The Supreme Court held that the English courts had no jurisdiction under article 5.3 of the Judgments Regulation to hear a London broker’s claim that a German law firm had induced clients to sue in Germany in breach of exclusive English jurisdiction clauses. The direct harm was the expenditure caused by those German proceedings, so the harmful event occurred in Germany rather than in England.
AMT Futures Limited (AMTF), a London-based execution-only derivatives broker, contracted with clients introduced by German brokers. The contracts provided for English law and for the exclusive jurisdiction of the English courts. About 70 former clients, dissatisfied with their transactions, brought proceedings in Germany against the introducing brokers and against AMTF under the German law of delict. AMTF challenged the German court’s jurisdiction, but many claims were settled. AMTF then sued in the English High Court, alleging that Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH (MMGR), a German firm of lawyers, had induced the former clients to issue those German proceedings and to advance German-law claims, in breach of the exclusive jurisdiction and applicable-law clauses. AMTF sought damages and an injunction for the English tort of inducing breach of contract, and relied on article 5.3 of Council Regulation (EC) No 44/2001.
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Article 5.3 allows a person domiciled in one member state to be sued in tort in the courts for the place where the harmful event occurred or may occur. MMGR, which is incorporated and carries on business in Germany, disputed English jurisdiction. Popplewell J held that the English courts had jurisdiction. He treated the exclusive jurisdiction clause as imposing a positive obligation to sue in England and located the relevant harm in England, as the loss of that contractual benefit. The Court of Appeal, in a judgment of Christopher Clarke LJ, held that the relevant harm had occurred in Germany and that the English courts therefore lacked jurisdiction. It reached that conclusion without enthusiasm, because AMTF’s contractual claims against the former clients could proceed in England while the ancillary tort claim against MMGR could not.
The approach to article 5.3
Lord Hodge, with whom Lord Neuberger, Lord Mance, Lord Clarke and Lord Sumption agreed, started from the Regulation’s basic rule that a defendant is sued in the member state of domicile. Article 5.3 is a derogation and must be interpreted restrictively. Its justification is a close connection that promotes the efficient administration of justice, but jurisdiction depends on the terms of the ground itself, not merely on that justification. Court of Justice authority establishes that the claimant may sue where the event giving rise to the damage occurred or, if different, where the damage occurred. The relevant damage is the direct and immediate harm to the immediate victim, not harm to an indirect victim or later consequential financial loss.
There was no dispute that the alleged inducement occurred in Germany. AMTF therefore had to establish England as the place where the damage occurred.
The place of the direct harm
The former clients were not obliged to sue AMTF at all. Their obligation was not to sue in Germany or anywhere other than England. They could have performed it by refraining from German proceedings or by discontinuing them. This was different from a case in which the induced breach was of a positive obligation to pay money into a bank account in England, where the harm occurred at the place of the missed payment. AMTF did not obtain the benefit of English determination under English law, and the German proceedings may also have affected the focus of its business model. Those consequences, however, followed from the direct harm of having to deal with and settle the German claims. The expenditure occasioned by the German proceedings was the direct harm, so Germany was the place where the harmful event occurred.
Why no special rule was created
The Court rejected AMTF’s invitation to fashion a special rule placing the harm in the contractually selected court whenever the induced breach concerns an exclusive jurisdiction clause. Foreseeability and the sound administration of justice justify article 5.3; they are not additional connecting factors. A claimant must bring the claim within the ground as interpreted by the Court of Justice. The accessory character of the tort and the inconvenience of separating the claim against MMGR from the contractual claims against the former clients did not alter that result. The Regulation’s scheme can require related contractual, tortious and other claims to be heard in different member states. That inconvenience is the price of legal certainty and of avoiding clashes of jurisdiction. An exclusive jurisdiction agreement binds its parties, but it cannot be pleaded against a non-party such as MMGR, and article 6 does not supply co-defendant jurisdiction merely because another claim has an article 5 connection.
Nor did the case call for one of the special locating rules developed where harm cannot readily be placed in one member state, such as certain internet or cartel cases. Both the event giving rise to the harm and the direct harm occurred in Germany. Later EU provision for courts chosen by exclusive jurisdiction agreements to take priority did not move the place of the harmful event to England. The interpretation was acte clair, so no reference to the Court of Justice was required. Because the Regulation conferred no English jurisdiction, it was unnecessary to decide whether an English hearing would impermissibly interfere with the German courts.
Costs
MMGR also challenged the Court of Appeal’s costs order. That court had given MMGR only the costs of the jurisdiction issue and had required it to pay AMTF’s costs of the separate argument about whether the claim had real prospects of success. Lord Hodge held that costs are discretionary, including as to relative success on issues, and that there was no basis for interfering with the Court of Appeal’s decision.
Verdict: The Court unanimously dismissed AMT Futures’ appeal. Under article 5(3) of the Regulation, the relevant harm occurred in Germany, so the English courts lacked jurisdiction over this tort claim. The Court left the Court of Appeal’s costs order in place.
Source: AMT Futures Limited v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH [2017] UKSC 13
