Robert Gagliardi v Evolution Capital Management LLC
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 29 June 2023 |
| Neutral Citation | [2023] EWHC 1608 (Comm) |
| Docket Number | Case No: CL-2022-000466 |
| Court | King's Bench Division (Commercial Court) |
[2023] EWHC 1608 (Comm)
Mr Justice Foxton
Case No: CL-2022-000466
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Daniel Oudkerk KC (instructed by Brahams Dutt Badrick French LLP) for Mr Gagliardi
Richard Leiper KC and Judy Stone (instructed by Morrison & Foerster (UK) LLP) for Evolution Capital Management LLC
Hearing date: 15 June 2023
Draft Judgment Circulated: 20 June 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Thursday 29 June 2023 at 10:30am.
The Honourable
This is the hearing of an application by the claimant ( Mr Gagliardi) for an anti-suit injunction ( ASI) to give effect to what he contends is his statutory right under s15C(3) of the Civil Jurisdiction and Judgments Act 1982 ( CJJA 1982) to be sued in England and Wales, in relation to an employment dispute.
The ASI is sought against Evolution Capital Management LLC ( Evolution). Evolution is a Nevada-based investment adviser which I am told is owned by a Mr Michael Lerch.
Section 15C was introduced by regulation 26 of the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019/479, pursuant to the European Union (Withdrawal) Act 2018. Its effect is to retain, in England and Wales, what was previously Section 5, Article 22 of the Brussels I Recast Regulation. Section 15C(3) provides:
“If the employee is domiciled in the United Kingdom, the employer may only sue the employee in the part of the United Kingdom in which the employee is domiciled (regardless of the domicile of the employer).”
It is accepted (for the purposes of this hearing) that, before the court could grant an ASI against Evolution, it must be satisfied that it has personal jurisdiction over Evolution in respect of the claim which Mr Gagliardi seeks to bring ( Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871, 892). Mr Gagliardi relies on s.15C(2)(b) of the CJJA 1982 which provides that an employer may be sued by an employee “in the courts for the place in the United Kingdom where or from where the employee habitually carries out the employee's work or last did so”.
Evolution disputes that it has commenced proceedings against Mr Gagliardi which fall within s.15C(3) of the CJJA 1982, and it also disputes that the claims which Mr Gagliardi has brought against it fall within s.15C(2)(b) of the CJJA 1982.
The appropriate decision-making framework
It is important at the outset to identify the appropriate framework for determining the issues which I have been asked to decide.
So far as the application for an ASI is concerned, the effect of the order which Mr Gagliardi seeks will be to prevent Evolution from pursuing proceedings before a court of its choice and whose jurisdiction under its own rules has been established. Given the final effect of ASIs, the court does not usually apply American Cyanamid principles when deciding whether or not to make an order of that kind. In cases in which the ASI is sought to enforce compliance with a jurisdiction or arbitration agreement, the approach which the court should take is as summarised in AIG Europe SA v John Wood Group Plc and ors [2021] EWHC 2567 (Comm), [58], and [2022] EWCA Civ 781, [10]:
(1) The court's power to grant an ASI to restrain foreign proceedings, when brought or threatened to be brought in breach of a binding agreement to refer disputes to arbitration (or before the English court), is derived from s.37(1) of the Senior Courts Act 1981, and it will do so when it is “just and convenient”.
(2) The touchstone is what the ends of justice require.
(3) The jurisdiction to grant an ASI should be exercised with caution.
(4) The injunction applicant must establish with a “high degree of probability” that there is an arbitration or jurisdiction agreement which governs the dispute in question.
(5) The court will ordinarily exercise its discretion to restrain the pursuit of proceedings brought in breach of a forum clause unless the defendant can show strong reasons to refuse the relief.
The same test has been applied when the basis on which the ASI is sought is that the defendant is seeking to pursue a right, the exercise of which is conditioned by an obligation to assert that right only in a specific forum, even when the party seeking the ASI does not contend that the foreign proceedings are brought in breach of a contract between the claimant and the defendant: see QBE Europe SA/NV v Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm), [10]–[11].
In this case, the ASI is not sought on either of those bases, but in reliance upon what can fairly be described as a controversial right of an employee arising under the Brussels Regulation and its successors only to be sued in a court recognised as an appropriate court by the Regulation. However, the effect of an ASI on Evolution's ability to litigate in New York will be the same as in a case involving an application for a contractual or quasi-contractual ASI, and I am satisfied that the same test should apply.
By contrast, the question of whether the court has in personam jurisdiction over Mr Gagliardi's claim requires him to establish a “good arguable case” that s.15C(2)(b) is engaged. In answering that question, I have applied the test as discussed by Green LJ in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, [70]–[80]. In brief summary:
(1) The claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway, which, subject to (3), requires the claimant to show that it has the better of the argument.
(2) If there is an issue of fact as to the application of gateway, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so, applying common sense and pragmatism.
(3) The nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it.
Is there any need for the Court to consider this application now?
Before proceeding further, it is necessary to address the question of whether there is any need for the court to consider Mr Gagliardi's application at this point. To answer that question, it is necessary to consider the history of the proceedings to date.
After originally indicating that he would start proceedings against Evolution in New York, Mr Gagliardi issued these proceedings on 26 August 2022 claiming outstanding bonus amounts which he says are due to him. He did not immediately serve them, but Evolution's lawyers were informed that proceedings had been issued in this jurisdiction and provided with a copy of the claim form on 9 September 2022. The parties attended a mediation on 9 November 2022. The mediation was unsuccessful, and that evening Evolution commenced proceedings against Mr Gagliardi in the State of New York seeking, inter alia, a declaration that Mr Gagliardi was not owed the bonus he had claimed in these proceedings, and seeking to recover bonus amounts previously paid to Mr Gagliardi. Mr Gagliardi issued a motion asking the New York court to dismiss the New York proceedings ( the Motion to Dismiss).
Mr Gagliardi issued this application for an ASI on 9 February 2023. Evolution issued an application to challenge the jurisdiction of the English court. Mr Gagliardi sought an expedited hearing of his ASI application. Correspondence followed between the parties in an effort to reach an agreement which would allow the Motion to Dismiss to be determined, prevent the need for an expedited ASI application, and allow that application and the jurisdictional challenge to be brought on together.
On 8 March 2023, Evolution's solicitors wrote to Mr Gagliardi's solicitors confirming that if agreement was reached that the ASI and jurisdiction applications were heard together, and no expedited application for ASI relief was made, then:
“We confirm that, other than in relation to our client's application for a sealing order or in relation to your client's motion to dismiss, our client will undertake not to further prosecute the New York proceedings between now and the combined hearing of the Jurisdiction Application and the Anti-Suit Application.”
This offer did not address the position where the New York Court made an order of its own motion, and did not agree to Mr Gagliardi's request that an undertaking should be provided by Evolution to address that risk.
On 15 March 2023, Mr Gagliardi's solicitors wrote to the Commercial Court seeking expedition. This application was supported by a witness statement from Mr Redniss, a US attorney acting for Mr Gagliardi in the New York proceedings, which stated:
“If the New York Court denies the Motion to Dismiss, absent a stay granted by Justice Reed or an appellate court, Mr Gagliardi would then be required to answer the Complaint and the New York Court would set a court conference and require the parties to enter into a discovery schedule with deadlines for compliance. These steps would be taken by the New York Court of its own motion”.
It is important to note that this witness statement expressly identified the fact that, if the Motion to Dismiss was...
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