SK Slavia Praha-Fotbal AS v Debt Collect London Ltd & Anor [2010] EWCA Civ 1250

[2010] EWCA Civ 1250Case No A2/2009/2481IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
THE HON MR JUSTICE TUGENDHAT
IHQ/09/0840
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 04/11/2010
Before
LORD JUSTICE MUMMERYLORD JUSTICE LLOYDLORD JUSTICE STANLEY BURNTON
Between
S.K. SLAVIA PRAHA-FOTBAL A.S.AppellantDEBT COLLECT LONDON LIMITEDRespondentENIC GROUPRespondent
MR THOMAS KEITH (instructed by Eversheds LLP) for AppellantMR JONATHAN BRETTLER (instructed by Wallace LLP) for RespondentsHearing Hearing dates : 13 th July 2010
Judgment
[1]S.K. Slavia Praha-Fotbal A.S (SSPF) is a Czech company, which owns and carries on the business of the Slavia Prague professional football club in the Czech Republic. Its two appeals arise from proceedings related to liability for the repayment of the balance of 18 advances totalling nearly £2.9m under a series of similar loan agreements between January 2005 and May 2007. The advances were repayable on demand. SSPF did not repay the balance demanded by letters in March and April 2009. A claim for a further £1m is made against it under a Discounted Funding Agreement (the DFA) dated 14 October 2005. SSPF’s liability is disputed in legal proceedings both in England and in the Czech Republic.[2]The first appeal is about whether the English Court, as I shall describe it, has jurisdiction to determine these proceedings for recovery of the advances. That depends on the answer to this question: was the English Court, as Tugendhat J held, “first seised” of the proceedings within the meaning of Article 30.1 of the Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition of Judgments in Civil and Commercial matters in the European Union (the Judgments Regulation); or was the Municipal Court of Prague in the Czech Republic (the Czech Court), as SSFP contends, “first seised”? The appeal is with permission granted by this court on a renewed application on 3 February 2010. SSPF was later ordered to provide £41,000 security for the costs of the jurisdiction appeal.[3]In his judgment of 3 November 2009 [2009] EWHC 2726 (QB) Tugendhat J held that the English Court has jurisdiction to determine the claims against SSPF under the loan agreements and the DFA, which are expressly governed by English law and were made with a company incorporated in England, Enic Group (Enic). Enic is the parent company of Enic Sport SARL, a Luxembourg company which wholly owns a Czech company, Enic Football Management SARL (SARL). SARL’s connection with SSPF is that it was originally SSPF’s majority shareholder, but it has not been the registered majority shareholder since May 2006 when its original 99% registered share holding was reduced to 39%. In January 2008 SARL’S registered holding was reduced to 15.7%, but in disputed circumstances.[4]In March 2009 Enic assigned the benefit of the loan agreements and DFA to the respondent Debt Collect London Limited (DCL), which then demanded repayment by SSPF. As payment was not made, DCL and Enic issued English proceedings on 12 June 2009 claiming payment under all the various loan agreements and the DFA. On 15 June 2009 DCL and Enic also issued proceedings against SSPF in the Czech Republic. The English proceedings were served on SSPF on 29 June 2009 at its registered office in the Czech Republic and on the following day by post. There was a dispute about the validity of the purported service on 29 June 2009, which the judge resolved in favour of Enic and DCL. (It was accepted that the English proceedings were validly served subsequently on 4 August 2009 through the Czech Court.)[5]At the time of issue and service of their proceedings DCL and Enic were unaware that on 15 April 2009 SSPF had lodged proceedings in the Czech Court against DCL seeking a declaration that its obligations under the DFA had been fulfilled and the DFA discharged. The Czech proceedings were not and could not be served on DCL and Enic, as SSPF had not paid to the Czech Court the fee required for service of the proceedings to be effected. It did not pay the court fee until 6 August 2009 following a request by the Czech Court on 17 July.[6]On 24 August 2009 SSPF issued an application in these proceedings challenging the jurisdiction of the English Court or seeking a stay of these proceedings pending determination by the Czech Court of its jurisdiction in SSPF’s Czech proceedings. At the date of the judgment of Tugendhat J on 3 November 2009 the Czech proceedings had still not been served on DCL.[7]The jurisdiction issue turns on the provisions of the Judgments Regulation that give priority to the pending proceedings in the court that was “first seised.” SSPF says that the judge misinterpreted Article 30.1 by holding that the English Courts were first seised, that on the proper interpretation the Czech Court was first seised and that jurisdiction in the English proceedings must either be declined under Article 27 of the Judgments Regulation or should properly be stayed as a matter of discretion under Article 28.[8]SSPF’s other appeal is against summary judgment under CPR 24 by order of the same judge on 2 February 2010 on the application of Enic and DCL. Originally the application by Enic and DCL was for judgment under CPR 12.3(1) in default of acknowledgement of service, but directions were then sought for it to proceed as an application for summary judgment. The judge ordered payment of £3,744,208 and an interim payment of £30,000 on account of costs. He held that SSPF had no arguable defence under English law and he rejected SSPF’s defence based on the Czech law of shareholder loyalty to corporations formed under the law of the Czech Republic as having no real prospect of success.