Article 27 of the Lugano Convention is not amended by Article 31(2) of the Recast Brussels Regulation (Mastermelt Ltd v Siegfried Evionnaz SA)

Articles
28 Apr 2020

Dispute Resolution analysis: This case considers the impact which Article 31(2) of the Recast Brussels Regulation has on Article 27 of the Lugano Convention in cases where one party asserts the existence of an exclusive jurisdiction clause (“EJC”) and proceedings have begun in more than one Convention State.

Mastermelt Ltd v Siegfried Evionnaz SA [2020] EWHC 927 (QB)

What are the practical implications of this case?

This case demonstrates an important limitation on the concept of harmonisation seen in cases such as JSC Bank v Kolomoisky. That concept stresses the need for a harmonised system of jurisdictional rules within the EU and Lugano Convention Member States and suggests that where amendments are made to the Brussels Regulation, the Lugano Convention should be taken to be amended as well. Waksman J felt that this concept is limited and heed should be paid to the fact that a system already exists for amendments to be made to the Lugano Convention. Where the Standing Committee has considered the possibility of amendment in light of the Recast Brussels Regulation but has not proposed any, courts should not interpret provisions in the Lugano Convention in a manner compatible with the Recast Brussels Regulation where that interpretation conflicts with the ordinary language of the provision.

What was the background?

Mastermelt, an English company specialising in the reclamation of precious metals, became embroiled in a dispute with Siegfried, a Swiss company which develops pharmaceutical ingredients. In essence, Mastermelt had provided reclamation services for Siegfried and Siegfried disputed the quality of its work. Siegfried’s standard terms and conditions (“STCs”) included a choice of law clause in favour of Swiss law and a jurisdiction clause in favour of Switzerland. When Siegfried informed Mastermelt that it was going to issue proceedings in Switzerland, Mastermelt issued these proceedings in the Commercial Court. Siegfried issued proceedings in the Swiss courts and an application in the Commercial Court proceedings for a declaration that it had no jurisdiction to hear Mastermelt’s claim. Mastermelt applied unsuccessfully for a stay from the Swiss court and is now appealing that decision. In giving reasons for rejecting Mastermelt’s application, the Swiss Court held that Article 27 of the Lugano Convention (interpreted in the context of Article 31(2) of the Recast Brussels Regulation) required it first to determine the question of its own jurisdiction. In Siegfried’s application, three principal issues arose:

  • Whether the Commercial Court was bound by the Swiss court’s decision concerning the interpretation of Article 27 of the Lugano Convention;
  • If not, whether a ‘harmonised’ version of Article 27 of the Lugano Convention applies and, therefore, whether the Commercial Court should do nothing other than stay the proceedings there pending determination of the question of its own jurisdiction by the Swiss Court; and
  • In the alternative, whether the Commercial Court should determine whether it had jurisdiction on the basis of whether the EJC was valid or not under Article 23 of the Lugano Convention.

What did the court decide?

 Waksman J did not accept that the Commercial Court was bound by the Swiss court’s decision. That decision was ‘too remote’ (notwithstanding that it concerned the same parties and the same issues) to bind him. It was appropriate for him to consider the proper interpretation of Article 27 for himself.

Consistent with a number of textbooks cited in the judgment, Waksman J rejected Siegfried’s harmonised interpretation of Article 27 and concluded that it was not affected by Article 31(2) of the Recast Brussels Regulation. Properly construed, Article 27 provided that where proceedings involving the same cause of action between the same parties have been brought in different Lugano Convention States, any court other than the court first seised must stay proceedings brought there.

On the facts, Waksman J proceeded to conclude that the EJC was valid and evidenced in writing and, therefore, the Swiss courts had jurisdiction to try the claim. The Commercial Court proceedings should either be dismissed or stayed.

Case details

  • Court: Commercial Court
  • Judge: Mr Justice Waksman
  • Date of judgment: 16 April 2020

This article was first published by Lexis PSL on 28 April 2020.

Author

Phillip Patterson

Call: 2008

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