BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

IN THE SUPREME COURT OF JUDICATURE CHANI 97/0811/B

Royal Courts of Justice

Strand, London WC2

Wednesday, 29th October 1997

B e f o r e :

LORD JUSTICE NOURSE

LORD JUSTICE PILL

and

LORD JUSTICE WALLER

---------------

THE CANADA TRUST COMPANY Plaintiffs

and Others

-v-

WOLFGANG OTTO STOLZENBERG

and Others Defendants

---------------

Handed Down Judgment prepared by

Smith Bernal Reporting Limited

180 Fleet Street London EC4A 2HD

Tel: 0171 421 4040 Fax: 0171 831 8838

(Official Shorthand Writers to the Court)

---------------

MR A HOCHHAUSER QC , MR M GRIFFITHS and MR V FLYNN (instructed by Messrs Richards Butler, London EC3) and on 29.10.97 MR C SALTER (instructed by Messrs Colman Coyle, London N1) appeared on behalf of the Appellant Second, Fifth, Seventh, Tenth, Fifteenth and Sixteenth Defendants (RB Defendants).

MR T IVORY (instructed by Messrs Rakisons, London WC2) appeared on behalf of the Appellant Fourth Defendant.

MR C CARR QC , MR P MARSHALL and MR A LENON (instructed by Messrs Denton Hall, London WC2) appeared on behalf of the Respondent Plaintiffs.

---------------

J U D G M E N T

(As Approved by the Court)

Crown Copyright

Wednesday, 29th October 1997

LORD JUSTICE WALLER:

This is an appeal by the Second, Fifth, Seventh, Tenth, Fifteenth and Sixteenth defendants, on behalf of whom Mr Hochhauser Q.C. presented the appeal, and of the Fourth defendant, for whom Mr Ivory presented separate but supporting arguments. The appeals are from the judgment of Mr Justice Rattee delivered on 27 May 1997. That judgment was concerned with the question of the jurisdiction of the English court over the defendants. The Plaintiffs assert that the First defendant (“Mr Stolzenberg”) has at all material times been domiciled in England, and it is on that basis that they assert that the English court has jurisdiction over him, and indeed it is on that basis alone (as will appear) that they assert that the English court has jurisdiction over the other defendants. It is the plaintiffs’ case that Mr Stolzenberg is the principal defendant, and responsible with other defendants for inducing them by fraud to make investments in a Group of Companies called the Castor Group. The plaintiffs have accordingly commenced these proceedings against Mr Stolzenberg in England, and have sought to join as parties those whom they assert partook in the fraud together with certain entities or persons whom they assert hold assets into which the plaintiffs claim to trace their investment.

The plaintiffs assert that the English court has jurisdiction over the Second, Sixteenth and Fourth defendants on the basis that they were domiciled in Switzerland, a contracting state under the Lugano convention, relying on Article 6.1 of that convention which provides as follows:

"A person domiciled in a Contracting State may also be sued- 1. Where he is one of a number of defendants, in the courts for the place where anyone of them is domiciled."

The Lugano convention was incorporated into English law by Section 3A of the Civil Jurisdiction and Judgments Act 1982 inserted by the Civil Jurisdiction and Judgments Act 1991. The plaintiffs desired to serve the above defendants in Switzerland, and, by Ord.11 r.1(2) were entitled so to do without leave of the court provided that prior to issue of the same they could in compliance with Ord.6 r.7 indorse the writ with a statement that the court had power under the Civil Jurisdiction and Judgments Act 1982 (the 1982 Act) to hear and determine the claim, and that no other proceedings involving the same cause of action were pending in another contracting state or in another part of the United Kingdom. Prior to issuing the writ the plaintiffs so indorsed the same in relation to the above defendants. These defendants were served with the proceedings, but applied under Ord.12 r.8 for declarations that the English court had no jurisdiction over them on the ground that the English court did not have jurisdiction to hear and determine the claim because Mr Stolzenberg was not domiciled within the United Kingdom at the material time. It is that declaration which the Judge refused to grant from which refusal these defendants (“the Convention Defendants”) appeal.

As regards the Fifth, Seventh, Tenth and Fifteenth defendants (entities domiciled in Panama, Liechtenstein and Netherlands Antilles i.e. non-contracting states) the plaintiffs needed leave under Ord.6 r.7(1) to issue the writ or a concurrent writ for service out of the jurisdiction. The grounds on which they sought leave were that those defendants were necessary and proper parties within Ord.11 r.1(1)(c) i.e. necessary or proper parties to a claim brought against a person duly served (whether within or out of England). The plaintiffs sought that leave prior to having served any defendants, and these defendants accordingly applied to set aside leave. It was accepted before the judge that before leave to serve out of the jurisdiction could be granted in reliance on Ord.11 r.1(1)(c), at least one other defendant should have been served, and that thus prima facie leave had been wrongly granted. However, the judge having ruled that Mr Stolzenberg was domiciled in the United Kingdom at the material time, and that the Convention Defendants had been duly served, was prepared to validate service retrospectively on these “non-Convention Defendants” following the guidance given in Kuwait Oil Tanker Co. S v. Al Bade [1997] 2 All ER 855. The non-Convention Defendants challenge the judge’s decision to validate, but they do so simply by reference to the point which arises in relation to the Convention Defendants. Their submission is that the judge was wrong to conclude that Mr Stolzenberg was domiciled in England at any material time, and was wrong thus to conclude that the English court could ever have any jurisdiction over any defendant. Thus, it is submitted, since such service as has taken place must be set aside there could never be a basis for leave under Ord.11 r.1(1)(c), and obviously thus no foundation for any validation.

Various matters were raised before the judge and have been raised on the appeal which may need further consideration; for example the judge, when the matter was before him, was asked to consider whether Mr Stolzenberg had been served within the United Kingdom, and there is a respondents’ notice on that aspect of the case. There are further applications to adduce fresh evidence from both sides, the application from the defendants seeking to put in further evidence to challenge whether Mr Stolzenberg was ever domiciled within the United Kingdom at any material time, but we have been asked to deal at this stage with certain points of principle decided by the judge against the appellants in the hope that that will dispose of the appeal or at least curtail the same.

Those points of principle are as follows.

(1) What is the correct standard of proof to apply to the question whether a defendant is domiciled in England on an application under Ord.12 r.8 involving issues arising under Article 6?

(2) What is the correct date for determining whether or not a defendant is domiciled in England for the purpose of determining whether the court has jurisdiction under Article 6?

(3) Should Article 6 on its true construction require the defendant domiciled within England to have been served prior to issue or service of the proceedings against defendants in other contracting states?

The judge held that the Convention Defendants’ applications to set aside service would fail if the plaintiffs had shown a good arguable case that the requirements of Article 6.1 had been satisfied. He refused to accept the submission made on behalf of those defendants that the standard of proof required was what he described as “the ordinary civil standard of proof, that is to say, on the balance of probabilities.”

We have had a full and helpful citation of authority. What can be gleaned from those authorities can in some instances be summarised, but also calls for some comment.

(1) There is no doubt that where the English court is considering whether any of the sub-paragraphs under Ord.11 r.1(1) apply in relation to leave to serve out of the jurisdiction, the relevant question is whether the plaintiff has established a good arguable case: see Seaconsar Ltd. V Bank Markazi [1994] 1 AC 438 .

