Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Judges
  • LORDS DECISIONS
  • LORDS DECISIONS >>
  • LORDS
  • LORD BINGHAM OF CORNHILL LORD MACKAY OF CLASHFERN LORD NICHOLLS OF BIRKENHEAD LORD HOBHOUSE OF WOOD-BOROUGH LORD SCOTT OF FOSCOTT
  • LORDS OF APPEAL FOR JUDGMENT
  • LORD BINGHAM OF CORNHILL
  • LORDS,
  • LORDS AND THE PRIVY COUNCIL IN A SERIES OF DECISIONS IN RECENT YEARS WHICH INCLUDE SISKINA (OWNERS OF CARGO LATELY LADEN ON BOARD) AND OTHERS V DISTOS COMPANIA NAVIERA SA [1979] AC 210; CASTANHO V BROWN & ROOT (UK) LTD [1981] AC 557; BRITISH AIRWAYS BOARD V LAKER AIRWAYS LTD [1985] AC 58; SOUTH CAROLINA INSURANCE CO V ASSURANTIE MAATSCHAPPIJ "DE ZEVEN PROVINCIEN" NV [1987] AC 24; SOCIéTé NATIONALE INDUSTRIELLE AéROSPATIALE V LEE KUI JAK [1987] AC 871; AND AIRBUS INDUSTRIE GIE V PATEL [1999] 1 AC 119. THOSE DECISIONS REVEAL SOME DEVELOPMENT OF PRINCIPLE AND THERE HAS IN OTHER DECISIONS (FOR EXAMPLE, MERCEDES BENZ AG V LEIDUCK [1996] AC 284) BEEN SOME DIVERGENCE OF OPINION. BUT CERTAIN PRINCIPLES GOVERNING THE GRANT OF AN INJUNCTION TO RESTRAIN A PARTY FROM COMMENCING OR PURSUING LEGAL PROCEEDINGS IN A FOREIGN JURISDICTION, IN CASES SUCH AS THE PRESENT, AS BETWEEN THE ARMCO COMPANIES AND THESE PCCS, ARE NOW BEYOND DISPUTE. THEY WERE IDENTIFIED BY LORD GOFF OF CHIEVELEY GIVING THE OPINION OF THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL IN AéROSPATIALE (AT P 892):
  • JUSTICE REQUIRE IT.
  • LORD GOFF SUMMARISED THE GUIDING PRINCIPLES:
  • LORDSHIPS, IN A CASE SUCH AS THE PRESENT WHERE A REMEDY FOR A PARTICULAR WRONG IS AVAILABLE BOTH IN THE ENGLISH (OR, AS HERE, THE BRUNEI) COURT AND IN A FOREIGN COURT, THE ENGLISH OR BRUNEI COURT WILL, GENERALLY SPEAKING, ONLY RESTRAIN THE PLAINTIFF FROM PURSUING PROCEEDINGS IN THE FOREIGN COURT IF SUCH PURSUIT WOULD BE VEXATIOUS OR OPPRESSIVE. THIS PRESUPPOSES THAT, AS A GENERAL RULE, THE ENGLISH OR BRUNEI COURT MUST CONCLUDE THAT IT PROVIDES THE NATURAL FORUM FOR THE TRIAL OF THE ACTION; AND FURTHER, SINCE THE COURT IS CONCERNED WITH THE ENDS OF JUSTICE, THAT ACCOUNT MUST BE TAKEN NOT ONLY OF INJUSTICE TO THE DEFENDANT IF THE PLAINTIFF IS ALLOWED TO PURSUE THE FOREIGN PROCEEDINGS, BUT ALSO OF INJUSTICE TO THE PLAINTIFF IF HE IS NOT ALLOWED TO DO SO. SO THE COURT WILL NOT GRANT AN INJUNCTION IF, BY DOING SO, IT WILL DEPRIVE THE PLAINTIFF OF ADVANTAGES IN THE FOREIGN FORUM OF WHICH IT WOULD BE UNJUST TO DEPRIVE HIM. FORTUNATELY, HOWEVER, AS THE PRESENT CASE SHOWS, THAT PROBLEM CAN OFTEN BE OVERCOME BY APPROPRIATE UNDERTAKINGS GIVEN BY THE DEFENDANT, OR BY GRANTING AN INJUNCTION UPON APPROPRIATE TERMS; JUST AS, IN CASES OF STAY OF PROCEEDINGS, THE PARALLEL PROBLEM OF ADVANTAGES TO THE PLAINTIFF IN THE DOMESTIC FORUM WHICH IS, PRIMA FACIE, INAPPROPRIATE, CAN LIKEWISE OFTEN BE SOLVED BY GRANTING A STAY UPON TERMS."
  • LORD GOFF MADE REFERENCE TO "A PARTY WHO IS AMENABLE TO THE JURISDICTION OF THE COURT". THIS ECHOED THE LANGUAGE OF LORD DIPLOCK IN HIS IMPORTANT STATEMENT OF PRINCIPLE IN THE SISKINA, ABOVE, AT P 256, WHICH HAS BEEN UNDERSTOOD TO MEAN THAT THE COURT MAY ONLY GRANT AN INJUNCTION WHERE IT HAS PERSONAL JURISDICTION OVER THE DEFENDANT IN THE SENSE THAT HE COULD BE SERVED PERSONALLY OR UNDER RSC ORDER 11 (OTHER THAN SUB-RULE (I)): SEE CHANNEL TUNNEL GROUP LTD V BALFOUR BEATTY CONSTRUCTION LTD [1993] AC 334 AT 342, PER LORD BROWNE-WILKINSON. THESE PCCS COULD NOT, AS ALREADY NOTED, HAVE OBTAINED LEAVE TO SERVE OUT OF THE JURISDICTION ON ANY OF THE ARMCO COMPANIES IN INDEPENDENT PROCEEDINGS. SERVICE ON APL AND NNIC HAS BEEN SET ASIDE. DOES THE AMENABILITY OF ARMCO INC, AFSC AND AFSIL TO THE JURISDICTION OF THE ENGLISH COURT BY VIRTUE OF THEIR CONTRACTUAL RELATIONSHIP WITH MR DONOHUE ENABLE THESE PCCS TO TAKE ADVANTAGE OF THAT RELATIONSHIP TO EFFECT SERVICE ON THE SOLICITORS NOMINATED BY THOSE COMPANIES PURSUANT TO THE TRANSFER AND SALE AND PURCHASE AGREEMENTS, AND THUS TO PROSECUTE A CLAIM WHICH COULD NOT OTHERWISE HAVE BEEN PROSECUTED IN THIS FORUM? IN MY OPINION IT DOES NOT. SINCE HOLLAND V LESLIE [1894] 2 QB 450 THE VIEW HAS PREVAILED THAT THE COURT SHOULD REFUSE TO ALLOW AN AMENDMENT OF PROCEEDINGS WHICH WOULD INTRODUCE A NEW CAUSE OF ACTION AGAINST A FOREIGN DEFENDANT IN RESPECT OF WHICH THE COURT WOULD HAVE REFUSED LEAVE FOR SERVICE OUT OF THE JURISDICTION (SEE, FOR INSTANCE, BECK V VALUE CAPITAL LTD (NO 2) [1975] 1 WLR 6, AFFIRMED, ALTHOUGH NOT ON THIS POINT, [1976] 1 WLR 572). THIS VIEW SEEMS TO ME TO ACCORD WITH PRINCIPLE. THE JURISDICTION OF THE ENGLISH COURT IS TERRITORIAL. A PARTY RESIDENT ABROAD MAY BE SUBJECTED TO THE JURISDICTION OF THE COURT TO THE EXTENT (AND ONLY TO THE EXTENT) THAT STATUTE OR RULES MADE UNDER STATUTE PERMIT. IT WOULD EMASCULATE THAT SALUTARY RULE IF SUCH A PARTY, PROPERLY SERVED WITH NOTICE OF A CLAIM FALLING WITHIN RSC ORDER 11, CPR R 1 OR R 6.20 WERE THEN TO BE EXPOSED TO CLAIMS FALLING OUTSIDE THE RELEVANT RULE. IN EXERCISING ITS DISCRETION TO GIVE LEAVE TO SERVE OUT OF THE JURISDICTION THE COURT WILL HAVE REGARD TO THE SUBSTANCE OF A CLAIMANT'S COMPLAINT AND NOT PERMIT JURISDICTION TO BE OBTAINED BY A MERE DEVICE: JOHNSON V TAYLOR BROS & CO LTD [1920] AC 144. IT WOULD BE WRONG IN PRINCIPLE TO ALLOW THESE PCCS TO USE MR DONOHUE'S ACTION AS A TROJAN HORSE IN WHICH TO ENTER THE PROCEEDINGS WHEN THEY COULD HAVE SHOWN NO POSSIBLE GROUND FOR DOING SO IN THEIR OWN RIGHT.
