The Trademark Licensing Company Ltd & Anor v Leofelis SA

Under article 28 of Council Regulation (EU) No. 44/2001, proceedings are “related actions” only where their connection is sufficiently close and the risk of irreconcilable judgments is sufficiently substantial to make it expedient to hear them together. A mere common factual or legal background is insufficient.

If that threshold is met, the stay discretion requires a case-specific assessment. Relevant considerations include the degree of connection and risk of inconsistent decisions, the stage and likely duration of each proceeding, and which court is best placed to determine the common issue. There is no general presumption in favour of a stay in cases of doubt.

The claimants sought declarations and damages arising from the termination of a trade mark licence agreement. The defendant applied under CPR 11 for a stay pending proceedings brought by a former sub-licensee in Milan.

The defendant relied on article 22 of the Lugano Convention. The claimants contended that article 28 of Council Regulation (EU) No. 44/2001 applied because the relevant proceedings were in the courts of two Member States. The central issues were which regime governed, whether the proceedings were related actions, and, if so, whether a stay should be granted.

1. Applicable regime. Article 28 of Council Regulation (EU) No. 44/2001, rather than article 22 of the Lugano Convention, governed the application. The proceedings were in the courts of Italy and the United Kingdom, both Member States, and the domicile of the Swiss defendant did not prevent the Regulation from applying. Article 54B of the Lugano Convention was irrelevant.
2. Related actions. Proceedings are not related merely because they concern connected commercial arrangements. Applying the guidance in Research in Motion UK Ltd v Visto Corporation [2008] EWCA Civ 153, the court must assess the degree of connection and whether the risk of irreconcilable judgments is sufficiently great to make a joint hearing expedient. The Milan proceedings principally concerned the sub-licensee’s alleged losses and rights. The English proceedings concerned the validity of termination of the head licence and the claim for royalties. On the pleadings, the possible overlap was limited and the threshold in article 28(3) was not met.
3. Discretion. Even if the proceedings were related, the stay would be refused. The factors identified in Owens Bank Ltd v Bracco (Case C-129/92) [1994] QB 509 were relevant: the extent of relatedness and risk of irreconcilable decisions, the stage reached in each proceeding, and the proximity of the courts to the subject matter. The court also agreed with Centro Internationale Handelsbank Attorney-General v Morgan Grenfell Trade Finance Ltd [1997] CLC 870 that no general presumption favoured a stay in cases of doubt.
4. The English proceedings were likely to conclude substantially earlier, the common issue was one of English law, and the English court was contractually selected as having exclusive jurisdiction. A stay might increase rather than reduce the risk of inconsistent decisions. The application was dismissed.