Sawyer v Atari Interactive Inc

When deciding whether England is the appropriate forum for service out of the jurisdiction, the court must identify the likely issues and compare the competing fora. It must not simply count connecting factors.

An express choice of English law is relevant, but it is distinct from a contractual choice of English jurisdiction and may carry different weight according to the issues. Relevant considerations include the extent to which the dispute turns on questions of law, whether the foreign court would apply English law, and whether there is any material difference between the applicable laws. Where the dispute principally concerns construction of contracts governed by English law, and related arbitration or supervisory proceedings are in England, England may be the clearly appropriate forum despite documents and accounting operations being abroad.

The claimant, a Scottish-based computer-game designer, brought claims against the defendant distributor concerning royalties, audit rights, accounting records and contractual deductions under five licence agreements. The agreements were governed by English law. The 1994 agreement contained an arbitration clause; the remaining agreements did not.

The claimant obtained permission to serve the proceedings out of the jurisdiction. The defendant applied for an extension of time to challenge jurisdiction, a stay under section 9 of the Arbitration Act 1996 in respect of the 1994 agreement, and the setting aside of permission to serve out or a stay on forum conveniens grounds. The central issues were whether the late jurisdiction application could be permitted and whether England was clearly the appropriate forum for the claims under the other agreements.

1. The defendant’s solicitors had misunderstood the time limit under CPR r. 11(4). The court had power under CPR r. 3.1(2)(a) to extend the period retrospectively because CPR r. 11(5) did not displace that general discretion. An extension was appropriate: it was sought promptly, caused no prejudice, and refusing it could have resulted in proceedings continuing in an inappropriate forum.

2. The claim had a reasonable prospect of success and fell within CPR r. 6.20(5)(c) because the agreements were governed by English law. The court did not need to decide the claimant’s alternative jurisdictional bases.

3. For service out, CPR r. 6.21 required consideration of three matters: a cause of action with a reasonable prospect of success, a case falling within a jurisdictional gateway, and England being the appropriate forum. The third question required the claimant to show that England was clearly the appropriate forum. The inquiry concerned the likely issues and the suitability of the competing fora, not a mechanical tally of contacts.

4. An express choice of English law was an important but variable factor. It did not amount to an agreement to submit to English jurisdiction. Its weight depended on the likely issues, any material difference between English law and the foreign law, whether the foreign court would apply English law, and the extent to which the dispute turned on legal questions.

5. The dispute was not predominantly factual or accountancy-based. Its central issues concerned construction of provisions governing audit rights, retention of records, royalty calculations, deductions, reserves, withholding tax and payment currency. The related factual and accounting issues did not outweigh the contractual and legal connection with England.

6. The claim under the 1994 agreement had to be stayed because of the arbitration clause, and permission to serve out in respect of that agreement was set aside. England was nevertheless the clearly appropriate forum for the claims under the 1998, 1999, 2000 and 2002 agreements. The English arbitration concerning the 1994 agreement, including issues common to the other agreements, and the English governing law were each sufficient reasons supporting that conclusion. Permission to serve out was therefore maintained for the remaining claims.

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