Bank of Tokyo-Mitsubishi Ltd & Anor v Baskan Gida Sanayi Ve Pazarlama & Ors

Under the Judgments Regulation, a court second seised must stay proceedings involving the same parties and cause of action until the court first seised determines its jurisdiction. A negative declaration may have the same cause and object as a later positive claim concerning the same contractual relationship.

Related contractual actions may also be stayed where there is a risk of inconsistent judgments. The English court retains jurisdiction over distinct tortious claims where the claims are closely connected with proceedings against an English-domiciled defendant under Article 6(1). Procedural defects in service need not invalidate the proceedings where the court has jurisdiction over other causes of action and the defect causes no prejudice.

The Banks brought English proceedings against Baskan Gida, associated defendants and four Ferrero companies concerning assignments of debts arising from hazelnut sales, conspiracy, conversion, knowing receipt and related claims. Ferrero Industrial and Ferrero Italy had first commenced proceedings in Italy seeking negative declarations that they owed nothing to the Banks and that the assignments could not be asserted against them.

The Ferrero companies applied to challenge jurisdiction, set aside service or obtain stays under Articles 27 and 28 of the Judgments Regulation. The Banks also sought amendments alleging further conspiracy and fraudulent or negligent misstatement. The central issues were whether the contractual claims were the same as, or related to, the Italian proceedings, and whether the English court retained jurisdiction over the tortious claims.

1. Contractual claims against Ferrero Industrial and Ferrero Italy. The Italian court was first seised. The English and Italian proceedings concerned substantially the same facts, legal rules and contractual liability arising from the assignments and undertakings. Their objects were essentially the same, notwithstanding that the Italian proceedings sought negative declarations. Article 27 therefore required the English claims against those defendants to be stayed until the Court of Cassation ruled on the Italian court’s jurisdiction.
2. Service. Service without permission was governed by CPR, r. 6.19(1A), and CPR, r. 6.20 did not apply to defendants domiciled in Regulation States. However, non-compliance relating to one cause of action did not require service to be set aside where the English court had jurisdiction over other claims and the defect caused no prejudice. The defect could be cured under CPR, r. 3.10.
3. Other contractual claims. The claims against Ferrero France and Ferrero Germany were related to the Italian contractual claims. Article 28 applied and those claims were stayed pending the Italian jurisdictional challenge. The alleged German jurisdiction clause had not been incorporated into the relevant contracts on the evidence before the court.
4. Tortious and quasi-tortious claims. The Italian proceedings did not involve the same cause of action as the conspiracy, conversion, knowing receipt and tracing claims, and those claims were not related actions. Article 27 and Article 28 therefore did not apply. The claims against the Ferrero companies were closely connected with the conspiracy claims against Indo-Med and Aksu Gida, so Article 6(1) provided jurisdiction. The conversion and knowing-receipt claims did not independently satisfy Article 5(3), because the relevant events and loss of security occurred outside England.
5. Amendments. The amendments alleging conspiracy to procure advances and deceit or negligent misstatement were allowed. There was a good arguable case that the alleged conspiracy caused loss in England because funds held by the Banks in England were paid out, and that the December 2001 letter induced entry into the facility agreement and advances made from England. The English court therefore had jurisdiction over the misstatement claims under Article 5(3).