Deutsche Bank Ag v Sebastian Holdings Inc

Where parties have selected English jurisdiction, a stay on forum non conveniens grounds requires a substantially heavier showing than under the ordinary Spiliada test. The applicant must establish strong, very strong or exceptional reasons, particularly where the clause is exclusive or contains a waiver of forum non conveniens. Foreseeable inconvenience, competing jurisdiction clauses and parallel foreign proceedings will not ordinarily suffice. The mere existence of a foreign lis alibi pendens, or the fact that proceedings were commenced first, is insufficient. The court must assess whether the foreign forum is clearly and distinctly more appropriate and whether exceptional circumstances justify releasing the parties from their contractual bargain. The court left unresolved whether Owusu v Jackson prevents a stay under Article 23 of the Council Regulations (EC) 44/2001.

Deutsche Bank AG and Sebastian Holdings Inc were parties to related proceedings in England and New York concerning equity and foreign-exchange trading accounts. Walker J had held that the English court possessed jurisdiction under several contractual jurisdiction clauses. The defendant then applied for a stay of the English proceedings in favour of New York, relying on forum non conveniens and the existence of the New York proceedings.

The agreements contained a mixture of exclusive and non-exclusive English jurisdiction clauses, English forum non conveniens waivers, and a non-exclusive New York jurisdiction clause. The central questions were whether New York was clearly the more appropriate forum and whether the contractual allocation of jurisdiction should be displaced in the interests of justice.

1. The application for a stay was dismissed. New York was not shown to be clearly and distinctly the more appropriate forum, and there were no exceptional, strong or very strong reasons for releasing the parties from their contractual choice of English jurisdiction.

2. Jurisdiction clauses have a hierarchy. An exclusive jurisdiction clause is the most stringent. A non-exclusive clause coupled with a forum non conveniens waiver is next. A bare non-exclusive clause is less stringent, but still records the parties’ contractual allocation and may permit parallel proceedings.

3. Under the ordinary common-law test in Spiliada Maritime Corp v Cansulex Ltd, the defendant must show that another forum is clearly more appropriate. That test is materially affected by a jurisdiction agreement. Even an exclusive clause may be displaced in the interests of justice only where strong reasons exist. The same approach applies, with appropriate weight, to a forum non conveniens waiver and to a non-exclusive jurisdiction clause.

4. Foreseeable factors of convenience do not ordinarily justify departure from the contractual bargain. Where the possibility of competing jurisdictions was foreseeable, and no relevant third-party interests were shown, the reasons required are especially compelling. A standard balancing exercise is inappropriate.

5. The existence of parallel proceedings is not, by itself, sufficient. Nor should the fact that one proceeding was commenced first carry decisive weight. It remains desirable for disputes to be resolved in one forum, but it was not established that New York could resolve all the disputes which could be resolved in London.

6. The court declined to decide the unresolved question whether Owusu v Jackson prevents a stay under Article 23 of the Council Regulations (EC) 44/2001. The application failed on common-law principles, making that issue unnecessary to determine.

Walker J had previously held that the English court had jurisdiction over the London claim. Permission to appeal that decision was refused on paper by Sir Richard Buxton, subject to renewal before the Court of Appeal. The present court proceeded on the basis that English jurisdiction had been established and dismissed the stay application.