European Film Bonds A/S and Others v Lotus Holdings LLC and Others
| Jurisdiction | England & Wales |
| Judge | Master Henderson |
| Judgment Date | 25 July 2019 |
| Neutral Citation | [2019] EWHC 2116 (Ch) |
| Court | Chancery Division |
| Date | 25 July 2019 |
| Docket Number | Claim No BL-2018-002267 |
[2019] EWHC 2116 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Deputy Master Henderson
Claim No BL-2018-002267
Laura John and Alexandra Whelan (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP and Wiggin LLP), counsel for the First, Second and Third Defendants (Applicants), Edmund Cullen QC (instructed by Clintons), leading counsel for the Claimants (Respondents)
Hearing dates: 20 th March and 25 th July 2019
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
DEPUTY Master Henderson
Introduction
By a Part 8 Claim Form issued on 19 th October 2018 the Claimants sought the following relief:
“A declaration that, in the circumstances set out in the Witness Statement of Stephen Joelson (dated 19 October 2018) filed in support of this claim, under the Completion Guarantee dated 25 April 2016 (as amended by the Deed of Amendment dated 31 January 2017) (“ the CGA”), completion and delivery of the Film (as defined in clause 1.12 of the CGA), including Sales Agent Delivery (as defined in clause 1.12(a)), has (and is conclusively presumed to have) been effected and the First and Second Defendants have (and are conclusively presumed to have) issued a notice in writing that completion and delivery of the Film, including Sales Agent Delivery, has been effected.”
That issue (“ the Substantive Issue”) arises against the background that, if the Claimants are successful on it, then:
2.1. The Second to Eighth Claimants will avoid or will avoid the risk of being liable to make payments to the Third and Fourth Defendants under clause 2.1(c) of the CGA. However, it does not necessarily follow that, if the Claimants are not successful on the Substantive Issue, that the Second to Eighth Claimants will be liable under clause 2.1(c) of the CGA.
2.2. If the Second to Eighth Defendant's are otherwise potentially liable to the First and Second Defendants on a claim that they were in breach of contract for failing to complete and deliver the Film; that potential liability might be avoided.
By an application notice dated 21 st November 2018 the Third Defendant (“ Larkhark”) sought the following order:
“A stay of these proceedings under section 9 of the Arbitration Act 1996 and/or the Court's inherent jurisdiction on the basis that these proceedings fall within the scope of arbitration agreements between the parties.”
By an application notice dated 29 th November 2018 the First and Second Defendants (together “ the Lotus Entities”) sought the same relief as Larkhark.
I heard submissions from Counsel on those two application notices (“ the November 2018 Applications”) on 20 th March 2019 and reserved judgment.
Before I delivered that reserved judgment Larkhark issued and served an application notice dated 4 th April 2019. By this application Larkhark sought the following orders:
(1) An order that the fourth witness statement of Alan Owens be admitted as late evidence.
(2) An order that this claim, including the November 2018 applications, be stayed pending the decision of the California Superior Court in proceedings issued by the Claimants by way of a “Complaint” filed on 19 th March 2019 at 17:41 Pacific Standard Time.
The 4 th April 2019 application came on for hearing before me on 25 th July 2019 when Ms John acting on this occasion only on behalf of Larkhark submitted that I should not hand down judgment on the November 2018 applications, but should stay them and the remainder of these proceedings under the court's inherent jurisdiction or its case management powers.
I do not consider it just, appropriate or in accordance with the overriding objective not to give my judgment on the November 2018 applications. In substance I do not consider that the 4 th April 2018, its supporting evidence and Mr Joelson's third witness statement in answer do more than (i) update the court as to events in California and (ii) possibly to bear upon how I should the exercise my discretion to order a stay under the inherent jurisdiction or my case management powers, which was a discretion I had under the November applications in any event. Accordingly this is my judgment on the November 2018 applications and on the 4 th April 2019 application notice.
The relevant subsections of s.9 Arbitration Act 1996 are subsections (1) and (4) which provide:
(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.
Where it applies, s.9 is mandatory. By s.2(2) of the Act, s.9 applies even if, as in the present case, the seat of the arbitration is outside England and Wales or Northern Ireland.
The Part 8 Claim Form was supported by a witness statement of Mr Joelson, a partner in the Claimants' solicitors. Larkhark's application was initially supported by a witness statement of Mr Owens, a partner in Larkhark's solicitors. This statement was also relied upon by the Lotus Entities in support of their application notice. Mr Owen made a second statement. This was dated 11 th March 2019. Mr Gans, a partner in the Lotus Entities' Californian attorneys made a statement dated 14 th March 2019 endorsing Mr Owens' second statement. Mr Joelson made a second statement on behalf of the Claimants. This was dated 15 th March 2019. I have read all those statements and parts of the exhibits to them. There was a third statement of Mr Owens to which I was not taken and which I have not read, but which I was told exhibited or gave expert evidence as to Californian or USA law. The Claimant's objected to the admission of any such expert evidence.
Near the beginning of the hearing I ruled against the admission of any expert evidence as to Californian or USA law, but without either (i) preventing reference to American authorities as persuasive authorities as to English law or (ii) preventing any party from relying on the actual decision of HH Judge David Cunningham on a motion made to him sitting in the Superior Court of the State of California by the Claimants for a stay of the Californian arbitration proceedings which the Lotus Entities and Larkhark have commenced. Accordingly the third statement of Mr Owens was excluded.
The 4 th April application was supported by and sought permission to rely upon a fourth statement of Mr Owens. I admit that statement. I also admit the third statement of Mr Joelson which was put in in answer. In parts both these statements, more especially that of Mr Joelson, stray into the territory of expert evidence as to Californian law. No permission has been sought or given for expert evidence as to Californian law and insofar as those statements purport to give such evidence I ignore them.
I gave my reasons for ruling that Mr Owens' third statement should be excluded at the hearing on 20 th March 2019. I was not asked to re-visit that exclusion in the light of Mr Owens' fourth statement and do not do so. Essentially the reasons were that that there had been no permission for expert evidence; the expert evidence had only been put in by one side; if I gave permission to the Lotus Entities and Larkhark to rely on the expert evidence there would have to be an adjournment of the applications so as to give the Claimants an opportunity to consider the evidence and put in evidence in response. That last could not be done if the Lotus entities and Larkhark who wanted to put in the expert evidence also wanted, as they did, their applications to be heard on 20 th March. Ms John indicated that the Lotus Entities and Larkhark would wish me determine the applications on the existing evidence, and possibly re-visit the question of expert evidence as to Californian law after I had ruled on the applications on the basis of the existing evidence. That did not appear to me to be an attractive course. The applications either had to be decided on the existing evidence (or some of it) or be adjourned. If and insofar as foreign law was relevant, generally I could apply the English law rule (“the Default Rule”) that generally where foreign law is not pleaded and proved, the court applies English law; though the applicability of that rule was doubtful where the English law relied upon was statutory rather than the common law.
If I hold that Californian law is the law applicable to any of the issues before me, then I might apply the Default Rule. This rule is frequently described as a presumption that, in the absence of evidence as to what foreign law is, an English court should presume it to be the same as English law. This general rule or presumption becomes of doubtful application where it would be wholly artificial to apply rules of English law to an issue governed by foreign law. In such circumstances the English court may simply regard a party who has pleaded but who has failed to prove foreign law with...
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