BP International Ltd. v Energy Infrastructure Group Ltd.

A non-exclusive jurisdiction clause gives a party a right to commence proceedings in the chosen jurisdiction, but the court retains a discretion to stay them. The existence of overlapping proceedings elsewhere is a significant factor, particularly where parallel proceedings may conflict. A claimant seeking negative declaratory relief must show a dispute which it bona fide desires to have tried and must establish that the declaration would be useful. Without-prejudice discussions may be mentioned to show that a dispute exists, but their substance and the parties’ claims may not be disclosed to identify the dispute. Where proceedings have been contrived to influence a foreign forum decision, a stay may nevertheless be appropriate if the claimant has submitted to that foreign jurisdiction. The court treated the circumstances as exceptional and stayed the English proceedings pending the foreign court’s forum decision.

BP International Ltd. sought negative declarations concerning its rights and liabilities under a joint-venture agreement with Energy Infrastructure Group Ltd. The agreement was governed by English law and submitted disputes to the non-exclusive jurisdiction of the English courts.

Energy Infrastructure Group had already commenced proceedings in Dallas, alleging fraud, breach of fiduciary duty and losses arising from BP’s withdrawal from the project. BP had challenged the Texas jurisdiction but subsequently submitted to it, while applying for the Texas proceedings to be dismissed on forum non conveniens grounds. Energy Infrastructure Group applied under CPR rule 11(1) to set aside service or, alternatively, to stay the English proceedings. The issues were whether there was a serious issue to be tried, whether permission should be set aside for non-disclosure, and whether the English proceedings should be stayed.

1. Serious issue to be tried. The court held that the dispute had to be assessed realistically. Serious issues arose concerning sums due under clause 5, the possible existence of a fiduciary relationship, alleged breaches arising from BP’s withdrawal, and the effect of clauses 5 and 13 on BP’s liability. The contractual and tortious issues could not sensibly be separated.
2. Negative declarations. Proceedings seeking only negative declarations are subject to the ordinary principles applicable to other actions. The claimant must show both a dispute which it bona fide desires to have tried and that the declaration would be useful in the context of the parties’ disputes.
3. Without-prejudice material. The existence of without-prejudice discussions may be disclosed where relevant to show that a dispute exists. Their contents, the nature of the dispute and the claims made during them cannot be disclosed for that purpose.
4. Full and frank disclosure. Although BP’s evidence could have been fuller and had been drafted in a way which explained why permission was granted ex parte, the court did not find it insufficiently full and frank. Permission was therefore not set aside.
5. Stay. The English proceedings appeared to have been contrived principally to strengthen BP’s forum non conveniens application in Dallas. Nevertheless, dismissal was inappropriate. The centre of gravity of the dispute lay in the Texas fraud proceedings, substantial overlap existed, and BP had submitted to the Dallas court’s jurisdiction. Those circumstances justified a stay, notwithstanding the non-exclusive English jurisdiction clause. The proceedings were stayed until the Dallas court had ruled on the pending motion.

First-instance decision. No earlier appellate decision is stated in the judgment.