Inconsistent dispute resolution clauses – Commercial Court emphasises presumption of “one-stop adjudication”

The Commercial Court has found that an arbitration clause in a consultancy agreement was superseded by an exclusive English jurisdiction clause in a later settlement agreement: Monde Petroleum SA v Westernzagros Limited [2015] EWHC 67 (Comm).

The court emphasised the presumption in favour of one-stop adjudication – that is, the presumption that rational commercial parties normally intend all questions arising out of their legal relationship to be determined in the same forum. That conclusion is not however invariable; where there is clear wording to the contrary, the court will give effect to it even if that leads to a fragmentation of proceedings (see this post).

The present decision suggests that the presumption of one-stop adjudication is particularly strong where an agreement is entered into for the purpose of terminating an earlier agreement between the same parties or settling disputes which have arisen under such an agreement. Nonetheless, where parties intend that a previous dispute resolution clause will be superseded, it is best to say so expressly. Click here to read more about the case on our Arbitration Notes blog.

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Article published on changes to jurisdiction rules under recast Brussels Regulation

The recast Brussels Regulation has introduced significant changes to the EU rules on jurisdiction and the enforcement of judgments for proceedings commenced from 10 January 2015. Adam Johnson, Anna Pertoldi, Nick Peacock and Hannah Ambrose have published an article in PLC Magazine, The recast Brussels Regulation: Implications for commercial parties, which considers the key changes and the areas in which uncertainty remains.

This article was first published in the January/February 2015 issue of PLC Magazine – click here for the PLC magazine home page.

We have also published a “handy client guide” to jurisdiction under the recast Brussels Regulation, featuring a decision tree to help determine whether the English court will have jurisdiction over a dispute under the new rules. Click here to download a copy.

 

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When can the court stay proceedings against an English domiciled defendant in favour of proceedings in a non-EU court?

The High Court has held that it had power to stay proceedings against an English domiciled defendant in favour of the courts of Western Australia, as the dispute came within an exclusive jurisdiction clause in favour of those courts: Plaza BV v The Law Debenture Trust Corporation [2015] EWHC 43 (Ch).

When the English court can stay proceedings against an English domiciled defendant in favour of proceedings in a non-EU court is a vexed question under English law.

The ECJ in Owusu v Jackson Case C-281/02 decided that there was no power to stay proceedings in favour of a non-EU court on the grounds that it would be a more appropriate forum (forum conveniens) for the resolution of the dispute (see post). That left open the question whether there was a power to stay other than on forum conveniens grounds, so where for example there is an exclusive jurisdiction agreement in favour of a non-EU court or there are competing proceedings (lis pendens) in a non-EU court.

The current decision adds to the weight of first instance authorities which find that there is such a power, at least where there is an exclusive jurisdiction agreement. The court was also inclined to consider that it had power to stay on the basis that there were ongoing proceedings in Western Australia, but did not reach a decision on that point. It would also have been prepared to order a stay on case management grounds if that had been necessary.

Below we consider the Plaza decision in more detail, as well as the potential impact of the recast Brussels Regulation which applies to proceedings commenced on or after 10 January 2015 and so was not considered in this case. Continue reading

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High Court provides guidance on waiver of sovereign immunity

In a recent decision, the High Court considered the scope of sovereign immunity provided by section 1 of the State Immunity Act 1978 (the “1978 Act“): High Commissioner for Pakistan In the United Kingdom v National Westminster Bank [2015] EWHC 55 (Ch).

The court expressed the view that once sovereign immunity is waived by a State instituting proceedings, it is waived for the duration of those proceedings, including any new claims that the State could have predicted would arise from the original proceedings.

The discussion in this case sheds some light on the boundaries of an area of law that has seen limited judicial consideration. It remains to be seen whether Pakistan will appeal, and so give a higher court an opportunity to provide further guidance. For more detail on the case, see this post on our PIL Notes blog.

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Think twice before withdrawing a Part 36 offer

A recent High Court decision illustrates the drawbacks of withdrawing a Part 36 offer to settle, namely the potential loss of some or all of the costs benefits that would otherwise have arisen if the opponent fails to beat the offer: Uwug Limited (in liquidation) v Ball [2015] EWHC 74 (IPEC).

In this case, the defendant withdrew his Part 36 offer four months after it was made. The case went to trial and the claimant’s damages were less than the amount offered. As a result, the claimant was not awarded his costs from the date the court said he should have accepted the offer. However, he was not ordered to pay the defendant’s costs from that date, as would almost certainly have been the case if the offer had not been withdrawn. Continue reading

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Contracts with consumers – where can a business sue and be sued?

