Garcia v (1) BIH (UK) Ltd (2) Total Gabon SA (3) Sigma Offshore SARL [2017] EWHC 739 (Admlty)

Introduction

English courts are averse to the risk of parallel litigation in multiple jurisdictions. For this reason, where an English defendant is correctly sued in England, foreign domiciled defendants who are necessary and proper parties to the claim are commonly brought into the English court’s jurisdiction.

In Garcia v (1) BIH (UK) Ltd (2) Total Gabon SA (3) Sigma Offshore SARL [2017] EWHC 739 (Admlty), the court was prepared to make an exception from this usual course.

Facts

The claimant, Mr Garcia, a French national, claimed damages for severe brain injury sustained when working as a diver on a coastal construction project located offshore of Gabon.

Mr Garcia brought claims against English company BIH (UK) Limited, and Gabonese companies, Total Gabon SA and Sigma Offshore SARL. Total Gabon operated the offshore project with licence from the Gabonese government, and contracted Sigma to obtain personnel to operate it. BIH (UK) employed Mr Garcia.

Mr Garcia’s claim against BIH (UK) was based on his employment contract which contained a clause agreeing English law and jurisdiction.

Mr Garcia sought permission to serve Total Gabon and Sigma under CPR r.6.36-6.37 and Practice Direction 6B paragraph 3.1(3), that is, on the basis that Total Gabon and Sigma were necessary and proper parties to the action against BIH (UK). The English court granted permission on 17 March 2016.

Default judgments were entered against BIH (UK) on 13 April, and against Sigma on 16 August 2016. On 12 August 2016, the sole director of BIH (UK) applied to have that company voluntarily struck from the Register. No insurer for BIH (UK) has been identified.

Total Gabon brought a CPR Part 11 application disputing jurisdiction, seeking that permission to serve out be set aside, alternatively, that the proceedings against Total Gabon be stayed on the basis of forum non conveniens.

Decision

The Admiralty Registrar, Master Kay, considered the tests in CPR rule 6.36-6.37 and Practice Direction 6B paragraph 3.1(3).

The learned Master held that (1) under EU Regulation 1215/2012 (the Recast Directive) and following the ECJ decision in Owusu v Jackson [2005] QB 801, the English court has no power to decline jurisdiction against BIH (UK); (2) there was a serious issue to be tried on the merits against Total Gabon in both contract and tort; (3) the natural forum for the claim against Total Gabon was Gabon. Factors supporting that conclusion were the language of the parties, the applicable law of any tortious claim, and the likely requirement for expert evidence and site inspection.

Authority is clear that the existence of proceedings against a defendant properly sued in England is a highly persuasive reason to bring foreign defendants into English jurisdiction because courts do not want to duplicate proceedings: Credit Agricole Indosuez v Unicof Limited [2003] EWHC 2676 (Comm); Lungowe v Vedanta Resources PLC [2016] EWHC 975 (TCC). However, in respect of non-EU domiciled parties, courts may depart from this if there are exceptional reasons to do so.

One case of such exceptional circumstances is Erste Group Bank AG (London) v JSC “VMZ Red October” [2015] EWCA Civ 379. The learned Master held that the present matter was in line with that case. The fact of the default judgments having been entered against all other parties save for Total Gabon meant that, practically, the English proceedings had run their course, save for the assessment of damages. With no further liability proceedings in England, the negative effects of multiple proceedings will not arise. Accordingly, the court stayed proceedings in England for the appropriate and available forum, Gabon.

Discussion

Key to this decision is the court’s analysis of necessary and proper parties. The court relied extensively on the clear judgment in Lungowe v Vedanta Resources PLC, a recent case that considers the key decisions on this point.

Rightly, courts resist fragmenting multiparty proceedings. Duplication of claims and inconsistent judgments are patently undesirable, especially in cases with a multiplicity of potential jurisdictions. For this reason, the fact that an English defendant is properly sued in England is a strongly persuasive reason for bringing foreign defendants who are necessary and proper parties into the jurisdiction of the English court. That outcome has been described as “virtually concluded” (Credit Agricole Indosuez v Unicof, at [19]), or at least “plainly a highly significant factor” (Lungowe v Vedanta, at [167]).

However, exceptions can and will be made in appropriate circumstances.

In this case, permission to serve out was correct at the time of application, but subsequent events changed the practical reality: all parties except Total Gabon were subject to default judgment. Also, although not specifically mentioned in the judgment as a reason for the decision to stay, further facts point to this conclusion. First, there was no insurer identified for BIH (UK), and secondly, the English company had applied to be voluntarily struck from the Register. Such circumstances diminish the negative effects of parallel proceedings. The learned Master reasoned that “the reality is that there will be no further proceedings in England and therefore the spectre of there being competing decisions in two separate jurisdictions does not arise” [36].

This judgment does not dilute the English court’s natural antipathy to parallel litigation. However, it reminds us that even where a foreign defendant is properly served as a necessary and proper party to litigation, proceedings may still be stayed. The court will look at the practical reality of the litigation, including considering events as they have unfolded since permission was granted to serve out.

This case will be of assistance in circumstances where, at the date of the jurisdictional challenge, English liability proceedings have run their course. The chief concern of English courts is to avoid fragmentation of litigation and inconsistent judgments. If it can be shown that these are negligible risks, and where the natural forum is clearly the foreign jurisdiction, the court is likely to take a pragmatic approach, and stay the English proceedings.