SK Slavia Praha-Fotbal AS v Debt Collect London Ltd & Anor

For the purposes of lis pendens under Council Regulation (EC) No 44/2001, lodging the originating document does not invariably make a court first seised. The court must consider whether the claimant subsequently failed to take a step required by domestic procedural law to effect service.

A culpable failure to perform an immediately enforceable duty engages the proviso in Article 30.1. The court then ceases to be seised for the relevant period, although compliance may restore seisin. The comparison is made when competing proceedings exist.

On summary judgment, an assumed rule of foreign company law does not create a real prospect of defending an English-law contractual claim where there is no evidence establishing the factual conditions for that rule to apply.

A Czech football company brought Czech proceedings seeking a declaration that its obligations under a funding agreement had been discharged. It lodged the claim before the respondents commenced English proceedings to recover advances under English-law loan agreements and the funding agreement. The Czech claim could not be served until a court fee was paid, and the fee remained unpaid when the English proceedings were issued and served.

Tugendhat J held in [2009] EWHC 2726 (QB) that the English court was first seised under Article 30.1 of Council Regulation (EC) No 44/2001. He subsequently granted the respondents summary judgment in [2010] EWHC 57 (QB), rejecting a proposed defence based on Czech shareholder-loyalty law.

The appeals concerned which court was first seised and whether the foreign-law defence had a real prospect of success.

1. Both appeals dismissed. Mummery LJ delivered the leading judgment. Lloyd and Stanley Burnton LJJ agreed that the English court was first seised and that summary judgment was properly granted.

2. Article 30.1 of Council Regulation (EC) No 44/2001 makes lodging the originating document the starting point for seisin where lodging precedes service. That rule is subject to the proviso concerning a subsequent failure to take a step required to effect service. The proviso requires examination of the relevant domestic procedural law to identify the claimant’s duty, while the consequence for seisin remains a question under the Regulation.

3. The Czech procedural legislation imposed a duty to pay the court fee when the claim was filed. Payment was a prerequisite to service. The claimant knew the fixed amount and could have paid it immediately by fee stamps. Its non-payment was therefore a continuing failure to perform a required step, rather than merely the permissible use of a procedural period. The ordinary Czech practice of awaiting a demand did not alter the duty.

4. Per Lloyd LJ, the proviso does not mean that a court can never regain seisin after a failure. The court is seised upon lodging in principle, may cease to be seised when a culpable failure engages the proviso, and may become seised again when that failure is remedied. The material comparison is whether the first court remained seised immediately before the competing proceedings began. Stanley Burnton LJ similarly regarded “failure” as non-compliance with a duty imposed by the relevant procedural law.

5. The Czech court was not seised when the English proceedings commenced because the fee remained unpaid and service could not occur. The English court was therefore first seised. It was unnecessary to decide whether Article 27 required a refusal of jurisdiction or whether Article 28 permitted a stay on the footing that the Czech court was first seised.

6. The proposed Czech-law defence also had no real prospect of success. Even assuming that the shareholder-loyalty principle was potentially applicable, there was no factual evidence that the respondent parent company was or had been a shareholder, exercised substantial influence over the football company, or used the debt claim oppressively. English law governed the contractual claims, to which there was no arguable defence.

1. Court of Appeal (Civil Division): In [2010] EWCA Civ 1250, unanimously dismissed the jurisdiction and summary judgment appeals.
2. High Court, Queen’s Bench Division: Tugendhat J held in [2009] EWHC 2726 (QB) that the English court was first seised and dismissed the jurisdiction challenge and stay application.
3. High Court, Queen’s Bench Division: Tugendhat J granted summary judgment in [2010] EWHC 57 (QB) for £3,744,208, together with an interim payment on account of costs.