Choice of Law and Forum

Choice of Law and Forum: Swift Justice in England Including Pre-Judgment Tactics and Relief and Enforcement Throughout Europe

England is the capital of the world when it comes to devising and granting remedies against international fraudsters and preventing those who would seek to frustrate a potential judgment from being enforced.

Much of what I say will be in the context of fraud, as it is there that the exorbitant jurisdiction and powerful armoury of remedies available in the English courts comes to the fore. However, the jurisdiction and remedies can be and are used in other situations. It should be remembered that the Anton Piller case itself concerned copyright and confidential information.

My first statement was an extravagant boast, but I hope that I will convince you that it is not an idle one.

The English Courts have territorial jurisdiction in respect of England and Wales. Scotland, Northern Ireland, Isle of Man and the Channel Islands are separate jurisdictions.

The Commercial Court, which is part of the Queen’s Bench Division of the High Court, has been in existence for over 100 years. Its purpose is to provide a specialised court expert in commercial and mercantile disputes, and to provide procedures to resolve those disputes expeditiously, efficiently and without unnecessary formality. A Commercial Court Committee of users, judges and practitioners advises the Court, to assist it in remaining responsive to the needs of litigants.

The Commercial Court hears “commercial actions,” which are defined by Court rule as including

“any cause arising out of the ordinary transactions of merchants and traders and ... any cause relating to the construction of a mercantile document, the export or import of merchandise, affreightment, insurance, banking, mercantile agency and mercantile usage.” (Rules of the Supreme Court, Order 72, rule 1(2)).

Pursuant to Order 73 of the Rules of the Supreme Court, matters relating to arbitration are referred to the Commercial Court.

The judges of the Commercial Court have all been Queen’s Counsel (senior barristers) specialising in commercial actions. They have experience not only in the areas of law that are likely to come before the Court, but also in industry and commercial practices relating to banking, shipping, insurance and other commercial matters.

All procedural applications in the Commercial Court are heard by the judges themselves. In the rest of the Queen’s Bench and Chancery Divisions, interlocutory matters are heard by Masters. The Commercial Court practice cuts out one potential level of appeal on procedural matters.

Two thirds of all cases before the Commercial Court involve at least one foreign party. A third of the cases involve only foreign parties. The Commercial Court is also used to dealing with matters of foreign law. Foreign law is treated as a matter of fact. When questions of foreign law are at issue, reports are submitted by experts for each party. The experts, unless agreement can be reached, will appear as witnesses to give evidence, which the judge will evaluate.

The fact that so many commercial contracts between parties ‑ often neither of which is English - specify that disputes shall be referred to the Commercial Court in London is testimony to the fact that the Court is not xenophobic and is a favorable forum for foreign parties to resolve disputes, even against English parties.

The English courts have a very long arm jurisdiction. This means that they will take jurisdiction in the High Court in a manner which is certainly as broad as in the USA and as in most other jurisdictions I have come across.

The English courts will take jurisdiction if you can serve one Defendant here, and show that everyone else is “a necessary and proper party” who ought to be brought before the court for the purpose of determining the dispute.

In Canada Trust Company v. Stolzenberg [1997] 1 W.L.R. 1582., a case currently before the courts, jurisdiction has been taken against dozens of individuals and companies who were allegedly participants in a grand conspiracy even though

(a) only one defendant lived here, in one of his houses he maintained across the world, and even then he was only living here at the time when the writ was issued and (it is argued) not at the time of service of the action;

(b) the fraud was perpetrated by people who were mainly not in this country; and was worked on parties who were defrauded in Canada.

In the Grupo Torras case, another case before the courts at present, only a handful of the current 65 defendants live in England.

The main legislation governing jurisdiction is the Civil Jurisdiction and Judgements Act 1982 ("the Act") which is "an act to make further provision about the jurisdiction of courts and tribunals in the United Kingdom and certain other territories and about the recognition and enforcement of judgments given in the United Kingdom or elsewhere....". The Act was passed to bring into effect in English Law the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters ("the Convention") and other conventions.

All member States of the EU have agreed to be bound by the terms of the Convention (with or without adjustments) and where the defendant is domiciled in the EU these rules apply.

The provisions of the Act and the Convention are extremely lengthy and complicated and so I will only deal with the basic provisions.

The primary basis of jurisdiction under the Convention is the "domicile" of the defendant. For the purposes of the Convention a person is domiciled in the state in which he resides or in which he has a substantial connection. A company is domiciled in the state in which it is incorporated, has its registered office or its central management and control (Section 41 of the Act).

"subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the Courts of that State".

Article 5 of the Convention sets out a secondary basis of jurisdiction. It provides that

"a person domiciled in a Contracting State may, in another Contracting State, be sued:

(1) in manners relating to a contract, in the Courts for the place of performance of the obligation in question;...

(3) in matters relating to tort, delict or quasi-delict in the Courts for the place where the harmful act occurred;...

(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the Courts for the place in which the branch, agency or other establishment is situated ...".

The provisions set out above deal with the day-to-day jurisdiction of Courts in "civil and commercial matters". Arbitration matters are amongst the few areas to which the Convention has no application.

"if the parties, one or more of whom is domiciled in the Contracting State, have agreed the Court, or the Courts of a Contracting State, are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, then those Courts shall have exclusive jurisdiction."

The Article goes on to provide that such agreement must be in writing, evidenced in writing or be in accordance with the practices in a particular trade. It should however be noted that Article 17 also provides:-

"if an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention".

