21st October 2016 – European community and questions of jurisdiction, forum shopping (1)
By Silva Opusunju
The Orji Uzor Kalu case and the question of radical transfer of divisional jurisdiction within the Federal High Court has once again ignited a national discourse mainly among legal practitioners about the legal concept of “forum shopping.” Kalu, former governor of Abia State (from 1999-2004), was in 2007 charged along with two others by the Economic and Financial Crimes Commission (EFCC) at the Abuja Division of the Federal High Court, for various acts of financial impropriety. He and his co-defendants pleaded not guilty and thereafter challenged the jurisdiction of the court.
Following the decision of the apex appellate court that the Federal High Court had jurisdiction, the EFCC has now filed an application seeking to transfer the case to Lagos. The question is whether there can be fair hearing for the plaintiff in a matter in which the crimes were allegedly committed while he was in office as governor in Umuahia, Abia State; the action subsequently commenced in Abuja and is now being sought to be transferred to Lagos for final trial process; and whether such forum shopping is permissible under the laws and practices of Nigerian jurisprudence.
As a result of the requests of my colleagues, I have taken this opportunity to throw some light on the subject matter, expanding it to include the related concepts of lis pendens and torpedo actions. I will, in this paper, examine how the international community (using the European Community and its national systems because of similarities with Nigeria) has handled the complex issues of forum shopping, jurisdiction, lis pendens and torpedo actions. Also, I will narrow the study to Nigeria with specific examples of such occurrences in its adjudicatory system. It will also elucidate my findings and recommendations of applicable standards.
Europe is made up of sovereign states each characterised by an independent legal system. Globalisation, fuelled by new forms of innovations, technologies, communication and mass transit systems, continues to aid the rapid movement of people, products and services across Europe and the rest of the world in an unprecedented manner.
Concerned about the near haphazard manner of these economic activities within the region, in 1957, the European Community (EC) was formed with the objective of creating and maintaining a common European market that would regulate internal and, to some extent, trans-national commerce and trade outside the Eurozone. The complication, which was later identified in the pursuit of the common market agenda, was essentially a result of the procedural laws of member states. For example, how should the courts within the different jurisdictions and legal systems that make up the EC region handle cases to ensure avoidance of parallel actions and the timely administration of justice through a non-diversified, but uniformity? What about trade between the EC group and non-forum members?
If not resolved, there was the likelihood of an exponential rise in the cost of doing business in the EC, along with negative impact on foreign investments and innovation in the Community. In the circumstance, the tenets, Conflict of Laws (Private International Law), had to be invoked to weave key legal concepts, procedures and practices of the differing nationalities of the EC states to formulate a civil procedure regime for the contracting states of the EC.
The metamorphosis of the EC into the European Union (EU) brought with it, additional changes, one of which is further reconciliation of the concerns identified in the march towards a workable common market mechanism. Thus in 1968, through the recommendations of the Convention held at Brussels (Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters), it addressed the issue of the duplication of legal proceedings and judgments among the contracting states or parties of the Community. This provision was given thrust by Article 21 of the Convention.
In 2000, the provisions of the Convention relating to the issue of parallel proceedings were codified into a legal instrument called Brussels I Regulation, thus bringing into law the principle of lis pendens in its Article 27. The Regulation, whose success is philosophically hinged on the political will and trust of its signatories, is to be administered by the ECJ in a manner that would adhere strictly to the allocation of jurisdiction on a “first-come, first-served” basis.
According to Eisengraeber: “Article 27 grants privity to the court seised first without giving a subsequently seised court the possibility to examine the first court grounds of jurisdiction. Furthermore, in the case of proceedings involving the same cause of action and between the same parties, Article 27(2) imposes a mandatory obligation on the court subsequently seized to decline jurisdiction in favour of the court first seised.”
Although very exquisitely drafted, unintended problems considered as the side effects of Article 27 have emerged. There is evidence of parties deliberately initiating first-strike actions through early commencement of litigation in order to take advantage of Article 27 provision. In summary, this phenomenon known as “torpedo actions” has tended to render Brussels 1 Regulation, ironically counter-productive to the quick administration of justice, which is the very essence of its formulation.
