BUSINESS AND PROPERTY COURTS
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
||
B e f o r e :
Sitting as a Deputy Judge of the High Court
____________________
(1) YUKOS INTERNATIONAL UK BV | ||
(2) YUKOS CAPITAL LIMITED | ||
(3) YUKOS HYDROCARBONS INVESTMENTS LIMITED | Claimant | |
- and - | ||
DMITRI MERINSON | Defendant |
____________________
(instructed by CMS Cameron McKenna Nabarro Olswang LLP)
appeared for the Claimants
Mr Daniel Jowell QC and Mr Edward Cumming
(instructed by Enyo Law LLP)
appeared for the Defendant
Hearing date: 18 December 2017
____________________
Crown Copyright ©
MR SALTER QC:
Introduction
Background
Mr Merinson's employment by Yukos
The Dutch Court Settlement
The parties state, after a recess of the hearing, that they have agreed the following settlement agreement.
The Settlement Agreement which follows then states (omitting immaterial passages):
To end their dispute, the Parties agree as follows:
1. This arrangement is made between Merinson and Yukos International and for the benefit of all the entities affiliated with Yukos International including without limitation any direct or indirect Yukos subsidiaries, affiliates, divisions, successors, predecessors and/or related corporate entities or group entities, including any other former subsidiaries of Yukos Oil Company or any affiliates thereof ..
2. The employment contract and any other legal relationships (save for this agreement) between the parties ended on 1 January 2016.
3. Merinson has no obligation to repay the salaries and other emoluments received by him to date.
4. ..
5. Yukos International will pay to Merinson a sum of 200,000 Euros net.
6. This sum should have been deposited in the bank account of Merinson .. with reference "severance compensation", no later than by 5 October 2016
7. Merinson declares that to this day he has complied with the confidentiality clause as included in article 19 of the employment contract in relation to all information concerning Yukos and will continue to do so, now and in the future. On violation of this confidentiality clause is set a penalty of 360,000 Euros immediately due and payable to Yukos International.
Merinson declares that, other than the documents produced in the current proceedings and in the summary proceedings between the parties, he has no (digital) documents in his possession that regard Yukos ..
..
Merinson will not render his co-operation to, work for or render services to any party involved in any legal action concerning Yukos or persons affiliated with it; if Merinson should be requested to appear in any legal action versus Yukos, he will inform Yukos of this immediately.
8. The moment that payments can lawfully be made from the assets of the Dutch branch to former shareholders of Yukos Oil, Yukos will pay to Merinson .. a second net sum of 200,000 Euros ..
9. ..
10. Parties give mutual and final discharge for all that they have claimed in these legal actions and all they might yet claim in the context of the legal relationship that used to exist between them, notwithstanding the right to claim specific performance of this settlement agreement.
11. The Parties intend that the disputes released here be construed as broadly as possible. This release extends to Yukos and any current or former Yukos Entity officer, director, employee, consultant, agent and attorney, whether or not acting in his/her representative, individual or any other capacity.
12. ..
13. ..
14. This agreement shall in all respects be interpreted, enforced and governed by the laws of the Netherlands. Any disputes regarding or relating to any aspect of this agreement formation, meaning, performance or breach, including any claim for breach of the confidentiality provision, shall be submitted to the courts of the Netherlands.
15. Parties each bear their own procedural costs and agreed to have this current action deleted.
2. The employment contract and any other legal relationships (save for this agreement) between the parties ended on 1 October 2016.
3. Merinson has no obligation to repay the salaries and other emoluments received by him to date and Yukos has no obligation to pay any salaries and other emoluments to Merinson other than the salaries and other emoluments paid to Merinson to date.
This addendum was in English, and was signed by the parties. It was not incorporated into any proces-verbaal of the Dutch court.
The present action
10.1 First, they seek to recover damages for losses which they claim to have suffered as a result of what they allege were Mr Merinson's breach of his duties under his employment contract. I shall refer to this group of claims as "the Damages Claims".
10.1.1 The Claim Form gives little detail of the basis of these claims: but, as appears from the evidence, what the Yukos Group alleges (in very broad terms) is that Mr Merinson, in the course of his employment, took "kickbacks" amounting to millions of pounds from the financial institutions with which he was charged with negotiating the Yukos Group's financial and banking arrangements.
10.1.2 It is right that I should record at the outset that Mr Merinson disputes the Yukos Group's allegations and asserts that, in bringing this action, the Yukos Group is unjustly and improperly seeking to punish him for trying to "blow the whistle" internally within the Yukos Group in relation to the wrongdoing of those in control of the Yukos Group.
10.2 Secondly, they seek a declaration that the Dutch Court Settlement does not, on its true construction, bar the Damages Claims; alternatively, an order that the Settlement Agreement as incorporated into the Dutch Court Settlement should be annulled under various provisions of the Dutch Civil Code, on the grounds of error and/or fraud. I shall refer to this group of claims as "the Annulment Claims".