[9]I will deal first with the jurisdiction appeal for, if that succeeds, so must the appeal against summary judgment. A. The jurisdiction appeal[10]Articles 27, 28 and 30 in Section 9 of the Judgments Regulation headed “Lis pendens - related actions” are relevant to this appeal. Section 9 deals generally with priority of proceedings in the courts of different EU Member States and, in particular, with the question of the time when a court shall be deemed to be seised of proceedings. The court was not referred to decisions of the Court of Justice or the courts of any of the other Member States on the interpretation or application of the provisions relating to when a court is seised, or first seised, of proceedings.[11]Article 27 is in mandatory terms. It provides that, where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States and the jurisdiction of the court first seised is established, any other court shall decline jurisdiction in favour of that court. The English proceedings and the Czech proceedings are between the same parties. SSPF’s contention that they involve the same cause of action is disputed by Enic and DCL, who point out that the Czech proceedings only concern the DFA, whereas the English proceedings also involve the loan agreements which predominate, and that there is little overlap between the claims.[12]If the Czech Court was first seised of the proceedings, the issue whether the proceedings involve the same cause of action must be resolved. If the answer is “Yes”, the English Court must decline jurisdiction in accordance with Article 27. If the answer is “No”, then the proceedings do not involve the same cause of action and the conflict does not arise. Article 27 would not be relevant to this appeal if the jurisdiction of the English Court is established as the court first seised of the proceedings.[13]Article 28 is in discretionary terms. It provides that, where “related actions” are pending at first instance in the courts of different Member States, any court “other than the court first seised” may stay its proceedings. Actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. SSPF submits that, if and to the extent that Article 27 is inapplicable, then the power to stay under Article 28 to stay these proceedings should be exercised. SSPF’s contention that the Czech proceedings and the English proceedings are related actions and give rise to a substantial risk of irreconcilable judgments is disputed by Enic and DCL, who also contend that a discretionary stay of their English proceedings is not justified in this case. Article 28 would not be relevant to this appeal, if the jurisdiction of the English court is established as the court first seised of the proceedings: the discretion to stay proceedings is that of the other court, the one that is not first seised.[14]Article 30.1 applies to the determination under Article 27 and 28 of which court is “first seised” of the pending proceedings by providing when a court “shall be deemed to be seised” of proceedings:- “For the purposes of this Section, a court shall be deemed to be seised: 1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or 2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court.”[15]I note that the Article does not use the expression first seised that appears in Articles 27 and 28. It is, however, implicit in the structure of the Article that the first lodging of a document instituting the proceedings does not always mean first seised of the proceedings. The general statements in the Article as to when the court is deemed to be seised of proceedings are subject to an express proviso as to the circumstances in which the court is not deemed to be seised of the proceedings at all. The result is that, when the proviso applies, the pending proceedings first lodged in court do not enjoy the prima facie precedence of being the proceedings first seised by that court.[16]At the hearing before the judge there was undisputed evidence of Czech law that the filing of a petition with the Czech Court for commencement of proceedings created an obligation to pay a fee; that if the fee is not paid on the date when the petition was filed, the court will request the claimant to pay it; and that, unless the proceedings are exempt from court fee, the court shall not serve the proceedings on the other parties before the fee has been paid. According to the translation of the Act of the Czech National Council dated 5 December 1991 on Court Fees, Section 4 (1) provides that “If a fee for proceedings is involved a duty to pay a fee is created (a) by filing an action or other petition for commencement of proceedings...” Section 7 states that “A fee becomes payable by creation of fee duty.” Section 9 deals with the consequences of non-payment of fees. It provides that, if a fee for proceedings which became payable by filing a petition for commencement of proceedings is not paid, the court shall call the payer to payment thereof within a period of time stipulated by the court and, after a lapse of such period without effect, the court will stay the proceedings.[17]The evidence also established the existence of a standard practice in the Czech Republic not to pay court fees at the time of filing the action, while the claimant awaits the information from the Czech Court in respect of the amount and the bank account details. In this case a resolution requesting payment of the court fee for the action of Slavia v. DCL within 10 days of the delivery of the resolution was made on 17 July 2009 and was delivered on 28 July 2009. It provided that, failing payment, the proceedings “will be discontinued.”