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Jurisdiction Questions under Regulation 44/2001
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution
In Anglo Irish Bank Corporation Limited v. Quinn Investments Sweden AB & Others (1) the High Court had to consider applications under Articles 23 and 28 of Regulation 44/20001 (the “Brussels Regulation”). Ultimately, whilst it dealt with the application under Article 23, the High Court felt that, on the Article 28 application, further clarification was required and referred the matter to the Court of Justice, adjourning the proceedings pending that determination.
A dispute arose between the parties in relation to the provision of finance to the Quinn Group by the plaintiff, which sought declarations as to the ownership of share pledges. A Swedish company (the first named defendant) had been set up by the Quinn family through which property was owned. That company had various subsidiaries, including Cypriot companies, which held shareholdings in other companies which directly held the properties. The plaintiff had prima facie security over the property portfolio and the companies that held the property. However, the plaintiff alleged a conspiracy to alter the way in which the property portfolio was held, with the object of depriving the plaintiff of its security over the property portfolio. The Quinns applied to stay or dismiss the proceedings under Article 23 on the basis that a related action was pending in Cyprus. They also sought declarations that the courts of Sweden and Cyprus had jurisdiction to settle disputes about the share pledges under Article 28.
At the outset, Clarke J. noted that, notwithstanding the merits of the claim, he was only concerned with the question of jurisdiction. He outlined that, in the EU context, the Brussels Convention and, latterly, the Brussels Regulation, had been adopted to specify the particular jurisdiction or jurisdictions which are appropriate to decide particular disputes. Moreover, as sell as setting out rules which determine the jurisdiction(s) most appropriate to decide on a particular dispute, the Brussels Regulation also identifies which countries’ courts are to make a decision as to where the proceedings will be tried. Although those rules are relatively detailed, he noted that the interpretation of those rules can be difficult and the application of the rules to individual cases can be controversial. Inasmuch as possible, it is important that there are clear rules as to which countries’ courts are to make the decision as to where the trial is to be held, because without them, there is potential for differing views to be adopted.
It was, Clarke J. felt, important to bear in mind that that there were a number of proceedings in being between the parties in various jurisdictions. He identified that those other cases formed part of the picture against which the jurisdictional issues before him in this case fell to be considered. He noted that, although the legal and factual bases underlying the proceedings brought by the Quinns in Cyprus and Ireland were the same, the security at which each of the sets of proceedings were directed was different. As part of the proceedings before him, the plaintiff sought orders to restrain the Quinns from taking any steps in furtherance of the alleged plan to restructure the property holdings to limit the effectiveness of the plaintiff’s security. The Quinns brought their applications under Articles 23 and 28 in respect of those proceedings brought by the plaintiff.
Even before considering those articles, he referred to Bosphorus Hava Yollari Turizm Ve Ticaret Anonim Sirketi v. Minister for Transport (2). There, Murphy J. stated that the teleological or schematic approach was a fundamental principle of interpretation to be applied to EC regulations and directives. The Supreme Court approved such a position in Radio Limerick One Ltd v. Independent Radio and Television Commission (3). Consequently, Clarke J. here opined that the starting point for any consideration of the Brussels Regulation is its recitals, and he cited recitals 2, 11, 12, 15 and 16.
