The Brussels Regulation (44/2001/EC) (the Regulation) determines jurisdiction in civil and commercial matters where the defendant is domiciled in an EU member state. The basic principle is that a person domiciled in a member state shall be sued in that member state. However, there are certain exceptions in which the courts of another member state can take jurisdiction.
One of these exceptions in tortious claims is that a person may also be sued “in the courts for the place where the harmful event occurred or may occur” (Article 5(3))1.
That may sound straightforward, but a recent decision of the English Court of Appeal in Marzillier, Dr Meier and Dr Guntner Rechstanwaltgesellschaft mbH v AMT Futures Limited (26 February 2015) both demonstrates that identifying where the harmful event occurred may not be clear cut and offers guidance in how to approach the question.
The appellant is German law firm Marzillier, Dr Meier and Dr Guntner Rechtsanwaltgesellschaft mbH (MMGR) and the respondent, AMT Futures Limited (AMTF), is a UK company which acts as an execution-only broker for the purchase and sale of derivatives.
MMGR acted for 70 of AMTF’s former clients (the former clients) in proceedings brought against AMTF in Germany, despite the contracts between AMTF and its former clients providing for English law and the exclusive jurisdiction of the English courts to determine any disputes between them.
AMTF issued a claim in tort against MMGR in the English High Court, alleging that MMGR had induced the former clients to breach the terms of the exclusive jurisdiction and choice of law clauses causing AMTF losses, including legal costs and settlement payments, as a result.
The claim relied upon Article 5(3) of the Regulation as the jurisdictional basis for bringing the claim in England.
The English High Court found that it did have jurisdiction to hear the claim on the basis that the harmful event (the breach of the obligation to bring proceedings in the English courts) occurred in England. MMGR appealed.
The issue for appeal: where “the harmful event” occurred
The English Court of Appeal had to consider whether “the harmful event” under Article 5(3) occurred in England or Germany.
AMTF argued that the harm which it suffered was the loss of the benefit that any litigation would be in England; the harmful event therefore took place in England and the fact that AMTF was sued in Germany was a consequence of the harmful event rather than the harmful event itself.
MMGR argued that the fact that litigation was not begun in England had no negative consequences for AMTF; the real complaint was that MMGR induced the former clients to commence proceedings in Germany, as a result of which AMTF suffered loss predominantly in Germany.
The decision of the English Court of Appeal
The Court of Appeal allowed MMGR’s appeal, on the basis that the failure to issue proceedings in England had not caused AMTF any harm. It was in Germany that the harm (i.e. the costs and expenses caused by the German litigation) was suffered and it was therefore the German courts which had jurisdiction to hear the claim.
In its judgment, the Court of Appeal reviewed the European Court of Justice’s leading decisions on the meaning of the expression “where the harmful event occurred or may occur” and summarised the following key principles:
- Where harm might be regarded as happening in two different states, the search is for the state in which “the harm” occurred i.e. the element of damage which is closest in causal proximity to the harmful event.
- The Regulation is to be given a community, not a national, construction.
- The European Court of Justice has set itself against any interpretation of the Regulation which would mean that a claimant would, in practice, always be able to sue in tort in the courts of its own domicile.
- Article 5 of the Regulation was designed to cover cases where there is a particularly close connecting factor between the dispute and courts other than those of the member state where the defendant is domiciled, which justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice and the efficacious conduct of the proceedings. It does not involve any form offorum conveniens test.
- One of the aims of the Brussels Convention (and the Regulation) is that there should be foreseeability and certainty as to the State where jurisdiction may lie.
It is perhaps surprising that in a claim in tort for inducement of breach of contract, the courts of the member state where the inducement and breach occurred should have jurisdiction, rather than the courts which the contract breaker agreed should have jurisdiction in respect of claims under the contract. This was acknowledged by the Court of Appeal, which expressly stated that it had reached its decision without any great enthusiasm.
However, in respect of a claim in tort against a third party, the choice of law and exclusive jurisdiction clauses in the contracts between AMTF and its former clients were not a determining factor in the allocation of jurisdiction under the Regulation.