CA Indosuez (Switzerland) SA v Afriquia Gaz SA
| Jurisdiction | England & Wales |
| Judge | Lord Justice Phillips,Lady Justice Carr,Sir Geoffrey Vos |
| Judgment Date | 28 September 2023 |
| Neutral Citation | [2023] EWCA Civ 1072 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000016 |
and
[2023] EWCA Civ 1072
Sir Geoffrey Vos, MASTER OF THE ROLLS
Lord Justice Phillips
and
Lady Justice Carr
Case No: CA-2023-000016
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
MR JUSTICE ROBIN KNOWLES CBE
Royal Courts of Justice
Strand, London, WC2A 2LL
Laura John KC and Daniel Schwennicke (instructed by Holman Fenwick Willan LLP) for the Appellant
James M. Turner KC (instructed by Bird & Bird LLP) for the Respondents
Hearing date: 15 June 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on Thursday 28 September 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives
Introduction
This appeal concerned a Part 20 claim form issued by the respondents (“the Buyers”) on 30 December 2020, the day before the EU Exit Implementation Period ended (“IP completion day”), endorsed with the assertion that the Buyers were permitted to serve the Part 20 claim form on the appellant (“UBS”) in Switzerland pursuant to Article 6(2) of the Lugano Convention. 1 Article 6(2) provides that a person may be sued in third party proceedings in the court seized of the original proceedings unless these were instituted solely with the object of removing him from the jurisdiction of the court which would otherwise be competent in his case.
The first issue on the appeal was whether, notwithstanding that the Lugano Convention continues to apply to proceedings commenced before the United Kingdom ceased to be a party on IP completion day (“Transitional Claims”), 2 changes in the Civil Procedure Rules which came into effect at the end of the implementation period introduced a requirement that permission of the court be obtained to serve Transitional Claims out of the jurisdiction. The Buyers did not obtain such permission before serving or purporting to serve UBS in Switzerland on 8 March 2021.
The second issue was whether the Buyers can continue to rely on Article 6(2) as founding jurisdiction in England and Wales (assuming they were entitled to do so at the date of issue of the Part 20 claim form) notwithstanding that, by the time UBS's challenge to that jurisdiction was heard in February 2022, the original proceedings against the Buyers in this jurisdiction had been settled. UBS contended that substantive jurisdiction under Article 6(2) had been lost or, alternatively, that the English court should exercise a discretion to decline to exercise it. The issue may have relevance in this jurisdiction beyond Transitional Claims as the United Kingdom has applied for individual membership of the Lugano Convention.
On 11 November 2022 Knowles J (“the Judge”), in a careful and well-reasoned judgment, held (in relation to the issues subject to appeal) that (i) the changes to the CPR did not introduce a requirement that permission be obtained to serve Transitional Claims out of the jurisdiction; and (ii) the courts of England and Wales had had jurisdiction under Article 6(2) at the date of issue of the Part 20 claim form and that jurisdiction was not lost (and should not be declined as a matter of discretion) by reason of the intervening settlement of the main proceedings. Accordingly, by order dated 15 December 2022, the Judge dismissed UBS's jurisdiction challenge.
UBS appealed the Judge's decision on each of the issues identified above with permission granted by the Judge. The Buyers opposed the appeal and further contended, by way of Respondent's Notice, that if (contrary to the Judge's decision) they should have obtained permission to serve the Part 20 claim form out of the jurisdiction, service
The essential facts
By a sale contract dated 9 June 2020, the first Part 20 defendant (“the Seller”) agreed to sell 22,000 mt of commercial butane to one or both of the Buyers. The sale contract provided that any dispute would be subject to the exclusive jurisdiction of the High Court in London.
On 23 July 2020, following deliveries to each of the Buyers, the Seller invoiced US$1,020,219 to the first-named Buyer and US$2,958,523.14 to the second-named Buyer, demanding payment to itself at its account with the claimant bank (“CAIS”), giving notice that the debts had been assigned as security to CAIS and directing payment exclusively to the Seller's CAIS account. On 27 and 28 July CAIS gave notice of assignment of the debts to the Buyers.
