England and Wales High Court (Technology and Construction Court) Decisions

In The High Court of Justice Official Referees' Business

Before: His Honour Judge Thornton Q.C.

Between

British Nuclear Fuels PLC Plaintiff

and

(2) Comex Nucleaire SA Defendants

Case number: 1997 ORB No. 439

Dates of Hearing 20 and 26 February 1998

Date of Judgment 11 March 1998

1. This was an application by the plaintiff for an anti-suit injunction to restrain the defendants from continuing with proceedings in France and by the defendants to dismiss or stay the action. The basis of both applications was articles 21 and 22 of the Brussels Convention. The correct test to apply in considering whether these articles are applicable was discussed and applied.

2. The application by the plaintiff for an anti-suit injunction was granted, the applications of the defendants were dismissed. The defendants were ordered to pay the plaintiff's costs of the applications, to be taxed if not agreed.

3. The text of the judgment approved by His Honour Judge Thornton Q.C. is as follows:

1) This judgment is concerned with three summonses whose purpose is to seek a decision by this court, the English High Court, determining the action as official referees' business, as to the appropriate court to hear and determine certain issues that require to be resolved in the complex dispute that has arisen in connection with the supply and installation of a cutting system. This system cuts up Inconel melter crucibles located inside radioactive cells forming part of the plaintiff's waste vitrification plant which treats and processes nuclear waste at the plaintiff's plant at Sellafield, Cumbria. The summonses involve a consideration of the applicability of articles 17, 21 and 22 of the Brussels Convention, more formally the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968, as amended by the 1971 Protocol and the Accession Conventions of 1978 and 1982 ("the Convention") which is given the force of law as part of English domestic law by the Civil Jurisdiction and Judgments Act 1982 ("the Act"). The Act reproduces the Convention as Schedules 1, 2, 3 and 3A. The summonses also raise the question of whether it is appropriate to grant an anti-suit injunction preventing the second defendant from continuing related proceedings in the Tribunal de Commerce de Marseille, France.

2) The plaintiff ("BNFL"), on its case, contracted with the first defendant ("CNSL") under three contracts to (1) design and develop a cutting system; (2) manufacture, assemble, inspect, supply and deliver that cutting system; and (3) detail design, manufacture, assemble, test, supply and deliver a control system for that cutting system. CNSL alleges that there were more than three contracts. Hereafter, I refer to these contracts compendiously as "the three contracts". The technology is complex given that the material to be cut is a superalloy which forms the melter crucible used in the process. This alloy is extremely hard and is located in a completely isolated radioactive environment which is both extremely hot and highly radioactive. The cutting operation is required to cut up the material so that it can be removed, through a small escape route, out of the cell in which it is located since the lifespan of the crucible, which solidifies within the cell during the processing of the waste, is shorter than that of the cell.

3) CNSL is the English-based subsidiary of a French company, the second defendant ("CxN"). This French parent company provided a guarantee, dated 20th April 1994, in which CxN guaranteed the due performance by CNSL of all three contracts and also provided that, if CNSL failed to perform these contracts, CxN would forthwith perform the terms of the contracts to the extent that CNSL was to perform them. CxN maintains that this guarantee is neither valid nor enforceable.

4) Two saws have been delivered to BNFL, in the period between August 1994 and February 1995. Between these deliveries and October 1996, according to BNFL's case, repeated attempts were made to work the saws satisfactorily and to require CNSL to make good defects in the saws and the control system but, at the end of that period, this had still not been achieved. Further, again as BNFL sees its case, CNSL was given a final chance to remedy the defects in the saws and to prove their capability. This was provided for by an agreement dated 11th October 1996 between BNFL and CxN, with a side letter to that agreement, whereby one of the saws was returned to CxN in Marseilles with an obligation to show that the saw satisfied seven defined performance criteria. I refer to this agreement and the side letter compendiously as "the October Agreement".

5) On CNSL's case, it was not in default of any of the three agreements. CNSL raises substantial defences as to the scope of its obligations of design, of the nature of the manufacturing contract and of the factual allegations of breach. Moreover, the saws were prototypes which, as CNSL pleads in paragraph 29 of its defence:

6) However, CNSL also raises two substantial defences arising out of the October Agreement. Firstly, that agreement discharged all primary obligations CNSL owed to BNFL. The October Agreement is alleged to have resolved all outstanding disputes by an obligation imposed on CxN to prove the design and performance of the saw in accordance with the criteria in the side letter. This was to be achieved, and was allegedly achieved, before an independent body in Marseilles, France.

7) The claim raised by BNFL is for (1) approximately £1.2m for additional storage costs resulting from the need to dispose of the machine; (2) £1m as the monies already paid to CNSL; and (3) nearly £400,000 additional wasted expenditure. There is a corresponding claim on the guarantee against CxN, which is limited, by the terms of the guarantee, to £741,288.50. CNSL counterclaims approximately £56,000 representing unpaid retention and extra work.

