An Analysis of ECJ Decisions in Gasser, Turner and Owusu Cases - Essay Example

ECJ DECISIONS IN GASSER, TURNER AND OWUSU CASES- AN ANALYSIS Erich Gasser GmbH v MISAT Srl1 Gasser is an Austrian registered company and for many years, it had supplied children’s wear to MISAT, an Italian registered business. In 2000, a dispute arose in the contract and MISAT initiated legal proceedings against Gasser in the Italian Courts thereby setting a confirmation that the contract had come to an end, and it also claimed damages from Gasser for infringement of contract. After the lapse of 8 months, Gasser also initiated legal proceedings against MISAT in the Austrian courts, thereby seeking payments against overdue bills. It also contended that the court had jurisdiction since Austria was the place of performance of the contract as evidenced by the Brussels Convention’s Article 5 (1). Further, in all the invoices raised by the Gasser to MISAT, Austrian court was mentioned as a ‘choice of court’ clause and MISAT had never raised any objection over it. Within the meaning of Articles 17 of the Brussels Convention and because of the trade usage and practice existed in the trade between Italy and Austria, the two parties had consented to accept the jurisdiction of the Austrian courts. The Austrian court jurisdiction was contested by the MISAT on the following: MISAT domicile was in Italy. No valid jurisdiction agreement was in existence. In respect of the same dispute, MISAT had earlier initiated legal proceedings in Rome. However, the Austrian court forwarded this issue to the European Court for an initial hearing on the following question: Whether the court second seised may evaluate the authority of the court of the first seised if the second court has the sole deciding authority under Art 17 or must the second court prevent its proceedings as per Art 21 albeit the accord granting jurisdiction. (Sheppard 2007: 211). Though, there is no involvement of English parties in Gasser case, UK government still presented its written remarks on the question raised. It was submitted that in cases of unique jurisdiction, a derogation from Art 21 can be made by the court second seised and can declare its verdict without awaiting for the court first seised to decide that it had no legal standi on the issue. They counted on ECJ verdict in “Overseas Union Insurance “, which dealt with Article Sixteen as opposed to Article Seventeen, which was in question this case. It was further contended that the court named in the agreement authorising jurisdiction will, in normal parlance, be in a better status to rule as to the impact of that agreement by applying an essential law of that Member Nation. (Sheppard 2007: 211). The European Court held that the objective of Art 21 is to bar corresponding actions occurring in courts of various Contracting States as to stop implementation of judgments. Hence, so as to give effect to this, Art 21 shall have to be given a wide elucidation. It was viewed that under the provision of Art 21, until the legal status of the court firs seised has been corroborated and where it so established, must renounce legal jurisdiction in favour of the latter. (Sheppard 2007: 211). The Brussels Regulation offers a wide-ranging overture to be legal standi and the acknowledgement and the implementation of court verdicts. By acting so, it makes no provision for the principle of “forum non conveniens”, thereby working to refute the application of principle within the European Union system. Further, European Regulation corroborates both a ruling on jurisdiction through contractual preference of court regulations in Article 23 and a strict regulation of lis pendens in Article 27. The lis pendens rule is given as under; Where legal proceedings concerning between the same parties and the same cause of actions are initiated in the courts of different Member Nations, any court other than the court first seised can use its own motion stay its proceedings till such a moment as the jurisdiction of the court first seised is founded. Where the jurisdiction of the court first seised is ascertained, any court other than the first seised shall turn down jurisdiction in favour of that court. A strict race to the courthouse is being created by the Brussels system due to this rule. The first court seised to attain jurisdiction and an action initiated in the court of a second Member Nation is to be blocked and finally dismissed, in favour of the first action. The significance of Article 27 was corroborated in Gasser case where the court showed significance to the lis pendens doctrine over acknowledgment of an ostensible choice of court agreement between the parties to litigation. When one party has first initiated an action in Italy and then a second legal action was initiated in Austria under a choice of court agreement by the other party , the ECJ viewed that Art 21 of the Brussels Convention demands that “ a court second seised whose legal authority has been arrogated under an accord offering jurisdiction must, however, ban proceedings till the court first seised has affirmed that it has no jurisdiction “ and where the length of time of court dealings before the courts of Contracting Nations where the “court of first seised” is deemed to be extremely too long. A decision to litigate in one State by searching a negative declaration in the courts of Lethargia or Torpidia , due to States court systems are so sluggish that it may take many years to get a verdict on the issue. The decisions in Italian courts are famously known for their slowness in deciding the cases to final stage, resulting in the “Italian torpedo” approach of filing in Italy to bar a natural plaintiff from initiating successful legal suits somewhere. Thus, giving precedence to a rule of lis pendens acts to worsen this issue by barring either parallel litigation or the finding a