10.2.1 The Claim Form gives no details of the error or and/or fraud relied on. However, an indication of the likely grounds for the Annulment Claims is given in the first report (dated 22 September 2017) of Prof Arthur S Hartkamp, the Yukos Group's expert on Dutch law. According to paragraphs 3.5 and 3.6 of Prof Hartkamp's first report:
10.2.1.1 "To rely on error it will be necessary that (Yukos proves that) 1) it did not know (and should not have known) of the [kickback] payments, 2) that it would not have concluded the Settlement Agreement, or not under the same conditions, if it had known, and 3) that Merinson knew that or should have understood that, so that he should have informed Yukos".
10.2.1.2 "Annulment on grounds of deceit is possible in this case. Article 3:44 shows that deliberate omission with the intention to mislead can fall under the term deceit. The intention to mislead follows from the facts of the case: Merinson knew or must have known that the fee sharing agreement with Julius Baer was in breach of his obligations under the employment contract and that Yukos would not concluded the settlement agreement on the same terms if it had known of that agreement".
The present application
16.1 First, that the Annulment Claims do not in any event fall within Article 22(1), since they are not "matters relating to [an] individual contract of employment" within the meaning of that Article; and
16.2 Secondly, that the Settlement Agreement is a Court Settlement falling within the scope of Articles 59 and 60 of the Recast Judgments Regulation, which this court is obliged to enforce, and whose substance this court is precluded by Chapter IV and Article 52 from reviewing.
17.1 The Annulment Claims are indeed matters relating to Mr Merinson's contract of employment, interpreting that phrase in the broad sense required by Article 22(1).
17.2 The rules in Chapter IV of the Recast Judgments Regulation are irrelevant, since they relate only to enforcement, not to jurisdiction. Since, as a matter of Dutch Law, the Settlement Agreement can be set aside like any other contract, it is subject to no special jurisdictional rules taking it outside the scope of Article 22(1).
17.3 In any event, the effect of the Settlement Agreement is, at most, an issue arising in respect of a defence likely to be raised by Mr Merinson. It has no relevance to jurisdiction over the Damages Claims.
The issues
18.1 Are the Damages Claims and/or the Annulment Claims "matters relating to [an] individual contract of employment" within the meaning of Article 20(1)?
18.2 If so, is the Settlement Agreement "an agreement .. entered into after the dispute has arisen" within the meaning of Article 23(1)?
18.3 Is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation?
18.4 What are the consequences, as regards jurisdiction, of my decisions on the first three of these issues?
Issue (1): Are the Damages Claims and/or the Annulment Claims "matters relating to individual contract of employment" within the meaning of Article 20(1)?
The law
In matters relating to individual contracts of employment, jurisdiction shall be determined by this Section ..
Article 22(1) then states that:
An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled.
It follows that an employer (such as Yukos International) is prima facie obliged to bring any action against an employee or former employee (such as Mr Merinson) in the courts of the Member State in which that employee is domiciled at the date when that action is commenced, if (and only if) the claim made in that action is one "relating to individual contracts of employment".
20.1 Terms used in the Recast Judgments Regulation must be given an autonomous (European) meaning, so that each Member State will apply the regulation consistently and not interpret it in accordance with its own national law[6].
20.2 In interpreting the Recast Judgments Regulation, the purpose which it is designed to achieve is likely to provide a surer guide to its meaning than a close scrutiny of the words used[7].
20.3 The purpose of the rules in Section 5 of the Recast Judgments Regulation is identified in recitals 18[8] and 19[9]. It is to protect employees, as the weaker parties in the employment relationship from a socio-economic point of view[10].
20.3.1 For these purposes, employers and employees are treated as general categories, irrespective of their relative bargaining power in any particular case[11].
20.3.2 It follows that it cannot be a material consideration that, in the present case, it is the employee, Mr Merinson, who is seeking to prevent this action being fought in the courts of the Member State in which he was domiciled when the action was begun[12].
20.4 Section 5 of the Recast Judgments Regulation must therefore be interpreted in the way that will most effectively afford employees the degree of protection which those who framed the Regulation intended them to receive[13].
20.5 That is most likely to be achieved by looking at the substance of the relationship rather than the legal structure within which it sits[14].
21.1 Samengo-Turner v JH March & McLennan Ltd[15] was a case concerning proceedings in the USA for disclosure in connection with a bonus agreement containing "claw-back" provisions. In holding that that those proceedings came within the predecessor of Section 5, Tuckey LJ (with whom Longmore and Lloyd LJJ agreed) observed that:
.. The question is simply whether the claim is based on a contract of employment. The contract need not be in one document or made at one time. An agreement varying or adding to the terms of an earlier contract of employment obviously becomes part of that contract even if on its own it does not contain all the terms one would expect to find in such a contract ..
21.2 Alfa-Laval Tumba AB v Separator Spares International Ltd[16] involved an application to join an employee to a claim for breach of copyright and misuse of confidential information. In holding that those proceedings also came within the predecessor of Section 5, Longmore LJ (with whom Sir Andrew Morritt C and Davies LJ agreed) explained that there was no requirement that the claim be brought under the contract of employment before this Section could be engaged, and that the test was not one of "legal relevance".
.. It is much better to stick with the actual words of [the] article .. and ask oneself the question "do the claims made against an employee relates to the individual's contract of employment?"
This is a broad test which should be comparatively easy to apply. Sir Andrew Morritt C indicated in argument that (without proposing a test of any kind) it might in many cases be helpful to ask whether the claim by the employer constitute breaches of contract by the employee. If so, the claims would be likely to "relate" to the contract of employment. If not, not.
