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Sometimes, for strategic reasons, a foreign
litigant prefers to sue in the Courts of the United Kingdom. For example, Russian oligarchs have often
done so, even when the connection between the U.K. and the dispute is
tenuous. A recent ruling of the U.K. Supreme Court narrows
the British courts’ jurisdiction. In AMT Futures Ltd. v. Marziller [2017] UKSC 13, AMT chose the British courts
for a claim against a lawyer, Marziller, who resides in Germany. AMT could sue Marziller
in the U.K. only if the claim is for damage “sustained within [the U.K.]” (CPR PD 6B r.3.1(9)). This rule is based on the Brussels I
Regulation (s 7(2)). Such jurisdiction
is an exception to the general rule that a defendant is to be sued in the
defendant’s domicile.
The
facts are these. Marziller had sued AMT
on behalf of AMT clients, in Germany. He did so despite the fact the client contracts
contained a exclusive jurisdiction clause in favour of the U.K. courts. AMT challenged the jurisdiction of the German
courts but lost, and paid over two million pounds to settle the case. AMT then sued Marziller, arguing that
Marziller had deprived AMT of the benefit of the exclusive jurisdiction clause
by inducing AMT’s clients to breach their contract. AMT
argued that the harm occurred in the U.K. based on the fact AMT had paid the settlement
out of an account in England and based on the exclusive jurisdiction clause in
favour of the U.K.
AMT
succeeded at the trial level, but the Court of Appeal and U.K. Supreme Court ruled
that the claim could not be brought in the U.K.
The Supreme Court stated that promoting certainty is central to the
Regulation. A defendant ought to be able
to predict where he might be sued. Exceptions
to the general rule that a defendant is to be sued in his domicile are to be restrictively
interpreted. There must be a close connection
between the court and the action, for the sake of the sound administration of
justice. The rationale for the ‘damage sustained in the
jurisdiction’ exception is that the courts of such jurisdiction are in a
particularly good position to determine the evidence of actual damage. However, on the facts here, where the inducement
to breach occurred in Germany, such rationale would not apply. Various rulings of the Court of Justice
for the European Union have limited the scope of the ‘damage sustained in the jurisdiction’
exception to initial and direct damage to the immediate victim.
This
wariness
about damage sustained as a basis for jurisdiction is found also in Canada. The Supreme Court of Canada expressly
rejected ‘damage sustained’ as a presumptive connecting factor for tort cases in
Club Resorts v Van Breda [2012] S.C.J.
no. 17. Its reason:
that an injury may occur in one jurisdiction and the injured person
suffer the pain and inconvenience in a second, or a third. “damage
sustained”, as a presumptive connecting factor, would risk “sweeping into that jurisdiction claims that have only a
limited relationship with the forum” (para
89). Similarly, the Court Jurisdiction and Proceedings Transfer Act, in force in B.C., Saskatchewan and Nova Scotia, which deems several
types of claims to have a real and substantial connection (e.g. claims relating
to a tort occurring in the province, or claims relating to a contract to be performed
in the province) does not include damage sustained in that list.
