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  • “Weighing Anchors”: assessing the merits of claims against “anchor defendants” after Sabbagh v Khoury [2017] EWCA Civ 1120? - Michael McParland QC View More

    Thu, 03 August, 2017

    The Court of Appeal’s 28 July 2017 decision in Sabbagh v Khoury [2017] EWCA Civ 1120 is compulsory reading for anyone involved in cross-border cases where EU domiciled defendants are joined to proceedings in England and Wales under the ancillary jurisdiction rules of the Brussels I Regulation.

    Rules

    Those rules, formerly found in Article 6(1) of the original Brussels I Regulation (44/2001) and which are now found in identical terms in Article 8(1) of the Brussels I (Recast) Regulation (1215/2012), provide that:

     “A person domiciled in a Member State may also be sued:

    1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings;”

    Within the Brussels I jurisdiction regime this rule serves a similar function to the “necessary or proper party” jurisdiction joinder rule found in CPR 6.37 and PD6B para. 3.1(3). But the Regulation’s rule is much narrower than the common law. One defendant has to be domiciled in the UK (the so-called “anchor defendant”) and the exercise of ancillary jurisdiction under the Regulation is subject to the proviso that the claims brought against that anchor defendant and the other EU domiciled defendants are “… so closely connected” that it is “expedient” to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

    In cross-border litigation, this rule have provided a fertile source of dispute, and there has been repeated concerns expressed about it being used abusively to deprive EU defendants of the right to be sued in their Member State of domicile. How can such abuse be avoided? The European Court of Justice (“CJEU”) has provided guidance of sorts on the operation of Article 6(1) in a series of piecemeal and occasionally Delphic judgments. For example, in Reisch Montage AG (C-103/05) [2006] E.C.R. I-6827, at [32], the CJEU Stated that Article 6(1):

     “… cannot be interpreted in such a way as to allow a plaintiff to make a claim against a number of defendants for the sole purpose of removing one of them from the jurisdiction of the courts of the Member State in what that defendant is domiciled”.

    But in Freeport plc v Arnoldsson (Case C-98/06) [2008] QB 34, the CJEU stated (at [54]) that Article 6(1) can be applied

     “without there being any further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the member state were one of the defendants is domiciled”.

    But should a national court apply a “merits test” in evaluating the claim against an anchor defendant before exercising its ancillary jurisdiction over defendants domiciled in other EU Member States?

    In Aeroflot – Russian Airlines v Berezovksy [2013] EWCA Civ 784, [2013] 2 Lloyd’s Rep. 242, the Court of Appeal considered that there was no place in assessing the merits of the claims against the other foreign defendants who had been joined to the action under Article 6(1). But what about the merits of the claim against the anchor defendant himself?

    In Sabbagh, the Court of Appeal engaged in a very detailed obiter discussion of this question, with the majority opinion being that the merits of the claim against the anchor defendant is a relevant consideration for the national court when considering whether ancillary jurisdiction should be exercised under Article 6(1).

    The Majority

    The majority (Lord Justices Patten and Beatson) considered that if the claim against the anchor defendant was “hopeless or presents no serious issue to be tried”, then it could be inferred from the “bringing of an unsustainable claim” against the anchor defendant that the claimant’s real purpose was to remove the co-defendants domiciled in other Member States from the jurisdiction of the courts of those states. It would amount to “a misuse of Article 6(1) to allow hopeless claims to oust the jurisdiction of domicile of foreign co-defendants”, something which they considered was prohibited under “sole purpose” or “sole object” analysis that is found in the CJEU’s existing case-law, especially the decision in Reisch Montage AG (C-103/05) [2006] E.C.R. I-6827 highlighted above. Their Lordships observed (at [69]) that:

     It is important, and the CJEU is clearly concerned to ensure, that Article 6(1) is not misused. In our judgment, it would be a misuse of Article 6(1) to allow hopeless claims to oust the jurisdiction of domicile of foreign co-defendants. To allow the claim to proceed in the present appeal would undermine the   principle that a defendant may be sued only before the courts for the place where he is domiciled. It is said that the merit of an approach which eschews any examination of the merits of the claim absent evidence of abuse or fraudulent intention to artificially fulfil the requirement of connection under Article 6(1) is that it avoids the risk of irreconcilable judgments and protracted disputes about the substance of a claim at the jurisdiction stage. But it does so by a bright line binary rule which does not address the fact that derogations from the general principle that civil actions are to be bought against defendants in the courts of the place where they are domiciled must be restrictively interpreted. It is open to question whether this is justified or whether this is the true import of the decisions of the CJEU which have not directly addressed the question that is before us. It is also said that defendants may, subsequently, if they wish, attempt to strike out the claims. That, however, would simply shift to strike out and summary judgment applications what is said to be undesirable and impermissible in the context of jurisdiction”.

    The Vice-President, Lady Justice Gloster, dissented from the majority’s obiter conclusions. In a detailed and careful analysis of the existing authorities, Her Ladyship held that there was clear authority that Article 6(1) could be used to establish jurisdiction against non-anchor defendants even if the claim against the anchor defendant will not proceed, unless the claimant is engaged in a fraudulent abuse of Article 6(1). That qualification of the operation of Article 6(1) would only arise when a national court was satisfied there was firm evidence to demonstrate fraudulent abuse. There was no scope for an evaluation of the merits of the claim against the anchor defendant.

    Her Ladyship also considered that English courts could not incorporate a merits test in relation the claim against the anchor defendant within the requirement in Article 6(1) of establishing a close connection between the claims. Gloster LJ considered that the defendant’s submissions in support of the adoption of a merits test were inconsistent with the CJEU’s decisions, especially that of Reich Montage. Her Ladyship then made a number of observations on the decision in Aeroflot – Russian Airlines v Berezovksy [2013] EWCA Civ 784, [2013] 2 Lloyd’s Rep. 242, which concerned the application of a merits test to the claims against the foreign, non-anchor, co-defendants. Gloster LJ considered Aeroflot must be “approached with a degree of caution”.

    Benefits

    There is much benefit to be gained from a reading of the conflicting conclusions in Sabbagh. The difference between the two positions is both important and subtle. In practical terms, defendants challenging the exercise of jurisdiction may well wish to argue that a merits test should be applied. Claimants, especially those asserting jurisdiction based on relatively weak claims against an anchor defendant, who may well not be the main target of their claim, are likely to argue the opposite. But it is abundantly clear that the issues raised in these obiter conclusions in the Court of Appeal will have to be fought out in future cases. There may well have to be a lot more “weighing anchors” before the issue as to the correct approach to the exercise of this ancillary jurisdiction is finally resolved.

     

    Michael McParland QC

    Michael McParland QC is an international lawyer, with a wide ranging practice in commercial, civil and international advocacy and advice in the courts, arbitral and regulatory tribunals of England and Wales and overseas.