Davies LJ added that the words:
.. "Relating to", in the context of [this] article, are broad and unqualified words of nexus and do not require artificial limitation, even though it may be accepted that the nexus must be material ..
. He also noted that the test cannot be simply a matter of pleading, since not all Member States have the strict pleading requirements generally applicable under the law of England and Wales. Accordingly:
.. It is necessary to have regard to the substance the matter in each case ..
21.3 Petter v EMC Europe Ltd[17] was another case in which the provision of incentive awards by one company to an employee of another was held to make the first company an "employer" for the purposes of a dispute with the employee about those awards. Moore-Bick LJ (with whom Vos and Sales LJJ agreed) said of Article 20 (1):
"Relating to" is an expression capable of being given a broad interpretation .. [A] dispute may "relate to" a contract of employment even though the claim itself sounds in tort ..
21.4 In Bosworth v Arcadia Petroleum Ltd[18], Gross LJ (with whom Gloster and Macur LJJ agreed) reviewed the earlier authorities and stated that:
..For my part, the correct approach as a matter of English law is to consider the question whether the reality in substance of the conduct relates to the individual contract of employment, having regard to the social purpose of Section 5 ..
In relation to the specific case being considered by the Court of Appeal (which involved claims in unlawful means conspiracy and breach of fiduciary duty, together with claims of dishonest assistance and in knowing receipt in respect of breaches of fiduciary duty committed by other defendants), he asked himself the following questions:
As a matter of reality and substance, do the conspiracy claims relate to the appellants' individual contracts of employment? Is there a material nexus between the conduct complained of and those contracts? Can the legal basis of these claims reasonably be regarded as a breach of those contracts so that is indispensable to consider them in order to resolve the matter in dispute?
The arguments of the parties
23.1 First (in Mr Willan's submission), the court should look at the Yukos Group's claims as a whole, and should not divide them into separate parts. The Annulment Claims are not a discrete claim in their own right. They are simply a step on the way to the substantive relief sought in relation to Mr Merinson's wrongful conduct as an employee.
23.2 Secondly, even if (contrary to Mr Willan's first submission) it is necessary to consider the Annulment Claims separately, those claims (in Mr Willan's alternative submission) do relate to Mr Merinson's contract of employment, in the extended sense discussed above.
23.2.1 The Annulment Claims relate to the Settlement Agreement: and the Settlement Agreement regulated the termination of Mr Merinson's employment. It set the date on which that employment ended, varied the terms of the confidentiality agreement contained in clause 19 of Mr Merinson's employment contract, and set out the terms for a "clean break" of the employment relationship, including prescribing the "severance compensation" payable to Mr Merinson. The Settlement Agreement was, therefore, inseparably connected with Mr Merinson's contract of employment. Indeed, like any other variation, it should be treated as part of that contract.
23.2.2 Alternatively, the Annulment Claims involve a dispute about the terms on which Mr Merinson's employment has been terminated, and that is necessarily one "relating to" the contract of employment which is being terminated.
24.1 The Annulment Claims must be considered separately, since they are separate causes of action which are separately pleaded. Looked at independently in this way, they plainly relate to a contract: but that contract is the Settlement Agreement, not Mr Merinson's contract of employment.
24.2 In any event, the terms of the Settlement Agreement were incorporated into the Dutch Court Settlement, which is a "juridical act" of the Dutch court, which the English court is required to recognise and enforce under Chapter IV of the Recast Judgments Regulation as a "court settlement". Quite apart from the submission (dealt with later in this judgment) that the English court has no jurisdiction to interfere with such a court settlement, it cannot sensibly be suggested, even on an expansive interpretation of Section 5, that a claim to annul such a "juridical act" of the Dutch Court is properly a matter relating to an individual contract of employment.
Analysis
26.1 The object of this action as a whole is to recover compensation for what are alleged to have been breaches of duty committed by Mr Merinson in the course of his employment. That, in reality, is the substance of the action. The setting aside of the Settlement Agreement is not an independent object of the action. It is simply a necessary step in order for the Yukos Group to obtain that compensation. I accept Mr Willan's submission that, on the facts of this case, it is artificial to separate the Yukos Group's claims into discrete categories, as if each had an existence and a purpose separate from the other.
26.2 That that is so may be seen from the grounds relied upon for the Annulment Claims, which (in large measure) rely upon the same breaches of duty under Mr Merinson's contract of employment as are relied on to support the Damages Claims. In order for the court to adjudicate on the Annulment Claims, it will first have to adjudicate upon the allegations which found the Damages Claims: and it is conceded that those allegations relate directly to Mr Merinson's contract of employment.
26.3 The Settlement Agreement is, as Mr Jowell submits, a free-standing agreement. It is not itself a contract of employment. However, the Settlement Agreement set out the terms on which Mr Merinson's contract of employment came to an end. In so doing, it also varied the terms of that contract of employment. After the making of the Settlement Agreement, it would no longer be possible to enforce the provisions of the contract of employment relating to severance or to confidentiality without taking into account the amendments to those provisions made by the Settlement Agreement. To that extent, the terms of the Settlement Agreement now form part of the contractual terms on which Mr Merinson was employed, and which govern the rights and liabilities arising out of the employment relationship between him and the Yukos Group.
