FKI Engineering Ltd & Anor v Stribog Ltd

For the purposes of Article 28 of the Council Regulation (EC) No 44/2001, the court first seised is determined by applying the autonomous rules in Article 30. Where proceedings were unrelated when the later action began, a party cannot unilaterally alter the earlier proceedings so that they become related and thereby obtain priority. The court first seised is the court in which the related issues were originally brought. The same principle applies where a later amendment introduces a party or cause of action previously raised in the second proceedings. The discretion to stay under Article 28 belongs only to the court second seised.

FKI Engineering Ltd and FKI Ltd brought English proceedings against Stribog Ltd, formerly DeWind Ltd, for payment of the purchase price under a Business Transfer Agreement governed by English law and containing a jurisdiction clause referring disputes to Milton Keynes.

Stribog had previously commenced proceedings in the Landgericht Lübeck seeking declarations that claims asserted by FKI did not exist. Those proceedings expressly excluded purchase-price claims under the Agreement. After the English proceedings began, Stribog introduced an allegation that the assignment of the claims was invalid under German law and applied for a stay under Articles 27 and 28 of the Council Regulation (EC) No 44/2001. The central issue was which court was first seised for Article 28 purposes.

1. Application dismissed. The English court was the court first seised, and therefore had no discretion to stay the proceedings under Article 28.
2. Article 27 was not engaged because the German and English proceedings did not concern the same cause of action. The German proceedings expressly excluded claims for the purchase price under the Business Transfer Agreement. The later allegation that the assignment was invalid was a new case, not an issue intrinsic in the original German proceedings.
3. Under Article 28, relatedness may require consideration of both claims and defences. The anticipated defence that the assignment was invalid could therefore be considered in assessing whether the actions were related. However, that did not make the German court first seised.
4. The reasoning in Research in Motion UK Ltd v Visto Corporation supported consideration of the defence, but did not assist Stribog because the German claimant itself had introduced the assignment into its case and had initially accepted its existence.
5. The amendment authorities, particularly Grupo Torras SA v Al-Sabah and Underwriting Members of Lloyd’s Syndicate 980 v Sinco SA, supported treating the later introduction of the new issue as equivalent to an amendment. Article 30 had the same construction for Articles 27 and 28.
6. Where an action is unrelated to a second action when the second action is commenced, a subsequent alteration of the first action cannot retrospectively make its court the court first seised. That result preserves predictability, provides a clear mechanism for resolving related proceedings, and prevents forum-shopping.
7. The stay discretion under Article 28 is available only to the court second seised. Any application for a stay of the German proceedings was therefore a matter for the Lübeck court.

Not stated in the judgment.