    Michael has been described by clients in the Chambers UK and the Legal 500 legal directories as “phenomenal”, “incredibly knowledgeable and a tremendous advocate who is a very powerful person to have on your side” , “a thorough, knowledgeable and intelligent advocate”, “incredibly bright and hardworking, a real team player”, “a really powerful operator” with “complete control of the facts of a case” who “really thinks about things and then steamrollers the opposition”.  He is said to have “real commercial intelligence and an easy client manner”, his advocacy is “effective and persuasive” and his “attention to detail prepares him for all eventualities in the course of litigation”.

    Michael is a recognised international law expert. He is the author of The Rome I Regulation on the Law Applicable to Contractual Obligations (Oxford University Press, 2015), a leading textbook on private international law that is cited with approval by the Advocate-General in the European Court of Justice and by judges in the Commercial Court. “

    > read Michael's full profile

  • A return to a stricter approach to time-limits? - Jonathan ChambersView More

    Mon, 31 July, 2017

    Lakhani v Mahmud [2017] EWHC 1713 (Ch)

    The modern and oft-repeated advice to legal practitioners is that non-compliance with time-limits may lead to sanctions and will result in the costs and embarrassment of a potentially unsuccessful application for relief from the sanctions under CPR 3.14. The best advice is comply and failing that make your application for relief from sanctions promptly.

    A good example of the pitfalls of a dilatory approach leading to arguably ‘disproportionate’ sanctions centre in Lakhani v Mahmud [2017] EWHC 1713 (Ch).

    Facts
    As is standard practice, parties were ordered to file and serve updated costs budgets 21 days before a costs and case management conference (CCMC). This was to enable the parties to communicate with each other in good time prior to the hearing to limit disputes over costs budgeting. The Claimant’s solicitor complied but the Defendant’s solicitor failed and filed and served it a day late. The automatic consequence under the CPR was that, unless relief from sanctions was permitted, the Defendant would be unable to recover any more than court costs if successful.

    In the meantime and prior to the CMCC the parties’ solicitors got on with the exercise of commenting on each other’s costs proposals. Thus the Defendant argued on its application at the CMCC for relief from sanctions on the basis that the Claimant had suffered no prejudice by missing the deadline by a day.

    The Decision
    At first instance HH Judge Lochrane held that being one day late with a costs budget “might not be regarded as terribly serious”.  However in this case it was serious because (i) it was only accepted belatedly that the costs budget was late, (ii) the situation was made worse by the solicitor’s annual Christmas closure, (iii) the solicitor was aware that filing late would restrict a period already limited, (iv) the fact that budgets had not been agreed in any event was irrelevant and (v) late service had ‘created an environment’ which was not conducive to agreement.

    Thus although no actual prejudice had been suffered, it was a serious not a trivial breach and there was no sensible excuse for the breach (applying Clearway Drainage Systems Ltd v Miles Smith Ltd [2016] EWCA Civ 1258).

    The Appeal and the Test
    On appeal to the Chancery Division, Daniel Alexander QC upheld the decision at first instance and held that relief from sanctions should not be given.

    As a matter of principle Case Management decisions should not be interfered with if the court below has “applied the correct principles and…has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the trial judge”.

    The High Court applied the 3 stage test in Denton [2014] EWCA Civ 906 which is as follows:

    1. The first stage is to identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order”. If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.
    2. The second stage is to consider why the default occurred.
    3. The third stage is to evaluate "all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]"."

    At the first stage the test is not whether a future hearing date is imperilled. A breach may be incapable of affecting the efficient progress of the litigation and may still be serious. At the second stage, the fact that solicitors may be under pressure and have too much work will rarely be a good reason for a default. As to the third stage, the factors set out in CPR 3.9(1) (a) and (b) ((a) efficient conduct of litigation at proportionate cost and (b) enforcement of rules, PDs and Orders) may not be of paramount importance but are of particular importance.

    The High Court considered that the following factors rendered the breach ‘serious’.

    (i) The absolute and relative amount of time lost by missing the deadline had to be considered. Although a comparatively generous period for compliance was provided in terms of number of days the effective useable time was more limited. It is legitimate for a court to take account of the effective amount of time available and how much of that was lost as a result. The amount of time lost can be more significant where a task involves a degree of co-operation, such as attempting to agree a matter, rather than the unilateral performance of an act.

    (ii) Whether missing the deadline affected the litigation or a procedural step in it or was likely to do so. If litigation is adversely affected as a result of breach of an Order, necessitating an adjournment or by making it much harder to reach agreement without a hearing on given issues or by making other steps in litigation more difficult or complex to perform, that is a powerful factor in favour of finding that the breach was serious or significant. However it is not an over-riding factor and in the case of orders whose performance requires a degree of co-operation it may make it more inconvenient and costly, since extra time may need to be made available.

    (iii) The direct consequences of missing the deadline and how it was addressed. The mere fact that an application for relief from sanctions might need to take place at the same time as an attempt to complete the tasks required by the Order does not mean that the breach should necessarily be regarded as serious on the basis that such may risk distraction. However, where a party in default makes “a mountain of procedural annoyance out of a molehill of missing a deadline” it may be serious.

    (iv) The impact of missing the deadline on litigation generally. In this case what should have been a short hearing on costs-budgeting turned into a long one dominated by relief from sanctions, using valuable court time.

    Secondly, the High Court also found that there was no reasonable excuse for the default. An error made by a legal representative as to a particular deadline for compliance should not be treated as a reasonable excuse.

    Thirdly, the High Court held that the sanction dealt justly with the breach. Although “on the tougher end of the spectrum” the simple effect of the Rules is that the Defendant is deprived of their budgeted costs in the event that they succeed and if they lose at trial the sanction will have had a limited adverse impact on the Defendant

    Conclusion
    Thus the moral of the story must be to diarise, diarise and diarise and then comply with Court deadlines. As Shakespeare wrote “Better three hours too soon than a minute too late” (The Merry Wives of Windsor)

    Jonathan Chambers

    Jonathan has a broad practice covering all aspects of commercial and transport law.  He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior  with Chambers UK (2016)  commenting that he is  “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2016) describing him as “Very well prepared”.

    Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.

    jonathan.chambers@quadrantchambers.com

    Related News:

    Challenging jurisdiction (well) out of time – justice trumps time-limits - Jonathan Chambers

  • Challenging jurisdiction (well) out of time – justice trumps time-limits - Jonathan ChambersView More

    Mon, 31 July, 2017

    Newland Shipping and Forwarding Ltd v Toba Trading FZC [2017] EWHC 1416 (Comm) (Ms Sara Cockerill QC)

    The English Commercial Court recently dealt with a dual application by the Fifth Defendant (D5) for relief from sanctions under CPR 3.9 and to dispute jurisdiction late under CPR 11. The High Court found that the justice of the challenge to jurisdiction trumped the long delay in making the application and gave relief from sanctions.

