DSM Anti-Infectives BV & Anor v Smithkline Beecham Plc & Anor

An exclusive jurisdiction clause covering disputes in connection with an agreement receives a wide and generous interpretation. It may govern a factual dispute about whether conduct falls within a contractual protection, even where the agreement does not expressly identify the disputed subject matter. A clause reserving rights in the United States does not necessarily displace that bargain. Where a judge refuses a stay in favour of an exclusive jurisdiction clause, the Court of Appeal should not interfere absent an error of law or principle. Delay and the risk of inconsistent findings are matters of weight. An unresolved jurisdiction issue under Council Regulation (EC) 44/2001 need not be decided where the appeal fails on contractual and discretionary grounds.

DSM companies brought English proceedings against SmithKline Beecham companies concerning a settlement agreement, the alleged use of a bacterial strain, related proceedings in Pennsylvania, and a proposed supply to an Italian licensee. DSM sought declarations and an injunction. SmithKline Beecham plc applied under Civil Procedure Rules 1998 Part 11 and rule 3.1 for a stay on forum non conveniens grounds. Lewison J dismissed the application, holding that the agreement’s exclusive jurisdiction clause applied and that the relevant factors did not justify a stay. The appeal concerned the construction of the agreement, the effect of its United States exclusion clause, the exercise of the stay discretion, and the unresolved Regulation issue.

Lord Justice Peter Gibson delivered the leading judgment. Lord Justices Tuckey and Longmore agreed.

1. Appeal dismissed. The refusal of a stay was upheld.
2. Exclusive jurisdiction clause. The phrase in connection with is wide. Consistently with Donohue v Armco [2002] 1 Lloyd’s Rep. 425, such a clause should receive a generous interpretation between the contracting parties. The central dispute—whether DSM used the protected Annex VII strain or GSK’s SC7 strain—was connected with the agreement. The pre-agreement correspondence showed that misuse of confidential information was part of the parties’ concerns, and clause 5(i) barred GSK from objecting to use of the Annex VII strain.
3. United States exclusion. Clause 14 did not prevent DSM from invoking clause 15, even if it permitted GSK to bring proceedings in Pennsylvania. If it were necessary to decide the point, clause 14 would still not authorise determination in the United States of the underlying dispute about a strain used in Sweden. Its wording was directed to territorial rights in potassium clavulanate, particularly patent rights, rather than ownership of a production strain. Relief in Pennsylvania would in substance create worldwide effects through estoppel.
4. Discretion and appellate review. Once clause 15 was correctly construed, the judge was entitled to give it paramountcy. The Court of Appeal would interfere only for an error of law or principle. The judge’s assessment of DSM’s delay and the risk of inconsistent findings involved matters of weight. The risk of inconsistent results was properly treated as remote, particularly because the English dispute could be tried promptly and the first decision would ordinarily create an estoppel between GSK and DSM.
5. Regulation issue. It was unnecessary to determine whether Council Regulation (EC) 44/2001 deprived the court of jurisdiction to grant a stay. The question was left for a case in which the court would otherwise be minded to grant a stay.

1. Court of Appeal (Civil Division): The appeal was dismissed: [2004] EWCA Civ 1199.
2. High Court of Justice, Chancery Division: Lewison J dismissed SmithKline Beecham plc’s application for a stay of the English proceedings on forum non conveniens grounds on 25 April 2004.