8) The guarantee is set out in a document which, on the face of it, is a deed dated 20th April 1994. The deed is pleaded as guaranteeing the due performance of the three contracts entered into by CNSL, thereby irrevocably guaranteeing to BNFL that CNSL would punctually and properly perform these three contracts and comply with their terms. IF CNSL should fail to perform its obligations under these contracts, CxN would take over from CNSL the three contracts and forthwith perform those obligations and would accept responsibility for the payment by CNSL for all losses and damages due or payable to BNFL up to a limit of £741,288.50.

9) Cnx pleads a series of defences to this claim. In summary, it is alleged that the deed was of no effect since there was, on the date of purported execution, no contract between CNSL and BNFL. Alternatively, there was no consideration for the deed and no demand has been made, a condition precedent to recovery under its proper law which is French law. Finally, the October Agreement, although entered into by CxN, had the effect of discharging CNSL's primary liability under any contract guaranteed by the deed and, in consequence, CNSL remains under no continuing liability under the three contracts and CxN under no continuing liability under the guarantee.

10) The chronology of the various proceedings is important. The English action was started by a writ dated 30th June 1997. This writ had followed by an agreement giving the Official Referees of the English High Court, sitting in London, jurisdiction. This has the effect of being an exclusive jurisdiction agreement by virtue of Article 17 of the Convention. I determined, in a judgment I delivered on 5th December 1997 following an earlier summons in this action, that the Article 17 agreement was concluded on 13th August 1997 by an exchange of correspondence between the respective parties' legal representatives. In conformity with the agreement, these proceedings were started as Official Referees' business and the first hearing involved an ex parte application by BNFL for a Mareva injunction restraining the removal of assets from the jurisdiction and requiring the disclosure of information as to its assets. This injunction was granted by me on 28th October, on the basis that there was concern that CNSL was winding down its business and transferring its assets to France. CNSL complied with the terms of the injunction and served a defence on 19th December. It is clear that CNSL has no remaining assets with which it could discharge any liability to BNFL and that the effective claim is for the sum payable under the guarantee plus any interest the court might order to be paid under the Law Reform (Miscellaneous Provisions) Act 1934.

11) Meanwhile, CxN issued a summons dated 16th October 1997 seeking an order setting aside the writ and a declaration that the English High Court has no jurisdiction over CxN. The basis of this application was Articles 2, 5(1) and 6 of the Convention. In summary, it was alleged that CxN was domiciled in France, that the contract under which it had been sued, the guarantee, was governed by French law and that the place of performance of the relevant obligation was in France. I did not determine the application on these grounds but on the anterior ground, put forward by BNFL, that the pre-existing jurisdiction agreement, to which I have already referred, prevailed and that, in conformity with Article 17 of the Convention, England was the appropriate forum for resolving the dispute arising out of BNFL's claim on the guarantee, Article 17 confers on this agreement the status of an exclusive jurisdiction agreement.

12) On 19th November 1997, after the issue of CxN's summons but before I determined it, CxN issued a writ in the Tribunal de Commerce de Marseille against BNFL based on the October Agreement. These proceedings and this action is concerned solely with that Agreement. It seeks a ruling, or declaration, that CxN complied with its contractual obligation and proved, with the assistance of test certificates, that the saw complied with the criteria set out by BNFL in the side letter to the Agreement. It also seeks a ruling that BNFL has wrongly refused to acknowledge that the saw has been proved and judgment for the sum due under the October Agreement once the saw has been proved.

13) Meanwhile, BNFL requested the Tribunal de Commerce de Marseille to order that that court declined jurisdiction under Article 21 of the Convention or that the English High Court be requested to accept jurisdiction under Article 22. This request was dealt with by a judgment of the court dated 19th February 1998 of which I have been provided with an unofficial translated version. By that judgment, the court put off, or adjourned, BNFL's request for a ruling as to its jurisdiction, a request which was based on lis pendens and the relationship of the proceedings with the English proceedings, until the parties have filed submissions on the merits of the case and explained their respective contentions about the merits of the dispute. That hearing has been fixed for 3rd April 1998.

14) Subsequently, in these proceedings, CNSL and CxN each issued a summons in this action. These summonses have been met by a cross-summons from BNFL. The hearings on 20th February and 26th February were concerned with these three summonses which, in summary, seek the following relief:

1. CxN's summons issued on 2nd December 1997.

15) The proceedings against CxN should be stayed under Article 21 of the Convention on the grounds that the French action involves issues which are raised as "the same cause of action" in the English action. The French court was "first seised" so far as this cause of action is concerned. The balance of the proceedings should be stayed pending a determination of the French proceedings since, if CxN succeed in those proceedings, much of the balance of the English proceedings, not involving the "French issues" will become unnecessary.