26.4 The fallacy in Mr Jowell QC's argument that a claim to annul a "juridical act" of the Dutch Court cannot properly be regarded as a matter relating to an individual contract of employment is that it concentrates on form rather than substance. For the purposes of Section 5, a matter can relate to an individual contract of employment, if (as here) that is the substance of the action, even though in form it involves impeaching a "juridical act". I will deal with Mr Jowell QC's separate argument - that the English court is required to recognise and enforce the Dutch Court Settlement under Chapter IV of the Recast Judgments Regulation, and so has no jurisdiction to entertain a claim to impeach it - under Issue 3.
Issue (2): If so, is the Settlement Agreement "an agreement .. entered into after the dispute has arisen" within the meaning of Article 23(1)?
The Law
.. may be departed from only by an agreement:
(1) which is entered into after the dispute has arisen; or
(2) which allows the employee to bring proceedings in courts other than those indicated in this Section
Similar provisions to those in Article 23(1) may also be found in Article 15(1) concerning jurisdiction in matters relating to insurance, and in Article 19(1) concerning jurisdiction over consumer contracts. Article 25(4) then provides that:
Agreements .. conferring jurisdiction shall have no legal force if they are contrary to Articles 15, 19 or 23 ..
It follows that the jurisdiction provisions of the Settlement Agreement can have no effect, except to the extent that they qualify under Article 23.
Article 12 relates to agreements conferring jurisdiction. Agreements concluded before a dispute arises will have no legal force if they are contrary to the rules of jurisdiction laid down in the Convention.
The purpose of this Article is to prevent the parties from limiting the choice offered by this Convention to the policy-holder, and to prevent the insurer from avoiding the restrictions imposed under Article 11.
A number of exceptions are, however, permitted. After a dispute has arisen, that is to say 'as soon as the parties disagree upon a specific point and legal proceedings are imminent or contemplated' [BRAAS, Précis de procédure civile, Vol I No 795], the parties completely regain their freedom ..
The point at which a dispute arises for these purposes must be somewhere between the occurrence of the facts which will give rise to the claim and the service of process. But it is not possible, at this stage, to be any more precise about it.
His commentary on Article 23 merely refers to "the difficulty, common to Sections 4 and 5, of identifying the precise point at which a dispute has arisen"[24].
It is suggested that the test proposed by Jenard should be modified slightly, so that proceedings should be both imminent and contemplated. This is because the practical need for an agreement on jurisdiction ought not to arise until the dispute becomes one which will apparently need litigation to resolve it. A jurisdiction agreement entered into at any earlier stage would be a precautionary measure only, and would be contrary to the same policy objections as support the existence of [this Article] in the first place.
Specifically with regard to the predecessor of Article 23(1), they note that[29]:
Before the dispute has arisen, the employee is protected against agreeing on the jurisdiction of courts which may not be to his liking. At such a time, he is unlikely to be contemplating litigation, and the provision helps to redress the effects of inequality of bargaining power
The facts
.. Senior officers within the Yuklos Group also made allegations regarding my conduct during 2014 and 2015. For instance, it was alleged that I was involved in a fraudulent scheme said to have been instigated by Mr Daniel Feldman .. Mr Feldman had been the object of aggressive litigation in the United States following his departure in 2014 during the course of which Yukos Group had made various claims including allegations of fraud .. During the course of 2014 and 2015, and whilst I was still an employee of Yukos International, it was put to me by senior officers within the Yukos Group, and its legal advisers, that I was mixed up in this allegedly fraudulent scheme ..
.. very keen to try to agree an amicable full and final settlement with the Yukos Group. I was acutely conscious that the Yukos Group had adopted an aggressive stance towards other former employees and officeholders. In particular .. I was conscious that Mr Feldman had been the object of aggressive litigation after his departure in 2014. During the course of that litigation the Yukos Group had made various claims and counter claims including allegations of fraud. As well as a suitable financial package, I was therefore keen to secure an appropriate release from claims that the Yukos Group might seek to pursue against me. I did not wish to be the target of litigation in the way that Mr Feldman had been and to continue to be victimised after leaving Yukos ..
.. I had the very clear objective throughout the negotiations of securing as broad a release as possible from every entity within the Yukos Group .. I knew that Mr Feldman was being sued in the United States by various entities within the Yukos Group .. I was conscious that I had come into contact with all the companies in the Yukos Group .. through my work. I was also conscious that the Yukos Group was experienced in aggressive international litigation, has essentially an unlimited budget, and would not hesitate to make the most serious of allegations against someone it wished to target. I wanted to make sure that I secured a genuinely clean break with the Yukos Group ..
As I explained to the Dutch court at the Settlement Hearing, a crucial part of any settlement from Mr Merinson's perspective was that it should release Mr Merinson from any future claims of any nature which might otherwise be made against him .. Indeed, even before the settlement discussions commenced, various Yukos entities were engaged in proceedings against a former senior officer of Yukos, Mr Daniel Feldman, in the US courts (as I explained to the Dutch court). These proceedings - and previous intimations that Mr Merinson may have been involved in similar wrongdoing to that which had been alleged against Mr Feldman - underscored the importance of securing the broadest possible release from the Yukos group of companies. Indeed, Mr Merinson had been questioned by Marc Fleischman (a senior officer of Yukos) as to the extent of his contact with Mr Feldman after the proceedings had been initiated against him in the US courts ..
