements of the proper administration of justice."

25. Kronhofer v Maier (Case C-168/02) was concerned with investment losses suffered on call options subscribed on the London Stock Exchange. The investor, who was domiciled in Austria, brought proceedings in Austria against the German domiciled directors of the German investment advisory company through which he had made the investment, alleging that they failed to warn him of the risks of the transaction. He had paid $82,500 to the German company in order for the investment to be made and received back only a part of the capital as a result of trading losses. The claimant argued that Article 5(3) was engaged by his having suffered a diminution in his assets in Austria. The ECJ said:

"The question referred

11 By its question, the national court is essentially asking whether Art. 5(3) of the Convention should be interpreted as meaning that the expression "place where the harmful event occurred" may cover the place where the claimant is domiciled and where "his assets are concentrated" by reason only of the fact that the claimant has suffered financial damage there resulting in the loss of part of his assets which arose and was incurred in another Contracting State.

12 It should be noted at the outset that the system of common rules of conferment of jurisdiction laid down in Title II of the Convention is based on the general rule, set out in the first paragraph of Art.2, that persons domiciled in a Contracting State are to be sued in the courts of that State, irrespective of the nationality of the parties.

13 It is only by way of derogation from that fundamental principle attributing jurisdiction to the courts of the defendant's domicile that s.2 of Title II of the Convention makes provision for certain special jurisdictional rules, such as that laid down in Art.5(3) of the Convention.

14 Those special jurisdictional rules must be restrictively interpreted and cannot give rise to an interpretation going beyond the cases expressly envisaged by the Convention.

15 According to settled case law, the rule laid down in Art. 5(3) of the Convention is based on the existence of a particularly close connecting factor between a dispute and courts other than those for the place where the defendant is domiciled, which justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of proceedings.

16 The Court has also held that where the place in which the event which may give rise to liability in tort, delict or quasi-delict occurs and the place where that event results in damage are not identical, the expression "place where the harmful event occurred" in Art.5(3) of the Convention must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the claimant, in the courts for either of those places.

17 It is clear from the order for reference that the Oberster Gerichtshof takes the view that, in the case in the main proceedings, the place where the damage occurred and the place of the event giving rise to it were both in Germany. The distinguishing feature of this case lies in the fact that the financial damage allegedly suffered by the claimant in another Contracting State is said to have affected the whole of his assets simultaneously.

18 As the Advocate General rightly noted at point 46 of his Opinion, there is nothing in such a situation to justify conferring jurisdiction to the courts of a Contracting State other than that on whose territory the event which resulted in the damage occurred and the damage was sustained, that is to say all of the elements which give rise to liability. To confer jurisdiction in that way would not meet any objective need as regards evidence or the conduct of the proceedings.

19 As the Court has held (in Marinari), the term "place where the harmful event occurred" cannot be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually arising elsewhere.

20 In a situation such as that in the main proceedings, such an interpretation would mean that the determination of the court having jurisdiction would depend on matters that were uncertain, such as the place where the victim's "assets are concentrated" and would thus run counter to the strengthening of the legal protection of persons established in the Community which, by enabling the claimant to identify easily the court in which he may sue and the defendant reasonably to foresee in which court he may be sued, is one of the objectives of the Convention. Furthermore, it would be liable in most cases to give jurisdiction to the courts of the place in which the claimant was domiciled. As the Court found at para.[14] of this judgment, the Convention does not favour that solution except in cases where it expressly so provides.

21 In view of the foregoing considerations, the answer to the question referred must be that Art.5(3) of the Convention must be interpreted as meaning that the expression "place where the harmful event occurred" does not refer to the place where the claimant is domiciled or where "his assets are concentrated" by reason only of the fact that he has suffered financial damage there resulting from the loss of part of his assets which arose and was incurred in another Contracting State."

26. It does not appear that any argument was raised or addressed in that case that the funding of the investment in the first place from Austria, in reliance on the allegedly delictual omission to warn of the risks, might engage Article 5(3) as the place where the damage occurred. The explanation may well be, as the editors of Briggs & Rees on Civil Jurisdictions and Judgments 5^th edn. suggest at 2.186, that no investment loss could occur before the German investment advisors invested the funds, before which the Austrian claimant was entitled to call for their return.
27. In Domicrest Ltd v Swiss Bank Corp [1999] QB 548 the English claimant agreed, contrary to its usual practice, to release goods in Switzerland and Italy on receipt of a copy payment order from the bank. It sued the bank in England on the footing that the bank had misrepresented the effect of the payment order and its client's credit. Rix J, as he then was, held that the damage suffered by the plaintiff had occurred in Switzerland and Italy where the goods were released. He observed at 568D:

'It is by reference to the loss of those goods that the damages are in my view primarily pleaded ... even if there is also an alternative plea ... in terms of the unpaid price (a plea which in any event may have been intended for the claim in breach of contract). In truth, even though Domicrest would have suffered no loss if Swiss Bank Corporation, or Interglobal had paid the price of those goods, nevertheless it has to be remembered that the remedy in negligent mis-statement is not, as it is in contract, to be put in the same position as if the contract had been performed but depends on the answer to the question: what would have happened if the negligent mis-statement had not been made? In that case, the goods would not have been released before payment and this lost to Domicrest. The essence of the complaint is in any event that the goods were released prior to payment on the strength of Swiss Bank Corporation's representations and contrary to Domicrest's trading policy. It seems to me that this is consistent with the decision in Marinari v Lloyds Bank plc [1995] ECR 1-2719; [1996] QB 217.'"