    Facts
    The claim arose out of a contract for the sale of gasoil made between the Claimant (C) (as seller) and the First Defendant (D1) (as buyer) in February 2011. The Claimant alleged that it shipped the cargo in March 2011 but D1 failed to pay. In August 2014 D5 was added to the claim on the basis that D5 was a necessary and proper party as “the director and shareholder” of D1 and served out of the jurisdiction by email.

    Procedural History
    D5 did not acknowledge service or challenge jurisdiction within the time prescribed by the CPR as he did not receive the emailed Claim Form or know of the claim until October 2016. In October 2014 C entered judgment in default against D5 for more than US$7 million. D5 entered an acknowledgement of service 4 months after the proceedings came to his knowledge and issued applications to challenge jurisdiction and for relief to make such application within 28 days thereafter in January/February 2017.

    The Issues
    The issues for the Court were whether (i) D5 should have relief from sanctions under CPR Part 3.9 and an extension of time to make its application to challenge jurisdiction not having not entered an acknowledgement of service within 28 days of service and whether (ii) D5 had been properly joined to the proceedings and service out had been properly affected.

    Preliminary Issue – A challenge to jurisdiction without submitting to the jurisdiction?
    D5, intentionally, did not make an application to set aside the judgment in default on the basis that such a challenge might amount to a submission to the English jurisdiction thereby rendering the jurisdictional challenge nugatory.

    The Court held that it was arguable that a challenge to a default judgment in partnership with a jurisdictional challenge might amount to a submission on the basis that taking any step in relation to the merits of the claim can amount to a submission (Global Multimedia International v ARA Media Services [2006] EWHC 3612 and Deutsche Bank AG London Branch v Petromena ASA [2015] EWCA Civ 226).

    The Court also held that, if the jurisdictional challenge succeeded the default judgment could not stand. The Court’s reasoning was that if a claim form was set aside the basis for the default judgment would be removed and the judgment itself could not stand. Thus an application to set aside default judgment was strictly unnecessary.

    How should a dual application to challenge jurisdiction and for additional time to make such a challenge be dealt with?
    Logically the issue of whether D5 could bring an application to challenge jurisdiction should have preceded the issue of whether there was jurisdiction against D5.  However, sensibly, the Court regarded the that merits of whether there was jurisdiction was an important issue as to whether procedural relief from sanctions should be granted under CPR Part 3.9.

    Was there Jurisdiction?
    C’s joinder of and service out on D5 was founded on the assertion that he was both the director and shareholder of D1. There was however no evidence that D5 was the director and shareholder of D1 at the relevant time i.e. in 2011, whatever may have been the position when proceedings were commenced or default judgment entered. On that basis the Court held it did not have jurisdiction, D5 should not have been joined, service out should not have been effected and judgment in default should not have been entered.

    Should there be relief from sanctions?
    On that basis the Court then had to decide whether there should be relief from the sanctions consequential on the failure to challenge jurisdiction and whether what would otherwise be a successful challenge to jurisdiction should be permitted 2 years and 4 months late.

    In the usual course of events a party wishing to dispute jurisdiction must make such an application, supported by evidence, within 28 days after filing an acknowledgment of service: (CPR 11.4). However, the English Courts have jurisdiction to grant a retrospective extension of time where appropriate, Texan Management Ltd v Pacific Electric Wire and Cable Co Ltd [2009] UKPC 46. However an application for retrospective extension (made out of time) falls to be decided in accordance with CPR 3.9 as clarified by the 3-stage test in Denton v TH White Ltd [2014] EWCA Civ 906. This 3-stage test is as follows

    1. The first stage is to identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order”. If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.
    2. The second stage is to consider why the default occurred.
    3. The third stage is to evaluate "all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]"."

    As to the first stage of Denton, the Court found that the breach by D5 was serious and significant.  However with respect to the second stage, the Court found that there was a good explanation for the failure to make an application up to at least October 2016 in that the proceedings did not come to D5’s knowledge until then. Conversely for the period between October 2016 and January 2017, the period of 4 months, from the receipt of Court documents until service of the acknowledgement, was not covered by a good reason. Thus the default position at stage 3 of Denton was that there should be no relief from sanctions.

    However at the third stage of the Denton test the Court held that it must consider whether there are other “circumstances” which indicate against refusing the application. The Court indicated that in addition to the 2 explicit factors set out in CPR Part 3.9(1)(a) and (b) the following might be relevant factors:-

    1. whether the sanction imposed is proportionate to the breach in question;
    2. whether the application for relief from sanctions was made promptly; and
    3. whether the defaulting party has a poor record as to compliance with proper court procedures.


    The Result
    The Court granted relief. The Court held that the need for litigation to be conducted efficiently and at proportionate cost in CPR Part 3.9(1)(a) was not engaged on the facts as there were no ‘knock-on’ effects on the litigation, in the form of adjournments or other manifest inconvenience. Similarly the objective of enforcing compliance with rules, practice directions and orders (CPR Part 3.9(1)(b), there was a good excuse for most of the delay, there was no flouting of  the rules and no history of non-compliance. In the absence of relief, the CPR also provided for an “unusually disproportionate sanction” since D5 would have been entitled to set aside the Claim Form and its service and to deprive him of the opportunity to challenge a baseless assertion of jurisdiction when there was no prejudice would be disproportionate.

    The Court held that a refusal to grant relief would be “a display of judicial musculature […] hard to square with [CPR Part 3.9’s] wording”.

    The Procedural Lesson
    Thus the lesson of the case is that although some latitude will be given to a litigant in challenging the jurisdiction of the English Court, such challenges should be made immediately a party has knowledge of the proceedings. Such challenged will only generally be allowed to be made late when the merits for setting aside service are overwhelming.

    Jonathan Chambers

    Jonathan has a broad practice covering all aspects of commercial and transport law.  He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior  with Chambers UK (2016)  commenting that he is  “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2016) describing him as “Very well prepared”.

    Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.

    jonathan.chambers@quadrantchambers.com

    Related News:

    A Return to a Stricter Approach to Time Limits? - Jonathan Chambers

  • European Court of Justice - Assens Havn v Navigators Management (UK) Limited - Michael McParland QCView More

    Mon, 17 July, 2017

    English Jurisdiction Clauses in Insurance Policies and Direct Actions by EU Third Parties: The European Court strikes - Michael McParland QC

    On 13 July 2017 the European Court of Justice handed down their ruling in Case C-368/16 Assens Havn v Navigators Management (UK) Limited.  In Assens Havn, the Court held that an English jurisdiction clause in an English law marine insurance policy, between a marine insurer of a tug and its insured policyholder, is not binding in respect of a direct action claim for compensation brought against the insurer by a third party claiming for damage allegedly caused by the insured tug to port installations in Denmark. The Assens Havn case is an important one for anyone advising marine or non-marine insurers in cross-border disputes. Its implications are far-reaching.

