We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
14 October 2008
The High Court recently held that where civil proceedings are commenced in the courts of a state that is a party to the EU Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (44/2001),(1) and the defendant to those proceedings is domiciled in that member state, then that court cannot decline jurisdiction even though proceedings between the same parties, dealing with the same issues have previously been commenced in the courts of a non-member state.(2) The case will be of particular interest to multinationals and others engaged in commercial transactions with EU domiciled entities.
The defendant, Life Receivables Ltd, is a company incorporated in Ireland. Plaintiffs Goshawk Dedicated Ltd, Kite Dedicated Ltd, Cavell Management Serviced Ltd and Cavell Managing Agency Ltd are companies incorporated in the United Kingdom. The defendant invested in a bankruptcy-remote trust in the United States called Life Receivables Trust. The defendant alleged that it was induced to invest in the bankruptcy-remote trust as a result of, among other things, misrepresentation on the part of the plaintiffs.
Proceedings were commenced in the United States by the defendant against the plaintiffs and a number of other additional parties involved in the sale of the interest in Life Receivables Trust.
The plaintiffs subsequently brought proceedings in the Irish courts, seeking declarations that they did not make the misrepresentations alleged by the defendant in the US proceedings, despite the fact that these proceedings were, in the court’s words, a “mirror image” of the US proceedings. The defendants brought an application to seek a stay on the Irish proceedings pending the outcome of the US proceedings. It is this application on which the court passed judgment.
The court noted that as the defendant is domiciled in Ireland, it should, in the first instance, be sued in Ireland under Article 2 of the regulation.(3) The key issue to be decided was whether Article 2 could be interpreted in such a way as to leave room for the application of the common law doctrine of lis alibi pendens (action pending elsewhere). This would allow an Irish court to decline jurisdiction on the basis that another jurisdiction, which was not a party to the regulation, might be considered a more appropriate place for the resolution of the dispute.
The court made significant reference to and placed reliance on the decision of the European Court of Justice (ECJ) in Owusu v Jackson.(4)The case involved an English national who was injured while on holiday in Jamaica. The English national commenced proceedings in England against the travel company and the Jamaican landowner. The defendants argued that the dispute was most closely connected with Jamaica and thus should be resolved there based on the common law doctrine of forum non conveniens (inappropriate forum). However, the ECJ ruled that the English court had jurisdiction under the regulation and no discretion to stay or suspend those proceedings.
The court noted, after considering the Owusu decision, that counsel for the defendants had accepted that the doctrine of lis alibi pendens is properly regarded as an aspect of forum non conveniens.
The defendant's principal submissions were that the regulation (i) expressly recognizes the doctrine of lis alibi pendens, and (ii) allows for the recognition of judgments handed down in non-member states in preference to judgments of member states, if the former have priority in time. The doctrine of lis alibi pendens is recognized in Articles 27 and 28 of the regulation, which allow the court of a member state specifically to decline jurisdiction on the basis that the matter is the subject of proceedings before the court of another member state. The defendant argued that this doctrine, as recognized by the regulation, should be applied by analogy to proceedings involving proceedings commenced in a non-contracting state.
The court rejected these arguments. Firstly, the court stated that to accept the defendant’s arguments with respect to the doctrine of lis alibi pendens would be to contradict the mandatory language of Article 2 of the Brussels Regulation as stated in the judgment of the ECJ in Owusu. Secondly, the Brussels Regulation sets down the procedure and the principles by which competing member states should determine where the dispute is to be litigated. Specifically, the court of the member state first seized of the dispute should decide whether it has jurisdiction under the Brussels Regulation. Only if the court in a member state declines jurisdiction under the provisions of the Brussels Convention can the dispute be activated in another jurisdiction. However, if a member state stayed proceedings under the doctrine of lis alibi pendens where the competing jurisdiction was a non-contracting party, the court in that jurisdiction would determine whether it had jurisdiction to hear the matter, not with reference to the provisions of the Brussels Regulation, but in accordance with the principles of private international law in force in that jurisdiction. The court stated that such a situation was inconsistent with the jurisprudence of the ECJ and therefore it had no jurisdiction to stay the proceedings.
The implications of this ruling are likely to be significant for parties engaged in litigation with legal persons domiciled in member states where proceedings are commenced in jurisdictions which are not bound by the Brussels Regulation. The ruling will allow such entities to sue EU-domiciled parties in their home jurisdiction irrespective of the fact that litigation has already been commenced in a jurisdiction which is not a party to the Brussels Regulation.
This decision will be of particular interest to international entities engaged in commercial disputes with Irish-domiciled parties as they now have the option of commencing parallel proceedings in Irish courts. The attraction of this for such entities is obtaining speedy judgments in Ireland’s Commercial Court.(5)
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.