The Court of Appeal has upheld an order declining English jurisdiction over a claim against a Monaco-domiciled defendant where there was an exclusive jurisdiction clause in favour of the Monaco courts: Jong v HSBC Private Bank (Monaco) SA [2015] EWCA Civ 1057. The result is that there may be parallel proceedings in England and Monaco, as the claimant is entitled to pursue its claims against two related English companies in the English courts. 

Although each case will turn on its facts, the decision illustrates that claimants who wish to persuade the English court to accept jurisdiction despite an exclusive jurisdiction clause in favour of a non-EU member state court are likely to face an uphill struggle. (Of course, where the chosen jurisdiction is another EU member state, and proceedings have been commenced in that state's courts, the English court will be bound to decline jurisdiction – click here for a copy of our “handy client guide" to jurisdiction under the recast Brussels Regulation.)

Background

The claimant brought proceedings in the English courts against a Monaco-domiciled company in the HSBC group, relating to foreign currency trades the company had placed on her behalf. The claimant decided to sue in England despite the presence of an exclusive jurisdiction clause in favour of the Monaco courts in the relevant contract. In the same action (by a later amendment) the claimant sought damages against two other HSBC companies, both of which were domiciled in England and Wales, alleging that they had failed adequately to consider her complaints about HSBC Monaco.

In relation to whether the claimant should be permitted to serve the proceedings on HSBC Monaco outside the court's jurisdiction, it was common ground that there was a sufficiently arguable case against HSBC Monaco, that at least one of the common law "gateways" for serving out of the jurisdiction applied, and that the burden was on the claimant to establish that England was "clearly and distinctly" the more appropriate forum to try the claim. 

It was also common ground that the claimant was entitled to pursue the claims against the two English-domiciled companies in the English courts in any event. This was because in Owusu v Jackson (Case C-281/02) (see post) the CJEU decided that, where jurisdiction was based on the defendant's domicile, there was no discretion to decline jurisdiction on the basis that the courts of a non-member state would be a more convenient forum. 

The master made an order permitting service out of the jurisdiction on HSBC Monaco. That was set aside by the High Court and the claimant appealed to the Court of Appeal.

Decision

The Court of Appeal (Moore-Bick and Lewison LJJ and Sir Timothy Lloyd) dismissed the appeal. The court noted that the risk of inconsistent judgments and the potentially increased cost of parallel proceedings clearly pointed in favour of HSBC Monaco being sued together with the two English companies. However, the existence of the exclusive jurisdiction clause clearly pointed in favour of the order setting aside service out. The court referred to Donohue v Armco Inc [2001] UKHL 64, where Lord Bingham said that the English court will ordinarily exercise its discretion to secure compliance with an exclusive jurisdiction agreement, in the absence of strong reason for departing from it. Given that there were these two powerful factors each pointing in a different direction, it was for the judge to weigh their competing merits.

The judge had identified a number of factors in favour of the Monaco courts, in addition to the exclusive jurisdiction clause. These were that the claimant had chosen to open a bank account in Monaco and had conducted her foreign exchange dealings through that account, and that the claim was governed by Monegasque law. Even without the exclusive jurisdiction clause, the judge had considered that the claim had a much closer connection with Monaco than with England.

The judge had also identified factors that pointed towards a trial in England, including that the claimant had the right to sue the two English companies in England, those claims required the claimant to prove against the English companies the truth of the allegations she made against HSBC Monaco, and if there were trials in both England and in Monaco there would be a risk of inconsistent judgments.

The judge described the two English companies as "bit-part players" in the litigation, who had little to add to the main claim against HSBC Monaco (particularly as the claims against them would not lead to further damages that were not recoverable against HSBC Monaco) and said that to allow the claims against the English defendants to govern the choice of forum would be to "allow the tail to wag the dog". The Court of Appeal rejected the claimant's criticism of these statements, saying that although the language was "colourful", the judge was not wrong to consider the nature of the case against the two English companies, or to see the claim against HSBC Monaco as being the most important of the claims.

Overall, the judge had decided that he should give greater weight to the exclusive jurisdiction clause and the fact that all the trades were carried out through HSBC Monaco in Monaco than to the other connecting factors. He took into account the relevant considerations, did not take into account irrelevant ones, and reached a decision that was within the bounds of reasonableness. Whether a different judge might have reached a different decision was irrelevant.