MF Tel Sarl v Visa Europe Ltd

on the Defendant's application dated 31 October 2022

Hearing 3 May 2023

Judgment handed down remotely on 5 June 2023

The defendant applied by application notice dated 31 October 2022 to strike out the claim under CPR rule 3.4(2)(a) or, alternatively, for summary judgment under CPR rule 24.2.

At the time the application was issued the claim was pleaded solely on the basis that the cause or causes of action were subject to the laws of France. Subsequently, the claimant amended the claim and particulars of claim, with the consent of the defendant, to plead in the alternative that the claim is subject to the laws of England.

On 18 April 2023 the defendant amended its application notice 1 into the following form:

“The Claimant has amended its Claim Form and Particulars of Claim retaining its existing French law claim but adding an English law claim in the alternative. As such, the Defendant continues to pursue an application for the Amended Claim Form and Amended Particulars of Claim to be struck out insofar as they refer to or rely upon French law pursuant to CPR 3.4(2)(a), or alternatively under the court's inherent jurisdiction; and additionally or in the alternative for summary judgment to the same extent in favour of the Defendant pursuant to CPR 24.2; a declaration that the Claimant's claim is governed by English law; and for the court to make any consequential orders it considers appropriate.”

So far as the claim form is concerned, the defendant seeks to strike out the following words:

“(1) “by French law, alternatively”;

(2) “interest on all sums due pursuant to French law at the “taux legal” [legal rate], pursuant to Articles 1231–6 and 1231–7 of the French Civil Code; alternatively”; and

(3) “; and (iv) a sum for management time pursuant to French law Articles 1231–1 and 1231-2 of the French Civil Code (as interpreted and applied by case law of the Cour de Cassation)”; and”

In addition, the defendant seeks to strike out paragraphs 21 to 35, 35A, 36.1 and 37 of the amended particulars of claim.

When the application was heard the court considered two witness statements made by David Winfield-Chislett, who is a solicitor and in-house counsel to the defendant, and a witness statement made by Jonathan Speed, who is a partner with Bird & Bird LLP the claimant's solicitors.

At the hearing I observed that Mr Speed had failed to comply with CPR rule 32.8 and paragraph 18.2(2) Practice Direction 32. The latter provides that:

“ 18.2 A witness statement must indicate:

(1) which of the statements in it are made from the witness's own knowledge and which are matters of information or belief, and

(2) the source for any matters of information or belief.”

A witness statement that contains information provided by another person must provide the source of any matters of information and belief. The point is not without importance because the accuracy of this information may be challenged at the hearing of an application or at the trial. The source of the information needs to be clear. 2 It is of particular importance on applications made under CPR rule 24.2 where the court may be required to exercise a

During the hearing Mr Cloherty KC, who appeared for the claimant, accepted that the witness statement was defective and the claimant offered to provide a corrective statement. On 10 May 2023 Mr Speed filed a further statement providing the source of the evidence given in his first statement. In addition, he took the opportunity to clarify a point made in his first statement. This has proved to be controversial and on 12 May 2023 DLA Piper UK LLP on behalf of the defendant invited the court to disregard Mr Speed's second statement describing it as not only providing late evidence but also a pleadings alteration. On 17 May 2023 Bird & Bird LLP responded saying, amongst other things, that the statement did not affect the case set out in the amended particulars of claim.

There are in fact few material issues of fact between the parties arising from the witness evidence relating to the defendant's application. At this stage I have in mind two points:

(1) For the purposes of the application under CPR rule 3.4(2)(a) the court will usually proceed on the basis that the pleaded facts are true. The claim usually stands or falls based upon the case set out in the statement of case. The witness statements add little or nothing for the purposes of considering whether the statement of case shows reasonable grounds for bringing the claim. They may have a greater bearing on the alternative application under CPR rule 24.2.

(2) The defendant's application is focussed upon whether the claimant is able to pursue a claim based upon the applicable law being the law of France. The witness evidence is not, and does not purport to be, a more comprehensive review of all aspects of direct and indirect dealings between the parties.

I will return to the question of whether I should have regard to Mr Speed's second statement later in this judgment.

I will approach this judgment in the following way. I will:

(1) Provide the background to the claim and the legal issue that falls to be considered.

(2) Summarise the previous proceedings between the parties in France.

(3) Summarise the principles that apply to applications made under CPR rule 3.4(2)(a) and CPR rule 24.2.

(4) Consider the relevant parts of the amended particulars of claim.

(5) Summarise the legal framework and the submissions made by each party.

(6) Provide my decision on the application and my reasons for it.

Background

The claimant is a French company based in France which operated a pre-paid payment card programme under the ‘Transcash’ brand. The defendant is a payments technology provider incorporated in the United Kingdom.

The claimant operated its pre-payment cards using the defendant's card transaction services. However, the claimant never had a contractual relationship with the defendant. Instead, the claimant operated through a ‘sponsor’, R Raphael & Sons plc (“RRS”), a bank based in London, which was a member of the Visa system. The claimant entered into contractual arrangements with RRS on 25 June 2009 and later on 5 December 2014. Both agreements were subject to English law.

RRS was a member of the Visa System by virtue of a membership agreement dated 14 April 2009 which was subject to an English choice of law and exclusive jurisdiction clause. The Visa System was defined in that agreement as being:

“… the information technology and other systems and platforms for data processing and payment authorisation, clearing and settlement services owned and/or operated by Visa Europe or Visa Inc from time to time”.

RRS was the issuer of cards that were branded as Transcash cards and the cards were operated using the Visa System. As the above definition makes clear, the defendant does not handle the money that is processed using its system. It provides the technology to enable transactions to operate.

Two further agreements were appended to the membership agreement between Visa and RRS: (i) a Technology Licence Agreement and (ii) a Trade Mark Licence agreement. Both those agreements were also subject to an English law and exclusive jurisdiction clause.

The intention of the Transcash Programme is to provide prepaid electronic cash cards to individuals who would usually fall outside the traditional electronic banking system. It allows cardholders to keep their money safe and gives them access to online services that require electronic payments. The Transcash Programme can also be used as a means of gifting or sending money securely. Once the card has been loaded with credit, the card holder can withdraw cash from an ATM machine or use the card to make payments via an Electronic Payment Terminal (“EPT”) connected to the VISA network in the same way as other bank cards.

The stores that participated in the claimant's scheme are located mainly in France and Francophone countries in West Africa, including Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo, Gabon, Cameroon, Central African Republic, Republic of the Congo, Equatorial Guinea and Chad. Stores selling Transcash cards and top-up vouchers would receive an invoice from RRS and were required to pay RRS the value of the vouchers prior to selling them to cardholders. RRS received the funds into a ‘trust account’ in its name with Barclays Bank in England. RRS had the responsibility of settling the Transcash users' transactions on behalf of the claimant, including the collection of transaction fees. Settlement would involve RRS remitting funds from its trust account (i) to the bank accounts of merchants on the other side of the card user's transaction and (ii) to the claimant's bank account in France for the transaction fees.

The claim concerns an alleged failure by the defendant to apply “Optional Issuer Fees” (“OIFs”) to specific transactions entered into by cardholders in the currencies of a number of countries (“the Currencies”). OIFs are defined in the defendant's Core Rules as being:

“A fee that an Issuer 3 may charge a Cardholder by the application of a percentage increase to the Currency Conversion Rate, which the Visa Systems use to determine the Transaction Amount in the Billing Currency for each...