Goshawk Dedicated v Life Receivables Ireland: Jurisdiction, Lis Alibi Pendens, and the Problematic...

TRINITY COLLEGE LAW REVIEW

VOLUME 12

2009

PROUDLY SUPPORTED BY

DUBLIN UNIVERSITY LAW SOCIETY

© 2009 David Kenny and Dublin University Law Society

GOSHAWK DEDICATED LTD V LIFE RECEIVABLES

IRELAND LTD — JURISDICTION, LIS ALIBI

PENDENS AND PROBLEMATIC USE OF THE

BRUSSELS REGIME

DAVID KENNY!

Introduction

Regulation 44/2001/EC,1 known as the Brussels Regulation, harmonised rules on jurisdiction, recognition and enforcement of judgments in civil and commercial matters throughout the European Union. Divergence between the Member States’ jurisdictional rules was thought to endanger the operation of the internal market. To protect against this, the rules of the Brussels Convention on Jurisdiction and Recognition and Enforcement were incorporated into the law of the European Union, making them binding and directly applicable. Consistency and uniformity are the major concerns of the Regulation.

In the judgment of Owusu v Jackson,2 the European Court of Justice held that the common law doctrine of forum non conveniens was not compatible with this Regulation. This doctrine was a cornerstone of the common law approach to jurisdiction. It allowed English and Irish courts to cede jurisdiction, where, in all the circumstances, another country’s courts appeared to be more closely connected to the issue, and could decide the issue competently with considerably less inconvenience and expense. The European Court of Justice held that this doctrine could not prevent the English courts from assuming jurisdiction under Article 2 of the Regulation, which states that, subject to certain listed limitations, “…persons domiciled in a Member State shall, whatever their nationality,

! LLB (Dub), LLM Candidate, Harvard Law School. The author would like to thank Stephen O'Connor and the TCLR Editorial Board for their editorial comments, the research staff of the Harvard Law School Library, and Ms Bairbre O'Brien for her comments on an earlier draft. Any errors or omissions are entirely my own. 1 Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L12/1 [hereinafter Brussels Regulation]. 2 Case 281/02 Owusu v Jackson [2005] ECR I-1383 [hereinafter Owusu].

6 Trinity College Law Review [Vol. 12

be sued in the courts of that Member State”.3 This meant that despite there being a forum manifestly more closely connected to the action in question, the English courts cannot cede jurisdiction under the Regulation if the defendant is of English domicile. While many might consider the loss of this flexible doctrine to be unfortunate, few could think it unexpected. The flexible and uncertain case-by-case analysis of the doctrine was anathema to the ideas of certainty and predictability that lie at the heart of the Brussels Regulation.

However, the ECJ decision in Owusu may lead to the abolition of another related common law doctrine, lis alibi pendens, and this could have more significant and substantial effects. Its abolition would risk the Brussels regime being exploited as a weapon in international legal disputes, and could lead to the courts of Europe being forced to disregard the courts of non-Member States. Clarke J addressed this issue, which had not previously arisen in any other Member State court, in the recent High Court judgment of Goshawk Dedicated Ltd v Life Receivables Ireland Ltd.4 This judgment is a harbinger of a major new development in the law of jurisdiction.

There can be little doubt but that that traditional common law jurisdiction has, at a minimum, been substantially eroded by the provisions of the Brussels Convention and the Brussels Regulation. In reality, the issue which arises in this case is as to just how far that process has gone.5

If Clarke J’s judgment is correct, the process has gone very far indeed, and the Brussels Regulation has probably abolished not only common law lis

pendens, but the civil law doctrine also. This leaves the path clear for unscrupulous parties to use the rules to frustrate foreign litigation.

A Separate Doctrine?

The doctrine of lis alibi pendens involves deferring to the jurisdiction of a foreign court when that court is an appropriate forum and where there is litigation already pending before it. Such pending litigation in a foreign court is thought to provide an even more pressing reason to reconsider jurisdiction, as hearing multiple actions in different countries is not only costly and wasteful, but risks the unpalatable possibility of conflicting 3 Brussels Regulation, art 2. 4 [2008] IEHC 90 [hereinafter Goshawk]. 5 [2008] IEHC 90, at [1.3].

2009] Goshawk Dedicated Ltd v Life Receivables Ireland Ltd 7

judgments. While there are slightly different considerations at play, the doctrine is, in common law countries, inextricably linked to the doctrine of forum non conveniens. Lord Diplock stated that lis pendens was “…indistinguishable from the…doctrine of forum non conveniens”.6 Cases on the former readily cite precedent on the latter and vice versa.7 It was agreed by the parties in Goshawk that the doctrines could not be said to be separate, lis pendens being an aspect or species of forum non conveniens.

Although the two concepts are closely linked, a different rationale underlies lis pendens. In The Abidin Daver,8 Lord Diplock outlined the rationale for lis pendens as being concerned not only with issues of comity and convenience, but also with the danger posed by conflicting judgments and the desirability of avoiding such an occurrence. The Brussels Regulation shares similar concerns. Recital 15 of the Regulation states:

In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions…9

It should be noted that although the recital is concerned with the prospect of conflicting judgments, this concern is limited to such conflicts arising between Member State courts. The priority is clearly Member State interests, and this is reflected in the substance of the Regulation.

