IN THE SUPREME COURT OF THE UNITED KINGDOM

Transcription

1 IN THE SUPREME COURT OF THE UNITED KINGDOM 21 December 2010 Before Registered at the Court of Justice under No. ~ 6b 5.21:. Lord Phillips Lord Rodger Lord Collins (1)JPMorgan Chase Bank, N.A. (2) J.P.Morgan Securities Limited (Respondents) v Berliner Verkehrsbetriebe (BVG) Anstalt Des Offentlichen Rechts (Appellant) AFTER hearing Counsel for the Appellant and Counsel for the Respondents on 11 November 2010 and AFTER consideration of the written submissions filed by the parties THE COURT ORDERED THAT (1) The questions set out in Schedule 1 to this order be referred to the Court of Justice of the European Union for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union, Schedule 2 to this order setting out the factual and legal background to this reference (2) The proceedings before the Commercial Court and the

2 application for permission to appeal to this Court be stayed pending the determination of the reference (3) Costs be reserved. Registrar 21 December 2010

3 (1)JPMorgan Chase Bank, N.A. (2) J.P.Morgan Securities Limited (Respondents) v Berliner Verkehrsbetriebe (BVG) Anstalt Des Offentlichen Rechts (Appellant) SCHEDULE 1:QUESTIONS REFERRED 1. The referring court submits the following questions to the Court of Justice of the European Union (the "Court of Justice") for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union: (1) When identifying, for the purposes of Articles 22(2) and 25 of the Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the "Brussels I Regulation") what proceedings have as their object and with what they are principally concerned, should the national court only have regard to the claims made by the claimant(s) or should it also have regard to any defences or arguments raised by the defendants? (2) If a party raises an issue in proceedings which falls within the subject matter of Article 22(2) of the Brussels I Regulation, such as an issue as to the validity of the decision of an organ of a company or other legal person, does it necessarily follow that that issue forms the object of the proceedings and that the proceedings are principally concerned with that issue if that issue may be potentially dispositive of the proceedings, irrespective of the nature and number of other issues raised in the proceedings and of whether all or some of those issues are also potentially dispositive? (3) If the answer to question (2) above is negative, is the national court required, in order to identify the object of the proceedings and the issue with which the proceedings are principally concerned, to consider the proceedings overall and form an overall judgment of their object and what they are principally concerned with; and if not, what test should the national court apply to identify these matters? 2. The Supreme Court respectfully requests that this reference should if possible be joined with Case C-144/10, a preliminary reference made by the Kammergericht (Berlin Court of Appeal) which involves the same parties, pursuant to Article 43 of the Rules of Procedure of the Court of Justice. 1

4 (1) JPMorgan Chase Bank, N.A. (2) J.P.Morgan Securities Limited (Respondents) v Berliner Verkehrsbetriebe (BVG) Anstalt Des Offentlichen Rechts (Appellant) SCHEDULE 2:ANNEXE Introduction 1. This Annexe sets out the factual and the legal background to the reference and the summary of the parties' submissions. 2. The Supreme Court of the United Kingdom seeks a preliminary ruling from the Court of Justice under Article 267 of the Treaty on the Functioning of the European Union on questions concerning the interpretation of Articles 22(2) and 25 of Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the "Brussels I Regulation"). 3. The jurisdictional challenge in the main proceedings raises the questions of what approach a national court should take in order to determine whether an issue is the "object of proceedings" and what the proceedings are "principally concerned" with, for the purposes of deciding whether exclusive jurisdiction is engaged under Article 22(2) and whether the national court is obliged under Article 25 of the Brussels I Regulation to decline jurisdiction. 4. In the present proceedings the High Court of Justice (Queen's Bench Division, Commercial Court) ("the Commercial Court") and the Court of Appeal held that Article 22(2) is not engaged. The judgments of Mr Justice Teare in the Commercial Court of 9 July 2009 ([2010] QB 276, [2009]EWHC 1627 (Comm)) and of the Court of Appeal of 28 April 2010 ([2010] EWCA Civ 390) are annexed to this.2