  • LORDS, I TURN TO THE QUESTION WHETHER AN ANTI-SUIT INJUNCTION SHOULD BE GRANTED TO MR DONOHUE, RECOGNISING THAT AS BETWEEN HIM AND THE FIRST THREE ARMCO APPELLANTS (ARMCO INC, AFSC AND AFSIL) THERE IS A CONTRACTUAL OBLIGATION TO SUBMIT ANY DISPUTE WHICH MAY ARISE OUT OF OR IN CONNECTION WITH THE SALE AND PURCHASE AGREEMENT TO THE EXCLUSIVE JURISDICTION OF THE ENGLISH COURT. IT IS PLAIN THAT WHILE SOME OF THE CLAIMS MADE BY THE ARMCO COMPANIES IN THE NEW YORK PROCEEDINGS FALL OUTSIDE THE SCOPE OF THIS CLAUSE, SOME CLAIMS CENTRAL TO THE ARMCO COMPANIES' COMPLAINT FALL WITHIN IT. IN THIS SITUATION, EXERCISE OF THE BROAD DISCRETION CONFERRED ON THE COURT BY SECTION 37 OF THE SUPREME COURT ACT 1981 TO GRANT AN INJUNCTION IN ALL CASES IN WHICH IT APPEARS TO THE COURT TO BE JUST AND CONVENIENT TO DO SO IS CONTROLLED BY PRINCIPLES TO BE DERIVED FROM A SUBSTANTIAL LINE OF AUTHORITY HERE AND ABROAD.
  • JUSTICE AND MADE AN ORDER INTENDED TO ACHIEVE A COMPOSITE TRIAL IN LONDON DESPITE A SINGAPOREAN EXCLUSIVE JURISDICTION CLAUSE: SEE AT PP 1375-1376. MAHAVIR MINERALS LTD V CHO YANG SHIPPING CO LTD (THE M C PEARL) [1997] 1 LLOYD'S REP 566 AGAIN INVOLVED THIRD PARTIES AND RAISED THE POSSIBILITY OF INCONSISTENT FINDINGS. DESPITE A CLAUSE CONFERRING EXCLUSIVE JURISDICTION ON THE COURTS OF SEOUL, RIX J REFUSED TO STAY PROCEEDINGS IN ENGLAND. HE REGARDED THE CASE AS ON ALL FOURS WITH CITI-MARCH (SEE P 575) AND AT P 569 OBSERVED:
  • JUSTICE CLARKE DID SO IN HIS JUDGMENT AND THE CONTRARY HAS NOT BEEN ARGUED BEFORE US. THE RELEVANCE OF THE POTENTIAL EFFECTS ON THIRD PARTIES HAS BEEN RECOGNISED IN OTHER AUTHORITIES . . ."
  • JUSTICE TO INJUNCT THE NEW YORK PROCEEDINGS IN SO FAR AS CLAIMS AGAINST [B] AND [D] ARE CONCERNED . . .".
  • JUSTICE. THIS RISK DOES NOT DERIVE FROM THE VENUE ALONE: MR DONOHUE MIGHT, AS A UNITED KINGDOM CITIZEN, PREFER TO BE SUED IN LONDON RATHER THAN NEW YORK IF HE HAS TO BE SUED ANYWHERE, BUT TO HIM, AS A RESIDENT OF SINGAPORE, NEW YORK IS NOT IN ITSELF AN OBVIOUSLY MORE INCONVENIENT FORUM THAN LONDON. A MORE SUBSTANTIAL OBJECTION MAY BE FOUNDED ON THE PERCEIVED PROCEDURAL DISADVANTAGES TO HIM OF BEING SUED IN NEW YORK: AS THE EVIDENCE SUGGESTS, THE COST WOULD BE GREATER, TRIAL WOULD BE BY JURY AND COSTS WOULD BE VERY LARGELY IRRECOVERABLE EVEN IF HE WERE TO SUCCEED. BUT THERE ARE ALWAYS POINTS OF THIS KIND TO BE MADE WHEN COMPARING ONE FORUM WITH ANOTHER, AND THE STANDING, AUTHORITY AND EXPERTISE OF THE FORUM IN WHICH THE NEW YORK PROCEEDINGS ARE BEING PURSUED CANNOT BE QUESTIONED. MUCH MORE SIGNIFICANT, FROM MR DONOHUE'S VIEWPOINT, ARE THE RICO CLAIMS MADE AGAINST HIM. THEY COULD NOT BE PURSUED AGAINST HIM IN ENGLAND. THEY COULD, IF ESTABLISHED IN NEW YORK, LEAD TO THE AWARD OF SWINGEING DAMAGES AGAINST HIM. ON AGREEMENT OF THE EXCLUSIVE JURISDICTION CLAUSE HE COULD REASONABLY HAVE FELT CONFIDENT THAT NO RICO CLAIM ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENTS COULD BE PURSUED AGAINST HIM AND IT WOULD REPRESENT AN OBVIOUS INJUSTICE IF HE WERE NOW TO BE EXPOSED TO THOSE CLAIMS.
  • JUSTICE TO MR DONOHUE, ALREADY NOTED, IF EFFECT IS NOT GIVEN TO THE EXCLUSIVE JURISDICTION CLAUSES) THEY MUST LIE IN THE PROSPECT, IF AN INJUNCTION IS GRANTED, OF LITIGATION BETWEEN THE ARMCO COMPANIES ON ONE SIDE AND MR DONOHUE AND THE PCCS ON THE OTHER CONTINUING PARTLY IN ENGLAND AND PARTLY IN NEW YORK. WHAT WEIGHT SHOULD BE GIVEN TO THAT CONSIDERATION IN THE CIRCUMSTANCES OF THIS CASE?
  • JUSTICE ARE BEST SERVED BY THE SUBMISSION OF THE WHOLE DISPUTE TO A SINGLE TRIBUNAL WHICH IS BEST FITTED TO MAKE A RELIABLE, COMPREHENSIVE JUDGMENT ON ALL THE MATTERS IN ISSUE. A PROCEDURE WHICH PERMITTED THE POSSIBILITY OF DIFFERENT CONCLUSIONS BY DIFFERENT TRIBUNALS, PERHAPS MADE ON DIFFERENT EVIDENCE, WOULD IN MY VIEW RUN DIRECTLY COUNTER TO THE INTERESTS OF JUSTICE.
  • JUSTICE WOULD BE WELL SERVED IF ARMCO'S ALLEGATIONS CONCERNING THE TRANSFER AND SALE AND PURCHASE AGREEMENTS WERE DETERMINED IN ENGLAND AND ITS ALLEGATIONS CONCERNING THE COLLECTION AGREEMENT AND TRUST FUND WITHDRAWALS WERE DETERMINED IN SEPARATE PROCEEDINGS IN NEW YORK. THE JUDGMENT MADE OF THE MOTIVES AND HONESTY OF THE FOUR ALLEGED CONSPIRATORS IN THE ONE CONTEXT WOULD PLAINLY HAVE AN IMPORTANT BEARING ON THE JUDGMENT MADE IN THE OTHER.
