Cuccolini S.R.L v Elcan Industries Inc.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Stuart-Smith |
| Judgment Date | 08 October 2013 |
| Neutral Citation | [2013] EWHC 2994 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ13X03092 |
| Date | 08 October 2013 |
[2013] EWHC 2994 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Stuart-Smith
Case No: HQ13X03092
Robert Howe QC and Tom Cleaver (instructed by Mishcon De Reya) for the Claimant
Alexander Milner (instructed by Osborne Clarke) for the Defendant
Hearing dates: 25 September 2013
Introduction
This is an application by the Defendant ["Elcan"], which is a New York company, for an order setting aside the service of proceedings on forum non-conveniens grounds and for a declaration that the English courts should not exercise any jurisdiction over Elcan in these proceedings.
Factual Background
The Claimant ["Cuccolini"] is an Italian company that manufactures vibrating screening machines. On 10 June 2010 Cuccolini entered into an agreement ["the Agreement"] with Elcan which appointed Elcan to be the sole distributor of Cuccolini's machines in the United States and to be a non-exclusive distributor in Canada. The Agreement imposed a number of obligations upon Elcan, including that it should use its best commercial endeavours to promote the distribution and sale of the machines. Clause 14.2 provided for termination by either party if the other party repeatedly breached any of the terms of the Agreement "in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this Agreement."
Clause 28 is central to this application and provided as follows:
"28 GOVERNING LAW AND JURISDICTION
28.1 This Agreement and any dispute or claim arising out of it or in connection with it or its subject matter shall be governed by and construed in accordance with the laws of England and Wales.
28.2 The parties irrevocably agree that the courts of the England and Wales shall have the necessary jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement or its subject matter.
28.3 The parties shall nonetheless retain the right within their discretion to institute proceedings in any court having jurisdiction or, upon the written agreement of the parties, to resolve any disputes in accordance with alternative dispute resolutions such as mediation or arbitration."
On 5 June 2013, Cuccolini's solicitors wrote to Elcan terminating the Agreement in accordance with Clause 14.2, relying upon multiple allegations of breach of the Agreement. On 10 June 2013 Cuccolini issued these proceedings, which allege multiple and repeated breaches of the Agreement by Elcan, and promptly applied for permission to serve the claim form on Elcan outside the jurisdiction pursuant to CPR 6.36, 6.37 and Practice Direction 6B, paragraphs 3.1(6)(c) and (d). The application was supported by a witness statement from Ms Hill, Cuccolini's solicitor, which identified Clause 28 of the Agreement as the foundation for the application and outlined the nature of the claim. She expressed the Claimant's view (which cannot be seriously doubted) that the claim raised serious issues to be tried and submitted that the English courts are clearly and distinctly the most suitable forum.
On 11 June 2013, Master Roberts made the order granting permission that is now challenged by Elcan.
Before the English proceedings had been served on it in the United States, Elcan issued proceedings in the United States District Court for the Southern District of New York. Those proceedings allege a conspiracy between Cuccolini and two other parties (who are based in Virginia), namely Peters Equipment Company LLC ["Peters"], and Mr Robert Ramsey, an officer of Peters. The nature of the conspiracy is alleged to be that Cuccolini conspired with Peters and Mr Ramsay to remove Elcan and to replace it with Peters as Cuccolini's distributor.
Elcan's solicitors filed an acknowledgement of service on 8 July 2013 and issued the present application on 29 July 2013. The application is supported by witness statements from Mr Hayward (Elcan's English solicitor) and Mr Samberg (its US attorney). Cuccolini resists the application and has filed a witness statement from Ms Hill in support of its opposition.
The Issues
The parties have, by their evidence and submissions, raised the following issues:
i) Does the Court have a discretion to stay the proceedings?
ii) If the Court has a discretion to stay the proceedings, has Elcan satisfied the requirements to persuade the Court to do so?
iii) Did Cuccolini give full and frank disclosure to Master Roberts and, if not, should his order be set aside and jurisdiction declined for that reason?
