19 November 2013

The classic problem of international disputes is the possibility of contradictory decisions in different countries over the same facts. The case of the Alexandros T sheds some light on the English court's approach to related proceedings issued in different European jurisdictions.

Brussels Regulation

Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the 'Brussels Regulation') governs which courts in the European Community should hear a case. The principal objective of the Brussels Regulation is to avoid conflicting and irreconcilable judgments. The key clauses are as follows:

  • Article 27 forces any court which is not first seised of proceedings involving the 'same cause of action' to grant a stay in favour of a court first seised.  
  • Article 28, on the other hand, gives such courts discretion in the case of 'related actions'.

Hence, whether a court must defer to its cousin elsewhere in the EC depends upon whether both actions deal with the rather loosely termed 'same cause of action', or merely a 'related action'. The lack of certainty in these terms inevitably causes great difficulty.

The Alexandros T

In 2006, the Alexandros T sank in the Southern Indian Ocean with the loss of 27 crew members. The Greek owners sued their insurers in the English High Court after the latter refused to indemnify the owners for their losses. The parties compromised the claim and entered a settlement agreement shortly before trial in the form of a 'Tomlin Order.'

Fast-forward to 2011 and the owners now sued their insurers in the Greek courts for damages on the basis of various tortious delicts under Greek law. The insurers subsequently revived the English proceedings, claiming damages for breach of the settlement agreement and seeking a declaration that the Greek proceedings were settled and/or compromised. The owners applied to stay the English proceedings on the basis that the Greek court was first seised of the claims.

The English proceedings had only been stayed so were still in existence. They had been brought before the Greek proceedings. But the Greek proceedings had been brought before the English proceedings were revived. And the English claim related to an insurance contract whereas the Greek claim related to tortious breaches. So are the claims the 'same cause of action' or 'related actions'? Can the owners get around the English Court because their lawyers are clever enough to come up with a different cause of action arising from the same facts? And who gets to hear the claim?

The English Supreme Court

The Supreme Court refused to stay the English proceedings in favour the Greek proceedings. Probably, if it had allowed the Greek proceedings to take precedence, future applicants would be tempted to conclude that all they needed to do was come up with a different way of expressing their claims in order to get away from the English court system.

The Court found that claims were not the 'same cause of action' (ie Article 27 did not apply on the facts of the case). According to the majority judges, the test has two strands:

  • Do the parallel proceedings invoke the same rights and obligations (allowing for differences in semantic classification)?
  • Do they have the same object purpose (eg 'the same end in view')?

The test applies only to claims, not defences. 

In this case, delivering the majority judgment, Lord Clarke held that the competing claims were not 'mirror images' (Lord Mance disagreeing on this point in his reasoning but came to the same overall conclusion on the facts). Broadly speaking, the Greek claims were based on tortious obligations whereas the English claims were based on contractual obligations.

Instead, the English and Greek proceedings were only 'related actions' under Article 28. The original 2006 claims had not been dismissed but merely stayed (on the basis of settlement), so that the English court was in fact the court first seised. The Court could safely exercise its discretion not to grant a stay because the resulting judgments in the English and Greek courts would not lead to an irreconcilable conflict. If (as was likely) the Greek court awarded the owners damages in respect of the tortious delicts, the owners would be liable to compensate their insurers in the English court on the basis that the Greek claims had been brought in breach of terms of the settlement agreement.

The Court declined, however, to hand down the declarations sought by the insurers that the owners' tort claims were subject to the settlement agreement without a further reference to the Court of Justice of the European Union (CJEU). The idea that the English court can pre-emptively declare the outcome of a foreign claim seemed a step too far without clearer CJEU guidance. The insurers have until 20 November 2013 to decide what to do.

Thierry De Poerck is a member of Burges Salmon's Dispute Resolution team led by David Hall and Paul Haggett.

Key contact

David Hall

David Hall Partner

  • Dispute Resolution
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