This paper seeks to address three key issues: the current regulation, including its reforms, the emergence of a universal EC jurisdiction on the subject matter, and the effects of Italian torpedo suits. An in-depth discussion of the Brussels 1 Regulation must inherently entail a discussion of the question of jurisdiction as will be shown in the foregoing paragraphs. To more meaningfully accomplish the objective, the topic will be approached under the following broad themes:
1) The Brussels Convention, Brussels Regulation and Reforms.
2) Jurisdiction in the Context of Brussels Regulation.
3) Torpedo Phenomenon and Actions.
1. The Brussels Convention, Brussels 1 Regulation and reforms
The Brussels Convention came into being in 1973, approximately 18 years after the creation of the European Economic Community in 1957. The purpose was to “harmonise the rules on jurisdiction” of the various state parties to the Community and permit the free “circulation of judgments.” All of these were to be achieved through absolute trust in the legal system of member states. The question of interpretation of the judgments of the foreign courts were also addressed by the formulation and release of the instrument called Protocol on Interpretation in 1975.
Through the vehicle of the Civil Jurisdiction and Judgments Act passed in 1982, but effective 1987, the UK acceded to and domesticated the Convention and the Protocol into its internal laws. It should be noted that not all European nations automatically belong to the EC/EU, or acceded to all legislation emanating from the regional body. Like the British, the Greeks, Spaniards, Portuguese later acceded to the Convention. This resulted in a number of changes and amendments to the provisions of the Convention and Protocol as amended by the 1978, 1982 and 1989 Acts Accession.”
The Convention as amended were enforceable through the supra-national authority of the European Court of Justice (ECJ). While it was easy to adjudicate among the Members of the EC/EU who had “ratified” the Convention, it posed major constitutional challenges in relation to non-Convention member states. One such challenge was that of the European Free Trade Association (EFTA), a body of six states with particular trading relationships. To minimise the potentiality of discontent arising from interpretation and application, the EC entered into a “parallel Convention with EFTA based on the initial Brussels Convention. The product of this effort was the Lugano Convention.
Highlights of Reforms – From Convention to Regulation
In terms of reforms, the Brussels 1 Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (European Council Regulation No. 44/2001, December 2000) seeks to imbibe a character of bindiness among the contracting states, and removes the discretion inherent in the Convention. Since the binding nature means that the ECJ would exercise final authority as apex court (of appeals and interpretation), the objective becomes the promotion of uniformity on the rules of jurisdiction and the enforcement of judgments among the member states. This is accomplished by newer but more streamlined Euro-legal definitions provided in the Regulation.
Both Convention and Regulation have their Articles 1 similar on the question of suing the defendant in his domicile according to the domestic laws of the contracting states. However, and with respect to artificial persons, the change is made in Article 60 of the Regulation.
Another reform ushered in by the Regulation is the determination of the place of performance of contract obligations per Article 5(1). The Regulation was explicit in setting a two stage-tests or criteria; while the Convention left the interpretation to domestic courts on the basis of Conflict of Law principles.
The Convention was beset with difficulties in dealing with Internet commerce (e-Commerce) and trade activities as contained in its Article 13(3) (a-b). But the Regulation addressed this shortcoming in its Article 15(1)(c) on consumer contracts, qualification and justiciability of such agreements, protecting the weaker person- the consumer. Article 15(1)(c) should be read in conjunction with Article 23 of the Regulation, which seeks to protect the validity of Internet contracts executed by use of email/digital signatures, the “submit” or “I Accept” buttons of dialogue boxes by providing that “…any communication by electronic means which provides a durable record of the agreement shall be the equivalent of [writing..]”
By the combined effect of Articles 18-21 under a new Section 5 introduced in the Regulation, matters of employment contracts were given more clarity. Thus the flexibility in the Convention has been removed for a stricter provision on where an employee can be sued. The jurisdiction may be the place of his domicile in the contracting state, where he habitually works, or the business place where his engagement is situated. Again, the regulation seeks to protect the weaker party- the employee.
Regulation’s Article 30 deals with the question of seisn of courts. The Convention had left this to the municipal courts. A two-limb approach has been enunciated by the regime, which reconciles the role of state judicial authorities and the defendant in effecting processes. This will be further explored in the text of this paper.