  • JUSTICE WOULD BE BEST SERVED BY A SINGLE COMPOSITE TRIAL IN THE ONLY FORUM IN WHICH A SINGLE COMPOSITE TRIAL CAN BE PROCURED, WHICH IS NEW YORK, AND ACCORDINGLY I FIND STRONG REASONS FOR NOT GIVING EFFECT TO THE EXCLUSIVE JURISDICTION CLAUSE IN FAVOUR OF MR DONOHUE. IN NEW YORK PROCEEDINGS MR DONOHUE WILL BE ENTITLED TO CLAIM THAT THE SALE AND PURCHASE AGREEMENT IS GOVERNED BY ENGLISH LAW. AND LORD GRABINER, REPRESENTING ARMCO, HAS ACCEPTED THAT ARMCO'S BREACH OF CONTRACT IN SUING ELSEWHERE THAN IN THE CONTRACTUAL FORUM COULD FOUND A CLAIM BY MR DONOHUE FOR ANY DAMAGE HE HAS SUFFERED AS A RESULT. THE QUALIFICATION IS THAT HE SHOULD BE PROTECTED AGAINST LIABILITY UNDER THE RICO CLAIMS MADE AGAINST HIM BECAUSE OF THE OBVIOUS INJUSTICE TO HIM WHICH SUCH LIABILITY WOULD IN THE CIRCUMSTANCES INVOLVE. BUT BEFORE CONSIDERING WHETHER SUCH A PROTECTION CAN AND SHOULD BE AFFORDED TO MR DONOHUE IT IS NECESSARY TO ADDRESS AN IMPORTANT PRELIMINARY QUESTION.
  • JUSTICE ARE IN MY JUDGMENT BEST SERVED IF AN ANTI-SUIT INJUNCTION IS DENIED TO MR DONOHUE BUT AN UNDERTAKING PROFFERED ON BEHALF OF THE ARMCO COMPANIES (DEFINED TO INCLUDE THE FIVE ARMCO APPELLANTS) IS ACCEPTED IN THE FOLLOWING TERMS:
  • LORD MACKAY OF CLASHFERN
  • LORDS,
  • LORD BINGHAM OF CORNHILL. FOR THE REASONS HE GIVES WITH WHICH I AGREE, I ALSO WOULD ALLOW THE APPEAL ON THE TERMS HE HAS PROPOSED.
  • LORD NICHOLLS OF BIRKENHEAD
  • LORDS,
  • LORD BINGHAM OF CORNHILL. FOR THE REASONS HE GIVES, AND WITH WHICH I AGREE, I TOO WOULD ALLOW THIS APPEAL.
  • LORD HOBHOUSE OF WOODBOROUGH
  • LORDS,
  • LORD BINGHAM OF CORNHILL WITH WHICH I AGREE. THIS APPEAL HAS NOT INVOLVED ANY DISPUTED QUESTION OF PRINCIPLE BUT HAS TURNED UPON THE APPLICATION OF ESTABLISHED PRINCIPLES TO THE FACTUAL COMPLEXITIES OF INTERNATIONAL MULTI-PARTY DISPUTES AS EXEMPLIFIED BY THE FACTS OF THIS PARTICULAR CASE. IT IS BECAUSE WE ARE EXCEPTIONALLY DIFFERING FROM THE COURT OF APPEAL ON A QUESTION OF DISCRETION THAT I WILL BRIEFLY ADD MY OWN REASONS FOR DOING SO.
  • JUSTICE REQUIRES THAT HE SHOULD BE GRANTED AN INJUNCTION. THE COURT OF APPEAL SHOULD HAVE REFUSED THE APPLICATION OF THE FOUR PCCS TO BE JOINED AND SHOULD LIKEWISE HAVE REFUSED THEIR APPLICATION FOR AN INJUNCTION.
  • LORD GRABINER QC FOR THE DEFENDANTS RECOGNISED THIS AND MET IT BY OFFERING THE UNDERTAKING TO WHICH MY NOBLE AND LEARNED FRIEND LORD BINGHAM HAS ALREADY REFERRED. THE OFFER OF THIS UNDERTAKING DOES ALTER THE POSITION AND INDEED A COURT COULD HAVE MET THE POINT BY IMPOSING EQUIVALENT TERMS UPON THE DEFENDANTS AS A CONDITION OF REFUSING TO GRANT MR DONOHUE AN UNQUALIFIED INJUNCTION. THIS TOO HAS CHANGED THE BALANCE BETWEEN THE TWO JURISDICTIONS AND SHOULD BE TAKEN INTO ACCOUNT.
  • LORD GRABINER TOOK HIS ARGUMENT ONE STEP FURTHER. HE ACKNOWLEDGED THAT SOME BREACHES OF THE EXCLUSIVE JURISDICTION CLAUSE HAVE TAKEN PLACE AND WILL CONTINUE, IF THE APPEAL IS ALLOWED AND THE INJUNCTION REFUSED, AND HE LIKEWISE RECOGNISED THAT, IF THIS LEADS TO MR DONOHUE INCURRING A GREATER LIABILITY OR BEING PUT TO A GREATER EXPENSE (EG, FOR UNRECOVERED COSTS) IN NEW YORK THAN WOULD HAVE BEEN THE CASE IN LONDON, MR DONOHUE MAY HAVE A CLAIM IN DAMAGES AGAINST THE DEFENDANTS FOR BREACH OF CONTRACT - BREACH OF THE EXCLUSIVE JURISDICTION CLAUSE. THIS DOES NOT APPEAR TO HAVE BEEN A POINT PUT TO THE COURT OF APPEAL AND IT WAS ONLY RAISED BY LORD GRABINER IN THIS HOUSE DURING HIS REPLY, NO DOUBT AS A RESULT OF HIS FURTHER CONSIDERATION OF THE RICO POINT. I AM PREPARED TO ACCEPT THIS SUBMISSION AND PROCEED ON THE BASIS THAT, IF MR DONOHUE CAN HEREAFTER SHOW THAT HE HAS SUFFERED LOSS AS A RESULT OF THE BREACH OF THE CLAUSE, THE ORDINARY REMEDY IN DAMAGES FOR BREACH OF CONTRACT WOULD BE OPEN TO HIM. I SAY NO MORE THAN THIS SINCE THE POSITION IS COMPLEX. THE LITIGATION IN NEW YORK INCLUDES PARTIES WHO ARE NOT PARTIES TO THE JURISDICTION AGREEMENT AND AGAINST WHOM, AND IN RELATION TO WHOM, MR DONOHUE IS NOT ENTITLED TO RELY UPON THE CLAUSE. FURTHER, WHEN THE ISSUES OF FACT HAVE BEEN FULLY TRIED IN NEW YORK, A SITUATION MAY BE ESTABLISHED WHEREBY MR DONOHUE'S RIGHT TO RELY UPON THE CONTRACT AS AGAINST THE DEFENDANTS MAY BE AFFECTED OR SITUATIONS OF CIRCUITY OF ACTION MAY ARISE. THAT IS NOT PRESENTLY THE POSITION BUT LORD GRABINER'S POINT HAS MERIT AND RELEVANCE IN THIS EXCEPTIONAL AND FINELY BALANCED CASE.
  • LORDSHIPS AND AGAINST THE GRANT OF THE INJUNCTION.
  • LORD SCOTT OF FOSCOTE
  • LORDS,
  • LORD BINGHAM OF CORNHILL, AND GRATEFULLY ADOPT HIS RECITAL OF THE RELEVANT FACTS.
  • LORDSHIPS. IT IS ACCEPTED THAT A CONTRACTUAL EXCLUSIVE JURISDICTION CLAUSE OUGHT TO BE ENFORCED AS BETWEEN THE PARTIES TO THE CONTRACT UNLESS THERE ARE STRONG REASONS NOT TO DO SO. PRIMA FACIE PARTIES SHOULD BE HELD TO THEIR CONTRACTUAL BARGAIN: SEE THE FEHMARN [1958] 1 WLR 159; THE CHAPARRAL [1968] 2 LLOYD'S REP 158; THE EL AMRIA [1981] 2 LLOYD'S REP 119; THE SENNAR (NO 2) [1985] 1 WLR 490; THE ANGELIC GRACE [1995] 1 LLOYD'S REP 87. IF, ON THE OTHER HAND, THERE IS NO CONTRACTUAL BARGAIN STANDING IN THE WAY OF THE FOREIGN PROCEEDINGS, "THE . . . COURT WILL, GENERALLY SPEAKING, ONLY RESTRAIN THE PLAINTIFF FROM PURSUING PROCEEDINGS IN THE FOREIGN COURT IF SUCH PURSUIT WOULD BE VEXATIOUS OR OPPRESSIVE": PER LORD GOFF OF CHIEVELEY IN SOCIéTé NATIONALE INDUSTRIELLE AéROSPATIALE V LEE KUI JAK [1987] AC 871, 896.