.. Merinson reported abuses of the kind reported by Feldman from November 2014 onwards by repeatedly reporting it internally at Yukos in the way prescribed by the law .. The way in which Yukos dealt with Feldman, both inside and outside the courtroom, made Merinson realise that it might be his turn next ..
When the 2016 settlement agreement was entered into, the dispute that is the subject of the current proceedings have simply not arisen and it was not in contemplation. To my knowledge, the circumstances giving rise to the current claim only came to the Claimants' notice in around March 2017 (and those circumstances are still under investigation). Before the 2016 settlement agreement was entered into, there was no suggestion that the defendant had been wrongfully taking payments from banks.
Had the First Claimant been aware of the facts and matters which are the subject of this dispute, I confirm that there is absolutely no way the First Claimant would have entered into the 2016 settlement agreement ..
In brief, the main areas of dispute that had arisen between the Claimants and the Defendant at the time of the 2016 settlement agreement was entered into were: (1) Suspicion that the Defendant had breached the confidentiality provisions of his Employment Agreement; (2) Questions as to whether a change of control clause in the Defendant's Employment Agreement had been triggered; (3) Claims by the Defendant that he was a whistleblower for alleged excessive spending and mismanagement; (4) The refusal of the Defendant to carry out his employment duties, for example in relation to the transfer of certain original promissory notes; (5) the Defendant's involvement in contemplating a scheme for extracting out 2 USD 75 million for personal "bonuses"; (6) A general breakdown in the employment relationship between the Defendant and the First Claimant.
.. [N]one of these disputes was even remotely connected to the dispute that is the subject of these proceedings (the basis of which only first became known to the Claimants about 6 months after the 2016 settlement agreement was concluded).
For the avoidance of any doubt, and although I do not understand the contrary to be suggested by the Defendant, the present claim has nothing to do with the contemplating scheme for extracting up to USD 75 million personal "bonuses". This was a very specific and particular concern the Yukos Group had .. In fact, in the Dutch employment proceedings, Yukos specifically noted that the Defendant was one of the individuals who put a stop to the scheme before it was carried out..
YUKOS ATTORNEY: Have you ever received an introductory fee?
FELDMAN: No.
YUKOS ATTORNEY: During your tenure at Yukos, did you ever receive any kickbacks from banks or financial institutions that held Yukos funds?
FELDMAN: No.
YUKOS ATTORNEY: What about Dmitri Merinson?
FELDMAN: I don't know.
YUKOS ATTORNEY: Do you have any reason to think Dmitri Merinson did receive some form of introductory fee or kickback?
FELDMAN: I don't know.
YUKOS ATTORNEY: What about from Falcon Bank? Did either of you, to your knowledge, ever receive any sort of fee or award from Falcon Bank?
FELDMAN: I can't speak for him. I haven't.
YUKOS ATTORNEY: What about Piraeus?
FELDMAN: No.
YUKOS ATTORNEY: You never received any – any – anything at all?
FELDMAN: Zero.
The arguments of the parties
50.1 In order to show that the dispute had already arisen when a jurisdiction agreement was entered into, a party need only show that there had been a prior dispute - in other words, that the employment relationship had become contentious - which was compromised on terms that addressed that dispute.
50.2 Alternatively, if some further element is required, it is sufficient that the potential existence of the particular further claim in question was also within the reasonable contemplation of the parties at the time of the settlement and the jurisdiction agreement.
51.1 In the present case, there had previously been a dispute between Mr Merinson and the Yukos Group that had resulted in the litigation between them. They had agreed to settle that previous dispute on terms that included a jurisdiction agreement: and the present dispute is within the ambit of the settlement and the jurisdiction agreement
51.2 Alternatively, if the further element is required, it is shown on the facts of the present case. The fact that a claim such as is made in the present action was present to Mr Merinson's mind at the time of the settlement is shown by the many references made on his behalf, both in court documents and in oral submissions to the Dutch court, to the proceedings against Mr Feldman. The fact that such a claim was also present to the mind of the Yukos Group is clearly shown by the excerpt from the transcript of Mr Feldman's June 2017 deposition.
53.1 A dispute will have "arisen" only when the particular matter which forms the basis for the subsequent proceedings has been raised between the parties, and the parties specifically contemplate the commencement of legal proceedings in relation to that matter.
53.1.1 That is the natural meaning of the words used in the Article. The word "the" indicates that it must be the same dispute which forms the subject-matter of the proceedings in which the jurisdiction clauses invoked. The concept of a "dispute" requires the existence of some particular matter on which the parties have actually joined issue. The parties are not in "dispute" merely because one or both of them are aware of circumstances which could give rise to a claim; and, finally, for a dispute to have "arisen" it must have actually manifested itself in a concrete form. The phrase can naturally be contrasted with foreseeable claims which have not yet matured into actual disputes.
