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17 January 2012
In Anglo Irish Bank Corporation Limited v Quinn Investments Sweden AB (1) the High Court had to consider applications under Articles 23 and 28 of the EU Brussels I Regulation (44/2001). Ultimately, while the High Court dealt with the application under Article 23, it found that further clarification was required on the Article 28 application and referred the matter to the European Court of Justice (ECJ), adjourning the proceedings pending that determination.
A dispute arose between the parties in relation to the provision of finance to the Quinn Group by the plaintiff, which sought declarations as to the ownership of share pledges. A Swedish company (the first named defendant) had been set up by the Quinn family through which property was owned. That company had various subsidiaries, including Cypriot companies, which held shareholdings in other companies which directly held the properties. The plaintiff had prima facie security over the property portfolio and the companies that held the property. However, the plaintiff alleged a conspiracy to alter the way in which the property portfolio was held, with the object of depriving the plaintiff of its security over the property portfolio. The Quinns applied to stay or dismiss the proceedings under Article 23 on the basis that a related action was pending in Cyprus. They also sought declarations that the courts of Sweden and Cyprus had jurisdiction to settle disputes about the share pledges under Article 28.
At the outset, Justice Clarke noted that – notwithstanding the merits of the claim – the court was concerned only with the question of jurisdiction. The court outlined that, in the EU context, the Brussels Convention and, latterly, the Brussels I Regulation had been adopted to specify the particular jurisdiction or jurisdictions which are appropriate to decide particular disputes. Moreover, as well as setting out rules which determine the jurisdiction(s) most appropriate to decide on a particular dispute, the Brussels I Regulation identifies which countries' courts are to make a decision as to where the proceedings will be tried. Although those rules are relatively detailed, the court noted that their interpretation can be difficult and their application to individual cases controversial. Insofar as possible, it is important that there are clear rules as to which countries' courts are to determine where a trial is to be held, because without them there is potential for differing views to be adopted.
The court emphasised that a number of proceedings were being conducted between the parties in various jurisdictions. The court identified that those other cases formed part of the picture against which the jurisdictional issues before it in this case fell to be considered. The court noted that, although the legal and factual bases underlying the proceedings brought by the Quinns in Cyprus and Ireland were the same, the security at which each set of proceedings was directed was different. As part of the proceedings before the court, the plaintiff sought orders to restrain the Quinns from taking any steps in furtherance of the alleged plan to restructure the property holdings in order to limit the effectiveness of the plaintiff's security. The Quinns brought their applications under Articles 23 and 28 in respect of those proceedings brought by the plaintiff.
Even before considering those articles, the court referred to Bosphorus Hava Yollari Turizm Ve Ticaret Anonim Sirketi v Minister for Transport. (2) In that case, Justice Murphy stated that the teleological or schematic approach was a fundamental principle of interpretation to be applied to EU regulations and directives. The Supreme Court approved such a position in Radio Limerick One Ltd v Independent Radio and Television Commission. (3) Consequently, in this case the court opined that the starting point for any consideration of the Brussels I Regulation is its recitals, and the court cited Recitals 2, 11, 12, 15 and 16.
However, prior to addressing either article, the court referred to Article 27, which – along with Article 28 – forms part of Section 9 of the regulation, headed "Lis Pendens – Related Actions". In that context, the court noted that the difference between Article 27 and Article 28 is that the former is concerned with proceedings that involve the same cause of action and the same parties, while the latter addresses what are described as 'related actions', in the sense in which that term is used. The court felt that related actions clarified the "overall architecture" of the provisions in that, where the same case is brought in more than one jurisdiction, the court first seized has jurisdiction and any other courts are to decline jurisdiction. However, the court made clear that if any doubt exists, then all other courts are to stay their proceedings until the court first seized can determine whether it has jurisdiction. With related actions, under Article 28, a court other than the court first seized is permitted to stay its proceedings. Thus, relying on Popely v Popely, (4) which the court thought was of general guidance, the overall purpose of Section 9 is to prevent "parallel proceedings in two Member States with jurisdiction with potentially irreconcilable judgments".
On the Article 23 application, the court noted that there was nothing in the relevant pledge agreements that purported to confer exclusive jurisdiction on, respectively, the Swedish or Cypriot courts. Although those courts did have jurisdiction by reference to the relevant clauses, no provision was made for them to have exclusive jurisdiction. The court found that the sole basis on which Article 23 could exclude the jurisdiction of the Irish courts (which the court found did arise) was if there were relevant and applicable jurisdiction clauses, which conferred an exclusive jurisdiction on the courts of a jurisdiction other than Ireland. Since the clauses in the pledge agreement did not, the court held that Article 23 had no bearing on these proceedings.
Regarding Article 28, the court noted that the proper approach for a court to adopt in circumstances where three separate courts are seized of the same or similar issues had been considered only once before, in Masri v Consolidated Contractors International Company SAL. (5) However, the court suggested that that case was "unusual" and ultimately offered no guidance.
As a general observation, the court acknowledged that where related proceedings are brought sequentially in three different jurisdictions, the third set of proceedings does not, of itself, cause any additional complication. In short, any court other than that first seized may consider whether it should stay or decline jurisdiction – this principle equally applies to a court third seized. If the third proceedings are related to those other proceedings, then the court third seized should decline jurisdiction. However, a complication can arise where the court third seized is the same as the court first seized. As put by the court:
"In other words, a difficulty potentially arises where proceedings are brought in country A followed by a second set of (potentially related) proceedings in country B and followed in turn by a third set of (potentially related) proceedings back in country A. The question which arises is as to whether the prior existence of the proceedings first seised in country A can confer on that jurisdiction any additional entitlement to deal with the third case."
In the current context, the court stated that it was not the function of the courts of Ireland to interfere with the proper consideration by the Cypriot courts as to whether they had jurisdiction, and the court noted that an application had in fact been brought on the basis that the Cypriot proceedings were related to the first in time Irish proceedings. This was a matter for the Cypriot courts to decide and the court stated that it would be wholly inappropriate for it to offer any view on that determination. Notwithstanding that, the Cypriot court's ruling on the issue is of some significance: if the Cypriot court eschewed jurisdiction, there would be no Cypriot proceedings to prevent the Irish court from dealing with these proceedings in the ordinary way. Accordingly, the court refused to decline jurisdiction (by dismissing these proceedings under Article 28) at this stage, as to do so would pre-empt the decision of the Cypriot court. Ultimately, the court considered that since there was no clear guidance as to what would happen in the context of a third set of proceedings being brought in a jurisdiction first seized of at least connected proceedings, the best course of action was to obtain definitive guidance by referring the question to the ECJ.
In reaching that conclusion, the court observed that the approach to adopt where there are:
"three sets of proceedings pending, two of which (being the first and third in time) are pending in the courts of one member state while the other is pending in the courts of a different member state is not entirely clear."
Further, the court identified that it was necessary and important to decide which courts should make the jurisdictional decisions and to determine which actions are "related" for the purpose of the Brussels I Regulation.
The court declined the application made under Article 23 on the basis that there is no agreement that would confer exclusive jurisdiction on the courts of any other member state. On the propriety of the Irish court dismissing or staying these proceedings under Article 28, the matter was referred to the ECJ. Finally, in circumstances where that issue was to be referred, the court adjourned the application before it pending the ruling of the ECJ.
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