  • LORDSHIPS AS TO THE ORDER IN WHICH THE TWO ISSUES REFERRED TO ABOVE SHOULD BE CONSIDERED BUT IT SEEMS TO ME CONVENIENT TO START WITH THE EXCLUSIVE JURISDICTION CLAUSES AND TO TRY AND DECIDE WHAT PART, IF ANY, OF THE NEW YORK PROCEEDINGS THE CLAUSES COVER, WHO IS AND WHO IS NOT ENTITLED TO THEIR BENEFIT AND WHO IS AND WHO IS NOT BOUND BY THEM.
  • LORD BINGHAM. AND THE PROSECUTION IN NEW YORK OF THE CLAIMS, NOT ONLY AGAINST MR DONOHUE BUT AGAINST MR ROSSI AND MR STINSON AS WELL, THAT FALL WITHIN THE EXCLUSIVE JURISDICTION CLAUSE CONSTITUTES A BREACH OF A CONTRACTUAL TERM THAT MR DONOHUE IS PRIMA FACIE ENTITLED TO REQUIRE TO BE OBSERVED. IT IS RELEVANT TO TAKE INTO ACCOUNT, HOWEVER, THAT THE NEW YORK CLAIMS THAT DO FALL WITHIN THE EXCLUSIVE JURISDICTION CLAUSE ON ITS TRUE CONSTRUCTION ARE SOMEWHAT PERIPHERAL, IF MEASURED AGAINST THE SORT OF CONTRACTUAL AND TORTIOUS CLAIMS THAT THE PARTIES MIGHT REASONABLY BE SUPPOSED TO HAVE HAD IN MIND WHEN AGREEING TO THAT CLAUSE. THE CONSPIRACY CONSTITUTED BY THE ALLEGED SECRET AGREEMENT WAS AIMED AT EXTRACTING MONEY FROM THE ARMCO GROUP BY USING, OR MISUSING, THE AUTHORITY OF TWO OF ARMCO'S OWN OFFICERS WHO HAD BECOME CO-CONSPIRATORS. IT IS ONE THING TO CONCLUDE THAT THOSE CLAIMS BASED UPON THE CONSPIRACY THAT ARISE OUT OF OR IN CONNECTION WITH THE MANAGEMENT BUY-OUT ARE CAUGHT BY THE EXCLUSIVE JURISDICTION CLAUSE PROPERLY CONSTRUED; IT IS QUITE ANOTHER TO SUPPOSE THAT THE PARTIES WOULD HAVE HAD CLAIMS OF THAT SORT IN MIND WHEN AGREEING TO THE CLAUSE.
  • LORD BINGHAM HAS REFERRED CONFIRMS IT. IF IT SHOULD TRANSPIRE THAT MR DONOHUE IS SUCCESSFUL IN THE NEW YORK PROCEEDINGS BUT IS UNABLE TO RECOVER HIS COSTS, BEING COSTS THAT HE WOULD HAVE EXPECTED TO HAVE BEEN AWARDED IF HE HAD SUCCESSFULLY DEFENDED IN ENGLAND, I CAN SEE NO REASON IN PRINCIPLE WHY HE SHOULD NOT RECOVER, AS DAMAGES FOR BREACH OF THE EXCLUSIVE JURISDICTION CLAUSE, SUCH PART OF THOSE COSTS AS HE INCURRED IN HIS SUCCESSFUL DEFENCE OF THE CLAIMS THAT FALL WITHIN THAT CLAUSE.
  • LORD BINGHAM HAS SUGGESTED. AS I HAVE ENDEAVOURED TO EXPLAIN, I REGARD THE EXCLUSIVE JURISDICTION CLAUSE, CORRECTLY CONSTRUED, TO THE BENEFIT OF WHICH MR DONOHUE IS BUT MR ROSSI AND MR STINSON ARE NOT CONTRACTUALLY ENTITLED, AS COVERING SOME OF THE CLAIMS MADE AGAINST MR ROSSI AND MR STINSON WHETHER OR NOT MR DONOHUE IS A CO-DEFENDANT AND AS NOT COVERING ANY OF THE RICO ACT CLAIMS. SUBJECT TO THAT, I AM IN RESPECTFUL AND COMPLETE AGREEMENT WITH THE REASONS GIVEN BY LORD BINGHAM FOR ALLOWING THE APPEAL.
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Judges
  • LORDS DECISIONS
  • LORDS DECISIONS >>
  • LORDS
  • LORD BINGHAM OF CORNHILL LORD MACKAY OF CLASHFERN LORD NICHOLLS OF BIRKENHEAD LORD HOBHOUSE OF WOOD-BOROUGH LORD SCOTT OF FOSCOTT
  • LORDS OF APPEAL FOR JUDGMENT
  • LORD BINGHAM OF CORNHILL
  • LORDS,
  • LORDS AND THE PRIVY COUNCIL IN A SERIES OF DECISIONS IN RECENT YEARS WHICH INCLUDE SISKINA (OWNERS OF CARGO LATELY LADEN ON BOARD) AND OTHERS V DISTOS COMPANIA NAVIERA SA [1979] AC 210; CASTANHO V BROWN & ROOT (UK) LTD [1981] AC 557; BRITISH AIRWAYS BOARD V LAKER AIRWAYS LTD [1985] AC 58; SOUTH CAROLINA INSURANCE CO V ASSURANTIE MAATSCHAPPIJ "DE ZEVEN PROVINCIEN" NV [1987] AC 24; SOCIéTé NATIONALE INDUSTRIELLE AéROSPATIALE V LEE KUI JAK [1987] AC 871; AND AIRBUS INDUSTRIE GIE V PATEL [1999] 1 AC 119. THOSE DECISIONS REVEAL SOME DEVELOPMENT OF PRINCIPLE AND THERE HAS IN OTHER DECISIONS (FOR EXAMPLE, MERCEDES BENZ AG V LEIDUCK [1996] AC 284) BEEN SOME DIVERGENCE OF OPINION. BUT CERTAIN PRINCIPLES GOVERNING THE GRANT OF AN INJUNCTION TO RESTRAIN A PARTY FROM COMMENCING OR PURSUING LEGAL PROCEEDINGS IN A FOREIGN JURISDICTION, IN CASES SUCH AS THE PRESENT, AS BETWEEN THE ARMCO COMPANIES AND THESE PCCS, ARE NOW BEYOND DISPUTE. THEY WERE IDENTIFIED BY LORD GOFF OF CHIEVELEY GIVING THE OPINION OF THE JUDICIAL COMMITTEE OF THE PRIVY COUNCIL IN AéROSPATIALE (AT P 892):
  • JUSTICE REQUIRE IT.
  • LORD GOFF SUMMARISED THE GUIDING PRINCIPLES:
  • LORDSHIPS, IN A CASE SUCH AS THE PRESENT WHERE A REMEDY FOR A PARTICULAR WRONG IS AVAILABLE BOTH IN THE ENGLISH (OR, AS HERE, THE BRUNEI) COURT AND IN A FOREIGN COURT, THE ENGLISH OR BRUNEI COURT WILL, GENERALLY SPEAKING, ONLY RESTRAIN THE PLAINTIFF FROM PURSUING PROCEEDINGS IN THE FOREIGN COURT IF SUCH PURSUIT WOULD BE VEXATIOUS OR OPPRESSIVE. THIS PRESUPPOSES THAT, AS A GENERAL RULE, THE ENGLISH OR BRUNEI COURT MUST CONCLUDE THAT IT PROVIDES THE NATURAL FORUM FOR THE TRIAL OF THE ACTION; AND FURTHER, SINCE THE COURT IS CONCERNED WITH THE ENDS OF JUSTICE, THAT ACCOUNT MUST BE TAKEN NOT ONLY OF INJUSTICE TO THE DEFENDANT IF THE PLAINTIFF IS ALLOWED TO PURSUE THE FOREIGN PROCEEDINGS, BUT ALSO OF INJUSTICE TO THE PLAINTIFF IF HE IS NOT ALLOWED TO DO SO. SO THE COURT WILL NOT GRANT AN INJUNCTION IF, BY DOING SO, IT WILL DEPRIVE THE PLAINTIFF OF ADVANTAGES IN THE FOREIGN FORUM OF WHICH IT WOULD BE UNJUST TO DEPRIVE HIM. FORTUNATELY, HOWEVER, AS THE PRESENT CASE SHOWS, THAT PROBLEM CAN OFTEN BE OVERCOME BY APPROPRIATE UNDERTAKINGS GIVEN BY THE DEFENDANT, OR BY GRANTING AN INJUNCTION UPON APPROPRIATE TERMS; JUST AS, IN CASES OF STAY OF PROCEEDINGS, THE PARALLEL PROBLEM OF ADVANTAGES TO THE PLAINTIFF IN THE DOMESTIC FORUM WHICH IS, PRIMA FACIE, INAPPROPRIATE, CAN LIKEWISE OFTEN BE SOLVED BY GRANTING A STAY UPON TERMS."