53.1.2 That is the approach suggested by the Jenard Report.
53.1.3 That approach is consistent with the policy of Section 5, which is to protect employees from bargaining away their rights except where the specific consequences of doing so are plain.
53.1.4 That approach is also consistent with the commentaries by Briggs and by Layton and Mercer.
53.1.5 Any other approach would require a court to imply some widening "gloss" to the words of the Article.
Analysis
Issue (3) - Is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation?
63.1 First, that the Dutch Court Settlement is a juridical act of the Dutch, over which the Recast Judgments Regulation provides no jurisdictional basis for the English court to assume jurisdiction;
63.2 Secondly, that the Dutch Court Settlement is a "Court Settlement" for the purposes of Chapter IV of the Recast Judgments Regulation, which the English Court is obliged to recognise and enforce.
The law
A provision covering court settlements was considered necessary on account of the German and Netherlands legal systems. Under German and Netherlands law, settlements approved by a court in the course of proceedings are enforceable without further formality ..
The Convention, like the Convention between Germany and Belgium, makes court settlements subject to the same rules as authentic instruments, since both are contractual in nature. Enforcement can therefore be refused only if it is contrary to public policy in the State in which it is sought ..
The Schlosser Report[42] (on the accession of the United Kingdom, Denmark and Ireland to the Convention) merely notes that "in England and Ireland there is no equivalent of enforceable [ie "authentic"] instruments".
A court settlement which is enforceable in the Member State of origin shall be enforced in the other Member States under the same conditions as authentic instruments
An authentic instrument which is enforceable in the Member State of origin shall be enforceable in the other Member States without any declaration of enforceability being required.
Enforcement of the authentic instruments may be refused only if such enforcement is manifestly contrary to public policy (ordre public) in the Member State addressed.
The provisions of Section 2, Subsection 2 of section 3 and Section 4 of Chapter III shall apply to authentic instruments.
Under no circumstances may judgment given in a Member State be reviewed as to its substance in the Member State addressed.
[17] It follows from the foregoing that, to be classified as a "judgment" within the meaning of the Convention, the act must be that of the court belonging to a Contracting State and ruling on its own authority on points in dispute between the parties.
[18] However, this condition is not fulfilled in the case of a settlement, even if it is reached before a judge of a contracting State and puts an end to a dispute. Court settlements are essentially contractual in nature, in the sense that their terms depend primarily on the parties' intentions ..
..
[22] .. The case of court settlements is expressly regulated by Article 51 of the Convention, which forms part of Title IV of the Convention, entitled "Authentic Instruments and Court Settlements", and lays down specific rules for their enforcement ..
.. What the person against whom enforcement is sought may not argue .. and what the court of the state addressed may not consider, is whether as a matter of substance he was not, or should not have been, under the obligation in the first place. In order to raise that objection, the party should bring an action to nullify the instrument (by whatever means may be available) in a court of competent jurisdiction, which in the context of the Brussels-Lugano regime, will usually mean a court with jurisdiction under Ch II. The judgment in such an action would be accorded automatic recognition in the other Brussels-Lugano states.
But if he has not done so, or if his action has not yet been concluded, and an application for a declaration of enforceability is made in a Brussels-Lugano state other than the state of origin, the person against whom enforcement is sought may find that he is faced with the prospects of enforcement being carried out against him, without his having an opportunity to protest his objections of substance. In those circumstances, the court of the state addressed is not competent to consider the objection .. It is probable therefore, that the most that an enforcing court could do is to require security for enforcement ..
Dutch law
There is no special regime for fraud with regard to the conclusion of settlement agreements, except that - as with annulment on the basis of error - the nature of settlement agreements carries with it that courts adopt a reticent approach in setting aside ..
Annulment of an agreement can only take place in accordance with article 3:49 DCC, which provides "where a juridical act is subject to annulment, it can be annulled either by extra-judicial declaration or by a judicial decision". The agreement and all of its provisions bind the parties if none of the steps described in Article 3:49 DCC has been taken. If an extrajudicial declaration is issued but refused by the other party, it must be followed by a declarative judgment of the court that the annulment is valid for it to have effect.
.. It may therefore properly be described as an instrument or product of the Dutch Court.
Specifically, if a settlement agreement is recorded in a "proces-verbaal" which is endorsed with the words "In naam van de Koning", it is immediately enforceable in the Netherlands and (after having been served to the person or entity against whom the enforcement is directed) may be executed by a bailiff with no further steps being required. This is in contrast to an out-of-court settlement agreement which, if breached, would require the party seeking to enforce the terms of that agreement to apply to the court, establish the breach, and obtain an order which could be enforced against the non-complying party.
Therefore, as a matter of Dutch Law, the [Dutch Court Settlement] meets the threshold set out in Article 59 of [the Recast Judgments Regulation]. Specifically, the [Dutch Court Settlement] is "A court settlement which is enforceable in the Member State of origin".
.. the effect of the settlement being recorded in a proces-verbaal endorsed with the words "In the name of the King" is that the settlement is enforceable in the Netherlands without any separate court action ..
Analysis
78.1 The Dutch Court Settlement is a "court settlement" within the definition in Article 2 of the Recast Judgments Regulation[47]. It is therefore enforceable in the United Kingdom under Chapter IV of the Recast Judgments Regulation.
