AMT Futures Ltd v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbh
| Jurisdiction | England & Wales |
| Judge | Lord Justice Christopher Clarke,Lord Justice Tomlinson,Lord Justice Laws |
| Judgment Date | 26 February 2015 |
| Neutral Citation | [2015] EWCA Civ 143 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 February 2015 |
| Docket Number | Case No: A3/2014/1398 |
[2015] EWCA Civ 143
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MR JUSTICE POPPLEWELL
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Laws
Lord Justice Tomlinson
and
Lord Justice Christopher Clarke
Case No: A3/2014/1398
Hugh Mercer QC and Pierre Janusz (instructed by Zimmers) for the Appellant
Thomas de la Mare QC and Andrew Scott (instructed by Farrer & Co LLP) for the Respondent
Hearing dates: 11 th and 12 th February 2015
The background
AMT Futures Ltd ("AMTF") is a company incorporated in the UK, which acted as an execution only broker for the purchase and sale of derivative instruments. Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH ("MMGR") is a firm of German lawyers.
AMTF obtained instructions from introducing brokers. They introduced clients to AMTF who wanted to trade in derivatives and AMTF did so on their behalf. In some cases, the clients suffered losses on their trades. Some 70 of AMTF's former clients ("the former clients") issued proceedings in Germany against AMTF in which they claimed damages in respect of their losses. AMTF challenged the jurisdiction of the German court. In the event many of them have recovered damages by way of settlement.
The agreements made between the former clients and AMTF contained provisions whereby (a) the dealings between them and AMTF were to be governed by English law; and (b) the English courts were to have exclusive jurisdiction in respect of any disputes. AMTF has relied on these provisions, and other matters, in challenging the jurisdiction of the German court.
AMTF's case is that MMGR induced the former clients to issue proceedings in Germany and to advance causes of action under German law, and thereby to breach the terms of the applicable exclusive jurisdiction and choice of law clauses. AMTF claims damages against MMGR for their having done so, its claim being a claim in tort for inducement of breach of contract.
The issue
The question is whether or not the English Courts have jurisdiction to entertain this action under Council Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("the Regulation"). Popplewell J decided that they did. MMGR says that he was wrong to do so.
The German proceedings
Three of the 70 cases were brought in Hamburg. The remainder were brought in Duisburg or, on appeal therefrom, in Düsseldorf. The reason why the court in Duisburg was chosen is said by AMTF to have been because it had a particularly "investor friendly" approach. The claims, which were in delict or quasi delict, followed a standard model marketed by MMGR. The judge summarised them thus [7]:
" The primary complaint was addressed to the conduct of the relevant independent broker in advising the client to make the investments or failing to advise of the risks, but AMT was alleged to have encouraged this conduct by "kickbacks" to the independent brokers from the fees it was earning on the transactions so as to owe a duty directly to the client in tort to prevent any transactions being undertaken contrary to the client's interests, and a duty to brief the client about what was characterised as "fee churning". The claims against AMT were in essence based on an accessory liability ancillary to that of the introducing broker."
The 70 different cases have had different outcomes. The position at the time of the hearing before us was said to be as follows. 51 of the 70 cases had been settled, often for considerably less than the amount claimed. Of those 51, 30 were settled before any judgment had been given. 21 were settled after a judgment was given in relation to jurisdiction. Some of the settlements were approved by the court. 4 cases have been determined by a final judgment — 2 in favour of AMTF and 2 against. In the 15 cases which have not finally been settled, 4 are pending in the lower court. In 11 cases the lower court has made a decision and an appeal is pending. In 5 of those 11 cases AMTF was the winner in the lower court.
The damages sought by AMTF in the action include claims for (a) monies paid in settlement; (b) legal costs incurred in Germany and in England; (c) loss of management time; and (d) loss of profit in respect of future contracts. AMTF also seeks injunctive relief restraining MMGR from any further inducement.
The exclusive jurisdiction clauses
The contractual documentation between the former clients and AMTF consisted of a "Customer" or "Terms of Business" letter and a Client (or Customer) Agreement with terms of business. There were 5 different agreements used by AMTF over time.
The earliest relevant client agreements were on the SFA Terms (1991) which provide that:
" 33.1 This Agreement and all rights and obligations arising in respect of your Account shall be governed by, performed and construed in accordance with the laws of England and … you irrevocably submit to the exclusive jurisdiction of the English courts in relation to such dispute, without prejudice to our right to seek enforcement of any arbitration award or judgment in any other jurisdiction."
The SFA Terms (1991) incorporated the terms of the Netting Agreement annexed to those terms, which provides at clause 12 as follows:
" 12.1 These terms shall be governed by, and construed in accordance with, the laws of England and Wales.
12.2 With respect to any Proceedings each Party irrevocably (i) agrees that the courts of England shall have exclusive jurisdiction to determine any Proceedings and irrevocably submits to the jurisdiction of the English courts…"
The term " Proceedings" is defined under clause 13.1 of the Netting Agreement as
" Any suit, action, or other proceedings relating to this agreement."
As the judge recorded, over time the terms of the law and jurisdiction clauses came to be drawn more widely still. It is plainly seriously arguable that the German proceedings commenced by the 70 former clients were commenced in breach of the exclusive English jurisdiction clause and that, as a matter of contract the entirety of the legal relationship between the client and AMTF in relation to the client's account was agreed to be subject to English law. That raises questions as to the scope of Article 14 of the Rome II Regulation, with which we are not presently concerned. The terms of the letter contained an acknowledgment signed by the client that he understood that AMTF was only providing a dealing service and was not providing advice. The standard terms themselves contained provisions to the like effect. The letters included a confirmation that the introducing broker acted as his advisers and would be receiving a commission from AMTF per transaction.
The purpose of these arrangements, so far as AMTF was concerned, was as follows. AMTF was unwilling to assume the costs and risks, including regulatory risks, of advising on investments. The terms and conditions and letters were drafted so as (i) to make clear to clients the limited scope of the services to be provided; (ii) to comply with the UK regulatory regime to which AMTF is subject, and align the law of the contract with that of the regulatory regime; and (iii) to protect AMTF against the risk of becoming subject to proceedings outside England in courts which might not apply English law and would certainly be less familiar with it. It was only on those terms that AMTF was prepared to trade. The first set of contractual documentation was prepared on the basis of legal advice received by AMTF and the later sets of terms were prepared by English lawyers acting on behalf of a trade association of brokers, including AMTF, who were regulated by the SFA or the FSA.
The Judgments Regulation
Article 2 of the Regulation provides:
" 1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of the Member State."
Article 5 provides:
"A person domiciled in a Member State may, in another Member State, be sued:
1 (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question:
…
3 In matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur".
Accordingly whether or not MMGR can be sued in England depends on whether the place where " the harmful event occurred" was in this country. There are at least five major cases in which the ECJ has had to consider a situation in which the act giving rise to loss or damage has arisen in one country and the loss or damage in another (or more than one other) country.
Bier
In Handelskwekerj GJ Bier NV v SA Mines de Potasse d'Alsace ( Case 4320/74) [1978] QB 708 the delictual claim was for damage caused to the plaintiff's nursery garden in Holland. The garden was watered from the Rhine and its seed beds were damaged by saline waste flowing down the river from the defendant's mine in France. The Court made clear [11] that the freedom of choice provided by the exceptions to Article 2 in Article 5 was:
" introduced having regard to the existence in certain clearly defined circumstances of a particularly close connecting factor between a dispute and the court which may be called upon to hear it, with a view to the efficacious conduct of the proceedings".
The Court held that the place of the event giving rise to the damage, no less than the place...
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