28. Reunion Europeenne SA v Spliethoff's Bevrachtingskantoor BV (Case C-51/97) [1999] CLC 282 was a case of physical damage to goods, but is of some assistance in the current context. Pears were carried from Melbourne to Rotterdam by sea in refrigerated containers and then by road to France. When the consignment arrived at Rungis the fruit had prematurely ripened. Subrogated insurers brought an action in France against the issuer of the bill of lading, the actual carrier and the Master. In his Opinion the Advocate General said:

"48. In my opinion, the abovementioned case-law shows that, in order to determine the "place where the damage occurred", it is essential to define the relevant "damage". "Damage" means any harm to the property or person of the plaintiff, where it relates to the event giving rise to the damage, that is to say to the illegal behaviour attributed to the defendant by a direct and causal link, to the exclusion of indirect, more remote damage or damage which is suffered by an indirect victim. Consequently, "the place where the damage occurred" is that where the event giving rise to the damage caused injury, within the above meaning, to the plaintiff.

49. The above case-law provides sufficient elements to determine the "place where the damage occurred" in the case where the damage occurs in the course of international carriage of good, as in the present case.

50. First of all, it must be observed that the basic obligation imposed on every carrier is to load the goods at a given point and to deliver them intact at another point. As a result, carriers are, in principle, liable for any damage caused to the goods between the departure and the arrival points of the voyage that is to say for the entire duration of the voyage."

29. In its judgment the Court said:

"33. As the Advocate General emphasises in points 54-56 of his Opinion, in an international transport operation of the kind at issue in the main proceedings the place where the event giving rise to the damage occurred may be difficult or indeed impossible to determine. In such circumstances, it will be for the consignee of the damaged goods to bring the actual maritime carrier before the courts for the place where the damage occurred. It must be pointed out in that regard that, in an international transport operation of the kind at issue in the main proceedings, the place where the damage occurred cannot be either the place of final delivery, which, as the Commission rightly pointed out, can be changed in mid-voyage, or the place where the damage was ascertained.

34. To allow the consignee to bring the actual maritime carrier before the courts for the place of final delivery or before those for the place where the damage was ascertained would in most cases mean attributing jurisdiction to the courts for the place of the plaintiff's domicile, whereas the authors of the Convention demonstrated their opposition to such attribution of jurisdiction otherwise than in the cases for which it expressly provides (see, to that effect, Dumez France and Tracoba, cited above, paragraphs 16 and 19, and Case C-89/91 Shearson Lehman Hutton v TVB (Case C-89/91) [1993] ECR 1-139, paragraph 17). Furthermore, such an interpretation of the Convention would make the determination of the competent court depend on uncertain factors, which would be incompatible with the objective of the Convention which is to provide for a clear and certain attribution of jurisdiction: see, to that effect. Marinari, paragraph 19, and Handte (Case C-26/9l), paragraph 19, both cited above).

35. In those circumstances, the place where the damage arose in the case of an international transport operation of the kind at issue in the main proceedings can only be the place where the actual maritime carrier was to deliver the goods.

36. That place meets the requirements of foreseeability and certainty imposed by the Convention and displays a particularly close connecting factor with the dispute in the main proceedings, so that the attribution of jurisdiction to the courts for that place is justified by reasons relating to the sound administration of justice and the efficacious conduct of proceedings."

30. Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Asssurans Forening (The Swedish Club) [2009] 1 CLC is a decision of Christopher Clarke J, as he then was, upon which AMT places particular reliance. Dolphin was an English company which carried on business as a cargo recovery agent and claims correspondent. It was engaged by Turkish cargo underwriters to pursue a claim against shipowners whose vessel was entered with a Swedish Club. It was engaged on terms (as Christopher Clarke J found established to the relevant merits threshold) which entitled it to receive the full amount of any recoveries, so as to be able to deduct its commission before passing on the balance to its principals, and to receive them into its English bank account. The Club provided a Letter of Undertaking addressed to cargo underwriters securing the shipowners' liability. It had been negotiated by Dolphin and provided for payment of any settlement monies to Dolphin or solicitors appointed by Dolphin. The Club negotiated a settlement directly with cargo underwriters and paid the settlement monies directly to cargo underwriters. Dolphin brought a claim against the Club for (i) breach of contract, the contract being the LOU; (ii) inducing a breach of contract by cargo underwriters, the contract being the terms of engagement between Dolphin and the cargo underwriters; and (iii) conspiracy to injure by unlawful means, the unlawful means being the breach of contract between cargo underwriters and Dolphin. Christopher Clarke J gave summary judgment against Dolphin on its contract claim on the grounds that Dolphin was not party to the LOU. For the tort claims, the issue was whether Dolphin had suffered the damage in England so as to bring itself within Article 5(3). Christopher Clarke J held that it had. Having set out a number of the principles from the European jurisprudence I have referred to above, he gave his reasons, which I respectfully find compelling:

"56. Accordingly there is, as it seems to me, a well arguable case that, under the terms and conditions, the underwriters were bound to procure that the sums recovered directly from the Club were paid in the first instance to Dolphin. I do not regard Dolphin as precluded from relying on clause 11.8 by reason of the contents of the Claim Form. That pleads, in para. 4, that the underwriters were obliged to ensure that any payment in settlement of any cargo claim was paid direct to the Claimants.