2. CNSL's summons issued on 17th February 1998.

16) The proceedings against CNSL, who is not a party to the French proceedings, should be stayed until the determination of the French proceedings for the same reason as the balance of the CxN English proceedings should be stayed.

3. BNFL's summons issued on 23rd February 1998.

17) An anti-suit injunction should be granted restraining CxNfrom taking any further steps to prosecute the Marseilles proceedings and to discontinue those proceedings.

18) At the heart of the procedural argument as to which court is, or should be, seised of the various parts of the disputes between BNFL on the one hand and both CNSL and CxN on the other hand, is CxN's contention that the October Agreement had the effect of discharging any liability that CNSL had under the three contracts. This contention is to the effect that the October Agreement was in the nature of a compromise of liability under those three contracts. This compromise agreement was supported by CxN's agreement to prove that the relevant saw met the stated criteria in the side letter. The issue does not appear in that form in the unofficial English translation of the French writ with which I was provided. This states:

19) In its defence in the English proceedings, both CNSL (in paragraph 30 of its defence) and CxN (in paragraph 10 of its defence) allege that:

20) The relevant agreement is contained in a letter from BNFL to CxN dated 11th October 1996 and the relevant passage is as follows:

21) Thus, the October Agreement included 7 criteria, of which 6 were criteria set out in the three contracts. The seventh criterion concerned the cutting cycle time. Both Parties reserved their positions with regard to the contractual nature of this time criterion for the purposes of possible future litigation.

22) These extracts show that the French action does not directly raise the question of whether the contractual effect of the October Agreement was to discharge CNSL's liability under the three contracts. No evidence was placed before me that that was the effect of the French action. Mr. Susman Q.C. so argued but I cannot proceed on that basis given the wording of the translated French writ. If the October Agreement did discharge CNSL's liability under the three contracts, that discharge would have occurred by virtue of the wording of the October Agreement and not by virtue of its subsequent performance. However, no issue is apparently raised in the French action as to the meaning and effect of the October Agreement, in so far as these affect CNSL's contractual liability under the three contracts.

23) What is clear is that the French writ does require the French court to determine whether 6 of the criteria required under those three contracts have been shown to have been fulfilled by the process of CxN proving the saw under the October Agreement and whether an appropriate acceptance test certificate has been issued under that Agreement. However, in the English proceedings, it is alleged by both CNSL and CxN that the effect of the October Agreement was to discharge CNSL from liability under the three contracts.

24) It follows that any finding as to the satisfactory proving of the 6 criteria (and the seventh criterion, if it is found to be a contractual criterion under the three contracts) would create issue estoppels relating to some of the issues affecting CNSL's primary liability in the English action between BNFL and CxN and would affect, and might possibly create appropriate issue estoppels in, the issues concerning causation, mitigation and loss in the English action. Moreover, it is open to CNSL and CxN to argue in the English action that the October Agreement and/or the test results and test certificate discharged CNSL's liabilities under the three earlier contracts.

25) The Convention is incorporated into English law by the Act. The method of incorporation is by section 2(1) which provides that the Conventions (ie the various Conventions and the Protocol making up the Brussels Convention) shall:

26) One of the purposes of the Convention is to provide a means of ensuring, so far as possible, that the totality of a commercial dispute should be resolved in the courts of only one member state of what has become the European Union. A related purpose is to minimise the creation of irreconcilable judgments arising in a dispute because courts of different member states had dealt with the same dispute. One way of achieving these purposes is to require any court other than the court first seised to decline jurisdiction to determine the relevant parts of the dispute by use of a simple rule which gives primacy to the jurisdiction of the court first seised. This rule has been called a "tie-break rule" and a rule that has the "simplicity, certainty and predictability of a rule of chronological priority". An English court, faced with a claim to put a stop to proceedings because the relevant provisions of the Convention give that court, or another court, primacy is bound to interpret any relevant but ambiguous or loosely-worded provision in the Convention so as to further both these purposes and the "tie-break" rule created by the Convention.

27) The summonses I have to decide are concerned with three separate provisions in the Convention. These Convention provisions are, in summary, as follows:

28) It is clear from the wording of the Convention and the jurisprudence of the European Court that, where Article 17 is capable of applying as well as Articles 21 or 22, Article 17 should take precedence and should be applicable. This is partly because of the wording of the Convention and partly because of the principle of party autonomy which is enshrined in the scheme it sets up.

29) The potential application of these Articles has to be considered because the parties entered into a jurisdiction agreement of uncertain width, BNFL then instituted proceedings in England and, finally, CxN instituted proceedings in France which have, at the very least, a superficial resemblance to the English proceedings and which may share a cause of action with those proceedings or may constitute a related action to the English action.

30) BNFL argues that it entered into an agreement conferring jurisdiction on the English High Court with both CNSL and CxN and that I have already found that such an agreement exists. Therefore Article 17 requires that agreement to be implemented. It also provides that the effect of the agreement is that the English High Court has exclusive jurisdiction over all the disputes arising out of the three contracts, the guarantee and the October Agreement.

