Canada Trust Co v Stolzenberg (No 2)

On an interlocutory challenge to jurisdiction under article 6.1 of the Lugano Convention, a claimant must establish the relevant domicile by a good arguable case. This requires the claimant to have the better argument on the available material. It does not require proof on the balance of probabilities.

Domicile is determined when proceedings are issued against the defendant whose domicile founds jurisdiction. It is not determined when process is served. Article 6.1 does not require that defendant to have been served before proceedings are issued or served against defendants domiciled in other contracting states. The court must instead be satisfied that the domiciled defendant is a genuine party and that article 6.1 is not being abused.

The plaintiffs alleged that the first defendant had participated in a fraud concerning investments in the Castor Group. They claimed that he was domiciled in England and relied on article 6.1 of the Lugano Convention to sue defendants domiciled in Switzerland. They also obtained leave to serve defendants domiciled in non-contracting states as necessary or proper parties.

Rattee J refused the defendants’ applications challenging jurisdiction. He held that domicile had to be established to the standard of a good arguable case and accepted that the first defendant was domiciled in England at the material time. He also retrospectively validated service on the non-Convention defendants.

The Court of Appeal was asked initially to decide three points of principle: the standard of proof for domicile, the date at which domicile must be determined, and whether article 6.1 required prior service on the defendant domiciled in England.

1. Disposition. The court made declarations answering the three preliminary questions in the terms proposed by Waller LJ. Nourse LJ agreed. Pill LJ agreed on the standard of proof but dissented on the questions concerning the date of domicile and service. The applications to adduce fresh evidence and any further hearing of the appeal were adjourned. Costs were reserved.

2. Standard of proof. Waller, Pill and Nourse LJJ agreed that domicile had to be established by a good arguable case. The analysis in Seaconsar Ltd v Bank Markazi [1994] 1 AC 438 showed that this standard applies to the jurisdictional facts which bring a claim within a permitted jurisdictional head. It is below proof on the balance of probabilities but above the existence of a serious question to be tried. At the inter partes stage, the claimant must have the much better argument on the available material. The court must remain conscious that jurisdiction is being decided through an interlocutory process without full discovery or cross-examination.

3. Date of domicile. By a majority, domicile under articles 2 and 6.1 of the Lugano Convention had to be determined when proceedings were issued against the defendant whose domicile founded jurisdiction. Those articles identify the courts in which proceedings may be issued. A date-of-issue rule also enables a claimant to identify the proper court before incurring the cost of commencing proceedings and avoids uncertainty where domicile changes before different defendants are served.

   The rules governing when a court becomes seised under articles 21 to 23 perform a later, tie-breaking function. Decisions establishing that seisin ordinarily occurs upon service were therefore distinguished.

4. No prior-service condition. Article 6.1 contains no requirement equivalent to the express service condition in Ord.11 r.1(1)(c) of the Rules of the Supreme Court. At an inter partes challenge, the relevant safeguards are whether the defendant domiciled in the forum is a genuine party and whether article 6.1 is being abused. Service on that defendant need not precede the issue or service of proceedings against defendants domiciled elsewhere.

5. Dissent. Pill LJ considered that a person was “sued” only upon service. He would therefore have determined domicile at the date of service and held that article 6.1 could not be invoked without service on the defendant domiciled in England.

1. Court of Appeal: In Canada Trust Co v Stolzenberg (No 2) [1997] EWCA Civ 2592, the court determined three preliminary jurisdictional questions. By a majority it adopted the date of issue and held that prior service on the domiciled defendant was unnecessary. The fresh-evidence applications and any further hearing were adjourned.
2. High Court, Chancery Division: Rattee J, on 27 May 1997, refused the defendants’ jurisdictional declarations. He applied the good arguable case standard, held that the first defendant was domiciled in England at the material time and retrospectively validated service on the non-Convention defendants.