The Brussels Regulation provides for an exception to the general rule that a claimant must sue a defendant in the EU Member State where the defendant is domiciled. The exception allows a claimant to sue a defendant where a co-defendant (the “anchor” defendant) is domiciled instead, if the claims are so closely connected that it is expedient for a court to hear them together. In Sabbagh v Khoury and others, a majority of the Court of Appeal (the Court) considered that this exception will not apply if the claim against the anchor defendant is hopeless or presents no serious issue to be tried.[i]
Sabbagh v Khoury and others: the Case and Judgment
Article 6(1) of the Brussels I Regulation (44/2001) provides that a person domiciled in an EU Member State may also be sued : “where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.” Article 8(1) of the Brussels I (Recast) Regulation (1215/2012), which replaced the Brussels I Regulation and post-dated the claim in Sabbagh, now contains the same provision.
For the first time, the Court in Sabbagh considered (albeit in obiter) whether it is appropriate for the English courts to assess the merits of the claim against the anchor defendant in cases involving the Brussels Regulation exception. The parties in Sabbagh raised the following arguments:
- The claimant/appellant argued that Article 6(1) of the Brussels Regulation did not require the court to assess the merits of its claims. Rather, the only requirement was that the claims against the non-anchor defendants are so closely connected to the claims against the anchor defendant that it is expedient for the court to determine them together to avoid the risk of irreconcilable judgments. The claimant also relied on the Court’s decision in Joint Stock Co “Aeroflot Russian Airlines” v Berezovsky[ii] to establish that under Article 6(1), the court is not required to assess the merits of claims against non-anchor defendants, and that the court should apply the same logic to the anchor defendant.
- The defendants/respondents, referring to the jurisprudence of the Court of Justice of the European Union (CJEU), argued that it must be expedient for the court to hear the claim against the anchor defendant together with the claims against the foreign co-defendants. They further argued that the court should consider whether the claim against the anchor defendant raises serious issues for the court to hear, otherwise it cannot be expedient for the court to hear and to determine the claim together with claims against the foreign defendants.
Following a detailed discussion of CJEU jurisprudence, the Court in a majority judgment (Patten LJ and Beatson LJ) concluded that the jurisprudence does not preclude the Court from considering the substantive merits of the claims brought against an anchor defendant. The Court also noted that the Aeroflot judgment did not indicate that the Court had considered the anchor defendant’s specific position, let alone that the Court had in mind to include such a defendant. The Court rejected the claimant’s argument that the Court should apply the Aeroflot logic to anchor defendants, since there is a significant distinction between the anchor defendant and the foreign co-defendants. Namely, if the claims against one or more foreign co-defendants fall away, this would not affect the claim against the anchor defendant or the claims against other foreign co-defendants. However, without a legitimate claim against the anchor defendant, a claimant should not be able to oust foreign co-defendants from their jurisdiction of domicile.
The majority concluded that invoking Article 6(1) by bringing a claim against an anchor defendant raising no serious issue to be tried would be wrong, because that would allow claimants to remove foreign defendants from the jurisdiction of the Member State courts in which they are domiciled. To allow hopeless claims to oust the jurisdiction of domicile of foreign co-defendants would be a misuse of Article 6(1), and to allow the Sabbagh claim to proceed would undermine the principle that a claimant may sue a defendant only before the courts in the place where it is domiciled.
In a dissenting judgment, Gloster LJ agreed with the claimant that the CJEU jurisprudence provided clear authority that courts might use Article 6(1) to establish jurisdiction against non-anchor defendants even if the claim against the anchor defendant will not proceed, unless the claimant is engaged in a fraudulent abuse of Article 6(1). Gloster LJ also noted that the incorporation of a merits test would be a restriction that the CJEU authorities do not permit, and that a merits test fundamentally undermines the certainty, predictability, and efficiency of the application of Article 6(1).
The detailed discussion of the relevant principles and jurisprudence in this case, as well as the split decision, provide fertile ground for parties in future Article 6(1) cases. Foreign co-defendants seeking to avoid jurisdiction will continue to argue that the English courts should assess the merits of the claim against the anchor defendant. On the other hand, claimants will argue that no such assessment is necessary, and the only requirement is that the claim against the foreign co-defendants is so closely connected to the claim against the anchor defendant that it is expedient for the courts to determine them together to avoid the risk of irreconcilable judgments.