31) It is first necessary to set out the text of the relevant part of Article 17. This reads as follows:

32) As to my previous determination, this was concerned with an argument that the claim of BNFL against CxN in the English proceedings was subject to an Article 17 agreement. My extempore judgment was delivered on 5th December 1997. It dismissed the summons brought by CxN which had sought an order striking out the action against it on the grounds that the English High Court had no jurisdiction. My judgment contains this passage:

33) It was a necessary corollary of that finding that whatever was encompassed by the writ in relation to claims against CNSL was also encompassed by the same Article 17 agreement. It had not been necessary for me to make that an express finding since CNSL was not seeking to strike out the claim against it. However, I had found that Cxn's solicitors, in acting in the negotiations leading up to the agreement that they made on behalf of CxN, were also acting for CNSL.

34) This finding is not conclusive, in BNFL's favour, of the present Article 17 agreement argument since I merely determined that there was such an agreement in force whose width was sufficient to encompass whatever was encompassed by the writ in this action. I expressly left open for later determination what are the boundaries of that agreement.

35) BNFL argues that the subject-matter of the French proceedings, in their entirety, is encompassed by the Article 17 agreement for two reasons:

36) To determine this question, I must consider the background to the agreement in some detail, as part of the exercise of construing the operative part of the agreement.

37) As a preliminary matter, it is agreed by both parties that the proper law of the agreement, as the lex fori, is English law, that the agreement satisfies the requirement imposed by Article 17 that it should be in writing and that the principles governing the construction of a commercial contract imposed by English law are the relevant principles that I must apply in construing this agreement. These principles are found set out in three decisions of the House of Lords. The most recent, in which the leading speech was delivered by Lord Hoffmann, is Investors Compensation Scheme Limited v. West Bromwich Building Society and Others. This speech builds on principles taken from the two earlier decisions of the House of Lords. The relevant principles of construction applicable to the task of construing the Article 17 agreement, which I have taken verbatim from Lord Hoffmann's speech, are these:

38) In order to construe the relevant terms of the Article 17 agreement, the extensive background to it needs to be summarised. I take the necessary background from the pleadings and the exhibits to the affidavits lodged in relation to a proposed preliminary issue concerned with the validity and enforceability of the guarantee. Some of these issues were to have been heard at, or soon after, the hearing of the three summonses with which this judgment is concerned but the parties have agreed that that hearing, if required, should take place at a later date.

39) The starting point for a consideration of this background is the delivery of the saws. These were delivered as follows: the first prototype saw on 1st August 1994, the first saw in late November 1994 and the second saw in February 1995. The first saw was installed in the active cell at Sellafield on 31st December 1994 whereas the second saw was retained outside the active cell and was the saw ultimately returned to France pursuant to the October Agreement.

40) From the outset, BNFL was complaining that the saws were delivered late. There were meetings and correspondence between the parties, particularly in June 1995 when CNSL alleges that BNFL confirmed that work on the manufacturing contract had finished. However, BNFL remained dissatisfied with the performance of the saw in service and when, in April 1996, CNSL sought payment of the remaining 5% retention, BNFL made a claim on the guarantee. BNFL called for a report from CNSL in June 1996 setting out "a detailed written proposal dealing with CNSL's proposed solution evidencing the viability and safety of [CNSL's] solution accompanied wherever possible by supporting evidence and data."

41) Following a meeting and an inspection of the saws at Sellafield in July and further discussions and exchanges, the parties concluded the October 1996 Agreement, the second saw was transported to CxN's premises at Marseilles and testing and associated work started. The relevant criteria had been discussed in detail before being set out in the side letter to the October Agreement. In early December, BNFL witnessed the operation of the saw and subsequently expressed the opinion that "the machine has come nowhere near to operating in accordance with the agreed criteria with simulate."

42) By January 1997, BNFL's correspondence to CxN on the subject of the testing and proving of the saw in Marseilles was headed "Disc Saw Machine Litigation". A final visit to witness the performance of the saw by BNFL was made between 3rd and 6th March 1997. BNFL wrote to CxN in the aftermath of that visit on 11th March:

43) On 14th March 1997, BNFL served notice of termination of the hire period and asked for the return of the saw. CxN, meanwhile, had taken a diametrically opposite view of the saw's capabilities. The tests of the saw were witnessed by representatives of an independent company who are experts in the relevant technologies and, on 28th March 1997, they reported to CxN that the saw worked well and in accordance with the seven criteria. CxN subsequently claimed to be entitled to be paid back the cost of the transportation of the saw to, and its installation in its working position in, CxN's premises in Marseilles, France.