In England jurisdiction can only be taken by the English Court if proceedings can be served on the defendant or defendants. Where a defendant is domiciled in an EU or other European country the English Court has jurisdiction under the Conventions and service of proceedings may be made out of the jurisdiction without the leave of the Court.

Where the defendant is not domiciled in a Convention country, the English Court can exercise jurisdiction over a defendant present in England, but leave must be obtained from the Court to serve proceedings out of the jurisdiction. The Court has discretion as to whether or not to grant leave to serve proceedings out of the jurisdiction and will only do so if the applicant for such leave shows that he has "a good arguable case" on the merits and that England is the appropriate forum for the trial of the action.

A defendant who has been served with proceedings whether domiciled in England or not can make an application to the Court disputing the jurisdiction of the Court by applying for an order setting aside service of the writ, an order declaring that the writ has not been duly served, or an order discharging any order giving leave to serve the writ out of the jurisdiction. There may be further or other reasons indicating the fact that the English Court is not the proper forum (forum non conveniens).

Our remedies are probably the strongest available in the world for fighting fraud and securing assets. We have injunctions which are very wide ranging in effect.

Type of Relief

Description

Against

Fraudster

Against

3rd Party

Freeze Order (previously known as Mareva Injunction[1])

Prevents Defendants from disposing of assets. In appropriate circumstances, the Order may apply to the Defendant’s worldwide assets. Can be ordered in aid of foreign proceedings.

•

[2]

Search order (previously known as Anton Piller Order[3])

Requires Defendant to admit a Plaintiff to search premises and inspect, remove or preserve evidence relating to the Plaintiff’s cause of action. Can be ordered in aid of foreign proceedings.

•

2/

Sarwar Order[4]

Where the Defendant is a well established and respectable business.   Similar to an Anton Piller Order in that it provides for the delivery up of infringing copies, the disclosure of the names and addresses of suppliers and the surrender of relevant documents. No search and seizure provision.

•

Mukhtar Order[5]

Where there is a suspicion that the Defendant is not acting in good faith the Court will require delivery up of certain specified articles to the Plaintiff’s solicitor. No search and seizure provision.

•

Disclosure Order

Where the Defendant is ordered to give orally and/or on affidavit answers to written questions relating to the whereabouts of missing assets or documents.

•

Bayer Order[6]

The Court will order the Defendant not to leave the jurisdiction and require him to give up his passport.

•

Writ Ne Exeat Regno[7]

The Court may issue a writ Ne Exeat Regno to prevent a Defendant leaving England and Wales with assets, and thereby prejudicing a Plaintiff’s valid claim.

•

“Amenable Jurisdiction”

Orders that a Defendant write (e.g.) to his foreign banker instructing them to transfer funds to a more amenable jurisdiction; or that they provide information.

•

Norwich Pharmacal[8]

Where an innocent party through no fault of his own becomes involved in the tortious acts of the intended Defendant so as to facilitate his wrongdoing, he comes under an obligation to assist the person wronged by giving full information and disclosing the identity of the wrongdoers. Such an application would be made inter partes. Where there is evidence that a 3rd party will destroy or conceal such information, an ex parte application for an Anton Piller Order may be made.

     •

Bankers Trust[9]

Disclosure of relevant documents may be ordered against a bank or other innocent 3rd party in order to assist in tracing assets. The banker’s duty of confidence to his client can be overridden.

     •

Bankers Books Evidence Act 1879 (s.7)

A statutory power allowing any party to an action to inspect and copy bank records for the purposes of the action. Such an Order may be made ex parte.

     •

The English courts are willing to use those injunctions to support civil proceedings in other countries in appropriate cases. The law in this area has moved on from the 1987 case of The Siskina[10] in which the House of Lords held that where there was no underlying cause of action being tried in the English Courts, the Plaintiffs were not entitled to an injunction restraining removal of the Defendant’s assets from the jurisdiction. The position was modified somewhat by s25(1) of the Civil Jurisdiction & Judgments Act 1982 (which came into force on 1 January 1987). The English Courts were given the power to grant interim relief where there are no underlying proceedings being tried there, but there are ongoing proceedings in countries which are signatories to the Brussels Convention (broadly, the EEC countries) or the Lugano Convention (most notably, Switzerland). The first reported case of the Court exercising its power under s.25 was in Haiti v Duvalier[11]. Although proceedings to recover allegedly embezzled sums were begun in France, the Defendants had apparently used a firm of English solicitors to assist with the movement of assets. The English Court was reined back somewhat in the Roossell [12] case, where it was held that the Court should be wary of making

“criss-crossing long arm jurisdictional orders with a high degree of probability that there would be confusion and, indeed, resentment by the nations concerned at interference within their jurisdictions”.

However, the more recent case of Credit Suisse v Cuoghi [13] found that, so long as the granting of interim relief in England did not hamper the substantive proceedings, the Court should make an Order whenever it was expedient to do so. Section 25(3) provides that the power to grant relief can be further extended by Order in Council. As of 1 April 1997, the power to grant relief has been extended to jurisdictions in addition to a Brussels or Lugano Convention country.

These remedies are now partly statutory[14] and contained in the Civil Procedure Rules[15].

Following a string of cases (starting with Babanaft Co SA v Bassatne [1990] Ch13) it is now clearly established that Mareva relief can be granted before or after judgment over the defendant’s assets, wherever they are situated.