    The Facts

    In 2007, Skåne Entreprenad Service AB (‘Skåne Entreprenad’), a Swedish company, chartered a number of tugs and lighters, including the tug Sea Endeavour I, to carry a cargo of sugar beet between two ports in Denmark, and took out liability insurance with Navigators. The insurance policy contained an English choice of law and exclusive English jurisdiction clause:

    ‘Choice of law and jurisdiction

    This insurance shall be governed by and construed in accordance with the law of England and Wales and each party agrees to submit to the exclusive jurisdiction of the courts of England and Wales.’

     Furthermore, Navigator’s conditions of insurance also emphasised that

     “… [t]his insurance shall be governed by and construed in accordance with English law and, in particular, be subject to and incorporate the terms of the Marine Insurance Act 1906 and any statutory modification thereto. This insurance, including any dispute under or in connection with it, shall also be subject to the exclusive jurisdiction of the High Court in London (United Kingdom)”.

    When the tug arrived at its destination at Assens Havn, some damage was caused to the quay installations. How the damage occurred and who was liable for it was in dispute. However, by the time proceedings were to be commenced, the insured policyholder, the Swedish company Skåne Entreprenad, had gone into liquidation. Therefore, Assens Havn brought a direct action under Danish law claiming compensation for damage in the Danish Maritime and Commercial Court against Navigators as the liability insurer of the party who allegedly caused the harm.

    The Danish Action

    At first instance, the Danish court dismissed the action on the grounds that it did not have jurisdiction, on the basis that the agreement on jurisdiction concluded between the parties to the insurance contract was binding on the injured party, Assens Havn. On appeal, however, the Danish Supreme Court referred a question to the CJEU, asking in essence whether the special insurance jurisdiction provisions of the Brussels I Regulation had to be interpreted so that third parties bringing a direct action against an insurer are bound by an agreement on jurisdiction validly concluded between the insurer and the policyholder?

    The CJEU’s Decision

    The CJEU answered that question with a resounding “no”. The Court concluded that not only did the special jurisdiction provisions of the Brussels I Regime intended to protect the weaker contracting party (the policyholder) but also eased the situation of a victim of insured damage by enabling them, in particular, to sue the insurer in question before the courts for the place where the harmful event occurred provided that the national law permits such a direct action. In such circumstances, in relation to matters of insurance, agreements on jurisdiction must be interpreted strictly and can jurisdiction clauses that might alter that situation only be invoked strictly in accordance with terms of the Brussels I Regulation.

    Despite the fact that the Regulation did provide for agreements on jurisdiction to be entered into in relation to any loss or damage arising from the use or operation of vessels, the Court concluded that an agreement on jurisdiction made between an insurer and an insured party cannot be invoked against a victim of insured damage who wishes to bring an action directly against the insurer before the courts for the place where the harmful event occurred or before the courts for the place where the victim is domiciled. To permit otherwise was considered the compromise the Regulation’s objective to protect the economically and legally weaker party.

    As a result, Assens Havn were not bound by the English jurisdiction clause, and can bring their action in Denmark against Navigators. Not a happy position for the insurers, and one that may be repeated in any number of European cases in the future.

     

    Michael McParland QC

    Michael McParland QC is an international lawyer, with a wide ranging practice in commercial, civil and international advocacy and advice in the courts, arbitral and regulatory tribunals of England and Wales and overseas.

    Michael has been described by clients in the Chambers UK and the Legal 500 legal directories as “phenomenal”, “incredibly knowledgeable and a tremendous advocate who is a very powerful person to have on your side” , “a thorough, knowledgeable and intelligent advocate”, “incredibly bright and hardworking, a real team player”, “a really powerful operator” with “complete control of the facts of a case” who “really thinks about things and then steamrollers the opposition”.  He is said to have “real commercial intelligence and an easy client manner”, his advocacy is “effective and persuasive” and his “attention to detail prepares him for all eventualities in the course of litigation”.

    Michael is a recognised international law expert. He is the author of The Rome I Regulation on the Law Applicable to Contractual Obligations (Oxford University Press, 2015), a leading textbook on private international law that is cited with approval by the Advocate-General in the European Court of Justice and by judges in the Commercial Court. “

    > read Michael's full profile

  • Coincidentally Collateral or Causally Connected? Dancing around Post-Breach Benefits:Simon Rainey QCView More

    Fri, 30 June, 2017

    A Short Question of Fact?

    An owner of an elderly cruise ship lets her on time charter, extended by two years. The charterer redelivers in 2007 the vessel two years early, in repudiatory breach of the charter. The owner accepts the breach and terminates the charter. The time charter market for an old lady like the ‘New Flamenco’ is non-existent. The owner decides to sell the vessel rather than to continue to trade her. The arbitrator finds variously “it would not have been possible for the Owners to conclude an alternative substitute two year time charterparty. The need to sell the vessel was clearly caused by the breach” and “in this case it was clear that the necessity for the sale had been brought about by the refusal to perform the two year extension”.

    The New Flamenco (Globalia Business Travel SAU v Fulton Shipping Inc) [2017] UKSC 43

    When the owner sells the vessel he (perhaps surprisingly) finds a buyer for her willing to pay US$23.7 million. Had the charterer performed the charterparty, the vessel would have been worth much less at the end of the two years in 2009: had the owner wanted to sell her then, it would have received only in the region of US$ 7 million.

    Should the owner have to give credit to the charterer for the difference in value (23.7 – 7) against its claim for damages for loss of profit over the two years (based on the difference between the charter rate and spot and other employment)?

    The dance (a minuet, rather than a flamenco perhaps) then began. The arbitrator held that the owner did have to give credit, in the light of his findings of fact. Popplewell J held that it did not. A strong Court of Appeal was of the same view as the arbitrator. A strong Supreme Court this week unanimously rejected that view and restored Popplewell J’s approach, holding that to oblige the owner to give credit was wrong in principle and wrong on the facts as found by the arbitrator.

    The short answer of the Supreme Court (expressed succinctly in six paragraphs) was that while the breach and early redelivery was the occasion or ‘trigger’ for the owner’s sale of the vessel, it was not the legal cause of the sale taking place nor could the sale sensibly be described as a step taken by the owner in mitigating the loss of charter earnings over the two years.

    The decision is important in focussing on what needs to be shown in terms of legal causation in the breach and mitigation contexts, rather than pointing simply at acts which are factually connected. It is also noteworthy in the way it demonstrates the tension on a section 69 Arbitration Act 1996 appeal between “findings of fact” and findings, which while expressed as ones of fact, are on proper analysis ones of law.