44) Discussions continued once the saw had been returned to Sellafield. CxN supplied BNSL with different software to enable BNFL to investigate the saw further. Following that investigation, BNFL wrote to CxN on 4th June and informed CxN that the saws supplied by CxN were fundamentally flawed. The letter continued:

45) The letter contained a draft proposed arbitration agreement which agreed to refer "all disputes and differences whatsoever between [BNFL], CNSL and CxN to a single arbitrator.

46) This letter was replied to by CNSL and CxN's solicitors dated 16th June. They stated:

47) On 28th July, BNFL's Senior Legal Advisor wrote back:

48) A further letter from BNFL's Senior Legal Advisor enclosing the writ in this action was sent on 30th July, to which CNSL and CxN's solicitors replied on 1st August with this statement:

49) This authority to accept service was obviously received because the solicitors filed acknowledgments of service on behalf of both CNSL and CxN in the Official Referees' Registry on 8th August 1997.

50) The fist conclusion to be drawn from this history and the culminating exchange of correspondence that I have summarised is that the Article 17 agreement is contained in CNSL and CxN's offer that: "if BNFL intends to pursue its claims, the appropriate forum would be the High Court in London" and BNFL's acceptance that: "In accordance with your client's preference, we have issued proceedings in the High Court in London".

51) This conclusion as to the documents forming the Article 17 agreement and as to the operative part of that agreement appear, at first sight, to be at variance with my earlier judgment which suggested that the agreement was concluded on 13th August by CNSL and CxN's solicitors writing to their opposite number informing them that they had filed an acknowledgment of service. However, the judgment continues:

52) On reflection, it seems to me that the necessary ingredients for an agreement had crystallised by the exchange of letters on 16th June and 28th July, since the offer to BNFL to litigate its claims in the High Court in London as Official Referees' Business was accepted by the statement "in accordance with your client's preference, we have issued proceedings in the High Court in London (Official Referees' Business)." However, my original formulation of the agreement makes no practical difference since the operative part of the agreement, as I originally formulated it, contained in that later letter of 28th July coupled with a second letter of 30th July enclosing the writs. On this alternative formulation, these letters would constitute the offer and not the acceptance. If this was the offer, it would have been accepted by the letter in reply, dated 1st August 1997, the operative part of which is set out above. This letter is coupled with CNSL and CxN's solicitors subsequent conduct in acknowledging service of the writ. On this formulation, the operative phrase is "your client's preference" which in context, and in the light of the contents of the letter in reply, is a reference to "any disputes".

53) On either formulation of the agreement, the basic ingredients required of an Article 17 agreement are present, namely an agreement evidence in writing by the agents of parties acting with express authority which agrees that a court in a contracting state (namely a state which is a party to the Convention) is to have jurisdiction to settle disputes which have arisen. The question I must now answer, in the light of the surrounding circumstances I have summarised, is what is meant by the phrase "its claims" or by the alternative phrase "any disputes". Another way of asking this question is by paraphrasing Lord Hoffmann's fourth proposition from the Investors case which I have already referred to. The question would then read: "what would the parties reasonably have understood the words "its claims" or "any disputes" to have meant, given the relevant background which I have already summarised?

54) It is clear that the parties were referring to the related questions as to whether CNSL had performed its contractual obligations under the three contracts, whether CxN had proved that the seven criteria had been satisfied by the relevant saw whether BNFL was entitled to damages and to replace the saws and whether CxN was entitled to reimbursement for the proving process carried out in Marseilles. It is true that there had not been express reference to the argument that the October Agreement discharged CNSL's obligations under the earlier three contracts and was a form of compromise agreement in the correspondence leading up to the October Agreement. However, these arguments and BNFL's challenge to them, are part of the relevant body of claims or disputes for two reasons:

55) This allegation is quite legitimately included in the statement of claim, is relevant to BNFL's claims and to the disputes arising out of the original delivery and testing of the saws and itself gives rise to substantial disputes.

56) It follows that the meaning and effect of the October Agreement must be considered and determined as part of the determination of BNFL's pleaded allegations.

57) The conclusion is that all claims or disputes, including all those included in CxN's claims set out in the writ issued in the Tribunal de Commerce de Marseille, are encompassed by the Article 17 agreement whereby the parties agreed that the English High Court would have jurisdiction to determine these disputes. Against this conclusion, Mr. Susman Q.C. argued that the parties did not have Article 17 in mind when reaching their agreement that BNFL's writ should be dealt with as Official Referees' Business. Moreover, the French proceedings involve a different contract to the contracts encompassed by the English proceedings. For these reasons, the relevant words of the Article 17 agreement should be interpreted to exclude the disputes encompassed by the French proceedings. However, it is not necessary for the parties to have the contents of Article 17 in mind when entering into an agreement governed by that Article. All they must intend is to refer disputes to the court of a Contracting State. If they agree to this in writing, the consequence, as a result of the words of Article 17, is that that court will have exclusive jurisdiction to determine those disputes. Moreover, although the French proceedings involve a different contract, they are intimately connected with the disputes contained in these English proceedings. For all these reasons, BNFL succeeds on the first issue I must decide, based on Article 17 of the Convention.