Despite the similarity of the two doctrines, the Owusu judgment could not, of itself, be held to abolish the doctrine of lis pendens. The concerns of comity are more acute when dealing with litigation already underway in another court, as opposed to those courts simply being thought a better or more appropriate forum; it demands care and circumspection when a court decides to hear an action over which another court has taken jurisdiction. Furthermore, the added risk of conflicting judgments makes the considerations of lis pendens more important than those of forum non

conveniens. These concerns are recognised in the Regulation itself. A form of lis pendens which is to apply between Member States is enshrined in Articles 27 and 28 of the Regulation. These differences should be significant enough to warrant independent examination of lis pendens in

6 The Abidin Daver [1984] AC 398, at 411. 7 See, eg, The Abidin Daver [1984] AC 398; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, at 474–475. 8 [1984] AC 398, at 412. 9 Brussels Regulation, recital 15.


light of the reasoning in Owusu before writing it off as a species of the doctrine already abolished.

Despite the parties’ concessions regarding the close connection of the two doctrines, Clarke J concluded that the abolition of lis pendens was not a definite consequence of Owusu.10 The ECJ, as a matter of policy, does not usually address any question greater than the one necessary to resolve the case in question. The Court thus confined itself to the narrow question of forum non conveniens raised in that case, that is, that a court could not decline jurisdiction under the Convention in favour of a non-Contracting State. It specifically declined to answer the second question posed by the House of Lords asking whether the doctrine was precluded from applying in all or just in some circumstances, as it was not necessary to consider it in order to resolve the case. Thus Clarke J concluded that

…the decision in Owusu does not expressly rule out the possibility of a discretion existing in other circumstances…[or] the possibility that the lis alibi pendens jurisdiction remains, whether in whole or in part…11

The judge stressed that this conclusion did not deny the huge importance of Owusu; it merely demanded examination of the rationale and reasoning for that decision and consideration of the doctrine in light of that case.

The Facts of Goshawk

The circumstances of Goshawk illustrate perfectly how a lack of flexibility in the Brussels regime can result in unfortunate results. Goshawk, the plaintiff company, was resident in England, and Life Receivables, the defendant, was resident in Ireland. The case, as it came before the High Court, concerned an application by Goshawk seeking a declaration that they were not liable to the defendant in tort for an alleged misrepresentation that caused the defendant to purchase a partnership interest in a Delaware partnership. At the time of the Irish hearing, this issue was the subject of a tort action in the US District Court for the Northern District of Georgia filed in June of 2007 and taken by Life Receivables against, inter alios, the plaintiff in the Irish action, Goshawk Dedicated. The Irish proceedings were a “mirror image”12 of those in the Federal Court. The Irish Court assumed jurisdiction under Article 2 of the 10 [2008] IEHC 90, at [3.8], [4.10]–[4.11]. 11 [2008] IEHC 90, at [3.8]. 12 [2008] IEHC 90, at [2.3].


Brussels Regulation, because, prima facie, it had jurisdiction on account of the defendant being domiciled in Ireland. Life Receivables argued that in spite of this, discretion remained for the Irish Court to decline jurisdiction on the basis of litigation already underway in Georgia, which was also the appropriate forum for the hearing of the action. In the alternative, Life Receivables argued that the Brussels Regulation’s own lis pendens provisions, Articles 27 and 28, ought apply ‘reflexively’, that is be applied by Member State courts to decline jurisdiction in favour of a non-Member State court if there was litigation already before that court on the same issue. Finally, Life Receivables claimed that the Court should strike the action out as an abuse of process, since it was taken with the intention to frustrate and derail the US proceedings.

If Goshawk succeeded in obtaining a negative declaration, that judgment could potentially be used to frustrate the tort claim taken by Life Receivables in the US courts, as will be discussed later. The only apparent connection to Ireland in the case was the domicile of Life Receivables, and in the absence of jurisdiction under the Brussels Regulation, the Irish Court would surely have declined jurisdiction. Yet despite the possible consequence for the foreign litigation, Goshawk Dedicated was allowed to pursue a negative declaration in Ireland, with the domicile of the defendant providing sufficient grounds for assuming jurisdiction. This opens the door for use of the Brussels Regulation to frustrate foreign litigation.

The Consequences of Owusu

The facts of Owusu are well known, but they are worth repeating here briefly. The British plaintiff had suffered a serious accident while on holiday in Jamaica, a state not governed by the Brussels regime. The holiday was arranged by the first defendant, a travel agent and British domiciliary. The plaintiff was rendered tetraplegic after diving into a submerged sandbank on a private beach; he had no knowledge of the sandbank and was given no warning. He sued the British defendant in the English High Court, and joined several other defendants to the action, who were of Jamaican domicile, and who were connected in various ways with the maintenance and safety of the beach. The defendants objected to the assumption by the British courts of jurisdiction under the Brussels Regulation, saying that due to the domicile of the majority of the defendants, as well as the availability of witnesses and other conveniences, Jamaica was a substantially more appropriate forum in which to hear the action for damages. The question eventually made its way to the House of


Lords, who submitted the question of the continued applicability of forum

non conveniens to the ECJ for a preliminary ruling. Could a court, when considering jurisdiction under the Regulation, decline to take jurisdiction due to the existence of a more appropriate forum in a non-Member State court? In the view of both the Advocate General and the European Court of Justice, the answer is no, as the provisions of Article 2 are mandatory and must be applied by Member States without discretion.

