H421
Judgment Title: Celtic Salmon Atlantic (Killary) Limited -v- Aller Acqua (Ireland) Limited & Anor Neutral Citation: [2014] IEHC 421 High Court Record Number: 2009 3075 P Date of Delivery: 31/07/2014 Court: High Court Composition of Court: Judgment by: Hogan J. Status of Judgment: Approved |
Neutral Citation: [2014] IEHC 421 THE HIGH COURT [2009 No. 3075 P] BETWEEN CELTIC ATLANTIC SALMON (KILLARY) LIMITED (IN VOLUNTARY LIQUIDATION) PLAINTIFF AND
ALLER ACQUA (IRELAND) LIMITED AND (BY ORDER) ALLER ACQUA A/S DEFENDANTS JUDGMENT of Mr. Justice Hogan delivered on 31st July, 2014 1. Where a defendant in foreign proceedings governed by the Brussels Regulation (Council Regulation No. 44/2001EC) fails to advance and maintain a counter-claim for damages for in those proceedings, is that party then barred by the doctrine of res judicata or by the provisions of the Brussels Regulation itself from re-litigating that counterclaim for damages for breach of contract and negligence in existing proceedings in this jurisdiction where it sues as plaintiff? This, in essence, is the difficult issue of conflict of laws which arise in the present proceedings. PART I - INTRODUCTION 3. The defendants carry on the business of sale and supply of fish feed. The present proceedings were commenced in this jurisdiction in 2009 and in those proceedings Celtic Atlantic claims that the Aller Ireland sold and supplied fish feed which did not have contain an appropriate phosphorous content. It further contends that, as a result, its fish failed to thrive and they developed feed related dystrophy. It claims that it suffered very significant financial loss (estimated at over €2m.) by reason of this alleged breach of contract and negligence. 4. In July, 2008 Celtic Atlantic had commissioned a report from a specialist veterinarian, Hamish Rodger. According to his report (“the Rodger report”), 209 fish were caught in cages and drugged. Of these it is said that between 49% to 80% of them had obvious defects and had developed obvious deformities and nutritional disorders. Mr. Rodger attributed this unusual state of affairs to a phosphorous deficiency. Having examined the labelling on the boxes of feed, Mr. Rodger noted that the phosphorous level was 0.8% which was below the recommended level for growing juvenile Atlantic salmon, as the figure ought to have been 1.1%. Mr. Rodger commented that on a previous visit in June, 2008:
7. On 6th November, 2008, Aller Denmark then commenced proceedings as plaintiff against Celtic Atlantic as defendant by writ of summons in the Civil Court at Kolding. The scope of these Danish proceedings is of some importance. There were, in fact, two separate claims. First, Aller Denmark claimed €58,655 plus interest in respect of certain unpaid invoices for the fish feed (“claim 1”). (It also reserved its position to make further claims in this regard.) Second, it sought an order that “Celtic be ordered to admit that the delivered feed on which Aller Acqua’s claim is based is in conformity with the contract.” (“claim 2”). 8. Here it should be noted that there is general agreement that the feed supplied prior to 1st January 2008 was supplied by Aller Ireland, whereas the feed supplied after that date was supplied by Aller Denmark. The claim which was actually advanced by Aller Denmark in the Danish court was approximately 7% in value of the total unpaid invoices claimed (€58,655/€834,000) on behalf of the Aller companies. While a further exploration of this topic would require extensive discovery and an examination of the records of the parties, one may, I think, fairly surmise that the Danish proceedings and ultimate judgment of the Danish court related only to a fraction of the fish feed actually supplied by the Aller companies. 9. This is, perhaps, of some importance. From a reading of Mr. Rodger’s report, it does not seem possible to ascertain whether the alleged deficiency stemmed from particular identifiable batches of feed. On the contrary, it seems that these deficiencies occurred during the life cycle of the fish as they grew to maturity. The scope of the potential claim and defence in this regard is, moreover, not absolutely clear. 10. Assuming for the moment that the analysis conducted by Mr. Rodger and by Mr. Murphy analysis is correct, then the question which immediately arises is how this state of affairscame about. In other words, is this a defective products type case in the true sense of that term where the feed was simply inherently defective in that it contained insufficient phosphorous? Or is it the case that the feed was not defective in itself, but rather that the wrong type of feed was supplied for these particular fish (growing juvenile Atlantic salmon)? This is an issue which, as we shall presently see, has some implications in the context of the scope of the default judgment ultimately granted by the Danish courts. 11. In February, 2009 the solicitors for the liquidator, Lyons Kenny, instructed Danish lawyers, Maare Advockataktieslkab (“Maare”) to act for the then liquidator, Kieran McCarthy, to act on behalf of Mr. McCarthy in the Danish proceedings. (Mr. McCarthy resigned as liquidator and was replaced by the present liquidator, Mr. Kieran Wallace, in February, 2012). Following discussions between the parties, Lyons Kenny advised that it would be unwise to bring a counter-claim in the Danish proceedings, because to do so “would preclude us from bringing proceedings in Ireland for damages for breach of contract.” 