Background
Case


Background

Before commencing proceedings in any commercial case, the claimant should carefully consider the doctrine of litis consortium (ie, the principle whereby the claimant must call as a defendant every individual and corporation that may be affected by the court's judgment).

If this burden is not discharged, the case will be dismissed without consideration of its merits.

The court will examine this requirement even when this defence has not been raised by the other party, and regardless of whether the case is before the trial judge, the court of appeal or even the Supreme Court.

Case

On April 24 2003 the Supreme Court (RJ 3530) decided a case in which no litis consortium was found by the trial judge or court of appeal; neither was this defence raised by the defendants. Nevertheless, in light of the facts alleged by the parties the Supreme Court found that there was a risk that an individual not called as a defendant by the claimant could be affected by the judgment.

An individual entered into a contract dated August 8 1994 with a naval engineer to construct a passenger boat for Pta22 million. The vessel was built and handed to the buyer. A second contract was signed by a different buyer on November 30 1994 with the same naval engineer for the construction of the same passenger boat, but for a different amount, Ffr580,000, which was effectively paid.

The second buyer filed a claim against the first buyer seeking payment of the Ffr580,000 paid as consideration for the boat.

The trial judge issued a judgment in which he declared that the first contract was unenforceable by virtue of the second contract.

The appeal was dismissed and the case was referred to the Supreme Court. The Supreme Court dismissed the action because the second buyer should have addressed his lawsuit not only against the first buyer, but also against the naval engineer, as he had received the money. The engineer would be affected if the court decided to deem the first contract unenforceable against the second.


For further information on this topic please contact Jorge Hern├índez by telephone (+34 9152 47100) or by fax (+34 9152 47153) or by email ([email protected]).