57. In those circumstances, the arguments on behalf of Dolphin are, in my judgment, to be preferred. Dolphin's essential complaint is that it suffered harm because it did not receive the $8.5 million into its bank account which it should have done because, despite knowledge that this would involve a breach of the underwriters' contract with Dolphin, the Club paid it to their accounts in Turkey. I recognise that the matter must be looked at through European spectacles. But there is nothing insular in recognising that the contract (which is governed and must be interpreted by English law) calls in terms for 'Recoveries and quasi-Recoveries (i.e. sums which would otherwise comprise 'Recoveries') to be received direct by Dolphin and that the complaint in tort is that the Club wrongfully brought about a breach of that obligation.

58. When, in those circumstances, I ask myself 'where the damage to the direct victim occurred' (Dumez: Advocate General para. 52) or 'where the event giving rise to the damage, and entailing tortious liability, directly produced its harmful effects upon the person who is the immediate victim of that event' (Dumez (ECJ) para. 20) or 'where the event giving rise to the damage caused injury' (Reunion), the answer appears to me that it is in this country, where Dolphin did not receive the money which, if the contract had been performed, it should have received.

59. Further, if I ask myself what would have been the position if the tort complained of had not taken place, the answer is that payment would have been made to Dolphin in England: and the essence of Dolphin's complaint is that that did not occur. Mr Thomas submitted that an inquiry as to what would have happened if the tort was not committed was no guide to the question - where did the damage occur? If there was no tort, there would have been no damage. In some cases, e.g. in cases of damage to goods or persons, the question may have no great utility. But in others where the claimant has failed to obtain some property or money which he would otherwise have received the answer to the question may be a guide to identifying where the harm in the particular case occurred.

60. I do not ignore the danger of conflating the place where the damage occurred with the place where the loss was suffered. There is, however, a difference between a case in which the claimant complains that he has lost his money or goods (as in Domicrest or The Seaward Quest) and a case in which the claimant complains that he has not received a sum which he should have received. In the former case the harm may be regarded as occurring in the place where the goods were lost (Domicrest) or the place from or to which the moneys were paid (The Seaward Quest), although the loss may be said to have been suffered in the claimant's domicile. In the latter case the harm lies in the non receipt of the money at the place where it ought to have been received, and the damage to him is likely to have occurred in the place where he should have received it. That place may well be the place of his domicile and, therefore, also the place where he has suffered loss. An analogy may be drawn with the non delivery of cargo at the destination port: see Reunion Europeenne.

61. There is, in my view, nothing inconsistent with the scheme of the Regulation in that result. In those circumstances the place where the benefit should have been received provides a sufficiently 'close connecting factor with the courts of a Member State other than that in which the defendant is domiciled which satisfies the need for certainty and justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice', particularly where, as here, the contract between Dolphin and the Club was subject to English law and arbitration, and where Dolphin was a provider of services in England (as well as elsewhere).

62. Accordingly, Dolphin's tortious claims fall, in my judgment, within Article 5(3) of the Regulation. Whilst the argument centred round the claim for inducing breach of contract, I did not understand it to be suggested that, if the inducement claim fell within that Article the claim in conspiracy might not.

63. I would have reached a similar conclusion if I had held that there was no obligation under the terms to procure that the $8.5 million was paid to Dolphin in England. On that footing the relevant breaches would be the breaches of clause 6.5. constituted by the underwriters negotiating and settling with the Club directly in the discussions that led to the agreement of 14 May and the further meeting on or around 21 May at which the underwriters must have confirmed their instruction for payment direct to their own bank accounts and called on the Club to remit the settlement monies accordingly. In addition the underwriters will have been in breach of the notification provisions of clause 6.1. by reason of the underwriters' failure to inform Dolphin about the progress of the settlement negotiations, although the extent of that breach is in issue.

64. On this analysis the relevant breaches occurred, so far as clause 6.1. (failure to inform) is concerned, in England and, so far as clause 5 (direct negotiation) is concerned, in Greece or Turkey. The harmful events therefore occurred in one or other of those countries. But the relevant question remains: where did Dolphin suffer the harmful consequences of those events? The harmful consequence to Dolphin of these breaches was not that the agreement was made but that under it Dolphin was not paid direct. The effect was to deprive Dolphin of the rights that would have accrued to it under clause 6.8. if Dolphin had made the Recovery. If the underwriters had complied with their obligations the claim would have been settled with Dolphin's involvement and on terms that the monies would be paid into Dolphin's bank account. In the event Dolphin was deprived of the right to have payment made to it in England under what would probably have been an agreement which like the 14 May settlement agreement provided for English law and jurisdiction."