1. General Approach

58) Articles 21 and 22 read as follows:

59) Although Article 23 is not relied upon by either party, it is instructive to set it out as well, being the third of the trilogy of related Articles. It reads as follows:

60) Strictly speaking, I do not need to determine whether either of these Articles apply to these proceedings or this action and to the French proceedings or action in view of my finding that the Article 17 agreement covers all issues in both sets of proceedings. However, an anti-suit injunction is sought. This is resisted by CxN, partly on the basis that I should exercise my discretion to refuse this discretionary remedy. It is, therefore, appropriate to consider on which of the several grounds relied on by BNFL it is correct to contend that the French court does not have, or should decline, jurisdiction since the stronger the case for requiring the French court to decline jurisdiction, the stronger is the case for an anti-suit injunction to bring that action to an end.

61) It is first necessary to refer to the different terminology of the two Articles. In Article 21, the relevant concept is "proceedings". The cause of action that that Article is concerned with must arise in proceedings in both relevant courts. In Article 22, the relevant concept is "action". The two actions must be related. Clearly, "proceedings" is intended to be a narrower concept than "action" but I am not required to consider what the difference is between these two concepts. In these applications, I have already shown that, for all relevant purposes, BNFL's proceedings, set out in the English action, covers the same subject-matter as CxN's proceedings set out in the French action. I, therefore, use the word "proceedings" when discussing the applicability of Article 21 and "action" when discussing the applicability of Article 22, albeit that I am using these words, for all practicable purposes, to mean the same thing.

62) These Articles, and particularly Article 21, are argued by CxN to be relevant to its application to stay these English proceedings because it argues that the French court is the court first seised of the relevant cause of action, being one which only first arose in the French proceedings in connection with the October Agreement. That court should therefore decide that cause of action, arising in the French proceedings, although the same cause of action arises in the English proceedings, in the defences of CNSL and CxN. The relevant cause of action is for a declaration that CNSL's liability under the three contracts, and CxN's liability under the guarantee, has been discharged by the October Agreement. Another way of expressing this cause of action is that CNSL is entitled, in the English proceedings, to rely on the defence that it has been discharged of liability under the three contracts by virtue of the October Agreement and CxN is entitled to rely on CNSL's discharge of liability as discharging its liability under the guarantee.

63) I have already shown that this cause of action does not appear to arise in the French proceedings since no question of the effect of the October Agreement nor as to the effect that its successful performance might have had on the three contracts appears to be raised in the French proceedings. However, Mr. Susman Q.C.'s argument was premised on the assumption that this cause of action did arise in both sets of proceedings, a premise which was not challenged by Mr. Marrin Q.C. in his argument.

64) Mr. Susman's argument can be stated in three propositions:

65) If this is the right approach, it can have the effect that a court is the court first seised of proceedings but, after the relevant proceedings have been properly started in that court, the court can then become the inappropriate court to continue with the proceedings as a result of the second set of proceedings having been started subsequently in the courts of a second Contracting State.

66) Mr. Marrin's answer to this argument is to argue that Mr. Susman's approach is fundamentally wrong, in that it concentrates on specific issues. In fact, the Convention adopts a simpler, albeit more mechanistic approach. This approach, Mr. Marrin argues, is to determine which is the first set of proceedings to have been started in point of time. That court is the court first seised, unless the second subsequent set of proceedings in the courts of another Contracting State can be shown to come within the ambit of neither Article 21 nor Article 22.

67) The correct approach to adopt has recently been identified in the decision of the Court of Appeal in The "Happy Fellow". In the course of giving the only reasoned judgment, with which the other two members of the Court agreed, Saville L.J. said this:

68) This approach, being one of the application of these Articles of the Convention to the relevant proceedings or actions, accords with the body of jurisprudence, or "doctrine", that the English courts have built up in giving effect to the Convention. Three cases illustrate this approach, two having been decided before The "Happy Fellow" and the third being decided by the House of Lords after The "Happy Fellow" was decided but before it was reported.

69) The first of the trilogy is Dresser UK Ltd and Others v Falcongate Freight Management Ltd and others, in which, giving the leading judgment, Bingham L.J. stated:

70) The significance of this decision is that it was the first reported decision of an English Court to stress that chronological priority was to be adopted as the test for determining the order of consideration of the various proceedings or actions that a court concerned with the operation of Articles 21 - 23 had to consider. This ranking requires the order in which the various courts were seised to be determined, the precise date of each act which constituted a particular court being seised being determined by the domestic law of that court.

