Judgments - Turner v. Grovit and Others

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    24. The power to make the order is dependent upon there being wrongful conduct of the party to be restrained of which the applicant is entitled to complain and has a legitimate interest in seeking to prevent. In British Airways v Laker Airways [1985] AC 58 at 81, Lord Diplock said that it was necessary that the conduct of the party being restrained should fit "the generic description of conduct that is 'unconscionable' in the eye of English law". The use of the word "unconscionable" derives from English equity law. It was the courts of equity that had the power to grant injunctions and the equity jurisdiction was personal and related to matters which should affect a person's conscience. But the point being made by the use of the word is that the remedy is a personal remedy for the wrongful conduct of an individual. It is essentially a 'fault' based remedial concept. Other phrases have from time to time been used to describe the criticism of the relevant person's conduct, for example, "vexatious" and "oppressive", but these are not to be taken as limiting definitions; it derives from "the basic principle of justice" (per Lord Goff, SNI Aerospatiale v Lee, at 893). Sometimes, as in the present case, the phrase "abuse of process" (borrowed from another context) is used to express the same general ideas but with particular reference to the effect of the unconscionable conduct upon pending English proceedings. As I will explain, policy considerations enter into the decision whether or not to make the restraining order but only as constraints upon the exercise of the power. To the same effect is the statement of Lord Woolf MR Fort Dodge v Akzo Nobel [1998] FSR 222 at 246:

    "The United Kingdom courts have jurisdiction to prevent vexation and oppression by persons subject to their jurisdiction. In particular, the courts are entitled to prevent persons domiciled in this country from being submitted to vexatious or oppressive litigation whether started or to be started in this country or another country. As was stated in the advice of the Privy Council in SNI Aerospatiale v Lee, a court can restrain a person from pursuing proceedings in a foreign court where a remedy is available both in that foreign court and [in] this country, but will only do so if pursuit by the person 'would be vexatious or oppressive'. Further, since such order indirectly affects the foreign court, the jurisdiction must be exercised with caution and only if the ends of justice so require. We emphasise that injunctions granted for such purpose are directed against the vexatious party and not the courts of the other jurisdiction."

    25. An order restraining proceedings in some other forum is the obverse of an order for the stay of proceedings before the forum itself. If there are proceedings before an English court which it is unconscionable for a party to pursue, such proceedings will be stayed. This follows the same basic logic as the grant of a restraining order where the unconscionable conduct lies in the pursuit of proceedings elsewhere. The difference between the two situations does not materially alter the nature of the unconscionable conduct being relied upon by the applicant but does importantly affect the grant of the remedy. As Lord Goff put it in Airbus Industrie v Patel (at p.133), "the former [the power to stay] depends on its voluntary adoption by the state in question and the latter [the power to make a restraining order] is inhibited by respect for comity". Under English law, a person has no right not to be sued in a particular forum, domestic or foreign, unless there is some specific factor which gives him that right. A contractual arbitration or exclusive jurisdiction clause will provide such a ground for seeking to invoke the right to enforce the clause. The applicant does not have to show that the contractual forum is more appropriate than any other; the parties' contractual agreement does that for him. Similarly, where as in the present case there has been clearly unconscionable conduct on the part of the party sought to be restrained, this conduct is a sufficiently strong element to support the affected party's application for an order to restrain such conduct. This, as well, is not based upon the complaint that the action has been brought in an inappropriate forum - the doctrine of forum non conveniens. But, where the conduct relates to the prosecution of proceedings abroad, the question whether or not the foreign forum was an appropriate forum in which to sue is bound to have an evidential importance in the evaluation of the conduct complained of and to affect importantly the decision whether or not to grant the remedy of a restraining order. By contrast, there are cases where the only unconscionable conduct alleged is the fact that the party sought to be restrained has commenced proceedings in an inappropriate forum. This is a weak complaint and is easily overridden by other factors or considerations: see for example Castanho v Brown & Root [1981] AC 557 , Spiliada Maritime v Cansulex [1987] AC 460 and SNI Aerospatiale v Lee [1987] AC 871. Most of the criticism of the use of 'anti-suit' injunctions (ie restraining orders) relates to their use in this field. These criticisms are recognised and for reasons of comity an English court will be reluctant to take upon itself the decision whether the foreign forum is an inappropriate one (Airbus Industrie v Patel [1999] 1 AC 119) and it will not do so where the foreign country is a Brussels Convention country (ib. at p.132).