    The To-and-fro of the Decisions Below

    At first instance, Popplewell J had distilled no fewer than eleven principles after an extensive review of the cases: see [2014] EWHC 1547 (Comm) at [64]. Of these perhaps the most important are the first four, which stressed that for a benefit to be taken into account, the critical test was one of legal causation linking the reception or creation of the benefit with the breach, so that the breach is the actual legal cause of the benefit being conferred. The Judge regarded mitigation as governed by the same principles. As his fifth to eighth principles, he therefore analysed how the requirement of legal causation applies to mitigation, pointing out “The fact that a mitigating step, by way of action or inaction, may be a reasonable and sensible business decision with a view to reducing the impact of the breach, does not of itself render it one which is sufficiently caused by the breach. A step taken by the innocent party which is a reasonable response to the breach and designed to reduce losses caused thereby may be triggered by a breach but not legally caused by the breach” (citing The Elena d’Amico [1980] 1 Ll. Rep 75.)

    The Judge disposed of the case on the basis that the difference in value of the vessel between the date of the sale and the date of the expiry of the two years had nothing to do with the breach: it was simply caused by the drop in the market which would have occurred anyway. Similarly, the effect of fluctuating market values for the capital value of the vessel was only produced by a decision to sell the vessel, which decision the owner could take and could have taken at any time, irrespective of the breach. If the owner could not be criticised if it had decided not to sell the vessel but chose to sit tight for two years, on the basis of a failure to mitigate, how could the sale which it chose to make be treated as “mitigation” caused by the breach? If it could not, then the benefit was not a benefit accruing from mitigation but was entirely collateral.

    The Court of Appeal (Longmore, Christopher Clarke, Sales LJJ) approached the matter from a different standpoint. Its starting point was that “It is notoriously difficult to lay down principles of law in the realm of mitigation of loss particularly when it is said that a benefit received by a claimant is to be brought into account as avoiding the loss. The judge is to be commended for having tried to do so but his use of the word “indicative” is itself indicative that hard and fast principles are difficult to enunciate. In appeals from an arbitrator's award a court has to be particularly respectful of the boundaries between fact and law which the parties, by their choice of tribunal, have created.” [20]

    Thereafter, the Court of Appeal based itself on the arbitrator’s decision of the factual connection between the owner’s decision to sell the vessel as being a sufficient legal connection: “Viscount Haldane's formulation in British Westinghouse that the benefit must ‘arise from the consequences of the breach’ remains, in my view, entirely apposite. The issue of mitigation arises when the breach has had harmful consequences which the injured party has taken steps to ameliorate … the finding of fact made by the arbitrator was in effect that the benefit did arise from the consequences of the breach” (Christopher Clarke LJ at [47-48].

    The Reasoning of the Supreme Court

    In the Supreme Court, Lord Clarke (with whom Lords Neuberger, Mance, Sumption and Hodge agreed) preferred the reasoning of Popplewell J. While, perhaps unhelpfully, the Court did not comment expressly on the ‘eleven point’ guide set out by the Judge, the Court’s adoption of the reasoning and result arrived at by him is likely to mean that parties are likely to go back to them as a stepped approach to similar post-breach benefit problems.

    The Court stressed, as had the Judge, that the question was simply one of legal causation: was the post-breach benefit in law to be regarded as having been caused by the breach or by mitigation of the loss caused by the breach? It rejected the argument that to be legally relevant the benefit had to be ‘of the same kind’ as the loss. This was too vague and arbitrary a test. Causation alone is key.

    Lord Clarke dealt first with the argument that the difference in value (23.7 – 7) was to be treated as a benefit to the owner because it was “the benefit of having avoided a loss” by the owner selling the vessel in 2007 rather than on redelivery in 2009.

    The obvious fallacy in this way of putting the argument might be thought to be that the owner did not need to sell the vessel at any time, including at the end of the charter term. It was simply a matter of the owner’s commercial decision-making as to how and when it ran its capital book.  As Lord Clarke explained, the owner could not have claimed from the charterer as damages for its breach if the vessel would have been worth more in 2009 than in 2007. Further, why take 2009 as the date of comparison simply because it represented the end of the charter period when the owner could have continued to trade? The owner might not have sold then. While a premature termination might lead an owner to sell earlier than it would otherwise have done, that had nothing to do with the charterer: it was “the disposal of an interest in the vessel which no part of the subject matter of the charterparty and had nothing to do with the owners” [32].

    Lord Clarke dealt next with the mitigation argument based on the sale being an act taken by the owner to mitigate the loss of hire resulting from the breach.

    Here, rather than analyse the matter as the Judge did, from the starting point that the owner could not be faulted for not mitigating if he had chosen not to sell the vessel, therefore any sale he chose to do was not ‘mitigation’ properly understood, Lord Clarke focussed on the precise nature of the loss. The loss was the loss of an income stream under the charter. Realising the capital value of the vessel did not and could not mitigate the loss of that income stream which, irrespective of the sale, remained lost [34]. While it might be thought that the Court here looked at the nature of the benefit and the nature of the loss (having deprecated just such a test), the nature of the loss and the benefit may be relevant in a causation enquiry. As Popplewell J, who had similarly rejected the ‘of the same kind’ argument, pointed out: “There is no requirement that the benefit must be of the same kind as the loss being claimed or mitigated … but such a difference in kind may be indicative that the benefit is not legally caused by the breach” [64(8)] (emphasis added; this proposition was expressly approved by the Supreme Court at [30]).

    The Court pointed out that a sale of the vessel might be relevant to the compensatory principle if it could be shown, for example, that the owner would have sold the vessel during the two years had the charterer performed, because then that would on Golden Victory principles cut down the period of loss. But that had nothing to do with a collateral decision by an owner, post breach, to sell his vessel on a poor trading market.

    Conclusions

    The decision, and the procedural history, shows the difficulty that may lie in distinguishing between an act taken post-breach from which the claimant benefits and an act which is legally to be viewed as caused by that breach.

    Where mitigation is concerned, if the claimant was not obliged to take such a post-breach step at all, then it seems clear that if he does take it, the defendant cannot seek to bring the benefits of so doing into account.

    Coda: the Arbitral Context

    It was strongly argued that, as causation was a question of fact, to be approached in a commonsense way, the decision of the arbitrator (extracts from which as reported are cited above) was one which was not open to challenge. Popplewell J. accepted that “whether a benefit is caused by a breach is a question of fact and degree which must be answered by considering all the relevant circumstances in order to form a commonsense overall judgment on the sufficiency of the causal nexus between breach and benefit” [64(9)] but considered that the arbitrator had simply gone wrong in treating things as sufficiently ‘caused’ when in law they could not be so regarded. Lord Clarke endorsed this approach at [24].

    This gives rise to the apparent oddity of an arbitrator finding that the sale of the vessel was in consequence of and resulted from the breach and was a step taken by the owner to prevent loss from not being able to trade the vessel but this “not [being] legally sufficient to establish the necessary causative link between breach and benefit”.

     

    Simon Rainey QC is one of the best-known practitioners at the Commercial Bar with a broad commercial advisory and advocacy practice spanning substantial commercial contractual disputes, international trade and commodities, shipping and maritime law in all its aspects, energy and natural resources and insurance and reinsurance and has extensive experience of international arbitration.