Advocate General Léger, considering the intention of the drafters of the original Convention, examined whether or not that intention changed with the accession of Ireland and the UK, and again with the drafting of the Brussels Regulation.13 He concluded that at no time was it intended to incorporate a discretionary doctrine like forum non conveniens into the scheme of the Convention. He concluded that there was no intention to incorporate the doctrine, and indeed a majority of States were firmly opposed to the idea of its inclusion. Furthermore, an analysis of the text of Article 2 does not allow for the inclusion of a discretionary doctrine.

The judgment of the European Court of Justice was influenced in particular by the concept of legal certainty. Article 2 must be interpreted in such a way that a well-informed defendant could reasonably foresee in which courts he might be sued.14 The concept of forum non conveniens suffered further from the fact that it is acknowledged and applied in only a few Member States, and even then not applied with great consistency. The very idea of the Brussels regime is to lay down uniform rules that are not subject to capricious national rules.15 As for the rationale for the doctrine, and the potential difficulties and inconvenience that would be caused by its non-application, the ECJ was unsympathetic:

[G]enuine as those difficulties may be, suffice it to observe that such considerations, which are precisely those which may be taken into account when forum non conveniens is considered, are not such as to call into question the mandatory nature of the fundamental rule of jurisdiction contained in Article 2...[T]he Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Article 2 of that convention on the ground that a court of a non-Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of

13

[2005] ECR I-1383, Advocate General Léger, opinion, at [217]–[280]. 14 [2005] ECR I-1383, at [40]. 15 [2005] ECR I-1383, at [43].


no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State.16

The decision of the European Court of Justice may have surprised lawyers in Britain and Ireland, but it should not have shocked them. As Clarke J notes, two previous High Court actions in the UK had ruled that forum non

conveniens had not survived the implementation of the Brussels Convention.17 In the words of Clarke J, “the judgment in Owusu is in clear and unambiguous terms”.18 The ECJ made it very clear that certainty and uniformity are absolute priorities when the Brussels regime is at issue. Article 2 is mandatory, and national rules that derogate from it cannot be allowed to prevail.

Clarke J in Goshawk considered whether the reasoning in Owusu precluded the application of the common law doctrine of lis alibi pendens and found that it clearly did. The doctrine, being a species of forum non

conveniens, invokes the same broad discretion which the ECJ found to be inconsistent with the certainty demanded by the Brussels regime. Its very purpose was to override such national rules in favour of uniformity. Clarke J, having reviewed the operation of the common law doctrine, concluded that

[g]iven the clear statements to be found in Owusu to the effect that the Brussels Regulation does not permit of the exercise of broad discretionary powers for the purposes of declining a jurisdiction which would otherwise arise under Article 2, it seems unlikely that a doctrine of lis alibi pendens which conferred on the court the level of discretion currently available under the common law, could survive in tandem with the mandatory requirements of the Convention.19

This seems to the author to be plainly correct. There is little doubt that the reasoning of Owusu must prohibit the exercise of a lis pendens discretion which is nearly identical to and indistinguishable from the one found in forum non conveniens, even if the policy considerations of the former are more pressing than the latter. Though the ECJ decided Owusu with characteristic precision, refusing to comment on lis pendens, it is patently clear that the Court’s judgment demands its abolition, and dooms any

16 [2005] ECR I-1383, at [45]–[46]. 17

S & W Berisford Plc v New Hampsire Assurance Company [1990] 2 All ER 321; Arkwright

Mutual Insurance Company v Bryanston Insurance Company [1990] 2 All ER 335. 18 [2008] IEHC 90, at [4.11]. 19 [2008] IEHC 90, at [5.4].


flexible common law doctrine for declining jurisdiction. The primary purpose of the Regulation is to provide certainty, and the common law doctrines frustrate this objective.

The Life Receivables Proposition

Aware that the common law doctrine of lis pendens was unlikely to fare well in light of Owusu, Life Receivables proposed a novel alternative: a lis

pendens doctrine based on the one contained in the Brussels Regulation, but applied reflexively, that is, applied to foreign litigation in non-Member States as well as Member States.