    26. The making of a restraining order does not depend upon denying, or preempting, the jurisdiction of the foreign court. One of the errors made by the deputy judge in the present case was to treat the case as if it were about the jurisdiction of the Madrid court. Jurisdiction is a different concept. For the foreign court, its jurisdiction and whether to exercise that jurisdiction falls to be decided by the foreign court itself in accordance with its own laws (including conventions to which the foreign country may be a party). The jurisdiction which the foreign court chooses to assume may thus include an extraterritorial (or exorbitant) jurisdiction which is not internationally recognised. International recognition of the jurisdiction assumed by the foreign court only becomes critical at the stage of the enforcement of the judgments and decisions of the foreign court by the courts of another country. Restraining orders come into the picture at an earlier stage and involve not a decision upon the jurisdiction of the foreign court but an assessment of the conduct of the relevant party in invoking that jurisdiction. English law makes these distinctions. Indeed, the typical situation in which a restraining order is made is one where the foreign court has or is willing to assume jurisdiction; if this were not so, no restraining order would be necessary and none should be granted.

    27. The applicant for a restraining order must have a legitimate interest in making his application and the protection of that interest must make it necessary to make the order. Where the applicant is relying upon a contractual right not to be sued in the foreign country (say because of an exclusive jurisdiction clause or an arbitration clause), then, absent some special circumstance, he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract. But where he is relying upon conduct of the other person which is unconscionable for some non-contractual reason, English law requires that the legitimate interest must be the existence of proceedings in this country which need to be protected by the grant of a restraining order. This was the point decided by this House in Airbus Industrie v Patel [1999] 1 AC 119. The case arose out of the crash of an Indian Airlines Airbus A-320 whilst landing at Bangalore airport after an internal Indian flight from Delhi. Among the passengers were Mr and Mrs Patel who lived in England. Proceedings were started by the injured parties in Bangalore against the airline and the airport authority which was also alleged to be to blame. The natural forum was the Bangalore court in India and there were proceedings on foot there. The Patels and other English passengers, however, having settled with the airline for its maximum liability, chose, in defiance of an order made by the Bangalore court, to sue the French manufacturers of the aircraft not in France but in Texas (which had no natural jurisdiction) on the basis of an American principle of no-fault liability, punitive damages and contingent fees. What is more, the Texas court had no principle of forum non conveniens and it was not an option for Airbus Industrie to apply to the Texas court to stay the proceedings there on that ground. The House held that the English passengers should not be restrained from suing in Texas. There were no English proceedings (other than the application to the English court for the injunction). Airbus Industrie had no sufficient interest in asking the English court for a remedy. This is a striking example of the important restriction upon the willingness of the English courts to grant restraining orders in relation to foreign legal proceedings: The applicant for the restraining order must be a party to litigation in this country at which the unconscionable conduct of the party to be restrained is directed. It is not sufficient for the applicant to say that there is another foreign forum which is the appropriate forum.

    28. Similarly, English law attaches a high importance to international comity (Airbus Industrie, sup, per Lord Goff at pp.133 and 138) and the English court has in mind how the restraining order will be perceived by foreign courts. This is the prime reason for strictly limiting the making of restraining orders on grounds of forum non conveniens. It is recognised that to make an order against a person who is a party to proceedings before a foreign court may be treated as an interference (albeit indirect) in the foreign proceedings. Thus English law requires the applicant to show a clear need to protect existing English proceedings. The protection of English proceedings is, understandably, regarded as a legitimate subject matter for an English court. It is not the concern of any other court. The order made operates in personam and relies for its enforcement solely upon the English court. In the present case, the Court of Appeal were at pains to stress that their orders were directed to the defendants and not the Spanish court: see [2000] 1 QB at 364.

    29. Therefore, to summarise, the essential features which made it proper, under English law, for the Court of Appeal to exercise its power to make the order in the present case are -

(a)  The applicant is a party to existing legal proceedings in this country;

    (b)  The defendants have in bad faith commenced and propose to prosecute proceedings against the applicant in another jurisdiction for the purpose of frustrating or obstructing the proceedings in this country;

    (c)  The court considers that it is necessary in order to protect the legitimate interest of the applicant in the English proceedings to grant the applicant a restraining order against the defendants.

The order applies only to the defendants before the English court. It does not require the English court to make any finding as to the jurisdiction of the foreign court.

Discussion:

    30. The question is whether the English law is consistent with the Brussels Convention. The preamble to the Convention identifies the primary purpose of the Convention. It is "to secure the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals". It considers that "it is necessary for this purpose to determine the international jurisdiction of their courts, to facilitate recognition and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements". It is not the object of the Convention to unify procedural rules or the national rules governing the admissibility of an action but national procedural rules may not impair the effectiveness of the Convention. (Kongress Agentur Hagen v Zeehaghe, case 365/88, §§17-20 ).