(2) There are however points in and arising from the speech of Lord Goff of Chievely in Seaconsar which establishes the above proposition and in his analysis of Vitkovice Horni a Hutni Tezirsto v Korner [1951] A.C. 869, on which I should expand a little:

a. first, he makes clear that under Ord.11 r.4(2) the words “No such leave shall be granted unless it shall be made sufficiently to appear ... ” are directed to whether the plaintiff has established that the case falls within one of the heads of jurisdiction specified in r.1. In this he is following Lord Davey in Chemische Fabriik vormals Sandos v Badische Anilin und Soda Fabriks (1904) 90 L.T. 733 at 735 where he said in relation to similar words under the former rule “The words at the end of the order do not, I think, mean more than that the court is to be satisfied that the case comes within the class of cases in which service abroad may be made under the first rule of the order.”

b. second, he demonstrates through his analysis of Korner that the House of Lords in that case rejected the civil standard of proof in relation to establishing that a case fell within one of the relevant sub-paragraphs. In Korner the question that arose was whether a breach of contract had occurred within the jurisdiction. Slade J, purporting to follow Lord Goddard in Malik v NarogniBanka [1946] 2 All E.R. 663, had distinguished between the questions (1) whether there was a contract; (2) whether there had been a breach of contract; and (3) whether such breach had been committed within the jurisdiction and had applied the civil burden of proof to the third question. Lord Goff’s summary is as follows:

"This House took the view that Lord Goddard’s statement of the law in Malik, or at least Slade J’s understanding of it, was erroneous in so far as it required that the plaintiff must satisfy the court on the civil burden of proof that his case fell within one of the heads of jurisdiction in Ord. 11, r. 1(1). The applicable standard was laid down in Ord. 11 r. 4(2), which required no more than that it should be made sufficiently to appear to the court that the case was a proper one for service out of the jurisdiction, a requirement that was inconsistent with a standard of proof “which in effect amounted to a trial of the action or a premature expression on its merits:” see per Lord Simonds, at p. 879. Equally, the expression “prima facie case” was rejected as inappropriate, because a conflict may arise on the material before the court, which has to reach a conclusion on all the materials then before it. In an endeavour to assist on the degree of sufficiency required by rule 4(2) Lord Simonds (with whom Lord Normand, at p. 881, agreed) said, at p. 880, that “the description ‘a good arguable case’ has been suggested [by counsel for the plaintiff] and I do not quarrel with it;” and Lord Radcliffe ( with whose statement of principle Lord Tucker, at p. 890, agreed) used the expression “ a strong argument,” at pp. 883 and 885, and “a strong case for argument,” at p. 884. There is no reason to suppose that there is any material difference between these various expressions, from which is derived the “good arguable case” test which has been applied in innumerable cases since. At all events, the House of Lords held unanimously that, on that test, the plaintiff was entitled to succeed, and so dismissed the appeal. For present purposes, it is relevant to consider to which elements in what is now paragraph (e) of Ord. 11 r. 1(1) the House of Lords concluded that the “good arguable case” test should be applied. Lord Radcliffe, at pp. 883-884, was of the opinion that he was unable to be “satisfied as to where a breach of contract had taken place without being at any rate as much satisfied that the contract existed and had been broken.” On this approach (with which, as I understand it, Lord Tucker was in agreement) it will be necessary for the purpose of establishing jurisdiction under paragraph (e) not merely to show (to the extent required by rule 4(2)) that, if there was a contract and it had been broken, such breach was committed within the jurisdiction (which had been the view of Lord Goddard C.J. in Malik) but so to establish all three elements of contract, breach and place of breach. Likewise, Lord Simonds considered, at p.879, that the plaintiff's prospects of establishing the existence of the oral agreement on which he relied were relevant to the question of jurisdiction. Lord Normand agreed generally with Lord Simonds; and Lord Oaksey expressed no opinion on the point. It follows that four members of the Appellate Committee must be taken to have decided that, when considering what is now paragraph (e), all three elements of contract, breach and place of breach must be established, to the extent required by rule 4(2), before the plaintiff can successfully invoke the jurisdiction of the court under that paragraph. It also follows that, under that paragraph, no separate issue will arise on the merits of the plaintiff's claim to which a lower standard of proof might be applied; and for that reason no question arose directly as to the standard of proof applicable to the merits of the plaintiff's claim in Korner's case, though the point was adverted to by Lord Tucker. I wish to record in parenthesis my suspicion that a failure to appreciate this point has led to a belief that the "good arguable case" test established in Korner's case is as applicable to the merits of the plaintiff's case as it is to the question of jurisdiction under Ord. 11, r. 1(1) - as indeed has been stated in successive editions of The Supreme Court Practice: see the 1993 edition, para 11/1/6, p.85.

c. third, by necessary implication Lord Goff must have rejected the notion of there being any different standard of proof depending on whether or not a point will only arise at the jurisdiction stage. This point has now been affirmed by the Court of Appeal in Agrafax Public Relations Ltd v United Scottish Society Inc [1995] CLC 862 (see in particular the passage in Henry L.J.’s judgment at 869E with which Ward and Russell LJJ agreed). Accordingly, insofar as in Attock Cement v Romanian Bank for Foreign Trade [1989] 1 WLR 1147 Staughton L.J. could be taken to be suggesting a different standard of proof in relation to an issue which relates to jurisdiction and which will not be an issue at the trial he is not to be followed. But Lord Goff was not concerned to explore in Seaconsar the application of the standard "good arguable case" to all the various factors that can arise. It is I believe important to recognise, as the language of their Lordships in Korner demonstrated, that what the court is endeavouring to do is to find a concept not capable of very precise definition which reflects that the plaintiff must properly satisfy the court that it is right for the court to take jurisdiction. That may involve in some cases considering matters which go both to jurisdiction and to the very matter to be argued at the trial e.g. the existence of a contract, but in other cases a matter which goes purely to jurisdiction e.g. the domicile of a defendant. The concept also reflects that the question before the court is one which should be decided on affidavits from both sides and without full discovery and/or cross examination, and in relation to which therefore to apply the language of the civil burden of proof applicable to issues after full trial, is inapposite. Although there is power under Ord.12 r.8(5) to order a preliminary issue on jurisdiction, as Staughton L.J. pointed out in Attock, at p.1156D it is seldom that the power is used because trials on jurisdiction issues are to be strongly discouraged. It is also important to remember that the phrase which reflects the concept "good arguable case" as the other phrases in Korner “a strong argument” and “a case for strong argument” were originally employed in relation to points which related to jurisdiction but which might also be argued about at the trial. The court in such cases must be concerned not even to appear to express some concluded view as to the merits, e.g. as to whether the contract existed or not. It is also right to remember that the "good arguable case" test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a "trial". "Good arguable case" reflects in that context that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate i.e. of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.

The civil standard of proof has itself a flexibility depending on the issue being considered and the concept "good arguable case" has a similar flexibility. It is natural for example in a case concerned with a contract where the jurisdiction depends on whether the breach took place within the jurisdiction, but where the issue to be tried will be whether there was a contract at all, not to wish to give even the appearance of pre-trying the central issue, even though the concept of being satisfied must apply both to the existence of the contract and the place of the breach. It is equally natural for the court in the process of being satisfied to scrutinise most jealously that factor which actually provides jurisdiction. It is equally natural that where the foundation of jurisdiction is domicile i.e. an issue that will not arise at the trial, that particular scrutiny of the material available takes place in the context of the limitations applied to an interlocutory process.

