Microsoft Mobile Oy (Ltd) v Sony Europe Ltd and others [2017] EWHC 374 (Ch) – Service out of the Jurisdiction

This blog post is by Philip Mead of 12 King’s Bench Walk. The case concerned the Defendants’ applications to stay the Claimant’s claims or set aside the Claimant’s claims on the basis that the Court had no jurisdiction to hear them. The judgment contains a useful summary of the tests to be applied and applicable principles in the case law when seeking to challenge jurisdiction.

The Claimant’s claims alleged infringements of the applicable competition laws and other economic torts in relation to the sale and supply of lithium ion batteries used in the handsets of Nokia mobile phones, as a result of an unlawful cartel. The First Defendant was sued as of right as an English domiciled entity; the Second, Fourth and Sixth Defendants were served out of the jurisdiction pursuant to permission granted under CPR Part 6.36. The First and Second Defendants applied for a stay on the basis that the proceedings were the subject of a valid arbitration clause. The Fourth and Sixth Defendants applied to set aside service out of the jurisdiction. A further application by the Second Defendant also sought the same relief as the Fourth and Sixth Defendants.

The two gateways potentially applicable in this case were Gateway (3): whether the Defendant is a necessary or proper party to a claim made against a defendant susceptible to the jurisdiction of the Court; and Gateway (9)(a): where the claim is made in tort and the damage is sustained or will be sustained within the jurisdiction. The Judgment also addresses the duty of full and frank disclosure at an ex parte hearing.

Having reviewed the case law on ‘good arguable case’ (para 99 onwards), and the requirements to be satisfied in relation to Gateway (3), the Judge applied established case law to find that the sole reason for suing the First Defendant was to anchor claims against the other (non-domiciled) Defendants was not in itself objectionable (para 111).

Having stayed the claims against the First and Second Defendants on the basis that they were subject to a valid arbitration clause, the Court then went on to consider whether in relation to the exercise of jurisdiction over the co-Defendants there was a claim against the anchor Defendant which it was reasonable to try in accordance with the first stage of Gateway (3) (identified in the Erste Group Bank case). Given the stay, the Learned Judge found there was no issue between the Claimant and the First Defendant for the Court to try (para 117).

The Court went on to consider whether the co-Defendants were proper parties, summarising the case law on what ‘proper’ means (para 130 onwards), and found that they would have been. The proceedings against the First Defendant would have proceeded against the First Defendant in any event, even though it was not necessary to sue the First Defendant in addition to the other Defendants. The other Defendants were jointly and severally liable; investigating a cartel was in effect subject to one investigation, and it made no sense to duplicate investigations with the risk of irreconcilable findings (para 139).

In relation to Gateway (9)(a), the Claimant was unable to identify the damage with sufficient particularity to make out a good arguable case in relation to direct damage within the jurisdiction, and the claim failed under this head.

The Learned Judge also went on to find that the Claimant had also not demonstrated that the English Courts were clearly and distinctly the proper forum (para 191). Were it the case that the stay against the First and Second Defendants had been found to be wrong, then the Judge would have found that the proceedings against the other co-Defendants in the English Courts did pass the test of being clearly and distinctly the proper forum (para 199).

At para 201 and following, the Learned Judge reviewed the case law on the duty of full and frank disclosure. The Defendants argued that the Claimant had failed to draw the Master’s attention on the ex parte application to the difficulties it had in identifying the direct damage, and as a consequence there was a good argument that Gateway (9)(a) was not satisfied, particularly where the Claimant was an assignee of claims by several entities; and that there were a range of factors which indicated that Japan or Korea were the more appropriate fora to hear the claims against the foreign domiciled Defendants.

The Learned Judge held that the Court had been misled by the evidence in the form of witness statements before the Master at the ex parte hearing in relation to the substance of the claim and the difficulty in ascertaining the direct damage, which details only emerged during the inter partes hearing. Of particular note, the Judge found that the witness statement before the Master should have pointed out the counter-vailing factors and arguments in order to be a ‘fair statement’ of the points the Defendants could deploy in favour of a jurisdiction other than England and Wales (para 207 iv). The Judge therefore would have discharged the Order of the Master and set aside the service on grounds of non-disclosure (para 210).

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