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The Enforcement of Jurisdiction Agreements Within The Brussels Regime

Published online by Cambridge University Press:  17 January 2008

Louise Merrett
Louise Merrett
Affiliation:
Fellow Trinity College, Cambridge and Barrister FountainCourt Chambers: From September 2006 Lovelis Lecturer in Law, University of Cambridge.
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Abstract

Until relatively recently the question of whether it is possible to get damages for breach of an exclusive jurisdiction clause was very rarely considered by the courts and had attracted little academic interest. But when considered alongside recent developments in cases covered by the Brussels regime, the subject becomes of potentially much greater practical significance. The main purpose of this article is to consider how the newly developing common law principles might apply in that context.

Type
Articles
Information
International & Comparative Law Quarterly , Volume 55 , Issue 2 , April 2006 , pp. 315 - 336
Copyright
Copyright © British Institute of International and Comparative Law 2006

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References

1 [2002] 1 Lloyd's Rep 425.

2 [2002] 1 WLR 1517.

3 [2002] EWHC 797 (Comm).

4 See, in particular, Tan, D and Yeo, N ‘Breaking Promises to Litigate in a Particular Forum: Are Damages an appropriate remedy?’ [2004] LMCLQ 435;Google ScholarTham, C ‘Damages for breach of English jurisdiction clauses: more than meets the eye’ [2004] LMCLQ 46.Google Scholar

5 It would, of course, be possible for the parties to confer on the court a jurisdiction it already has — but the clause is, in such a case, effectively pointless.

6 See Fawcett, J ‘Non-exclusive jurisdicaton agreements in private international law’ [2001] LMCLQ 234, 235; C Tham (n 4) 58. This may be true of an arguement denying that the chosen court has jurisdiction at all, but whether there is a positive obligation not to apply for a stay of proceedings in the chosen forum must be a more difficult question.Google Scholar

7 Such clauses can raise interesting issues of their own (see J Fawcett (n 6) 239–40) but for the purposes of this article they raise the same issues as ‘exclusive’ jurisdiction agreements in the traditional sense.

8 cfHo, L ‘Anti-suit Injunctions in Cross-Border Insolvency: A Restatement’ [2003] 52 ICLQ 697, who suggests that a jurisdiction clause is not an ordinary contract creating an independently enforceable obligation. Cf the critique of that view in C Tham (n 4). He accepts that the clause creates a binding promise but doubts whether it a promise which sounds in damages.CrossRefGoogle Scholar

9 See Continental Bank v Aekeos [1994] 1 WLR 588: ‘a claim for damages for breach of contract would be a relatively ineffective remedy’; ‘the bank' legal rights will prove to be valueless unless the injunction is granted’; The Jay Bola [1997] 2 Lloyd's Rep 79: the usual remedy is a stay (if proceedings are commenced in England) or anti-suit injunction if commenced abroad. ‘The aggrieved party also hasthe option to sue for damages for breach of contract though this is rarely a satisfactory remedy.’

10 An argument to the contrary (that is, that an anti-suit injunction was directed only at the person and therefore could not be inconsistent with the Brussels regulation scheme for allocating jurisdiction between contracting states) was understandably given short shrift by theECJ in Turner v Grovit, para 28.

11 Aggeliki Charis Campania Maritima v Pagnan Spa ‘The Angelic Grace’ [1995] 1 Lloyd's Rep 87, 96 per Millet LJ.

12 Donohue v Armco 439 per Lord Hobouse. A fuller explanation of the position at common law can be found in Peel, E ‘Exclusive jurisdiction agreements: purity and pragmatism in the conflict of laws’ [1998] LMCLQ 182.Google Scholar

13 Another possible situation is referred to in The Lisboa [1980] 2 Lloyd's Rep 546. The Court of Appeal indicated that even if an exclusive jurisdiction clause in favour of the English court covered the arrest of a vessel in Italy, an injunction should not be granted to enforce that clause. The court relied, inter alia, on the delay in bringing the claim for an injunction and the commercial purpose and importance within maritime law of the arrest procedure.