12. Shortly afterwards a plenary summons was issued in Ireland claiming damages against Aller Ireland and this summons was served on Aller Ireland on 26th May, 2009. A conditional appearance was entered on behalf of Aller Ireland on 30th June, 2009. The proceedings were admitted into the Commercial Court on 27th July, 2009, and in the meantime a motion contesting the jurisdiction of this Court had been filed by Aller Ireland. The proceedings themselves amounted to a claim for damages for negligence and breach of contract by reason of the allegedly defective nature of the fish feed. The proceedings in Denmark 14. The jurisdiction of the Danish court was challenged by Celtic Atlantic and in August, 2009 a motion contesting that jurisdiction was heard by the Kolding District Court. At the hearing of that jurisdictional motion, oral evidence was given by James Murray, the former general manager of Celtic Atlantic, stating that the parties had never considered the question of whether the contractual obligation regarding the delivery of the feed was ex works or whether it was an obligation to deliver the feed to Celtic Atlantic in Donegal. This view was disputed by the witnesses called by Aller Denmark. One of them, Svend Kristensen, gave evidence that the fish feed in this case came from Aller Denmark’s factory in Christiansfeld rather than from the alternative source of supply, namely, Aller Denmark’s factory in Golob-Dubryzn in Poland. 15. In the light of this latter evidence the Kolding District Court held that the trading relationship between the parties was governed by the Aller Denmark’s conditions of trade and that the obligation in question was to supply the feed ex works in Christiansfeld. The presiding judge, Judge Andersen, then ruled that Celtic Atlantic:
17. In the wake of that decision the parties appear to have understood that the proceedings would be determined exclusively by the Danish courts. The Irish proceedings had already been admitted to the Commercial Court list and a date had been fixed for hearing on 5th March, 2010. However, on 25th February, 2010, Kelly J. made an order by consent staying the Irish proceedings pursuant to Article 28 of the Brussels Regulation and/or the inherent jurisdiction of the Court. The order further recited that “the substantive action is now going for trial in Denmark and that these proceedings are at an end in this jurisdiction.” Would the Rodger report have been admissible or, if admissible, would it have had any value before the Danish courts?
This [is] due to the fact that the procedure regarding expert investigation under Danish law has not been complied with, and the fact that neither the fish nor the fish feed [can] be re-examined by a court appointed expert witness as they are no longer present. It is my opinion that claim for damages etc. for the defective fish feed due to the above-mentioned [law] will have little or no chance of success under court proceedings in Denmark. It is my opinion that the counterpart in the matter, Aller Aqua, is fully aware of this fact and that this is the reason they contest venue in Ireland.”
25. It would, of course, be presumptuous for this court to rule on what appears to be a difficult and possibly evolving aspect of Danish law. Nevertheless, having regard to the comments of the two experts, it seems clear that the admissibility of the Rodger report before a Danish court would not have been straightforward. It is true that, as Mr. Cramer notes, Celtic Atlantic did refer to the Rodger report in its Danish pleadings and it may even have been formally presented as evidence to the Danish courts without any formal adverse ruling on admissibility. Yet irrespective of any question of formal admissibility before the Danish courts, the question as to whether a Danish court would attribute any weight to such a report is just as important. 26. The preponderance of the evidence from these experts suggests that a Danish court probably would not attribute any real weight or value to a report which was not sanctioned under the Danish Administration of Justice Act. There was, at the very least, a real doubt on the issue and had the question been presented, it would have raised a dubium which would probably have required an authoritative determination from the Danish courts. 27. It is true that, as Mr. Cramer observes, Celtic Atlantic could have produced other evidence and could also have asked the District Court at Kolding “to appoint an expert to investigate the fish feed.” The difficulty, of course, here is that both the feed and the fish were no more. 28. These views regarding Danish law must have presented Celtic Atlantic with considerable difficulties. It meant that even if Celtic Atlantic’s substantive claims regarding the defective feed were correct, then it had proceeded to gather the most vital item of evidence - namely, the preparation of a report from an expert witness - in order to base a claim for breach of contract and negligence in respect of loss and damage which occurred in Ireland which was (apparently) of little value in a Danish court. Yet by arranging for the preparation of such a report, the Irish legal advisers naturally followed the time-honoured law and practice of the requirements of Irish law and judicial practice. Against the background, how, it might be asked, could they have known that in this respect it would have been necessary for them to make an application in the first instance to a Danish court for an order under the Danish Administration of Justice Act to have a court appointed expert investigate the gathering of evidence in Ireland? 29. In the light of these advices it is scarcely a surprise that Celtic Atlantic elected not to pursue the counterclaim in respect of the defective feed. While there was some dispute between the Danish lawyers as to what actually happened at the Kolding court, it would seem that, according to the defence filed in the Danish proceedings that Celtic Atlantic set up the claim “as a counterclaim for compensation in support of the denial of liability. [Celtic Atlantic] reserves the right to set up a counterclaim for payment of damages.” 30. Celtic Atlantic pleaded in that defence that “the feed which had been delivered to [Celtic Atlantic] was defective and as a result the fish growth was not as expected and [Celtic Altantic’s] sales were ruined.” It also reserved the right to appoint an expert under the Danish Administration of Justice Act and to counterclaim for general damages. It also made extensive reference to the report of Hamish Rodger in that defence. 31. It would seem, therefore, that there was no true general counterclaim for damages in the sense which Irish procedural law would understand that phrase. There was rather a counterclaim by way of defence. This was really a defence on the merits - rather than a counterclaim in the true sense of the term - since Celtic Atlantic set up the (allegedly) defective nature of the product as a defence to the non-payment of the invoices, but did not file a general counterclaim for damages for breach for contract or for negligence. 32. This decision not to proceed with a general counterclaim to have been arrived in consideration of Mr. Moefelt’s report, but it was made sometime after Kelly J. had been informed in February 2010 that these proceedings would ultimately be determined by the Danish courts. An email sent by the plaintiff’s solicitors on 10th May 2010 records that it was agreed that the Irish proceedings would be stayed pending the outcome of the Danish proceedings. The writer, Barry Kenny, added:
