Sana Hassib Sabbagh -v- Wael Said Khoury & Others [2017] EWCA Civ 1120

The judgment handed down by the Court of Appeal in this instance concerned a dispute in which, contrary to the general rule contained in Article 2(1) of Regulation 44/2001 (the Brussels Regulation), multiple defendants were sued in the court of a member state outside of their jurisdiction of domicile. The question for the court was whether an assessment of the merits of the claim against the anchor defendant was necessary if the claimant wished to join other, foreign, defendants to the proceedings against the anchor defendant. This is an important decision for an industry in which multi-jurisdictional and multi-defendant disputes commonly arise. There were a number of other issues considered in this case, however, we have intentionally decided to focus on the jurisdiction issue as more relevant to shipping disputes.

The facts

The factual background to this dispute is quite complex and for our purposes it will suffice to say that Ms Sana Hassib Sabbagh (Sana) was the daughter of the late Mr Hassib Sabbagh (Hassib), who suffered a stroke in 2002 which incapacitated him for the rest of his life and, allegedly, rendered him unable to make any business decisions or manage his own affairs. In 2013, Sana alleged that 10 defendants conspired shortly after Hassib’s stroke to misappropriate assets belonging to him and that, since Hassib’s death in 2010, they have also conspired to deprive her of her entitlement to shares that belonged to Hassib on the date of his death.

Of all the defendants in this claim, only one (Wael) was domiciled within the jurisdiction of England and Wales. All of the other defendants were domiciled abroad. Wael was therefore the ‘anchor defendant’ for the purposes of establishing jurisdiction against all 10 defendants and was sued under Article 2(1) of the Brussels Regulation on the basis of his domicile in England. Jurisdiction was asserted against eight of the other nine defendants under Article 6(1) of the Brussels Regulation and against the last defendant under Article 6(1) of the Lugano Convention (which is in the same terms). These other nine defendants are referred to as the ‘non-anchor’ defendants. The original Brussels Regulation was applicable because the claim pre-dated the recast Brussels Regulation (Regulation 1215/2012).

At first instance, Carr J decided that Sana had established a good arguable case in conspiracy for jurisdictional purposes against each defendant in relation to the asset misappropriation claim, however, she held that no such case had been made out against the anchor defendant in relation to the share deprivation claim which was ordered to be struck out.

Sana was granted permission to appeal against this decision to strike out and she was also given permission to appeal in relation to whether the court’s jurisdiction to try the share deprivation claim against the other defendants depended on showing that the claim had a real prospect of success against the anchor defendant.

Legal issues

The general rule, pursuant to Article 2(1) of the Brussels Regulation, is that defendants should be sued in the courts of the member state where they are domiciled, irrespective of nationality. Article 6(1) creates an exception to Article 2(1) where, in the case of multiple defendants with different domiciles, the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

The main jurisdictional issue therefore to be decided was whether Carr J was wrong to consider the merits of the claim against the anchor defendant for the purpose of establishing jurisdiction against the non-anchor defendants under Article 6(1). In other words, what was the jurisdictional test under Article 6(1)?

 In AMT Futures Limited -v- Marzillier [2017] UKSC 13, Lord Hodge stated that the Brussels Regulation ‘is underpinned by the principle of mutual trust between the courts of the member states’ and that any derogations from the general rule set out in Article 2(1) ‘must be restrictively interpreted’ in order to achieve the aims of the Brussels Regulation.

Relying on the decision in Joint Stock Co ‘Aeroflot Russian Airlines’ –v- Berezovsky [2013] EWCA Civ 784 (Aeroflot), Sana sought to establish that, in a case under Article 6(1), the court was not required as part of the considerations for establishing jurisdiction to assess the merits or strengths of the claims against the defendants. In Cherney -v- Deripaska (No 2) [2009] it was stated that ‘disputes as to forum should not become state trials’. The question the court had to consider was whether, in the context of Article 6, the law had moved from the traditional position where the court asked whether a claim against an anchor defendant raises a serious issue to be tried in the sense of excluding summarily cases that are fanciful or bound to fail. Sana’s primary argument was that, unless the sole object of bringing the claim against the anchor defendant was to oust the co-defendants from the jurisdiction in which they were domiciled, the strength of the claim against the anchor defendant was irrelevant.