14 The Sennar [1982] 2 All ER 104.

15 [1983] 3 All ER 140.

16 [1995] 1 Lloyd's Rep 87.

17 See Doleman & Sons v Osset Corporation [1912] 3 KB 257; Mantovani v Carapelli SpA [1980] 1 Lloyd's Rep 375. The extent to which arbitration clauses can be equated with exclusive jurisdiction clauses is disputed by some (see C Tham ‘Damages for Breach of English Jurisdiction clauses: more than meets the eye’ (n 4), and referred to in n 8 above) but was relied on by the Court of Appeal in The Lisboa.

18 Indeed, the court hearing the claim for damages, does not re-hear evidence so as to decide the case again on the merits, rather it hears evidence as to why the result may havebeen different: see D Tan and N Yeo (n 4) n 17.

19 cfMales, S ‘Comity and anti-suit injunctions’ [1998] LMCLQ 543, 549. When considering anti-suit injunctions he takes a different view stating that if theforeign court accepts jurisdiction in situations where there is alleged to be an exclusive jurisdiction agreement in favour of England it would be ‘patronising, invidious and the reverse of comity for the English court then to grant an injunction, directly conflicting with the decision of the foreign court on the ground that the foreign court arrived at the wrong decision’.Google Scholar

20 This was, in essence, the reason why relief was refused in Donohue v Armco.

21 See E Peel (n 12) 226 and D Tan and N Yeo (n 4), both of whom envisage an award of damages being made in this situation.

22 cf the provisional view Clarke J (as he then was) in Banco de Honduras vEast West Insurance Co Ltd [1996] 1 Lloyd's Rep 74. In Svenborg v Wensa [1996] 2 Lloyd's Rep 559, 574 he repeated that this was his ‘provisional view’ but recognized that the contrary is also arguable.

23 [1980] 2 Lloyd's Rep 546.

24 The same result can be achieved as a matter of contractual construction. Lord Denning had already held as the primary ground for his decision that the clause in question couldbe construed in a way which did not extend to claims for security. It is also possible to see his dicta as indicating that there will be a condition in every jurisdiction agreement that it does not preclude security claims in this situation.

25 Art 25 of the Brussels Regulation.

26 Briggs, A ‘Anti-European teeth for choice of court clauses’ [1994] LMCLQ 158, 162.Google Scholar

27 This is probably the best construction of the clause in the Continental Bank case.

28 Couturier v Hastie (1856) 5 HLC 673; and generally Chitty on Contracts 29th edn ISBN 5-033-5-035.

29 See Montovani per Megaw LJ. If a party is sued in England in breach of an arbitration clause, the proper remedy is to apply for a stay under s 4 of the Arbitration Act. If the court refuses a stay because the case is not a proper one for arbitration, the contract by inference includes the provision that if the court holds that the case is not suitable for arbitration there is no breach in not arbitrating.

30 Ultimately, both common mistake and the implication of conditions into the contract depend on an analysis of the parties intentions and which label is applied should not matter (see Chitty ISBN 5-039–5-041).

31 (1883) QBD 674.

32 [1883] QBD 674, 690.

33 [1962] 1 QB 306.

34 See also Lord Scott in Donohue v Armco and Oft Africa Line Ltd v Magic Sportswear Corp [2005] 1 Lloyd's Rep 252.

35 para 37. No question seems to have been raised as to whether a claim for costs should have been made in the Hong Kong proceedings. Usually it will not make any difference whether the contract breaker pays by way of costs or damages but, if necessary, it seems arguablethat the failure to claim costs in that forum could amount to a failure to mitigate.

36 The views of some authors to the contrary, in particular Ho and Tham, have already been mentioned.

37 The Brussels Convention has been replaced from 1 Mar 2002 by Council Regulation (EC) No 44/2001 (‘The Brussels Regulation’).As between the original MS's except Denmark, the Position is now regulated by the Brussels Regulation. The Lugano Convention stillapplies to EFTA states. The Differences between the various regimes are not material for the issues discussed in the article and the discussion will be based on the provisions of the Brussels Regulation.

38 [1994] 1 WLR 588.

