In this blog post, Philip Mead of 12 King’s Bench Walk considers the recent Supreme Court judgment on the application of Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Judgments Regulation”), Article 5(3) in respect of a dispute which at its heart concerned the giving of bad investment advice in relation to the trade in derivatives, and the tort of inducing a breach of contract. The judgment provides useful clarity in relation to the underlying principles which apply when considering the Article 5(3) tort gateway.

AMTF were sued by former clients in Germany in respect of the alleged bad investment advice, and settled various claims in that jurisdiction. AMTF then sought to bring proceedings in the English Courts and claimed damages in respect of the expense incurred in investigating the German claims, legal costs in Germany and England and settlement costs.

MMGR, a German law firm, were alleged to have given advice to the former clients of AMTF to bring proceedings in Germany in breach of an exclusive jurisdiction clause and an applicable law clause. AMTF alleged that MMGR was guilty of the tort of inducing a breach of contract, and that according to Article 5(3) of the Judgments Regulation, the English Courts had jurisdiction, as being the courts of the place where the harmful event occurred or may occur.

At first instance, the Court ruled that the relevant harm had occurred in England because AMTF had been deprived of the benefit of an exclusive jurisdiction clause. The Court of Appeal disagreed, finding that the relevant harm had occurred in Germany. The Court of Appeal considered that whilst the English courts had jurisdiction in relation to any claims AMTF had against their former clients, the same Court did not have jurisdiction in relation to any tort claim against MMGR.

Before the Supreme Court, AMTF argued that it was appropriate and in accordance with legal certainty to align any tort claim against MMGR with the contractual jurisdiction which permitted the English courts to consider any claims against the former clients in accordance with the exclusive jurisdiction clause.

The Supreme Court held that the damage suffered by AMTF was suffered in Germany by having to engage in the German proceedings and settle claims there (para 25).

The fact that a claim in tort is connected with a contractual claim has not led the CJEU to elide the grounds of jurisdiction in matters relating to contract with those matters relating to tort (para 31). This may lead to circumstances whereby one jurisdiction may not be able to deal with all related points in a dispute (para 32). The separation of the tort claim from the contract claims arises as a result of the application of the rules of legal certainty and foreseeability (para 35).

The Supreme Court reviewed the case law of the CJEU which had identified the place where the harm had occurred in certain cases where the place of the damage was not evident from a straight forward application of Article 5(3), for example in relation to goods damaged at sea, the place of delivery by the maritime carrier was held to be the place of the damage; damage suffered by a claimant where libellous material was published in several member states, when proceedings could be brought against the defendant in the defendant’s home courts for the totality of the damage or in each other state for the damage occurring in that state; in relation to the protection of intellectual property rights on the internet, by reference to the courts of the place where the property right was registered and the place of the establishment of the advertiser; and in relation to claims for damages in relation to international cartels for breach of competition law, by reference to place of the victim’s registered office.

The Supreme Court declined to consider that this case law assisted the Claimant in constructing a new rule in relation to the location of the damage, when such damage was readily ascertainable in any event (see paras 36 to 42). The Supreme Court accordingly dismissed the appeal of AMTF.

James Beeton Judgments Regulation

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