In arguing that the court was not required to assess the merits of the claim, Sana also relied on the statement of Briggs in civil jurisdiction and judgments (6th ed 2015) that the weakness of the claim against the anchor defendant did not affect the existence of the risk of irreconcilable judgments. By this reasoning, a claim that had little prospect of success could still fall within the ambit of Article 6(1).

The reasoning of the court

The court was not unanimous in its conclusions on the first issue. The majority views of Lord Justices Pattern and Beatson are summarised below.

The court considered a number of judgments from the European Court of Justice (ECJ) but stated that none of them precluded the consideration of the substantive merits of the claims brought against an anchor defendant. The court also made the distinction between assessing the merits of the claim against the anchor defendant and the non-anchor defendants. It pointed out that, if the claims against one or more non-anchor defendants fell away, there would be no effect upon the claim against the anchor defendant or the claims against other non-anchor defendants. In contrast, without a legitimate claim against the anchor defendant, there was no reason to oust the non-anchor defendants from their jurisdiction of domicile.

In response to the argument that a weak claim still posed a risk of creating irreconcilable judgments, the court disagreed. As Justice Hamblen pointed out in Brown -v- Innovatorone plc [2010] EWHC 1321 (Comm), ‘even if the proceedings could be and were brought elsewhere, the outcome would be the same if there is no seriously arguable claim’. The risk of irreconcilable judgments was therefore unlikely to arise.

The court held that there would be an abuse of Article 6(1) if the only reason for invoking it was to oust the non-anchor defendants from the jurisdiction of the courts of the member states in which they are domiciled. In the court’s view, if a claim was brought against an anchor defendant that presented no real or serious issue to be tried, then it could be inferred that the sole purpose or sole object of bringing the claim against the anchor defendant was to oust the non-anchor defendants from their jurisdiction of domicile. The courts reiterated that derogations from the general rule should be restrictively interpreted and claimants should not be encouraged to use Article 6(1) as a means of ‘forum shopping’.

For these reasons, the majority held that the merits of a claim against an anchor defendant should be considered in determining whether or not to allow non-anchor defendants to be joined to proceedings under Article 6(1) of the Brussels Regulation.

Gloster LJ, dissenting, agreed with Sana’s submissions that Article 6(1) did not allow the courts to apply a merits threshold to the claim against the anchor defendant. However, she qualified that assertion by stating that it would only apply where the claimant is not engaged in a fraudulent abuse of Article 6(1) and that the decision in Aeroflot ‘must be approached with a degree of caution’.

The court’s decision on the merits of this case was that Sana had a real prospect of establishing the share deprivation claim against the anchor defendant if this was required to exercise jurisdiction under Article 6(1).

It is also worth noting that, later on in their judgment, the court considered whether or not the subject matter of the claim was succession. Although the judges agreed that there was an issue as to the property owned by Sana’s father on his death, they recognised that it was not enough to bring the claim within the meaning of succession, which was excluded by the Brussels Regulation.

Case comment

This judgment will aid parties in preventing opponents from forum shopping and ousting them from courts in member states whose jurisdiction they would otherwise be entitled to. That being said, the dissenting remarks of Lady Justice Gloster may well create room for future debate for claimants who wish to join potential defendants to proceedings in their home courts that they do not have a strong chance of winning.

This article originally appeared in the September 2017 edition of shipping case digest. Other articles include:

MT Højgaard A/S -v- E.ON Climate & Renewables UK Robin Rigg East Limited [2017] UKSC 59

Dainford Navigation Inc -v- PDVSA Petroleo S.A “MOSCOW STARS” [2017] EWHC 2150 (Comm)

Aspen Underwriting Limited and Others -v- Kairos Shipping Limited and Others [2017] EWHC 1904 (Comm)