    Simon regularly acts in ground-breaking cases including NYK Bulkship (Atlantic) NV v Cargill International SA (The Global Santosh) [2016] UKSC 20 where Simon was brought in to argue the case in the Supreme Court and represented the successful appellants, Cargill. The decision is a landmark one in relation to a contracting party’s responsibility for the vicarious or delegated performance by a third party of its contractual obligations, both in the common charterparty and international sale of goods contexts and more generally. In Bunge SA v Nidera SA [2015] UKSC 43 Simon successfully represented Bunge in a landmark decision by the Supreme Court on GAFTA Default Clause and sale of goods damages after The Golden Victory on points which had been lost at every stage below.

    Ranked as the “Star Individual” for shipping by Chambers UK in 2015, 2016 and 2017, Simon: ‘impresses with his mastery of the brief...exceptionally gifted, he has the strong confidence of his clients, and is an excellent presenter of complex material....’ and ‘….is one of those super silk guys who has judges eating out of his hands." "He has the gift of going straight to the problem.’ He was ranked as Shipping Silk of the year 2017 by Chambers and Partners UK and Legal 500 UK Awards and one of the Top Ten Maritime Lawyers 2017 by Lloyd’s List.

    Simon Croall QC and Ben Gardner (with Door Tenant Peter Ferrer) acted for the Charterers

    Related News:

    The New Flamenco – the Supreme Court places limits on the rules of mitigation of damages - Simon Croall QC and Ben Gardner

  • The New Flamenco – the Supreme Court places limits on the rules of mitigation of damagesView More

    Wed, 28 June, 2017

    The Supreme Court has today handed down the long awaited judgment in Globalia Business Travel SAU (formerly TravelPlan SAU) of Spain v Fulton Shipping Inc “The New Flamenco”. An appeal under section 69 of the Arbitration Act, the appeal addressed the nature and scope of mitigation of damage and whether certain benefits obtained by an innocent party have to be brought into account when assessing damages for the repudiation of as time charterparty. 

    Simon Croall QC and Ben Gardner (with Door Tenant Peter Ferrer) acted for the Charterers

    The judgment can be found here

    The New Flamenco was a cruise ship that had been chartered for a two-year extension to a time charter.  Shortly before the two-year extension was due to start, the Charterers repudiated the extension and redelivered the vessel.  The Owners responded by selling the vessel in October 2007 for US$23.8m. On the findings of the Arbitrator the sale was made in mitigation of the losses caused by the repudiation and gave rise to a gain. The latter finding arose from his conclusion that the Vessel would only have been worth US$7m at the time when she should have been redelivered under the extended time charter in November 2009 (i.e. the first point when she could have sailed).  The difference in value was at least in part due to the collapse of the cruise market in late 2008 in the light of the financial crisis. 

    The arbitrator decided that the benefit of selling the New Flamenco two years early was an act of mitigation caused by Charterers’ repudiation of the charterparty and credit should be given for it.  On an appeal on a point of law under section 69 of the Arbitration Act, Popplewell J held that as a matter of law the sale was not caused by the repudiation and could not be regarded as mitigation of the Owners’ loss of revenue under the repudiated time charterparty.  The Court of Appeal disagreed, reinstating the arbitrators’ decision.  Their analysis involved applying the principles in British Westinghouse Electric & Manufacturing Co. Ltd v Underground Electric Railways Company of London Ltd [1912] AC 673. They concluded that in the light of the finding of mitigation made by the Arbitrator the benefit was to be taken account of as a successful act of mitigation. The Owners appealed to the Supreme Court.

    In a short judgment, Lord Clarke (with whom the other Justices agreed) indicated a preference for Popplewell J’s conclusion and approach and allowed the appeal.  He considered that the sale of the Vessel was not caused by the repudiation of the charterparty and “was not itself an act of mitigation because it was incapable of mitigating the loss of the income stream”. In so doing it has placed a limitation upon the types of actions which can, as a matter of law, be regarded as mitigation such that under established principles the results of such acts are brought into account. That limitation must arise as a matter of law because being an appeal from an Arbitrator the court’s jurisdiction only extended to issues of law.

    What is less clear is the applicable principle in determining whether the results of actions taken in response to a breach are to be regarded as successful mitigation. The Court rejected the Owners’ argument that a benefit could only be taken into account if it is of the same kind as the loss. It emphasised that “the relevant link is causation”.  However the rationale for rejecting the sale as a successful act of mitigation does not appear to relate to causation but instead suggest that some kinds of benefit cannot be treated as mitigating some kinds of loss. This comes quite close to adopting something like the difference in kind test and suggests that such differences are potentially significant in the context of the relevant enquiry.

    The judgment leaves a number of questions unanswered, including the extent to which a benefit of a different kind can ever mitigate a loss.  It is also unclear to what extent the Court endorsed some of the elements of Popplewell J’s judgment which troubled the Court of Appeal, such as his two-step causation test and his emphasis on the policy reasons for Owners bearing the benefits and burdens of investing in the vessel.  Finally it is unclear whether the principles set out in British Westinghouse (which have long been thought to govern this area of law but were not directly addressed in the judgment) have by implication been revised. These questions will doubtless be explored in future cases.

    AUTHORS  

     

    Simon Croall QC is an established commercial silk. He is a sought after trial advocate as well as being respected in the appellate courts.  In recent years much of his work has been in the context of International Arbitrations.

    Click to view Simon's full profile

    Ben Gardner practises primarily in shipping, commodities and international trade, insurance, conflict of laws, banking and aviation, within a broad commercial practice.  He is recommended as a leading junior by Chambers & Partners 2017, where he is described as "very impressive", "a great junior counsel and very user-friendly", "solution driven, helps you make a decision and is very personable" and "very helpful, sensible and willing to get stuck in as much as required".

    Ben often appears in the High Court and in the Court of Appeal, as sole counsel and as part of a counsel team. He has also appeared in the Supreme Court twice in 2016.

    Click to view Ben's full profile

    Related News:

    Coincidentally Collateral or Causally Connected? Dancing around Post-Breach Benefits - Simon Rainey QC

  • The Lawyer Awards, Quadrant Chambers runner up for Chambers of the Year 2017View More

    Wed, 28 June, 2017

    A fantastic evening at The Lawyer Awards, at which Quadrant Chambers were named runner up for Chambers of the Year 2017.

    Full details regarding the winners and nominations for all categories can be found here.

  • Will Brexit reduce London’s dominance as a litigation centre? Michael McParland QC examines the potential impact on use of English jurisdiction and choice of law agreements.

    This article was first published in Counsel Magazine, June 2017. View More

    Thu, 22 June, 2017

    A PDF copy of the original article can be downloaded here

    ‘One of the attractions of English law as a legal system of choice in commercial matters is its stability and continuity…’ Wood v Sureterm Direct Ltd [2017] UKSC 24, para [15]

    The High Court in London is the leading court centre for international dispute resolution in Europe; a status achieved by the widespread use of English jurisdiction and choice of law agreements in international business transactions. Both of these private international law mechanisms are supported by EU rules or international conventions to which the UK belongs through its EU membership. Will Brexit reduce the attractiveness of these agreements and thus London’s dominance as a litigation centre?

