Law Report: 19 November 1997: Common-sense approach should be adopted by court

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A broad common-sense approach should be adopted to the question whether actions were related for the purposes of an application to stay proceedings or to decline jurisdiction pursuant to the provisions of article 22 of the Brussels Convention.

Sarrio SA v Kuwait Investment Authority; House of Lords (Lord Goff of Chieveley, Lord Lloyd of Berwick, Lord Hope of Craighead, Lord Clyde and Lord Saville) 13 November 1997

The House of Lords allowed the appeal of Kuwait Investment Authority against the decision of the Court of Appeal, which had lifted a stay imposed under the provisions of article 22 of the amended Brussels Convention (incorporated into English law by the Civil Jurisdiction and Judgments Act 1982) of English proceedings brought by Sarrio SA against the appellant, but varied the order for a stay to one declining jurisdiction. The respondent, a Spanish company, had started proceedings in Spain against the appellant, a Kuwaiti legal entity, and others. While those proceedings were pending the respondent had also started English proceedings against the appellant.

Nicholas Chambers QC, Andrew Popplewell QC and Paul Wright (Baker & McKenzie) for the appellant; Peter Goldsmith QC, Charles Hollander and Adrian Briggs (Linklaters & Paines) for the respondent.

Lord Saville said that article 22 of the Brussels Convention was in the following terms:

Where related actions are brought in the courts of different contracting states, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings.

A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court per-

mits the consolidation of related actions and the court first seised has jurisdiction over both actions.

For the purposes of this article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

The essential dispute between the parties was whether the actions were related, and the debate had concentrated on whether there was a risk of irreconcilable judgments resulting from the two sets of proceedings.

In his judgment in the Court of Appeal, Evans LJ had considered the approach of the European Court (including the opinion of the Advocate General) in The Maciej Rataj [1994] ECR I-5439, and had concluded that the issues which must be considered in order to decide whether or not there was a risk of irreconcilable judgments were the primary issues which were limited to those facts necessary to establish a cause of action.

On that basis, Evans LJ had concluded that there was no risk of irreconcilable judgments. Article 22 could not, however, be interpreted or applied in that way. There was nothing in the opinion of the Advocate General or in the judgment in The Maciej Rataj which lent support to the suggestion that a distinction should be drawn between those facts necessary to establish a cause of action and other facts and matters on which conflicting decisions might arise.

On the contrary, the case seemed to lead to the opposite conclusion, the court having emphasised that the objective of article 22 was to improve co-ordination of the exercise of judicial functions within the Community and to avoid conflicting and contradictory decisions, and having rejected the argument that the phrase "irreconcilable differences" should be interpreted so as to confine it to cases where the decisions would have mutually exclusive legal consequences.

Furthermore, the words of the article itself militated against the suggested limitation, and to adopt that limitation would in truth be to give the phrase "related actions" a special "English" meaning. That would be contrary to what the court had decided in The Maciej Rataj, where it was pointed out that since the phrase did not have the same meaning in all the member states, it was necessary to give it an independent interpretation.

There should, therefore, be a broad common-sense approach to the question whether the actions in question were related. That seemed to have been the approach adopted by the judge at first instance. The appeal would be allowed.