31. Melzer v MF Global UK Limited (C-228/11) [2013] QB 112, was a case, like Kronhofer, of investment losses. It had common factual features with the present case because it involved the activity of MMGR in assisting German clients to sue an English broker in a similar position to AMT and on similar grounds. It was concerned, however, with jurisdiction over the claim by the client against the English broker, not a claim against MMGR. The claimant investor (Mr Melzer), who was domiciled in Berlin, was introduced by an introductory broker (WWH), whose registered office was in Düsseldorf, to become a client with the defendant (MF Global), a brokerage house located in London, for the purposes of trading in stock market futures. Mr Melzer paid some €172,000 into MF Global's London account from his funds in Berlin, and as a result of trading losses received back only about €1,000. Mr Melzer sued MF Global in Düsseldorf. The claim was in tort for damages on the grounds that MF Global had deliberately assisted WWH to cause him unfair harm. It was framed in accordance with MMGR's model which was also used for the former clients of MMGR to sue AMT, giving rise to the instant claim. WWH, the German introductory broker, was not a party to the proceedings. The decision turned on the application of the second limb of Bier, namely where the harmful event occurred, and was not directly concerned with where the damage occurred, as the Court observed at para [29]. The ECJ held that Article 5(3) was not engaged because the harmful event had not occurred in Germany; the harmful event was the conduct of the broker in London, and could not be treated as being in Germany merely because what was being alleged against the English broker was a tortious form of accessory liability ancillary to that of the introducing broker in Düsseldorf.
32. The Landsgericht Düsseldorf had held that the damage had been suffered in Berlin where Mr Melzer was resident, because it was from there that the payments were made into his account in London and the loss to his assets was sustained by his bank account in Germany. The reason why the question where the damage occurred did not arise for decision before the European Court was that whether it was in England where the trading losses occurred, or in Berlin where the client was domiciled, neither was the place in which proceedings were commenced, which was Düsseldorf. However in his Opinion, the Advocate General disagreed with the Landgericht on this issue. At paragraph 32 he said:

"I agree with the commission that the financial damage for which Mr Melzer claims compensation, namely the loss of a portion of the capital he invested, appears to me to have occurred in London and not in Berlin. The contested funds were put in an account with the brokerage house in London, and that is where they were lost, since performance of the option contract, or expiry of the option period, resulted in the sums repaid to that account being less than the sums invested."

33. I do not read paragraph [15] of the Court's judgment as expressing a contrary view. It merely records the finding of the Landsgericht.
34. From these authorities I derive the following relevant principles:

(1) Article 2 contains the general and fundamental principle of the Judgment Regulation which is that subject to certain exceptions, civil actions are to be brought against individuals or companies in the courts of the place where they are domiciled; the "special jurisdiction" found in Article 5(3) is a derogation from the fundamental principle set out in Article 2, and as such must be restrictively interpreted: Kalfelis at [19], Dumez at [17], and Kronhofer at [12]-[14].

(2) This special jurisdiction is only justified because of the existence of a particularly close connecting factor between a particular dispute and the courts of the member state other than that in which the defendant is domiciled, which satisfies the need for certainty, and justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice: Dumez at [17]; Kronhofer at [15]; Reunion Europeenne at [35]-[36].

(3) The justification for treating the place where the damage occurred as one of the two grounds for founding jurisdiction in cases of tort, delict and quasi-delict is that damage having a causal connection with the harmful event is a necessary component of liability and so provides the necessary close connecting factor to the dispute (Bier at [16]-[17]).

(4) In cases of economic loss, the search is for the place where the harmful event directly had its effect on the immediate victim and where the original damage is manifested: Dumez at [20]-[21]. The damage occurs where the direct harmful consequences are suffered, not at the place where indirect or more remote damage occurs or consequential financial damage is felt which has arisen out of an event which has already caused initial and actual damage elsewhere: Marinari at [14]-[15] (and A-G's Opinion at [26]-[27]); Kronhofer at [19],[21]; Reunion Europeenne A-G's Opinion at [48].

(5) These formulations give effect to two important aspects of the search:

(a) The task is so far as possible to identify a single place for the occurrence of damage. The search is for the place where the damage occurred. This reflects the fundamental objective of certainty.

(b) The search will be for the element of damage which is closest in causal proximity to the harmful event. This is because it is this causal connection which justifies attribution of jurisdiction to the courts of the place where damage occurs (see Bier at [16]-[17] and Dumez at [20]).

(6) There is a difference between a case in which the claimant complains that he has lost his money or goods (as in Marinari or Domicrest) and a case in which the claimant complains that he has not received money or goods which he should have received. In the former case the harm may be regarded as occurring in the place where the money or goods were lost, although the loss may be said to have been consequentially felt in the claimant's domicile. In the latter case the harm lies in the non-receipt of the money or goods at the place where they ought to have been received, and the damage to him is likely to have occurred in the place where he should have received them: Dolphin at [60] and Reunion Europeenne at [35]-[36].

(7) It may assist in identifying the place where damage occurred to ask what would have happened if the tort or delict had not been committed: Domicrest at 568E-F, Dolphin at [59]. That is not, however, always an answer to where the damage has occurred. That question engages the issues of which damage is direct, immediate and initial and which merely indirect or consequential.