solution to the case in a speedy manner in the natural forum. Thus, under lis alibi pendens rules, other States are likely to be barred from entertaining the analogues dispute in parallel proceedings. (Brand & Jablonski 2007: 128). Owusu v Jackson 2 In this case, ECJ held that Court has no legal standing to grant stay or injunction against proceedings in support of a non-contracting nation. The decision by ECJ in his case will put a full stop to all storms over whether the English court has the jurisdiction to bar its proceedings in support of a non-Contracting State on the footing of “forum non conveniens “by emphasising that the other legal jurisdiction is more proper to decide the case. The ECJ decision is just opposite to the stand assumed by the Court of Appeal in Harrods Buenos Aires Limited [1992] Ch 72 about a decade ago that it did not have. This verdict can be construed as a line of late verdicts in which ECJ has longed for certainty over the elasticity advocated by English common law. (Smith 2005). In this case, ECJ held ruled out the chances of a Contracting State disowning its jurisdiction based on Art 2 of the Convention in favour of a non-Contracting State jurisdiction, on the footing of forum non-conventiens. Under Brussels Regulations also, the same ruling will be applicable. In this case, the defendant Jackson who was residing in UK had let his villa in Jamaica to the claimant, Mr. Owusu, a British citizen. The contract contained provision as to the right of Owusu to have access to a private beach which was managed and owned by a company in Jamaica. While at residing at the villa, Owusu went to swim in the beach and had sustained a fracture in his vertebra. Owusu claimed damages against Jackson in the English court for his injury on the footing of infringement of contract as the beach was not safe. An action was also initiated against several other Jamaican companies and against a beach Management Company in English Court. For the ends of justice and in the pursuits of the all the parties involved, it was contended by Jackson in the English court for a declaration to deny jurisdiction on the footing that Jamaica was the right jurisdiction for initiating any action. Owusu contended that Art 2 of the Convention would be applicable and eschewed the authority of the court to stay its proceedings. However, the stay to proceedings was refused by the trial court and the defendant made an appeal to the “Court of Appeal “which consulted the case to the ECJ (Sheppard 2007: 226). The main question in this case was whether Brussels Convention Art 2 would still be applicable where one of the defendants and the claimant are resided in the identical Contracting Nation and the litigation involving them has some linking features with a non-Contracting Nation. The ECJ ruled that a court of Member Nation cannot refute jurisdiction on the footing that the proceedings have more been linking features to any other (Member) Nation. (Magnus et al 2007:72). The rule laid down in Owusu is as follows ; According to Art 25, where European Regulations are covered by a court in which proceedings are commenced on its own efforts , shall scrutinise whether it has jurisdiction over it or not. Moreover, a court must not entertain jurisdiction if proceedings associating between the same parties and for the same cause of action has already been started in the judicatures of another Contracting Nation in favour of analogue proceedings in the courts of another state. It is irrelevant whether or not the other State is within the EFTA or EU. (O’ Hare & Browne 2005:155). The verdict in Owusu case will have a poignant effect on the resolutions of jurisdictional disputes where a claimant initiates legal proceeding against both foreign domiciled defendants from a non-contracting state and English domiciled defendants in same proceedings. It seems to lead the finding that where a many number of respondents were sued in UK, but only one of them is residing in UK, the English court will not grant stay or injunction against proceedings, even if the natural court or forum is in a non-Contracting Nation or non-Regulation State or, even if the first and principal defendant as in this case Owusu himself is residing in a non –Regulation or non-Contracting Nation. In such instances, the respondent may, hence, find himself ‘hauled” into a legal process in UK, even where neither the subject matter nor the defendant of the legal proceedings has any material link or association with UK. (Smith 2005). Turner v Grovit 3 In Turner v Grovit, on reference by the English House of Lords, a party endeavoured to obtain a restraining order from the English courts thereby thwarting the other party from prolonging court proceedings in Spain. The ECJ held that “the reply to be forwarded to the national court must be that the Convention is to be construed as precluding the grant of an injunction whereby a court of a Contracting State bar a party to a case pending before it from continuing or commencing legal proceedings before a court of another Contracting State, even in case where that party is performing in bad faith with an intention to disturb the existing proceedings. “ The core aim corroborating this relief is that a stay may have the impact of “restricting the relevance of rules on jurisdiction prescribed by the Convention. Moreover, the court emphasised the “reciprocal confidence which has facilitated a compulsory system of jurisdiction to be instituted and the association between the regulations of jurisdictions and on acknowledgement and implementation of foreign judgments. It is to be observed that this verdict only wraps the association between two court cases and is restricted to the case where the court granting the injunction has been apprehended with the action. However, the scenario will be altogether different in arbitration cases since the