(3). Under sub-paragraph (a) of Ord.11 r.1(2), where the question is whether the defendant is domiciled within the jurisdiction, domicile in that sub-paragraph has the same meaning as under the 1982 Act (see Ord.11 r.1(4)), and in Dubai Bank Ltd v Fouad Haji Abbas and Another Transcript 17th July 1996 (page 6) one can see Saville L.J., in a judgment with which Simon Brown and Aldous LJJ agreed, applying the test of “good arguable case” to the issue of domicile, but, as appears from the judgment, Saville L.J. scrutinised the material which was before the court before concluding that the plaintiffs had failed to make out a good arguable case for the defendant being domiciled in England. His approach is I believe to be consistent with what I have suggested above.

(4) On a reference from the House of Lords in relation to Article 5(3) of the Brussels Convention the European Court of Justice in Fiona Shevill and others v Presse Alliance S[1995] ECR 1-415 ruled that in relation to the standard of proof required before a national court was entitled to conclude that it had jurisdiction, the question was one for the national courts. The court held that the "criteria for assessment" were governed by national law "provided that the effectiveness of the convention is not thereby impaired." It is perhaps right to recognise that we are concerned with the Lugano Convention in relation to which the European court does not have jurisdiction. This is reflected in Sections 3 and 3B of the 1982 Act as amended by the 1991 Act, Section 3 making the decisions of the European Court determinative in interpreting the Brussels Conventions, and Section 3B simply requiring the English court to take account of any relevant decision of any other Lugano contracting state. But this is a distinction without a difference having regard to the fact that the Brussels Convention and Lugano Convention are in identical terms and the English court must accordingly follow the interpretation of the European court. In any event, in declarations signed between Member States of the European Community and the EFTA member states, the EFTA member states have declared that they consider it appropriate that their courts, when interpreting the Lugano Convention, pay due regard to the case law of the European court and the courts of the member states of the European communities in respect of provisions of the Brussels Convention. (see Dicey and Morris 12th edition p.288/9).

(5) The English court has had to consider the standard of proof to be applied to Convention and in particular Brussels Convention cases. The two most important decisions are decisions of the court of appeal in Tesam Distribution v Schuh Mode Team [1990] I.L.Pr. 149 and Molnlycke AB v Procter & Gamble [1992] 1 W.L.R. 1112. They held that the standard of proof to be applied to the question whether a plaintiff had established whether, in the one case, the English court had jurisdiction under Article 5(1), and in the other whether it had jurisdiction under Article 5(3) was the same as for the establishment of whether a plaintiff had brought himself within one of the sub-paragraphs of Ord.11 r.1(1). Paragraph 49 of the judgment of Stocker L.J. in Tesam with which O’Conner L.J. agreed, says as much, and Dillon L.J. (with whose judgment on this aspect Woolf and Leggatt LJJ agreed) also refers to the test being “ a good arguable case” (see 1120F) in Molnlycke. However, both decisions were prior to Seaconsar, and it is possible that some of the language used might have been different after that decision.

In Tesam, the issue between the parties was whether a contract existed at all, it being clear that if it did performance would have been in London and that thus Article 5(1) would have applied. Nicholls L.J. having, it is right to emphasise, referred to the passage in the Schlosser Report, much relied on by Mr Hochhauser before us, to the effect that “... a court may assume jurisdiction only if it is completely satisfied of all the facts on which such jurisdiction is based ...” said in relation to the issue relating to the existence of the contract as follows:

"This is not to say that the bare assertion of the existence of a contract is the end of the matter on an interlocutory application such as this. Far from it. The English court has ample powers of its own to see that the jurisdiction which it is given by Article 5(1) of the Convention is not abused. When leave to serve a writ out of the territorial jurisdiction of the English court is needed under Order 11, rule 1(1), leave is not granted unless it is made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction (see Order 11, rule 4). To satisfy that requirement a good arguable case must be made out : see Lord Simonds in Vitkovice v Korner . Order 11, rule 1(1) does not apply in the present case. Jurisdiction under the Convention is not a matter of discretion. Nevertheless, bearing in mind that jurisdiction under Article 5 is an exception to the general rule under Article 2, the English court will be astute to see that frivolous or vexatious claims for the existence of a contract are stopped summarily at the outset, either under Order 18, rule 19 or under the inherent jurisdiction of the court. There must be evidence establishing a genuine and real dispute. The court should be satisfied that there is a serious question which calls for a trial for its proper determination."

The phrase "serious question which calls for a trial" reflects the language of which Lord Goff in Seaconsar would have approved in relation to the merits of the dispute after a good arguable case has been established for bringing the case within one of the sub-paragraphs of Ord.11 r.1(1). Nicholls L.J.’s language could be said to be a little different when he turns to deal with the actual point which established jurisdiction i.e. in that case where the contract was to be performed. At paragraph 26 he said “The national court has to be satisfied that it has jurisdiction. For example, if the defendant is sued in the court of the state in which he is not domiciled .... where the claim is for breach of contract the court must be satisfied as to the place of performance ...”

Stocker L.J. put the matter this way:-

"There must be evidence adduced from which a conclusion could properly and genuinely be drawn that a contract existed and that the place of performance was the country in which the action was brought. Once jurisdiction can be properly established on this basis then the effect of Article 5(1) in the light of the Effer v Kaniner decision is that the court has jurisdiction finally to determine the issues between the parties. If after full trial the conclusion is that no contract existed, then since the court had jurisdiction to determine the issue, that determination is final and binding upon the parties.”

Later he made clear that the standard he was applying was the “Ord.11 - viz a good arguable case”.

In Molnlycke Dillon L.J. when saying the test should be “good arguable case” went on to say “as interpreted by Nicholls L.J.”in Tesam. He then quoted the passage in the judgment of Nicholls L.J. in Tesam suggesting the test of “serious question which calls for trial ”. He then dealt with Stocker L.J.’s reference to Ord.11, and said that he had no doubt that Stocker L.J. was using the phrase “good arguable case” in the sense used by Nicholls L.J.

In the light of Seaconsar it seems to me that in the Ord.11 context it can now be seen that it was probably inappropriate to use the phrase "serious question to be tried" as if it was equated with "good arguable case". Seaconsar demonstrates that what has to be sufficiently shown for the purpose of establishing jurisdiction both in relation to the argument as to whether the contact existed or not (which may arise more fully at the trial) and as to where the breach took place, (which will not), has to be shown to the standard of a “good arguable case”. As further appears from Seaconsar, that is a threshold below “proved on a balance of probabilities”, because that is the civil burden after a full trial, but higher than “serious question to be tried” which relates of the plaintiff’s claim relative to the contract. But, as I have sought to stress, "good arguable case” is a concept with some degree of flexibility depending on the issue. Accordingly, although at first sight there may in the judgment of Nicholls L.J. appear to have been some elision between the “good arguable case” and “the serious issue to be tried” when considering at the jurisdiction stage, a question ultimately also to be in issue at the trial i.e. the existence of the contract, I do not think he was in fact eliding the concepts Lord Goff had in mind in the use of the different phrases "good arguable case" and "serious issues to be tried". The judgment is merely consistent with the flexibility in the concept of "good arguable case" to which I have referred. In any event it is clear in my view (1) that the Court of Appeal intended that the test in relation to convention cases should be the same as in the context of Ord.11 r.1(1); and (2) that in relation to points that went to jurisdiction they intended “good arguable case” as interpreted in the Ord.11 context to be the standard of proof.