  • LORD GOFF MADE REFERENCE TO "A PARTY WHO IS AMENABLE TO THE JURISDICTION OF THE COURT". THIS ECHOED THE LANGUAGE OF LORD DIPLOCK IN HIS IMPORTANT STATEMENT OF PRINCIPLE IN THE SISKINA, ABOVE, AT P 256, WHICH HAS BEEN UNDERSTOOD TO MEAN THAT THE COURT MAY ONLY GRANT AN INJUNCTION WHERE IT HAS PERSONAL JURISDICTION OVER THE DEFENDANT IN THE SENSE THAT HE COULD BE SERVED PERSONALLY OR UNDER RSC ORDER 11 (OTHER THAN SUB-RULE (I)): SEE CHANNEL TUNNEL GROUP LTD V BALFOUR BEATTY CONSTRUCTION LTD [1993] AC 334 AT 342, PER LORD BROWNE-WILKINSON. THESE PCCS COULD NOT, AS ALREADY NOTED, HAVE OBTAINED LEAVE TO SERVE OUT OF THE JURISDICTION ON ANY OF THE ARMCO COMPANIES IN INDEPENDENT PROCEEDINGS. SERVICE ON APL AND NNIC HAS BEEN SET ASIDE. DOES THE AMENABILITY OF ARMCO INC, AFSC AND AFSIL TO THE JURISDICTION OF THE ENGLISH COURT BY VIRTUE OF THEIR CONTRACTUAL RELATIONSHIP WITH MR DONOHUE ENABLE THESE PCCS TO TAKE ADVANTAGE OF THAT RELATIONSHIP TO EFFECT SERVICE ON THE SOLICITORS NOMINATED BY THOSE COMPANIES PURSUANT TO THE TRANSFER AND SALE AND PURCHASE AGREEMENTS, AND THUS TO PROSECUTE A CLAIM WHICH COULD NOT OTHERWISE HAVE BEEN PROSECUTED IN THIS FORUM? IN MY OPINION IT DOES NOT. SINCE HOLLAND V LESLIE [1894] 2 QB 450 THE VIEW HAS PREVAILED THAT THE COURT SHOULD REFUSE TO ALLOW AN AMENDMENT OF PROCEEDINGS WHICH WOULD INTRODUCE A NEW CAUSE OF ACTION AGAINST A FOREIGN DEFENDANT IN RESPECT OF WHICH THE COURT WOULD HAVE REFUSED LEAVE FOR SERVICE OUT OF THE JURISDICTION (SEE, FOR INSTANCE, BECK V VALUE CAPITAL LTD (NO 2) [1975] 1 WLR 6, AFFIRMED, ALTHOUGH NOT ON THIS POINT, [1976] 1 WLR 572). THIS VIEW SEEMS TO ME TO ACCORD WITH PRINCIPLE. THE JURISDICTION OF THE ENGLISH COURT IS TERRITORIAL. A PARTY RESIDENT ABROAD MAY BE SUBJECTED TO THE JURISDICTION OF THE COURT TO THE EXTENT (AND ONLY TO THE EXTENT) THAT STATUTE OR RULES MADE UNDER STATUTE PERMIT. IT WOULD EMASCULATE THAT SALUTARY RULE IF SUCH A PARTY, PROPERLY SERVED WITH NOTICE OF A CLAIM FALLING WITHIN RSC ORDER 11, CPR R 1 OR R 6.20 WERE THEN TO BE EXPOSED TO CLAIMS FALLING OUTSIDE THE RELEVANT RULE. IN EXERCISING ITS DISCRETION TO GIVE LEAVE TO SERVE OUT OF THE JURISDICTION THE COURT WILL HAVE REGARD TO THE SUBSTANCE OF A CLAIMANT'S COMPLAINT AND NOT PERMIT JURISDICTION TO BE OBTAINED BY A MERE DEVICE: JOHNSON V TAYLOR BROS & CO LTD [1920] AC 144. IT WOULD BE WRONG IN PRINCIPLE TO ALLOW THESE PCCS TO USE MR DONOHUE'S ACTION AS A TROJAN HORSE IN WHICH TO ENTER THE PROCEEDINGS WHEN THEY COULD HAVE SHOWN NO POSSIBLE GROUND FOR DOING SO IN THEIR OWN RIGHT.
  • LORDS, I TURN TO THE QUESTION WHETHER AN ANTI-SUIT INJUNCTION SHOULD BE GRANTED TO MR DONOHUE, RECOGNISING THAT AS BETWEEN HIM AND THE FIRST THREE ARMCO APPELLANTS (ARMCO INC, AFSC AND AFSIL) THERE IS A CONTRACTUAL OBLIGATION TO SUBMIT ANY DISPUTE WHICH MAY ARISE OUT OF OR IN CONNECTION WITH THE SALE AND PURCHASE AGREEMENT TO THE EXCLUSIVE JURISDICTION OF THE ENGLISH COURT. IT IS PLAIN THAT WHILE SOME OF THE CLAIMS MADE BY THE ARMCO COMPANIES IN THE NEW YORK PROCEEDINGS FALL OUTSIDE THE SCOPE OF THIS CLAUSE, SOME CLAIMS CENTRAL TO THE ARMCO COMPANIES' COMPLAINT FALL WITHIN IT. IN THIS SITUATION, EXERCISE OF THE BROAD DISCRETION CONFERRED ON THE COURT BY SECTION 37 OF THE SUPREME COURT ACT 1981 TO GRANT AN INJUNCTION IN ALL CASES IN WHICH IT APPEARS TO THE COURT TO BE JUST AND CONVENIENT TO DO SO IS CONTROLLED BY PRINCIPLES TO BE DERIVED FROM A SUBSTANTIAL LINE OF AUTHORITY HERE AND ABROAD.
  • JUSTICE AND MADE AN ORDER INTENDED TO ACHIEVE A COMPOSITE TRIAL IN LONDON DESPITE A SINGAPOREAN EXCLUSIVE JURISDICTION CLAUSE: SEE AT PP 1375-1376. MAHAVIR MINERALS LTD V CHO YANG SHIPPING CO LTD (THE M C PEARL) [1997] 1 LLOYD'S REP 566 AGAIN INVOLVED THIRD PARTIES AND RAISED THE POSSIBILITY OF INCONSISTENT FINDINGS. DESPITE A CLAUSE CONFERRING EXCLUSIVE JURISDICTION ON THE COURTS OF SEOUL, RIX J REFUSED TO STAY PROCEEDINGS IN ENGLAND. HE REGARDED THE CASE AS ON ALL FOURS WITH CITI-MARCH (SEE P 575) AND AT P 569 OBSERVED:
  • JUSTICE CLARKE DID SO IN HIS JUDGMENT AND THE CONTRARY HAS NOT BEEN ARGUED BEFORE US. THE RELEVANCE OF THE POTENTIAL EFFECTS ON THIRD PARTIES HAS BEEN RECOGNISED IN OTHER AUTHORITIES . . ."
  • JUSTICE TO INJUNCT THE NEW YORK PROCEEDINGS IN SO FAR AS CLAIMS AGAINST [B] AND [D] ARE CONCERNED . . .".