Once the Danish proceedings are complete….we can revisit the proceedings in the [Irish] High Court.”
35. As far as the effect of this judgment is concerned, this Court has had the benefit of opinions offered by the two Danish legal experts, Mr. Henrik Benjaminsen (for Celtic Atlantic) and Mr. Kenneth Cramer (for Aller Denmark). There is in truth little difference between these two distinguished experts on many issues. Both agree that the judgment is a default judgment which is final and conclusive and is no longer appealable. Both further agree that the default judgment is not a judgment on the merits, but rather a judgment on the pleadings. Thus, Mr. Benjaminsen states:
38. Returning to the wider questions, perhaps the easiest point of departure is to consider, first, what the position would have been at common law and then, second, then to consider whether the common law has been altered by reason of the entry into force of the Brussels Regulation. We can now turn to consider these issues. PART II: THE POSITION AT COMMON LAW Recognition of foreign default judgments: the position at common law 39. The position at common law regarding estoppel by res judicata was well summed up in the following terms by Girvan J. in Lough Neagh Exploration Co. Ltd. v. Morrice [1999] NI 258, 274:
“Final and conclusive” “On the merits”
44. Clarke J. first articulated the general principle:
46. However, Clarke J. rejected the argument that Dalton v. Flynn is authority for the proposition that a dismissal on the basis that an action is bound to fail does not amount to a dismissal on the merits such as would necessarily give rise to a bar to the same issue being raised again:
There may, of course, be other reasons why proceedings may be dismissed as being frivolous or vexatious which would not require the court to go fully into the merits of the case. In those circumstances a dismissal may not amount to a bar to future proceedings. I am, therefore, satisfied that where a court enters into a consideration of the merits of a plaintiff’s claim on a motion to dismiss as being bound to fail and comes to the conclusion, on the merits, that the proceedings are bound to fail, that it follows that the same proceedings cannot be recommenced without infringing the doctrine of res judicata.” 48. Inasmuch as the Court granted Aller Denmark a negative declaration in a default judgment in claim 2 to the effect that the goods were delivered in accordance with the contract, that declaration would not be recognised by an Irish court on the application of Irish conflict of law rules since it was a form of exorbitant jurisdiction which deprived the true plaintiff (i.e., Celtic Atlantic) the right to sue in Ireland in respect of (allegedly) defective goods which caused loss and damage here. (The position under the Brussels Regulation is, as we shall, see, quite different). 49. It is also important to recall that the Danish court never adjudicated on the actual merits of any Celtic Atlantic’s counterclaim, since such a claim (as we would recognise it) was never presented (or, indeed, even lodged) before that court. It never even adjudicated on the merits of the defence set up by Celtic Atlantic which had pleaded the defective nature of the feed by way of defence. 50. It follows that so far, at any rate, as Irish domestic law is concerned, the decision of the Danish court in January, 2011 in respect of claim 2 does not give rise to a res judicata. “Between the same parties” 52. It follows, therefore, that this requirement of the identity of the parties is satisfied, at least so far as the common law’s requirements for an estoppel per rem judicatam are concerned. It is also important to observe that the Danish court expressly found in the jurisdictional judgment in August, 2009 (and confirmed on appeal in November, 2009) and by necessary implication in respect of the judgment for debt in January, 2011 that the terms of and conditions regarding the supply of the fish feed were those of Aller Denmark, irrespective of which subsidiary or associate company actually supplied the fish feed at any given time. Involving the same cause of action 54. Viewing the matter exclusively from the perspective of the common law and postponing for the moment any consideration of the Brussels Regulation, it can be said that the Irish claims for damages for breach of contract and for negligence are certainly closely related to the Danish claims. Nevertheless, it cannot be stated that the claims are in every respect identical, even so far as the claims between Celtic Atlantic and Aller Denmark is concerned. 55. First, the judgments in respect of both claim 1 and claim 2 only concerned the fish feed supplied by Aller Denmark after January, 2008 and represents, as we have already seen, approximately 7% of the fish feed supplied in total by the Aller companies. The position in respect of the much larger bulk of feed which had been supplied by Aller Ireland prior to January, 2008 is simply not addressed - even by implication - in this judgment. There might, in any event, be a claim for negligence over and above the terms of the contract on the basis that the product contained phosphorous levels which were inadequate for juvenile Atlantic salmon. 