Future Investments SA v Federation Internationale de Football Association (FIFA) is a useful example of how the courts will apply the Lugano Convention in deciding whether they have jurisdiction over a dispute.
The basic principle in the Lugano Convention is that a defendant is entitled to be sued in the courts of the state in which he/she is domiciled. Article 5(3) of the Convention provides an exception to this general rule for tortious claims. Here, the claimant can sue “in the courts for the place where the harmful event occurred”. This means both:
- the courts of the place where the damage occurred; and
- the courts of the place where the event which gives rise to the damage occurred.
Where these two places are not the same, the claimant has the option of suing in either court.
The dispute concerned the rights to produce and exploit home videos/DVDs of the 1998 World Cup. Future acquired the exclusive rights via a chain of agreements in 1987 from FIFI to OTI and from OTI to Future. Each of these agreements was signed in Switzerland and was subject to Swiss law.
In 2004, FIFA licensed IMG Media Limited to sell the DVD ‘FIFA Fever’ which contained footage of the 1998 World Cup. In the agreement, FIFA warranted that had the right to grant these rights to IMG (which of course, it did not as Future owned the rights). The agreement was signed in Switzerland.
Future brought proceedings in the English High Court against FIFA for the tort of causing harm by unlawful means. The court had to decide whether it had jurisdiction over the dispute under Article 5(3) of the Lugano Convention. FIFA argued that it did not.
Mr Justice Floyd held that the English courts did not have jurisdiction over the dispute and that proceedings should have been commenced in Switzerland. Applying Article 5(3), he held that the event giving rise to the damage was when FIFA signed the agreement with IMG and this occurred in Switzerland. The effect of this event (the damage) was to interfere with IMG’s freedom to deal with Future in that the existence of the warranty in the agreement meant that IMG believed that they did not need to apply to Future for a licence. This damage occurred where the licence between Future and IMG would otherwise have been made and the court was persuaded on the evidence that this would have been Switzerland. The court declined jurisdiction.
Click here for a copy of the judgment