Jersey: A Funny Thing Happened On The Way To The Forum

INTRODUCTION

  1. The Jersey Court of Appeal (Leeds United Football Club Limited v Weston and Levi [2012] JCA 083) has confirmed the Royal Court's ruling ([2011] JRC 185) that there is a clear distinction between challenging the jurisdiction of the Jersey court and seeking a stay in favour of a more appropriate forum. Service of an answer or other participation by the defendant in the proceedings is not a bar to a stay. The rule requiring a challenge to jurisdiction to be made within 28 days does not apply to forum challenges.
  2. While in most cases the forum challenge will naturally be made at the outset, there will be instances when a stay might justifiably be sought later in the proceedings; for example, a later change of circumstances. Leeds v Weston and Levi confirms that there can still be a forum challenge even when some steps have already been taken in the proceedings by the defendant seeking a stay. This is different from the position in relation to challenging jurisdiction.
  3. The distinction between challenging jurisdiction and seeking an alternative forum has not always been fully appreciated or understood, either in Jersey or in England and Wales. Leeds v Weston and Levi brings a clarity which is to be welcomed.

BASIC PRINCIPLE OF FORUM NON CONVENIENS

  1. It is well established that the Royal Court has jurisdiction to order a stay of proceedings when satisfied that "there is some other tribunal, having competent jurisdiction, in which the case may be tried more suitably for the interests of all the parties and for the ends of justice." This long-held principle of English law was most recently approved in the Jersey Court of Appeal in Durant v Brazil [2010] JCA 214.
  2. Where there is a clearly more appropriate forum the court will order a stay unless in the circumstances justice requires that a stay should nevertheless not be granted (Spiliada Maritime Corporation v Cansulex Limited [1987] 1 A.C. 460).

FORUM AND JURISDICTION

  1. The Court of Appeal at paragraphs 13 and 14 of Leeds v Weston and Levi identified the key issue as "the difference between a plea of no jurisdiction and a challenge to forum. The first is a matter of law and falls to be determined by strict application of the relevant legal rules. For example legal rules are applied to determine whether or not a party, who would otherwise not be subject to the jurisdiction of the Jersey courts, is to be held to have submitted to it. By contrast, a forum challenge falls to be exercised in the exercise of the court's equitable jurisdiction." The Court held that factors such as the degree of a party's participation in the proceedings or the timing of the challenge "may be relevant in determining how best the ends of justice may be served, but they cannot operate as an absolute bar to an application for a stay."

THE FACTS

  1. The plaintiff, which owns the English football club of the same name and is beneficially owned by a Mr Ken Bates, had been pursuing a debt claim in the Royal Court against a Jersey company, trading as AdMatch ("the first action"), for some five years before deciding to bring a separate claim in December 2010 ("the second action"). The second action made allegations against the defendants in connection with the subject-matter of the first action. It claimed inter alia the plaintiffs' costs relating to the first action.
  2. In the first action AdMatch was not represented by lawyers but by its beneficial owner and director, Mr Weston. He was one of the two defendants in the second action. In the second action the defendants were represented by Baker & Partners, who were first instructed in mid February 2011.
  3. In the second action there could be no serious challenge to the jurisdiction of the Royal Court, as Mr Weston is a Jersey resident. No initial challenge was made to the choice of Jersey as forum. However Baker & Partners wrote to the plaintiffs saying that the choice of forum for both actions was wrong, but that because the first action was ongoing and had been litigated in Jersey it was accepted that it would be more convenient for the second action to be tried in the same forum. Three weeks later, an answer was served on behalf of both defendants in the second action, which pleaded to the Order of Justice and made the same point about the choice of forum.
  4. Matters changed when the first action came to an abrupt end. AdMatch failed to comply with an unless order, and after an unsuccessful attempt to appeal the unless order and an unsuccessful attempt to persuade the Royal Court not to enforce it, a default judgment was finally entered against AdMatch on 19 May 2011. The defendants in the second action then took the view that the circumstances which had rendered it more convenient to try the second action in Jersey no longer applied.
  5. The defendants promptly brought an application for a stay on the ground of forum non conveniens in favour of England. The main grounds for asserting that England was clearly a more appropriate forum were that most of the likely witnesses and documents were in England, and all but one of the parties were resident in England.
  6. The plaintiff disputed that England was a more convenient forum on a wide range of grounds including applicable law and the fact that a lot of work had already been carried out by its Jersey lawyers, Sinels, the cost of which would be wasted. But they also argued that the application could not be made as a matter of law, because it was too late.
  7. This latter objection had two bases: first, that an answer had been filed, which was a bar to challenging forum; and second, that the forum application was made more than 28 days after the date when the case was placed on the pending list, and thus was barred by virtue of Royal Court Rule 6/7(3).

