In AMT Futures Limited v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH(1) the Commercial Court considered whether it had jurisdiction over a claim against a firm of German lawyers. Claimant AMT alleged that the defendant, Marzillier, had wrongfully induced AMT's clients to disregard contractual clauses which stipulated the jurisdiction of the courts of England (and English law) in relation to any disputes that those clients had with AMT. AMT argued that the English court had jurisdiction over its claim in tort against the lawyers because England was the place where the harmful event occurred within the meaning of Article 5(3) of the EU Brussels Regulation. The case offers an interesting clarification of the rules for jurisdiction over tort claims when the damage pertains to the loss of a contractual right.
The Commercial Court held that when the damage involves the deprivation of a contractual benefit, the damage is likely to have occurred in the place where the claimant would have received that benefit. The damage to AMT occurred in England, because it was deprived in England of the benefit of its right to be sued there.
This recent decision might be regarded as a sign that the court is increasingly willing to expand the application of Article 5(3) of the Brussels Regulation for the establishment of jurisdiction.
The Brussels Regulation is used, among other things, to ascertain jurisdiction for the determination of disputes involving parties domiciled in the European Union. Article 2 of the Brussels Regulation sets out the primary position on jurisdiction, which is that a defendant domiciled in the European Union should be sued in the courts of the country of its domicile.
Notwithstanding this primary position, pursuant to Article 5(3) of the Brussels Regulation, a defendant can be sued in an EU member state which is not its place of domicile if the claimant can show that, in relation to a claim in tort, it is the place where a harmful event has occurred. In short, the "place where the harmful event occurred" refers both to the courts of the place where the damage occurred and the courts of the place where the harmful event giving rise to the damage occurred. The damage occurs where the direct harmful consequences are suffered, not at the place where indirect or more remote damage occurs, or where consequential financial damage is felt. However, Article 5(3) is seen as somewhat subordinate to the domicile test in Article 2. The courts have therefore been hesitant to apply Article 5(3).
Notably, Articles 15 to 17 of the Brussels Regulation contain specific rules for jurisdiction over contracts concluded by an individual who is not acting in his or her profession or trade. Such an individual can commence proceedings in the courts of the EU member state where the other party is domiciled (following Article 2) or in the courts of the state where the individual is domiciled.
AMT is an English company which offers brokerage and fund management services to a variety of investors. The claim arose out of proceedings brought in Germany by 70 German former clients of AMT, in connection with alleged bad investment advice given by AMT. The clients claimed that they had been wrongly advised by certain local introductory brokers about a number of investments and therefore asserted that AMT was liable in tort as an accessory. The clients were advised in those actions by Marzillier.
AMT incurred substantial sums to defend the claims in Germany, which were ultimately settled. It then issued proceedings in England against Marzillier to recover the substantial losses that it had suffered as a result of Marzillier having induced AMT's German clients to sue AMT in Germany under German law. In response, Marzillier disputed the jurisdiction of the English courts to deal with the matter, in particular having regard to the interpretation of Article 5(3) of the Brussels Regulation.
AMT argued that the English courts had jurisdiction, under Article 5(3), over its claim in tort against Marzillier because England was the place where the damage to AMT had occurred. Marzillier contested the jurisdiction of the English courts.
AMT claimed that despite Marzillier being a German-domiciled company, the English courts had jurisdiction to determine the matter under Article 5(3), as England was the place in which AMT had suffered damage, on the grounds that:
- Marzillier's wrongful inducement had denied AMT the contractual right to the determination of the clients' disputes in England, in accordance with English law; and
- England was where AMT had had to provide funds to finance the costs of the German proceedings and the settlement of the claims, and where it had suffered the loss of management time and loss of profit in its business.
The Commercial Court held that it had jurisdiction to hear the claim. It found that England was the place where the damage occurred and dismissed Marzillier's challenge to its jurisdiction.
The place where the harmful event occurred, within the meaning of Article 5(3), includes the place where the damage occurred as well as the place where the event giving rise to it occurred. In cases where the tort involves the claimant being deprived of a contractual benefit, such as that provided by an exclusive jurisdiction clause, the damage is likely to have occurred in the place in which the claimant would have received that benefit. The consequence of the deprivation of the benefit of the exclusive jurisdiction clause was harm suffered by AMT in England and, accordingly, its claim against Marzillier fell within Article 5(3).
The judge arrived at a number of conclusions in the light of the case law on the issue of where damage has occurred. He considered that Article 5(3) jurisdiction should be restrictively interpreted, and that jurisdiction should be justified only by a real nexus between a dispute and the courts of an EU member state other than the state in which the defendant is domiciled.
In cases of economic loss, the relevant place is where the harmful event directly affected the immediate victim and where the original damage is manifested. A single place for the occurrence of damage should be identified. The damage is that which is closest in causal proximity to the harmful event.
If the claim is for loss of money or goods, the harm may be regarded as occurring in the place where they were lost. If the claim is for non-receipt of money or goods which the claimant should have received, the damage is likely to have occurred in the place where the claimant should have received them.
The judge found that when the damage involves the deprivation of a contractual benefit, the damage is likely to have occurred at the place where the claimant would have received that benefit. In this case, the benefit to AMT comprised the right to have any disputes falling within the scope of the jurisdiction clause resolved in England. The harm that it suffered was the deprivation of the possibility of having its disputes dealt with by the English courts, as had been the intention of the parties when entering into their contracts. This was loss suffered in England.
However, the judge concluded that the settlement moneys paid by AMT to the clients and the expenditure of management time were not 'the damage' for the purposes of Article 5(3). Insofar as they could be said to be recoverable losses, those were losses suffered in Germany.
In cases of economic loss, the place where the harmful event occurred is where it directly affected the victim and where the direct harmful consequences were suffered. It fell to the court to identify a single location for the occurrence of damage. The direct harm which AMT suffered was the activity that it was required to undertake in Germany to handle the litigation initiated there. That took place and incurred a cost in Germany. Payment of the settlement sums followed negotiations conducted in Germany and the payments were made there.
This case clarifies the rules for jurisdiction over tort claims in which the damage consists of the loss of a contractual entitlement. The application of Article 5(3) of the Brussels Regulation is one of a handful of exceptions to the domicile test. Predominantly, it is interpreted restrictively. However, the findings reached in this case suggest the prospect of a broader analysis of what constitutes 'damage' and where 'harm' caused is actually felt.
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(1)  EWHC 1085.