71) The next case was The Sargasso in which the leading judgment was delivered by Steyn L.J. who stated this:

72) This reasoning is applicable to these English proceedings. The approach to adopt in applying the Convention to new or unusual fact-situations is to apply a simple tie-break rule, namely one that insists on chronological priority.

73) Nonetheless, CxN argues that this approach is consistent with its approach, which is to focus on an issue which allegedly does not arise in the English proceedings, if only the claims of BNFL are considered, but is alleged to arise in the French proceedings. This situation is argued to be unusual, allegedly only capable of applying where a compromise agreement or an arbitration agreement is relied on, since such agreements have independent existence to the underlying contract or contracts with which they are associated. This approach involves isolating the issues arising in proceedings or an action before the rule of chronological priority can be applied.

74) However, such an "issue-orientated" approach is not permissible. This is clear from the recent decision of the House of Lords in Sarrio S.A. v Kuwait Investment Authority in which the leading speech was delivered by Lord Saville. He was explaining why the approach of the Court of Appeal in that case was wrong when, in applying Article 22 to the facts, the Court of Appeal had sought to isolate the issues arising in the action in the Spanish Court, the court in which the first action had been started, and then compare them to the issues apparently arising in the English action which, in chronological terms, had been started second. This approach enabled the Court of Appeal to allow the English action to proceed notwithstanding the continuation of the Spanish action. The speech contains this passage:

75) This reasoning makes it clear that even if the issues arising in the second set of proceedings or action had not apparently arisen in the first set of proceedings or action, and could only arise in those proceedings or that action in a counterclaim with which the first court had not been seised at the date the second court became seised of these issues, nonetheless, the rule of chronological priority applies and both courts, in determining whether either has, or should retain, jurisdiction, should first consider the application of Articles 21 - 23 to the court first seised of, respectively, the proceedings or the action.

2. Article 21

76) The question to consider is whether the French proceedings involve "the same cause of action" as these proceedings, given that these proceedings have chronological priority. The expression "cause of action" is not to be given its technical English law meaning, which was spelt out in the judgment of Diplock L.J. in Letang v Cooper as follows:

77) Instead, a broader approach is required. I was referred to two decisions of the Court of the European Communities. These were: Gubisch Maschinenfabrik KG v Palumbo [1987] ECR 4861 and Tatry v Maciej Rataj, The Maciej Rataj [1995] AER (EC) 229.

78) Applying these principles to the two sets of proceedings with which I am concerned, it seems clear that they do involve the same cause of action, at least if the assertion of CxN is adopted that the French proceedings are seeking to determine that the October Agreement discharged CNSL's liability under the three contracts and, hence, discharged CxN's liability under the guarantee. Although I have shown that this issue does not appear to arise in the French proceedings, it seems to me that I should proceed to determine the potential jurisdiction of the French court by adopting the assertion of the applicant, CxN, in these English proceedings, certainly when, as here, it is a less favourable assertion that CxN is making than the alternative assertion open to it.

79) On that basis, CxN's assertion is to the effect that the causes of action asserted by BNFL in these proceedings have been discharged. Moreover, since this allegation is now raised by way of defence in the English proceedings, BNFL will have to show in this court that there has been no compromise or discharge of liability under each of the three contracts. The objective of both proceedings is to determine whether CNSL and CxN are liable under, respectively, the three contracts and the guarantee.

80) Thus, applying Article 21, this court, being the court first seised, has jurisdiction and the French court, being the court second seised, should decline jurisdiction in favour of this court.

3. Article 22

81) This Article is easier to apply. The actions, which expression must, in the context of these actions, include the counterclaim in this court, are clearly related. In determining whether or not this is so, I should adopt "a broad common-sense approach to the question" of whether the actions are related. Here, CxN asserts that the English action should be stayed pending the determination of the discharge of liability issue in the French action because that determination might significantly affect BNFL's ability to recover damages in the English action and a possibility of conflicting judgments might otherwise arise. This clearly shows the related nature of the two actions and the desirability of the court first seised of the subject-matter of the action to keep and maintain jurisdiction of that subject-matter.

82) Thus, this court is entitled to retain jurisdiction and control of this action and to expect the French court to apply Article 22 to stay that action whilst this action remains pending at first instance. Although the French court has a discretion under this Article, if it considered the case as an Article 22 case rather than an Article 17 or 21 case, this court would expect the French court to grant a stay, given the close relationship of both actions and the clear risk of irreconcilable and unenforceable judgments if both courts made determinations on the merits in their respective actions.

4. Article 23

83) This Article is not relied on by either party, presumably because the French court has not intimated that it regards itself as having exclusive jurisdiction over the October Agreement. Had that happened, or if it happened in the future, Article 23 would appear to give this court jurisdiction over all aspects of both actions as "the court first seised".

84) The basis of an anti-suit injunction is well established. Such an injunction is one whereby a party amenable to the jurisdiction of the English High Court is restrained by that court from initiating threatened proceedings in the court of another jurisdiction or from continuing with proceedings which have already been started. In that latter case, it is normal to add an order requiring the enjoined party to discontinue the proceedings in that other jurisdiction.

