King v Crown Energy Trading AG [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | HHJ Chambers |
| Judgment Date | 11 February 2003 |
| Date | 11 February 2003 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court)
HHJ Chambers QC.
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.
The following cases were referred to in the judgment:
Canada Trust Co v Stolzenberg (No. 2) [1998] CLC 23; [1998] 1 WLR 547.
Carnoustie Universal SA v International Transport Workers FederationUNK [2002] EWHC 1624 (Comm).
Kalfelis v Bankhaus Schroder Munchmeyer Hengst & Co [1988] ECR 5565.
Rewia, TheUNK [1991] 2 Ll Rep 325.
Sarrio SA v Kuwait Investment Authority [1997] CLC 1640; [1999] 1 AC 32.
Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami IranELR [1994] 1 AC 438.
Conflict of laws — Service out of jurisdiction — Domicile of companies — Central administration — Principal place of business — Claim for breach of service agreement — Whether foreign companies had central administration or principal place of business in London — Whether company properly sued as one of number of defendants — Council Regulation 44/2001, art. 60(1)(b), (c) — Civil Jurisdiction and Judgments Act 1982, Sch. 3C (Lugano Convention), art. 6(1).
The defendant companies applied 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”).
The claimant sought damages against that company for breach of a service agreement dated 28 November 2000. He sued the second defendant (“Crown Resources”) under a side letter of the same date as guarantor of the 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 had been given, the claimant sought 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. The parties were agreed that for the claimant to succeed in establishing jurisdiction he had to show a good arguable case that domicile was established under art. 60 of Council Regulation 44/2001 in respect of one or both of the defendants and that, if domicile was established against only one of the defendants, the other could be made subject to the jurisdiction by a relevant article of the Lugano Convention.
The claimant was an oil trader. He was one of a team of traders that Crown Resources put together to strengthen its trading activities. The function of Crown Energy, which was owned by Crown Resources, was to employ the claimant and others in the trading team. The team operated from Zug which was the statutory seat of the two defendants. The claimant's evidence was that the two companies had their central administration or principal place of business in London.
Held, dismissing the applications:
1. The claimant had shown a good arguable case to the effect that, when the action commenced, Crown Resources had its central administration and principal place of business within the jurisdiction within the meanings of respectively art. 60(1)(b) and (c) of Council Regulation 44/2001 and that Crown Energy could be sued as a defendant by virtue of art. 6(1) of the Lugano Convention.
2. The two categories of central administration and principal place of business in art. 60(1)(b) and (c) were concerned with substance and not form. In contrast with the rather modest premises that it occupied in Zug, Crown Resources occupied 14,000 square feet of office space in London's West End. The two committees that were at the heart of the operations of Crown Resources were the management committee and the risk management committee. There was nothing to suggest that the risk management committee was situated anywhere other than London. When the action was started the central administration of Crown Resources was in London. Despite the fact the main income of Crown Resources might well have been derived from the traders in Zug, there was a good arguable case to the effect that its principal place of business was in London. (The RewiaUNK[1991] 2 Ll Rep 325applied.)
3. It was not necessary to make a finding under art. 60 in relation to Crown Energy since it was clear that it came within art. 6(1) of the Lugano Convention. It was axiomatic that the exercise of deciding whether Crown Resources was liable to the claimant would involve travelling much the same road as must be followed in order to see whether Crown Energy was liable under the service agreement. It was entirely desirable that the two cases be heard together to avoid the risk of irreconcilable judgments.
HHJ Chambers QC:
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...
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