Jefferies International Ltd & Anor v Cantor Fitzgerald & Co & Ors

Permission to serve proceedings out of the jurisdiction should be assessed by identifying the forum in which the claims against all defendants can most suitably be tried. The presence of anchor defendants properly sued in England may be decisive, particularly where a foreign forum would produce fragmented proceedings or inconsistent decisions.

A regulatory obligation to arbitrate does not necessarily constitute a contractual arbitration agreement for the purposes of section 9 of the Arbitration Act 1996. A case-management stay is exceptional. It is inappropriate where the parallel proceedings will not bind all parties or resolve the issues, and where it would cause substantial delay without materially reducing the risk of inconsistent decisions.

The claim arose from the coordinated departure of employees from an international financial-services business and their subsequent employment by a competitor. The claimants alleged breaches of repayment obligations and tortious inducement by the competitor and its former employees.

The defendants applied to challenge jurisdiction, set aside service out of the jurisdiction, and obtain stays based on arbitration, forum, fair presentation, exclusive jurisdiction clauses, and parallel FINRA proceedings. The court determined whether the claims should proceed in England, including claims involving New York and Hong Kong parties and contracts governed by different laws.

1. The claimants’ claims against the United States and Hong Kong defendants were not stayed. England and Wales was the proper forum under CPR 6.37. The court applied the principles in The Spiliada [1987] AC 460 and Lungowe v Vendanta Resources Plc [2019] 1 WLR 1051 (SC). The claims against the English anchor defendants had to proceed in England, and no credible alternative forum had been identified which could determine all claims together.

2. Under section 9 of the Arbitration Act 1996, the court must first determine whether an arbitration agreement exists within section 6(1). That is a mixed question of fact and English law. The FINRA rules imposed a regulatory obligation and did not, on the evidence, amount to a contractual agreement between the parties. The claims were therefore not subject to a stay under section 9.

3. There had been no breach of the duty of fair presentation on the without-notice application. The potentially relevant arbitration and New York-law arguments had either not been raised before service or had been adequately addressed.

4. The court refused a case-management stay pending FINRA arbitration. Such a stay is available only in rare and compelling circumstances, and its benefits must clearly outweigh the prejudice to the opposing party. The arbitration would not bind all parties, would not determine the English-law, Hong Kong-law or tort issues, and would not materially eliminate the risk of inconsistent decisions. Delay until 2021 or later would prejudice the claimants.

5. The court accepted that the employee defendants’ New York exclusive jurisdiction clauses should be disregarded in accordance with EMC v Petter [2015] EWCA Civ 828, following Samengo-Turner and others v J&H Marsh & McLennan (Services) Ltd and others [2007] EWCA Civ 723.

6. The defendants’ applications were dismissed. The claim was to proceed to trial in the High Court.

First-instance decision. The judgment states that the defendants’ applications were dismissed and that the claim would proceed to trial in the High Court.