Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of Parallelewelten.
It is generally considered that the English court can assume jurisdiction for any dispute either according to scope of Brussels 1 Regulation or traditional English rules. Therefore, it seems important first to examine the Brussels regime which includes the general rules if the defendant is domiciles in a Member State Article 2. In fact in the case of Cigs Inc. v. Malanga, both parties are not domiciles in the Member State because Cigs Inc. is incorporated in New York and Malanga is a farmer resident in Zambia. Furthermore, there is no mandatory and exclusive Articles 22(exclusive jurisdiction) and Articles 23 (choice of the courts clauses). Thus the Brussels regime will not apply and as a matter of the commercial dispute the traditional rules will apply in this case.
It seems important at this point to start with a short summary about the case; Cigs Inc. a tobacco company incorporated in New York. After the negotiations stage involved in the legal relation with Malange, a farmer resident in Zambia, the two parties had a contract. The negotiation was in London during the World Tobacco Fair, where discussions took place about the price and the amount of tobacco. A contract was drawn up to include a clause indicating that under the terms of the contract any disputes were to be settled in the court of Zimbabwe. Subsequently, Cigs inc. refused the delivery because there was breach of contract; they claimed that the goods did not correspond to the contract description. Therefore, they asked for damages for misrepresentation in a court in Zambia. It is clear that Cigs breached the jurisdiction clause that was in favor of a court in Zimbabwe. They justified this breach as due to the political situation in the named country, they were worried about the safety of the legal team.
After Cigs started their claim, Malange decided to breach the clause and sue Cigs for breach of contract in England. This could not be done in a Zimbabwean court because he feared for his life. Furthermore, he refused to sue in the Zambian courts because the cost was very expensive, the judges did not have experience in commercial matters and so on.
In fact the English courts can assume jurisdiction under the traditional rules in three situations: First, if the defendant is an individual or the company is present in England. Second, if the defendant submits to the English courts or there is agreement to submit. And the third situation is if the claim falls within scope CPR rules 6.20. In this situation it is entirely dependent on the discretion of the court.
This paper examines whether the English courts may assume the jurisdiction in this case under service as of right and the service out of right. It highlights the solution including the forum convenience and the doctrine forum non convenience which has been applied in some cases and is related to the present case.
Service As Of Right
There are various principles that have been established in order to find and prove the jurisdiction in civil and commercial matters for the courts if there is conflict between the English courts and the foreign courts. It seems necessary to mention the rule if the defendant is domiciled in the United Kingdom or another country. Furthermore it is important to distinguish between natural people from the companies. In fact in the case of Cigs the place of incorporation in New York and it does not have a branch in England. However, it rents offices every year in London for the World Tobacco Fair for two weeks. Therefore, the legal question is whether the two weeks residency can be considered as the basic point for the claimant Malange to bring his claims and to prove that the English courts have jurisdiction.
The following discussion regarding service as of right is divided into three sections: the presence of companies, submission and forum non convenience.
Presence Or Residence Of The Company
It could be said that the overseas company may be sued in England if it has place of business in England according to Companies Act 2006 or CPR rule 6.5.
It may be helpful to notice that the traditional rules which govern the foreign companies are similar to those under Article 5(5) of the Brussels 1 regulation.
Companies Act 2006
The company which carries out business outside the United Kingdom but is registered in the United Kingdom under the companies Act 2006 will be considered as present in the United Kingdom. It is worth noting that under the companies Act 1985 there were two separate regimes: one for foreign companies that have a branch in Great Britain, and the second for foreign companies which have established a place of business. However, under Act 2006 there is one single regime which is the foreign companies that have established a place of business. It may be said that the notion of establishment of a place of business includes a branch and goes wider than that.
In the Act 2006, service on an overseas company was mentioned in S 1139 (2) and the Act also make provisions for service on directors and secretaries companies.
In this case Cigs rent a suite of offices for two weeks every year; however, it is not clear whether the company is registered in England or not.
It could be questioned whether the owner of the office has the authorities to accept the service of the claim form. In the absence of these requirements then he can claim according to any place of business in England.
Moreover, in the present case it could be said that if the courts consider two factors which are the two weeks and the office supplied with secretaries, telephones and computers then it appears that there is an established place of business with an address. Then it may be said that the service in present in this case will be affective.
In case this point does not work then we will go to an alternative method which is the Civil Procedure Rules.