(8) The fundamental objective of the Judgments Regulation militates against an interpretation of the Regulation, otherwise than in the cases expressly provided for, which might lead to recognition of the jurisdiction of the courts of the claimant's domicile and which would enable the claimant to determine the competent court by his choice of domicile: Dumez at [16]-[19]; the Opinion of the Advocate General in Marinari at [30]-[31]; Kronhofer at [20]. Nevertheless if a proper application of Article 5(3) entitles the claimant to commence proceedings in the courts of his domicile, he is not to be precluded from doing so because the court in question is a court of that domicile: see Custom Made Commercial Limited v Stawa Metallbau GmbH (Case C-288/92) [1994] ECR I-2913.

(9) It will rarely, if ever, be sufficient for the claimant to establish that the financial loss has been suffered at the place of his domicile merely to show that that is where his accounts are held and where the loss is ultimately felt: Kronhofer. That would be likely to confer jurisdiction on a court which has no connection at all with the subject matter of the dispute, whereas it is such connection which justifies the special jurisdiction provided for in Article 5(3), and would be to found jurisdiction on uncertain factors such as where the claimant's assets are located: Marinari at [19]-[20]. It would also be to accord jurisdiction in almost every case to the place of domicile of a claimant, thereby offending the fundamental objective militating against enabling the claimant to determine the competent court by his choice of domicile.

Application

(1) Deprivation of contractual benefit in England

35. For the reasons explained in Dolphin, where the claimant complains that he has not received money or goods which he should have received, the harm lies in the non receipt of the money or goods at the place where they ought to have been received, and the damage to him is likely to have occurred in the place where he should have received them. What is true of a contractual entitlement to a sum of money or goods is, in principle, true of any contractual entitlement which is a benefit which the contract is intended to confer. The benefit may comprise a contractual right, or the fulfilment of a contractual obligation, or both. In cases where the tort or delict involves the claimant being deprived of a contractual benefit, the damage is likely to have occurred in the place at which the claimant would have received that benefit. I see no reason why this principle should not apply to the contractual benefit conferred by an exclusive jurisdiction clause, where the harmful event is alleged to be a breach of the rights and obligations conferred by such a clause, just as much as to any other contractual benefit. The question is whether the contractual benefit in this case fell to be enjoyed in England. Was the relevant benefit a right of AMT to be sued in England, or to put the correlative obligation, was the relevant obligation breached by the former clients an obligation to sue in England?
36. An exclusive jurisdiction clause has two aspects. It involves a positive obligation to submit disputes falling within its scope to the courts of the chosen jurisdiction. It contains a negative obligation not to bring claims falling within its scope before any other court or tribunal elsewhere. As with an arbitration clause, these two aspects are not quite the opposite sides of the same coin; the negative obligation may be broken without reference to the positive obligation: see AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889 per Lord Mance at [21].
37. Mr Janusz argued that the Dolphin case was distinguishable from the present case because it was concerned with a positive obligation which had to be performed in England, whereas this case is concerned with a negative obligation which fell to be performed outside England. In Dolphin, the cargo underwriters were obliged to see that the payment of the recoveries was made to Dolphin in England. By contrast, in the current case, the clients were not under a positive obligation to sue in England. AMT would not have been able to complain of a breach if it had not been sued in England, so long as it was not sued elsewhere. If no proceedings had been brought anywhere, there would have been no breach. It was the negative aspect of the governing law and jurisdiction clauses which was breached in this case by bringing proceedings elsewhere than in England asserting German law causes of action. That breach took place in Germany. There was no breach of an obligation to do something in England; there was a breach of an obligation not to do something in Germany.
38. I am not persuaded by this argument. The relevant obligation was the positive obligation to bring proceedings in England, not merely the negative obligation not to bring proceedings in Germany. The jurisdiction clause required the former clients to sue AMT, if at all, in England. It is true that this obligation was contingent, in the sense that there was only an obligation to bring proceedings in England if the client determined to bring proceedings somewhere. But once such a contingency had arisen, as ex hypothesi it had because proceedings were in fact commenced in Germany, the obligation was to seek determination of such claims by the English Court. Once the decision was made to bring proceedings somewhere, the obligation was to bring them in England. That was the relevant obligation whose breach was induced by MMGT. Dolphin can not be distinguished on the basis Mr Janusz suggests.
39. It does not matter that in all probability in those circumstances no claims would have been commenced in England at all, because they would have been regarded as bound to fail. That merely reinforces the conclusion that the damage was suffered in England. If one asks the question what would have happened if the tort had not been committed, the answer is that if any proceedings were brought, they would have had to have been brought in England where they would have been struck out.
40. This conclusion is reinforced by a closer examination of the nature of the benefit conferred by an exclusive jurisdiction clause.
41. The benefit conferred on a party by an exclusive jurisdiction clause may include questions of cost and convenience. It may be cheaper and simpler for the party to litigate in the chosen forum by reason of its procedures, its location, or the location of evidence and witnesses. But the benefit is not simply, or often primarily, a matter of geography or cost. The benefit is often ancillary to the choice of law and the right to have disputes which fall within the scope of the clause determined in accordance with that system of law. Such disputes extend to the determination of the respective rights and obligations of the parties not only in contract, but also in tort, quasi-tort or delict if they are within the scope of the relevant clauses because they arise out of or relate to the contract or are sufficiently connected with the contractual relationship. Businessmen will generally want any dispute arising out of the relationship into which they have entered, whether based in contract or tort, to be resolved by the same tribunal (see Fiona Trust & Holding Corp v Privalov [2007] Bus LR 1719), and governing law and jurisdiction clauses are often couched in terms which are deliberately wide enough to cover non contractual claims which have a connection with the contractual relationship.
42. Whilst the governing law of a contract circumscribes the nature and extent of the substantive rights and obligations of the parties, of equal importance is the forum in which the rights and obligations are to be determined and enforced. Rights arising out of a contractual relationship are only of value to the extent that they can be protected and enforced. It is in the choice of forum that the parties seek to secure such protection. Without such protection, rights which are certain and enforceable under the chosen system of law may be rendered uncertain or unenforceable.
43. Not all jurisdiction clauses involve choosing a forum which coincides with the chosen system of law or is chosen for that reason. For example, parties sometimes agree to submit their disputes to a neutral forum, whether it be some national court or international arbitration body or tribunal, because they want to avoid the other party resorting to its home court. But where the forum chosen comprises the national courts of the system of law chosen, one of the main functions of the choice of forum is the selection of a tribunal which is familiar with the law in question, and so best placed to determine and apply it to any dispute which has arisen so as to uphold the parties' rights. A primary function of the jurisdiction clause is securing this protection.
44. In this way the benefit of an exclusive English jurisdiction clause in an English law contract goes to the heart of the substantive rights and obligations which arise out of the contractual relationship. It protects a party in respect of his substantive rights and obligations by seeking to ensure that they are adjudicated upon and upheld by the English Courts which are familiar with English law and experienced in applying it. Its function is the protection of English law rights by the English Courts in England.
45. In this case the contractual benefit to AMT of the exclusive English jurisdiction clause comprised the right to be sued, if anywhere, in England as the place where AMT was entitled to have resolved any disputes falling within the scope of the clause. The contractual benefit comprised the right to recourse to the English Courts in order to protect and enforce AMT's substantive rights. The harm AMT has suffered in this case is the loss of the protection and enforcement of those rights in the English Courts. The deprivation of that benefit is harm suffered in England, where the benefit ought to have been enjoyed, just as much as would be deprivation of a money sum which fell to be paid in England, or goods which fell to be delivered in England. AMT has suffered damage here because it has lost the protection of its substantive rights in the English Courts in England.
46. For these reasons, in my judgment AMT's claim against MMGR falls within Article 5(3). The place where the damage occurred as a result of MMGR's allegedly tortious conduct was England, where such conduct deprived AMT of the contractual benefit of the exclusive jurisdiction clause which ought to have been enjoyed in England.
47. That is sufficient to dispose of the issue of the application of Article 5(3). I should for completeness state my conclusions on the alternative ground upon which Mr De La Mare QC relied, which was that the payments for the settlements and costs came from England, and that England is where management time was wasted and future business lost.

