Third Eye Projects Ltd v Mint S.P.A
| Jurisdiction | England & Wales |
| Judge | Master Kaye |
| Judgment Date | 05 May 2023 |
| Neutral Citation | [2023] EWHC 1023 (Ch) |
| Docket Number | Case No: BL-2022-001435 |
| Court | Chancery Division |
[2023] EWHC 1023 (Ch)
Master Kaye
Case No: BL-2022-001435
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
The Rolls Building
7 Rolls Buildings
London, EC4A 1NL
Mr Andrew Scott KC and Mr Andrew Blake (instructed by Mishcon de Reya LLP) for the Claimants
Mr Edward Meuli (instructed by Morgan Lewis & Bockius UK LLP) for the Defendant
Hearing dates: 23 January 2023
Approved Judgment
This judgment will be handed down 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 10 am on Friday 5 May 2023
This is my judgment on an application by the defendant dated 19 October 2022, seeking an order that the English court decline jurisdiction and stay the claim on the basis that Italy, and in particular the First Instance Court of Milan, is a more appropriate forum for the determination of this claim (“the Application”).
The defendant is an Italian Company (a joint stock company with three Italian corporate shareholders). The claimants issued and served their claim on the defendant at its UK Branch in England. There is no challenge to the English court's jurisdiction.
The Application gives rise to two questions:
i) whether the claim falls within the scope of a jurisdiction clause conferring exclusive jurisdiction on the courts of England and Wales. If it does then the Application will fail. (The Jurisdiction Clause Issue)
ii) If it does not then the court must consider whether, as the defendant maintains, the First Instance Court of Milan is clearly and distinctly the more appropriate forum. (The Forum Issue)
The Legal Principles/Tests
I did not detect any significant difference between the parties on the principles/tests to be applied in determining either the Jurisdiction Clause Issue or the Forum Issue, only on how they were to be applied to the facts of this case.
The Jurisdiction Clause Issue concerns the interpretation and scope of a widely drawn jurisdiction clause in an earlier agreement. The English court's approach to construing jurisdiction clauses was set out in Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 (“ Fiona Trust”). Although Fiona Trust concerned an arbitration clause the principles have long been recognised to apply equally to jurisdiction clauses. The generous interpretation to be given to arbitration and jurisdiction clauses following Fiona Trust has been extended to cover multi-contract disputes.
In Terre Neuve Sarl v Yewdale Ltd [2020] EWHC 772 (Comm) (“ Terre Neuve”) Bryan J considered the scope of this extended principle and in doing so reviewed the earlier authorities where it had been extended. He described this as the Extended Fiona Trust Principle, and set out six points to be considered to determine whether a jurisdiction clause in an agreement was fairly capable of applying to a later dispute even if that later dispute arose under a subsequent agreement at [31] as follows:
“The following six points can be made about the Extended Fiona Trust Principle:-
(1) The principle is based on the construction of the relevant jurisdiction clause (which I will refer to as being contained in “Contract A”): it is not based on an implication or implied incorporation of the jurisdiction clause from Contract A into a related contract (henceforth known as “Contract B”).
(2) As a matter of contractual construction, the wording of the clause in Contract A must be fairly capable of applying to disputes in Contract B. For example, a clause which stated that “any dispute under this contract shall be referred to arbitration” may not apply to disputes arising out of a (related) Contract B.
(3) It is not legally or commercially odd or improbable that an agreement should have no jurisdiction clause. Equally an agreement may have no jurisdiction clause and not be covered by a jurisdiction clause in a different agreement. This was confirmed in Am Trust Europe Ltd v Trust Risk Group at [46] (albeit in reference to competing jurisdiction agreements):
“There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes under contract B; the question is entirely one of construction”.
However, the absence of any competing jurisdiction clauses in any agreements within a particular set of agreements concluded by the parties for the same purpose, at the same time, and with the same subject matter, can be a relevant consideration ( Etihad at [102(v)]).