    31. The Convention has two main parts corresponding to its primary and subsidiary purposes. These are Title III, 'Recognition and Enforcement' and Title II, 'Jurisdiction'. Article 26 requires judgments given in Contracting States to be recognised in other Contracting States. The grounds upon which recognition may be refused are very limited and are spelled out in Articles 27 and 28. These do not include a right to dispute the jurisdiction of the court which gave judgment save as permitted by the first paragraph of Article 28. For present purposes the only significant paragraph of Article 27 is (3) which provides that a judgment shall not be recognised

    "if the judgment is irreconcilable with a judgment given in a dispute between the same parties in the State in which recognition is sought."

This exclusion is the only one which directly addresses the question of the irreconcilable judgments arising from the exercise of overlapping jurisdictions which may not have fully complied with the provisions of Title II. Article 27(3) does not give any priority to the judgment pronounced earlier in time. It does not deal with attempts to register inconsistent judgments in 3rd party Convention countries (but this point has now been covered in the expanded fourth paragraph in Article 34 of the Council Regulation 44/2001, 22 December 2000) nor does it deal with the position of a party who, although domiciled in one Convention country, has a business or property in another and therefore cannot afford to ignore a judgment given in that other country even though he has an irreconcilable judgment given in his own favour in his own country. Title III does not obviate the need for a restraining order where there is a risk of irreconcilable judgments or other specific detriment which the applicant can show he will suffer if a restraining order is not made.

    32. The defendants have not submitted that Title II contains any provision which expressly precludes an English court from granting a restraining order. Indeed, it may be thought that certain provisions are fully consistent with the exercise of such a power. Arbitration has been excluded from the scope of the Brussels Convention by Article 1 (4) and the relevant operation of the New York Convention of 1958 is preserved by the general words of Article 57. The question of exclusive jurisdiction clauses is addressed in Article 17 with the clear general intention that they should be given effect to in all Convention countries as there provided. This, it may be thought, gives rise to no inconsistency in principle with the power of the English court to grant a restraining order on the ground of an exclusive jurisdiction clause although it should usually make such an order unnecessary.

    33. Section 8 of the Convention (Articles 21 to 23) likewise does not, it may be thought, create an inconsistency. The basic object here is to avoid irreconcilable judgments by providing that the court first seised should assume jurisdiction and not defer to courts which only became seised subsequently and, in cases which involve a risk of such judgments, that a court other than that first seised may chose to decline jurisdiction or stay the relevant proceedings before it. The English law, as I have explained, will only grant a restraining order (other than under an arbitration or exclusive jurisdiction clause) in aid of existing proceedings in England. This means that, unless the English court has infringed Article 21 by not having declined jurisdiction when those proceedings were instituted, the grant of a restraint order in personam in support of those proceedings will not be inconsistent with the Convention. It is only if the grant of the restraining order has been preceded by a breach by the English court of Article 21 or, say, Article 16 that the grant of the restraining order would be objectionable under the Convention and that would be because the earlier steps taken would conflict with the Convention and not because of any inherent inconsistency arising from the restraining order itself.

    34. The primary argument of the defendants was that the power to grant a restraining order was inconsistent with the Convention because it was inconsistent with the jurisdiction conferred by the Convention upon the courts of other Convention countries and their competence to decide their own jurisdiction. This argument would be sound if the restraining order was directed to the foreign court not to the party whose conduct was in question. As explained, the order is not addressed to the foreign court and does not bind it. It does not involve a decision upon its jurisdiction: indeed, it assumes that the foreign court will hold that it has jurisdiction under its own law. The decision involved is about the quality of the conduct of the party sought to be restrained and the need to protect existing English proceedings. If the English courts based the grant of a restraining order upon the view that the foreign Convention country was a forum non conveniens, that would be inconsistent with the decision of the ECJ in the Overseas Union case (sup). But the English courts would not grant a restraining order on such a ground in such circumstances. As Lord Goff said in Airbus Industrie, at p.132, the principle of forum conveniens "has no application as between states which are parties to the Brussels Convention". The present case out of which this reference arises is not such a case. The conduct of the defendants was unconscionable because, in bad faith, it was designed to obstruct and frustrate the existing English proceedings, not because the Madrid court was a forum non conveniens.

    35. Support for the view which I have expressed is to be found in the leading English text book, Dicey & Morris: Conflict of Laws 13th Edn. at §12-066, p.419:

    "The European Court has held that a court of one Contracting State has no right to adjudicate upon the jurisdiction of a court in another Contracting State [cases 351/89 and 163/95 cited]; if the claim for an anti-suit injunction is in substance founded on the bare argument that the other court should have concluded that it had no jurisdiction under the [Brussels] Convention, it may be incompatible with the Convention for an injunction to be ordered. ... By contrast, where the injunction is in substance directed at unconscionable conduct of the defendant, as distinct from an alleged jurisdictional error by the foreign court, there is no reason why an English court should not have recourse to its procedural law by granting an injunction to restrain such behaviour."