(ii)Under CPR Rule 6.5
As has been seen, the companies Act are complex. On the other hand the CPR is more extended and much simpler for raising the court’s jurisdiction about the company which has a presence in England. Therefore the claimant has a choice in relying on the Companies Act 2006 or CPR 6.5. First from the point of view of the legal technique under the CPR 6.5(6) gives the claimant the right to trade from any place of business within the jurisdiction. In spite of the fact that this company is not incorporated and registered in England it can be sued. Additionally there are no requirements that the disputes are linked to the defendant’s activities in England. The crucial point under CPR 6.5(6)is that if a foreign company has trade or business within a few days exhibition in England and the plaintiff serves a claim in this period, the English courts have jurisdiction over this company. It could be said that the CPR regime is more flexible and gives the plaintiff more choice. Hence in the present case if Malange claimed during the World Tobacco Fair, it would be effective and the English court would have jurisdiction. Nevertheless, if the claim took place outside this period then another method would need to be pursued.
The basic rule is that the courts cannot take action against a defendant who is not present in England unless he submits the claim to the court. This submission may take place in a variety of ways. One example is when the defendant appears to the court without any reservations or without instructing a solicitor to accept working on his behalf. However, it could be argued that if the defendant appears to contest the court’s jurisdiction, then it could mean that he submits. In the case of Williams and Glyn’s the court held that the appearance of the defendant in front of court does not mean he submits. Moreover, “a defendant does not submit if he enters a conditional appearance and seeks to set aside permission to serve process of the court outside the jurisdiction”
Furthermore, another way to give submission to the jurisdiction of court is by making an agreement either expressly or impliedly. For instance, in the case of international contracts, both parties commonly agree that any dispute arising among them may be solved or settled by the English court. When the contract includes a clause of jurisdiction but does not identify which way the procedure can be served in England, it cannot be considered as a submission to the English courts. However, in this case the courts may use the discretionary basis. It seems necessary to emphasize that the doctrine of submission is only valid to action in personam but cannot apply with other situations such as a decree of divorce.
Strictly speaking, in the Cigs and Malange case, the defendant does not appear or submit to the English court and a claim has started in Zambia against Malange. Furthermore, the jurisdiction clause does not include a clause that shows the English court has jurisdiction but the jurisdiction clause explains that the Zimbabwe court is to settle any dispute. Consequently, the submission principle will not apply in this case.
Forum Non Conveniens
In spite of the fact that the parties agreement contains a clause that any dispute raised between them will be settled by the Zimbabwe court, it does not mean that the English court will not except to serve as of right or serve out of Jurisdiction.
The important point is whether the claimant can satisfy that England is the proper place to start the claim or not.According to the traditional rules discretion plays a major role in most cases in granting the court permission to assume the jurisdiction in the present case when relying on the Spiliada doctrine (forum non convenience).
It might be useful to give a brief summary about Spiliada principle. This gives the court power and more flexibility to take particular circumstances of each case into account. It seems that this is due to the fact that the courts want to ensure that the interest of the justice and parties govern appropriate weight.In the present case, Malanga wishes to start legal action in England in order to benefit by suing there. As Lord Denning once emphases, ‘if the forum is England, it is a good place to shop in, both for the quality of the goods and the speed of service.’
It is worth noting that the argument about the Spliliada doctrine between the supporter for the traditional rule and the supporter of the Brussels Regulation. As matter of fact the English court has more discretion and can give the courts more power. However, the Brussels regime is inflexible and the ground of forum non conveniens was rejected by the European courts.
The Determination Of The Appropriate Forum
In the present case, if Malanga starts his claim in England, and Cigs Inc. has started their claims in Zambia, there will be two actions at the same time (parallel action). Therefore, from the legal point of view, the question is whether the Zambia court or the English court is more appropriate. It was recognized in the case, Spiliada Maritime Corp v Cansulexthat there are two stages to consider in each case.
It could be said that if the defendant persuades the court that there is another more appropriate forum than England, the English court will stay the proceeding on the ground of forum non-conveniens. This point is illustrated by the decision in the Lubbe case which stated that South Africa is more suitable because the defendant convinced the English court that the legal representation and the expert evidence required to demonstrate their claims is in South Africa.
In the present case if the Cigs Company, as a defendant, is satisfied that the English court is inappropriate and the Zambian court is more appropriate than the English court may stay the preceding
Under the CPR rule 6.20 the burden of proof is on the plaintiff to convince the court that this case is suitable one of service out of the jurisdiction and England is the proper forum. In the present case, the English court must decide which court is more appropriate: the England court or Zambian court. Therefore, the English court will apply two tests in order to see which has the most appropriate forum.
