King v Crown Energy Trading AG and Another
| Jurisdiction | England & Wales |
| Judgment Date | 11 February 2003 |
| Neutral Citation | [2003] EWHC 163 (Comm) |
| Docket Number | Case No: 2002 Folio No 603 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 February 2003 |
[2003] EWHC 163 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEENS BENCH DIVISION
Royal Courts of Justice
Strand,
London WC2A 2LL
His Honour Judge Chambers Qc
(sitting As A Judge Of The Queen's Bench Division)
Case No: 2002 Folio No 603
Bernard Eder QC and James Collins (instructed by Hill Taylor Dickinson) for the Claimant
Jeffrey Gruder QC and David Scorey (instructed by Charles Russell) for the Defendants
Hearing date: 20 th December 2002
Approved Judgment
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.
HH Judge Chambers QC
HH Judge Chambers QC:
Introduction
1. The defendants seek to set aside service upon them in Zug of proceedings brought by the claimant in respect of the termination of his employment by the first defendant ("Crown Energy"). He seeks damages against that company for breach of a service agreement dated 28 November 2000. He sues the second defendant ("Crown Resources") under a side letter of the same date as guarantor of obligations of Crown Energy and in respect of an agreement in the letter to pay a bonus and share of profits. By amendment, for which permission has been given, the claimant seeks damages against Crown Resources for wrongful inducement of breach of contract by Crown Energy. The service agreement was terminated on 24 May 2002. The claim form was issued on 20 June 2002.
2. Although, by its express terms, the service agreement conferred jurisdiction upon the English Courts and is subject to English law, it is an unfortunate feature of Article 17 of the Lugano Convention that its wording would appear to render the jurisdiction clause unenforceable by either party to the agreement, even though it was at the request of the claimant that the clause was inserted. Leading counsel for the claimant, Mr Bernard Eder QC, invites me to adopt a purposive approach to the construction of the article so as to give to the party for whose protection it must be regarded as having been provided the opportunity to waive the prohibition. Tempting as that approach may be, the view of those before me was that I should start with the first of the five issues that they had helpfully agreed and only move on if an earlier issue had been decided against the claimant. As I shall adopt the spirit of counsels''invitation and the Article 17 issue is some way down my list, the need to address the point will not arise. I shall therefore start with my conclusion.
Conclusion
3. My conclusion is that the claimant has shown a good arguable case to the effect that, when this action commenced, Crown Resources had its central administration and principal place of business within this jurisdiction within the meanings of respectively Article 60(1)(b) and (c) of Council Regulation (EC) No. 44/2001 ("the Regulation") and that Crown Energy may be sued as a defendant in this action under Article 6(1) of the Lugano Convention. My reasons for these conclusions are set out in the following paragraphs.
Reasons
The standard of proof
4. The parties are agreed that for the claimant to succeed in establishing jurisdiction, he must show a good arguable case that domicile is established under Article 60 in respect of one or both of the defendants and that, if domicile is established against only one of the defendants, that the other can be made subject to the jurisdiction by a relevant article of the Lugano Convention. They agree that the standard of proof comes between that of a serious issue to be tried and success on a balance of probabilities. They also agree that the standard is a flexible one. However leading counsel for the defendants, Mr Jeffrey Grader QC, relies upon a passage by Waller LJ in the Court of Appeal in Canada Trust Co v Stolzenberg (No.2) [1998] 1 WLR 547 where at p555 F-G he said:
"… It is also right to remember that the "good arguable case" test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a "trial". "Good arguable case" reflects in that context that one side has a much better argument on the material available. ……"
5. In Carnoustie Universal v International Transport Workers Federation [2002] EWHC 1624 (Comm) at paragraph 47, Mr Richard Siberry QC, sitting as a Deputy High Court Judge, said when dealing with Articles 17 and 21 of the Brussels Convention, "… I have approached these issues on the basis that, in this context, "good arguable case" requires the Claimants to demonstrate that they have much the better of the argument on the material available".
6. I regret that I have difficulty in understanding precisely what is meant by the two passages. I certainly do not understand the words of Waller LJ to mean that, where there is a hearing between the parties, the court must make what is, in effect, a decision on a balance of probabilities on the evidence before it. (In any event, the words "much the better" carry with them the implication that one is concerned with more than a bare ascendancy: the superiority must be emphatic.) While agreeing with the judgment of Waller LJ, Nourse LJ at p572 H summarised the position as follows:
"……the authorities disclose no confusion at all in rejecting the notion that the balance of probabilities, the standard appropriate to a trial, is applicable to a preliminary question of domicile such as that which has arisen in this case. The balance of probabilities having been firmly rejected, the authorities establish that "good arguable case" is the standard of proof to be applied . …"
7. In his careful and detailed judgment in Stolzenberg, Waller LJ placed considerable reliance upon the decision of the House of Lords in Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438. That case was concerned with service out of the jurisdiction where leave was required and set out what is now the governing test. That test involves the use of the standard of "a good arguable case" in deciding whether a case comes within one of those categories upon which leave (now permission) to serve out of the jurisdiction may be founded. Waller LJ considered that the test is to be regarded as flexible because of the different situations in which it would be applied. In some cases the issue would be revisited for determination at trial but not in others. However, I do not understand him to have confined the passage with which I am concerned to any particular situation. Furthermore, I do not understand him to have been confining its ambit to a 'Convention case' as against a 'permission case'. That being so, it seems to me that all the words mean is that, when the argument and analysis consequent upon an inter partes hearing are over, there must clearly remain a case which has that degree of cogency necessary to make it a good arguable case.
The application of the test
The law
8. In the absence of direct authority upon the meaning of Article 60, whether by decision or commentary, the defendants place considerable reliance upon The Rewia [1991] 2 Lloyd's Rep 325. In that case what the Court of Appeal considered was the meaning of the term "the principal place of business" of a corporation. The decision is usefully summarised in the passage from the second finding in the headnote which reads:
"the principal place of business was not necessarily the place where most of the business was carried out; there was nothing uncommercial or inapposite about the conclusion that the principal place of business was in Hamburg of a company registered in Liberia owning a ship, the earnings of which would ultimately be remitted to Germany, and about which most important decisions would be taken in Germany; although in practice Turbata had a free hand in the day to day management of the vessel from Hong Kong all that they did was subject to the control of the directors in Hamburg; that was the centre from which instructions were given when necessary and ultimate control exercised; the reference to "principal place" did not require identification of a particular building…"
9. At page 334 Leggatt LJ put the matter...
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