    The rules we leave behind

    Unless some alternative and novel agreements are reached, upon leaving the EU the UK will immediately drop out of the Brussels I (Recast) Regulation (1215/2012). This Regulation grants a high degree of legal certainty for English jurisdiction agreements, has anti-abuse provisions to prevent contract-breakers avoiding their choice of jurisdiction, and provides a relative easy system of recognition and enforcement of English judgments based on such agreements. The UK will also cease to be a party to the Lugano II Convention (2007), which gives reduced levels of protections in the courts of Iceland, Norway, and Switzerland; and to the Hague Convention on Choice of Court Agreements (2005), which currently gives an even narrower range of protections in the courts of Mexico and Singapore.

    The Rome I Regulation (593/2008) governs choice of law in contracts concluded as from 17 December 2009, and Art 14 of the Rome II Regulation (864/2007) enables parties to select the applicable law of non-contractual obligations since 11 January 2009. Both will no longer be directly applicable in English courts.

    Parliamentary concern

    Committees of both Houses of Parliament have expressed concern about the potential damage to the UK’s legal business and of diversion of work elsewhere by the loss of those instruments. The House of Commons Justice Committee said:

    ‘We recommend that protecting the UK as a top-class commercial law centre should be a major priority for the government in Brexit negotiations given the clear impacts on the UK economy of failure to do so. Protecting court choices and maintaining mutual recognition and enforcement of judgments are central to this objective: the government should aim to replicate the provisions of Brussels I Recast as closely as possible, perhaps using the EU-Denmark agreement as a blueprint. As a minimum, it must endeavour to secure membership of Lugano II and the 2005 Hague Convention in its own right. Rome I and II should be brought into domestic law.’ (House of Commons Justice Committee, 9th Report, Implications of Brexit for the justice system, HC 750. See also House of Lords EU Committee: 20th Report, Brexit: justice for families, individuals and businesses?, HL Paper 134.)

    The government has also said:

    ‘We recognise that an effective system of civil judicial cooperation will provide certainty and protection for citizens and businesses of a stronger global UK.’ (HM Government, The United Kingdom’s exit from and new partnership with the European Union, Cm 9417, February 2017, para 8.19.)

    What will a red, white and blue Brexit look like?

    Despite hopes that a new arrangement can be reached with the EU-27, for this exercise we should assume that a ‘Red, White and Blue Brexit’ will see the UK drop out of the Brussels I Recast regime, which was created to enhance the operation of the internal market which the UK is leaving. With no competence to negotiate its own admission to international conventions pre-Brexit, joining the Lugano II Convention might be more difficult and time-consuming than the UK would like; as this would require an application after re-joining EFTA or applying as a non-member and obtaining the consent of all signatories, which includes the EU (Lugano II, Arts 70-73). The Hague Convention is nowhere near as comprehensive as the Brussels I Recast, and will only affect exclusive jurisdiction agreements entered into after it entered into force in the UK, and shall not apply to proceedings instituted before that date (Hague: Art 16). Unfortunate ‘gaps’ in protections may well arise.

    Attempts to steal a march

    Consequently, a number of the UK’s competitors are seeking to take advantage. On 30 March 2017, the day after the UK’s Art 50 notice was given, the German Federal State of Hesse promoted a conference entitled Brexit: an opportunity for Frankfurt to become a new hub of litigation in Europe. This is part of their Frankfurt Justice Initiative, which proposes wide-ranging organisational and procedural improvements to bring its courts closer to the English system and thus more attractive to Anglophone businesses.

    In Europe, such developments are supported by a burgeoning academic cottage industry which argues that Brexit creates substantial uncertainty regarding the recognition and enforcement of English choice of law and choice of jurisdiction clauses, and the enforcement of English judgments. Unless the UK and the EU agree on the continued application of the Rome I, Rome II and the Brussels I (Recast) or enter into a new treaty, Brexit will make it less attractive to settle international disputes in London. (A recent example is G Rühl, ‘Die Wahl englischen Rechts und englischer Gerichte nach dem Brexit. Zur Zukunft des Justizstandorts England’ (2017) 2 JuristenZeitung p 72.)

    Is there anything positive that can be said in response? Despite the uncertainties, a few points can be made.

    Don’t panic, Mr Mainwaring

    First, regarding English choice of law agreements, any claims that agreement between the UK and the EU-27 on the continued application of the Rome I and II is required to avoid adverse post-Brexit consequences are misplaced. Neither depends on mutual reciprocity. EU courts will be obliged to give effect to English choice of law agreements under Rome I and II in exactly the same way as they did pre-Brexit. This is because the rules contained in both regulations are of ‘universal application’ and are not limited to a choice of law of EU member states. Consequently, Brexit will have little, if any, practical effect on the operation of English choice of law agreements in EU-27 courts.

    In the UK, both Rome I and Art 14 of the Rome II Regulation can be transposed into domestic law via the so-called Great Repeal Bill. English courts will continue to apply an essentially similar regime post-Brexit. While differences between the ‘Catholic’ and ‘Protestant’ texts will eventually arise, this should not damage London in the foreseeable future.

    In contrast, the Brussels I Recast Regulation depends upon reciprocity and sincere cooperation between member states. If the UK is not a member of the agreed scheme then transposing the Brussels I rules into UK domestic law is of no assistance.

    Instead of the common, autonomous criteria for deciding whether parties can and did consent to English jurisdiction now found in Art 25 of the Brussels I Recast, EU-27 courts will apply their own national laws. The new anti-abuse protections in Art 31 that gave precedence to the courts of a member state selected by such an agreement will also no longer apply. Consequently we may see proceedings in EU-27 courts by disgruntled parties suing in their home courts and alleging that any English jurisdiction is invalid.

    But the uncertainties in such circumstances can be exaggerated. Some EU-27 states have aligned their own national private international law rules with the common EU rules, and there may be little substantive difference in practice. Furthermore, when parties sue in countries willing to allow them to bring claims in breach of an English jurisdiction clause, then outside of the Brussels regime, English courts would be free to restrain them by issuing anti-suit injunctions and imposing fines and penalties for contempt. For some of London’s clients this may be a positive attraction. Indeed, the need to preserve anti-suit powers may give pause for considering whether joining an unmodified Lugano II is appropriate at all.

    It is undoubtedly correct that the relative ease of recognition and enforcement of judgments under the Brussels I Recast would be a loss. But it is not the end of the world. While there are interesting arguments that the superseded international conventions (the Brussels Convention 1968 and the Lugano Convention 1988) might spring back to life, there are also old judgment recognition conventions with a number of our major European trading partners (such as (West) Germany, The Netherlands, Italy, Belgium, Austria and Norway) that may definitely revive in significance after Brexit.