The Life Receivables proposition has the attraction that lis pendens rules, in a less broad, less discretionary sense, are found in the civil law systems of the states which originally drafted the Brussels Convention. The doctrine also exists in some form in the Regulation, and the purpose it serves is specifically endorsed as one of the goals of the regime.20 Furthermore, it accords with the fact that the second part of the Brussels Regulation, concerning recognition and enforcement of judgments, does have regard to the judgments of non-Member State courts. It would make sense that the doctrine found in Articles 27 and 28 of the Regulation would apply to litigation in non-Member States, as it would show due regard for comity and respect for the courts of foreign countries and avoid the use of the regime to disrupt and frustrate the processes of foreign courts. On the other hand, according to the ECJ, the purpose of the Brussels regime is to give an ordinary defendant a clear idea of where he can be sued.21 This seems to suggest that the intention of the Brussels Regulation was to enumerate all places in which a European domiciliary can be sued; any litigation elsewhere frustrates this. If attaining this purpose shows manifest disregard for litigation already underway in foreign courts, it is quite possible that the ECJ would regard that as a necessary and intended evil.

The details of the Life Receivables proposition were as follows: a Member State court had a discretion (or obligation) to decline jurisdiction in favour of a non-Contracting State if

a) Proceedings had been commenced in the court of the non-

Contracting State; and b) The judgment of that court, once given, would be recognised in

accordance with the rules set down in the Regulation.

20 Brussels Regulation, recital 15. 21 This is illustrated by ECJ’s interpretation of article 2; [2005] ECR I-1383, at [40].


There was no clear position taken by the defendants on whether or not any discretion could be retained, or whether it ought to operate mechanically. Clarke J, unsure that any residual discretion would satisfy the Owusu reasoning, considered this suggestion in its more mechanical form.

Variants of this ‘reflexive’ lis pendens have been suggested by several leading academics.22 Yet despite the appeal of this approach, it does not find great support in the quite strict lis pendens doctrine found in the Regulation. The Article 27 and Article 28 lis pendens doctrine is a mechanism for deciding between competing claims of jurisdiction of Member States. It states that any Member State court other than the court first seized should stay its proceedings to allow the court first seized to determine whether or not it has jurisdiction under the Regulation to hear the particular case. If that court decides it does have jurisdiction, any other Member State court must therefore decline jurisdiction. This doctrine is clearly quite focused on resolving jurisdictional issues between Member

States, and was not intended to extend beyond that. The other argument in support of a reflexive doctrine is that the

Regulation does, in its Third Chapter on Recognition and Enforcement, indicate that regard ought to be had to foreign judgments. In Article 34(4), provision is made for non-recognition of a judgment if

…it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.23

In this circumstance, a judgment of a Member State may not be recognised if there is a prior conflicting judgment of a foreign court.

It was clear to Clarke J that the Regulation acknowledged the doctrine of lis pendens, and the importance of respecting the judgments of the foreign courts. Could these recognitions be seen as sufficiently important to create an exception to the mandatory nature of Article 2 espoused so clearly by the ECJ in Owusu? Clarke J held that they were not, and that the Life Receivables proposition was unsustainable. He first noted that the proposition was sought to be implied from the Brussels

22 Collins, Dicey, Morris and Collins on the Conflict of Laws (14th ed., Sweet and Maxwell, 2006). 23 Brussels Regulation, art 34(4).


Regulation.24 Though Clarke J did not stress this point, it is a cogent argument against the Life Receivables proposition, because implied limitations on the applicability of Article 2 are antithetical to the certainty that is demanded by the judgment in Owusu: one cannot know with certainty where one can be sued if the Regulation includes implicit exceptions to its rules. This alone would seem to make the argument unlikely to succeed.

In any event, Clarke J found there were greater difficulties with the Life Receivables proposition. As noted earlier, the lis pendens provisions found in Articles 27 and 28 are designed to resolve jurisdictional disputes between Member States. When these Articles are invoked, it is imagined that both states will be Member States, who will decide whether or not they have jurisdiction under the Regulation’s rules. The standard for determining jurisdiction within the EU will thus remain constant regardless of the application of the doctrine found in the Regulation; the private international law of individual states does not come into play.25 This is obviously not the case when the other state concerned is a non-Member State. The Brussels Regulation will not apply in determining jurisdiction before that court. Thus Life Receivables was asking that jurisdiction be deferred, under Articles 27 and 28, in favour of jurisdiction established other than under the Brussels Regulation. The analogy with the provisions in the Regulation fails if the Regulation does not apply. Though it was not relied on by Clarke J, the rationale for lis pendens expressed in Recital 15 of the Regulation, quoted above,26 supports his conclusion: it is expressly concerned with avoiding conflicting judgments and multiple instances of litigation among Member States. It is unconcerned with the same problems occurring in the case of non-Member States. Clarke J found that this problem was fatal:

The only way in which this difficulty could be got round is if either:-

(a) The Member State concerned were to decide whether the relevant non-Member State would have had jurisdiction in accordance with the terms of the Regulation. This would, in my view, be pushing the analogy far too far. It is one thing to say that there might be an analogous or ‘reflexive’ jurisdiction in respect of Third Party States. It is another thing altogether to expand that analogy by transferring the decision as to whether the State first seized should have

24 [2008] IEHC 90, at [6.11]. 25 [2008] IEHC 90, at [6.12]. 26 See supra at note 9.


jurisdiction from that State (as is clearly set out in Article 27) to the alternative State second seized of the proceedings; or

(b) If the Regulation were to be interpreted as permitting the private international law of the Third Party State concerned to determine whether that State should have priority. There is nothing in the Regulation which would suggest that that is an appropriate interpretation to place on the overall legal position.27

The reasoning by analogy suggested was not a permissible interpretation in light of the clear reasoning of the ECJ in Owusu, and even if this were not the case, the patent problems of ‘reflexive’ lis pendens would preclude its adoption.28

Finally, Clarke J concluded that the action taken by the plaintiff could not be an abuse of process, as jurisdiction was correctly established under Article 2.