5 reference. Legal Context 5. The relevant parts of the Brussels I Regulation are as follows: "Article 22 The following courts shall have exclusive jurisdiction, regardless of domicile: 2. in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; Article If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 13, 17 or 21, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22. Article 25 Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction. Article 29 Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 35 The Parties 1. Moreover, a judgment shall not be recognised if it conflicts with Sections 3, 4 or 6 of Chapter Il [Article 22 is in Section 6 of Chapter Il], or in a case provided for in Article 72.". 6. The claimants. in the proceedings are JPMorgan Chase Bank, NA, a company organised under the laws of the United States of America and J.P. Morgan Securities Ltd, a company incorporated under the laws of Great Britain. It is not necessary to distinguish between the claimants for the purposes of this summary and they are referred to individually and together as "JPM". 3

6 7. The defendant is Berliner Verkehrsbetriebe (BVG) Anstaltdes offentlichen Rechts ("BVG"), which is responsible for the provision of public transport services in Berlin. BVG is a public law institution under German law and has its seat in Germany. Nature and History of the Proceedings F actual Context 8. In outline, the factual background to the main proceedings is this. a. In 2007, BVG entered into a structured finance transaction (the "ICE Transaction"). b. BVG did so following resolutions of BVG's Management Board in March 2007 and Supervisory Board in April These were "decisions of organs" of BVG. c. The ICE Transaction is made up of two swap transactions, one of which is referred to as the "JPM Swap". d. BVG sold credit risk protection to JPM worth US$220 million in respect of 150 companies in return for a net premium of US$7 million which JPM paid immediately to BVG. The JPM Swap contains a choice of English law, and English jurisdiction clause. The Main Proceedings 9. Proceedings were commenced by JPM in October 2008 in the Commercial Court. JPM sought six declarations, including (1) that the JPM Swap is valid, binding and enforceable in accordance with its terms, (2) that the terms of the transaction documents constitute the entire agreement and understanding of the parties with respect to the JPM Swap, (3) that in entering into the JPM Swap BVG did not rely on any oral or written representation of JPM, and (4) that when entering into the 4

7 JPM Swap, BVG was capable of understanding, and understood and accepted, the risks of the JPM Swap. 10.After its claim was issued (but before it was served on BVG), JPM amended its claim in January 2009 to advance a money claim for US$112 million, which JPM claimed was the sum due to it under the terms of the JPM Swap. JPM has since served further notices on BVG, claiming that the total amount now due under the JPM Swap exceeds US$194 million. 11.BVG has not thus far filed a defence in the proceedings. 12. On 9 March 2009 BVG filed an application seeking a declaration that the English court has no jurisdiction over JPM's claim in the main proceedings by virtue of Article 22(2) of the Brussels I Regulation, on the basis that the main proceedings have as their object and are principally concerned with the validity of the decision of BVG to enter into the JPM Swap. 13. The Commercial Court (at para 20) found that BVG is likely to defend JPM's claim by arguing that the JPM Swap was ultra vires BVG and therefore void and also that the JPM Swap was the result of incorrect advice, with the latter issue likely to emerge in the form of allegations of misrepresentation, non-disclosure and breach of an advisory agreement. The Commercial Court also noted that BVG reserved the right to raise other issues in its defence. 14. It is common ground between the parties to the main proceedings that: a. BVG's seat is in Germany (and so any exclusive jurisdiction under Article 22(2) of the Brussels I Regulation will be that of the German courts). b. There is an issue of German law between the parties regarding whether entering into the JPM Swap was ultra vires BVG. German Proceedings 15. In March 2009, BVG filed a complaint against JPM in the Landgericht Berlin (Regional Court of Berlin). BVG's first claim in the German proceedings is that 5