(6) There is a further point to have in mind. In relation to Ord.11, the court is of course exercising a discretion which gives it an additional basis for ensuring that the spirit of that rule is complied with. No discretion is being exercised so far as the Convention is concerned, but even in relation to the Convention there is a further protection for a defendant to which I have already made a passing reference. The court will be anxious to see that the Convention is not abused and that its effectiveness is not impaired. In the Article 6 context in particular, despite the notion that the court has no discretion where the Convention is concerned, one sees that the court has formulated what are in essence terms to be implied into Article 6 e.g. that there must be a connection between the claims made (see e.g. Gascoigne v Pyrah The Times 26/11/91); it must not be the sole object of joining a defendant to oust the jurisdiction of the court of the domicile of other defendants (see the additions to note 75 in the 4th Cumulative supplement to Dicey & Morris 12th Edition and the reference to an Irish case Gannon v B&I Steampacket Co.Ltd [1993] 2 I.R. 359) and it would be an abuse of Article 6 to join a defendant simply to obtain discovery (see Molnlycke 1117B). Thus in approaching the question whether the court is satisfied that it should take jurisdiction under Article 6 for example, it will certainly have in mind the implications in relation to prevention of abuse.

(7) I ought finally to refer to a decision of my own relied on by Mr Hochhauser - I.P.Metal v Ruote [1993] 2 LL 60, and to the ruling of the Court of Appeal refusing leave to appeal from that decision reported at [1994] 2 LL 560. That case was concerned with Article 17 (agreements as to jurisdiction) and as to whether that Article, if applicable, in effect overrode Articles 21 and 22. I expressed the view that Article 17 did override, but that the English court would want to be as clear as possible, and at least form the view that it was highly likely that if the matter were tried out the plaintiff would succeed in his argument on the jurisdiction clause, before concluding that Article 17 applied. I was referred to Tesam and Molnlycke and Mr Gaisman for the plaintiffs in that case was seeking to persuade me that “a good arguable case” was the appropriate test. I rejected “good arguable case” as the appropriate test when dealing with Article 17, and preferred what I conceived to be a higher test because the question of whether there was a consensus within the terms of that Article was likely only to be of relevance when jurisdiction was being decided. In addition, I applied what I conceived to be a higher test, because I was dealing with a situation in which another court was seised and where it was being argued that it was that court which should decide the question of jurisdiction, not the English court. When leave to appeal was refused Saville L.J. referred to my formulation “highly likely”, but I do not read the judgment as approving or disapproving of the words I used.

I too was dealing with the matter without the benefit of Lord Goff’s analysis in Seaconsar. I think I was probably wrong to reject “good arguable case” as being the appropriate test. I say probably because the court may be in a slightly different position when faced with whether Article 17 should apply and override Article 21 or 22, than it is when considering whether it has jurisdiction under Articles 5 or 6. But I rather suspect that in truth “good arguable case” is the appropriate standard which I should have adopted, and that I failed to appreciate that that language would have enabled me to take the attitude that I did.

In the result in my view the judge was right to rule that the relevant standard of proof on the domicile issue was “good arguable case”, and there is no indication that he did not apply that concept correctly.

Time for testing domicile under Article 6

The relevant words of Article 6 are as follows:-

A person domiciled in a Contracting State may also be sued- 1. Where he is one of a number of defendants, in the courts for the place where any one of them is domiciled. 2. As a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case.

The relevant words of Article 2 are as follows:-

"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State. Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State.

There is no issue between the parties that, as the European Court of Justice held in Case 189/87 Kalfelis v Schroder [1988] ECR 5565 at para 19:

" ... the ‘special jurisdictions’ enumerated in Articles 5 and 6 of the Convention constitute derogations from the principle that jurisdiction is vested in the courts of the State where the defendant is domiciled and as such must be interpreted restrictively".

But this helps very little in solving the problem as to the time at which the domicile of “any one of the defendants” must exist under Article 6 because it would seem obvious that the relevant time must be the same under Article 2 as under Article 6.

What the Convention Defendants submit is that the words “be sued” wherever they appear in Articles 2, 3, 5, 6, 8 and 9 refer to the service of proceedings and not to the mere issue of proceedings. In his reply Mr Hochhauser suggested that sued really meant “summonsed” and that a defendant was not summonsed until he had been served. The most formidable argument of Mr Hochhauser was that unless “sued” bore that meaning there would be an inconsistency with Articles 19, 21, 22 and 23.

In relation to Articles 19, 21, 22 and 23 where the Convention is attempting to resolve situations where courts of Member States might be competing for jurisdiction, the concept which the Convention uses is of courts being “seised”. Thus by Article 19 it is provided that a court of a Contracting State “seised” of a claim which is principally concerned with a matter over which the courts of another Contracting State has exclusive jurisdiction by virtue of Article 16, it shall, of its own motion, declare it has no jurisdiction. Article 21 deals with proceedings involving the same cause of action and between the same parties being brought in different Contracting States, and imposes an obligation on any court other than the one first “seised” (1) to stay its proceedings until the jurisdiction of the court first “seised” is established, and (2) where it is established, to decline jurisdiction in favour of that court. Article 22 deals with related actions giving a discretion to courts other than the one first “seised” to stay proceedings. Article 23 deals with actions which are within the “exclusive jurisdiction of several courts” and imposes an obligation on all courts other than the one first “seised” to decline jurisdiction.

The concept seised has been considered by the Court of Appeal on two occasions, firstly in Dresser v Falcongate [1991] 1 LL 557; and then further in The Sargasso [1994] 2 LL 6. Those cases have established that the English court is not “seised” of proceedings until the proceedings have been actually served. Bingham L.J. in Dresser at p.569 summarised the matter in this way:-

"With genuine respect to the contrary opinions of Mr. Justice Hirst and Mr. Justice Hobhouse, it is in my judgment artificial, far-fetched and wrong to hold that the English Court is seised of proceedings, or that proceedings are decisively, conclusively, finally or definitely pending before it, upon mere issue of proceedings, when at that stage (1) the Court's involvement has been confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve the proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiff's claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve the writ or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiff's claim in any way, and not entitled to do so save be calling on the plaintiff to serve or discontinue; (6) the Court cannot exercise any powers which, on appropriate facts, it could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the Court. It would be wrong, at this early stage in the life of the Convention (in so far as it affects the United Kingdom), to attempt to formulate any rule which will govern all problems which may arise in the future. I am, however, satisfied that the English Court became seised of these proceedings, which first became definitively pending before it, when the defendants were served on July 13, 1989. The plaintiffs and the defendants then became bound by the Rules of Court to perform the obligations laid on them respectively or suffer the prescribed consequences of default. The defendants became subject to the Court's jurisdiction unless they successfully challenged or resisted it which they were required to do then or not at all. In the ordinary, straightforward case service of proceedings will be the time when the English Court becomes seised. I would, however, stress the qualification, because that is not an invariable rule. The most obvious exception is where an actual exercise of jurisdiction (as by the granting of a Mareva injunction or the making of an Anton Piller order or the arrest of a vessel) precedes service: plainly the Court is seised of proceedings when it makes an interlocutory order of that kind. Further exceptions and qualifications may well arise in practice, but they do not fall for consideration in this case."

It is that last aspect with which the Court of Appeal in The Sargasso disagreed holding that service in all cases was required.

The argument of Mr Hochhauser is that there is no reason in principle or logic for applying a different test when considering Article 6, particularly as the policy lying behind both provisions (in relation to which it should be said there is no issue) is of avoiding inconsistent judgments. Mr Hochhauser accepts Mr Carr Q.C.'s submission that the phrases used in Articles 2, 3, 5 and 6 and the phrase used in Articles 11, 12 and 14 "bring proceedings” involve the same concept, one viewed from the defendant’s point of view, and the other from the plaintiff’s point of view, but he says that the word “seised” is dealing with the same concept simply from the court’s point of view. How, he would ask rhetorically, can a court not be seised, if either a defendant has been sued or a plaintiff has brought proceedings? But he submits Mr Carr’s submissions involve that being possible.

