Moonbug Entertainment Limited v CCM Touring LLC & Anor

A contractual jurisdiction clause allocating governing law and exclusive jurisdiction by reference to the party bringing the claim may apply differently to separate claims arising from the same agreement. The court must identify the substance of the claims and the relief sought when deciding whether proceedings overlap. A stay is unwarranted where the foreign proceedings concern different subject matter. At common law, a defendant submits to jurisdiction by taking a step which is incapable of explanation except on the basis that the court is accepted as having jurisdiction to determine the merits. Conduct consistent only with defending on the merits may amount to submission.

The claimant sought declarations concerning the reversion of licensed rights under clause 3.1 of a licence agreement. The defendants applied retrospectively for an extension of time and relief from sanctions to challenge jurisdiction under Civil Procedure Rules 1998, Part 11. They also sought a stay pending proceedings brought by the first defendant in New York concerning alleged contractual breaches involving a different licensed activity.

The central issues were whether the English claim formed part of the New York proceedings, whether clause 8.3 required determination of the English claim under English law and by the English courts, whether the defendants had submitted to the jurisdiction, and whether a stay was appropriate.

1. Application dismissed. The defendants’ jurisdiction challenge and stay application failed. Directions were given for the claim to remain in the Shorter Trials Scheme and to proceed towards a trial commencing on 10 June 2024.
2. Clause 8.3 was effective according to its plain terms. It provided that a claim was governed by the law and jurisdiction of the party bringing it. Different claims under or arising from the same agreement could therefore be governed by different laws and subject to different exclusive jurisdiction obligations.
3. The English claim concerned whether clause 3.1 caused licensed rights to revert in countries other than the United States, Argentina and Canada. The New York claim was a common-law damages claim concerning the alleged infringement of exclusive rights by the “CoComelon Party Time” activity. The New York prayer for tolling certain contractual deadlines did not put the operation of clause 3.1 before the New York court. There was consequently no relevant claim overlap and no basis for a stay.
4. At common law, a defendant submits to jurisdiction by taking a step consistent only with acceptance that the court should determine the merits. A step capable of explanation as necessary or useful without accepting merits jurisdiction is not submission.
5. The defendants’ acknowledgments of service, application for additional time to file Defences, and subsequent case-management correspondence conveyed an unequivocal intention to defend on the merits. Taken together, those steps were consistent only with submission to the jurisdiction. The later reference to finalising their position on jurisdiction did not alter that conclusion.
6. The court did not need to decide whether retrospective relief from sanctions should be granted. In any event, applying the three-stage approach in Denton, the 40-day default was significant, inadequately explained, and did not justify relief.