8 the JPM Swap is invalid (because entering into it was beyond BVG's powers and ultra vires). In the alternative, BVG contends that it should be released from its obligations under the JPM Swap or awarded damages equivalent to the sums claimed by JPM, on the basis of a claim that the JPM Swap was mis-sold to BVG by JPM. 16. The Kammergericht (Berlin Court of Appeal) has found that the English and German proceedings both "related to the same claim and were direct mirror-image equivalents" for the purposes of Article 27 of the Brussels I Regulation (para 13 of the Kammergericht's preliminary reference). Jurisdiction over Proceedings 17. In both the English and the German proceedings, there is a dispute whether the English or the German courts have jurisdiction over the two sets of national proceedings. In essence: a. JPM contends that the English courts have jurisdiction under Article 23(1) of the Brussels I Regulation, because the JPM Swap contains an English jurisdiction clause and the English courts were first seised of the claim. b. BVG contends that the German courts have exclusive jurisdiction under Articles 22(2) and 25 of the Brussels I Regulation, because the proceedings "have as their object... the validity of the decision" of BVG to enter into the JPM Swap and are "principally concerned with" that issue (as provided for in Articles 22(2) and 25 respectively). Consideration of Jurisdiction by the English Courts 18. The English court of first instance (the Commercial Court) and subsequently the appellate court (Court of Appeal, Civil Division) found that exclusive jurisdiction under Article 22(2) was not engaged in the main proceedings. The Commercial Court and the Court of Appeal found that the English proceedings were not "principally concerned" with the question of the validity of the decisions of BVG's organs to enter into the JPM Swap. The Commercial Court and the Court of 6

9 Appeal rejected two further arguments advanced by JPM, namely (1) that Article 22(2) could only be engaged by matters raised by way of a claim (and not by defences) and (2) that Article 22(2) is only concerned with disputes between the company, its officers or shareholders and not with third parties to the company. 19.BVG sought to challenge this ruling on jurisdiction by an application for permission to appeal to the Supreme Court of the United Kingdom. At an oral hearing on 11 November 2010 at which both BVG and JPM made submissions, the Supreme Court decided that a reference should be made to the Court of Justice for a preliminary ruling. Consideration of Jurisdiction by the German Court 20. The German courts have also issued three decisions in relation to BVG's claim. 21. On 26 May 2009 the Landgericht Berlin held that it was obliged under Article 27 of the Brussels I Regulation to stay BVG's complaint. On 10 December 2009 the Landgericht Berlin held that Article 22(2) does not apply because any issues of nullity were only incidentally relevant, since only the agreement under civil law as well as any obligations preceding it were the "main issue". 22. On appeal by BVG to the Kammergericht (Berlin Court of Appeal), on 8 March 2010, the Kammergericht referred three questions to the Court of Justice for a preliminary ruling; that preliminary reference has been registered 'as Case C- 144/10. The translated text of the questions referred by the Kammergericht is as follows: a. "Does the scope of application of Art. 22 No. 2 of (BC) Council Regulation No. 44/2001 of 22nd December 2000 on Jurisdiction and Recognition and Enforcement of Decisions in Civil and Commercial Matters (BuGVVO) also extend to court actions in which a company or legal entity has disputed an action brought against it based on a legal transaction on grounds of the invalidity of resolutions by its official bodies resulting in the conclusion of the legal transaction due to breaches of its Articles of Association? b. If Question a) is answered in the affirmative, does Art. 22 No. 2 EUGVVO also apply to legal entities under public law insofar as the effectiveness of the resolutions of its official bodies is to be examined by civil courts? 7

10 c. If Question b) is answered in the affirmative, is the court in a member state last applied to in an action also required under Art. 27 EUGVVO to stay the action if it is claimed that an agreement regarding the legal venue is also invalid due to an invalid resolution by its official bodies according to its Articles of Association?". 23. On 19 November 2010 the Court of Justice notified the parties that the written procedure regarding this reference was complete (with written submissions having been made on behalf of the parties, the Czech Republic, the United Kingdom and the European Commission). At the Court of Justice's invitation, JPM is making an application for an oral hearing. Why Preliminary Ruling Requested 24. The Supreme Court of the United Kingdom seeks a preliminary ruling from the Court of Justice because these proceedings raise the important question whether, and in what circumstances, a defence of lack of capacity engages Article 22(2) of the Brussels I Regulation. Joinder with Case C-144/10 25.As indicated in Schedule 1, the Supreme Court respectfully requests that the present preliminary reference should if possible be joined with Case C-144/10 pursuant to Article 43 of the Rules of Procedure of the Court of Justice. Summary of Arguments 26. BVG contends that Article 22(2) will be engaged where there is an issue of exclusive jurisdiction (such as the ultra vires issue in the present national proceedings) which is capable of decisively influencing or is potentially dispositive of the proceedings. 27. In Ilsinger (C-180/06 [2009] ECR , para 58) the Court of Justice has emphasised that certainty is a cornerstone in the application of the Regulation. If different courts in different Member States interpret the Brussels I Regulation in divergent ways, the coherent scheme of allocation of jurisdiction will be 8