[18]Although SSPF’s proceedings were lodged in the Czech Court on 15 April 2009, they were not served on DCL before DCL issued the English proceedings on 12 June 2009, or before it had served them on SSPF at its registered office in the Czech Republic on 29 June 2009, or before the judgment of Tugendhat J on the jurisdiction issue on 3 November 2009. The explanation for the non-service of the Czech proceedings before the issue and service of the English proceedings is that SSPF had not paid the court fee when it lodged the Czech proceedings. On 17 July 2009 the Czech Court asked SSPF to pay the court fee, which it did on 6 August 2009. Only then, on 24 August 2009, did SSPF issue the application challenging the jurisdiction of the English Court to determine these proceedings.[19]The judge held that the Czech Court was not seised of SSPF’s proceedings before 6 August 2009, that the English Court was already seised of these proceedings by then and that therefore the English Court was “first seised” of the pending proceedings. His reasoning was there had been a failure on the part of SSPF to take a step that it was required to take to have service effected on DCL. That required step was the payment of the court fee to the Czech Court. If he was wrong on that point and the Czech Court was first seised, the judge held that Czech and the English proceedings did involve the same cause of action. If he was wrong about that, he said that they were related actions and that, as it was expedient to hear and determine them together, he would stay these proceedings.[20]On behalf of SSPF Mr Thomas Keith contends that the judge was mistaken in his interpretation of Article 30.1, that the Czech Court was first seised of the pending proceedings, that the judge was obliged under Article 27 to decline jurisdiction, or that he should have exercised his discretion under Article 28 to stay these proceedings. The judge’s basic error was that he interpreted “failure” in Article 30.1 as meaning or including “delay.” There was no duty on SSPF under the Judgments Regulation to serve the proceedings or to effect service of them, or to proceed to service of them without delay, or even with reasonable despatch. SSPF had not “failed” to take any step necessary for service. It had not failed to pay the court fee: it had simply waited, as was the usual practice under Czech law, for a request to be made by the court and when the request was made, it had paid the fee.[21]Mr Keith points out that unjust and irrational results would follow from equating “delay” in taking steps and “failure” to take steps and that there would be substantial uncertainty in applying the Regulation. That would be contrary to the underlying principles of the Judgments Regulation that the jurisdiction rules should be “highly predictable.” See recitals 11 and 15. For example, in this case the judge’s interpretation would mean that, if the fee were paid 1 day late on 16 April, that would be a “failure” to take a required step resulting in the English Court being first seised of proceedings issued 2 months later on 12 June. It was clear from the decision of this court in WPPHoldings v. Benatti [2007] EWCA Civ 263; [2008] 1 Lloyds Law Reports 396 that minor irregularities, such as delay in payment of court fees, should not be allowed to determine the issue of “first seised.”[22]Mr Keith contends that the plaintiff’s delay could only be relevant where it had resulted in proceedings being stayed or dismissed, or in the expiration of their validity. Delay in payment of the court fee under Czech law was only relevant for the purposes of Article 30 where it had resulted in the court staying or discontinuing the proceedings for non-payment. He emphasised that the non-service of the Czech proceedings before payment of the court fee following a request from the court for payment was in accordance with the usual practice and that it was a delay in payment, not a failure to take a step. The proceedings lodged remained valid despite that delay.[23]The error of the judge, he argues, was in reading the Article as requiring or permitting the court to examine whether the steps that a plaintiff was required to take to have service effected were taken before or after the other court was seised in order to determine which court was seised first. That was not the scheme of the Judgments Regulation. The date of seisure is the date of lodging if the plaintiff has taken the required steps. If he has not, the court is not seised of the proceedings at all. There is not a race between taking such steps and seisure by the rival court.[24]I do not accept Mr Keith’s submissions as the correct interpretation of Article 30.1 or on its application to the facts of this case. I agree that the Czech proceedings were lodged in the Czech Court before the English proceedings were issued and served. The problem is the legal effect under the proviso to Article 30.1 of SSPF’s non-payment of the court fee before the English proceedings were issued and served. It only becomes necessary to consider the effect of that Article when the courts of another Member State (in this case the English Court) appear on the litigation scene. When there are two sets of pending proceedings there will be an issue under Articles 27 and 28 as which courts are first seised of the pending proceedings. The proviso to Article 30.1 makes it necessary to consider the domestic law of the Member State (in this case Czech law) to see if there has been a failure to take the required step to have service of them effected on the defendant and, if so, what is the legal effect of that failure.