However, prior to addressing either article, he felt it appropriate to refer to Article 27, which, along with Article 28, forms part of section 9 of the Regulation, headed “Lis Pendens – Related Actions”. In that context, he noted that the difference between Article 27 and Article 28 is that Article 27 is concerned with proceedings involving the same cause of action and the same parties, whilst Article 28 addresses what are described as related actions in the sense in which that term is used. He felt that clarified the “overall architecture” of the provisions in that, where the same case is brought in more than one jurisdiction, the court first seised has jurisdiction and any other courts are to decline jurisdiction. However, he went on, if any doubt exists, then all other courts are to stay their proceedings until the court first seised can determine whether it has jurisdiction. With related actions, under Article 28, a court other than the court first seised is permitted to stay its proceedings. Thus, relying on Popely v. Popely (4) which Clarke J. felt was of general guidance, the overall purpose of section 9 is to prevent “parallel proceedings in two Member States with jurisdiction with potentially irreconcilable judgments”. Article 23
On the Article 23 application, he noted that there was nothing in the relevant pledge agreements which purported to confer exclusive jurisdiction on, respectively, the Swedish or Cypriot Courts. Although those courts did have jurisdiction by reference to the relevant clauses, no provision was made for those courts to have exclusive jurisdiction. Clarke J. found that the sole basis on which Article 23 could exclude the jurisdiction of the Irish Courts (which he found did arise) was if there were relevant and applicable jurisdiction clauses, which conferred an exclusive jurisdiction on the courts of a jurisdiction other than Ireland. Since the clauses in the pledge agreement did not, he held that Article 23 had no bearing on these proceedings.
In this regard, Clarke J. noted that the proper approach for a court to adopt in circumstances where three separate courts are seised of the same or similar issues has only been considered in one case being Masri v. Consolidated Contractors International Company SAL & Ors (5). That case, however, he felt was “unusual” and ultimately offered him no guidance.
As a general observation, he acknowledged that, where related proceedings are brought sequentially in three different jurisdictions, the third set of proceedings does not, of itself, cause any additional complication. In short, any court other than that first seised may consider whether it should stay or decline jurisdiction, which principle equally applies to a court third seised. If the third proceedings are related to those other proceedings, then the court third seised should decline jurisdiction. However, a complication can arise where the court third seised is the same as the court first seised. As put by Clarke J.:
“In other words, a difficulty potentially arises where proceedings are brought in country A followed by a second set of (potentially related) proceedings in country B and followed in turn by a third set of (potentially related) proceedings back in country A. The question which arises is as to whether the prior existence of the proceedings first seised in country A can confer on that jurisdiction any additional entitlement to deal with the third case.”
In the current context, he stated that it was not the function of the Courts of Ireland to interfere with the proper consideration by the Cypriot Courts as to whether those courts had jurisdiction and he noted that an application had in fact been brought on the basis that they were related to the first in time Irish proceedings. This was a matter for the Cypriot Courts to decide that question and Clarke J. stated that it would be wholly inappropriate for him to offer any view on that determination. Notwithstanding that, the Cypriot Court’s ruling on the issue is of some significance since, if the Cypriot Court eschewed jurisdiction, there would be no Cypriot proceedings to prevent the Irish Court in dealing with these proceedings in the ordinary way. Accordingly, Clarke J. refused to decline jurisdiction (by dismissing these proceedings under Article 28) at this stage as to do so would pre-empt the decision of that Court. Ultimately, he felt that, since there was no clear guidance as to what is to happen in the context of a third set of proceedings being brought in a jurisdiction first seised of at least connected proceedings, the best course of action was to obtain definitive guidance by referring the question to the Court of Justice.
In coming to that conclusion, he observed that the approach to adopt where there are “three sets of proceedings pending, two of which (being the first and third in time) are pending in the courts of one member state while the other is pending in the courts of a different member state is not entirely clear.” He also identified that it was also necessary and important to decide which courts should make the jurisdictional decisions and to determine which actions are “related” for the purpose of the Brussels Regulation.
Clarke J. declined the application made under Article 23 on the basis that there is no agreement that would confer exclusive jurisdiction on the courts of any other member state. On the propriety of the Irish Court dismissing or staying these proceedings under Article 28, the matter was referred to the Court of Justice. Finally, in circumstances where that issue was to be referred, he adjourned the application before him pending the ruling of the Court of Justice.
(1)  IEHC 356
(2)  2 ILRM 551
(3)  2 ILRM 1
(4)  4 I.R. 356
(5)  EWHC 1780 (Comm)