In a claim alleging conspiracy and unlawful interference in the claimant's business by cutting off supplies, the Court of Appeal has held that the harmful event occurred where the goods should have been delivered to packaging agents. As this was either Italy or the Netherlands, the English courts did not have jurisdiction. It was irrelevant that the failure to deliver meant the claimant was unable to supply its English distributor – that was merely consequential or indirect damage which was insufficient to give the English court jurisdiction under the Brussels and Lugano regime: Actial Farmaceutica LDA v Professor Claudio de Simone, Mendes SRL and another [2016] EWCA Civ 1311.

A defendant domiciled in an EU or EFTA member state can be sued in tort in another member state if the harmful event occurred there. This has been interpreted as meaning both the place where the event giving rise to the damage occurred and the place where the damage occurred.

The place where damage has occurred isn't always easy to determine, particularly in cases concerning economic loss. This decision (and the earlier Court of Appeal decision in AMT Futures Ltd v Marzillier, Dr Meier & Dr Guntner Rechtanwaltsgesellschaft mbH [2015] QB 699, considered here, which it draws heavily on) give guidance on the correct approach. The search is for the state where the jurisdictionally significant harm has occurred, or where damage has occurred which is closest in causal proximity to the harmful event. In this case, that was the non-delivery to the packaging agents.

Background

Through various joint venture arrangements, the claimant, Actial, was the distributor in Europe of VSL#3, a probiotic food product devised by the first defendant, the Professor. Actial obtained VSL#3 from a US company which made the product and exported it in bulk to Italy and the Netherlands for packaging. Once packaged, Actial supplied it through its distributors across Europe, including in the UK by means of an exclusive distribution agreement with an English company.

Actial's case was that the Professor and a company controlled by him embarked on a dishonest scheme to wrest control of the distribution of VSL#3 from Actial, with the intention of channelling sales through a rival business. Actial commenced English proceedings alleging unlawful means conspiracy with the intention of injuring Actial and unlawful interference with its business.

The defendants successfully challenged the jurisdiction of the English court and Actial appealed.

Decision

The Court of Appeal dismissed the appeal (Flaux LJ giving the leading judgment, with which Christopher Clarke and Lewison LJJ agreed). It upheld the finding of the judge at first instance that the relevant damage occurred when no supplies of VSL#3 were delivered in Italy or the Netherlands.

The court considered the relevant legal principles from the decided cases and added its own analysis. In summary:

  • A defendant domiciled in an EU (or EFTA) member state can be sued in matters relating to tort in the courts for the place where the harmful event occurred or may occur. This is an exception to the basic principle that such a defendant must be sued in its place of domicile.
  • The place where the harmful event occurred is given an autonomous meaning and encompasses both the place where the event giving rise to the damage occurred and the place where the damage occurred.
  • Damage occurs where direct harmful consequences are suffered, not at the place where indirect or remote damage occurs or consequential loss is felt.
  • Damage is therefore not suffered for these purposes where the claimant keeps its accounts and so suffers financial loss (without more). That would give jurisdiction to the claimant's domicile, which is the exact opposite of the basic rule which gives jurisdiction to the defendant's domicile.
  • In some cases damage may however occur where money should have been received. So in Dolphin Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening (The Swedish Club) [2009] EWHC 716 (Comm) for example, where the defendant was alleged to have procured a breach of a contract, the court held that the place where the damage occurred or where the event giving rise to the damage caused injury was England. This is where the claimant did not receive the money which, if the contract had been performed, it should have received.
  • The tort exception should be restrictively interpreted as it is an exception or derogation from the fundamental principle of jurisdiction based on the defendant's domicile.
  • It is designed to cover cases where there is a particularly close connecting factor which justifies the attribution of jurisdiction to those courts.
  • Hence the search is for the state where the jurisdictionally significant harm has occurred or where damage has occurred which is closest in causal proximity to the harmful event.
  • Where harm might be regarded as happening in two different states, the search is not for one or more states in which damage has been suffered but, if possible, for the state in which 'the harm' has occurred.
  • It may assist to ask what would have been the position if the tort complained of had not taken place, particularly where the claimant has failed to obtain some property or money which he would otherwise have received.

Comment

In some cases the application of the tort jurisdiction rules is settled. So for example in carriage of goods cases, the place where the harmful event occurs is generally where the carrier is to deliver the goods. In international libel cases, the event giving rise to the damage is the publication, so the harmful event and damage occur simultaneously in the same location. A claimant can sue in the place of publication rather than the defendant's domicile if it wishes, but only in respect of damage suffered in that state.

Where economic loss is concerned, there is no hard and fast rule; an analysis of the particular facts is needed and difficult questions can arise. The recent Court of Appeal decisions are however useful in setting out the legal principles and questions that need to be considered.