[25]In this case the consequence of SSPF’s non-payment of the Czech Court fee was that service of the Czech proceedings was not and could not be effected on DCL or Enic. I agree with the judge that, from the date of the lodging of the Czech proceedings on 15 April 2009 until 6 August 2009, there was a continuing failure by SSPF to perform its legal duty, which arose on its lodging of the proceedings, to pay the Czech Court fee. Payment of the court fee was a required step for the service of the Czech proceedings. SSPF did not take that step. It was established by an opinion of the Czech Supreme Court of 29 September 1988 (No 2/1989) that the court shall not serve the proceedings on other parties before the fee has been paid. SSPF’s evidence and submissions on the possible procedural consequences under Czech law of that failure upon the proceedings (whether they are stayed, or dismissed or cease to be valid) are irrelevant. What matters are the consequences for being seised of proceedings under the Judgments Regulation, which simply looks at whether or not there has been a failure to take a required step to effect service of the proceedings. As the judge said “66. In my judgment the issue that I have to decide in relation to this point depends only in part upon Czech law as to the effect of the non-payment of the fee. The Opinion of the Supreme Court cited in paragraph 58 above establishes (and Mr Matous does not dispute) that the court shall not serve the proceedings before the fee has been paid. Whether lodging a claim with the Czech court but not paying the fee, has the effect that the court is seised within Arts 27 and 28 is a point of EU law, not Czech law. It is not suggested that payment of the fee was required before lodgement of the documents. I therefore take the failure by SSPF to pay the fee to have been subsequent to the lodgement of the claim. And it was a failure to take a step that SSPF was required to take to have service effected on DCL.”[26]In Royal & Sun Alliance Insurance plc v. MK Digital FZE (Cyprus) Ltd [2005] EWHC 1408 (Comm), which was not cited to the judge, there was an issue as to whether the English Court or the French Court was first seised of proceedings subject to the Convention on the Carriage of Goods by Road. At paragraphs 64-65 Aikens J (as he then was) held that the English Court was first seised of proceedings where the claim form was lodged with the English Court first in time and there was no subsequent failure by the claimant to take the steps required for service of those proceedings: the rules about service in the CPR were complied with by the claimant, who was entitled to serve those proceedings out of the jurisdiction without the permission of the court. There was no defect in the technicalities of service, even though the French proceedings were instituted before service of the English proceedings on the defendants had taken place. The proviso did not therefore apply. He went on to hold (paragraph 74) that he had no power to stay the English proceedings, although the French proceedings and the English proceedings involved “the same cause of action” for the purposes of Article 27. The decision on the Article 30.1 point was not affected by a successful appeal to this court on other grounds.[27]In my judgment, the judge correctly held that non-payment of the fee was a failure to take a step required for effecting service. It follows that the proviso in Article 30.1 disapplies the general rule that the court is deemed to be seised of proceedings when they are lodged; that the Czech Court was not seised of the proceedings before the English proceedings were issued and served; that the English Court was first seised of the pending proceedings; and that the judge was right to dismiss SSPF’s application for a stay of these proceedings. I would dismiss the appeal on the jurisdiction point.[28]That outcome makes it unnecessary for the court to reach any conclusion on the submissions on a stay of these proceedings under Articles 27 and 28. Issues on whether the same causes of action are involved, whether the proceedings are related actions and what factors are relevant to the discretion to stay would only arise if the Czech Court were first seised. Although the judge held that the application of the Articles did not arise in the light of his conclusion that the English Courts was first seised of the proceedings, he briefly stated his views on those points to the effect that the pending proceedings involve the same cause of action and that, if they did not, nevertheless they were so closely connected that it was expedient to hear and determine them together and that it was not appropriate to split the actions. The correctness of those views is challenged by Enic and DCL in their respondents’ notice. Although this court has heard submissions on the interpretation and application Article 27 and 28 it is neither necessary nor desirable to express any concluded view on points that do not have to be decided in this case.