The High Court has held that the English court will only have jurisdiction against a co-defendant under article 8(1) of the recast Brussels Regulation where a merits test against the anchor defendant has been satisfied: Senior Taxi Aereo Executivo Ltda v Agusta Westland S.p.A  EWHC 1348 (Comm). In doing so, it largely followed obiter comments by the majority in a previous Court of Appeal decision (Sabbagh v Khoury  EWCA Civ 1120, considered here).
Under article 8(1), co-defendants domiciled in EU member states can be joined to proceedings commenced in England against an English domiciled defendant (the anchor defendant) where the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
There is no merits test in respect of the case against the co-defendants, but it has been unclear whether that is also the case in respect of the case against the anchor defendant. The majority in Sabbagh considered that there was such a test, but Gloster LJ gave a strong dissenting judgment, leaving the position in doubt. The judge in this case (Waksman J) held there is such a test, preferring the reasoning of the majority, although clearly the issue is ripe for consideration by the Court of Appeal or CJEU.
Although the recast Brussels Regulation will no longer apply in the UK after the end of the transition period following the UK’s departure from the EU (save in respect of proceedings started before the period ends), the decision will remain of relevance if the UK joins the Lugano Convention, as the Convention contains the same provision regarding co-defendants as the Regulation.
If the UK does not join the Lugano Convention, the decision will cease to have relevance, as the common law jurisdiction rules will apply to co-defendants. Under those rules, a merits test clearly does apply to the claim against the anchor defendant.
The proceedings arose out of a fatal helicopter crash in 2011. The claimants alleged that the crash was due to defects in the helicopter’s design and manufacture. They commenced proceedings against Agusta Westland Ltd (AW), an English domiciled company, as anchor defendant and against a number of other EU domiciled companies on the basis that the court had jurisdiction under article 8(1) of the recast Brussels Regulation.
The defendants argued that for article 8(1) to apply, there needed to be a viable claim against the anchor defendant and that test was not met, as AW had had no involvement in the design, manufacture supply or marketing of the helicopter.
The High Court held that there was a merits threshold to be met in respect of the claim against an anchor defendant. That test had not been met on the facts and accordingly the claim against the anchor defendant was dismissed and the jurisdiction challenge by the defendants sued on the basis of article 8(1) was upheld.
In his judgment the judge helpfully rehearsed the case law to date on the merits issue, including the Court of Appeal’s obiter comments in Sabbagh, explaining why in most instances he preferred the reasoning of the majority in that case.
In Sabbagh, the High Court had held that there was a merits test in respect of a claim against an anchor defendant and, as that claim was devoid of merit, there was no jurisdiction against co-defendants. The Court of Appeal held that the claim did in fact have merit, but went on to give its views on whether there was a merits test. The majority, Patten and Beatson LJJ, considered there was such a test whereas the minority, Gloster LJ, took the view that there was not.
Waksman J in reaching his decision placed importance on the following:
- The ”irreconcilable judgments argument” was, in his view, the basis for the existence of a merits test. This argument, which had found most support in the case law, states that where there is no arguable claim against the anchor defendant there is no ”close” connection between the claims because there is no connection. Moreover, there is no risk of irreconcilable judgments because, if the proceedings against the other defendants were brought elsewhere, the outcome as against them would be the same. He accepted that it could not be guaranteed that the outcome would be the same – just that this was likely – but unlike Gloster LJ he did not see that as an obstacle to the existence of a merits test.
- The merits test is not part of the ”artificial fulfilment exception” which applies where the conditions for application of article 8(1) have been artificially fulfilled. That might be the case where there has been collusion between the claimant and anchor defendant, for example by delaying formal conclusion of a settlement between the claimant and anchor defendant until proceedings have been instituted against the other defendants, so as to seek to rely on article 8(1) to found jurisdiction against them.
- The existence of a merits test also cannot be justified on the basis that it is part of a rule against suing an anchor defendant with the sole object of joining co-defendants (as the majority in Sabbagh thought). In JSC v Kolomoisky  EWCA Civ 1708 (considered here), a majority of the Court of Appeal held that there is no such rule but, in Waksman J’s view, the decision in that case proceeded on the assumption that a claimant needed a sustainable claim against an anchor defendant before it could join co-defendants under article 8(1) (or the equivalent rule under the Lugano Convention).
- While there is no merits test in respect of non-anchor defendants (Aeroflot v Berezovsky  EWCA 784), he agreed with the majority in Sabbagh that the claim against the anchor defendant is different, as it is fundamental to establishing jurisdiction against a co-defendant away from their domicile. In doing so he disagreed with the views of both Gloster LJ in Sabbagh and Aikens LJ (obiter) in Berezovsky.
- He did not accept that a merits test was ruled out because article 8(1) refers to a close connection between the ”claims” which must therefore be evaluated at the outset. While he acknowledged Gloster LJ’s concern about applying a merits test at a later point in time in the proceedings, in practice the test would be applied in the context of a jurisdiction challenge and that would take place at an early stage, with the proceedings effectively paused until that challenge was determined.
- The fact that it would be logical for the anchor defendant to apply itself to discharge the proceedings against it makes no difference. The relevant “home” for the merits test is in the jurisdiction challenge by the co-defendant.
- The test would not, as Gloster LJ thought, introduce an unacceptable degree of uncertainty and unpredictability. Finding a case is hopeless is different from trying to predict the outcome of a viable claim.
- None of the EU cases ruled out a merits test. The decision in Reisch Montage v Kiesel  IL Pr 10 could be distinguished. In that case the Austrian anchor defendant was bankrupt, so the claim against it could not proceed under national rules. The claim against the German guarantor co-defendant was however permitted to continue. The focus in that case was on a national rule as to admissibility and a procedural bar, rather than the merits, so the decision was no bar to a merits test.