Smith's Vitamins and Herbs Ltd v Ceprodi Compagnie Europeenne De Produits Dietetiques SA

Under article 28.3 of Regulation 44/2001, a stay for related proceedings requires a real risk of irreconcilable judgments. The court must identify the issues actually arising in the two proceedings. Potential arguments which have not been raised, and which the parties do not intend to raise, are insufficient. The assessment requires a broad, commonsense approach, but it must remain grounded in the proceedings as constituted. An undertaking to the English court not to pursue arguments in the foreign proceedings may remove the apprehended risk, even if enforcement abroad is uncertain.

Smith's Vitamins and Herbs Ltd, an English distributor, appealed against an order staying its contractual claim under articles 28(1) and 28(3) of Regulation 44/2001. The defendant had already commenced proceedings in France concerning the return or repayment of a specific consignment of goods. The English proceedings concerned alleged contractual breaches, including lost profits, regulatory approval costs and warehousing charges.

The Master concluded that the proceedings were related and that separate determination created a risk of irreconcilable judgments. The claimant argued that the French proceedings concerned a distinct and readily isolable issue, and undertook not to raise its English claims in France. The central issue was whether article 28.3 was engaged on the actual issues in the two proceedings.

1. The appeal was allowed and the Master's order was set aside. The mandatory stay provisions in article 27 were not engaged because the proceedings did not involve the same cause of action. That conclusion was not challenged by cross-appeal.

2. Article 28.2 had no application because there was insufficient information about the French law governing consolidation. The relevant question was therefore whether a discretionary stay was justified under article 28.3.

3. The assessment under article 28.3 requires a broad, commonsense approach, consistently with the guidance of Lord Saville in Serio v Kuwait Investment Authority [1999] 1 AC 32. The court must nevertheless examine the issues actually arising in each proceeding. It is not enough to identify arguments which might theoretically be available to either party.

4. The French claim concerned the return of an identified consignment or repayment of its price. The English claim concerned different alleged breaches of the distribution agreement. The Master had proceeded on the premise that exactly the same matters would require determination, but that premise was unfounded.

5. The claimant had consistently maintained that it would not raise its English claims in France and gave an undertaking to that effect. The undertaking was enforceable in England through contempt proceedings. It therefore removed the apprehended risk of irreconcilable judgments, notwithstanding the defendant's submission that it might not be enforceable in France.

6. To the extent that the Master's order rejected other grounds for a stay, those aspects remained undisturbed. The order was otherwise set aside.

• High Court (Queen’s Bench Division): The appeal from the Master's order was allowed and the order staying the claim was set aside.
• Master Leslie: Ordered a stay under articles 28(1) and 28(3) of Regulation 44/2001 and ordered the claimant to pay costs.
• Permission to appeal: Granted by Mr Justice Sweeney on 12 January 2010.