56. Of course, at one level it might be said that the very fact that the Danish courts gave judgment in respect of the claim 1 in respect of the invoices necessarily implies that the subject matter of the claim (namely the fish feed) was fit for purpose and of merchantable quality. Yet here - again, so far as Irish law, at any rate is concerned - there is a fundamental distinction between an action for a liquidated debt and a counter-claim for damages for breach of contract: see, e.g., Prendergast v. Biddle, Supreme Court, 31st July 1957), Walek & Co. K.G. v. Seafield Gentex Ltd. [1978] I.R. 167. 57. It accordingly does not follow that the claim for unliquidated damages for breach of contract and for negligence is inconsistent with an award for debt for a liquidated sum, since the claims relate to two different contractual obligations. Irish courts - and, for that matter, courts elsewhere within the European Union - frequently give judgment in favour of a plaintiff for debt while awarding the defendant damages for an unliquidated sum by way of counterclaim. Or, as Dicey, Morris & Collins, The Conflict of Laws (15th Ed., 2012) put the matter (at 778), “a judgment awarding an unpaid seller the price would not be irreconcilable with a judgment awarding damages to the buyer for breach of contract.” 58. The situation with regard to claim 2 is more complex, because the Danish court granted what amounts to a negative declaration to Aller Denmark that “the delivered feed on which Aller Acqua’s claim is based is in conformity with the contract.” This is, in effect, a declaration that Celtic Atlantic has no claim for damages for breach of contract in respect of the (allegedly defective) fish feed. Yet it must nevertheless be acknowledged that having regard to the special features of this case, a declaration that the fish feed was supplied in conformity with the contract would not necessarily preclude an action for negligence. It may be, for example, that the parties actually agreed that the fish feed would have a phosphorous content of 0.8%. But this would not necessarily prevent an action for negligence where the basis of the claim was that the supplier ought to have known that this product was quite unsuitable for its stated purpose, even if it were delivered in accordance with the contract. 59. In any event, I do not think that at common law an Irish court would have necessarily recognised a negative declaration of this kind which was granted in respect of claim 2. The common law tends to view negative declarations with some circumspection, albeit that they are by no means excluded on a priori basis. But there is a general “wariness about granting such relief in the case of transnational disputes out of a fear of encouraging forum shopping”: see Zamir and Woolf, The Declaratory Judgment (3rd.ed., 2002) at 118. Indeed, that very wariness can be detected in Websense International Technology Ltd. v. ITWAY SpA [2014] IESC 5, [2014] 2 I.L.R.M. 81 where MacMenamin J. suggested that “careful scrutiny might possibly be warranted” of applications for negative declarations which were brought as part of a strategy to choose a favourite jurisdiction, although he recognised that the potential for such arguments were strictly limited within the confines of the Brussels Regulations regime having regard to the judgment of the Court of Justice in Case C-116/02 Erich Gasser GmbH [2003] E.C.R. I-14721. 60. In the present case, however, an Irish court would not have recognised such a negative declaration, largely because it ousted the right of a plaintiff to bring an action in the Irish courts in respect of damage which - if the plaintiff is correct - occurred wholly within Ireland. That right is a central feature of our domestic rules of private international law, at least where case has more than a “tenuous” connection with this jurisdiction: see, e.g., the judgment of Walsh J. for the Supreme Court in Grehan v. Medical Inc. [1986] I.R. 528, 542 An Irish court would not accordingly recognise a negative declaration granted by a foreign court which effectively extinguished a true plaintiff’s right (i.e., the person claiming to have suffered loss and damage in Ireland by reason of a wrongful act) to sue in this jurisdiction in respect of such loss and damage. The rule in Henderson v. Henderson 62. The courts have nevertheless stressed that the rule in Henderson v. Henderson should not be applied in some automatic fashion. As Clarke J. observed in Mount Kennett Investment Co. v. O’Meara [2010] IEHC 216, [2011] 3 IR 547, 559 there is, therefore, a “material difference between a strict res judicata where the court has no discretion and the Henderson v. Henderson abuse where the court has some discretion.” 63. As I stated in Re Ashcoin Ltd. (No.2) [2013] IEHC 8:
67. Yet, having regard to the particular circumstances of the present case, it would nonetheless be unfair to bar the plaintiff on Henderson v. Henderson grounds. The fundamental reason why the plaintiff could not pursue the counter-claim was because it could not lead expert evidence on the allegedly defective nature of the fish feed. It could not have been foreseen when Mr. Rodger was retained to produce his expert report in July 2008 that it might also have been necessary to comply with the rather specific - and, viewed from an Irish perspective, quite unusual - requirements of Danish law which required the sanction of a Danish court under the Danish Administration of Justice Act before such an expert report might be even admissible or have any value in the Danish proceedings. Even if Celtic Atlantic were now to seek to obtain the sanction of the Danish courts under the Administration of Justice Act, the report of Mr. Rodger cannot now be replicated since, for obvious reasons, both the fish and the fish feed are no more. Conclusions on the common law question is concerned 69. It is true that the very existence of the Danish proceedings engages the rule in Henderson v. Henderson since, on one view, Celtic Atlantic had been presented with an opportunity to advance a counter-claim to those proceedings which they spurned. It would nonetheless have been unfair to require or expect Celtic Atlantic to pursue a counter-claim in circumstances where the admissibility of a critical expert report was at best doubtful, so that the having regard to the discretionary nature of the Henderson v. Henderson jurisprudence, it would be unfair to bar the claim on these grounds. 70. We can now proceed to consider whether and, to what extent, this has been changed by the Brussels Regulation. PART III: THE IMPACT OF THE BRUSSELS REGULATION