85) The starting point for a consideration of whether a plaintiff is entitled to an injunction restraining the continuation of proceedings in another jurisdiction is capable of being summarised in these propositions:

86) If authority is needed to support these propositions, it can be found in the seminal decisions, in this area of law, of the House of Lords in Castanho v. Brown & Root and British Airways v Laker Airways.

87) In this case, there was little disagreement that these requirements would be satisfied, assuming that I determined that there was in existence an Article 17 agreement covering disputes arising out of the October Agreement which provided for those disputes to be litigated in the English High Court. Such a conclusion would also follow if I was to conclude that Article 21 gave the English High Court the exclusive jurisdiction to determine the subject-matter of the French proceedings as the court first seised of the cause of action contained in those proceedings. Such was the basis for the grant of an injunction to restrain proceedings in Greece pending a determination of an action in the English High Court in Banque Cantonale Vaudoise v Waterlily Maritime Inc. and others.

88) The argument of Mr. Susman Q.C. was to the effect that I should nonetheless exercise my discretion to refuse to grant an injunction for these reasons:

89) I can deal with, and reject, each of these arguments in turn.

90) The wording and intention of the Article 17 agreement is, in my judgment, clear and would certainly have been clear to CxN and its advisors when it was entered into. The agreement was the immediate precursor of the initiation of the English proceedings and was made at both the suggestion of and at the instigation of CxN and CNSL. The intention of that agreement was clear to all parties when made.

91) I cannot agree that there has been no oppressive conduct by CxN. Immediately after CNSL had been made subject to a Mareva injunction and CxN had been served with, and accepted service of, these proceedings, the French proceedings were initiated and these applications to stay these proceedings were made to this court. These last steps had been proceeded by a previous application to stay these proceedings under Articles 2, 5(1) and 6 of the Convention. These steps are all oppressive and impose severe additional cost constraints on BNFL in seeking what, as it sees the situation, is its entitlement under the three contracts it has entered into with CNSL and under the guarantee entered into with CxN.

92) On analysis, the delay referred to, if it be delay, is from late November when the French action was started, until mid-January when BNFL's application to the French court to restrain the proceedings was heard. This delay is minimal and, in all other respects this application is a "paradigm case" for an anti-suit injunction.

93) There are no, or only slight, considerations of comity when a defendant initiates proceedings in France in clear breach of an Article 17 agreement that has only just been entered into and which had been the basis of the plaintiff initiating the earlier English proceedings in the first place.

94) In support of my rejection of these arguments, particularly the arguments based on delay and comity, and in support of my decision that this is a "paradigm case" for an anti-suit injunction, I rely on two recent decisions, one of the Court of Appeal and one of the English High Court.

95) The first was the decision of the Court of Appeal in Continental Bank N.A. v Aeakos Compania Naviera S.A. and others. This was also an Article 17 case in which the relevant clause conferred exclusive jurisdiction on the English High Court and where proceedings had nonetheless been initiated in breach of the agreement in Greece. Steyn L.J., in the leading judgment, said this:

96) In adopting this reasoning, the following additional points need to be stressed:

97) The other action is Schiffahrtsgesellschaft Detlev Von Appen G.m.b.H. v Voest Alpine Intertrading G.m.b.H.. In that case, the judge found that there had been culpable delay in initiating the injunction application, a factor not present in this case. Some additional costs had been incurred in the relevant Brazilian proceedings, which the applicant for the injunction was required to pay as a condition to being granted the injunction sought to restrain the Brazilian proceedings. A similar condition is sought by CxN, if I am minded to grant an injunction. The relevant costs would be those involved in the January hearing in the Tribunal de Commerce de Marseille.

98) I do not regard the period of delay as culpable. BNFL only had a few weeks in which to consider the position, once the French proceedings had been initiated and where entitled to see whether its application for a stay could succeed, given that it appeared to be a summary one. As soon as it appeared that the jurisdictional arguments would be prolonged and costly, BNFL moved rapidly to apply for the injunction now sought. There is no basis for my requiring BNFL to pay CxN's costs of the hearing in Marseilles, these were the reasonable and inevitable consequence of the proceedings being initiated by CxN in breach of the Article 17 agreement.

99) The overall conclusion is that the two summonses issued by CxN and CNSL should be dismissed and that BNFL should be granted injunctions in the terms sought. I will hear counsel as to the precise terms of the order that should be made.

100) In parting with these applications, I should like to pay tribute to the high quality of, and considerable assistance afforded to me by, the written skeleton arguments of all three counsel and the commendably brief but comprehensive oral submissions of Mr. Susman Q.C. and Mr. Marrin Q.C. in what was not an easy series of applications.

H.H. Judge Anthony Thornton Q.C.