Where a business has directed its activities to an EU member state in which a consumer is domiciled, two consequences follow: (i) it can generally only sue the consumer in that member state; and (ii) the consumer can choose to sue the business in that member state (among other options). Since 10 January 2015, that applies regardless of whether the business is itself EU domiciled or has any presence in the EU (see our post summarising the key changes under the recast Brussels Regulation).

The Court of Appeal has considered the test of when a business directs its activities to a member state, in the context of similar rules which apply to determine jurisdiction as between England and Wales, Scotland and Northern Ireland: Wood v Hewitsons LLP [2014] EWCA Civ 1698.

Here the question was whether an English firm of solicitors were directing their activities to Scotland and therefore could only sue their Scottish domiciled client in Scotland. The court applied the principles laid down by the CJEU in Peter Pammer v Reederei Karl Schluter GmbH & Co KG [2012] CLR 972, concluding there was nothing to suggest the nature of the activity was international and the activities were therefore not directed to Scotland.

The case is of interest as there are relatively few cases applying the Pammer principles in practice, and the court in this case appears to have taken a relatively strict approach on the facts in the context of professional services. Continue reading

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38th FA Mann Lecture – “‘Judge not, that ye be not judged': judging judicial decision-making”

The 38th FA Mann Lecture will take place at 18:00 on Thursday 29 January 2015 at The Old Hall, Lincoln’s Inn, London, WC2A 3TL.

The title for this year’s lecture is: “‘Judge not, that ye be not judged': judging judicial decision-making”. The lecture will be presented by Lord Neuberger of Abbotsbury and chaired by Lord Justice Vos.

This is the 38th in a series of annual lectures in honour of the late Dr FA Mann QC (Hon) (1907-1991), arranged by the partners of Herbert Smith Freehills and given under the auspices of the British Institute of International and Comparative Law.

Please click here for further information.

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Courts to charge issue fees of 5% of claim value

The government announced on Friday that it will go ahead with its proposal to introduce percentage issue fees for money claims over £10,000, calculated as 5% of the value of the claim subject to a cap of £10,000 (see our post summarising the proposals put forward in its December 2013 consultation). Issue fees currently range up to £1,920 for claims of more than £300,000, so the new fees will mean a fivefold increase for claims at that level.

The government has however decided against implementing its proposal to introduce even higher fees for claims in the Commercial Court, Chancery Division and Technology and Construction Court. These would have involved either a higher cap to the issue fee (either £15,000 or £20,000) or a new daily hearing fee (£1,000 per day, or £500 for hearings of half a day or less).

In addition, the government is consulting on further proposals to raise fee income, including a significant increase in application fees in civil proceedings, from £155 to £255 for a contested application and from £50 to £100 for an application without notice or by consent. That consultation will be open until 27 February.

The government’s decision to go ahead with substantial fee increases has been met by expressions of concern by various bodies, including the senior judiciary and the Civil Justice Council, as to their potential impact on access to justice as well as London’s competitive position as a centre for international dispute resolution. We share those concerns, though we welcome the government’s decision to abandon its proposals to introduce further increases for commercial claims.

As the new 5% issue fee is an “enhanced fee”, meaning that it is aimed at recovering more than the cost of the services to which it relates, it must be introduced by statutory instrument. The government has said it will prepare and bring forward the necessary legislation so that the new fee can take effect before the start of the 2015/16 court term, subject to Parliamentary time being made available.

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Article published on dealing with distressed companies

Recent developments, including proposed changes to the UK insolvency regime, present an increasing number of pitfalls for parties involved in the management of, and transactions with, distressed companies.  Claims against stakeholders in insolvent companies and the third parties with whom they deal are becoming increasingly frequent.

Partners Natasha Johnson and John Whiteoak and Andrew Cooke, an associate, each in our dispute resolution team, have published an article in the January – March 2015 edition of Corporate Disputes magazine which considers the issues and steps that parties dealing with distressed companies might take to mitigate risk. Click here to download a PDF of the article: “Dealing with Distressed Companies”.

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Recast Brussels Regulation applies to proceedings commenced from today onwards

The recast Brussels Regulation introduces significant changes to the EU rules on jurisdiction and the enforcement of judgments for proceedings commenced from today, 10 January 2015 (Regulation (EU) 1215/2012).

The key practical implications for parties based both within and outside the EU are outlined in our recent post New EU jurisdiction rules apply from 10 January: Do you know where you can sue and be sued?.

We have also published a Handy client guide to jurisdiction under recast Brussels Regulation: England and Wales featuring a decision tree to help determine whether the English court will have jurisdiction over a dispute under the new rules.

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