Reaffirming the Criteria for Dominus Litis in Scottish Law: Reactec Ltd v Curotec Team Ltd [2021] CSOH 72

Introduction

The case of Reactec Ltd v Curotec Team Ltd [2021] CSOH 72 was heard in the Scottish Court of Session's Outer House on July 16, 2021. This intellectual property dispute revolved around Reactec Limited (the pursuer) asserting infringement of its patent rights by Curotec Team Limited (the defender). After Reactec obtained an interdict preventing Curotec from infringing its patents, matters escalated when Curotec entered voluntary liquidation. Reactec then sought to hold Rebound Technology Group Holdings Limited (RTGH), the parent company of Curotec, and an individual named Michael Jones liable for the litigation expenses under the doctrine of dominus litis.

Summary of the Judgment

Lord Clark, delivering the opinion, examined whether RTGH and Michael Jones could be deemed dominus litis—essentially the "master of the litigation"—and thus liable for the legal costs incurred by Reactec. The court meticulously analyzed the relationship between RTGH and Curotec, the extent of control exercised by RTGH over the litigation, and the established legal criteria for dominus litis. Ultimately, the court concluded that RTGH did not meet the stringent requirements to be considered dominus litis and dismissed Reactec's motion to hold RTGH liable for the expenses.

Analysis

Precedents Cited

The judgment extensively referenced several key cases to elucidate the principles governing dominus litis:

• Mathieson v Thomson (1853) 16 D 19: Established that dominus litis must have control over litigation arising from a direct interest in the case.
• McCuaig v McCuaig (1909) SC 355: Emphasized that dominus litis must possess the "whole interest" in the litigation for all practical purposes.
• Cairns v McGregor (1931) SC 84: Further clarified the necessity of dominus litis having the entire interest and control over the action.
• Fraser v Malloch (1896) 23 R 619: Highlighted scenarios where the interest and control of a third party supersede those of the nominal litigant.
• Eastford Ltd v Gillespie (2011 SC 501): Determined that mere overlapping of directorships does not suffice to establish dominus litis.
• Shepherd v Elliot (1896) 23 R 695: Discussed the general principles of cost allocation, stating that litigation costs should fall on the party who caused them.
• Travelers Insurance Co Ltd v XYZ [2019] UKSC 48: Provided comparative insights, noting that Scottish courts may recognize a dominus litis beyond the formal party structure.

These precedents collectively informed the court's determination that mere financial interest or indirect control does not suffice to establish dominus litis status.

Legal Reasoning

Lord Clark meticulously dissected the elements required to classify an entity or individual as dominus litis. The primary criteria identified were:

• Direct Interest: The party must have a direct and substantial interest in the subject matter of the litigation.
• Control over Litigation: The dominus litis must possess the authority to direct or compromise the litigation.
• Whole Interest: As per McCuaig v McCuaig, the dominus litis must hold the entire interest in the case for all practical purposes.

In this case, RTGH, despite being the parent company and holding a significant share, did not exhibit complete control or possess the entire interest in the litigation against Curotec. The fact that RTGH provided financial support and had shared directorship did not translate to dominus litis status. Additionally, Michael Jones, though involved in providing instructions, did not have a demonstrable interest aligning with the dominus litis requirements. The court emphasized that corporate structures inherently involve shared control, which does not equate to the overarching control necessary for dominus litis.

Impact

This judgment reinforces the stringent criteria for establishing dominus litis in Scottish law. It underscores that indirect financial interests or shared directorships are insufficient to attribute litigation control and responsibility for costs. Future cases involving parent companies or shareholders seeking to be held liable for subsidiary litigation expenses will reference this decision to assess the necessity of direct control and comprehensive interest. The decision also clarifies that the mere potential for influence does not meet the legal threshold for dominus litis, thereby protecting entities from ancillary liability unless unequivocally demonstrated.

Complex Concepts Simplified

Dominus Litis: A Latin term meaning "master of the lawsuit," referring to the party with the primary control and interest in a legal action. This party is typically responsible for the costs of the litigation.

Interdict: A court order prohibiting a party from performing a specific act, in this case, preventing patent infringement.

Voluntary Liquidation: A process where a company decides to cease operations and liquidate its assets, often to pay off debts.

Secured Loan: A loan backed by collateral, providing the lender with rights to specific assets if the borrower defaults.

Control in Litigation: The authority to make significant decisions regarding the conduct or settlement of a lawsuit.

Conclusion