[29]For completeness I mention later developments that have no direct relevance to the issues on this appeal because they concern the jurisdiction of the Czech Court over the Czech proceedings in their courts and not the issues of seisure of proceedings under the Judgments Regulation. The court was informed that on 9 February 2010 the Czech Court declined jurisdiction over the proceedings started by SSPF against Enic and dismissed them. The decision was made on the ex parte application by Enic. It is the subject of a pending appeal by SSPF. I should also mention that Mr Keith has drawn our attention to the very recent case of UBS AG & Anor –v- Kommunale Wasserwerke [2010] EWHC 2566 (Comm) in which Gloster J rightly distinguished the decision of Tugendhat J in this case. B. Summary judgment appeal[30]The judge granted summary judgment under CPR 24.2 to Enic and DCL on 2 February 2010 [2010] EWHC 57 (QB) on the basis that the claims were made under contracts governed by English law and that SSPF had no arguable defence under English law to the claims for repayment of the balance of the advances.[31]SSPF attempted to invoke a defence under Czech law. Witness statements from Mr Radek Matous, a qualified Czech lawyer in the Czech firm advising SSPF, were produced explaining the application of the Czech law principle of shareholder loyalty in the context of the relationship between Enic and SSPF. The judge described them as “a mixture of factual evidence, evidence of Czech law, and submissions or argument.” Enic and DCL relied on witness statements from Mr Rostislav Pekar, an advocate of the Czech Republic practising in association with its solicitors in Prague, but did not produce any evidence of Czech law on the principle of shareholder loyalty to contradict the evidence of Mr Matous. Neither side produced an expert’s report as prescribed by CPR 35 PD paragraph 2.1, a state of affairs which the judge regarded as “unusual and unsatisfactory.” Mr Keith criticised the judge for wrongly rejecting, on an application for summary judgment, the uncontradicted and only evidence of Czech law: see Sharif v. Azad [1967] 1 QB 605 at 616 per Denning LJ.[32]SSPF submits that Enic is a shareholder or a person with substantial influence over SSPF’s business for the purposes of the underlying principle of shareholder loyalty to a company according to Czech law in its Commercial Code (Act no. 513/1991 Coll.) and as acknowledged by the Czech Supreme Court. Czech law is, it is submitted, the law applicable to the internal management of SSPF as a company incorporated in the Czech Republic: see Base Metal Trading Ltd v. Chermourin [2004] EWCA Civ 1316; [2005] 1 WLR 1157 paras 54-56. The shareholder loyalty duty includes a duty to SSPF not to place it in danger to an inappropriate degree without justification. The duty applies regardless of nationality to shareholders and persons who substantially affect the conduct of the company by having substantial influence over its decisions. The duty was breached by Enic in seeking judgment in respect for sums due. If judgment is obtained and remains unsatisfied, its enforcement would result in SSPF’s insolvent liquidation.[33]The judge was unimpressed with that defence. He had reservations about the objectivity and impartiality of the evidence of Mr Matous. He concluded that there was no real prospect of SSPF establishing a factual basis in the English proceedings on which the Czech law of shareholder loyalty could be applied to prevent DCL, as assignee, from obtaining judgment in its capacity as creditor for the balance of the advances due and owing under loan contracts governed by English law.[34]The judge said that Enic was not and never had been a shareholder in SSPF nor, for the previous three years before the issue of proceedings, had it been associated with a registered holder of the majority of SSPF’s shares. He also said that there was no factual evidence adduced by SSPF to support the statement that Enic, or any company associated with it, exercises any influence over SSPF’s business, or to support assertions that Enic had decided to pursue a course of oppressing SSPF for the collateral purpose of its interest in separate proceedings involving another shareholder in SSPF (Key Investments AS) about the dilution of its share capital, or of enforcing debts without justification, or of engaging with DCL in “concerted conduct” contrary to s66b of the Czech Commercial Code in relation to utilising voting rights in SSPF to exert influence over it. He concluded that:- “20. In my judgment there is no real prospect of the Defendant [SSPF] persuading this court that ENIC, whether directly or through SARL, has substantial influence over the Defendant’s business, or that it has had such influence at any material time to these proceedings. It follows that the above mentioned provisions of Czech law have no application.”[35]Mr Keith submits on SSPF’s behalf that the judge rightly accepted that the principle of shareholder loyalty was governed by Czech law, but then wrongly rejected the evidence of Mr Matous on the application of the principles of Czech law to the facts of this case. The issue is whether Enic, as the ultimate holding company, owed any duty of shareholder loyalty to SSPF under Czech law that could be relied on as a defence to DCL’s contractual claims. It is said that that principle applies to the relationship between Enic and SSPF, as matters relating to the constitution and internal organisation of SSPF are governed by Czech law, which is the law of the place of SSPF’s incorporation. It is irrelevant that there are intervening companies, including a Luxembourg company wholly owned by Enic. The proper focus is on the position of Enic as the ultimate holding company. Enic’s assignment of the claims to DCL does not affect the operation of that principle, since DCL, as assignee, could not have any greater right than was vested in Enic. Its rights were subject to equities, which would include the defence of breach of the duty of loyalty under Czech law. The judge misinterpreted the evidence of Mr Matous on the scope of the principle of loyalty: it applies to both shareholders and to persons with a substantial influence over a company’s business. There is, it is said, evidence to support the assertion that Enic pursues this claim to oppress SSPF and that the claims could result in its insolvent liquidation. As to the lack of an independent expert’s report on which the judge commented adversely, it is submitted that, if the court considers that evidence of Czech law from an independent expert would assist, it should grant leave to defend conditional on the contents of the expert’s report.