Cuccolini S.R.L v Elcan Industries Inc

Where parties have freely agreed that the English courts may determine disputes, the contractual choice carries substantial weight. A stay on forum non conveniens grounds requires overwhelming, or at least very strong, reasons. Ordinary convenience factors and foreign proceedings, including proceedings involving third parties, will usually carry little weight where they were reasonably foreseeable when the contract was made.

On an application for permission to serve out of the jurisdiction, disclosure is required only of facts objectively material to the court’s limited inquiry. The mere possibility that the defendant may commence proceedings abroad is not necessarily a material fact.

Cuccolini S.R.L, an Italian manufacturer, appointed Elcan Industries Inc, a New York company, as distributor in the United States and Canada. The agreement was governed by English law and conferred jurisdiction on the courts of England and Wales, while preserving the parties’ right to sue in another court having jurisdiction.

Cuccolini terminated the agreement and obtained permission to serve proceedings out of the jurisdiction. Elcan subsequently commenced related proceedings in New York, alleging a conspiracy involving Cuccolini and two additional parties. Elcan applied to set aside service and for a stay or dismissal on forum non conveniens grounds, alleging also that Cuccolini had failed to make full and frank disclosure.

1. Application dismissed. Elcan failed to establish sufficient grounds either for a stay or for setting aside permission to serve out of the jurisdiction.
2. Assuming that the court had a discretion to stay proceedings notwithstanding the jurisdiction clause, the applicable principles were those identified in Amtec International Ltd v Biosafety USA Inc [2006] EWHC 47 (Comm). A freely negotiated non-exclusive English jurisdiction clause creates a strong prima facie case for the English jurisdiction. The defendant must identify overwhelming, or at least very strong, reasons to depart from the contractual bargain. Foreseeable convenience factors are generally insufficient.
3. The court adopted the reasoning in Mercury Communications Ltd v Communication Telesystems International [1999] 2 All ER (Comm) 33. The parties’ agreement to submit to the English courts justifies particular weight being given to that choice. The commencement of proceedings abroad is ordinarily weak evidence in favour of a stay, because parallel proceedings were a foreseeable consequence of a non-exclusive clause.
4. The involvement of third parties did not materially alter the position. The possibility that termination of a distribution agreement might lead to disputes involving a replacement distributor and allegations of conspiracy was foreseeable. Elcan had therefore not shown an exceptional reason for avoiding the agreed forum. The considerations relevant to anti-suit injunctions, discussed in Donohue v Armco [2002] 1 Lloyd’s Rep 425, could not simply be transposed to an application to stay English proceedings.
5. On disclosure, the court accepted the principles in Konamaneni v Rolls Royce Industrial Power (India) Ltd [2002] 1 WLR 1269 and MRG (Japan) Limited v Engelhard Metals Japan Limited [2003] EWHC 3418 (Comm). Materiality depends on the nature of the application. The inquiry on an application to serve out is limited to whether there is a serious issue to be tried, a good arguable jurisdictional basis and a clearly appropriate English forum.
6. The possibility of foreign proceedings was neither pending nor prospective merely because Cuccolini contemplated that Elcan might sue abroad. In any event, that possibility was immaterial to the Master’s decision. Permission to serve out and the jurisdictional basis were therefore not vitiated by non-disclosure.