SERVICE OF AN ANSWER

  1. As to whether service of an answer is a bar to challenging forum, the Defendants relied successfully on two recent Jersey Court of Appeal decisions: Jaiswal v Jaiswal [2007] JLR 305 and Durant v Brazil [2010] JCA 214. In Jaiswal, Beloff JA said at paragraph 78 that even if the defendant in that case had

    "... dropped his guard and failed to continue to protest the jurisdiction of the Royal Court, at most this would, in our view, prevent him from contending that the Royal Court was not an appropriate (or, at any rate, available) forum. It would not prevent him from contending that another forum was more appropriate."
  2. This distinction, between the questions (i) whether the court has jurisdiction to deal with a case at all and (ii) whether another court which also has jurisdiction is a more appropriate forum to hear the case, was adopted by Sir Philip Bailhache sitting as a single judge in Durant. He rejected an argument that the defendants in that case were barred from arguing forum because they had filed an answer:

    "Even if, by failing to reserve the position, the applicants could be prevented from contending that the Royal Court was not an appropriate forum, they are not disentitled from contending that Brazil is the more suitable forum for the ends of justice."
  3. The plaintiffs relied on obiter dicta in an earlier Jersey Court of Appeal decision, Wright v Rockway Ltd and others [1994] JLR 321, and obiter dicta of the Privy Council in Gheewala v Compendium Trust Co Ltd [2003] JLR 621 as authority for the proposition that serving an answer was a bar to a stay. In Wright v Rockway, Collins JA referred in the context of a stay application to the "insurmountable difficulty" that Rockway had "already served an answer and thus accepted the jurisdiction of the court." As the Royal Court noted, however, this was obiter, as it did not need to be decided in that case and had not been the subject of argument; indeed Rockway was not the defendant which was seeking a stay in any event. The Court of Appeal held (at 16) that the words relied on from Wright v Rockway were inconsistent with the principles on which the court's powers to grant a stay rest, and should not be followed.
  4. In Gheewala, Lord Walker of Gestingthorpe observed in passing that no party had "suggested that a defendant's failure to apply for an order setting aside service out disentitled him from applying for a stay (provided, of course, that he had not taken further active steps in the proceedings)." The Court of Appeal, however, agreed with the Royal Court's view in the Royal Court that this was merely an aside and there was no indication that the point had been argued.

RULE 6/7(3)

  1. As for the argument based on Rule 6/7(3), which relates to jurisdiction disputes, both the Royal Court and the Court of Appeal rejected the plaintiff's argument that it also applies to forum disputes. This was because the party making a forum challenge may not necessarily dispute the jurisdiction of the court; he may accept (as in this present case) that the court has jurisdiction but assert that the interests of justice and the parties militate in favour of a different forum. The Royal Court observed that if it had been intended that Rule 6/7(3) should apply to forum challenges it could easily have been drafted to say so.
  2. The Court of Appeal thus concluded that there was no legal bar to the application for a stay in this case and found that the Royal Court (being fully familiar with the background to both the first and the second actions) had been entitled to conclude that there had been a "significant change of circumstances on which the defendants were entitled to rely" once the first action came to an end. It endorsed the Royal Court's view that since the second action had not by that stage advanced beyond the service of an answer, a trivial amendment by consent and a request for further and better particulars, it was not unjust to stay the proceedings in favour of England. It also agreed that, on the facts of this case, England was clearly the most appropriate forum and thus dismissed the plaintiff's application for leave to appeal on the merits.
  3. This decision cannot be seen as a green light to delay forum challenges indefinitely. However where there is a good reason why the challenge is not made at the outset, and where injustice will not be caused by a stay, the court's discretion may still be exercised in favour of a stay some way into the proceedings.

www.bakerandpartners.com

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