[36]In my judgment, the judge was right not to be impressed with these submissions and to grant summary judgment against SSPF for the reasons given by him. I agree with Mr Brettler appearing for DCL that the judge did not in fact go so far as to decide that Czech law was the applicable law in relation to an issue between SSPF and parties who were not its shareholders, Enic and DCL. His approach was that an arguable defence of breach of the principle of shareholder loyalty under Czech law, even assuming that it was applicable, had not been made out evidentially. On that approach it was not necessary for the judge, and it is not necessary for this court, to embark on an inquiry under the English conflict of laws rules whether Czech law or English law is the applicable law for placing some restraint, such as the principle of shareholder loyalty to a company, on the enforcement by DCL of the contractual rights under the loan agreements and the DFA.[37]The facts are that Enic is not and never was a shareholder in SSPF. It is only a shareholder in its Luxembourg subsidiary. There is no factual evidence that Enic or its associates exercised any influence over SSPF’s business by reason of any shares registered in the name of SARL, or that, in demanding repayment, DCL was oppressing SSPF. So there is no real prospect of SSPF persuading the English Court at trial that Enic had a substantial influence over SSPF’s business. In the absence of any evidential basis for a defence based on the Czech law of shareholder loyalty English law applies to the claims and there is no arguable defence under English law to the contractual claims for repayment of advances made.

Result

[38]For these reasons I would dismiss both appeals. SSPF has not shown that the judge’s decision that the English Court was first seised was wrong, or that the judge was wrong in holding that SSPF has no arguable defence to the claims in the English proceedings. Lord Justice Lloyd:[39]I agree with Mummery LJ that SSPF’s appeals should be dismissed.[40]The jurisdiction appeal turns on article 27 of the Judgments Regulation, and on how article 30 applies in the present case. Article 30 fills a gap that became apparent in the Brussels Convention as a result of the ECJ decision in Zelger v Salinitri, Case 129/83 [1984] ECR 2397, under which the question whether and when a court was seised of proceedings was to be decided (for lack of any relevant provision in the Convention) according to the national law of the particular court.[41]Different Member States have different procedures for the initiation of proceedings. In some (as in England and Wales, and in the Czech Republic) the document is to be lodged with the court before it is served on the Defendant. In others (Italy appears to be an example of this, according to WPP Holdings Italy srl v Benatti) the document is to be served on the Defendant before it can be lodged with the court. This accounts for the two-fold provision made by article 30, though in the present case it is only necessary to consider the first of the two.[42]We were shown the Proposal for the Judgments Regulation, published in the Official Journal on 28 December 1999 as relevant travaux preparatoires to the Regulation. This is what it said about article 30:
“This Article fills in a gap in the Brussels Convention by giving a definition of the date on which an action is “pending” for the purposes of Articles 27 and 28. Treating an action as “pending” when the claim has been lodged with the court has the advantage of simplicity. But this solution is particularly unfair on the party commencing proceedings in a Member State where proceedings are commenced after service on the defendant of the document instituting proceedings. Yet to consider that the case is “pending” once the complaint has been served on the defendant again has the advantage of simplicity. But this solution penalises the party which commences the proceedings in a Member State where the court must be seised before notice is served. Another, legally sound, solution consists of considering that an action is pending only when the two procedural steps of notification or service and registration of the case in the court having jurisdiction have been performed. But this solution has the negative effect of delaying the determination that there is a lis pendens situation. Article 30 proposes a third course, which reconciles the various procedural systems while ensuring both that applicants will all be on an equal footing and that there can be no abuse of procedures. The date on which an action is considered to be “pending” will depend on the procedural system: • in Member States where the claim is lodged with the court before service of the document instituting the proceedings on the defendant, the