The First Stage
In the first stage the court takes into account which forum from prima facie is more appropriate: England or Zambia. Moreover, the court should consider the real and substantial link with the dispute. It appears important for the court to take into account another relevant factor such as, the availability of witnesses.
There is no limit of linking factors which the courts must take into account at the first stage as each case has different linking and various circumstances. It seems difficult to examine all the factors in this paper, so only four factors related to the present case will be examined:
Many points should be considered by the court when it analyses the territorial connections of the parties. The court should consider whether the parties are foreign and the dispute has no connection with England because, for example, the evidence is abroad and the contract has been prepared outside England.In the case of Prestrioka it was held that England is not the most closely connected forum due to the other forum being more related to the case.
In the Esam Distribution Ltd v. Schuh Mode Team GmbH case, the Court of Justice held that “in certain circumstances jurisdiction is conferred on a forum which has no more than a tenuous factual connection with the dispute”.
It is clear in the present case that the Zambian court is more appropriate than England because it has a more closely connected forum to the case. Consequently, the court may consider the next point.
Lis Alibi Pendens
In the case at the hand, the Cigs Company had started the claim in Zambia and Malanga wished to commence the proceedings in England. However, there will be ‘lis alibi pendens’ between the foreign court and English court, between the same parties with the same facts and similar issues.In this situation the court must consider the parallel proceedings at the English court and foreign court which may cause a clash between the judgments.
In the present case, if the court in Zambia has commenced the proceeding a few days before the English court then Lis alibi pendens is not adequate to assume the jurisdiction.
In the case of Abidin Daver when the plaintiff began the proceedings in Turkey, the defendant started another claim in England requesting damages due to collision which was caused by the decision of the House of Lord which stated that the English court should be stayed.
Moreover, in the present case if the Zambian court had taken many proceedings and it was close to make decision then Zambia would be the more appropriate forum. However, it could be argued that even though the Zambia court has started the proceedings and the claimant can justify to the English court that they will be deprived from justice in the Zambian court then in this case the English court is more likely to accept their claim and ignore the other court.
The Applicable Law
In the present case, there is no clear and not enough information about which law governs the contract between the parties. Therefore, if the parties consider the English law as the applicable law to govern the contract then it seems important for the English court to settle any disputes which may arise between the parties.However, if the fact for the dispute is more important than the applicable law, the applicable law will be less considered by the court due to the fact that the judge will look at the individual circumstances for each case.
It is necessary to emphasize that if the contract is governed by English law and any dispute arises concerning English public policy, then the English court is more appropriate to consider the issue.
It could be said that in the present case if both parties use the English law to govern their contract, then the English court will be more appropriate to assume the jurisdiction.
Documentary evidence is an important factor when a dispute arises between parties. The fact that the documents of the dispute or the contract are written in the language of the country, for example, in the present case is English. It might be considered as a factual connection with that country. Therefore if the relevant documents were in England, the English court may assume the jurisdiction due to it being the more appropriate court.
The Second Stage
The second stage of the test is that the court should not only require the assessment of the practicalities of the cases but also whether justice will be done in the foreign jurisdiction. It seems important to distinguish between the first stage and the second stage of the burden of proof for the more appropriate forum. At the first stage the burden of proof is on the defendant, Cigs Inc., that the Zambian court is more suitable than the English court. On the other hand, in the second stage the burden of proof is on the claimant, Malange, to prove that substantial justice will not be done in a Zambian court. For instance, if Malange can prove that there will be delays in the Zambian court or will not be able to recover his costs.
Perhaps it is difficult in the second stage is to determine the dividing line between, on the one hand, a factor which is merely an advantage to the claimant and, on the other, a factor which is so important that if this is denied to the claimant, there will be a denial of justice. In the Cig v Malange case the court will examine and discuss some factors related to this case which are delays, damage and costs, and procedural fairness
Delays, Damages and Costs
Delays: In the present case, Malaga claims the judges are not experienced in commercial matters in a Zambian court, which may lead to a delay in procedures and take a long time to complete the case. This point can be illustrated by the decision in the case Vishiva Ajay where a dispute arose between two Indian ships because of a collision between them. The court was held that the court in England refused to stay the proceeding on the basis the litigation in India could take at least six years. Hence, if Malange can persuade the English court about the delays in procedures in the Zambian court because the judges do not have experience, and the judges in England are more experienced and provide facilities for the parties. Consequently, the English court is a more appropriate forum.