11 undermined. Certainty in the interpretation of Article 22 is of particular importance, because Article 35 of the Brussels I Regulation provides that judgments given in breach of Article 22 will not be recognised. The facts of the present case, in which both the English and German courts are considering whether Article 22(2) applies, underline the need for a test or threshold which can be applied with certainty and consistently across different Member States. 28. The approach supported by JPM, which calls for each national court to reach an "overall judgment" about what proceedings are "principally concerned with", is uncertain and extremely subjective. It may depend in part on procedural differences between the national courts involved. Different courts in different national jurisdictions may reach different views on whether the proceedings before them engage exclusive jurisdiction." 29. The relevant Court of Justice authorities on the provisions of what is now Article 22 support the "decisive influence" or "potentially dispositive" test proposed by BVG: a. In Land Oberdsterreicbv CEZ, as ("CEZ') (C-343/04 [2006] ECR ) the Court of Justice held (at para 34) that the Austrian courts did not have exclusive jurisdiction under Article 22(1), because "the real and immovable nature of the right at issue does not have a decisive influence on the issues to be determined in the dispute in the main proceedings" (emphasis added). b. In Gesellscbaftfur.Antriebstecbnie mbh v Lame//en ("GAT') (C-4/03 [2006] ECR ) the Court of Justice held (at para 25) that "[i]n the light of the position of Article [22](4) within the scheme of the Convention and the objective pursued, the view must be taken that the exclusive jurisdiction provided for by that provision should apply whatever the form of proceedings in which the issue of a patent's validity is raised, be it by way of an action or a plea in objection, at the time the case is brought or at a later state in the proceedings". BVG argues that this ruling establishes that 9

12 exclusive jurisdiction will arise where the issue within the scope of Article 22 is potentially dispositive of the proceedings as a whole, even if there are other issues which are also potentially dispositive. 30. BVG contends that cases decided by the English courts also support the approach which it suggests. There are a number of English patent cases to the same effect as GAT, both pre- and post-dating the Court of Justice's judgment in GAT: Coin ControlsLtd v Suzo International (UK) Ltd [1999] Ch 33, p51; Fort DodgeAnimal Health Ltd v Akzo Nobei, [1998] I L Pr 732; Knorr-Bremse Systems v Haldex Brake Products [2008] EWHC 156 (pat), [2008] 2 All ER (Comm) 448, paras Outside the patent field, BVG relies on the approach adopted in Grupo Torras v Al-Sabah [1995] 1 Lloyd's Rep 374 (High Court); [1996] 1 Lloyd's Rep 7 (Court of Appeal) to the application of the predecessor to Article 22(2), in which the English court considered whether the proceedings were "likely to turn on" an issue of exclusive jurisdiction. 31. The first question referred is irrelevant to the national proceedings. The first declaration sought by JPM, as to the validity of the JPM Swap, raises the question of whether the JPM Swap is ultra vires and therefore invalid. Teare J held at paragraph 48 of his judgment that a decision as to the first declaration would have to take into account the ultra vires issue and the Court of Appeal held at paragraph 10 of its judgment that the terms of the first declaration would encompass Therefore, issues of the vires of the relevant decisions of the organs of BVG. the issue of the validity of the decision to enter into the JPM Swap is raised by JPM's claim and not by BVG's defence. Further, the Court of Justice has already decided in GAT that defences should be taken into account when determining whether exclusive jurisdiction has arisen under Article 22(4). There is no reason for the result to be different under the other heads of exclusive jurisdiction provided for in Article 22. Moreover, it is clear from the Court of Justice's judgment in GAT, paras 21 and 24, that the reasoning was equally applicable to cases falling within Article 22(2). 10

