The Court of Appeal has made a reference to the CJEU, asking for a preliminary ruling as to whether a defendant domiciled in an EU member state has the right, under the recast Brussels Regulation, to be sued in that state and to obtain an anti-suit injunction restraining proceedings in a non-EU jurisdiction. It further asks whether the availability of the injunction extends to a situation where the cause of action in the non-EU court isn’t available in the state of domicile: Gray v Hurley [2019] EWCA Civ 2222.

Previous Court of Appeal decisions have held that an employee has the right to be sued in their EU domicile and to restrain proceedings in a non-EU court. The court in this case considered, however, that those decisions were restricted to employees. Applying the same reasoning in all domicile cases would lead to extreme results and injunctions would be granted in circumstances where, if the Regulation did not apply, an English court would be unlikely to grant an injunction. It concluded, however, that the position was not sufficiently clear (acte clair) and therefore a reference should be made to the CJEU.

It is unlikely that the CJEU will give judgment before the end of 2020, when the transition period following Brexit is due to come to an end (assuming no extension). However, the withdrawal agreement provides that the CJEU will continue to have jurisdiction to give preliminary rulings in cases referred by the UK courts before the end of the transition period, and that such rulings will be binding in the UK.

Although the question arose in this case in the context of an attempt to restrain non-EU proceedings against an English-domiciled defendant, the question will have obvious implications for proceedings brought in the UK courts against EU-domiciled defendants post-Brexit – in particular if the CJEU decides that the Regulation does confer a right on EU-domiciled defendants to be sued in their home courts, rather than a non-EU court as the English court will be post-Brexit.

Background

Following the breakdown in the relationship between the English-domiciled claimant, Ms Gray, and the defendant, Mr Hurley, Ms Gray asserted ownership in certain assets held in Mr Hurley’s name and joint names. In response, Mr Hurley began proceedings in New Zealand seeking an order under a New Zealand statute which applies to the division of assets of co-habiting couples following the end of a relationship. Ms Gray then began English proceedings seeking declarations and restitution in respect of the contested assets, and sought an anti-suit injunction restraining Mr Hurley from continuing with the New Zealand proceedings.

The High Court refused the anti-suit injunction and Ms Gray appealed to the Court of Appeal.

Decision

Ms Gray argued that the English court was obliged to grant an anti-suit injunction restraining the continuance of the New Zealand proceedings, relying on two previous Court of Appeal authorities, Samengo-Turner v J & H Marsh McLennan (Services) Ltd [2007] EWCA Civ 723  and  Petter v EMC Europe Ltd [2015] EWCA Civ 828 (considered here). Those cases decided that employees domiciled in a member state, England, had the right to be sued only in the courts of their domicile; where the employer sought to litigate in a non-EU state, the US, an anti-suit injunction should be granted.

The Court of Appeal, agreeing with the High Court, rejected Ms Gray’s argument, finding that the reasoning in those decisions did not extend beyond the context of employment contracts. The decisions were firmly situated in the law relating to employment contracts and the wording of the relevant article made clear that jurisdiction in employment situations is exclusive.

So far as the effect of article 4(1) was concerned, Ms Gray argued that she had the right to be sued in, and only in, England relying on a number of arguments, including:

  • The emphasis on jurisdictional certainty underpinning the Regulation
  • The mandatory language in article 4 (“…persons domiciled in Member State shall be sued in the courts of that Member State”)
  • Decisions of the CJEU and Supreme Court which show the Regulation doesn’t merely lay down procedural rules but confers rights on individuals which are enforceable against others
  • The requirement that national laws to safeguard rights under EU law must be no less favourable and effective than those to safeguard domestic rights

The arguments against included:

  • There is nothing express in the Regulation which leads to this outcome
  • It is incorrect to characterise commencement of proceedings elsewhere as infringement of a right and anti-suit injunctions are outside the machinery of the Regulation
  • The decision in Owusu establishes that the court of a member state may not decline jurisdiction; it does not establish a further requirement to prevent proceedings in another jurisdiction
  • Anti-suit injunctions are not available in most member states and are not available between member states
  • Samengo-Turner and Petter have been the subject of academic criticism

The court pointed out that Ms Gray’s interpretation would lead to extreme results and would lead to injunctions being granted in circumstances where that would be unlikely if the Regulation did not apply. Under the common law, an anti-suit injunction is only granted where it is appropriate to avoid injustice and, as it is an interference with the process of the foreign court, the jurisdiction is exercised with caution. Where a remedy is available in two jurisdictions, the court will only order an anti-suit injunction where proceedings in the foreign court would be vexatious or oppressive. The threshold is even higher where, as in this case, the injuncted party would not be able to bring proceedings elsewhere.

If Ms Gray were correct then an English domiciled tortfeasor being sued only in a non-member state could require the English court to grant an anti-suit injunction. By the same token, if there were proceedings in a member state, the defendant could seek an anti-suit injunction to prevent the claimant from taking or continuing unrelated proceedings in a non-member state. This would mean an EU domiciled defendant would have greater rights than where there were merely identical or related proceedings in a non-member state; in the case of such identical/related proceedings, articles 33 and 34 give a discretion to the EU member state to stay its proceedings, rather than an obligation to do so.

The court was clearly unenthusiastic about Ms Gray’s interpretation of article 4, commenting that it was not an interpretation they would wish to adopt unless required to do so. They could not however say that the meaning of Article 4(1) was acte clair and therefore decided a reference should be made.

(Post updated 9 January 2020)

Anna Pertoldi
Anna Pertoldi
Partner
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608