Adactive Media Inc. v Mark Ingrouille
| Jurisdiction | England & Wales |
| Judge | Lord Justice David Richards,Lord Justice Henderson,Lady Justice Carr |
| Judgment Date | 05 March 2021 |
| Neutral Citation | [2021] EWCA Civ 313 |
| Docket Number | Case No: A2/2020/1376 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 March 2021 |
[2021] EWCA Civ 313
Lord Justice David Richards
Lord Justice Henderson
and
Lady Justice Carr
Case No: A2/2020/1376
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS AT BRISTOL
CIRCUIT COMMERCIAL COURT
HH Judge Russen QC
[2020] EWHC 2266 (Comm)
Royal Courts of Justice
Strand, London, WC2A 2LL
Gerard McMeel QC (instructed by Ashfords LLP) for the Appellant
Hugo Groves (instructed by Lester Aldridge LLP) for the Respondent
Hearing date: 24 February 2021
Approved Judgment
Introduction
This is an appeal against an order for summary judgment by way of enforcement of a judgment for US$11 million given by the United States District Court for the Central District of California (the US Court) on 26 August 2019. By the order, dated 21 July 2020, HH Judge Russen QC, sitting as a judge of the High Court, gave judgment under CPR Part 24 for £8,483,726.67, being the sterling equivalent of $11 million at the exchange rate ruling at the date of issue of the proceedings in England, together with interest and costs.
The proceedings in the US Court (the US proceedings) arose out of a consultancy agreement between the Respondent, AdActive Media Inc (the company), incorporated in Delaware, and the appellant, Mark Ingrouille, a British citizen resident in England. By the consultancy agreement, made in September 2014, Mr Ingrouille was engaged to provide services as part of the expansion of the company's business in South East Asia. The company terminated the agreement in March 2018 and commenced the US proceedings in April 2018, claiming damages for breach of contract, breach of fiduciary duty, fraud, embezzlement, interference with contractual relations and interference with economic advantage.
Mr Ingrouille did not participate in the US proceedings and judgment in default for $11 million in compensatory damages was entered in August 2019, but only after detailed legal submissions and expert evidence as to the quantum of damages, all of which were considered at oral hearings in February and April 2019.
The consultancy agreement is by its express terms governed by the law of the State of California. It contains three provisions dealing with jurisdiction, two of which confer jurisdiction on US District and State Courts in California and the other provides for arbitration. The provision for arbitration expressly excludes claims by the company under two clauses, one of which (clause 7) contains covenants against the misuse and unauthorised disclosure of confidential information. Alleged breaches of clause 7 featured prominently in the claims made in the US proceedings. The relationship between these provisions and their effect is one of the issues arising on this appeal. The company argued before the judge that they were irreconcilable, and that the arbitration clause was ineffective. Alternatively, it argued that as the US proceedings included claims in respect of the misuse and unauthorised disclosure of confidential information, they were properly brought in the US Court.
If the US proceedings were properly brought in the US Court in accordance with the terms of the consultancy agreement, that court is recognised under English common law principles as having jurisdiction over the claim against Mr Ingrouille and its judgment will prima facie be enforceable in England. Whether those proceedings were properly brought in the US Court depends on the application of the jurisdiction provisions of the consultancy agreement and on section 32 of the Civil Jurisdiction and Judgments Act 1982 (the 1982 Act), which so far as relevant provides:
“(1) Subject to the following provisions of this section, a judgment given by a court of an overseas country in any proceedings shall not be recognised or enforced in the United Kingdom if –
(a) the bringing of those proceedings in that court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of that country; and
(b) those proceedings were not brought in that court by, or with the agreement of, the person against whom the judgment was given; and
(c) that person did not counterclaim in the proceedings or otherwise submit to the jurisdiction of that court.
(2) Subsection (1) does not apply, where the agreement referred to in paragraph (a) of that subsection was illegal, void or unenforceable or was incapable of being performed for reasons not attributable to the fault of the party bringing the proceedings in which the judgment was given.
(3) In determining whether a judgment given by a court of an overseas country should be recognised or enforced in the United Kingdom, a court in the United Kingdom shall not be bound by any decision of the overseas court relating to any of the matters mentioned in subsection ( 1) or (2).”
In an ex tempore judgment, Judge Russen held, first, that the proceedings were properly brought in the US Court in accordance with the clauses conferring jurisdiction on that court because, even if the arbitration clause was effective, it did not exclude the US Court's jurisdiction if the proceedings included claims in respect of the misuse or unauthorised disclosure of confidential information. Second, and in any event, he held that the arbitration clause was unenforceable within the meaning of section 32(2) because it was irreconcilable with the other jurisdiction clauses. Mr Ingrouille appeals with permission granted by Males LJ.
The consultancy agreement
The consultancy agreement, entitled “Strategic Consulting Agreement”, provided that Mr Ingrouille was engaged to assist and advise the company with strategic business development. The company was described by its CEO in a witness statement made in support of the application for summary judgment as “a digital media company that specialises in optimising social media influences' channels and connecting them to brands for meaningful, engaging media and advertising campaigns”. Under the agreement, Mr Ingrouille's primary responsibilities were the establishment of its initial business operations throughout South East Asia, including the formation of subsidiaries in countries in the region, hiring and supervising office operations, introductions to and management of potential advertising clients and media partners and expansion and streamlining of the company's network of content creators. Clearly, Mr Ingrouille had wide-ranging responsibilities under the consultancy agreement for the development and management of the company's business in South East Asia. The engagement was for an initial term of three years and thereafter automatically renewing on a monthly basis.
Clause 3.2 provides that during the term of the agreement, Mr Ingrouille “shall act in good faith and to the best of [his] ability…and…shall devote the necessary time, attention, and efforts to the performance of the duties required by or consistent with the engagement.”
Clause 7.1 contains a definition of confidential information in broad but conventional terms. Clause 7.2 provides that Mr Ingrouille would not without prior written consent use or disclose confidential information and would exercise all due and diligent precautions to protect confidential information. Clause 8 contains elaborate provisions to protect the company's interest in Mr Ingrouille's “work product”.
Clauses 15 to 17 are as follows:
“15. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of laws. Any case, controversy, suit, action, or proceeding arising out of, in connection with, or related to this Agreement shall be brought in any Federal or State court located in Los Angeles County, the State of California.
16. Consent to Suit
Any legal proceeding arising out of or relating to this Agreement shall be instituted in the United States District Court for the District of California, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in the State of California, and Consultant hereby consents to the personal and exclusive jurisdiction of such court and hereby waives any objection that Consultant may have as to the venue of any such proceeding and any claim or defense of inconvenient forum.
17. Disputes
17.1 Excepting any claim by the Company against Consultant under Sections 7, and 8 of this Agreement, all claims, disputes, controversies, differences or misunderstandings between the parties arising out of, or by virtue of this Agreement or the interpretation of this Agreement, including the determination of “for Cause” under Section 6 hereof, which cannot be settled or resolved by the parties hereto will be settled or determined by arbitration by a panel of three arbitrators as herein provided. When a party wishes to submit a question or an issue to arbitration it will serve a notice upon the other party, setting forth the matter or matters to be arbitrated and the name and address of its arbitrator and within thirty (30) business days thereafter the other party will name its arbitrator and give written notice to the other party originally invoking arbitration of his name and address. Within ten (10) business days thereafter a third arbitrator will be appointed by the two arbitrators so selected.
17.2 If the party upon whom notice is served should fail to appoint an arbitrator within the time...
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