When pressed to demonstrate how, as a matter of language he suggested that the Convention should be read so as to give effect to his submissions, Mr Hochhauser showed us during the course of his reply a passage from Briggs on Civil Jurisdiction and Judgments 2nd edition page 16

"The Conventions are European texts, designed and drafted by civil lawyers trained in the continental legal tradition; and they are interpreted by judges who are, by a large majority, civilian lawyers. The texts have to be understood, and interpreted, according to the European style, at least if they are to be understood in a way which will conform, to the views of the Court of Justice. The English custom of interpreting, more or less literally, the precise relevant words, following the prior decisions of earlier courts, is not the European way. Instead, the Conventions are interpreted "teleologically"; that is to say, with a view predominantly given to the overall purposes of the Convention as a whole, as distinct from simply seeking to ascertain the natural meaning of a single provision in isolation from the rest of the text. For this reason, attention to the general principles underpinning the Convention, as the Court of Justice has declared them and as set out here, is the proper first step in the interpretation of any individual provision: they must be taken as read in all cases. A sound teleological argument may well defeat a good literal one."

He further showed how, in addition to the phrases “be sued”, “bringing Proceedings”, and “seised”, the Convention also used the concept of proceedings being “instituted”

(e.g. Article 6(2)), and of the document “instituting” (Article 20) or which “instituted” (Article 27(2)). He relied both in his original argument and in reply on Article 52 which provides as follows:-

"In order to determine whether a party is domiciled in the Contracting State whose courts are seised of a matter, the Court shall apply its internal law. If a party is not domiciled in the State whose courts are seised of the matter, then, in order to determine whether the party is domiciled in another Contracting State, the court shall apply the law of that State."

Mr Hochhauser submitted that the use of the present tense, and the reference to the court being seised, showed that the court was only intended to consider domicile after service.

I have to say that at the end of the day I did not find the use of other phrases in other Articles and/or Article 52 of any particular assistance. What was clearly a powerful point however was that at first sight it may seem strange if the concept under Articles 21 and 22 of a court being seised involves service, but being sued or bringing proceedings does not. But even if the point is a powerful one, I could not follow why, as Mr Hochhauser submitted, Articles 21 and 22 could not operate if “be sued” and “bring proceedings” meant commence the proceedings by issuing a writ. As Mr Carr forcefully pointed out, those Articles are concerned with a different stage i.e. a stage when a tie break has to operate. That tie break will only operate as between courts which actually have jurisdiction under the provisions of the Convention. There is accordingly actually no reason why the point of time at which that tie break operates should not be different from the point of time for deciding whether the court should be entitled to take jurisdiction originally even if at first sight it may seem surprising that it should be so.

Accordingly, (with the above passage of Briggs in mind), the question is ultimately one of construction of the relevant Articles. But I would stress that by using the word construction I do not intend to confine myself slavishly to the language. Obviously, if it is necessary to imply terms so that the Convention achieves its objectives, it appears from the illustrations already given that such terms will be implied. Strict construction will not necessarily supply the answer if the objectives of the Convention would thereby be frustrated.

The starting point is Article 2. The Article is concerned to establish the courts in which a person or company “shall” be sued. It is not concerned with the country in which a person or company shall be served. It is not in issue however that whether or not in one sense the courts of a country can be said to have jurisdiction over the people who live there, the in personam jurisdiction of the court is only achieved by service of the court process (see Rule 22 of Dicey & Morris page 270). In this sense it seems to me that point (7) of Bingham L.J.’s points in Dresser (despite Mr Carr’s protest to the contrary) is right. If the proceedings are ones to which Article 2 of the Convention applies, in order to sue in the courts of a defendant’s domicile, a writ or other document instituting the proceedings will have to be issued in the relevant court, and then served either within the Contracting State of the relevant court or in any other Contracting State.

It must in fact be rare for it to be a relevant question to ask whether it is at the time of the issue of the process in the relevant court or time of service of the process, that the defendant should be domiciled in the Contracting State of the court that has issued the process. Article 2 reflects the fundamental principle - defendants should be sued in their home state. Normally a person whose home is in a certain state will be both sued and served there, and if he were served elsewhere it would be because of some temporary visit to another state. In the instant case it would seem that Mr Stolzenberg may (and we know little about the facts and so I stress may) be seeking to change his domicile from the United Kingdom so as to avoid the jurisdiction of the English Court. That produces one circumstance where the point in time becomes of importance. Mr Hochhauser stressed that it was important not to construe the Convention on the basis that the reason why there might be a difference in domicile between date of issue and date of service was through an attempt to evade service, and suggested that it might well happen that a writ had been issued and not served and a defendant without any knowledge of proceedings moved and changed his domicile prior to service. In such a case he submitted that to give effect to the fundamental principle such a defendant should be entitled to have proceedings issued in the Contracting State to which he had moved, and to have the first proceedings set aside.

I reject the notion that date of service is the relevant date under Article 2, either as a matter of language or as a matter of implication. I accept that the court is searching for one moment in time i.e. either the issue of proceedings or the service of the same, but not both. The language of Article 2 is only consistent with that moment being the issue, because it contemplates taking action “in the courts”. It furthermore seems to me that since the issue of proceedings is a step that the plaintiff is bound to take and incur cost in taking, it is important that a plaintiff can identify easily the court before which he can bring his action before he launches it. Support for this being the plaintiff’s right is provided by a passage in the judgment of the European Court in Mulox IBC Ltd v Hendrick Geels [1993] ECR1-4075 where it is said as follows:-

"It is settled case-law that, as far as possible, the Court of Justice will interpret the terms of the Convention autonomously so as to ensure that it is fully effective having regard to the objectives of Article 220 of the EEC Treaty, for the implementation of which it was adopted. That autonomous interpretation alone is capable of ensuring uniform application of the Convention, the objectives of which include unification of the rules on jurisdiction of the Contracting States, so as to avoid as far as possible the multiplication of the bases of jurisdiction in relation to one and the same legal relationship and to reinforce the legal protection available to persons established in the Community by, at the same time, allowing the plaintiff easily to identify the court before which he may bring an action and the defendant reasonably to foresee the court before which he may be sued." (my emphasis).

Mr Hochhauser emphasises that the above quotation also refers to the defendant being able “reasonably to foresee the court before which he may be sued”. But if the choice is between a court which the plaintiff was absolutely right in thinking was the defendant’s home court when he issued the proceedings and a court which has only recently become the defendant’s home court after the issue of proceedings, I am not sympathetic to the view that the plaintiff should be disadvantaged. On any view the court chosen was one which the defendant would, for a considerable period of his life, have been happy to have been sued in; his disadvantage is therefore very small.

