Canada Trust Co v Stolzenberg (No 2)

For jurisdiction under articles 2 and 6 of the Lugano Convention, a person is “sued” when proceedings are initiated, not when originating process is served. The autonomous Convention concept must first be interpreted from its language, scheme and objectives. It must then be applied through the procedural law of the forum.

In English proceedings, initiation occurs when the writ or claim form is issued. The defendant’s domicile is therefore determined at that time. Article 6(1) does not require the anchor defendant to be served before the other defendants. On a jurisdictional challenge, domicile need only be established to the standard of a good arguable case. The distinct rules determining when a court is first seised under articles 21 and 22 do not govern when a person is sued under articles 2 and 6.

The claimant trustees alleged that they had been induced by fraud to invest about £120 million in insolvent companies. They issued an English writ against Mr Stolzenberg and 36 other defendants. Mr Stolzenberg was domiciled in England when the writ was issued, but may have abandoned that domicile before service. Two Swiss defendants relied on the Lugano Convention, while four defendants domiciled outside Convention states challenged service under the Rules of the Supreme Court.

Rattee J rejected their jurisdictional challenges. The Court of Appeal, by a majority, held in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 that the material date was the issue of the writ and that article 6(1) did not require prior service on the English-domiciled defendant.

The central questions were when a defendant is “sued” for articles 2 and 6, whether the anchor defendant had to be served first, and what standard of proof governed the disputed domicile.

1. Appeal dismissed unanimously. Lord Steyn delivered the leading speech. Lord Cooke of Thorndon, Lord Hope of Craighead and Lord Hobhouse of Woodborough adopted his reasons. Lord Hoffmann reached the same conclusion and agreed with Lord Steyn on the subsidiary issues.

2. Per Lord Steyn, a Convention concept must be addressed through a twofold classificatory enquiry. The court must first interpret the concept autonomously by reference to the Convention’s language, structure, system and objectives. It must then apply that concept to the procedural regime of the forum.

3. Per Lord Steyn, “sued” has the same meaning in articles 2 and 6 and refers to the initiation of proceedings. The Convention uses “sued”, “bring proceedings” and “instituting proceedings” interchangeably. Selecting initiation also promotes certainty, gives the parties an ascertainable date and prevents jurisdiction from depending on later service or a defendant’s evasion of process.

4. Per Lord Steyn, an English High Court action was initiated when the writ was issued. Mr Stolzenberg’s domicile therefore had to be determined as at that date. The rules governing when a court becomes first seised under articles 21 and 22 concern the different function of resolving competing proceedings. The House did not decide whether the English service rule previously adopted for those articles was correct.

5. Per Lord Steyn, article 6(1) does not require the anchor defendant to be served before the Convention co-defendants. When jurisdiction is challenged, the material questions are whether a defendant domiciled in the forum is a genuine party and whether article 6 has been abused. The sequence of service supplies no additional safeguard.

6. Per Lord Steyn, the non-Convention appellants were necessary and proper parties to claims involving another defendant who had submitted to English jurisdiction. Jurisdiction over them could therefore be maintained independently of service on Mr Stolzenberg.

7. Per Lord Steyn, a claimant need establish a good arguable case, rather than proof on the balance of probabilities, that the relevant defendant was domiciled in England. This standard permits Convention jurisdictional questions to be resolved promptly and ordinarily without oral evidence.

8. Lord Hope added that the English conclusion did not itself determine the corresponding procedural date in Scotland. The autonomous concept of initiation would require application to Scottish procedure, and the Scottish position remained judicially unresolved.

• House of Lords: In Canada Trust Co v Stolzenberg (No 2) [2002] 1 AC 1, the House unanimously dismissed the defendants’ appeal and affirmed the Court of Appeal’s order.
• Court of Appeal: In Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, the court unanimously adopted the good arguable case standard. By a majority, it held that domicile was tested when the writ was issued and that article 6 did not require prior service on the anchor defendant. The appeal was dismissed.
• High Court: Rattee J, in an unreported judgment, rejected all three jurisdictional arguments. He held that “sued” referred to the issue of the writ, that prior service on the anchor defendant was unnecessary and that the good arguable case standard applied.