Court, which is granting the injunction is having the lack of authority to try the case. Further, the reasons evidencing the verdict of the ECJ in “Turner v Grovit “emphasis that it may not be feasible to “restrict” the application of the rules on jurisdiction as stipulated by the conventions. If French court bars a party from continuing or initiating court proceedings in London in tune with the rules on jurisdiction, even if the purpose of the stay is to compel to arbitrate in Paris. Thus, the rationale of Turner v Grovit could substantiate the position that anti-suit injunctions to bar court proceedings in tune with the regulations of Conventions are no longer feasible, even in support of arbitration. (Poudret & Besson 2007:923). ECJ in this case has categorically said that Judicatures of Nations, which are parties to the “Brussels Convention 1968” can claim no legal standi or locus standi to award anti-lawsuit stay so as to stop the continuation or commencement of legal proceedings in the judicatures of other Nations parties to the Conventions. Thus , ECJ held that preventive decrees like this type are irreconcilable with the doctrine of reciprocal faith which the Contracting Nations grant to each other judicial institutions and legal setup even where such stays are granted in order to bar a misuse of procedure by a party performing in unsound trust with an intention to provoking the present legal processes. ECJ further observed that by awarding such restrictive commands tantamount to an objectionable meddling with the authority of the judicature of other Member Nations of the Brussels system. (Force & Davies: 257). Thus , the Turner case emphasis that Regulations and Conventions bar the award of a stay or injection against the initiation or prolongation of proceedings in the judicature of another Contracting Nation , even where the legal proceedings in such other State were initiated for no purpose other than to oppress or harass the applicant. (O’ Hare & Browne 2005:165). Conclusion In Owusu case, the canon of the forum non conveniens was followed, which was held in the celebrated case namely “Spiliada Maritime Corp v Cansulex [1987] AC 460 “where it was held that an English court may turn down jurisdiction on the footing that there is a court in another legal jurisdiction, which is more obviously a suitable authority for the assessment of the action, in the interests of all the parties involved and for the end of justice. It was held by ECJ in Turner v Grovit, granting of anti-suit injunction were contrary with the convention. Hence, it is not possible to get an injunction to stop a party to legal process before one Contracting Nation by starting or prolonging the legal process before a court of another Contracting Nation where even it can be demonstrated that a party is performing not in good faith so as to prolong the legal process which is already on the pipeline. ECJ observed in Gasser v Misak that a court of second seised must grant an injunction or stay favouring the fist court seised thereby deciding its legal standi or jurisdiction even though if the parties have given the court second seised the special or exclusive legal standi or jurisdiction. (Smith 2005). The decisions by European Court of Justice in Turner v Grovit , Gasser v Misat and Owusu v Jackson relates to forbiddance of anti-suit injunctions , lis pendens and the non-application of forum non conveniens where the Brussels Regulations 2001 applies. Thus, the decision by ECJ in Gasser, Turner and Owusu case and in the absence of analogue cannon in the majority of other Contracting Nations, the ECJ has assumed an inflexible stand which guarantees uniformity and certainty of legal application across Contracting Nations. However, this has been at the cost of the suppleness which is earlier available to the English courts to make sure a dispute was tried and taken in its natural forum. (Smith 2005). List of References Brand, Ronald A & Jablonski. (2007). Forum Non Conveniens. Oxford: Oxford University Press. Force Robert & Davies Martin. (2005).Jurisdiction and Forum Selection in International Maritime Law. New York: Kluwer Law International. Magnus Ulrich, Mankowski Peter & Caravaca, Alfonso –Luis Calvo. (2007) Brussels Regulations .Paris: European Law Publications. O’Hare John & Browne Kevin. (2005). Civil Litigation. London: Sweet & Maxwell. Pourdret, Jean –Francois & Besson, Sebastian. (2007).Comparative Law of International Arbitration. London: Sweet & Maxwell. Sheppard, Alexander Mandaraka. (2007). Modern Maritime Law and Risk Management. London: Routledge Taylor & Francis Group. Smith, Herbert. (2005). Court has no jurisdiction to stay proceedings. [online] available from http://www.herbertsmith.com/NR/rdonlyres/7E0897CB-A89E-4DEB-ADE4-4DF602BA941F/923/Litigation_e_bulletin_23_march_05.htm > [accessed 21 May 2010]. Read More

Brand, Ronald A & Jablonski. (2007). Forum Non Conveniens. Oxford: Oxford University Press.

 

 

Force Robert & Davies Martin. (2005).Jurisdiction and Forum Selection in International Maritime Law.  New York: Kluwer Law International.

 

 

Magnus Ulrich, Mankowski Peter & Caravaca, Alfonso –Luis Calvo. (2007) Brussels Regulations .Paris: European Law Publications.

 

 

O’Hare John & Browne Kevin. (2005). Civil Litigation. London: Sweet & Maxwell.

 

 

Pourdret, Jean –Francois & Besson, Sebastian. (2007).Comparative Law of International Arbitration.  London: Sweet & Maxwell.

 

 

Sheppard, Alexander Mandaraka. (2007). Modern Maritime Law and Risk Management.  London: Routledge Taylor & Francis Group.

 

 

Smith, Herbert. (2005). Court has no jurisdiction to stay proceedings. [online] available from http://www.herbertsmith.com/NR/rdonlyres/7E0897CB-A89E-4DEB-ADE4-4DF602BA941F/923/Litigation_e_bulletin_23_march_05.htm > [accessed 21 May 2010].

 

 

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