  • JUSTICE. THIS RISK DOES NOT DERIVE FROM THE VENUE ALONE: MR DONOHUE MIGHT, AS A UNITED KINGDOM CITIZEN, PREFER TO BE SUED IN LONDON RATHER THAN NEW YORK IF HE HAS TO BE SUED ANYWHERE, BUT TO HIM, AS A RESIDENT OF SINGAPORE, NEW YORK IS NOT IN ITSELF AN OBVIOUSLY MORE INCONVENIENT FORUM THAN LONDON. A MORE SUBSTANTIAL OBJECTION MAY BE FOUNDED ON THE PERCEIVED PROCEDURAL DISADVANTAGES TO HIM OF BEING SUED IN NEW YORK: AS THE EVIDENCE SUGGESTS, THE COST WOULD BE GREATER, TRIAL WOULD BE BY JURY AND COSTS WOULD BE VERY LARGELY IRRECOVERABLE EVEN IF HE WERE TO SUCCEED. BUT THERE ARE ALWAYS POINTS OF THIS KIND TO BE MADE WHEN COMPARING ONE FORUM WITH ANOTHER, AND THE STANDING, AUTHORITY AND EXPERTISE OF THE FORUM IN WHICH THE NEW YORK PROCEEDINGS ARE BEING PURSUED CANNOT BE QUESTIONED. MUCH MORE SIGNIFICANT, FROM MR DONOHUE'S VIEWPOINT, ARE THE RICO CLAIMS MADE AGAINST HIM. THEY COULD NOT BE PURSUED AGAINST HIM IN ENGLAND. THEY COULD, IF ESTABLISHED IN NEW YORK, LEAD TO THE AWARD OF SWINGEING DAMAGES AGAINST HIM. ON AGREEMENT OF THE EXCLUSIVE JURISDICTION CLAUSE HE COULD REASONABLY HAVE FELT CONFIDENT THAT NO RICO CLAIM ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENTS COULD BE PURSUED AGAINST HIM AND IT WOULD REPRESENT AN OBVIOUS INJUSTICE IF HE WERE NOW TO BE EXPOSED TO THOSE CLAIMS.
  • JUSTICE TO MR DONOHUE, ALREADY NOTED, IF EFFECT IS NOT GIVEN TO THE EXCLUSIVE JURISDICTION CLAUSES) THEY MUST LIE IN THE PROSPECT, IF AN INJUNCTION IS GRANTED, OF LITIGATION BETWEEN THE ARMCO COMPANIES ON ONE SIDE AND MR DONOHUE AND THE PCCS ON THE OTHER CONTINUING PARTLY IN ENGLAND AND PARTLY IN NEW YORK. WHAT WEIGHT SHOULD BE GIVEN TO THAT CONSIDERATION IN THE CIRCUMSTANCES OF THIS CASE?
  • JUSTICE ARE BEST SERVED BY THE SUBMISSION OF THE WHOLE DISPUTE TO A SINGLE TRIBUNAL WHICH IS BEST FITTED TO MAKE A RELIABLE, COMPREHENSIVE JUDGMENT ON ALL THE MATTERS IN ISSUE. A PROCEDURE WHICH PERMITTED THE POSSIBILITY OF DIFFERENT CONCLUSIONS BY DIFFERENT TRIBUNALS, PERHAPS MADE ON DIFFERENT EVIDENCE, WOULD IN MY VIEW RUN DIRECTLY COUNTER TO THE INTERESTS OF JUSTICE.
  • JUSTICE WOULD BE WELL SERVED IF ARMCO'S ALLEGATIONS CONCERNING THE TRANSFER AND SALE AND PURCHASE AGREEMENTS WERE DETERMINED IN ENGLAND AND ITS ALLEGATIONS CONCERNING THE COLLECTION AGREEMENT AND TRUST FUND WITHDRAWALS WERE DETERMINED IN SEPARATE PROCEEDINGS IN NEW YORK. THE JUDGMENT MADE OF THE MOTIVES AND HONESTY OF THE FOUR ALLEGED CONSPIRATORS IN THE ONE CONTEXT WOULD PLAINLY HAVE AN IMPORTANT BEARING ON THE JUDGMENT MADE IN THE OTHER.
  • JUSTICE WOULD BE BEST SERVED BY A SINGLE COMPOSITE TRIAL IN THE ONLY FORUM IN WHICH A SINGLE COMPOSITE TRIAL CAN BE PROCURED, WHICH IS NEW YORK, AND ACCORDINGLY I FIND STRONG REASONS FOR NOT GIVING EFFECT TO THE EXCLUSIVE JURISDICTION CLAUSE IN FAVOUR OF MR DONOHUE. IN NEW YORK PROCEEDINGS MR DONOHUE WILL BE ENTITLED TO CLAIM THAT THE SALE AND PURCHASE AGREEMENT IS GOVERNED BY ENGLISH LAW. AND LORD GRABINER, REPRESENTING ARMCO, HAS ACCEPTED THAT ARMCO'S BREACH OF CONTRACT IN SUING ELSEWHERE THAN IN THE CONTRACTUAL FORUM COULD FOUND A CLAIM BY MR DONOHUE FOR ANY DAMAGE HE HAS SUFFERED AS A RESULT. THE QUALIFICATION IS THAT HE SHOULD BE PROTECTED AGAINST LIABILITY UNDER THE RICO CLAIMS MADE AGAINST HIM BECAUSE OF THE OBVIOUS INJUSTICE TO HIM WHICH SUCH LIABILITY WOULD IN THE CIRCUMSTANCES INVOLVE. BUT BEFORE CONSIDERING WHETHER SUCH A PROTECTION CAN AND SHOULD BE AFFORDED TO MR DONOHUE IT IS NECESSARY TO ADDRESS AN IMPORTANT PRELIMINARY QUESTION.
  • JUSTICE ARE IN MY JUDGMENT BEST SERVED IF AN ANTI-SUIT INJUNCTION IS DENIED TO MR DONOHUE BUT AN UNDERTAKING PROFFERED ON BEHALF OF THE ARMCO COMPANIES (DEFINED TO INCLUDE THE FIVE ARMCO APPELLANTS) IS ACCEPTED IN THE FOLLOWING TERMS:
  • LORD MACKAY OF CLASHFERN
  • LORDS,
  • LORD BINGHAM OF CORNHILL. FOR THE REASONS HE GIVES WITH WHICH I AGREE, I ALSO WOULD ALLOW THE APPEAL ON THE TERMS HE HAS PROPOSED.
  • LORD NICHOLLS OF BIRKENHEAD
  • LORDS,
  • LORD BINGHAM OF CORNHILL. FOR THE REASONS HE GIVES, AND WITH WHICH I AGREE, I TOO WOULD ALLOW THIS APPEAL.
  • LORD HOBHOUSE OF WOODBOROUGH
  • LORDS,
  • LORD BINGHAM OF CORNHILL WITH WHICH I AGREE. THIS APPEAL HAS NOT INVOLVED ANY DISPUTED QUESTION OF PRINCIPLE BUT HAS TURNED UPON THE APPLICATION OF ESTABLISHED PRINCIPLES TO THE FACTUAL COMPLEXITIES OF INTERNATIONAL MULTI-PARTY DISPUTES AS EXEMPLIFIED BY THE FACTS OF THIS PARTICULAR CASE. IT IS BECAUSE WE ARE EXCEPTIONALLY DIFFERING FROM THE COURT OF APPEAL ON A QUESTION OF DISCRETION THAT I WILL BRIEFLY ADD MY OWN REASONS FOR DOING SO.
  • JUSTICE REQUIRES THAT HE SHOULD BE GRANTED AN INJUNCTION. THE COURT OF APPEAL SHOULD HAVE REFUSED THE APPLICATION OF THE FOUR PCCS TO BE JOINED AND SHOULD LIKEWISE HAVE REFUSED THEIR APPLICATION FOR AN INJUNCTION.
  • LORD GRABINER QC FOR THE DEFENDANTS RECOGNISED THIS AND MET IT BY OFFERING THE UNDERTAKING TO WHICH MY NOBLE AND LEARNED FRIEND LORD BINGHAM HAS ALREADY REFERRED. THE OFFER OF THIS UNDERTAKING DOES ALTER THE POSITION AND INDEED A COURT COULD HAVE MET THE POINT BY IMPOSING EQUIVALENT TERMS UPON THE DEFENDANTS AS A CONDITION OF REFUSING TO GRANT MR DONOHUE AN UNQUALIFIED INJUNCTION. THIS TOO HAS CHANGED THE BALANCE BETWEEN THE TWO JURISDICTIONS AND SHOULD BE TAKEN INTO ACCOUNT.
