Basis of claims
In Alfa Laval Tumba AB v Separator Spares international Ltd(1) t the High Court recently considered whether Polish defendants could be added to existing English proceedings. The basis for the argument to add them was a "special English jurisdiction" over them.(2) This was despite the fact that one of the Polish defendants was an employee and therefore had a right to be sued in his country of domicile,(3) not in England. Moreover, the existing proceedings had lain dormant for some years and had been settled against one of the English defendants; had the Polish defendants been sued in Poland, they might have had the benefit of a limitation defence.
The two Alfa Laval claimant companies - one Swedish and one Polish - designed, manufactured and sold marine separators. These devices are used on ships to separate oil and water, so that the oil can be reused and the water discharged at sea. Alfa Laval also manufactured and sold spare parts for its marine separators.
In 2008 proceedings were issued against Separator Spares International and its owner and manager, Mr Pacy. Both the company and Pacy were domiciled in the United Kingdom. It was alleged that they had unlawfully copied Alfa Laval's drawings and designs, rebranded them as those of Separator Spares International and commissioned the manufacture of spare parts using the rebranded drawings and designs, which were sold for a profit. A claim was also brought for unlawful use of Alfa Laval's customer lists.
Pacy had obtained the drawings and customer lists through Mr Jasikowski, an employee of the Polish Alfa Laval company, by bribing another of its employees during 2005. In 2006 Jasikowski resigned from his position and established a quasi-partnership with Pacy in Poland - Separator Spares International Poland - to act as the Polish distributor of these unlawful spare parts.
In late 2007 Alfa Laval received a tip-off that its drawings were being copied. The execution of a search order at Separator Spares International's Isle of Wight premises led to evidence to support the case against the company and Pacy. The claimants knew nothing of Jasikowski's involvement (or that of Separator Spares International Poland) until reading a disclosure affidavit in May 2008. Separator Spares International went into administration and Pacy was imprisoned for contempt of court. The claimants settled with Separator Spares International.
However, Jasikowski continued to operate his business in Poland. On Pacy's release he, in turn, re-established himself in that business by opening Separator Spares International UK. The claimants perceived that Jasikowski and Separator Spares International Poland were continuing to make unlawful use of their designs. In 2011 the claimants sought to add them as defendants to the existing proceedings. This was strongly resisted.
Alfa Laval wished to pursue claims against Jasikowski and Separator Spares International Poland for breach of copyright and misuse of confidential information under English law, and for unfair competition under Polish law.(4) It was noted from the outset that the limitation period under Polish law might have expired, there being no protection for claimants where the underlying facts have been deliberately concealed.(5)
Was there jurisdiction over the Polish defendants?
The judge commented that it was unusual for questions of "applicable law to form a major part in the debate" regarding joining foreign domiciled persons to English proceedings and that it was "unsatisfactory" to try to answer these questions early on, before the facts had been determined with any certainty. He ultimately decided that:
"the question for the court is whether the draft statement of case discloses a sufficiently arguable or prima facie case for the application of the particular national law relied upon to make it appropriate for the court to require the foreign defendants to answer the claim in the English court."
Relying on a number of authorities,(6) the Polish defendants stated that for the entire period before January 2009 - when the EU Rome II Regulation (864/2007) came into force - the law relating to a breach of confidence claim must be determined by ordinary common law principles. In this case this was akin to an unjust enrichment claim and any alleged enrichment had taken place in Poland. For periods after January 2009, Article 4 of the Rome II Regulation provides that the applicable law for breach of confidence is that of "the country in which the damage occurs unless some manifestly closer connection is established".
The claimants argued that the starting point was simply that:
- there were four perpetrators - Separator Spares International, Pacy, Separator Spares International Poland and Jasikowski - with a "common design" which was to use Separator Spares International's Isle of Wight premises to copy Alfa Laval's drawings in order to conduct business worldwide; and
- the Polish defendants were just as responsible for the planning and implementation of the scheme that took place in England as they were for the Polish elements.
To hold otherwise would lead to a different law - either English or Polish - being applied to the four defendants for a claim relating to a common design.
Section 5 of the Brussels Regulation
One difficulty with the claimants' argument was Jasikowski's status as a former employee of Alfa Laval in Poland.
Article 20.1 of the Brussels Regulation states: "An employer may bring proceedings only in the courts of the Member States in which the employee is domiciled."
Recital 13 states: "In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interest than the general rules provide for."
However, the claimants maintained that no claims were being made against Jasikowski based on an alleged breach of his contract of employment. The Polish defendants argued in response that the relevant provisions referred to "employment", not "contracts of employment" and that the claimants' argument would allow employers to circumvent the valid protection of Section 5 by dressing up claims against their employees as tort or breach of equitable obligations-type claims.(7)
In Swithenbank v Bowers(8) it was stated that:
"The contract of employment is relevant, and there is a matter relating to an individual contract of employment, only if the employer is seeking to rely on that contract of employment in order to bring his claim against the employee."
It was further held that there was no basis for conspirators and tortfeasors who are employees of the claimant to be given jurisdictional advantages over those who are not.
The judge endorsed this approach. He also referred to Article 6.1 of the Brussels Regulation, which provides that:
"where he is one of a number of defendants [the defendant may also be sued], in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
Therefore, the claimants were successful in joining the Polish defendants to the existing English proceedings, save in respect of the Polish law claim which, given the possibility of a limitation defence being available, would have to be dealt with by way of separate English proceedings. However, it was ordered that the two claims be case managed to be heard together.
In reaching this decision, the judge obviously had an eye on the merits of the claim - many of the underlying facts having been established against the existing defendants - and the need to avoid irreconcilable judgments. However, the effect of the judgment is that Separator Spares International Poland and Jasikowski will now have to defend themselves in the English courts, with all the difficulties and costs that this will entail.
For further information on this topic please contact Abigail Silver at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected]).
(2) Pursuant to Articles 5.3 and 6.1 of the Brussels Regulation (44/2001/EC).
(3) Pursuant to Articles 18 to 21 of the Brussels Regulation.
(4) Articles 11 and 23 of the Polish Act on Combating Unfair Competition 1993.
(5) Compare Section 32(1)(b) of the Limitation Act 1980.
(6) Innovia Films Ltd v Frito Lay North America Inc  EWHC 790 (Pat); Dicey & Morris on Conflict of Laws (13th edition) (2000), volume 2, at 34-029ff; and Douglas v Hello! Ltd (No3)  QB 125, at paragraph 97.
(7) Samengo-Turner v J&H Marsh & McLennan (Services) Ltd  ICR 18 and paragraph 2.103 of Briggs & Rees on Civil Jurisdiction Judgments (fifth edition).