The First Blow Is Half the Battle; The 'Torpedo' in (International) Legal Proceedings

The Brussels I Regulation (recast) (EU) 1215/2012 (Brussels I) contains rules of private international law to determine which courts have jurisdiction over claims in European civil and commercial matters. The rules on jurisdiction set out in Brussels I have a wide scope: several courts may have concurrent jurisdiction over the same claim or claims. This means that in certain circumstances a party may select a court from among severally objectively competent courts that is from a strategic perspective considered the most appropriate (forum shopping). Forum shopping is not reserved only to (potential) claimants/injured parties. A (potential) defendant/tortfeasor may also exert influence on the forum where an action is brought by proactively seeking negative declaratory relief, or in other words, filing a negative action (in practice also referred to as 'launching a torpedo'). In a paper we recently authored, 'The first blow is half the battle; the 'torpedo' in (international) legal proceedings', we discuss the strategic use of negative actions in cartel damages cases before Dutch, German and English courts and analyze how courts in these countries deal with pre-emptive negative actions that were brought earlier in a different member state.

When claims are pending before two courts of different member states at the same time between the same parties, concerning the same object and involving the same cause of action, the lis pendens principle of Article 29 Brussels I prescribes that the court last seised is required to stay the proceedings on its own motion and, subsequently, decline jurisdiction (when the court first seised assumes jurisdiction). The European Court of Justice (ECJ) emphasized in a number of rulings that Article 29 Brussels I also applies to negative actions and deviating from the lis pendens principle is generally not justified because of any (alleged) improper use of rights (see The Tatry, ECJ 6 December 1994, C-406/92 and Gasser v MISAT, ECJ 9 December 2003, C-116/02).

In our paper we discuss two recent judgments of lower Dutch and German courts (the District Court of Gelderland and the Landgericht Mannheim), where an alleged cartel member pre-emptively commenced a negative action in Germany two weeks before a purchaser – that allegedly incurred damages as a consequence of the (alleged) cartel – initiated proceedings in the Netherlands. In line with the ECJ rulings mentioned above, neither the German nor the Dutch court saw any reason for dismissing this procedural strategy and explicitly rejected claims for abuse of law. In an earlier judgment in a different cartel damages case, the Amsterdam District Court had already indicated that seeking negative declaratory relief, in principle, fulfils a legitimate function (and is not considered abusive). This confirms that Dutch and German courts are generally willing to accept the torpedo in cartel damages cases.

In the paper we note that in practice there is occasionally a perception that English courts are less willing to apply the rules of Brussels I strictly and do not want to facilitate the torpedo tactic. Although outside the scope of Brussels I, an English court is free to assess whether a negative action has been filed purely for the purpose of forum shopping or, as the case may be, whether there is an abuse of (procedural) law, this is different for situations that fall within the scope of Brussels I. If the conditions for application of Article 29 Brussels I have been satisfied, an English court may not, in principle, apply any additional test. In particular, JP Morgan v Primacom [2005] EWHC 508 (Comm), and more recently The Alexandros T [2013] UKSC 70, show that English courts interpret and apply the lis pendens rule autonomously and, in accordance with the directions of the ECJ, in a strict manner. This means that before English courts the threshold for any argument of abuse under Brussels I is similarly very high. When a negative action is brought in a different member state first, the English court that is seised subsequently must and will in principle decline jurisdiction, provided that the conditions of Article 29 Brussels I have otherwise been satisfied.

This refutes the occasional perception about English courts being less willing to apply Brussels I strictly and confirms that negative actions can be an important strategic tool in international litigation. 

This post comes to us from Daan Beenders (Partner) and Wouter Hofstee (Associate) from De Brauw Blackstone Westbroek.