Sebastian Holdings Inc v Deutsche Bank AG [2010] EWCA Civ 998

In this case, the Court of Appeal has had a further opportunity (following UBS v HSH Nordbank AG [2009] EWCA Civ 585) to consider jurisdiction issues in the context of a complex cross-border fi nancial transaction involving multiple agreements.  

Deutsche had brought claims under two agreements containing English jurisdiction clauses. Sebastian had also brought claims in New York under a different agreement, which contained a nonexclusive New York jurisdiction clause. Sebastian challenged the jurisdiction of the English courts on the basis that the agreement giving rise to its claim was at the centre of the dispute and, applying the principles in UBS, the dispute as a whole fell within the New York clause. It also sought a stay of the English proceedings, arguing that New York was a more appropriate forum.

The Court of Appeal considered the decisions of Walker J ([2009] EWHC 2132 (Comm)) and Burton J ([2009] EWHC 3069 (Comm)) who had held, respectively, that the English courts had jurisdiction to hear Deutsche’s claims and that the proceedings would not be stayed in favour of New York on forum non conveniens grounds.

The court approached the jurisdiction question as a simple matter of construction of the clauses in each of the agreements. Distinguishing UBS on the facts, it held that Deutsche’s claims fell within the English jurisdiction clauses. Sebastian’s contention that the claims more properly related to the agreement containing the New York clause was rejected on the basis that it would frustrate the parties’ intentions. Crucial to that decision appears to have been that the agreements under which Deutsche was claiming contained promises not to challenge the English jurisdiction.

As to the issue of forum non conveniens, the court upheld Burton J’s decision and found on the facts that New York was not a clearly more appropriate forum. It therefore did not consider Deutsche’s contention that it was not open to the English courts to consider forum non conveniens where jurisdiction was based on an agreement covered by Article 23 of the Brussels Regulation (and that the logic in Owusu v Jackson [2005] ECR I-1383 applied). See also the recent case of Royal & Sun Alliance & others v Rolls-Royce plc [2010] EWHC 1869, where the High Court similarly declined to address that question on the same basis. The court also declined to answer the question of the refl exive effect of Articles 27 and 28.

Comment

The central thrust of Sebastian’s submissions was that the court should look for the “centre of gravity” of the dispute, and for this it relied on UBS. However, the court was able to explain UBS as simply an example of the usual process of construction that has to be undertaken. It, in effect, rejected the idea that there was a special set of rules of construction to be applied to jurisdiction clauses which meant that one clause would always trump the others in the transaction. The court’s carefully reasoned judgment has therefore brought some useful clarity to the area. That said, we will have to continue to wait for the much needed clarifi cation on the application of Owusu. In the meantime, this case re-emphasises the need to draft jurisdiction clauses with care where multiple agreements are involved.