It does not seem to me that jurisdiction to deem an action an abuse of process could be applied where its implementation would be, in effect, to defeat the imperative contained in the Regulation to the effect that proceedings should be brought in the country of domicile of the defendant.29

It is very tempting to think that the court could strike out this proceeding as an abuse of process; it would prevent future use of the Regulation to derail foreign litigation already underway. Yet it is difficult to see how an action brought in compliance with European law could at the same time be an abuse of process. The Brussels Regulation is not concerned with motive or intention. It is doubtful that it allows national courts to strike out litigation on the basis of a belief that it is abusive. This is not the first instance of where the rules of the regime have been used to frustrate litigation; past instances have gone unchecked.30 It is submitted that Clarke J was right to refuse to declare this an abuse of process; a decision to the contrary would almost certainly not be tolerated by the ECJ.

However unpalatable the result of this judgment might be, the reasoning of Clarke J seems to be beyond reproach. In taking off his common law cap and seeing through the eyes of the ECJ, he acknowledged

27 [2008] IEHC 90, at [6.13]–[6.14]. 28 [2008] IEHC 90, at [6.15]. 29 [2008] IEHC 90, at [7.2]. 30 See infra at note 56.


that the flexibility inherent in the common law doctrine of lis pendens was not permissible in this new regime. Examination of the provisions of Articles 27 and 28 showed that they cannot be stretched to incorporate a reflexive doctrine, no matter how sensible such a doctrine might seem. The temptation to find the action taken by Goshawk to have been abusive might have been great, but was wisely resisted. The author submits that this interpretation will be vindicated and upheld in any future assessment of the issue.

The Supreme Court Appeal and Reference to the European Court of Justice

Life Receivables appealed the ruling of Clarke J to the Supreme Court, who delivered judgment on 30 January 2009.31 The Court declined to rule on the issue, deciding instead to send a preliminary reference under Article 234 EC to the European Court of Justice for determination. Denham J concluded that the facts of Owusu were materially different to the facts in the present case. In addition, the refusal of the ECJ in Owusu to answer the broader question posed by the House of Lords explicitly excluded this issue of lis alibi pendens from the scope of that judgment. The issue was thus not acte clair and it was now necessary for the ECJ, presented with the appropriate case, to answer this question once and for all.

The Supreme Court concluded that, though the form that the reference would take would not be decided until the parties had made further submissions, it would, broadly,

query whether, when a defendant is sued in its country of domicile, it is inconsistent with Regulation 44/2001 for the court of a Member State to decline jurisdiction or to stay proceedings on the basis that proceedings between the same parties and involving the same cause of action are already pending in the courts of a non-Member State and therefore first in time. It may be necessary also, having regard to the absence of any clear guidance, to pose an additional question concerning the criteria to be applied by a Member State coming to a decision whether to stay pending proceedings in a Member State, depending on the response to the first, primary, question to be posed.32

31 Goshawk Dedicated Ltd v Life Receivables Ireland Ltd [2009] IESC 7. 32 [2009] IESC 7, at [9].


We must now wait for the European Court of Justice to rule on the reference, but it is submitted that, despite the caution and reservations of the Supreme Court, Clarke J’s analysis of Owusu, and the clear priorities expressed in that case, will likely mirror the conclusion of the European Court of Justice.

The Consequence of Goshawk and the Demise of Lis

Pendens:

Clark J’s findings carry serious and far-reaching consequences. Not only does his reasoning put an end to common law lis pendens (practically a fait

accompli after Owusu) but his reasoning in rejecting a reflexive lis pendens doctrine would also doom the more mechanical lis pendens doctrines found in civil law countries which do not suffer from the vagueness and uncertainty of the common law variant. Though not falling foul of Owusu, they do purport to compromise the mandatory provisions of Article 2 by ceding jurisdiction to a non-Member State court. Clarke J’s rejection of reflexive lis pendens due to the introspective nature of Articles 27 and 28 implies that other national doctrines of lis pendens are similarly impermissible. They too defer jurisdiction to courts that do not decide jurisdiction based on the Brussels Regulation and thus equally compromise the certainty of an EU domiciliary about where he may be sued. It seems unlikely that these doctrines could stand, given that they have an effect that is strikingly similar to the reflexive lis pendens proposed by Life Receivables and rejected by the High Court.