39 See Briggs, A (n 26) 159; Dicey, & Morris, The Conflict of Laws (13th ednSweet & Maxwell London 2002) paras 12–122.Google Scholar

40 See further on this aspect of the case: Kruger, T ‘The Anti-Suit Injunction in the European Judicial Space: Turner v Grovit’ [2004] ICLQ 1030.CrossRefGoogle Scholar

41 Elefanten Schu GmbH v Jacqmain [1981] ECR 1671.

42 In Tracomin SA v Sudan Oil Seeds [1983] 3 All ER 140, for example, an action was brought in Switzerland in breach of a London arbitration clause. An application was brought to stay the Swiss proceedings but it was dismissed because the seller negligently failed to plead relevant English law relating to incorporation of the arbitration clause. Hence the Swiss court held that the arbitration clause was not applicable in a situation where it was clear that the English court would have reached the opposite view.

43 eg in English law a clause does not need to provide expressly that it is exclusive. This id not necessarily the case in the rest of Western Europe, see E Peel (n 12) n 9.

44 See generally The Angelic Grace (n 11) and The Eastern Trader [1996] 2 Lloyd's Rep where the court assumed, without detailed analysis, that if there had been submission that would have prevented a claim for damages being made. In DVA v Voest [1997] 1 Lloyd's Rep 179 Morison J Commented that submission to the jurisdiction was tantamount to a waiver of the contractual provision on the basis of which the anti-suit injunction is founded. The Court of Appeal [1997] 2 Lloyd's Rep 279 confirmed that on the facts there was no waiver on acquiescene. Cf Svendbourg v Wansa [1996] 2 Lloyd's Rep 559, where submission was treated as being relevant only to delay in applying for the injunction.

45 For example, Lord JusticeMance, ‘Exclusive Jurisdiction Agreements and European Ideas’ [2004] LQR 357, 363, writing on the decision in Eric Gasser, concludes that the result can only be practical uncertainly with large scope for tactical manoeuvrings, and notes that the question of whether a claim for damages might offer redress is a matter for speculation.Google Scholar

46 See Fentiman [2004] CLJ 312.

47 Section 32 (4) (b).

48 Article 35 provides that a judgment shall not be recognized if it conflictswith ss 3 (insurance), 4 (consumer contracts) or 6 (Art 22 exclusive jurisdiction). Thus, it does not apply to judgments given in conflict with an exclusive jurisdiction agreement under Art 23.

49 Which are excluded from the scope of the Brussels Regulation. See Through Transport Mutual Insurance Association v New India Assurance Co [2004] EWCA CIV 1598.

50 Art 34(1) of the Regulation. See Clarkson, CMV and Hill, J (eds) Jaffey on the Conflict of Laws (2nd ednReed Elsevier 1999 184–5.Google Scholar

51 An obvious example might be where the parties have obtained judgment by ignoring an injunction against the continuing of proceedings as in Philip Alexander Securities and Futures Ltd v Bamberger [1997] IL Pr 72 where the court indicated that a judgment givenin the fact of an interlocutory injunction granted by the commercial court should not as a matter ofpublic policy be recognized in the UK. But for the reasons explained in detail above, given that it is no longer open on the court to grant an anti-suit injunction in these circumstances it is unlikely that such a situation would arise in practice.

52 This difficulty was referred to by Hobhouse J in The Atlantic Emperor (No 2) [1992] 1 Lloyd's Rep 624.

53 Issue estoppel is not dealt with expressly in the Regulation but as a judgment which is entitled to be recognized must be treated as though it were an English judgment there seems to be no reason why a defendant could not rely on an issue estoppel arising from that judgment. See A Briggs ‘The Conflict of Laws’ 116–17.

54 See, for full discussion of Owusu v Jackson, Harris, J ‘Stays of Proceedings and the Brussels Convention’ [2005] ICLQ 933.CrossRefGoogle ScholarColman, J in Konkola Copper Mines plc v Coromin [2005] EWCH (Comm) 898 ruled that such a stay should in principle be possible but his views were obiter and it remains to be seen whether the ECJ would agree.Google Scholar