On the crucial issue of enforcement of judgment, Article 27 of the Convention was silent on the validity of parallel judgments issued by courts of Contracting states. However, Article 34 of the Regulation now decrees that the first judgment if qualified for recognition, prevails. In addition, judgments must have regard to the public policy of member states, where the recognition is being sought. Finally, and provided in Article 43, such judgments, once given, remain sacrosanct and cannot be subjected to further questions of recognition, even though appeals are allowed. Except for this, the enforcement of judgments are automatic per the Regulation.
Under Article 57 of the Convention, Contracting states may wish to be party to other international obligations on the same subject-matter as contracted under the Convention. However, the Regulation has reformed this provision, by handing over such matters to the EC (and not to the states). This is to maintain sustainability of the spirit of the Regulation on a European civil regime.
The Protocol on the Convention (1971) required that only appellate courts (including the House of Lords) when sitting in that capacity can refer matters to the ECJ, where such matters are not acte clair. The Regulation in its Article 68 has changed this by providing that referrals can still be made, but only if there are no existing remedies within domestic courts.
2. Jurisdiction in the context of Brussels 1 Regulation
England uses the open forum to determine questions of jurisdiction, which in itself falls into two categories: common law and statutory provisions. This means that English courts maintain minimal regard to a particularised form of theory of jurisdiction, which is not under the general approach of common law. In pursuit of this, English courts will under the common law (also called traditional) jurisdiction, give consideration to the following:
“(a) jurisdiction founded upon presence;
(b) submission to the jurisdiction; and
(c) the extended jurisdiction of the High Courts arising under RSC Ord. 11(Rules of Court).
There are differences with particular reference to the Dutch and the French approaches, which are mostly statute-governed. However, with regard to the subject-matter, the question of the exercise of civil jurisdiction can be made either through:
i) Common law/traditional rules, which cover those cases that were being litigated before the inception of the Brussels, the Modified or the Lugano Conventions, the Civil Jurisdiction and Judgments Act (1982) or cases that are specifically outside the ambit of the provisions of the Conventions. The determination of jurisdiction will of course be dependent on the establishment of the considerations contained in a-c, above.
ii) Brussels Convention, for those cases that are still governed by the Brussels Convention and its statute enacted in 1968 on European Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters and as may be permitted by prorogation.
iii) Modified Convention, as incorporated by the Civil Jurisdiction and Judgments Act 1982. The key element of this special Convention code is that a reference to the UK, automatically means the particular legal system (such as those of Northern Ireland, Wales, etc) within the UK. O’Brien notes that the “…Conventions applies to: internal cases which would otherwise be outside the Conventions… situations where the defendant is domiciled in the UK…[and] where the UK courts have exclusive jurisdiction under the Conventions’’…in civil and commercial cases.
iv) Lugano Convention – jurisdiction arises where one of the parties is domiciled in an EEC/EFTA state, although such cases are not appealble to the ECJ, but it bears close similarity with the Brussels Convention.
v) Brussels 1 Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (European Council Regulation No. 44/2001) effective from 2000. Note that all references to Convention heretofore mean the Regulation.
Specifically, with respect to the EC, the UK derives its powers from the Civil Jurisdiction and Judgments Act (1968), which is itself a “mirror” of the Modified Convention. Including the Lugano Convention, four fundamental issues characterise the application of the rules and principles of the provisions of the Regulation, with respect to the question of jurisdiction. They are:
i) The matter for determination by the Regulation must involve “international law” or “elements foreign to the contracting state.”
ii) The matter or dispute must be within the realm of commercial law. This appears to be the most difficult to evaluate especially in view of the fact that Article 1 of the neither the Convention nor the Regulation specifically define the meaning of such terms as civil, commercial, revenue, customs or administrative matters. These conflicts as to the recognition of these subject-matter in litigation, appears to have been addressed in two cases by the ECJ. In LTU v Eurocontrol , it held that disputes arising from the imposition of levies or charges by the state on foreign airlines were not commercial, but administrative law in the eyes of this Community; while in the Netherlands State v Ruffer, it held same – that the discharge of a public body’s statutory duty, whether arising by indirect or consequential exercise of its mandate, is in the class of administrative and not commercial law.
To be continued