#3626 - Relationship Between Bir And English Rules - Conflict of Laws

RELATIONSHIP BETWEEN BRUSSELS 1 REGULATION AND ENGLISH NATIONAL RULES

Forum Non Conveniens and the Brussels Regulation

1. Where national jurisdiction derives from national law (pursuant to Article 4), courts can stay in favour of non-Member States

2. Where national jurisdiction derives from Art 2 BIR, courts cannot stay in favour of non-Member States on basis of forum non conveniens

   Owusu v Jackson [2005] (ECJ)

   English courts had previously thought that stay was possible where they had Art 2 jurisdiction

   Re Harrods (Buenos Aires) [1992]

   NB may still stay in favour of Member States (Art 27+28)

1. Alternative Bases of Jurisdiction

1. Article 5

   Reasoning in Owusu subsequently applied where court had jurisdiction under Article 5(6)

   Gomez v Gomez-Moche Vives [2008]

2. Article 23

   Suggested that Owusu reasoning applies where court has exclusive Art 23 jurisdiction

   Equitas Ltd v AllstateInsurance [2008]

   Skype Technologies v Joltid Ltd [2009]

   However doubted whether Owusu applies where court has non-exclusive Art 23 jurisdiction.

   Antec International v Biosafety USA [2006]

Fentiman

Surely argument with Article 23 is same as that for Article 5

i.e. where court is seised under Article 23, it is just as seised as it is under Article 2

Could be argued that as Art 2 is the ‘kingpin’ jurisdiction, Owusu is a special case

However this argument unlikely to get very far

2. Prior Proceedings in Third State

No Stay

Irish court held it had no power to stay proceedings where it had BIR jurisdiction even though parallel proceedings were taking place in a non-Member State

Goshawk Dedicated Life v Life Receivables Ireland [2008] (Irish Case)

This approach followed in subsequent English case

i.e. stay is done on forum non conveniens grounds

thus rationale behind Owusu applies equally

Catalyst Investment Group v Lewinsohn [2010]

Stay

Alternatively, has been held that English court has discretion to stay where there are pending parallel proceedings in a non-Member State

Lucasfilm v Ainsworth [2009] (obiter)

JKN v JCN [2011]

Catalyst has been expressly disapproved in recent case

Ferrexpo [2012]

Hard to see how ECJ will JK/Ferrexpo to stand. Contrary to teleological approach.

3. Jurisdiction Clause in Favour of Third State

   Held that court may stay proceedings where there is jurisdiction clause in favour of a non-Member State

   certainly where clause is exclusive, though possibly also where clause is non-exclusive

   Konkola Copper Mines v Coromin [2005] (obiter)

   Winnetka Trading Corp v Julius Baer International [2009] (ratio)

   Reasons given:

1. Owusu concerned doctrine of forum non conveniens

   however where court stays on basis of jurisdiction clause, forum non conveniens doctrine not in play (thus Owusu cannot apply)

   Winnetka [2009]

2. Possibly supported by Schlosser Report

   Konkola Copper Mines [2005]

   This proposition perhaps supported by ECJ case law.

   Coreck Maritime [2000] (ECJ)

4. Article 22

   Held that court may stay proceedings in situations where Art 22 has reflexive effect

   Ferrexpo v Gilson Investments [2012]

   This decision reached in context of validity of company resolutions

   However seems reasoning also applicable in relation to immovable property

   English courts traditionally believe they have no subject-matter jurisdiction in relation to foreign land

   British South Africa Co [1893]

   Thus technically discretion to grant a stay does not come into play whatsoever

Issues

Ultimately answer to above questions depends on what interpretation is given to Owusu.

And ECJ has not been called upon to answer any of these questions.

1. Alternative Interpretations

   Alternative interpretations of Owusu are:

1. ECJ objects to any use of national law for staying of actions

2. ECJ objects to use of discretion (i.e. forum conveniens)

3. ECJ objects to use of national law where this does not reflect provisions of Regulation

1. No Use of National Law

   One reading of Owusu suggests that under no circumstances can national law be used for the staying of actions

   Paragraph 34 of Owusu

   i.e. Regulation designed to “eliminate obstacles to functioning of internal market”

   and such obstacles “may derive from disparities between national legislations”

   This is the absolutist approach

   Goshawk + Catalyst Investment

   Would be the definitive end to any staying of actions in favour of non-Member States where jurisdiction based on BIR.