Furthermore, if the above were not the correct view there are much greater disadvantages to which the plaintiff will be put. First, he will have been put to the cost and expense of preparing for and issuing the first proceedings. Second, if he has issued proceedings in the courts of the defendant’s domicile just prior to the limitation period expiring, and the defendant changes his domicile either innocently or with some more devious motive, if time of service is the relevant moment in time, the defendant can not only insist on being sued in his newly acquired domiciliary, but can insist on the original proceedings being set aside on the basis that that original court had no jurisdiction. He would thus obtain the advantage of a limitation defence. Third, if by chance the defendant is one who would wish to evade service of proceedings, he would on the defendants’ construction, be able to change domicile once he appreciated that proceedings in what was then his state of domicile had been commenced. I follow Mr Hochhauser’s submission that the Convention should not be construed with persons evading service as the only defendants in mind, but nevertheless it has to be recognised that defendants are not always willing litigants. It does in fact seem to me that a change or attempted change in domicile between issue and service is more likely to come from an unwilling defendant. A plaintiff accordingly should be entitled not to have proceedings set aside where they have been issued in the courts of a defendant’s domicile at the time of issue, and in my view under Article 2 time of issue is the relevant time.

I have spent some time on Article 2 and addressed the arguments in relation to that Article because it is difficult to see how the point in time could be different when Article 6 comes to be considered. But before turning to Article 6 it is worth mentioning Article 5. Article 5 provides the first exceptions to Article 2, and allows a person “to be sued” “in another Contracting State” in certain situations. The language is not consistent with allowing “service” in another Contracting State, indeed clearly once again the contemplation is of proceedings issued in the State to which one of the exceptions applies, with service in any Contracting State. The exceptions do on the whole either exist as at the date of issue or not at all, but little assistance can be gained from that fact. But exception (6) allows a defendant to be sued in his capacity as “settlor, trustee or beneficiary of a trust .... in the courts of the Contracting State in which the trust is domiciled”. The whole purpose is to allow a defendant to be sued in a country where he is not domiciled but where the trust is domiciled. It seems again that it would be an unnatural construction to place on that provision that would allow a plaintiff perfectly properly to form the view that the trust was domiciled in country X, incur the expenditure of consulting lawyers and getting proceedings issued, but find because it took time to locate the relevant defendant in some other Contracting State so as to serve him, that because in the meanwhile the trust had moved its domicile, the plaintiff had to start again elsewhere. Furthermore, what it might be asked if there were more than one trustee being sued? Unless date of issue is the correct point in time there could be a needless uncertainty as to the way in which Article 5(6) was to operate. Assume proceedings started against three trustees in the place where the trust was domiciled; assume one served immediately, but the others not for some period during which period the trust moved its domicile. Assume the trustee first served wanted the proceedings to remain in the court where they were started but the others applied to set the same aside on the basis that they must be sued in the country of their domicile, or the country of the trust’s new domicile. Suffice it to say the solution would not be easy if date of service were the relevant date.

Now to Article 6 itself. In Article 6(2) the concept seised is referred to in relation to third party proceedings. In that context seised would appear to have the same meaning as in Articles 21 and 22, but since prior to the taking of any such proceeding there must have been service on the defendant I do not myself think that any assistance is gained either way from the use of that term in that context. If anything it could be said to contrast with the expression sued.

Article 6 is concerned to avoid irreconcilable judgments being handed down in different Contracting States, and so far as Article 6.1 is concerned it does fulfil a function similar to the “necessary or proper party” provisions of Ord.11 r.1(1)(c) (see Dicey & Morris page 369). But it is in my view not necessarily to be equated with that provision alone. The Rules of the Supreme court recognise by other provisions the convenience of enabling connected issues being determined between all parties interested before the same tribunal; see for example in relation to joinder of defendants Ord.15 r.4(1) and if the proceedings are already in being the joinder of other parties Ord.15 r.6(2). Article 6 .1 simply recognises that principle, and seeks to provide a solution for the situation in which defendants from different domiciles should be defendants in the same proceedings in accordance with that principle. Mr Hochhauser stressed in relation to the construction of Article 6.1 that it should be construed in his clients' favour because it was being sought to deprive his clients of their fundamental rights under Article 2. That factor would seem to me rightly to be material in relation to whether the proceedings are sufficiently connected or whether Article 6 is being abused. However, I do not think it assists in determining the relevant date at which a defendant has to be domiciled. The relevant date must be the same for Article 6 as for Article 2. A plaintiff faced with wishing to sue defendants in proceedings connected in the sense required for Article 6 purposes has to take the same decisions as a plaintiff seeking to sue one defendant in the courts of his domicile under Article 2. What in fact Article 6 allows him to do is to comply with Article 2 so far as one or more defendants are concerned, and join others who are domiciled in other Contracting States. It is Article 6 that provides the power to issue the process in the court of the domicile of one defendant, and that court then allows service on the defendants so joined. It must once again be as at the date when the writ is issued that the relevant domicile must be tested for all the reasons already given in relation to Article 2.

Mr Hochhauser in his reply laid emphasis on the fact that the plaintiffs in this case had a choice and chose a less stable defendant for founding the jurisdiction of the English court. This was to support his argument that it was not unjust for the relevant date to be the date of service of the proceedings. But there are two comments to make. First, it has not been submitted, nor as I understand the allegations made by the plaintiffs could it be submitted, that Mr Stolzenberg was made a defendant simply to oust the jurisdiction of Contracting States where others were domiciled. If that were an allegation that could be made and was well founded, as already indicated by process of some implication into Article 6 of words similar to those appearing in Article 6.2, the court would have jurisdiction to stay such proceedings. Second, there is no question that the plaintiffs do have to establish the domicile of Mr Stolzenberg to the standard of proof already indicated, and it is for them to chose whether they wish to take on that burden ( if they appreciated there might be doubt about the matter), or continue with attempting to discharge that burden once they did appreciate there was a contest.

Article 6 also itself supports the construction I have placed on Article 2 in this way. Unless the defendants’ further argument to which I am about to turn is right, i.e. that service on Mr Stolzenberg was required before issue or at least service of the proceedings under Article 6 vis a vis the Convention Defendants, date of service produces great uncertainty and possible frustration of the objectives of Article 6.1. The argument presumably has to be that the date for ascertaining Mr Stolzenberg’s domicile is the date of service on each individual defendant. If again one assumes a multiplicity of defendants a domicile in England at the date of issue and some defendants served before the change in domicile, and if one then assumes a change of domicile and service on others; assume again the defendants first served wish to fight the proceedings in England and not in the place of the new domicile, but the other defendants want either the places of their own domicile or the courts of the new domicile. How does the court resolve the problem? If one point in time is appropriate in multiple defendant cases that point has to be issue if grave uncertainty and possible frustration of the objectives of the Convention is to be avoided.

I should finally on this aspect refer to certain other points.

1. Reliance was placed by Mr Hochhauser and Mr Ivory on Ord.11 r.1(2) their emphasis being placed on the fact that that rule concentrated on service. I cannot myself see how that rule helps to construe the Convention albeit I suppose it might assist in demonstrating what the English court contemplated in the concept “sued” or “bringing proceedings”. All I need say is that even if it is right to construe “sued” and the “bringing of proceedings” from the English court’s point of view, (and in the light of Zelger v Salinitri (no 2) [1984] ECR 2397 that may be right), as those representing the defendants emphasised, the English court will still in the context of the Convention “have regard to the international purpose which the Convention was made to achieve.” see Bingham L.J. in Dresser p.564, and the similar words of Steyn L.J. in The Sargasso p.10. The court's perspective is accordingly unlikely to be assisted by textual analysis of its own rules of court. But in any event, of equal relevance would then be Ord.6 r.7 which requires the indorsement on the writ prior to issue that the court has the power to hear and determine the claim under the 1982 Act.