In her witness statement opposing the application, Ms Hill raised a further issue, namely whether Elcan had submitted to the jurisdiction by requesting an extension of time for filing a Defence. However, it is clear that there is a dispute of fact in relation to that issue which the Court cannot resolve on this application. That issue is therefore not for determination now.
Summary
For Elcan to succeed in its application, it needs to succeed on one or other of issues 2 and 3. The parties indicated that they did not request the Court to decide Issue 1 if it became unnecessary to do so.
For the reasons set out below, Elcan fails on Issues 2 and 3 and therefore fails in its application. I therefore record the opposing submissions on Issue 1 in brief outline, but do not decide it.
Issue 1: Does the Court have a Discretion to Stay the Proceedings?
As a threshold objection to Elcan's application, Cuccolini submits that the Court has no discretion to stay proceedings. It does so by parity of reasoning with the decision of the European Court of Justice in Case C-281/02 Owusu v Jackson [2005] ECR I-1383.
The present case is subject to Article 23 of Council Regulation (EC) No. 44/2001 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters, which provides that:
"If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction."
Owusu was a decision on Article 2 of the Brussels Convention, which provides:
"Subject to the provisions of this Convention, persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state."
In Owusu the ECJ held that the doctrine of forum non conveniens was inapplicable in a case to which Article 2 applied on the basis that it would undermine the predictability of the rules of jurisdiction laid down by the Brussels convention and thereby undermine the principle of legal certainty, which is the basis of the Convention. Cuccolini submits that, by parity of reasoning, the doctrine of forum non conveniens is inapplicable in cases such as the present to which Article 23 applies; and it relies upon decisions and dicta in the English courts, including an observation by Lord Collins of Mapesbury in UBS AG v HSH Nordbank [2009] EWCA Civ 585, that the "prevailing view" is that there is no scope for the application of the doctrine to remove a case from a court which has jurisdiction under the Regulation.
Elcan submits that, even if the reasoning in Owusu is applicable in a case involving an exclusive or non-exclusive jurisdiction clause, it is inapplicable where, as here, there are parallel proceedings pending in the courts of a non-Member State. In support of its submission it relies upon the first instance decision in JKN v JCN [2011] 1 FLR 826 where the Court concluded that it was neither necessary nor desirable to extend the reasoning in Owusu to such a case.
Because I find against Elcan on Issues 2 and 3, it is not necessary to decide Issue 1 and I neither do so nor express any views on it.
Issue 2: If the Court Has a Discretion to Stay the Proceedings, Has Elcan Satisfied the Requirements to Persuade the Court to Do So?
The Applicable Principles
This issue proceeds on the assumption that the Court has a discretion to stay the proceedings. Subject to two glosses, Elcan accepts that the applicable principles are accurately set out in the judgment of Gloster J in Amtec International Ltd v Biosafety USA Inc [2006] EWHC 47 (Comm) at [7], a case involving a non-exclusive jurisdiction clause:
"i) The fact that the parties have freely negotiated a contract providing for the non-exclusive jurisdiction of the English courts and English law, creates a strong prima facie case that the English jurisdiction is the correct one. In such circumstances it is appropriate to approach the matter as though the claimant has founded jurisdiction here as of right, even though the clause is non-exclusive […]
ii) Although, in the exercise of its discretion, the court is entitled to have regard to all the circumstances of the case, the general rule is that the parties will be held to their contractual choice of English jurisdiction unless there are overwhelming, or at least very strong, reasons for departing from this rule […]
iii) Such overwhelming or very strong reasons do not include factors of convenience that were foreseeable at the time that the contract was entered into (save in exceptional circumstances involving the interests of justice); and it is not appropriate to embark upon a standard Spiliada balancing exercise. The defendant has to point to some factor which it could not have foreseen at the time the contract was concluded. Even if there is an unforeseeable factor or a party can point to some other reason which, in the interests of justice, points to another forum, this does not...
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