73. First, does Article 27 of the Brussels Regulation apply in the present case? 74. Second, even if it does not, is the obligation of this Court to ensure that the creation of potentially inconsistent judgments is avoided confined to those cases where the foreign judgment would itself have been entitled to recognition under Chapter III of the Brussels Regulation. 75. Third, if the answer to the second question is in the affirmative, would the Danish judgments themselves be entitled to recognition in this State? 76. We may now consider these questions in turn. Does Article 27 of the Brussels Regulation apply in the present case?
2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.” 79. This matter was considered by the English High Court. in Tavoulareas v. Tsavliris (No.2) [2005] EWHC 2643, [2006] 1 All E.R. (Comm)130. In that case it was accepted that an English court was bound to stay proceedings under Article 27 pending the determination of Greek proceedings involving the same object and cause of action. Once, however, the Greek court delivered its judgment in October 2004, the question then arose as to whether Article 27 continued to apply. 80. Andrew Smith J. concluded that it did because, he argued, if it were otherwise ([2006] 1 All E.R. 130, 133):
82. This, in any event, is also the view expressed by some of the most distinguished commentators on the private international law. Thus, writing from an English perspective, Briggs and Rees, Civil Jurisdiction and Judgments (4th Ed., 2005) state (at 235-236):
The general duty of the courts not to permit inconsistent judgments within the Brussels Regulation system 86. This point was made in the context of the lis alibi pendens provisions (Article 21 and Article 22) of the Brussels Convention (and now Article 27 and Article 28 of the Brussels Regulation) by the Court of Justice in Case C-163/95 Freifrau von Horn [1997] ECR I-5451:
“Though decided in the context of the Brussels Convention, it may be assumed to be equally applicable to the Brussels Regulations. The underlying objective of the Convention is to avoid conflicts between judgments delivered in the courts of the Member States between the same parties and touching on the same subject-matter. It follows that the courts of the Member States must act so as to prevent conflicting judgments from arising…..The Court thus established the broad principle, mentioned above, that the courts of the contracting states should avoid the risk of giving irreconcilable judgments. Even in the absence of express provision for cases where judgment had already been given, it applied a purposive interpretation by building on the combined effect of Article 26 (recognition) and Article 21 (lis pendens) [of the Brussels Convention]. It follows that an Irish court may not entertain a claim in respect of a matter covered by the Brussels Convention where the court of another contracting state has given judgment between the same parties.” 88. These comments of Fennelly J. make it plain that, generally speaking, the commencement of a second set of proceedings in respect of a judgment already given between the same parties, is per se abusive. 89. The decision of the Northern Irish High Court and that of the Northern Irish Court of Appeal in Lough Neagh Exploration Co. Ltd. v. Morrice [1999] NI 258 is also to the same general effect. In that case the plaintiff company, LNE, had acquired seismic data in aid of its exploration activities in respect of an area which straddled the land border between Ireland and Northern Ireland. The defendant was a 50% shareholder in LNE and she had entered into a contract to provide consultancy advice to that company. After the expiry of that contract she announced that she now going to assist a US company, P. Ltd., in its endeavours to explore the oil and gas reserves of the region. In 1996 the (Irish) Minister for Transport, Energy and Communications announced that he proposed to grant a petroleum prospecting licence to P Ltd. and to S Morrice and Co. Ltd. 90. At that point LNE commenced proceedings in this State claiming damages for breach of contract and breach of fiduciary duty. LNE further claimed relief as against the Minister. An application for an interlocutory injunction was refused by Laffoy J. on 27th August, 1997, and the proceedings were ultimately struck out by the Supreme Court on 17th May, 1999. LNE had, however, commenced separate proceedings in Northern Ireland for breach of contract and breach of fiduciary duty against Ms. Morrice in April 1998. She then applied to have those proceedings struck out on the ground that they amounted to an abuse of process. 91. In the High Court Girvan J. concluded that the fresh Northern Irish proceedings constituted an abuse of process because there had been no insuperable procedural difficulties to the plaintiff maintaining its proceedings in this State. The attempt to re-litigate the matter in Northern Ireland was accordingly abusive. As Girvan J. put it ([1999] NI 258, 278):
93. It follows, therefore, that if the present proceedings were to lead to judgments in this jurisdiction which were inconsistent with the Danish judgment, they would in principle have to be regarded as abusive. Yet even if these proceedings lead to an inconsistency, this would not necessarily be abusive if it could be shown that the Danish judgments (or parts of them) would not be entitled to recognition under Chapter III of the Brussels Regulation. Would the Irish proceedings be inconsistent with the earlier Danish judgments?