(2) Payments from England

48. When a given claim was commenced by a former client against AMT in Germany, AMT was immediately exposed to potential liability for the costs and expenses which it incurred by reason of such commencement. It would have to defend or settle the claim, and bear the legal costs involved in doing so. As the case progressed in Germany, the need to incur particular expenses and incur particular costs arose. They fell to be discharged in Germany. For those cases which were settled, the liability to pay arose out of the settlement agreement, which was reached in Germany and provided for payment in Germany in return for the cessation of proceedings in Germany.
49. Applying the principles in the jurisprudence set out above, if the damage is to be treated as the expense caused by the litigation, it occurred in Germany. The direct harm which AMT suffered was the activity it was required to undertake in Germany to handle the claims. It involved the engagement of German lawyers and the payment of court fees and other disbursements. This activity took place and incurred a cost in Germany. Payment of the settlement sums arose from the compromising of the claims which gave rise to the liability to make those payments. The compromises were concluded in Germany, and the liability discharged in Germany. All the expense caused by the litigation was incurred in Germany, and was made necessary because of the commencement of the proceedings there and the activity which AMT was forced to undertake there as a result. Germany was where the harm originally manifested itself.
50. The way in which AMT ultimately bore such expenditure by funding it is not the initial damage itself, but merely the remoter financial consequence of the activity in Germany. It is not therefore appropriate to look to the place where such payments occurred to determine where damage occurred for the purposes of Article 5(3). It is clear from the jurisprudence considered above, that it is not sufficient for a claimant to bring himself within Article 5(3) merely to establish that he ultimately feels the loss at his place of domicile, nor merely that that is the place from which he has funded the expenditure involved. This would be to accord in almost every case jurisdiction to the place of domicile of a claimant, which is contrary to the scheme of the Judgments Regulation and in particular the primacy of Article 2 conferring jurisdiction on the place of the claimant's domicile.
51. This is well illustrated by the payment of the settlement sums, which comprise the major element of AMT's quantified claim. If AMT had put its German lawyers in funds for a settlement, but decided that the payment should not be made at that time, it could have called for the return of its funds. No loss was incurred at the time of funding, just as in Kronhofer the Austrian investor could not say that the funding of investments was damage suffered because he could have called for the return of the money before the investment was made and the loss occurred. In fact, so far as concerns the settlement sums paid by AMT, the funding may have taken place after the loss occurred: the loss took place when AMT's compromise agreement with a client gave rise to a liability to pay. But even were one to treat the payment of the settlement amount as the loss, the loss would still have taken place in Germany upon payment by AMT's German lawyers as AMT's agent. Until that payment, any funding by AMT of its own lawyers to enable them to make the payment was not irrevocable and did not represent a loss.
52. The unquantified heads of loss for wasted management time and loss of business are not the primary heads of claim and do not constitute the main part of the damage said to have occurred as a result of the harmful event. They are not the damage. They are not initial, direct or immediate damage, but to the extent quantifiable and recoverable, merely the remoter financial consequences of the harm suffered in Germany.