However, it is suggested that without lis pendens, the Brussels Regulation exercises an exorbitant jurisdiction that is biased and excessively introspective, and one that ought not to be asserted. Under the Regulation, Member State courts must assume jurisdiction in a way that shows no comity to other courts outside the European Union. Comity has been described by McKechnie J as the “mutuality of respect which each judicial system affords to another”.33 Ironically, the Brussels Regulation, which itself stops Member States from exercising any jurisdiction that is considered to be excessive,34 has, by its own accord, created a jurisdiction that bears all the hallmarks of exorbitance. It is perversely pro-plaintiff, in that it prioritises certain relevant features of a case, namely the domicile of the defendant within the European Union, while ignoring others.

33 Walsh v National Irish Bank [2007] IEHC 325, at [4]. 34 See Brussels Regulation, art 3 and Annex 1.


Furthermore, it is parochial, showing concern only for affairs of Member States; it demonstrates a lack of regard for the interests of non-Member States, and it abandons the comity that is owed by the courts of nations to one another. Is this any less exorbitant than the jurisdiction rules that the Regulation prohibits, such as Irish or English courts taking jurisdiction based on the defendant’s temporary presence in their territory, or French courts asserting jurisdiction over any claim involving a French citizen?35 European courts will not be allowed to decline jurisdiction in favour of a court that is an equally good forum which already has litigation underway, preventing them from showing due respect to other judicial systems outside the remit of the Regulation.

It does not seem that the drafters of the Regulation intended this consequence. It seems that these problems arise, as Clarke J suggests,36 due to a simple lack of forethought on the part of the drafters. The Brussels Regulation simply fails to elaborate on how it is to be applied when there are non-Member States involved. When addressing this question, the ECJ has chosen to prioritise certainty, ensuring that an EU domiciliary will always know where he may be sued.

Apart from exorbitant jurisdiction and lack of comity, what effect does this development really have? What benefit might litigants derive from exploiting the Brussels regime and seeking a negative declaration in Ireland? Will it impact on litigation in the future? The most serious potential consequences were not discussed by Clarke J, given that such difficulties as might arise are seemingly irrelevant to the issue of how EC law should be interpreted.37 They do, however, merit serious consideration. Clearly, it is only of real benefit if litigants succeed in their action and are awarded their declaration; if not, they have achieved little other than to waste time and money in a needless second proceeding. If, however, someone invoking this tactic were successful in obtaining the declaration in Europe, and if that court delivered a judgment first, there are two possible ways that this might be beneficial to a party facing litigation abroad: the judgment could cause the foreign court to stop the action as res judicata, or it could frustrate an attempt to enforce the judgment of the foreign court at 35 The French Civil Code, arts 14–15. Neither of these rules is allowed to be applied to an EU domiciliary under the Regulation. 36 “In truth it seems to me that all of these difficulties stem from the fact that the framers of both the Convention and the Regulation did not set out, in terms, what was to be the position in relation to competing proceedings within and without the boundaries of the contracting or Member States who might, for the time being, be bound by those instruments.” [2008] IEHC 90, at [6.17]. 37 This can be easily inferred from the ECJ in Owusu, where the genuine difficulties caused by the judgment had no impact on the interpretation of the Brussels Regulation; [2005] ECR I-1383, at [45]–[46].


a later date. This results in a ‘race for judgment’, where the court that is first to deliver judgment could potentially resolve the dispute.

Res Judicata

If, in Goshawk, the High Court were to grant the plaintiff a negative declaration before the District Court in Georgia gave judgment, the US court could, conceivably, decide that the issue was res judicata even though the Irish action was filed at a later date. In the US, if domestic actions are pending at the same time, res judicata will apply to the first judgment regardless of date of filing.38 Furthermore, the US courts have been willing to recognise many foreign judgments for the purpose of barring domestic actions out of respect and comity, and are perhaps even more generous in this regard than courts elsewhere.39 “Comity should be withheld only when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect”.40 Thus it is quite possible that the US courts might hold the Georgia action barred by the Irish judgment.

However, it is submitted that it is unlikely that the District Court would stop the Georgia action on account of the High Court determining the issue. First, comity was manifestly not shown toward the US court system in the failure of European law to regard the priority of the US action and in its assumption of an exorbitant jurisdiction. It is a universal principle41 that recognition of a judgment will be refused if jurisdiction was improperly taken. The jurisdiction of the foreign court might be challenged if “the proceeding in the foreign court was manifestly unfair or the asserted bias for jurisdiction is clearly untenable”.42 Although the US courts generally recognise the domicile of the defendant as a legitimate ground for jurisdiction, an argument could easily be made that the exorbitant jurisdiction demanded by the Brussels Regulation, with no regard for foreign litigation, is untenable. This may lessen the inclination of the US

38 Wright, Miller and Cooper, Federal Practice and Procedure: Jurisdiction (Thomson, 2008) 2d §4404 quoting Jones v Sheehan, Young & Culp, C.A.5th (1996), 82 F.3d 1334, 1338–1339 n. 3: “When two suit are pending simultaneously in two different courts, preclusiveness of one as to the other is determined not by which was filed first, but by which reaches judgment first.” 39 Symeonides, American Private International Law (Kluwer, 2008), at 333. 40 Somportex Ltd v Philadephia Chew Gum Corp, C.A.3d, (1971) 453 F.2d 435, at 440. 41 Symeonides, note 39, at 336. In the US, Hilton v Guyot (1895) 159 US 113 acknowledges this principle. 42 American Law Institute, Restatement (Third) of Foreign Relations Law of the United States (1986) §481.


courts to show comity toward European courts in these circumstances and make them hesitant to recognise the judgment at all.

