Tavoulareas v Tsavliris & Anor

The court may set aside a default judgment so that a dispute can be determined on its merits, but should not impose security merely to penalise conduct in parallel proceedings in another Member State. The principle of mutual trust under the Brussels Convention prevents the English court from assessing whether foreign proceedings were abusive or whether a party should deploy the resulting judgment.

For jurisdiction under article 5(1)(a) of the Brussels Regulation, the court examines the pleaded contractual claim. Where repayment is due on demand, the place of performance is determined by the creditor’s residence when demand is made. For article 27, the deeming rule in article 30 applies to questions arising in proceedings instituted after the Regulation came into force, including the time when an earlier foreign court is deemed to have been seised.

The claimant brought two related actions concerning alleged repayment obligations arising from funding connected with the salvage of the vessel Atlas Pride. In the first action, the first defendant applied to set aside a default judgment. In the second, the defendant Greek company challenged the English court’s jurisdiction and sought a stay under article 27 of the Brussels Regulation because related proceedings had been commenced in Greece.

The court had to decide whether conditions should be attached to setting aside the default judgment, whether the English court had jurisdiction under article 5(1)(a), and which court was first seised for article 27 purposes.

1. The application to set aside the default judgment was allowed without a condition requiring payment of security. The defendant’s conduct in pursuing the Greek proceedings did not provide a proper basis for such a condition.

2. Following Turner v Grovit [2004] Lloyd’s Rep 169, the principle of mutual trust prevented the English court from deciding that proceedings in another Member State were inappropriate or abusive, or from criticising a party’s intention to rely on the foreign judgment under article 26 of the Brussels Convention or article 33 of the Brussels Regulation. Imposing security for that purpose would implicitly involve the prohibited assessment.

3. For the second action, the pleaded obligation was repayment on demand. The place of performance depended on the claimant’s residence when repayment was due. As demand was alleged to have been made by issuing and serving the claim form when the claimant resided in London, article 5(1)(a) gave the English court jurisdiction. At the jurisdiction stage, the court examined the pleaded claim rather than its merits.

4. Article 27 required the court to stay proceedings involving the same cause of action and the same parties where another Member State’s court was first seised. The expression was to be interpreted broadly, consistently with Overseas Union Insurance Ltd v New Hampshire Insurance Co. [1992] QB 434.

5. Article 30 applied to questions arising in proceedings to which the Brussels Regulation applied, even though the Greek proceedings had been instituted before the Regulation came into force. The Greek court was therefore deemed to have been seised when the Greek proceedings were lodged on 8 November 2001. The later provision of an incorrect address did not constitute a subsequent failure within article 30(1). The Greek court was consequently first seised for article 27 purposes.

6. The court left open whether article 27 applied after the proceedings in the court first seised had proceeded to judgment. The parties were invited to make submissions on that issue, and the second application was to be determined in light of the resulting decision.

The judgment describes earlier proceedings in the same litigation. Tomlinson J stayed the first action and set aside the default judgment on 21 March 2003. The Court of Appeal reversed that decision on 5 February 2004, declaring that the English court was first seised for the purposes of article 21 of the Brussels Convention and restoring the default judgment, without prejudice to an application to set it aside on other grounds.

This judgment reconsidered the default judgment and the jurisdictional issues arising in the related second action.