Merits threshold

53. Mr Janusz on behalf of MMGR advanced an additional ground of challenge to jurisdiction. He submitted that AMT had no real prospect of succeeding on an essential element of its claim, namely that the exclusive jurisdiction clause in each of the relevant contracts between AMT and the former clients was valid and enforceable against the client. The clause was said to be invalid or unenforceable because each client was a consumer and such was the effect of either or both of (i) The Unfair Terms in Consumer Contracts Regulations 1999 ("the 1999 Regulations") and (ii) Articles 16, 17 and 23(5) of the Judgments Regulation.
54. This was advanced very much as a subsidiary argument to the Article 5(3) point. Indeed it did not appear in the application notice, was foreshadowed for the first time only in evidence served in reply, and was articulated clearly for the first time only in the skeleton argument for the hearing.
55. On a jurisdiction challenge such as the present, it is open to a defendant to seek to persuade the court that it should refuse to accept jurisdiction by showing that the claim is doomed to failure: see Ryanair v Esso Italia Srl [2013] EWCA Civ 1450 per Rix LJ at [20]. The merits threshold is whether there is a serious issue to be tried, which is the same as whether the claim has a real (as distinct from fanciful) prospect of success: Altimo Holdings & Investment Limited v Kyrgyz Mobil Tel Limited [2012] 1 WLR 1804 at [71]. The Court will only decline jurisdiction on this basis, however, where the claim's lack of merits can be demonstrated without a lengthy or complicated investigation of the facts or the law. It is inappropriate to conduct anything approaching a mini-trial, which would be disproportionate and inappropriate for the reasons articulated recently by Lord Neuberger in VTB Capital Plc v Nutriek International Corp [2013] 2 AC 337 at [82]-[83]; or to engage in difficult questions of law which are best determined only after the necessary facts have been established.
56. MMGR's argument takes as its point of departure that each of the 70 former clients of AMT was a consumer in entering into its agreement with AMT, and that such agreement constituted a consumer contract. For the purposes of the 1999 Regulations "consumer" is defined in Regulation 3 as "any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession". The relevant definition in the Judgments Regulation is to be found in Article 15 which applies "in matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as outside his trade or profession". In Bencasa v Dentalkit Srl (C-269/95) [1997] ILPr 559, the ECJ stated that the concept of a consumer must be restrictively construed, that regard must be had to the nature of the contract in question, and that "only contracts concluded for the purpose of satisfying an individual's own needs in terms of private consumption" come within the protection: see [16]-[17]. It was not suggested that there is any distinction which is relevant for present purposes between the definition under the 1999 Regulations and that under the Judgments Regulation.
57. The application of this definition to investors has given rise to some controversy. In Standard Bank London Ltd v Apostolakis [2002] CLC 933 Longmore J, as he then was, rejected a submission that a Greek couple (a civil engineer and lawyer) who entered into 28 foreign exchange contracts with an exposure of some US$7 million were doing so by engaging in the trade of foreign exchange contracts as such. They were, he held, merely investing their wealth in the hope of profit. In the same case the Greek Court reached the opposite conclusion. Longmore J's decision has attracted some criticism from academic writers (see eg Briggs & Rees on Civil Jurisdiction and Judgments 5^th edn at para 2.94), and was doubted by Andrew Smith J in Maple Leaf Macro Volatility Master Fund v Rouvroy [200] 2 All ER (Comm) 287 at [209].
58. Wherever the dividing line is to be drawn in the case of investors, the result is likely to be heavily dependent on the circumstances of each individual and the nature and pattern of investment. At one end of the scale may be the retired dentist who makes a single investment for a modest amount by way of pension provision. At the other may be an investment banker or asset manager who plays the markets widely, regularly and for substantial amounts, for his own account. In between there are many factors which might influence the result, including the profile of the investor, the nature and extent of the investment activity, and the tax treatment of any profits or losses. The issue is fact specific.
59. I do not have the evidence before me in order to make that assessment for each of ATM's former clients. The exiguous evidence relied on by Mr Janusz is the assertion in a witness statement of Mr Guntner of MMGR that "each of the investors was a natural person acting for purposes which were outside his trade, business, or profession." This is no more than a recitation of the definition in the 1999 Regulations. It provides none of the information, even by way of summary, which would enable the Court to determine whether the test is satisfied. It is not fanciful to suppose that the circumstances of particular investors, and the part which the contract(s) with AMT represented in their investment activity as a whole, put some of them at least outside the definition of consumers. It is not for AMT at this stage to advance evidence in relation to each of them to establish that that is so. Such information would be within MMGR's knowledge. The issue is one on which MMGR bears the burden of proof. It is a burden which involves showing that every single one of the 70 former clients was a consumer, for otherwise the point merely goes to quantum. There is in my view plainly a serious issue to be tried on this question.
60. If, contrary to my view, the former clients are all to be treated as consumers in entering into their agreements with AMT, there are further reasons why I would reject MMGR's challenge on the merits.