96. What, then, did the Danish judgments decide? It is clear that between the judgments on the jurisdictional motion in August 2009 and November 2009 and the default judgments of January 2011 in respect of claim 1 and claim 2, the Danish courts decided the following propositions. 97. First, they decided that Aller Denmark delivered the feed ex works at Christiansfeld, so that the Danish courts had jurisdiction for the purposes of Article 5(1)(a) and (b) in respect of the contractual claim. Second, it is clear from the judgment on the jurisdictional motion that the court looked to the trading history of the parties, so that the obligation to supply ex works applied to all supplies, irrespective of whether the supplier was Aller Denmark or its affiliates, such as Aller Ireland. Third, the court held that Celtic Atlantic had failed to pay for the fish feed supplied by Aller Denmark, so that Aller Denmark were entitled to judgment for €58,655 (plus interest) in respect of these two invoices. Finally, the court ruled, that Aller Denmark had delivered the fish feed which was the subject of the invoices “in conformity with the contract.” 98. It is the latter finding that causes the most difficulties from a conflict of laws perspective. In principle, the Danish judgment amounts to a finding that the fish feed delivered according to the two invoices by Aller Denmark after January 2008 was in conformity with the contract. The corollary of this proposition is that it is not now open to Celtic Atlantic to argue in an Irish court that in respect of these particular supplies by Aller Denmark there was any breach of contract or that the products were defective in the sense that they did not conform to agreed specifications. This in turn means that the Celtic Atlantic cannot sue Aller Denmark in negligence, save insofar as it is alleged that Aller Denmark were negligent in supplying the wrong type of fish feed in the first place (i.e., supplying fish feed with a phosphorous level of 0.8% to juvenile Atlantic salmon), even if the fish feed was in fact supplied in a manner which conformed to the contract. 99. But I do not think that the matter can be put any further from the perspective of the Aller companies or that any wider implications can be drawn from the Danish judgments. It is clear, for example, that the Danish judgments do not address issues arising from the supply of fish feed prior to January, 2008 by Aller Ireland, save that it is clear from the determination on the jurisdictional motion that the place of performance of the obligation in question for the purposes of jurisdiction in contract under Article 5(1) of the Brussels Regulation in that case as well was ex works Christiansfeld. 100. It is for these reasons that a claim in this jurisdiction against Aller Ireland for damages for breach of contract or negligence would not be inconsistent with the Danish judgments. An action for damages (whether in contract or negligence) against Aller Denmark in respect of the feed which was the subject of the two invoices is, however, barred by reason of the prior Danish judgments, save only (i) to the extent that those judgments would not be recognised in Irish court (a matter which is next addressed) and (ii) that an action for negligence alleging that Aller Denmark delivered fish feed which was inherently unsuitable for these particular fish in the conditions under which they were being farmed would not be barred. 101. In the latter case, an award of damages for negligence would not be inconsistent with the prior Danish judgment because it would be tantamount to saying not that the fish feed supplied was defective and contrary to the contractual specifications, but rather that independent of the contractual specifications, Aller Denmark supplied the wrong type of fish feed in this case and that it ought to have known this before supplying this type of feed for this type of fish (juvenile Atlantic salmon) which were being farmed and harvested by Celtic Atlantic. Would the Danish judgments be entitled to recognition under Chapter III of the Brussels Regulation? 103. Different consideration arise in relation to the second claim which, as we have also seen, amounts to a negative declaration that Aller Denmark was not liable in respect of the claims for breach of contract. It is true that the determination was only to the effect that the feed had been supplied in a manner which conformed to the contract, but this also impliedly amounts to a declaration that there had been no breach of contract or even negligence on the part of Aller Denmark in the manner in which these goods had been supplied to Celtic Atlantic, unless, as we have seen, it is argued that these contractual specifications (i.e., 0.8% phosphorous) were inherently unsuitable or defective in themselves. 104. The issue of negative declarations in the context of the special jurisdiction provisions of the Brussels Regulation was examined by the Court of Justice in Case C-133./11 Folien Fischer AG [2012] E.C.R. I- 000. In that case, an Italian company, Ritrama, had claimed in correspondence that the distribution policy operated by a Swiss company, Folien Fischer, was unlawful and contrary to competition law. Folien manufactures certain laminated paper goods which it distributes in Germany among other places. 