2. Article 20 sub paragraph 2 could be said to give support to the view I have expressed in that it could be said to be contemplating a court dealing with the matter before service. Mr Hochhauser sought to demonstrate that it was in fact dealing with situations in which there had been service but too little time for the defendant to arrange his defence. I do not think Mr Hochhauser's submission is well founded, but I do not think the point is of any great influence.

3. Mr Ivory referred us to Rule 36 of Dicey & Morris 12th Edition concerned with the recognition by the English Courts of foreign judgments, and to the first case where such judgments are recognised being “If the judgment debtor was at the time the proceedings were instituted, present in the foreign country”. This reflects the general rule that “the plaintiff must sue in the court to which the defendant is subject at the time of suit ...” He then sought to persuade us that albeit the court of Appeal in Adams v Cape Industries [1990] Ch 433 had ultimately left the point open, because they had referred to dicta in earlier cases and said “It would appear that date of service of process rather than the date of issue of the proceedings is to be treated as the “time of suit” ...” this should influence our approach to the construction of the Convention. In my view the starting point, i.e. that time of suit is time of service, is not very firmly based, but in any event the point does not persuade me that the construction which seems to me to flow from the words and the objectives of the Convention should be any different from that I have suggested.

Ord.11 r.1(1)(c) expressly requires the claim to have been brought against a person “duly served within or out of the jurisdiction”, as well as the intended defendant to be a necessary or proper party. There is nothing in the wording of Article 6 which equates with that specific requirement in Ord.11 r.1(1)(c).

The reason for the express requirement in Ord.11 r.1(1)(c) flows from the original rule which required service on a defendant within the jurisdiction before a further defendant could be made a necessary and proper party. That was a requirement to ensure that someone within the jurisdiction was not simply made a party to obtain jurisdiction. Now the requirement is there in order to ensure that an action is genuinely brought against a defendant in relation to whom jurisdiction can be established by some other means. It is further a requirement to swear an affidavit in accordance with Ord.11 r.4(1)(d) stating the grounds for belief that there is between the plaintiff and the person on whom the writ has been served a real issue which the plaintiff may ask the court to try. But the rule is dealing with a situation in which leave to issue and serve is required from the court. That leave is obtained ex parte, and one can see that insistence on service on another defendant prior to obtaining leave may provide some practical safeguard.

There is no requirement for the obtaining of leave before the issuing of proceedings in reliance on Article 6. The concept is thus possibly more akin to Ord.15 r.4 under which there are safeguards against the abuse of the power to join co- defendants in the same proceedings, but an insistence that one should have been served before issue against, or service on another, is not one of them.

It is in my view not surprising that Article 6 does not provide for the service of proceedings on one defendant before the issue and joinder of others, because no practical safeguard would be provided by so insisting. The first time that a court will review the question of whether Article 6.1 provides jurisdiction is on an inter partes application contesting that jurisdiction. At that stage sufficient protection is available to a defendant and the order in which defendants have been served or whether one was served before the issue of proceedings against another has no materiality whatever. The proper question at that stage under Article 6.1 is simply whether a defendant domiciled within the jurisdiction is a party and a genuine party, and whether the Convention is in any way being abused.

I accordingly do not construe Article 6 as requiring service on the defendant domiciled within the country of the relevant court prior to issue or service of proceedings on other defendants. Furthermore I can see no necessity for implying a term to that effect.

Answers to points of principle

I would accordingly answer the points of principle as follows.

(1) "Good arguable case" is the appropriate standard of proof to apply to the question whether a defendant is domiciled in England on an application under Ord.12 r.8 involving issues arising under Article 6.

(2) The correct date for determining whether or not a defendant is domiciled in England for the purpose of determining whether the court has jurisdiction under Article 6, is the date of issue of the proceedings against the defendant domiciled in England.

(3) Article 6 does not require service on the defendant domiciled in England prior to issue or service of the proceedings against other defendants.

LORD JUSTICE PILL:

I gratefully adopt Waller LJ’s statement of facts. I also agree that the judge’s approach to the relevant standard of proof was correct.

The respondents seek to sue the appellants by relying upon Article 6.1 of the Lugano Convention and the first defendant’s domicile in England. The second issue, stated by Waller LJ, is as to the correct date for determining whether or not a defendant is domiciled in England for the purpose of determining whether the court has jurisdiction by virtue of Article 6. Is it the date on which the English writ was issued or the date of service?

That question requires a consideration of Article 2 of the Convention which, insofar as is material, provides that “subject to the provisions of this Convention, persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that state”. That is a general rule and, if it applies, the appellants cannot be sued in England.

Article 6 of the Convention creates a special jurisdiction which provides for a derogation from the general rule. Article 6.1 provides that “a person domiciled in a contracting state may also be sued - where he is one of a number of defendants, in the courts of the place where any one of them is domiciled.” The judge held that, a writ having been issued against the first defendant, in England, at a time when for present purposes it is assumed he was domiciled in England, Article 6.1 operates to permit the appellants to be sued in England. The appellants contend that, because the writ was not at a material time served upon the first defendant, Article 6.1 does not operate so as to permit them to be sued in England.

In Trade Indemnity v Forsakringsaktiebolaget Njord [1995] 1 All ER 796 Rix J referred at p 815, to the “underlying philosophy that jurisdiction is vested in the courts of the state where the defendant is domiciled”. That reflects the language of the Jenard Report on the 1968 Convention where it was stated in the commentary on Article 2:

“The maxim ‘ actor sequitur forum rei ’, which expresses the fact that the law leans in favour of the defendant, is even more relevant in the international sphere than it is in a national court. It is more difficult, generally speaking, to defend oneself in the courts of a foreign country than in those of another town in the country where one is domiciled.”

In Kalfelis v Schroder [1988] ECR 5565 the European Court of Justice held, at paragraph 19:

“¼ the ‘special jurisdictions’ enumerated in Articles 5 and 6 of the Convention constitute derogations from the principle that jurisdiction is vested in the courts of the State where the defendant is domiciled and as such must be interpreted restrictively.”

Morritt LJ reflected that language in A B Jarrett v Barclays Bank [1997] 2 All ER 484 at 492, when considering the language of Article 16 which also creates jurisdictions regardless of domicile and Rix J reflected it in the Trade Indemnity case.

It is common ground that one moment in time must be chosen to apply the test of domicile for the purposes of Articles 2 and 6. “Sued” must have the same meaning in the two Articles. It must in my judgment also be accepted that it is possible conceptually for a court to be seised of a matter for the purposes of Article 22 of the Convention only when a writ has been served but for a defendant to be sued under Articles 2 and 6 upon issue of a writ against him. The “tie-break rule”, to quote the expression used by Bingham LJ in Dresser UK Ltd v Falcongate Ltd [1992] 1 QB 502 at 514C, operates at a point in time different from that for deciding whether the court is entitled to take jurisdiction originally.

The expression “sued” should be considered in its context and having regard to the purposes of the Convention. Reference has been made to the expression “bring proceedings” in Articles 11, 12 and 14, to proceedings being “instituted” in Article 6.2 and to a “document instituting the proceedings” in Articles 20 and 27. A writ is a document instituting the proceedings but I do not regard the presence of the expression “may bring proceedings” as determinative of the present issue in the respondents’ favour. It begs the question whether proceedings are brought upon issue of the writ or upon service.