78.2 The only ground on which this court could refuse enforcement of the Dutch Court Settlement would be if such enforcement were manifestly contrary to public policy: see Articles 58 and 59[48].
78.3 Nevertheless, the Dutch Court Settlement does not have the status of a judgment: see Solo[49]. It remains essentially contractual in nature: see the Jenard Report[50] and Solo[51].
78.4 The applicable law of the Settlement Agreement is Dutch law. Under Dutch law, it can be impugned on the same basis as any other contract, and is not subject to any special regime in that regard: see the views of Prof Tjittes[52] and of Prof Hartkamp[53].
78.5 Any court of a Member State which, under the Recast Judgments Regulation, would have jurisdiction to set aside the Settlement Agreement as a contract still has that jurisdiction, even though the Settlement Agreement has been incorporated into the Dutch Court Settlement. The Dutch courts do not have exclusive jurisdiction in that regard to any greater extent that they would have in the case of any other contract: see the commentary in Layton and Mercer[54].
78.6 The judgment of such a court setting aside the Settlement Agreement would be entitled to recognition and enforcement in the other Member States, including the Netherlands, notwithstanding the Dutch Court Settlement: see Article 36, Solo and the commentary in Layton and Mercer.
82.1 If, as I have held, the Dutch Court Settlement remains an agreement which can be impugned on the same basis as any other contract, despite being incorporated in the proces-verbaal of the Dutch court, then there is no reason intrinsic to the Dutch Court Settlement to prevent the English court exercising jurisdiction in relation to it. That reasoning is fatal to Mr Jowell's first argument.
82.2 As to his second argument, based specifically on Chapter IV, it confuses enforceability with jurisdiction. If, as I have held, the English court has jurisdiction under Chapter II of the Recast Judgments Regulation to set aside the Settlement Agreement as a contract, it does not lose that jurisdiction merely because the Settlement Agreement is enforceable in the United Kingdom as part of the Dutch Court Settlement. The position would be different if the English court did not have jurisdiction under Chapter II. In those circumstances, the only issue might well be whether the public policy ground for the refusal of enforcement was made out. However, that is not the present situation.
Issue (4) - What are the consequences, as regards jurisdiction, of my decisions on the first three of these issues?
84.1 All of the claims in this action (including both the Damages claims and the Annulment Claims) are "matters relating to [Mr Merinson's] individual contract of employment" within the meaning of Article 20(1) of the Recast Judgments Regulation[56].
84.2 The present dispute had not "arisen" at the date of the Settlement Agreement. Under Articles 23(1) and 25(4), the jurisdiction provisions of the Settlement Agreement are therefore ineffective to override the otherwise mandatory jurisdiction provisions of Section 5[57].
84.3 The English court is not precluded by the nature of the Dutch Court Settlement from entertaining the Annulment Claims[58].
86.1 Mr Merinson may file any further acknowledgment of service by 4pm on Wednesday 28 March 2018;
86.2 If Mr Merinson files a further acknowledgment of service:
86.2.1 The Claimants shall file and serve Particulars of Claim by no later than 4pm on Friday 13th April;
86.2.2 Mr Merinson shall file and serve his Defence (and any Counterclaim) by no later than 4pm on Friday 11 May 2018
86.2.3 The Claimants shall file and serve any Reply by no later than Friday 25 May 2018
86.2.4 The parties shall apply to the Listing Office within 14 days of the filing of Mr Merinson's acknowledgement of service to fix a Case Management Conference with an estimated length of half a day, for the first available date on or after Friday 8 June 2018.
Note 1 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [Back] Note 2 Cf Samengo-Turner v JH March & McLennan Ltd [2007] EWCA Civ 723, [2008] ICR 18, where the second and third defendants were treated as “employers” even thought they were not parties to the contract of employment, but only had rights under the bonus agreement. See also Petter v EMC Europe Ltd [2015] EWCA Civ 828, which applied Samengo-Turner in holding that a parent company which made incentive awards of stock to an employee of a subsidiary company was, for the purposes of the regulation, an "employer" of that employee of the purposes of jurisdiction in relation to a dispute about those stock awards. [Back] Note 3 There is no precise English translation of the notion of a 'proces-verbaal'. It may variously be translated as an official report, record, or minute. “Report” is the word used in the translation in the papers before me. [Back] Note 4 Which (as was common ground) is the relevant date for determining jurisdiction: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at 566 (CA), affmd [2002] 1 AC 