Deutsche Bank AG v Sebastian Holdings Inc – forum non conveniens

This case concerns a series of complex agreements relating to equities and foreign exchange trading concluded between the claimant, an investment bank domiciled in Germany, and the defendant company incorporated in the Turks and Caicos Islands. There are seven interrelated agreements in issue between the parties. These contain five jurisdiction clauses providing for the jurisdiction of the English courts (two exclusive, two non-exclusive with a forum non conveniens waiver) and one (non-exclusive) providing for the New York courts.

The defendant applied for a stay of the English proceedings on the grounds of forum non conveniens and lis alibi pendens by reference to its New York proceedings begun shortly before the English proceedings. The judge dismissed the application.

The judgment sets out a helpful analysis of the different types of jurisdiction clause available and the courts’ approach to them. They are listed in hierarchical order from the most stringent to the most lenient.

1 Exclusive jurisdiction clause with waiver of forum non conveniens

This prescribes one jurisdiction (or perhaps two, dependent upon specified circumstances) in which the parties must litigate. It often provides for methods of service and even for special courts within the jurisdiction. It is a breach of contract for a party to issue proceedings against the other in another jurisdiction or to assert forum non conveniens in relation to the chosen jurisdiction.

2 Exclusive jurisdiction clause

This is the same as category 1 above but without the waiver.

3 Non-exclusive jurisdiction clause with waiver of forum non conveniens

This provides for one (or possibly more than one) jurisdiction in which a party may be sued by the other party. Proceedings may be issued by a party in another jurisdiction without being in breach of contract and there may be parallel proceedings giving rise to a risk of inconsistent judgments. The forum non conveniens waiver means that the parties agree not to assert that to be sued in the non-exclusive jurisdiction would be inconvenient, oppressive or expensive. It is a breach of contract for a party to assert forum non conveniens in relation to the chosen non-exclusive jurisdiction.

4 Non-exclusive jurisdiction clause

This is the same as category 3 above but without the waiver.

Effect of a forum non conveniens waiver

In National Westminster Bank v Utrecht-America Finance Co Clarke LJ thought a contractual waiver was “fatal” to any forum non conveniens argument, whereas in Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan Waller LJ did not treat such an agreement as decisive, but thought that it underlined the point that the jurisdiction agreement would be overridden only in exceptional circumstances. The latter approach is the one now being adopted by the courts (Donohue v Armco Inc).

In a category 1 case, it is still possible therefore that the court will stay proceedings on grounds of forum non conveniens notwithstanding the waiver but especially strong reasons will be required (Bank of New York Mellon v GV Films). At the other end of the scale, the court will not make a finding of forum non conveniens lightly even in a category 4 case. The party seeking a stay cannot rely upon foreseeable inconvenience and the interests of justice must also be engaged (Ace Insurance SA-NZ v Zurich Insurance Co, followed in Import Export Metro Ltd v CSAV and Antec International Ltd v Biosafety USA Inc).

Effect of Brussels Regulation regime

As noted last year in UBS AG v HSH Nordbank AG, it is a matter of controversy whether there is any room at all under the Brussels Regulation regime for a stay on forum non conveniens grounds. Following the ECJ decision in Owusu v Jackson, the prevailing view has been that that there is no scope for the application of forum non conveniens to remove a case from a court which has jurisdiction under the Brussels Regulation, even where the defendant is not domiciled in a Member State. The Supreme Court of Ireland has made a reference to the European Court as to whether the ruling in Owusu v Jackson applies even where proceedings have been commenced in a non-Member State prior to the proceedings in a Member State (Goshawk Dedicated Receivables Ltd v Life Receivables Ireland Ltd). In these circumstances, the judge sensibly refused to deal with this argument since he was able to reject the application on common law grounds alone.

Comment: the spate of jurisdictional spats in the last few years does not appear to be abating – the judge commented that he had been referred to “a positive bible” of 38 leading authorities on forum non conveniens alone. An earlier decision in the present case (unsuccessful application for a declaration that the English court had no jurisdiction) is apparently going to the Court of Appeal. The pending ECJ decision in Goshawk should resolve the issue concerning the scope of the courts’ jurisdiction to entertain forum non conveniens arguments at all where a Member State is involved. However, experience shows that this decision is unlikely to put an end to jurisdictional wrangles. The case of Shashoua v Sharma, in which the parties argued over the effect of the ECJ West Tankers decision last year concerning arbitration clauses and anti suit injunctions, illustrates that parties always seem to be able to think up further variants on a theme.

(On a related note, Africa Express Line Ltd v Socofi SA offers guidance on the incorporation of jurisdiction clauses under Art 23 of the Brussels Regulation. The court emphasized the important distinction between:

  • incorporation of a jurisdiction clause contained in standard terms and conditions where the clause can be incorporated even though one party has not seen the relevant terms and was unaware of the jurisdiction clause; and
  • incorporation of a jurisdiction clause contained in another related contract involving a third party, in which case only those terms which are directly germane to the parties' agreement will be incorporated.