Damages: Strictly speaking, Malange said that he was avoiding litigation in Zambia because Zambian courts do not award interest on damages. As a general rule the court will consider each case depending on the circumstances of each one. Therefore, in some cases if the claimant wishes to recover higher damages in England rather than in the foreign court, it is not enough to rationalize that the decision that the grant of stay must be refused. Nonetheless, in other cases the court may take a different approach to recover the damages.
Costs: As Malange mentioned in his claims, the litigation in Zambia would cost a lot of money which may mean that justice would not be done in Zambia. Furthermore he is looking for the benefit of suing in England because he can litigate without fear of costs by using ‘no-win no-fee’. This point is illustrated by the decision in the case of Connelly. It was held that the English proceeding should not be stayed due to the interest of justice.
It worth mentioning that both parties in the present case do not want to sue in Zimbabwean court because of the political situation there and their lives would be in danger. These reasons may be considered as significant reasons to serve in England as the appropriate forum.
From the legal point of view, if the claimant takes into account the previous points which have been examined, the English court may consider them effectively and may not stay the proceeding. Even though Cigs could argue that the Zambian court is more closely and connected to the case.
Weighing The Factors Between The Two Stages
In the first stage, the court points the connecting factors in different approaches in order to weigh them against each other to attempt to make balance of conveniens. However, in the second stage it seems more complicated for the court to weigh the relevant factors between the two sides and make balance between them. On the one hand, that England is not close to the parties and the dispute. On the other hand, the claimants assume that the justice will not be done abroad.
Service Out Of The Jurisdiction Under CPR 6.20
There are some situations where the court may assume jurisdiction notwithstanding the fact that the defendant is not presence or there is no submission to the English court “long arm” under the CPR 6.20.The aim of CPR 6.20 rule enables the court to exercise jurisdiction when it gives the claimant permission to sue the defendant out of the jurisdiction.However, the court will not give the permission unless the claimant is satisfied that England is the proper place in which to bring the claim.The claimant will not be allowed to serve the defendant out of the jurisdiction unless they satisfy the court on three issue (to be discussed below). The Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran case, the House of Lord required all the following three issues which came from Spiliada case;
First Serious Issue to be Tried
In the present case the claimant (Malange) should prove to the court that serious issues have arisen in the case. This might be happen if there is ‘a substantial question of fact or law (or both) which the claimant bone fide desires the court to try’.
Nevertheless, if Malange does not support the alleged facts, then there is no serious issue and the next point may apply.
A Claim Within The Scope Of CPR Rule 6.20
The claimant should show a good arguable case that satisfies one the paragraphs of CPR 6.20 rule.It could be said that in the present case, the claimant has a good arguable case when there is a strong link between the case and England, and that the negotiation period for the contract was in England. In this point the court may consider strong evidence to prove that the contract was made in England. Judge Kerr stated in relation to contract point “the contract had been made substantially in England so that England was forum convenience; and the according leave to service out of the jurisdiction had been properly granted”.
The point the claimant must establish is that England is the most suitable forum. The similar two stages of tests as forum non convenience will be considered again.
It can be shown that there has been a tenuous confusion between the forum convenience and non convenience. Therefore, it is worth distinguishing between them. First of all the burden of proof is on the claimant while in the forum non convenience case it is on the defendant. The second difference is that the claimant has to convince the court to exercise its discretionary power to sue the defendant outside the jurisdiction.
This paper has attempted to demonstrate various procedures to be considered by the English court in order to assume the jurisdiction in the Malanga v Cigs case. Considering the given facts and the key issues mentioned, in the light of statuaries, cases and scholars’ views, it is clear that the Brussels Regulation will not apply. However, it seems the English court will exercise the discretionary power under the traditional rules.
The research has indicated (see sections1) that the English court does not have jurisdiction when it considers the defendant presence because Cigs Company has no presence in England. Moreover, there is no submission from the Cigs Company so the English court cannot assume jurisdiction.
However, the English court may assume Jurisdiction from forum non convenience and forum convenience principles. In the Malange case, the claimant should satisfy the English court with all requirements for the two principles.
It also seems important for the English court to take into account the interest of the parties such as their interest in an economical trial and also the public interest.
In the present case if Malange convinces the court of all requirements, the court will exercise the discretionary power and then may assume the jurisdiction in this case.
This paper has examined and analyzed the requirements to settle this case, and it is supported by statuaries and related cases.
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