105. Folien then brought an action in the German courts seeking in essence a negative declaration to the effect that that its distribution policy was not unlawful. The matter ultimately came before the Bundesgerichtshof which in turn referred the question of whether a negative declaration of this kind came within Article 5(3) of the Brussels Regulation to the Court of Justice under Article 267 TFEU. Article 5(3) is, of course, one of the special jurisdiction provisions of the Brussels Regulation which enables the courts of the place of the “harmful event” to assume jurisdiction in matters relating to tort, delict or quasi-delict. 106. While the Court of Justice acknowledged that an application for a negative declaration entailed “a reversal of the normal roles in matters relating to tort or delict”, it nevertheless considered that such a jurisdiction to grant a negative declaration was not ex ante excluded by Article 5(3). Nor did Article 5(3) come within the special rules as to jurisdiction identified in Article 15 et seq. of the Brussels Regulation “which are designed to offer the weaker party stronger protection.” 107. The Court concluded:
52. If, therefore, the relevant elements in the action for a negative declaration can either show a connection with the State in which the damage occurred or may occur or show a connection with the State in which the causal event giving rise to that damage took place…..then the court in one of those two places, as the case may be, can claim jurisdiction to hear such an action, pursuant to point (3) of Article 5 of Regulation No 44/2001, irrespective of whether the action in question has been brought by a party whom a tort or delict may have adversely affected or by a party against whom a claim based on that tort or delict might be made. 53. Where, on the other hand, the court cannot identify, in the State in which that court is sitting, one of the two points of connection referred to in paragraph 39 above, it cannot claim jurisdiction without failing to have regard for the objectives of point (3) of Article 5 of Regulation No 44/2001.”
110. So far as the present case is concerned, it is clear that (assuming that the negligence claim of Celtic Atlantic is well founded) the physical damage occurred in Ireland, as this is the place where the fish were supplied the defective feed. Yet even on this hypothesis the defective feed was admittedly manufactured in Denmark. Can it nonetheless be said that Denmark was also a place “of the event giving rise to that damage” for the purposes of Article 5(3) in the sense envisaged in Folien Fischer? 111. This issue was considered by the Court of Justice in Case C-198/09 Zuid-Chemie BV [2009] ECR I-6917. In that case a Dutch fertiliser company (“Zuid-Chemie”) ordered a product called micromix from another company (“HCI”) based in Rotterdam. HCI ordered the product from a Belgian company (“Phillippo”). Zuid-Chemie took delivery of the micromix from Philippo in Belgium and later processed the micromix at its factory in the Netherland in order to make fertiliser. 112. It later became clear that a batch of the micromix was contaminated with the result that the fertiliser was unusable. The Court of Justice held (at para. 32 of the judgment) that the Dutch courts had jurisdiction for the purposes of Article 5(3) as this was a place where the damage occurred “as a result of the normal use of the product for the purpose for which it was intended.” What is significant for our purposes, however, is that the parties were agreed - with the evident approval of the Court of Justice - that Belgium was the place of the event giving rise to the damage as this was where the contaminated micromix had been manufactured : see para. 25 of the judgment. 113. This view was further confirmed by the Court of Justice in Case C-45/93 Andreas Kainz [2014] E.C.R. I-000 where the Court held (at paragraph 29):
115. Moreover, in the light of the earlier findings regarding the supply of the product ex works, the Danish courts likewise had a jurisdiction under Article 5(1) - applying here by analogy the reasoning in Folien Fischer to the claims in contract - to grant a negative declaration that Aller Denmark had supplied the feed in conformity with the contract. Such a declaration is tantamount to saying that the products in question are not defective, save where it was argued that the Aller companies were negligent in supplying fish feed of this agreed type in the first place. On that basis, therefore, the negligence would consist of the supply of fish feed which was inherently unsuitable in respect of this fish being farmed under these conditions. 116. It follows, therefore, that the Danish courts had jurisdiction to give judgment in the manner indicated. In principle, such a judgment would be entitled to recognition subject to the limitations of those judgments for the present proceedings in this State and also public policy issue which I will now consider. Whether the Irish courts would refuse to recognise the Danish judgment on the grounds of public policy?
