Deutsche Bank AG London Branch v Petromena ASA

A defendant which files a further acknowledgment of service after an unsuccessful jurisdiction challenge is, under Civil Procedure Rules 1998, rule 11(8), treated as having accepted the court’s jurisdiction. The objective “disinterested bystander” test does not qualify that statutory consequence. A defendant wishing to appeal should seek an extension of time or promptly apply, with evidence, to withdraw the acknowledgment.

An exclusive jurisdiction clause is confined to disputes arising from the particular legal relationship for which it was agreed. Even broadly construed, it does not ordinarily cover duties alleged to arise from a distinct adviser-client relationship. If alleged advisory services are contractual, their place of performance is where the provider principally carried out the relevant activities.

Deutsche Bank sought negative declarations in England concerning claims brought by Petromena in Norway. Petromena alleged that the bank had assumed an advisory role while it was also a bondholder, and had breached duties by acting in its own interests.

After the Commercial Court rejected Petromena’s jurisdiction challenge, Petromena filed a second acknowledgment of service stating that it intended to defend the whole claim. The court below had also held that the Norwegian jurisdiction clause in the bond loan agreement did not govern the alleged advisory duties, and that England had jurisdiction whether the claims were contractual or tortious: [2013] EWHC 3065 (Comm).

The appeal concerned the effect of the second acknowledgment under article 24 of the Lugano Convention, the scope of the exclusive Norwegian jurisdiction clause, and the place of performance if the advisory relationship was contractual.

1. Appeal dismissed. Petromena’s second acknowledgment of service gave the English court jurisdiction under article 24 of the Lugano Convention 2007. Whether an appearance has been entered is first determined by domestic procedural law, provided that law does not impair the Convention’s effectiveness.

   CPR rule 11(8) plainly treats a defendant who files a further acknowledgment after an unsuccessful jurisdiction challenge as having accepted jurisdiction. The same construction applies to rule 11(5). The earlier objective test in Sage v Double A Hydraulics and Chambers v Morgan Starkings did not qualify that statutory submission. The proper course pending an appeal was to seek an extension for filing the acknowledgment. Petromena made no prompt, evidence-supported application to withdraw it.

2. In any event, the Norwegian exclusive jurisdiction clause did not apply. Article 23 confines such a clause to disputes connected with the particular legal relationship for which it was agreed. Applying Powell Duffryn plc v M Petereit [1992] ECR I-1769, the court held that the thrust of Petromena’s claim concerned alleged duties in a distinct advisory relationship, not the debtor-creditor relationship under the loan agreement. The later allegation concerning acceleration under the agreement was parasitic on that principal claim.

3. If the advisory relationship was contractual, England was the place of performance under article 5(1). Applying the approach in Wood Floor Solutions Andreas Domberger v Silva Trade [2010] 1 WLR 1900, the relevant work was principally carried out in London, where the bank’s employees formulated the alleged advice and performed nearly all relevant activities. If the claim was non-contractual, it was a tort/delict claim and English jurisdiction under article 5(3) was accepted.

• Court of Appeal (Civil Division). Appeal dismissed; the respondent’s notice was upheld and the English court held to have jurisdiction: [2015] EWCA Civ 226.
• High Court, Queen’s Bench Division, Commercial Court. Gloster J dismissed Petromena’s application for a declaration that the English court lacked jurisdiction: [2013] EWHC 3065 (Comm).