UK: Jurisdiction Dispute Under Articles 27 And 30 Of EU Regulation 44/2001: “Syndicate 980 V Sinco S.A.” [2008] EWHC 1842 (Comm.)

Last Updated: 27 August 2008

In this case, the claimants were three Lloyd's Syndicates ("Syndicates") for various years of account between 1999 and 2006. The defendant was a Greek motor insurance broker ("Sinco") with authority to bind Greek motor insurances on behalf of the Syndicates. The defendant's authority to do this derived from binding authority agreements known as "Binders", which all contained materially identical provisions including a provision for English law to apply to the agreements and an exclusive jurisdiction clause in favour of the English courts.

In November 2006, the Syndicates sought to terminate the 2006 Binder and subsequently issued proceedings against Sinco in the English Commercial Court in January 2007. The basis of the claim was that Sinco fraudulently backdated policy cancellations and generated a fictional return of premium which it retained for its own account, further that it did not account to the Syndicates for premium. Sinco was also alleged to have misrepresented the level of claims under the early Binders, thereby inducing the Syndicates to enter into Binders for subsequent years, when they would not otherwise have done so.

Notwithstanding that the claim form was issued in January 2007, the claimants did not serve it on Sinco nor inform Sinco of the issue of proceedings. Subsequently in April 2007, Sinco issued proceedings in Greece against the Syndicates making claims that were effectively claims in tort and under Greek statute. As a result, the Syndicates amended the claim form in June 2007 to state that the English court had jurisdiction pursuant to EC Regulation 44/2001. They also added a claim for damages in respect of Sinco's alleged breach of the exclusive jurisdiction clause by commencing proceedings in Greece and proceeded to serve the claim form on Sinco.

Sinco sought to stay the English proceedings in respect of the added head of claim relating to breach of the jurisdiction clause, pending the determination of the Greek court of its jurisdiction (the Greek hearing had been delayed due to a court strike). They argued that the claims brought in Greece were not covered by the jurisdiction clauses in the Binders, which covered contractual claims only.

Article 30: court first seised of dispute

Firstly, the Commercial Court considered the effect of Article 30 of the Regulation, which deems a court to be seised of an action inter alia "when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant". The court had to consider when it was first seised of the dispute in relation to the alleged breach of the exclusive jurisdiction clause. Was this when the claim form was issued in January 2007 or when the claim form was amended to incorporate this part of the claim and subsequently served in June 2007? Of course, this added claim could not have been included in the original claim form because at that time, Sinco had not instituted the Greek proceedings.

The Commercial Court held that the English court had not been the court first seised of the claim for alleged breach of the exclusive jurisdiction clause. This was because at the time the proceedings in Greece were instituted, the claim made in Greece had not been made in England. This was particularly so where, as in the present case, the English proceedings had not been served on Sinco when it commenced proceedings in Greece.

Article 27: proceedings involving the same cause of action and between the same parties

Under Article 27, where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, "any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established".

The Commercial Court had to consider whether the cause and object of the jurisdiction clause claim in the English proceedings was the same as that of the claims made in Greece, so that the English proceedings should be stayed pending the Greek court's determination on its own jurisdiction.

In the first instance, the judge referred to Case 159/02 Turner v Grovit [2005] AC 101, where the ECJ held that the effect of Article 27 is not displaced by Article 23 (Article 17 of the Brussels Convention) relating to exclusive jurisdiction agreements, even where the party who has breached a jurisdiction agreement is acting in bad faith with a view to frustrating existing proceedings in the state designated by the jurisdiction clause. Emphasis was placed on the need to avoid the possibility of irreconciliable judgments as a major principle underlying Article 27.

The Commercial Court considered the proceedings as a whole rather than looking at particular issues and isolating the exclusive jurisdiction claim from the remainder of the contractual claims in the English proceedings. This approach was in line with the decision of the court in the case of Evialis SA v SIAT [2003] 2 Lloyd's Rep 377 to focus on the central or essential issue of the claim in deciding whether two sets of proceedings involved the same cause of action. In the present case, the judge found that the English claims were founded on alleged breaches of the Binders contracts, whereas the Greek proceedings involved claims arising outside contract and founded on tort or statute. Unlike the situation in the Evialis case, the jurisdiction claim was not "the mirror image" of the claims in the Greek proceedings.

Furthermore, the judge considered it "significant" that the main part of the English action was clearly the first in time. As regards the jurisdiction clause claim, this was an additional allegation of breach of the same contract as the contract giving rise to the original claim in January 2007. Therefore, he did not consider it appropriate to separate the jurisdiction clause claim from the claims of other breaches of the same contract.

Sinco's application for a stay was consequently rejected on the grounds that the issues were different in the two sets of proceedings so that Article 27 did not apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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