No Sole Object Test Applied to Article 6(1) of the Lugano Convention: Establishing Jurisdiction in England Against Foreign Defendants

Introduction

The case of JSC Commercial Bank Privatbank v. Kolomoisky & Ors ([2019] EWCA Civ 1708) addresses critical issues concerning judicial jurisdiction under international conventions, specifically the Lugano Convention and the Brussels Regulations. The central question revolves around whether Article 6(1) of the Lugano Convention is subject to a "sole object" test, which would limit its applicability in cases where proceedings against one defendant are initiated solely to join another defendant domiciled in a different Convention state.

Summary of the Judgment

The Court of Appeal delivered a complex judgment wherein the majority held that Article 6(1) of the Lugano Convention is not subject to a "sole object" test. This decision reversed the initial ruling by Fancourt J, who had declared that the proceedings brought by PJSC Commercial Bank Privatbank against certain defendants were designed solely to join a foreign defendant to the English proceedings, thereby staying those proceedings. The appeal was allowed on multiple grounds, affirming that the bank's legitimate claims could proceed in England without the constraints of a sole object test.

Analysis

Precedents Cited

The judgment extensively references seminal cases and legal instruments that shape the understanding of jurisdiction under the Lugano Convention and Brussels Regulations. Key among these are:

Kalfelis v Bankhaus Schröder (Case 189/87): Established the necessity of a close connection between claims to prevent jurisdictional misuse.
Reisch Montage AG v Kiesel Baumaschinen Handels GmbH (Case C-103/05): Addressed the interpretation of Article 6(1) concerning inadmissible claims due to bankruptcy.
Freeport plc v Arnoldsson (Case C-98/06): Clarified that Article 6(1) does not require a sole object test.
Cartel Damage Claims (Case C-352/13): Confirmed that Article 6(1) is not bound by an implied sole object test unless there is evidence of artificial fulfillment.
Vedanta Resources plc v Akzo Nobel NV (Case C-352/13): Reinforced the limitations of the abuse of law principle in relation to jurisdiction.

Legal Reasoning

The Court scrutinized whether initiating proceedings against multiple defendants under Article 6(1) was done with the sole intent of manipulating jurisdiction. The majority concluded that as long as the claims are closely connected, the absence of a sole object test allows legitimate, multifaceted legal strategies without undermining the principle that a defendant should be sued in their domicile state.

Lord Justice Newey's Dissent: Contrary to the majority, Lord Newey advocated for the application of a sole object test, arguing that Article 6(1) should not be exploited to circumvent jurisdictional norms. His stance emphasizes enhancing legal certainty and preventing potential abuse, though this did not alter the ultimate decision of the majority.

Impact

This judgment significantly narrows the scope for litigants to strategically join foreign defendants in domestic proceedings under Article 6(1) of the Lugano Convention without demonstrating a "sole object" intent. It reinforces the principle that as long as claims are interconnected to avert conflicting judgments, courts can fairly allocate jurisdiction without the necessity to probe the plaintiff’s underlying intentions.

Consequently, this decision aids in promoting legal certainty and reduces the barriers for plaintiffs to pursue comprehensive claims across multiple jurisdictions, provided the claims meet the connectedness criteria.

Complex Concepts Simplified

Lugano Convention: An international agreement governing jurisdiction and the recognition and enforcement of judgments in civil and commercial matters among EU and non-EU member states.

Article 6(1) of the Lugano Convention: Allows a plaintiff to sue multiple defendants in the domicile courts of at least one of them, provided their claims are closely connected to avoid inconsistent judgments.

Sole Object Test: A hypothetical criterion suggesting that if a plaintiff initiates proceedings solely to bring in another defendant from a different jurisdiction, the initial court should dismiss the claim to prevent jurisdictional manipulation.

Close Connection: A legal standard requiring that the claims against multiple defendants are so interlinked that hearing them together prevents contradictory rulings.

Abuse of Law Principle: A doctrine that prevents the manipulation of legal provisions to achieve unjust or unintended outcomes, such as jurisdictional overreach.

Conclusion

The Court of Appeal's decision in JSC Commercial Bank Privatbank v. Kolomoisky & Ors marks a pivotal moment in the interpretation of the Lugano Convention's jurisdictional provisions. By affirming that Article 6(1) is not subject to a sole object test, the judgment fosters a more flexible and pragmatic approach to cross-border litigation within the framework of established international agreements. This enhances plaintiffs’ ability to address comprehensive legal issues across multiple jurisdictions without being impeded by overly restrictive jurisdictional tests.

The ruling underscores the importance of maintaining closely connected claims to ensure judicial efficiency and coherence, thereby mitigating the risks of irreconcilable judgments while upholding the principles of legal certainty and fairness.