On about 19 August 2020 the Buyers paid the invoiced sums by SWIFT transfer, but paid them to an account held by the Seller at UBS rather than to its account with CAIS. The sums were then transferred in to a different account where they reduced but did not extinguish a negative balance. UBS has thereafter refused to unwind the credit to the account by returning the funds to the Buyers (for re-transfer to CAIS).
On 12 November 2020 CAIS issued proceedings against the Buyers in the Commercial Court (“the Main Proceedings”), claiming payment of the sums due under the invoices as assignee. The Buyers denied the claim, making no admission as to the alleged assignment and denying that any assignment was valid or effective.
As stated above, the Buyers issued the Part 20 claim against UBS on 30 December 2020, asserting that, if the Buyers were liable to CAIS in the Main Proceedings, then the payments to the Seller's account with UBS were made by mistake, there was no consideration for those payments and UBS was unjustly enriched. The Buyers claimed that, in those circumstances, the sums were held by UBS on constructive trust for the Buyers, alternatively the Buyers were entitled to restitution of those sums. It is common ground that Swiss law applies to these claims and the Buyers have now accepted, in the light of expert evidence as to that law, that their claim in constructive trust must fail.
UBS declined to nominate solicitors to accept service in the jurisdiction. After an extension of time for service, the Buyers procured that the Part 20 claim form was delivered to UBS in Switzerland (by way of purported service) on 8 March 2021.
UBS filed an Acknowledgment of Service indicating an intention to contest the jurisdiction and, on 21 April 2021, applied to set aside service of the Part 20 claim form on the ground that permission to serve out of the jurisdiction had not been obtained. On 7 May 2021 the Buyers cross-applied for an order under CPR 3.10.
By further application dated 5 July 2021 UBS sought a declaration that the English court has no jurisdiction to determine the claim by virtue of Article 6(2) of the Lugano Convention or otherwise and/or that the court should decline to exercise any jurisdiction it might have.
By order dated 8 July 2021, following a Case Management Conference, the Judge directed that the Part 20 claim proceed separately from the Main Proceedings,
On 17 December 2021 Butcher J ordered (by consent) that the Main Proceedings be stayed on confidential settlement terms and that the Part 20 claim continue.
As prefaced above, the Judge dismissed UBS's applications on 15 December 2022. He made no order on the Buyers' cross application under CPR 3.10, it being unnecessary for him to determine that application.
Is permission required to serve Transitional Claims out of the jurisdiction?
The position up to IP completion day
The United Kingdom was a State bound by the Lugano Convention by reason of its membership of the European Union. The stated purpose of the 1988 Lugano Convention was to extend the principles of the 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters between EU Member States to certain members of the European Free Trade Association (including Switzerland). In 2007 the European Union and certain members of EFTA (again including Switzerland) signed the current version of the Lugano Convention, the preamble to which recognised that it was designed to extend the principles laid down in Council Regulation (EC) No 44/2001 (“the Judgments Convention”), which had replaced the Brussels Convention, to the contracting parties to the Lugano Convention. Regulation 44/2001 was recast by Regulation (EU) No. 1215/2012 (“the Judgments Regulation”).
The Judgments Regulation and the Lugano Convention establish independent schemes for allocating jurisdiction and providing for recognition of judgments and are to be interpreted autonomously: see for example C-45/13 Kainz v Pantherwerke AG EU:C:2014:7, [2015] QB 34 at [18]–[19]. Each provides that persons domiciled in one state bound by the relevant instrument “may be sued” in the courts of another such state in specified circumstances and that states have exclusive jurisdiction, regardless of domicile, in other specified circumstances. On the face of matters, such provisions entitled claimants, as a matter of the United Kingdom's treaty obligations, to invoke the jurisdiction of the English courts when permitted by the relevant instrument without the need to pass through any of the gateways set out in CPR PD6B.3.1 and without demonstrating that the claim had a reasonable prospect of success ( CPR 6.37(1)(b)) and that England and Wales is the proper place to bring the claim ( CPR 6.37(3)).
The above position was reflected in the version of the Civil Procedure Rules in force up to IP completion day, permitting service out of...
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