(4) This principle normally applies where the parties to Contract A and Contract B are the same. This arises from the fact that the Extended Fiona Trust Principle ultimately involves an exercise in contractual construction. One would normally expect the parties to Contract A to intend that their dispute resolution mechanism be binding upon the parties to Contract A rather than also applying to persons who were not party to that contract at all. Where the principle is applied to a situation in which the parties to Contract A and Contract B are different, then it is possible that the court may conclude that it was the Contract A parties' intention that third parties should be able to rely on Contract A (for example in a Himalaya clause situation), or the court might conclude that only the common parties between Contract A and Contract B are bound by the jurisdiction clause in Contract A. However, the latter is an inherently unattractive prospect, as it involves the fragmentation of disputes pursuant to the same agreement (Contract B) – possibly even disputes concerning the very same obligations. This is the very menace which it was assumed in Fiona Trust rational businessmen want to avoid (of course agreements which appear to have been deliberately and professionally drafted are to be given effect, even where this may result in a degree of fragmentation in the resolution of disputes: see Dicey, 15th Edition at 12–110). The effect of Fiona Trust is that fragmentation of disputes under one agreement is unlikely to be what the parties intended. However, it is perfectly possible that there may be fragmentation of the resolution of disputes across several agreements (although whether this was the parties' intentions is to be considered when construing the contracts).
(5) The Extended Fiona Trust Principle normally applies where Contract A and Contract B are interdependent (Point (5a)), or have been concluded at the same time as part of a single package or transaction (Point (5b)), or (if concluded at different times) dealt with the same subject-matter (Point (5c)).
(6) A jurisdiction agreement in Contract A will generally apply to Contract B where that contract was entered into at the same or a similar time as Contract A. In this regard:
(a) In Etihad at [104], the judge noted that jurisdiction agreements in Contract A generally did not apply to a different agreement (Contract B) which had been concluded prior to the jurisdiction agreement coming into existence:
“Whilst it is not impossible for a jurisdiction agreement to have, on its true construction, such retrospective effect, a party seeking to rely upon a subsequently agreed jurisdiction agreement, in a separate contract, is likely to face an uphill struggle: see e.g. Satyam. One reason is that the earlier contract had an existence of its own, and hence an applicable law, prior to the conclusion of the subsequent agreements. If there was no jurisdiction agreement at the time it was concluded, then it may be difficult to conclude that it is to be found in a subsequent agreement, particularly if (as in Choil) the disputes arising under the later agreement are likely to have a very different character to disputes arising under the earlier agreement.”
(b) Further, if Contract B was concluded prior to Contract A and the Contract A parties intended for the jurisdiction clause to deal with disputes under Contract B, one would normally expect Contract A to deal expressly with jurisdiction under Contract B. Quite apart from anything else the parties already know about Contract B's existence.
(c) If Contract A was concluded prior to Contract B, and a jurisdiction clause in Contract A was intended to cover Contract B, one might expect Contract B to cross-refer back to Contract A (albeit that ultimately what one is construing for present purposes is Contract A and on normal principles of contractual construction it stands to be construed at the date on which it was entered into). It is also to be borne in mind that it may be more difficult to conclude that parties to a particular jurisdiction agreement intended for that agreement to apply to disputes arising out of contracts that have not been concluded yet, particularly if such future contracts are not being discussed as part of the same package of agreements, or if the future contracts are in fact separated by a significant period of time from the conclusion of the jurisdiction agreement.”
In this case the Jurisdiction Clause Issue is one to be considered by reference to the Extended Fiona Trust Principle.
When considering the Forum Issue following the UK's departure from the European Union, the Brussels Recast Regulation has ceased to have effect: Dicey, Morris & Collins on the Conflicts of Laws (16 th Edn) at 12-009. These proceedings were issued on 8 September 2022 after the expiration of the transition period and are therefore governed by the common law.
Consequently, the applicable principles when considering the Forum Issue are those set out in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (“ The Spiliada”) in the speech of Lord Goff at 475C – 478E.
The claimants referred me to Mrs Justice Joanna Smith's...
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