AJA Registrars Ltd & Anor v AJA Europe Ltd

A claim in tort may concern a matter arising out of an arbitration agreement where the tort issues have a sufficiently close connection with contractual disputes that must be arbitrated. The court should identify the real issues in the claim, including contractual rights relied on in the defence, rather than classify the claim solely by its cause of action. Intellectual property issues may be determined substantively by an arbitrator even where particular formal relief must be granted by a court or the UK Intellectual Property Office. A related claim by a non-party to the arbitration agreement may be stayed under the court’s inherent jurisdiction where parallel litigation would be unsatisfactory and inefficient.

The claimants brought proceedings concerning the defendant’s use of the “AJA” name and logo. The claims comprised trade mark infringement, passing off and invalidity of a UK trade mark. The defendant applied under section 9 of the Arbitration Act 1996, alternatively under the court’s inherent jurisdiction, relying on arbitration agreements in agreements made in 2014, 2015 and 2018.

The defendant argued that the claims involved disputes about ownership of the name rights, contractual permissions and termination of those permissions. The central questions were whether the first claimant’s passing off claim concerned a matter required to be referred to arbitration, and whether the second claimant’s related claim should also be stayed although it was not party to an arbitration agreement.

1. The application to amend the application notice was allowed. The challenge to jurisdiction under Part 11 of the Civil Procedure Rules 1998 had been made within 14 days of acknowledgment of service, and the section 9 application had been made before any substantive step to defend the proceedings. Lateness was relevant to costs rather than validity of the amendment.

2. The second claimant was not party to an arbitration agreement with the defendant. Its claim therefore could not be stayed under section 9 of the Arbitration Act 1996.

3. The first claimant’s passing off claim was nevertheless brought in respect of a matter required to be referred to arbitration under clause 16 of the 2015 agreement. Passing off is a tort and is not, merely for that reason, a contractual claim. The relevant inquiry is whether the issues actually raised have a sufficiently close connection with a contractual dispute falling within the arbitration agreement.

4. Applying the test described by Marcus Smith J in Microsoft Mobile Oy v Sony Europe Limited [2017] EWHC 374 (Ch) at paragraph 72, the ownership of the “AJA” name rights, the claimant’s alleged goodwill and the defendant’s contractual entitlement were sufficiently connected with the tort issues. The first claimant’s claim was therefore subject to a mandatory stay under section 9.

5. The fact that some intellectual property relief could be granted only by the court or the UK Intellectual Property Office did not prevent arbitration of the substance of the dispute. The court could assist with any necessary formal application.

6. The second claimant’s claim was stayed under the court’s inherent jurisdiction and for good case management, because it raised the same underlying ownership issue. The stay was to take effect when the defendant sent a draft defence within 28 days, provided that the first claimant’s stay was operational.

7. The stay of the first claimant’s claim was conditional on the defendant appointing an arbitrator consensually, or making and maintaining a valid appointment application, within six weeks. The reference was to determine ownership of the rights to use the name “AJA” under the 2008–2018 agreements or otherwise, with liberty to apply if necessary.