13 31.JPM contends that it is clearly established as a matter of English case law that the words "proceedings which have as their objective" in Article 22(2) mean "proceedings which have as their subject-matter" or "proceedings which are principally concerned with": Grupo Torras vai-sabah [1996] 1 Lloyd's Rep 7 at p The Jenard Report (OJ 1979 C 59/1) states (at page 34, in relation to what is now Article 22, and formerly Article 16) that the matters listed in Article 22 will normally be the subject matter of exclusive jurisdiction onlyif they constitute the "principal subject matter of the proceedings". It further states (at page 39, in relation to what is now Article 25, and formerly Article 19), that the words "principally concerned with" have the effect that a court is not obliged to declare of its own motion that it has no jurisdiction if an issue which comes within the exclusive jurisdiction of another court is raised only as a "preliminary or incidental matter". 33. Essentially, therefore, the established approach adopted by the English courts is that the courts are required to stand back and consider the issues in the case overall to determine whether the case is principally about an Article 22(2) matter. JPl'vf submits that this approach, as set out by Teare J in the Commercial Court at para 46 of his judgment and endorsed by Aikens LJ in the Court of Appeal (at para 90), is the correct one. 34.As observed by Aikens LJ in the Court of Appeal (at paras 83, 87, 88), this interpretation is consistent with the wording of the Brussels I Regulation and the J enard Report. There is nothing in the language of the Brussels I Regulation, the J enard Report or any decision of the Court of Justice or any national court that supports BVG's position (namely that once a party raises an issue whose subject matter falls within the scope of Article 22(2) and which capable of decisively influencing or is potentially dispositive of the proceedings, then exclusive jurisdiction is conferred in favour of the court designated by Article 22(2), regardless of the number and nature of other issues in the case and whether or not 11

14 they may also be capable of decisively influencing or potentially dispositive of the dispute). For the reasons given by the Court of Appeal (at paras 70-81), the decisions of the Court of Justice in GAT and CEZ do not support BVG's position. 35. It is clear from the case law of the Court of Justice, including in particular Hassettv South Eastern Health Board (C-372/07 [2008] ECR , paras 18-19), that the provisions of Article 22 must not be given an interpretation broader than is required by their objective since they introduce an exception to the general rule (based on domicile) governing the attribution of jurisdiction under the Brussels I Regulation, and their effect is to deprive the parties of the choice of forum that would otherwise be theirs. As the Court of Justice observed in Hassett (at para 22), if all disputes involving a decision by an organ of a company had to be treated as coming within Article 22(2), it would in reality meant that all legal actions brought against a company, whether in contract, tort or any other matter, would almost always come within the exclusive jurisdiction of the courts of the Member State in which the company has its seat. 36. BVG's proposed approach would be a. charter for forum shopping. Notwithstanding the existence of an agreed exclusive jurisdiction clause, a Defendant could simply raise an ultra vires argument (however speculative) and avoid the express choice of court in favour of the courts of its home jurisdiction. The risk of a defendant so doing is all the greater in circumstances in which he can challenge jurisdiction on the basis of Article 22(2) without having filed a defence and therefore revealed his full hand in the litigation. 37. If, contrary to the point above, the Court of Justice does not consider the approach adopted by the English court to be the correct one, JPM submit that the court should only consider the claim, and not the proposed defences, when identifying the object of the proceedings. This issue arises because ultra vires is not raised in the Claim Form in the proceedings, but only raised by BVG as a defence to the claim - this was found to be the case by Teare J at first instance (see paragraphs 48 and 50 of his judgment and see also paragraph 10 of Aikens LJ's 12

15 judgment, to similar effect). JPM submit that insofar as GAT suggests that both the claim and any defences should be taken into consideration, that case was concerned with patents, where different considerations arise (see, in particular, paras 17,22 and 30 of the GAT judgment). View of Referring Court 38. The referring court has not heard full argument on this matter and for that reason refrains from expressing its own opinion on the questions referred. 13