Secondly, the court may refuse to recognise the Irish judgment on grounds of public policy.43 A judgment that tends to undermine public interest or the public confidence in the administration of justice is contrary to public policy. It could be thought of as manifestly contrary to the interests of the US judicial system to allow litigants to frustrate domestic litigation by seeking out foreign judgments solely for that purpose. There is a practice of the US federal courts which indicates that the courts may take that view. The US federal courts are likely to dismiss a declaratory judgment action filed in order to secure a res judicata resolution of an issue in pending state litigation.44 Federal courts will not be used in a “race for res judicata”.45 The policy consideration at play here applies a fortiori to recognising a foreign declaratory judgment intended to frustrate domestic litigation by means of res judicata.

One further point suggests that recognition of such a judgment might be contrary to US public policy. In 2006, the American Law Institute proposed a draft statute for enactment by Congress, the Foreign Judgment Recognition and Enforcement Act.46 Although it seems unlikely to be enacted in its current form, it is expected to have significant influence on American courts.47 REFJA suggests that courts should refuse to recognise a judgment resulting from proceedings initiated after commencement of a proceeding in an American court on the same subject between the same parties.48 This might lead an American court to deny recognition to a judgment of the kind sought in Goshawk, even though the American courts do not usually regard time of filing as critical.49 Furthermore, it would allow refusal if “the judgment results from a proceeding undertaken with a view to frustrating a claimant’s opportunity to have the claims adjudicated in a more appropriate court in the United States…”50 The suit in Goshawk might be an archetypal example of such an action. Though they are only persuasive, Symeonides suggests that American courts can and will rely on these provisions to deny validity to judgments that seek to stop resolution

43 Symeodides, note 39, at 347. 44 Wright et al, note 38, §4404. 45 Omaha Property & Casualty Insurance Co. v Johnson C.A.6th, 1991, 923 F.2d 446. 46 American Law Institute, Recognition and Enforcement of Foreign Judgments: Analysis and

Proposed Federal Statute (2006) [hereinafter “REFJA”]. 47 Symeonides, note 39, at 335. 48 REFJA, §5(c)(iii). 49 Wright et al, note 38, §4404. 50 REFJA §5(c)(iv).


of an issue in the US on the grounds that they violate public policy.51 Cases like Goshawk may provoke such a reaction.

It is impossible to know for certain what the US courts will do when confronted by this novel scenario, but it is submitted that res judicata would likely not apply to the negative declaration the High Court might issue in Goshawk. US courts will not stand idly by while the idiosyncrasies of EU jurisdictional rules allow parties to impede and derail actions properly dealt with in the American judicial system.

Enforcement of Later US Judgment

Even if the US courts continued to hear the tort action in Georgia, there may still be an advantage for Goshawk Dedicated in receiving an earlier Irish judgment. An inconsistent prior judgment of a Member State court may act as a bar to enforcement of a foreign judgment. Goshawk Dedicated is a company domiciled in the United Kingdom. It is highly possible that, should Life Receivables win their tort action in the Federal Court, they will seek to enforce it against Goshawk in the UK. In that scenario, a judgment of the Irish courts inconsistent with the result in the Federal Court could potentially frustrate enforcement. Under traditional rules, the UK courts might refuse to enforce the US judgment because where there are “two conflicting foreign judgments, each of which would satisfy the criteria for recognition…the general rule is that the one given first in time is to be recognised, to the exclusion of the latter”.52 This is true of many countries, inside and outside the EU.53

Moreover, it is conceivable that the UK courts would decide that the Brussels Regulation itself bars recognition and enforcement. The Regulation does not specifically deal with enforcement of foreign judgments. Article 33 speaks only of recognition of judgments between Member States. However, Article 34(4) states that recognition of a Member State judgment shall be withheld where “it is irreconcilable with an earlier judgment given in another Member State or in a third state involving the same cause of action and between the same parties…”54 This provision clearly illustrates an intention not to enforce one judgment if it is

51 Symeonides, note 39, at 335. 52 Collins, note 22, at 580. 53

Courts outside the EU might refuse to recognise the negative declaration because of the manner in which jurisdiction was assumed, but Member State courts could not claim jurisdiction was incorrectly assumed if it was assumed in accordance with the Brussels Regulation. 54 Brussels Regulation, art 34(4).


inconsistent with another, whether from a foreign or Member State court. It is suggested that if the Brussels Regulation would bar enforcement of a Member State judgment when it is inconsistent with a foreign judgment, it must also bar enforcement of a foreign judgment when there is an inconsistent Member State court judgment. It would be perverse and inconsistent if it did not. Indeed, it would show greater respect for the judgments of foreign courts than Member State courts; the Regulation expects and demands that such trust and respect be shown between the courts of Member States.55 Barring enforcement in any Member States, and in other states that will not enforce a conflicting judgment under domestic rules, could make actions for negative declarations a hugely popular and useful tactic in international disputes. It could potentially allow parties to foreign litigation to evade the effects of a judgment entirely.