  • LORD GRABINER TOOK HIS ARGUMENT ONE STEP FURTHER. HE ACKNOWLEDGED THAT SOME BREACHES OF THE EXCLUSIVE JURISDICTION CLAUSE HAVE TAKEN PLACE AND WILL CONTINUE, IF THE APPEAL IS ALLOWED AND THE INJUNCTION REFUSED, AND HE LIKEWISE RECOGNISED THAT, IF THIS LEADS TO MR DONOHUE INCURRING A GREATER LIABILITY OR BEING PUT TO A GREATER EXPENSE (EG, FOR UNRECOVERED COSTS) IN NEW YORK THAN WOULD HAVE BEEN THE CASE IN LONDON, MR DONOHUE MAY HAVE A CLAIM IN DAMAGES AGAINST THE DEFENDANTS FOR BREACH OF CONTRACT - BREACH OF THE EXCLUSIVE JURISDICTION CLAUSE. THIS DOES NOT APPEAR TO HAVE BEEN A POINT PUT TO THE COURT OF APPEAL AND IT WAS ONLY RAISED BY LORD GRABINER IN THIS HOUSE DURING HIS REPLY, NO DOUBT AS A RESULT OF HIS FURTHER CONSIDERATION OF THE RICO POINT. I AM PREPARED TO ACCEPT THIS SUBMISSION AND PROCEED ON THE BASIS THAT, IF MR DONOHUE CAN HEREAFTER SHOW THAT HE HAS SUFFERED LOSS AS A RESULT OF THE BREACH OF THE CLAUSE, THE ORDINARY REMEDY IN DAMAGES FOR BREACH OF CONTRACT WOULD BE OPEN TO HIM. I SAY NO MORE THAN THIS SINCE THE POSITION IS COMPLEX. THE LITIGATION IN NEW YORK INCLUDES PARTIES WHO ARE NOT PARTIES TO THE JURISDICTION AGREEMENT AND AGAINST WHOM, AND IN RELATION TO WHOM, MR DONOHUE IS NOT ENTITLED TO RELY UPON THE CLAUSE. FURTHER, WHEN THE ISSUES OF FACT HAVE BEEN FULLY TRIED IN NEW YORK, A SITUATION MAY BE ESTABLISHED WHEREBY MR DONOHUE'S RIGHT TO RELY UPON THE CONTRACT AS AGAINST THE DEFENDANTS MAY BE AFFECTED OR SITUATIONS OF CIRCUITY OF ACTION MAY ARISE. THAT IS NOT PRESENTLY THE POSITION BUT LORD GRABINER'S POINT HAS MERIT AND RELEVANCE IN THIS EXCEPTIONAL AND FINELY BALANCED CASE.
  • LORDSHIPS AND AGAINST THE GRANT OF THE INJUNCTION.
  • LORD SCOTT OF FOSCOTE
  • LORDS,
  • LORD BINGHAM OF CORNHILL, AND GRATEFULLY ADOPT HIS RECITAL OF THE RELEVANT FACTS.
  • LORDSHIPS. IT IS ACCEPTED THAT A CONTRACTUAL EXCLUSIVE JURISDICTION CLAUSE OUGHT TO BE ENFORCED AS BETWEEN THE PARTIES TO THE CONTRACT UNLESS THERE ARE STRONG REASONS NOT TO DO SO. PRIMA FACIE PARTIES SHOULD BE HELD TO THEIR CONTRACTUAL BARGAIN: SEE THE FEHMARN [1958] 1 WLR 159; THE CHAPARRAL [1968] 2 LLOYD'S REP 158; THE EL AMRIA [1981] 2 LLOYD'S REP 119; THE SENNAR (NO 2) [1985] 1 WLR 490; THE ANGELIC GRACE [1995] 1 LLOYD'S REP 87. IF, ON THE OTHER HAND, THERE IS NO CONTRACTUAL BARGAIN STANDING IN THE WAY OF THE FOREIGN PROCEEDINGS, "THE . . . COURT WILL, GENERALLY SPEAKING, ONLY RESTRAIN THE PLAINTIFF FROM PURSUING PROCEEDINGS IN THE FOREIGN COURT IF SUCH PURSUIT WOULD BE VEXATIOUS OR OPPRESSIVE": PER LORD GOFF OF CHIEVELEY IN SOCIéTé NATIONALE INDUSTRIELLE AéROSPATIALE V LEE KUI JAK [1987] AC 871, 896.
  • LORDSHIPS AS TO THE ORDER IN WHICH THE TWO ISSUES REFERRED TO ABOVE SHOULD BE CONSIDERED BUT IT SEEMS TO ME CONVENIENT TO START WITH THE EXCLUSIVE JURISDICTION CLAUSES AND TO TRY AND DECIDE WHAT PART, IF ANY, OF THE NEW YORK PROCEEDINGS THE CLAUSES COVER, WHO IS AND WHO IS NOT ENTITLED TO THEIR BENEFIT AND WHO IS AND WHO IS NOT BOUND BY THEM.
  • LORD BINGHAM. AND THE PROSECUTION IN NEW YORK OF THE CLAIMS, NOT ONLY AGAINST MR DONOHUE BUT AGAINST MR ROSSI AND MR STINSON AS WELL, THAT FALL WITHIN THE EXCLUSIVE JURISDICTION CLAUSE CONSTITUTES A BREACH OF A CONTRACTUAL TERM THAT MR DONOHUE IS PRIMA FACIE ENTITLED TO REQUIRE TO BE OBSERVED. IT IS RELEVANT TO TAKE INTO ACCOUNT, HOWEVER, THAT THE NEW YORK CLAIMS THAT DO FALL WITHIN THE EXCLUSIVE JURISDICTION CLAUSE ON ITS TRUE CONSTRUCTION ARE SOMEWHAT PERIPHERAL, IF MEASURED AGAINST THE SORT OF CONTRACTUAL AND TORTIOUS CLAIMS THAT THE PARTIES MIGHT REASONABLY BE SUPPOSED TO HAVE HAD IN MIND WHEN AGREEING TO THAT CLAUSE. THE CONSPIRACY CONSTITUTED BY THE ALLEGED SECRET AGREEMENT WAS AIMED AT EXTRACTING MONEY FROM THE ARMCO GROUP BY USING, OR MISUSING, THE AUTHORITY OF TWO OF ARMCO'S OWN OFFICERS WHO HAD BECOME CO-CONSPIRATORS. IT IS ONE THING TO CONCLUDE THAT THOSE CLAIMS BASED UPON THE CONSPIRACY THAT ARISE OUT OF OR IN CONNECTION WITH THE MANAGEMENT BUY-OUT ARE CAUGHT BY THE EXCLUSIVE JURISDICTION CLAUSE PROPERLY CONSTRUED; IT IS QUITE ANOTHER TO SUPPOSE THAT THE PARTIES WOULD HAVE HAD CLAIMS OF THAT SORT IN MIND WHEN AGREEING TO THE CLAUSE.
  • LORD BINGHAM HAS REFERRED CONFIRMS IT. IF IT SHOULD TRANSPIRE THAT MR DONOHUE IS SUCCESSFUL IN THE NEW YORK PROCEEDINGS BUT IS UNABLE TO RECOVER HIS COSTS, BEING COSTS THAT HE WOULD HAVE EXPECTED TO HAVE BEEN AWARDED IF HE HAD SUCCESSFULLY DEFENDED IN ENGLAND, I CAN SEE NO REASON IN PRINCIPLE WHY HE SHOULD NOT RECOVER, AS DAMAGES FOR BREACH OF THE EXCLUSIVE JURISDICTION CLAUSE, SUCH PART OF THOSE COSTS AS HE INCURRED IN HIS SUCCESSFUL DEFENCE OF THE CLAIMS THAT FALL WITHIN THAT CLAUSE.
  • LORD BINGHAM HAS SUGGESTED. AS I HAVE ENDEAVOURED TO EXPLAIN, I REGARD THE EXCLUSIVE JURISDICTION CLAUSE, CORRECTLY CONSTRUED, TO THE BENEFIT OF WHICH MR DONOHUE IS BUT MR ROSSI AND MR STINSON ARE NOT CONTRACTUALLY ENTITLED, AS COVERING SOME OF THE CLAIMS MADE AGAINST MR ROSSI AND MR STINSON WHETHER OR NOT MR DONOHUE IS A CO-DEFENDANT AND AS NOT COVERING ANY OF THE RICO ACT CLAIMS. SUBJECT TO THAT, I AM IN RESPECTFUL AND COMPLETE AGREEMENT WITH THE REASONS GIVEN BY LORD BINGHAM FOR ALLOWING THE APPEAL.
See more information ...
Click here to read the full judgment