2. No Use of Discretion

   Another interpretation of Owusu is that non-discretionary grounds of declining jurisdiction under national law are ok

   e.g. immovable property in non-Member State

   Thus is only where ground of declining jurisdiction is discretionary that there can be no stay

   e.g. non-exclusive jurisdiction clause

   Case law:

   Skype Technologies [2009] (supports this view)

   Winnetka Trading Corp [2009], Konkola Copper Mines [2005] (do not support this view)

3. ‘Reflexive Effect’

   Another interpretation of Owusu is that relevant provisions of the Regulation have reflexive effect in national law

   i.e. that where the issues raised reflect the position between Member States under the Regulation, court has discretion to stay in favour of non-Member State.

   E.g. Articles 22, 23, 27 and 28.

   Possibility mentioned (but neither rejected nor approved) by AG Léger in Owusu.

   Given support by English cases

   Konkola Copper Mines [2005]

   JKN v JCN [2010]

   Ferrexpo [2012]

   English courts may stay e.g if German court has Article 22 jurisdiction (immovable property). Thus argued that the ‘reflexive effect’ of this is that English courts may stay if the case concerns immovable property in a non-Member State

Scope

Unclear what scope doctrine of reflexive effect has:

1. Liberal

• i.e. national courts retain discretion to stay wherever issues involved are broadly the same as those addressed by provisions of Regulation

• very uncertain – thus unlikely given hostility of ECJ in Owusu towards discretion

2. Medium

• i.e. national courts retain discretion to stay where, had the non-Member State been a Member State, they would have been obliged by Regulation to decline jurisdiction

• more certain – however by allowing courts a discretion, is still contrary to requirements of uniformity and certainty promoted by ECJ in Owusu

3. Strict

• i.e. national courts must stay where, had the non-Member State been a Member State, they would have been obliged by Regulation to decline jurisdiction

• most compatible with Owusu – mandatory stay avoids uncertainty inherent in allowing application of national law

  English courts have adopted the term ‘reflexive’ in the most liberal fashion

  i.e. where reflexive effect applies, BIR permits Member States to stay under their national rules

  and as English national rules allow courts discretion when deciding to stay, courts free to use discretion

  is not the case that the actual power to stay comes from BIR itself

  thus no need for strict reflexive effect

  Ferrexpo [2012]

2. Lacunae

   Suggested that stay may be granted where issues raised are not covered by Regulation at all

   i.e. even though the court’s jurisdiction is under Article 2

   Konkola Copper Mines [2005]

   JKN v JCN [2011]

   In one case, this meant stay could be granted even though court had Article 2 jurisdiction

   i.e. as the subject-matter of case (title to foreign IP) was not covered by BIR

   Lucasfilm v Ainsworth [2009] (CA)

When answering questions on whether stay is permitted under circumstances different from that in Owusu, is necessary to refer both to:

1. Authority

2. Relevant principles

Legislative Solution

Has been proposed that BIR be extended to cover defendants in a Third State.

On back of this assumption, Commission has proposed a new Article 34.

would allow Member State to decline jurisdiction where identical dispute is pending in a Member State and a third State.

would operate where:

1. non-Member State court is first seised of the dispute

2. dispute involves same cause of action and same parties

3. and a stay is required by the ‘proper administration of justice’

   Even though scope of discretion welcome, still open to criticism:

1. Why identical proceedings?

• Where cases are pending in different Member States, court may stay if they are merely related (Art 28)

2. Why the timing requirement?

• places undue emphasis on timing of proceedings

3. Why does the Article only cover parallel proceedings?

• other factors are arguably more relevant

  • lack of subject-matter jurisdiction, exclusive jurisdiction clauses etc.

Overruling Owusu?

Other possibility is amending Regulation so as to overrule Owusu

i.e. by remitting all questions of stay to national law

This is very unlikely to happen.

Suggestion

Would cause practical problems if English court could not stay proceedings under any circumstances

Collins LJ: would be odd if Regulation did not permit court to stay proceedings where case concerned land in third state/exclusive jurisdiction clause in favour of third state

Masri [2009]

surely the policy arguments behind Article 22, 23, 27 and 28 apply equally strongly where the other country is a non-Member State?

would be lacuna problems where situation not covered by Regulation

Reflexive effect doctrine is best compromise:

1. would promote certainty required by Regulation

2. would allow national courts enough discretion to avoid practical problems

   Thus only issue is as to how strict reflexive effect should be?

Critique of Owusu

• Owusu has been widely criticised, in terms of the quality of the reasoning and substance.

Hartley (2005)

1. Legal certainty argument wrong

   Was stated that legal certainty was for benefit of D

   i.e. as D will wish to be sued in his domicile (see notes)

   However whenever stay is granted in...