Foreign Court Wins the Race to Judgment

Another possible outcome was suggested in the Goshawk judgment, and arises when the Member State court is not first to give judgment and the foreign action concludes first. According to Clarke J, Member State courts may have to enforce the foreign judgment under Article 34(4) if it is enforceable under the recognition and enforcement rules of that Member State. This may preclude the Member State court from giving judgment even though they have jurisdiction to hear the case under the Regulation.

The Regulation does not appear to impose any preclusion for the recognition of judgments of non-Member States which are appropriately recognised under the private international law of the Member State concerned. Indeed under the provisions of Article 34(4), to which I have referred, such a judgment may, in effect, have

priority over a competing judgment of another Member State which

is later in time. It seems to follow that there would be nothing to

preclude such a judgment having priority so as to prevent the

Member State concerned itself giving judgment in the matter.56

This would, as Clarke J points out, cause “significant practical difficulties” in pursuing these actions. This analysis, if correct, means that judgments will not be issued after a foreign proceeding has completed, or at least

55 Brussels Regulation, recitals 16–17, article 36. 56 [2008] IEHC 90, at [6.16]. Emphasis added.


stops priority being given to a later judgment of a Member State court over a prior foreign judgment.

A Problematic Use of the Brussels Regulation

It may seem implausible that the European Union would tolerate the use of the Brussels Regulation to frustrate genuine litigation. The European Court of Justice could adopt a more flexible interpretation of the Regulation to avoid this, or the legislative bodies of the EU could rectify the Regulation. This seems unlikely however, considering that use of the Regulation to frustrate litigation has previously gone unchecked.

The famous “Italian torpedo”,57 mentioned by Clarke J in Goshawk,58 resulted from the rigid nature of the lis pendens provisions of Articles 27 and 28, and involved parties using actions for negative declarations to frustrate future litigation. The Italian courts are notorious for long delays in resolving actions before them, delays so substantial that they have been found to be in violation of Article 6 of the European Convention on Human Rights.59 A tactic grew up whereby parties would seek a declaration of non-liability in an Italian Court, even if the cause of action had little or no connection to Italy. Articles 27 and 28 lis pendens would then force a stay of any positive proceedings in another Member State during the inordinately long period it would take the Italian courts to establish that they had no jurisdiction to hear the case. This effectively ‘torpedoed’ future positive litigation, being extremely effective in causing delays. It was widely used to delay potential patent infringement suits.60 Despite this use of the Regulation, the ECJ held in Erich Gazzer GmbH v MISAT

61 that the lis pendens provisions must apply mechanically and that other proceedings must be stayed until the Italian courts determine whether or not they have jurisdiction under the Regulation.

The Goshawk action similarly exploits a weakness in the Brussels regime in order to gain an advantage in litigation. There is no reason to expect that this will be dealt with by the ECJ or EC legislative reform when similar past instances have gone unchecked.

57 It should be noted that Italian courts are not the only ones at fault; a ‘Belgian torpedo’ is also a recognised phenomenon. 58 [2008] IEHC 90, at [6.3]. 59 See, eg, Francesco Lombardo v Italy (1996) 21 EHRR 188. 60 Véron, “Thirty Years of Experience with the Brussels Convention in Patent Infringement Litigation” [2002] Journal of the Patent and Trademark Office Society 431. 61 Case 116/02 Erich Gazzer GmbH v MISAT [2003] ECR I–14693.


Conclusion

Goshawk was the first instance of this issue arising, but it will surely not be the last. It will be interesting to see how courts in future will address this question. In particular, it will soon be addressed by the European Court of Justice. The author believes that the reasoning employed by Clarke J will lead to an identical conclusion. If this is the case, many litigants may seek to use the Brussels Regulation to frustrate foreign court proceedings and Member State courts will be powerless to prevent this. It behoves EC lawmakers to address this issue immediately. Countries worldwide are now at risk of having their court process disrupted and their judgments disregarded because of the unthinking machinery of EC law. A Member State domiciliary suing abroad may have to fight a second, needless action in Europe to ensure that the foreign action can continue unabated and that its result will be respected.

While it is difficult not to agree with Clarke J in his conclusions, one might well lament the fact that this result is inevitable. One might resent the lack of foresight and disregard for comity in the drafting of this legislation; one might think that the Regulation applied so rigidly creates uncommonly silly rules; one might resent the use of Member State courts as a tool for foiling foreign litigation; but ultimately it is hoped that the European Union will not permit the use of its law in this manner for long. Whatever the eventual fate of lis pendens is, Goshawk is a landmark in the development of jurisdiction under the Brussels Regulation. And for the time being, for better or worse, that Regulation demands that “…persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”,62 no matter what the consequence.

62 Brussels Regulation, art 2.

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