In Celtic Salmon Atlantic (Killary) Limited -v- Aller Acqua (Ireland) Limited & Anor [2014] IEHC 421, Hogan J, 31 July, 2014 the central issue to be decided by the court was - where a defendant in foreign proceedings governed by the Brussels Regulation fails to advance and maintain a counter-claim for damages for in those proceedings, is that party then barred from re-litigating that counterclaim for damages for breach of contract and negligence in existing proceedings in this jurisdiction where it sues as plaintiff?

Facts

The plaintiff (Celtic Atlantic) was an Irish company engaged in fish farming and the defendants were suppliers of fish feed. In November, 2008, the second defendant (Aller Denmark) commenced proceedings against Celtic Atlantic in Denmark claiming payment in respect of unpaid fish feed (Claim 1). It also sought an order that the delivered feed was in conformity with the contract. (Claim 2).

Meanwhile Celtic Atlantic issued proceedings in Ireland in 2009 for negligence and breach of contract arising out of the supply of allegedly defective fish feed.

In the Danish proceedings it became apparent that the expert report commissioned by Celtic Atlantic into the suitability of the fish feed would not be admitted in evidence under Danish law and appointing a new expert would be impossible as both the feed and the fish had been destroyed.  Accordingly, while Celtic Atlantic argued in the Danish proceedings that the fish feed was defective as a defence to non-payment it did not counterclaim for damages for breach for contract or for negligence.

The Danish proceedings ultimately resulted in a judgment directing Celtic Atlantic to pay Aller Denmark €58,655, plus interest in respect of the unpaid fish feed. The Court further stated that Celtic Atlantic was “held liable to accept the grounds for Aller [Denmark’s] claim is that the delivered feed is contractual.”

Decision

The Irish High Court held that there was no question but that the Danish judgment would be recognised under the Brussels Regulation insofar as it concerned Claim 1, (i.e., the action for debt in respect of the unpaid invoices) but that different consideration arose in relation to the second claim which amounted to a negative declaration that Aller Denmark was not liable in respect of the claims for breach of contract.  In that regard the court had to consider the public policy issue.

Article 34(1) of the Brussels Regulation provides that  “a judgment shall not be recognised…if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought…..”  The court noted that the Court of Justice has held that this public policy exception must be interpreted strictly. 

In the present case, the court found that the exclusion of the expert report from evidence violated the effective procedural rights of Celtic Atlantic.  Without that expert evidence Celtic Atlantic could not effectively advance its case that the fish feed was intrinsically unsuitable for these particular fish. Therefore, the court found, that in the very special circumstances of this case, recognition of the Danish judgment in respect of Claim 2 would be manifestly contrary to public policy for the purposes of Article 34(1) of the Brussels Regulation.

In the circumstances Celtic Atlantic would be allowed to continue their proceedings in Ireland for breach of contract and for negligence.