    Whether it is really the fear of disruption of their business with London and its markets that causes Europeans to honour English judgments, rather than the recognition of their enforceability under the Brussels Regime, remains to be seen. While short-term things may get messy, don’t bet against London anytime soon.

    Contributor Michael McParland QC, Quadrant Chambers and author of The Rome I Regulation on the Law Applicable to Contractual Obligations (OUP 2015)

     

     

     

    Michael McParland QC is an international lawyer, with a wide ranging practice in commercial, civil and international advocacy and advice in the courts, arbitral and regulatory tribunals of England and Wales and overseas.  

    Michael has been described by clients in the Chambers UK and the Legal 500 legal directories as “phenomenal”, “incredibly knowledgeable and a tremendous advocate who is a very powerful person to have on your side” , “a thorough, knowledgeable and intelligent advocate”, “incredibly bright and hardworking, a real team player”,  “a really powerful operator” with “complete control of the facts of a case” who “really thinks about things and then steamrollers the opposition”.  He is said to have “real commercial intelligence and an easy client manner”, his advocacy is “effective and persuasive” and his “attention to detail prepares him for all eventualities in the course of litigation”.

    Michael is a recognised international law expert. He is the author of The Rome I Regulation on the Law Applicable to Contractual Obligations (Oxford University Press, 2015), a leading textbook on private international law that is cited with approval by the Advocate-General in the European Court of Justice and by judges in the Commercial Court. “

     

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  • Lifting Automatic Stays under Cross-Border Insolvency Regulations - Joseph EnglandView More

    Wed, 14 June, 2017

    Ronelp Marine Ltd & Others v STX Offshore & Shipbuilding Co. Ltd [2016] EWHC 2228 (Ch) is an example of the Court lifting the automatic stay on proceedings under the Cross-Border Insolvency Regulations 2006 (‘CBIR’), and allowing an English Commercial Court action, i.e. an unsecured claim, to continue on the basis of exceptional factors. 

    Joseph England outlines the repercussions of the above decision in a case review which was originally published in Volume 14, Issue 3 of International Corporate Rescue and which is available to read here with the kind permissions of the publishers, Chase Cambria. 

    Please click on the attached link to view the full article.

    Author: Joseph England

     

    Joe England practises in a wide range of commercial disputes.

    Joe began his legal career qualifying as a solicitor at Allen & Overy LLP before transferring to the Bar, where Joe spent the first year of his practice as the Judicial Assistant to Lord Sumption and Lord Wilson at the Supreme Court. He soon returned as counsel to the Supreme Court in Bank of Cyprus UK Limited v Menelaou [2015] UKSC 66, a case which has been the subject of much academic and judicial debate.

    Since starting practice in August 2013, Joe has also been engaged, on a near full-time basis, in a major ICC oil and gas arbitration in London and Geneva, and substantial related litigations, working and appearing with legal teams in Poland, The Netherlands, Ireland, Curaçao, Scotland, the US, London and Switzerland.

    Click to view Joe's full profile.

  • Admiralty Court judgment - Jurisdiction over torts committed within the UK’s Exclusive Economic ZoneView More

    Fri, 09 June, 2017

    The Admiralty Registrar has today handed down judgment in the matter of Virgin Media Ltd v Joseph Whelan T/A M & J Fish.  The judgment considers whether torts committed within the UK’s Exclusive Economic Zone (“EEZ”) are subject to the jurisdiction of the Courts of England and Wales by reason of Article 7 of the recast Judgments Regulation. 

    A copy of the judgment can be found here

    The scheme of the United Nations Convention on the Law of the Sea (“UNCLOS”) is to divide the sea into principal parts or zones.  An EEZ is “beyond and adjacent to the territorial sea” up to 200 nautical miles from the baselines from which the breadth of the territorial sea is measured.  Part V of UNCLOS grants the Coastal State (i.e. the state whose EEZ it is) certain exclusive or sovereign rights in respect of the EEZ and confers jurisdiction on the Coastal State over the EEZ for certain limited purposes. 

    The Claimant is the owner of the fibre optic telecommunications cable named Sirius South which runs across the Irish Sea between Lytham St Annes and Dublin. The Claimant alleged that the Defendant’s fishing trawler damaged the cable at a location which was outside UK territorial waters but within its EEZ. The Defendant was domiciled in the Republic of Ireland.

    The Claimant commenced proceedings in the English Courts claiming damages in negligence.  It contended that the Admiralty Court had jurisdiction over its claim by reason of Article 7 of the recast Judgments Regulation on the basis that the harmful event occurred within England and Wales.  It put particular reliance on the decision of Burton J in Conocophillips (UK) Ltd v Partnereederei MS Jork [2010] EWHC 1214 (Comm) where it was held that a claim for damages caused by a Vessel colliding with an unmanned oil platform located within the UK’s EEZ was subject to the English Court’s jurisdiction under the predecessor to Article 7 of the recast Judgments Regulation.

    The Defendant disputed jurisdiction on the basis that the mere fact that a tort occurred within the UK’s EEZ was not enough to ground jurisdiction in the English Courts and that Conocophillips should be distinguished.  In particular, the Defendant relied upon the differential treatment in UNCLOS of, for example, oil platforms (as in Conocophillips) and submarine cables (as in this case).   

    In the case of oil platforms, Articles 56 and 60 of UNCLOS granted the Coastal State the sovereign right to explore and exploit the natural resources of the waters, the seabed and subsoil, and the exclusive right to construct installations and structures for the purposes of exploration and exploitation of those resources.  Further, Article 60(2) expressly granted the Coastal State “exclusive jurisdiction” over installations and structures constructed for the purposes of exploration and exploitation of those natural resources.

    By contrast, Article 58(1) provided that all States (i.e. not just the Coastal State) had the freedom to lay submarine cables and pipelines within EEZs just as they had on the High Seas.

    In other words, UNCLOS does not grant exclusive or sovereign rights to, or confer jurisdiction upon, the Coastal State in respect of all matters and activities within the EEZ.  Rather the grant of rights and conferral of jurisdiction is functional and limited to specific matters or activities.  Those matters or activities do not include the laying of submarine cables.

    The Defendant, therefore, argued that there was no necessary connection between the Coastal State and the laying of submarine cables, since any State could lay a cable within any other State’s EEZ.  Given this lack of connection and the absence of any grant by UNCLOS on the Coastal State of a sovereign or exclusive right, still less a conferral of jurisdiction, in respect of submarine cables there was no reason why the UK’s EEZ should be treated as being part of the UK for the purposes of a claim for compensation for damage to a submarine cable. 

    The Admiralty Registrar accepted the Defendant’s arguments and held that the Court did not have jurisdiction over the Claimant’s claim.  

    Paul was instructed by Dale Stevens LLP on behalf of the successful Defendant.