1. If such recognition is manifestly contrary to public policy in the Member State in which recognition is sought…..” 119. It is nevertheless clear, as the Court made clear in Krombach (at para. 42) that:
121. Article 41, Article 47 and Article 48 of the Charter all serve to guarantee the effective procedural rights of a party otherwise adversely affected by an administrative (and, by necessary extension, judicial) decision: see, e.g., Case C-277/11 MM [2012] E.C.R. I-000, at paras. 81-85. 122. In the present case, I accordingly find myself coerced to the conclusion that, by reason of the manner in which the Danish Administration of Justice Act operated in this case, the effective procedural rights of Celtic Atlantic were violated so far as claim 2 is concerned 123. I must stress immediately that this is not a reflection in the slightest on the Court at Kolding or the Danish judicial system or Danish procedural law. It is rather that Danish Administration of Justice Act contains rules and procedure - specifically, the (apparent) requirement that only expert evidence obtained pursuant to an order made by the Danish courts under that legislation is admissible in evidence or, if admissible, has any value - which an Irish company such as Celtic Atlantic could not have effectively complied with so far as evidence-gathering within Ireland is concerned. This is particularly so given that it could not have been aware at the relevant time when the Rodger report was first commissioned (July 2008) that the substance of its claim might ultimately fall to be determined by a Danish court by means of a negative declaration granted at the suit in that jurisdiction of the putative defendant to any Irish proceedings brought for breach of contract and in negligence. 124. Yet without that expert evidence Celtic Atlantic could not effectively advance its case that the fish feed was intrinsically unsuitable for these particular type of fish. On the special and particular facts of this case, the existence and operation of the Danish law operated - to borrow the language of Girvan J. in Lough Neagh Exploration - as an “insuperable” procedural obstacle which barred the effective prosecution of its claim. 125. It is for these reasons that I must conclude that the judgment of the Danish court so far as it concerned claim 2 (i.e., the negative declaration regarding the conformity of the fish feed to the contract) would not be entitled to recognition in this State on the ground that it would be manifestly contrary to public policy for the purposes of Article 34.1 of the Brussels Regulation. No such difficulties arise in relation to claim 1, this was a claim for debt on the invoices in respect of which the expert evidence was not required. 126. In these circumstances, it would not be contrary to the scheme of the Brussels Regulation to permit Celtic Atlantic to pursue its claim for breach of contract and negligence as against Aller Ireland in this jurisdiction and, where necessary, to sue Aller Denmark for negligence on the sole basis that the fish feed as so supplied was inherently unsuitable for fish of this nature, irrespective of contractual specifications. PART IV - CONCLUSIONS 128. First, the Danish judgment in respect of claim 1 in respect of the invoices rests on a finding that the fish feed which was supplied by Aller Denmark after January 2008 as per the two invoices was in accordance with contractual specifications. That issue may not be re-litigated in Irish proceedings, since even though that judgment was a default judgment, it is nonetheless entitled to recognition in this State under the Brussels Regulation. 129. Second, it would not, however, be inconsistent with this judgment were Celtic Atlantic to sue Aller Ireland for breach of contract in respect of fish feed supplied prior to January 2008. 130. Third, the Danish courts had jurisdiction in principle to grant a negative declaration in favour of Aller Denmark in respect of claim 2 to the effect that the fish feed has been supplied in accordance with the contract. This impliedly amounts to a negative declaration that Celtic Atlantic could not succeed in a claim for either breach of contract or for negligence, save where it is contended that the negligence consists of acts over and above the contract by, e.g., supplying fish feed which Aller Denmark ought to have known was unsuitable for this kind of fish. 131. Fourth, however, in the very special circumstances of this present case, recognition of the Danish judgment in respect of claim 2 would be manifestly contrary to public policy for the purposes of Article 34(1) of the Brussels Regulation. This is because the operation of the Danish Administration of Justice Act meant that the expert report prepared by Celtic Atlantic’s expert would probably not be admissible in evidence or, if admissible, would not be given any weight. The practical consequence of this was that Celtic Atlantic could not effectively advance its claim that the fish feed was unsuitable for this type of fish, since the success of this claim was entirely contingent on the admissibility of an expert report. Celtic Atlantic could not have foreseen in June and July 2008 that it would have been necessary to apply to the Danish courts to have such a report commissioned. The tests which Mr. Rodger conducted in the early summer of 2008 could not now be readily duplicated, even if an application to the Danish courts for the appointment of an expert under the Danish Administration of Justice Act were to be successful. 132. Fifth, it follows that I will allow Celtic Atlantic to proceed in this action against Aller Ireland for breach of contract and for negligence. The claim for breach of contract must be confined to feed supplied prior to January 2008, as any other claim would be contrary to the terms of the Danish judgment in respect of claim 1. 133. Sixth, I would allow Celtic Atlantic to join Aller Denmark to these proceedings for the purposes of proceeding with a claim in negligence only, the contractual issue having already been determined by the Danish courts in respect of the judgment concerning claim 1.
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