61. So far as concerns the 1999 Regulations, an exclusive jurisdiction clause is not invalid per se. Regulation 8(1) prevents an unfair term being binding on a consumer. Regulation 5(1) provides: "A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract." Regulation 5(2) provides that Schedule 2 contains "an indicative and non exhaustive list of the terms which may be regarded as unfair." Schedule 2 includes at sub paragraph (q) a term "excluding or hindering the consumer's right to take legal action", which was interpreted by the European Court in Oceano Grupo Editorial SA v Murciano Quintero (C-240-244/98) [2002] CMLR 1226 as being capable of extending (in a Spanish domestic context) to exclusive jurisdiction clauses.
62. Schedule 2 is merely indicative and the Oceano case decides no more than that on the facts of that case the jurisdiction provision was capable of being unfair, not that it was unfair. Regulation 6 provides that "the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of the conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent." This again is a fact specific inquiry. AMT contends that it was only prepared to enter into the relevant contracts on an execution only basis and subject to the protection of the clause and would not have carried on the relevant derivatives business without its protection. As such the inclusion of the clause engages considerations of AMT's access to the single market. AMT also points to the parallel contracts between the former clients and the independent producing brokers, and the redress available against the latter for any inadequacy in the advice given. These raise serious issues to be tried giving rise to a real prospect that the exclusive jurisdiction clauses would not be treated as unenforceable under the 1999 Regulations even if the former clients are to be treated as consumers.
63. Under the Judgments Regulation, MMGR's argument faces three further hurdles which it fails to surmount. First, AMT must under Article 15(1)(c) be "a person who pursues commercial or professional activities in the Member Sate of the consumer's domicile, or by any means directs such activity to that Member State or to several States, including that Member State, and the contract falls within the scope of such activities." Mr Janusz contended that AMT directed its activities towards the relevant Member States (ie Germany, Austria, Belgium and Germany) by actively seeking clients through independent brokers in Germany. Such activity if aimed at Germany is arguably not directed to clients in Austria, Belgium or Switzerland and so would not apply to 12 of the claims in respect of which AMT sues. In any event, there is in my judgment a triable issue as to whether AMT's activities can be regarded as being directed towards the clients in Germany within the meaning of the Article, rather than towards the German independent brokers, which can only be answered when the full facts are ascertained.
64. Secondly, if the former clients of AMT are to be treated as consumers, Article 16 entitles them to bring a claim against the other party to the contract in the courts for the place where the client is domiciled. But the type of claims which fall within Article 16 must necessarily be restricted to those which have some connection with his status as a consumer and the consumer contract, as Mr Janusz accepts. If the former client had a claim which was unrelated to any consumer contract, it would not fall within Article 16. The claim must be a claim under or related to the consumer contract. The difficulty for MMGR's argument in this respect is that the claims of the former clients for whom they were acting in Germany were carefully framed to distance themselves from any reliance upon, or relationship with, the agreements between the former clients and AMT, in order to seek to avoid the application of the governing law and exclusive jurisdiction clause. There is a serious issue to be tried that the claims therefore had no sufficient connection to the contracts which the clients had (on this hypothesis) entered into as consumers, so as to engage Article 16.
65. Thirdly, if the former clients were consumers, and AMT fulfilled the requirements of Article 15(1)(c), the clients would have had the right under Article 16 to bring proceedings in the courts of the place of their domicile. Had they done so, the exclusive jurisdiction clause could not be relied on because of the provisions of Article 23(5). But that is not where the claims were brought. None of the claimants was domiciled within the jurisdiction of the local courts in Duisberg or Düsseldorf where proceedings were commenced. Mr Janusz argued that the exclusive jurisdiction clause is to be treated under Article 23(5) as having no legal force for all purposes because it would, if effective, exclude jurisdiction founded on Article 16 and so offends Article 17. But there is much to be said for a hierarchical approach to Article 23(5) in which jurisdiction falls to be established in consumer contracts first by reference to Article 16 (choice of claimant's or defendant's place of domicile), next by reference to Article 23 (prorogation by jurisdiction agreement or submission to the jurisdiction) and lastly to Article 2 (defendant's domicile) subject to the limited exceptions thereto such as Article 5. It is, at the lowest, arguable that the effect of Article 23(5) is not to render unenforceable an exclusive jurisdiction clause for all purposes, but only to the extent it is relied upon to evade jurisdiction based on Article 16; and that Article 23(5) does not invalidate such a clause where, as in this case, consumers were not seeking to found jurisdiction under Article 16.
66. For these reasons, there are serious issues to be tried that one or more of the claims commenced by AMT's former clients against it in Germany constituted a breach of a valid and enforceable exclusive jurisdiction clause binding on the former client.

Conclusion

67. MMGR's application fails and will be dismissed.