The appellants understandably rely upon the decision of this court in Dresser. The leading judgment was given by Bingham LJ, with whom Sir Stephen Brown P and Ralph Gibson LJ agreed. In considering, for the purposes of Article 22, whether the English court or the Dutch court was first seised of the matter, the court held that the High Court did not become seised of the matter until the writ had been served. Bingham LJ stated seven reasons why it was wrong to hold that the English court was seised of proceedings upon mere issue of proceedings. These are:

“(1) the Court’s involvement has been confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve the proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiff’s claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve the writ or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiff’s claim in any way, and not entitled to do so save be calling on the plaintiff to serve or discontinue; (6) the Court cannot exercise any powers which, on appropriate facts, to could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the Court.”

Bingham LJ contemplated exceptions and qualifications to the rule but in The Sargasso [1994] 2 Lloyd’s Rep 6, it was held in this court that there were no genuine exceptions to the rule that the date of service of the writ marked the time when the court becomes definitely seised of the proceedings (Steyn LJ at pp 11 and 12.) Steyn LJ affirmed the rejection in Dresser of the date of issue of the writ solution and added that the adopted rule was “a simple and practical rule which will readily be understood in England and in other jurisdictions which have to grapple with the question when an English court is seised of the proceedings. ¼ And it seems to me that a ‘date of service’ rule will be readily comprehensible not only in England but also in other contracting states.” Peter Gibson LJ stated, at p 12, that “the issue of a writ is not sufficient but service is required as a general rule. It is too preliminary a step being one which would have no consequences whatever if the plaintiff chooses not to serve the writ. Upon issue of the writ proceedings might said to be pending, but surely not definitively pending in the court”.

Having set out the authorities and the relevant considerations in considerable detail in Dresser, Bingham LJ stated that “the question is at root quite a short one”. In my judgment, that is true also of the present issue. Jurisdiction and seisin are intimately connected and the considerations set out by Bingham LJ in Dresser appear to me to have considerable weight in the present context and weigh heavily in favour of the conclusion that the defendant is not sued upon mere issue of the writ. The Convention is constructed around the principle stated in Article 2 and the phrase “sued in the courts” is to be considered in that context. A defendant is sued in the courts of England upon service and not mere issue. The writ being a writ of summons, I have no difficulty with that use of language quite apart from the considerations (1) to (6) set out by Bingham LJ in Dresser. Consideration (7) was that upon mere issue of proceedings “the defendant has not become subject to the jurisdiction of the court” which is consistent with his not being “sued”.

The European Court of Justice held in Kalfelis that Article 6 is to be interpreted restrictively insofar as it constitutes a derogation from the principle stated in Article 2. That restrictive interpretation requires, in context, that a defendant cannot be sued out of the country of his domicile by virtue of the issue of a writ in the country of another defendant’s domicile. While conceptually possible, it would also be an odd result if a defendant is held to be “sued” in England by virtue of Article 6 without the English court being “seised” of the action under Articles 21 to 23.

The wording of Article 20 of the Convention, which provides a degree of protection to defendants sued in a state other than that of their domicile, and Article 52 which provides how domicile is to be determined, appear to me to fit comfortably with that approach to Articles 2 and 6. Article 20, first paragraph, contemplates suing as including service by its reference to entering an appearance, an act which could only follow service. The second paragraph imposing obligations upon a court in the absence of service and does not detract from that.

Further, I would construe the expression “bring proceedings” in Articles 11, 12 and 14 in the same way. To find that proceedings are brought, or constituted, upon service and not mere issue, is in my view an acceptable use of language. That finding is not necessary for the present decision but I mention it in support of my view that the presence of the words “bring proceedings” in other Articles does not adversely affect the appellants’ case on the meaning of “sued” in Article 2.

Waller LJ has stressed the advantages to a plaintiff of a date of issue rule. I follow that there may be situations in which a plaintiff is at a disadvantage upon the construction of Articles 2 and 6 which I favour. There may be policy reasons for favouring a plaintiff and Waller LJ has set out uncertainties, difficulties and possible frustration which may in some cases arise for him. They should not however in my view be permitted to weaken the protection provided for a defendant in Article 2, having regard to the Dresser considerations. The principle in issue should not be determined upon the possibility that a potential defendant may try to arrange a change of domicile between issue and service in an attempt to frustrate a plaintiff. Moreover, in a situation such as the present, in which there is more than one potential defendant, a plaintiff may minimise the risk to him of a change of domicile between issue and service by an appropriate selection of forum. A result which, as in the present case, would involve defendants coming to England, a country with which they have no connection, to defend a claim in which no English defendant had been served would defeat the purpose of Article 2. There would be uncertainties for a defendant too, who upon contemplating a quite legitimate change of domicile, would not know whether he was already subject to a suit in the domicile he was planning to relinquish.

I do not consider that the general statement of the European Court of Justice in Mulox IBC Ltd v Hendrick Geels [1993] ECR 1 - 4075, cited by Waller LJ, with its reference to reinforcing “the legal protection available to persons established in the community”, supports the respondents’ construction of Article 2. It recognises the interests of defendants as well as those of plaintiffs.

I agree with Waller LJ that an analysis of the High Court’s own rules in of limited assistance for present purposes but RSC O 11 r 1(1)(c) does require valid service on the principal defendant as a pre-condition of the grant of leave to serve out of the jurisdiction on other defendants. Further, in giving the judgment of this court in Adams v Cope Industries [1990] Ch 433, Slade LJ, while declining to express a final view on the point, stated at p 518C that “it would appear that the date of the service of process rather than the date of issue of proceedings is to be treated as “the time of suit” for the purposes there in issue.

In my judgment the First Defendant has not been sued under Article 2 and the appellants cannot be sued under Article 6 of the Convention. It follows that my answer to the question as posed in the Notice of Appeal, would be that there was no valid service on the appellants under Article 6 in the absence of service of a writ upon the defendant domiciled in England at the date of service upon him.

LORD JUSTICE NOURSE:

I agree with the judgment of Lord Justice Waller and would give the same answers to the three questions which have been argued.

The authorities reviewed by Lord Justice Waller disclose that there may at times have been a measure of confusion between "good arguable case" and "serious question to be tried" or the like, perhaps because these expressions can mean different things to different minds and, to some at any rate, there cannot be a serious question to be tried if the plaintiff does not have a good arguable case. Be that as it may, the authorities disclose no confusion at all in rejecting the notion that the balance of probabilities, the standard appropriate to a trial, is applicable to a preliminary question of domicile such as that which has arisen in this case. The balance of probabilities having been firmly rejected, the authorities establish that "good arguable case" is the standard of proof to be applied. It has not been suggested that Mr Justice Rattee did not correctly apply that standard in this case.

The difficulty of this question is attested by the difference of opinion which has arisen between Lords Justices Pill and Waller, each of whose judgments makes a persuasive case for the conclusion to which it leads. In agreeing with Lord Justice Waller, I do not suggest that the words "be sued" are incapable of referring to the time at which process is served as opposed to that at which it is issued. I acknowledge that it is well possible to conceive of contexts in which someone could not be said to be sued until he had been served. But the concern of Articles 2 and 6 of the Lugano Convention is to identify the courts in which a person domiciled in a contracting state is to be sued, in other words the courts in which the process against him is to be issued, from which it seems necessarily to follow that his domicile is to be determined as at the date of issue and not service.

I do not wish to add anything to the reasoning of Lord Justice Waller on this question.

Order: declarations made in accordance with the answers given at the end of Lord Justice Waller's judgment; directed that appellants' application to adduce fresh evidence and the further hearing of the appeal, if appropriate, be adjourned to a date to be fixed and to come on before the court as at present constituted (estimate - 1 day), with liberty to counsel for the appellants to apply in regard to that date; all questions of costs to be reserved to the further hearing.