Donohue v. Armco Inc and Others

Smart Summary

Factual and Procedural Background

The Respondent, a former executive of Company A’s insurance group, entered into several 1991 agreements (two “transfer agreements” and one “sale-and-purchase agreement”) by which the Respondent and Company E acquired the shares of a run-off insurance business. Each agreement was expressly governed by English law and contained an exclusive jurisdiction clause naming the courts of The State (England) as the sole forum for disputes.

In 1998 the five Appellant companies (collectively, “the Appellants”) commenced proceedings in The City (New York) alleging that the Respondent and three other former executives (“Individual A,” “Individual B,” and “Individual C”) had, through a secret 1991 conspiracy, caused Company A to inject excessive capital into the target business and later siphoned off funds via debt-collection contracts, trust-fund withdrawals and other devices. The New York action pleaded numerous tort counts and claims under the United States RICO statute, exposing the Respondent to the risk of treble damages.

On 8 March 1999 the Respondent issued a summons in The State seeking (1) an anti-suit injunction restraining the Appellants from continuing the New York proceedings and (2) the joinder of several potential co-claimants (PCCs), including Individuals A and B and their companies, as additional claimants in the English action.

At first instance Judge Bingham refused the injunction and declined to add the PCCs. The Court of Appeal (majority) reversed, added all PCCs and granted an injunction against three of the five Appellant companies. The Appellants appealed to the House of Lords.

Legal Issues Presented

  1. Should the English court grant an anti-suit injunction restraining the Appellants from prosecuting the New York proceedings notwithstanding the exclusive jurisdiction clauses?
  2. If an injunction is appropriate, should it extend to claims brought by or against parties who were not signatories to the exclusive jurisdiction clauses (the PCCs)?
  3. Were the PCCs entitled to be joined as claimants despite having no independent basis for English jurisdiction?

Arguments of the Parties

Respondent’s Arguments

  • The New York proceedings breach the exclusive jurisdiction clauses, exposing the Respondent to increased cost, jury trial, and punitive/RICO liability; they are therefore oppressive and should be restrained.
  • Joining the PCCs is “desirable” because all alleged conspirators should litigate in one forum, avoiding duplication and inconsistent findings.

Appellants’ Arguments

  • The exclusive jurisdiction clauses bind only signatories; most New York defendants (Individuals A & B and their companies) are non-signatories and legitimately sued in The City.
  • England is not the natural forum; the alleged conspiracy, evidence, and many parties are located in The Country (U.S.A.).
  • PCCs lack any cause of action that would allow service out of the jurisdiction; their joinder would circumvent territorial limits on jurisdiction.
  • If the House refused an injunction, the Appellants offered an undertaking not to enforce multiple or punitive damages (including RICO treble damages) against the Respondent, Company E or Company F.

Table of Precedents Cited

PrecedentRule or Principle Cited ForApplication by the Court
Société Nationale Industrielle Aérospatiale v Lee Kui Jak [1987] AC 871Anti-suit injunctions appropriate only where foreign proceedings are vexatious or oppressive, balancing injustice to both sides.Formed the baseline test; the House found New York proceedings against non-signatories neither vexatious nor oppressive.
The Siskina [1979] AC 210Injunction jurisdiction depends on personal jurisdiction over the defendant.Cited to show PCCs could not bootstrap jurisdiction through the Respondent.
Channel Tunnel Group v Balfour Beatty [1993] AC 334Limits on granting injunctions where leave to serve out would have been refused.Supported refusal to let PCCs advance claims for which no service-out gateway existed.
The Eleftheria [1970] P 94Factors relevant to enforcing an exclusive jurisdiction clause; “strong reasons” test.Reaffirmed that such clauses are ordinarily enforced absent strong countervailing factors.
Evans Marshall v Bertola [1973] 1 WLR 349Risk of inconsistent judgments where only some parties are bound by jurisdiction clause.Used to weigh the danger of fragmented litigation.
The Angelic Grace [1995] 1 Lloyd’s Rep 87Courts will usually enforce exclusive jurisdiction or arbitration clauses.Cited to show the Respondent’s prima facie contractual right.
Bouygues Offshore v Caspian Shipping [1998] 2 Lloyd’s Rep 461Effect of third-party interests on enforcement of jurisdiction clauses.Illustrated that non-signatory involvement may justify refusing an injunction.
Credit Suisse v MLC [1999] 1 All ER (Comm) 237Composite trials vs. parallel litigation when only some parties are bound by the clause.Informed the House’s preference for a single New York trial.

Court's Reasoning and Analysis

Judge Bingham (for the House) began by rejecting the Court of Appeal’s joinder of the PCCs. The PCCs had no contractual right under the exclusive jurisdiction clauses and could not, independently, satisfy the rules for service outside the jurisdiction. Allowing them to “piggy-back” on the Respondent’s action would undermine territorial limits on jurisdiction.

Turning to the injunction request, the House identified two competing prima facie rights:

  • The Respondent’s contractual right to be sued in The State’s courts on clause-covered claims.
  • The Appellants’ right to litigate non-clause matters—especially serious fraud and RICO allegations—against non-signatories in any competent forum (here, The City).

The key discretionary question was whether “strong reasons” existed to refuse injunctive relief. The House emphasised:

  1. The alleged conspiracy required assessment of the honesty of all four individual defendants; justice strongly favoured a single fact-finder.
  2. Only The City could host a composite trial of all claims (clause and non-clause, RICO and common law) against all defendants.
  3. Granting an injunction would fragment litigation, risking inconsistent findings and leaving some claims (e.g., RICO) without any forum.
  4. The Appellants mitigated potential injustice by undertaking not to enforce multiple or punitive damages (including RICO trebles) against the Respondent and the two corporate PCCs.

Given these factors, the House concluded that the ends of justice required refusal of an injunction despite the exclusive jurisdiction clauses.

Holding and Implications

Appeal ALLOWED; anti-suit injunction set aside; joinder of PCCs refused.

Effect on the parties: the New York proceedings may continue in full, but the Appellants are barred (by their undertaking) from enforcing any multiple or punitive damages against the Respondent or the two corporate PCCs. The Respondent remains free to pursue damages in England for any loss caused by the Appellants’ breach of the jurisdiction clauses.

Broader implications: the decision underscores that English courts will ordinarily enforce exclusive jurisdiction clauses, yet may decline to do so where composite foreign litigation is the only practical route to resolve multi-party disputes and appropriate undertakings can alleviate prejudice. No new substantive precedent was created, but the judgment illustrates the flexible, discretion-based approach to anti-suit injunctions involving complex international conspiracies.

Click here to read the full judgment
Click here to read the smart summary
To access the original judgment, please Sign In or Subscribe.

Donohue v. Armco Inc and Others

Contains public sector information licensed under the Open Justice Licence v1.0.

Use AI to get other relevant cases.
Try AI Pro free for 7 days Upgrade to AI Pro

Comments

Donohue v. Armco Inc and Others
(Dec 13, 2001)