Whether English proceedings should be stayed in favour of a non-EU country


The ECJ decision in Owusu v Jackson [2005] provided that, where a defendant is sued in the Member  State where he is domiciled, the court of that Member State cannot stay its proceedings in favour  of a non-Member State court  on the ground that it would be more appropriate for the non-Member State court to hear the case. The issue in this case was whether a stay could be granted  on other grounds though. That is an issue which the English courts have considered in earlier  cases.

Here, the UK domiciled trust company wanted to stay the proceedings brought against it here on two  grounds:

  1. The parties were bound by an exclusive jurisdiction clause in favour of the courts of Western  Australia. Applying prior caselaw, Proudman J held that Owusu  did not prevent the English court  from staying its proceedings on this ground. Article 23 of Regulation 44/2001 provides that where  one of the parties is domiciled in a Member State and the parties agree that a Member State’s  courts shall have jurisdiction, then that agreement will be upheld. The judge noted that Article 23  is a mandatory exception to the rule that a defendant should be sued in the Member State where he  is domiciled and held that the same principle should be applied “reflexively” where the exclusive  jurisdiction clause is in favour of a non-EU court.
  2. There were related proceedings already ongoing  in Australia and those proceedings were so  closely connected to the proceedings here that there was a risk of irreconcilable judgments. There is  conflicting prior caselaw on this argument but Proudman J concluded that it is possible to stay the  English proceedings on this basis. However, she chose to base her decision to stay the English  proceedings on the exclusive jurisdiction clause point instead.

COMMENT: As has been previously reported, under the recast Regulation 1215/2012, English courts now  have a discretion to stay their proceedings in favour of a non- EU court if the non-EU court was first seised (and the proceedings are related). The new Regulation  did not apply here, though, as the English proceedings were commenced before 10 January 2015. However, it should be noted that  the new Regulation does not deal with the issue of whether the English court could grant a stay based on an exclusive jurisdiction clause in favour of a  non-EU country, and so the support for a stay in such circumstances from the court in this case  goes some way to help to clarify the position in England (although the Court of Appeal has yet to  rule on this issue and it might be argued that, since the new Regulation is silent on this point,  the legislators did not intend that a stay would be permissible in these circumstances).