action will be pending from the date of lodging, provided the plaintiff takes all the requisite steps to have it served on the defendant. These steps will depend on the legal system: they may include transmission to the court of all material facts enabling it to serve notice of the action, or the handing over of the document already registered at the court to the competent authority for service; • in Member States where service precedes lodging with the Court, the action becomes pending when the document is handed over to the authority responsible for service (and not on the date of actual service), provided the applicant lodges the document with the court as soon as he is required to do so by the lex fori.” • in Member States where the claim is lodged with the court before service of the document instituting the proceedings on the defendant, the action will be pending from the date of lodging, provided the plaintiff takes all the requisite steps to have it served on the defendant. These steps will depend on the legal system: they may include transmission to the court of all material facts enabling it to serve notice of the action, or the handing over of the document already registered at the court to the competent authority for service; • in Member States where service precedes lodging with the Court, the action becomes pending when the document is handed over to the authority responsible for service (and not on the date of actual service), provided the applicant lodges the document with the court as soon as he is required to do so by the lex fori.”
[43]In the case of each of the different approaches, article 30 specifies a moment as the time when a court is seised of proceedings, but subject to a proviso whose application depends on a subsequent failure by the plaintiff to take steps he is required to take. One of the issues is what is meant by failure to take steps in this context. It cannot refer only to the fact that the plaintiff has not yet taken the relevant steps. Otherwise, in practice, the court would only be seised once the required steps had been taken, even if they were taken promptly. That is clearly not the result that article 30 is intended to achieve. The failure must be, in some sense at least, a culpable failure. Thus, the proceedings in which the present appeals arise, issued on 12 June 2009 and served on SSPF on 29 June 2009 (or at latest on 4 August 2009), were pending in the High Court as from 12 June 2009. The Claimants took the steps that they were required to take to have service effected on SSPF, and did so within the time allowed by English procedural rules.[44]It was argued that, on this reading, a culpable failure at an early stage might mean that the relevant court was not and could never again be seised of proceedings which had in fact been commenced before it, even if the culpable failure had been remedied later. I would not accept that. The starting point (in an English or a Czech case) is the date when the document is lodged with the court. At that moment, in principle, that court is seised of the proceedings. The position may change, if the proviso comes to apply. If it does then, at that moment, the court is no longer seised of the proceedings. However, it may be that the failure is later remedied, as in the present case when the Czech court fee was paid. If so, then the court is again seised of the proceedings.[45]For that reason I would also not accept another submission made to us, that the only failure that could be relevant is one which meant that the proceedings could never be served on the defendant. That cannot be right, since in such a case the defendant would not be at risk.[46]I agree with Mummery LJ that the question whether a court is seised of proceedings does not have to be answered unless or until another court is (or may be) also seised of relevant proceedings – whether for the same cause of action within article 27 or for a related cause of action within the meaning of article 28. Once there are competing proceedings, it becomes necessary to decide which court was first seised. In order to do that, one must look at each set of proceedings on its own and decide when each of the relevant courts became seised of the proceedings, and whether it continued to be seised at all material times. In the present case, therefore, since it is known that the English court was seised of the proceedings on 12 June 2009 (and the proviso did not apply so as to affect that position), the “first seised” issue is to be decided by considering whether, immediately before the issue of the Claim Form on 12 June, the Czech court was itself seised of the Czech proceedings. The fact that it had been seised at an earlier stage is not relevant, if it was not seised at that time as a result of the operation of the proviso.[47]It is clear from the provisions of Czech law as to the payment of court fees, set out by the judge, that SSPF came under a duty to pay a court fee upon filing its documents with the Czech court on 15 April 2009. It is also clear that the fee actually paid, of CZK 1,000, could have been paid there and then by fee stamps (as it eventually was on 6 August). It is also clear that SSPF’s lawyers knew or could have known on 15 April 2009 the amount of the fee payable, because the claim was for a declaration, for which the fee was fixed.[48]Thus the obligation to pay the fee had arisen on 15 April 2009, and there was no impediment to the discharge of that obligation. Nor was it an obligation to be performed within a specified period, so that SSPF could not be said to be in breach of the obligation until after the expiry of that period (unlike, for example, provisions allowing a period within which service of a Claim Form is to be effected).