    36. In so far as a purpose of the Convention is to limit the risk of irreconcilable judgments, the use of restraining orders by the English courts is effective to achieve or aid this result. (It has achieved it in this case: the probability of irreconcilable judgments has been avoided.) It does so by granting a remedy which does not attack the jurisdiction of the foreign court. It bases the grant of that remedy upon a ground which does not involve a denial of the jurisdiction of the foreign court. It achieves a result intended by the Convention in a manner which is consistent with the Convention.

    37. The secondary argument of the defendants was that to grant a restraining order on the ground of obstructing in bad faith existing English proceedings was inconsistent with the Convention. This argument accepted that a restraining order for the purpose of enforcing an exclusive jurisdiction clause might be consistent with the Convention. It was argued that what Mr Turner was complaining about is being sued in Spain and that, accordingly, it should be a matter for the Spanish courts alone to decide whether what the defendants were doing in the Madrid action was objectionable and, if they held that it was, themselves to make an appropriate order. This argument misstates what the English court has to consider. It has to consider the significance of the defendants' conduct for the proceedings in England. That is a matter for the English court not the Spanish court and there is no reason, whether under the Convention or otherwise, why the Spanish court should concern itself with the protection of the English proceedings. It was further argued that the grant of an order restraining the obstruction in bad faith of English proceedings was contrary to the spirit of the Convention since not all Convention countries choose to give their courts that power and there would be a "loss of equality" between courts. This argument takes the argument too far. It is not the purpose of the Convention to require uniformity but to have clear rules governing jurisdiction. (See the Hagen case sup.) The grant of the restraining order is not concerned with and does not deny the jurisdiction of the foreign court.

    38. A further argument of the defendants was to treat the present case as if the English proceedings relevant to the grant of the restraining order were the application for the restraining order itself. That is not correct. The order that has been made is to protect and prevent the obstruction of the Employment Tribunal proceedings. Those proceedings were the first proceedings in point of time. The proceedings in the Madrid court came second and gave the defendants no right to rely on Section 8 of the Convention as against the Employment Tribunal proceedings. Mr Turner's application for the restraining order had to be made to the High Court and not to the Employment Tribunal itself because the Employment Tribunal, as a statutory tribunal, does not have the power under English procedural law to grant an injunction under s.37(1) of the Supreme Court Act 1981.

    39. Were the question of interpretation one which it was for your Lordships' House alone to decide, I would reject the defendants' arguments and dismiss the appeal primarily upon the ground that the defendants' arguments misstate the English law and that therefore their arguments upon the Convention are misplaced. But their arguments also seek to give the Convention an ambit, wider than is justified by any decision of the Court of Justice which they have cited, so as to cover questions of the procedure to be followed and remedies to be adopted by national courts where jurisdiction is not the issue.

    40. Finally it should be mentioned that the defendants sought to challenge the authority of the decision of the Court of Appeal in Continental Bank v Aeakos SA [1994] 1 WLR 588 . That was a case concerning an exclusive jurisdiction clause submitting the parties' disputes to the jurisdiction of the English courts. The agreement was expressly governed by English law under which it and the exclusive jurisdiction clause were valid and enforceable. The relevant contract was a loan contract between an American bank, as lender, and a Greek shipowning company, as borrowers, and various individuals as guarantors. The borrowers defaulted. They commenced proceedings in Greece claiming that the agreement "violated the commands of morality" contrary to a provision of the Greek Civil Code together with a claim for damages and a claim for a declaration that the guarantors were released. Relying on the exclusive jurisdiction clause, the bank sued in London for the repayment of the loan and also applied for an order restraining the borrowers and guarantors from continuing the action in Greece. The judge and the Court of Appeal granted the order. The relevant question which the Court of Appeal had to consider was the interaction of Article 17 and Articles 21 and 22 of the Convention. The Court of Appeal decided that to treat Article 21 as overriding Article 17 would frustrate the purpose of both Article 17 and of the parties' agreement upon an exclusive jurisdiction clause: they gave Article 17 priority. It is not necessary for the decision of the present case or the answering of the question of interpretation which it raises to decide whether the Court of Appeal were right to do so.

LORD MILLETT

My Lords,

    41. I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Hobhouse of Woodborough. I agree with it and with the order he proposes.

LORD SCOTT OF FOSCOTE

My Lords,

    

 
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