Benatti v WPP Holdings Italy SRL & Ors

For jurisdiction under the Judgments Regulation, a good arguable case requires the court to be as satisfied as the interlocutory process permits that jurisdictional factors exist. Whether a contract is an individual employment contract requires an overall evaluation of its terms and character. Control, remuneration and organisational integration are relevant but not mechanistic criteria.

Under Article 30(2), a court is seised when the document instituting proceedings is received by the authority responsible for service, provided that the claimant subsequently takes the required steps to lodge it with the court. Seisin does not depend upon completed or valid service. Where another Member State’s court was first seised of the same cause of action between the same parties, the later proceedings must be stayed.

The claimant companies alleged that an Italian businessman engaged as their country manager had breached contractual and fiduciary duties by failing to disclose interests connected with a corporate acquisition. His agreement described him as a consultant, selected English law and conferred exclusive jurisdiction on the English courts. He contended that it had become an individual employment contract and that proceedings had first been commenced in Verona.

Field J rejected his jurisdictional challenge in [2006] EWHC 1641 (Comm), also reported at [2007] 1 All ER (Comm) 208. The appeal concerned the employment-contract exception, jurisdiction over claims by third-party beneficiaries, and whether the English or Verona court was first seised of the dispute involving WPP 2005 Limited.

1. The appeal was allowed in relation to WPP 2005 Limited and dismissed in relation to WPP Italy and Berkeley Square Holding BV. The Verona court was first seised of the cause of action between WPP 2005 Limited and the appellant. The English proceedings involving that company therefore had to be stayed under Article 27 of Council Regulation (EC) No 44/2001.

2. The good arguable case standard requires the court to be as satisfied as the limitations of an interlocutory process permit that jurisdictional factors exist. Its practical application depends upon the jurisdictional fact to be established and any relevant policy of the Regulation. Where the court can form a clear view that one side has the better argument, that resolves the issue. The Court reserved the position where the arguments are equally strong and a firmer conclusion would require a mini-trial.

3. Field J was entitled to conclude that the consultancy agreement was not an individual employment contract. Relevant criteria included the provision of remunerated services over time, control and direction, and integration into the counterparty’s organisation. Those criteria were not hard-edged or suitable for a tick-box exercise. The agreement permitted extensive outside business activity and substantial freedom over working time. The evidence did not establish an amendment requiring full-time work.

4. Claims by third parties enforcing contractual rights conferred under section 1 of the Contracts (Rights of Third Parties) Act 1999 were matters relating to a contract for Article 5(1). There was a good arguable case that London was the place for performance of the alleged disclosure obligation. For the fiduciary claims, Article 5(3) permitted proceedings where either the damage or the event giving rise to it occurred. London was arguably the place of the relevant omission. The English court therefore had jurisdiction over the contractual and fiduciary claims of WPP 2005 Limited and BSH. It was unnecessary to decide whether those companies could invoke the jurisdiction agreement under Article 23.

5. Article 30(2) does not make seisin conditional upon valid service. It requires receipt of a document capable of instituting proceedings by the authority responsible for service, followed by the claimant taking the required steps to lodge it with the court. Those conditions were satisfied on 1 February 2006. Sir Anthony Clarke MR and Toulson LJ adopted this reasoning. Buxton LJ reached the same result on the alternative basis that the later translated writ retrospectively cured the original defect.

6. Although all the actions were related and England was first seised for Article 28 purposes, that did not permit the English court to retain the same-cause action involving WPP 2005 Limited. Whether to decline jurisdiction in favour of consolidated English proceedings was a matter for the Verona court.

1. Court of Appeal (Civil Division): By [2007] EWCA Civ 263, allowed the appeal concerning WPP 2005 Limited and dismissed it concerning WPP Italy and Berkeley Square Holding BV.
2. High Court, Commercial Court: Field J rejected the jurisdictional challenge in [2006] EWHC 1641 (Comm), also reported at [2007] 1 All ER (Comm) 208.