What is forum shopping?
Forum shopping is the practice of ensuring that a case is heard in a country which will produce the most favourable outcome. The forum in which a case is heard can be critical to the success or failure of a claim.
Why is forum shopping important?
It is well known that some countries are claimant-friendly and some are not: the nature of remedies; the amount of damages; and the conduct, speed and costs of the proceedings, all vary from one jurisdiction to the next. Choosing the correct forum is therefore vital.
How to forum shop
The key to forum shopping is to pre-empt your opponent and issue proceedings in your preferred country. Time is of the essence when it comes to forum shopping, hence the reason that it is often referred to as ‘the race for jurisdiction’. Forum shopping is all about tactical awareness and speed, and will reap the greatest rewards when it is considered at an early stage.
Unfortunately, forum shopping is not always straightforward. There are a number of rules (and exceptions to the same) that restrict the choice of forum. By way of example, in contract cases, jurisdiction is conferred on the courts of the country where the contract was to be performed. Such issues need to be considered at as early a stage as possible.
Who can forum shop?
Obviously, claimants can forum shop. Once the decision to litigate is made, a claimant can quickly commence proceedings in a favourable jurisdiction.
Less obviously, defendants can also forum shop. A defendant can employ spoiling tactics by commencing proceedings elsewhere in order to establish a less favourable jurisdiction or merely to delay effective proceedings being commenced. A defendant can also issue proceedings as a notional claimant and claim a negative declaration (ie that the defendant is not liable in respect of a claim). Whichever tactic is used, the outcome is the same – the defendant has won the jurisdiction race.
It is, however, also possible to challenge jurisdiction after proceedings have been commenced. In order to succeed, such a challenge needs to be made without delay.
Example of forum shopping
The benefit of effective forum shopping is demonstrated in a recent case (Sony Computer Entertainment Ltd v RH Freight Services Ltd & 2 others, in which Cobbetts acted on behalf of the third defendant. A claim was brought in the English courts against haulage companies in respect of the theft by third parties of a consignment of game console machines. The claimant alleged willful misconduct (ie gross negligence), which, if proved, would recover in excess of €1.000.000,00. The defendants’ preferred forum was the Netherlands on the grounds that the claimant would only be able to recover around €40.000,00.
We made an application disputing the English court’s jurisdiction. The English court accepted our argument and declined jurisdiction. This left the claimant with no prospect of obtaining the €1.000.000,00 claimed.
What to consider when forum shopping
Forum shopping is something that no potential litigant can afford to overlook.
The following should be considered when forum shopping:
- What is the nature of the dispute?
- What remedies are available? Are injunctions available?
- How long will it take to obtain judgment? Are appeals available?
- Can judgment be enforced or registered against assets in another jurisdiction?
- How expensive will the legal costs be? Will the court order costs against parties?