1; Petrotrade v Smith [1999] 1 WLR 457 at 464 (QB); Freeport v Arnoldsson C-98/06 [2008] QB 634 (ECJ) at [54]; and Per Linuzs v Latmar Holdings [2013] EWCA Civ 4 at [30] (“the relevant time for determining whether the court has jurisdiction .. is the time at which the jurisdiction was invoked i.e. the issue of the claim form”). [Back] Note 5 “If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.” [Back] Note 6 See eg Samengo-Turner v JH March & McLennan Ltd [2007] EWCA Civ 723, [2008] ICR 18, at [25], per Tuckey LJ; and Mahamdia v People's Democratic Republic of Algeria Case C-154/11 [2013] ICR at [42]; Holterman Ferho Exploitatie BV v Spies von Büllesheim Case C-47/14 [2016] ICR 90 at [37]. [Back] Note 7 See eg Petter v EMC Europe Ltd [2015] EWCA Civ 828 at [18], per Moore-Bick LJ [Back] Note 8 “In relation to insurance, consumer and employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules”. [Back] Note 9 “The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, should be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation”. [Back] Note 10 “Section 5 .. lays down a series of rules whose objective . is to protect the weaker party to the contract by means of rules of jurisdiction that are more favourable to his interests": Case C-154/11 Mahamdia v Algeria [2013] ICR 1 at [44]. See also Samengo-Turner at [25]; Petter at [19] and [57]; Bosworth v Arcadia Petroleum Ltd [2016] EWCA Civ 818, [2016] 2 CLC 387 at [72], per Gross LJ [Back] Note 12 “The principle of ‘legal certainty’ means that .. arguments which show that a jurisdictional rule, otherwise applicable, should not be applicable because its underlying purpose does not apply to the instant case will be unprofitable”: Briggs, Civil Jurisdiction and Judgments (6th ed) para 2.08, citing C-288/92 Custom Made Commercial v Stawa Metallbau GmbH [1994] ECR I-2913. [Back] Note 13 Mahmadia at [46]; Petter at [19] [Back] Note 15 [2007] EWCA Civ 723, [2008] ICR 18, at [29] [Back] Note 16 [2012] EWCA Civ 1569, [2013] 1 WLR 1110, at [24]-[25] and [43]-[44] [Back] Note 17 [2015] EWCA Civ 828 [Back] Note 18 [2016] EWCA Civ 818, [2016] 2 CLC 387 at [65] and [67] [Back] Note 19 See Recital (19) (quoted in full in footnote 9 above). [Back] Note 20 Cf Sherdley v Nordea Life & Pensions [2012] EWCA Civ 88, [2012] 1 Lloyd’s Rep IR 437 at {59], per Rix LJ. [Back] Note 21 “It was not until Regulation 44/2001 that the individual contract of employment achieved its status of junior parity alongside insurance contracts and certain contracts made by consumers; and it was not until Regulation 1215/2012 that it was, in effect, put on a par with contracts made by consumers”: Briggs, Civil Jurisdiction and Judgments (6th ed) at [2.115]. [Back] Note 22 [1979] OJ C59/1 (emphasis added) [Back] Note 23 See Briggs, op cit at [2.95] and fn 593. [Back] Note 24 Briggs, op cit at [2.120] [Back] Note 25 Layton and Mercer, European Civil Practice (2nd ed) at [16.060] [Back] Note 26 Picard-Bresson, Les assurances terrestres en droit français (3rd ed, 1972) Vol II p 438 [Back] Note 27 Prof Dr Reinhold Geimer and Prof Dr Rolf A. Schütze, Europäisches Zivilverfahrensrecht p 216 [Back] Note 28 Layton and Mercer, op cit at [16.060] [Back] Note 29 Layton and Mercer, op cit at [18.033] the [Back] Note 30 See Briggs, op cit at [1.15] for the status of these Official Reports. [Back] Note 31 Merinson (1) paras 81 and 85. [Back] Note 32 Merinson (1) para 16. [Back] Note 33 See paragraph 3 above [Back] Note 34 Merinson (1) paras 20 and 30 [Back] Note 35 Peters para 8. See, to similar effect, Peters para 33(a) [Back] Note 36 Quoted at Peters para 26 [Back] Note 37 Godfrey paras 9 and 10 [Back] Note 38 O’Sullivan paras13 to 15 [Back] Note 39 See Merinson (2) para 12 to 18. [Back] Note 40 Quoted in paragraph 34 above. [Back] Note 41 [1979] OJ C59/1 [Back] Note 42 [1979] OJ C59/77 para 226. [Back] Note 43 [1994] I L Pr 457. Prof Briggs says of the effect of this decision that it “seems odd in the light of the public interest in supporting the consensual settlement of claims”: Briggs, op cit, at [7.22] fn 214. [Back] Note 44 Layton and Mercer, op cit at [29.017] [Back] Note 45 First Report paras 87-89 [Back] Note 46 Third Report paras 5-7 [Back] Note 47 See paragraph 65 above [Back] Note 48 See paragraphs 65 and 66 above. [Back] Note 49 See paragraphs 68 to 70 above [Back] Note 50 Quoted in paragraph 64 above [Back] Note 51 See paragraph [18] of the judgment of the ECJ, quoted in paragraph 70 above. [Back] Note 52 Quoted in paragraph 74 above [Back] Note 53 Quoted in paragraph 77 above [Back] Note 54 Quoted in paragraph 71 above [Back] Note 55 Briggs op cit para [7.15]. See also Interdesco SA v Nullifire Ltd [1992] 1 Lloyd's Rep 180 (Philips J); and Societe d'Informatique Service Realisation Organisation (SISRO) v Ampersand Software BV [1994] I L Pr 55. (CA) [Back] Note 56 See Issue (1) above, particularly at paragraphs 25 to 27 [Back] Note 57 See Issue (2) above, particularly at paragraphs 55 to 62 [Back] Note 58 See Issue (3) above, particularly at paragraphs 78 to 83 [Back]