[49]As Mummery LJ says, it is said to be common practice in the Czech courts not to pay the fee on issue of the proceedings, and instead to wait until the court demands the fee, and to pay within the time set out in the court’s demand. That is what happened in the present case, and the fee was paid within the period stipulated by the court. We do not have to consider what might be the position if the plaintiff really does not know how much the fee is on issue of the proceedings, or really does not know to what bank account to pay the fee (if it has to be paid by bank payment rather than by the use of fee or duty stamps). In such a case it might be argued that the plaintiff cannot be said to be under an obligation which it has failed to comply with unless and until it is told what to pay and how and by when to pay it. In the present case, SSPF knew how much was payable from the start, and it could be paid (as it later was) by using stamps.[50]On that basis, it seems to me that SSPF’s failure to pay the court fee was a culpable failure under Czech law, rather than a mere omission or the taking of a period of time to do something which is permitted or allowed for under the relevant law. That failure had started and was still continuing on 15 June 2009. For that reason, I agree with the judge and with Mummery LJ that the Czech court was not at that time seised of the proceedings commenced by SSPF, within the meaning of the Judgments Regulation, that therefore the High Court was the court first seised, for the purposes of the Regulation, when the present proceedings were issued on that date, and that accordingly the jurisdiction appeal should be dismissed.[51]I also agree that it is unnecessary to say anything about the issues that might have arisen under articles 27 or 28 if the position had been otherwise.[52]I agree with Mummery LJ that SSPF’s second appeal, against the judge’s order giving summary judgment, also fails, for the reasons that he gives.

Lord Justice Stanley Burnton:

[53]I agree that SSPF’s jurisdiction appeal fails, for the reasons given by Mummery and Lloyd LJJ.[54]I do not think that Article 30 of the Judgments Regulation, with its reference to the vague and undefined term “failure”, and which requires a court to investigate and to determine the procedural law of another jurisdiction, achieves the clarity and simplicity of application that might have been hoped. However, I think that its application in the present case is clear.[55]It is clearly undesirable for any litigant to be able to seise the court of his choosing with proceedings against a foreign defendant without the defendant being reasonably promptly served with those proceedings. It is undesirable for any party to a dispute to be in ignorance of the fact that there are pending proceedings against him in a foreign jurisdiction. A period of ignorance, pending service of the proceedings, may be unavoidable, but I do not think that the Regulation should be interpreted so as to condone any lengthening of that period.[56]SSPF submitted that until its failure to pay the court fee had resulted in the Czech court discontinuing its proceedings, that court was first seised for the purposes of the Judgments Regulation. That submission leaves no room for the operation of Article 30.1. If the Czech court had discontinued the proceedings, it would have ceased to be seised of the proceedings, and there would not have been two competing pending proceedings. It would be unnecessary for this court to consider whether or not that was due to any “failure” of SSPF.[57]On SSPF’s case, if even after a prolonged delay in payment of the Czech court fee, but before an order of the Czech court stipulating a period for payment, it had come before the English court on the morning of its application to stay or to strike out the present proceedings, and informed the judge that it had that morning paid that fee, the judge would have had no alternative but to stay or to strike out the English proceedings. That would be an unreasonable and undesirable result.[58]It does not follow that delay in payment of a court fee causes the court in question to cease to be seised of the proceedings for all purposes. Article 30 is concerned with competition between jurisdictions. It has no application at a time when there are no competing proceedings. If DCL had not begun proceedings in this country, once SSPF had paid the appropriate court fee and the Czech proceedings had been duly served, the Czech court would have continued to be seised of the proceedings. If proceedings in this country had then been commenced, this court would have had to decline jurisdiction if, Article 27 applied. Because DCL had been served before the English court became seised, Article 30.1 would have had no application.[59]In my judgment, “failure” in Article 30.1 is a failure to comply with a duty imposed by the procedural law of the jurisdiction in question. SSPF failed to comply with its duty to pay the Czech court fee. Its duty had arisen as soon as it lodged its claim with the Czech court. As a result of that failure, DCL had not been served when this court became seised with the present proceedings. It follows that for the purposes of the Judgments Regulation, the English court was first seised.[60]So far as SSPF’s second appeal is concerned, I agree that it fails for the reasons given by Mummery LJ.

Cited in 2 later judgments