IBM UNITED KINGDOM LIMITED v LZLABS GmbH & Ors

An exclusive jurisdiction clause binds the parties who agreed it. A parent company is not made a party, agent or quasi-party merely by owning relevant rights, controlling a subsidiary, sharing group policy or participating in an audit decision. Agency, collateral agreement or estoppel must be established on the evidence.

For service out, the claimant must show a good arguable case, a serious issue to be tried and, under the relevant gateways, England as the clearly appropriate forum. CPR 6.33(2B)(b) does not bypass the requirement that the foreign defendant be bound by the jurisdiction term. An anti-suit injunction also requires jurisdiction and careful attention to contractual certainty, vexation or oppression, the natural forum and comity.

IBM United Kingdom Limited brought English proceedings against LZLABS GmbH, Winsopia Limited, LZLABS Limited and two individuals concerning alleged breaches of an IBM Customer Agreement and misuse of IBM software.

IBM Corporation subsequently brought proceedings in Texas against LZLABS GmbH and another company for alleged misappropriation of US and Texas trade secrets, patent infringement and false advertising. The corporate defendants sought to serve Part 20 claims against IBM Corporation, declarations and anti-suit injunctions. IBM Corporation challenged jurisdiction and service out. The central issues were whether IBM Corporation was bound by the exclusive jurisdiction clause, whether the proposed claims raised a serious issue to be tried, and whether interim anti-suit relief was available.

The Part 11 challenge succeeded. Service out of the Part 20 claims against Corp was set aside. Amendments relating to Corp, and amendments to paragraphs 117.3 and 117.5 against UK, were disallowed. The applications for anti-suit injunctions against Corp and UK were dismissed.

1. Jurisdiction and agency. A claimant seeking service out had to show a good arguable case that the relevant route applied and that there was a serious issue to be tried. The PD 6B gateways also required England to be clearly and distinctly the appropriate forum. The judge followed The Magellan Spirit [2016] EWHC 454 (Comm), applying an objective analysis to alleged undisclosed agency. The contract and dealings had to point clearly to agency, and actual authority and an intention to contract for the principal had to be shown. Corporate ownership, control, common policy, commercial interest and involvement in an audit did not suffice. Targe Towing Ltd v Marine Blast Ltd [2004] 1 Lloyds Rep 721, RFU v Clark Smith Partnership [2022] EWHC 956 (TCC) and National Bank of Kazakhstan v Bank of New York Mellon [2020] EWHC 916 supported that approach.
2. The IBM Customer Agreement named UK and Winsopia as the contracting principals. Its wording, including references distinguishing Corp from UK, was inconsistent with agency. No collateral agreement or clear representation giving rise to estoppel was established. Corp was therefore neither party to, nor otherwise bound by, the exclusive jurisdiction clause.
3. Rule 6.33(2B)(b) did not provide an alternative route to service out against a non-party to the jurisdiction agreement. The breadth of a clause as a matter of construction was distinct from whether the defendant was bound by it. The judge observed, obiter, that even if Corp had been bound, the UK-focused clause would not have covered Corp’s claims against non-parties concerning territorial US or Texas intellectual property rights. The scope question was considered by reference to Dell Emerging Markets v IB Maroc [2017] EWHC 2397, Team v Ghossoub [2017] EWHC 2401, Clearlake v Xiang Da Marine [2019] EWHC 2284, Donohoe v Armco [2001] UKHL 425 and Skype v Joltid [2009] EWHC 2783.
4. The proposed declarations were discretionary and had to concern a real and present dispute, remain within the issues actually in dispute and be an effective means of resolving them. The declarations against Corp lacked utility and were directed substantially at influencing the Texas proceedings. The relevant gateways were not satisfied. Rolls-Royce v Unite the Union [2010] 1 WLR 318, Merrill Lynch v Commune di Verona [2012] EWHC 1407 and Alliance v Aquanta [2012] EWCA 1588 were applied.
5. An interim anti-suit injunction required personal jurisdiction over the respondent. The contractual basis failed because Corp was not bound by the clause; the quasi-contractual basis failed because Corp was not a party or entitled third party; and the vexatious or oppressive basis failed because Texas was the manifestly appropriate forum for the US claims. The court applied the cautionary principles in BRG v Kowski [2022] EWHC 867, Deutsche Bank v Highland Crusader Offshore Partners LP [2009] EWCA Civ 725 and The Yusuf Cepnioglu [2016] EWCA Civ 386. UK could not properly be ordered to compel Corp to do something outside its power.