Wednesday, 24 November 2010

SK Slavia Praha-Fotbal AS v Debt Collect London Ltd [2010] EWCA Civ 1250: jurisdiction battle

They call it the Italian Missile.  If you have a dispute and think you are going to lose, just sue in Italy.  Whether your dispute has anything to do with Italy or not.  Because by the time the Italian court deals with it, five years will have passed, and your exasperated opponent may have settled with you.

The reason for this is because of international law.  Sometimes where a dispute should be heard is not clear; parties can choose in a contract which country's laws apply, or which country people should sue in, but such clauses are not always valid, and if you're driving a Belgian hire car in France and are hit by a German, you have a choice of countries.  Sometimes you even get the odd thing where the English court has to apply French law. 

And often there is a race to court.  Which means you could feasibly have two proceedings in two countries with two results.  A prime case in point is the recent Liverpool FC dispute; at one point the English Court had injuncted Messrs Hicks and Gillett from stopping Liverpool from being sold, whereas a Texan court had injuncted Liverpool from being sold.  Stalemate.  International law however provides the solution.  Using one of the few terms that has survived in the English court system all the way from when your average lawyer knew more Norman French than English.  Seisin.  (See-zin.)  It originally meant an interest in land, but it was conceptually extended to an interest in a court case.  The court first “seised” of the action has the jurisdiction, the second court has to decline.  In the Liverpool case this was simple – Hicks and Gillett had taken part in English proceedings before launching their action in Texas, England was therefore first, and the Texan court stood back.

At least the Texan court acted quickly.  Other courts take a lot longer – and under European law you have to wait for the Italian court to work out that, if the claim involves an English contract, written in English, with an English jurisdiction clause importing English law, breached in England, the appropriate forum is indeed England rather than Italy.  The English Court is not allowed to step in and stop the Italian proceedings; it has to let the Italian system work its inexorable way forward.

Which means that making sure your court is the one first seised (there is still some use for Norman French after all) is often of prime importance.  What amounts to “seisin”?  Just getting the claim in court?  Or something more involved?  It used to be the latter.  Getting the claim issued and served.  This is fraught with difficulty; serving on a non-English-speaking opponent for example may involve translations, notarization of the translations and service in accordance with the local rules.  The case of Molins plc v GD SpA involved a jurisdiction race between England and Italy – Molins claimed a debt from GD, asked for it to be paid, received no answer and so issued a claim in England, but whilst they were trying to get it served, GD's lawyers in Italy faxed an Italian claim form to Molins.  The Court of Appeal gave GD short shrift; Molins had never said it would accept faxed service, so under English law the claim could not be faxed but had to be posted, and, as Molins got its service in Italy right, the English proceedings were served first.  England 1, Italy 0.     

But what happens if service goes wrong because the Court makes a mistake?  In Philips v Symes, the English Court sent the usual bundle of papers to Switzerland for the Swiss court to serve, but a Swiss official removed the claim form from the package – because the English Court had mistakenly stamped it as “not for service outside England”.  The Court glossed over that particular error; it used its inherent jurisdiction to declare that the English Court was seised of the action, on the basis that Mr Philips had done everything in his power to get the service right and, indeed, had got it right.  Not his fault that it had gone wrong somewhere down the line. 

Which brings us to the Slavia Prague case.  More football.  Simple enough claim; the ENIC Group lent Slavia money, Slavia did not pay, ENIC sold the debt to DCL, and DCL sued Slavia for payment.  And obtained summary judgment.  In other words, the Court decided that there was no need for a trial.  Slavia had no defence that could possibly succeed.  So no need to waste time going to trial.  Slavia challenged this judgment on a different tack.  The club alleged that the English Court had no jurisdiction as the matter was before the Czech court - and a defence might have worked there. 

Was the Czech court seised first?  If it was, the English proceedings had to stop.  Slavia had certainly issued in the Czech Republic before DCL issued in England.  The Czechs take the lead.  Problem was Slavia did not serve the claim.  It needed to pay an extra sum of money to the Czech court to get the court to serve it – and by the time it did so, DCL had served its English claim on Slavia.  1-1, England ahead on away goals.

Slavia tried to overturn the English proceedings and failed.  The Court of Appeal said that it was a simple enough matter.  Unlike Mr Phillips, Slavia had not done everything necessary to get the Czech proceedings served.  Even though it was common practice to wait for the Czech court to confirm the amount due to it before service, it still meant Slavia had something more - that little payment - that it should have done before the Court would serve the proceedings.  The Czech court had not served the proceedings, the Czech court was not seised; the English proceedings could go ahead. 

And, as the English proceedings had already concluded in DCL’s favour, Slavia’s jurisdiction challenge had further consequences.  Not only did Slavia not get the matter heard at home, they had already, automatically, lost.  2-1 to England, back of the net.

No comments:

Post a Comment