England and Wales High Court (Chancery Division) Decisions

Pressed on precisely what was being alleged in paragraph 13 of the Amended Particulars of Claim as to how Nokia purchased Li-ion Batteries, Mr. Beal, Q.C. was unable to be more specific. It was possible either that Nokia subsidiaries acquired batteries through or via a common purchasing agent so that there was a direct purchase between that subsidiary and the vendor of the battery or that there was a chain of sales and purchases within Nokia, whereby one subsidiary purchased the Li-ion Battery from the vendor, and then on-sold it within Nokia.[8] 

21.              It is necessary to set out exactly what Microsoft Mobile was alleging in the Amended Particulars of Claim for the purposes of dealing with Microsoft Mobile’s contentions on jurisdiction. 

22.              D1/Sony Europe is sued in the jurisdiction of its domicile – England and Wales – and Microsoft Mobile contends that this court has jurisdiction by virtue of Article 4 of Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition of judgments in civil and commercial matters (recast) (“the Brussels I Regulation (Recast)”).

23.              By an application dated 3 June 2016, D1/Sony Europe seeks a stay of the proceedings against it pursuant to section 9 of the Arbitration Act 1996 and/or under the inherent jurisdiction of the court, on the grounds that the dispute between Microsoft and D1/Sony Europe is subject to a valid arbitration clause.

24.              The other Defendants are all companies domiciled in Japan and the Republic of Korea. Since none of these Defendants is domiciled in the EU or the EEA, this was not a case falling within the Brussels I Regulation (Recast), and Microsoft Mobile needed permission to serve the claim out of the jurisdiction pursuant to Part 6.36 of the Civil Procedure Rules. An application was made on 23 December 2015, supported by a witness statement of Mr. Robert Murray (“Murray 1”).

25.              As is considered in greater detail below, three requirements must be shown before the court will permit service of a claim or claims out of the jurisdiction:

26.              The application was heard by Master Clark, who made an order for service out of the jurisdiction on 19 January 2016.[9]

27.              D2/Sony Corporation, D4/LG Chem and D6/Samsung all object to this court assuming jurisdiction:

28.              I shall refer to these applications of the Defendants as the “Applications”.[10] D2/Sony Corporation – as a fall-back to its stay application – also challenges the court’s jurisdiction. This application, however, was not before the court on this occasion, the parties having agreed that (given the points raised by D2/Sony Corporation’s application) there would be insufficient time. The somewhat unsatisfactory basis on which this particular application was “parked” is described further in Section E below. The upshot is that the Defendants contend:

i)                   That there is no good arguable case that the claims against them fall within either of the Gateways relied upon by Microsoft Mobile.

ii)                 That England and Wales is not clearly and distinctly the proper forum for the trial of the claims.

As has already been noted, the satisfaction of the first requirement – that there was a serious issue to be tried on the merits – was “parked”, but it certainly cannot be said that the Defendants were conceding that this requirement was met in respect of all parts of the claim.

29.              The Applications were supported by the evidence listed in Annex 2 hereto, to which I shall refer using the abbreviations set out in Annex 2. This evidence was responded to by a further statement of Mr. Murray (“Murray 2”).[11]

30.              The Applications were heard over four days (16 to 19 January 2017). This Judgment determines the Applications and is structured as follows:

31.              It was also contended by the Defendants that the statement in support of Microsoft Mobile’s application to serve D2/Sony Corporation, D4/LG Chem and D6/Samsung out of the jurisdiction (Murray 1) made material non-disclosures and that the order of Master Clark and the service out of the proceedings should be set aside on that ground alone. This aspect is considered in Section H below.

32.              D1/Sony Europe is domiciled in the United Kingdom within the meaning of Article 63 of the Brussels I Regulation (Recast). It is common ground that the claims advanced by Microsoft Mobile against D1/Sony Europe are civil and commercial matters within the scope of Article 1 of the Brussels I Regulation (Recast) and that – but for the arbitration clause described in paragraph 35 below – the claims against the D1/Sony Europe were commenced as of right by Microsoft Mobile under Article 4 of the Brussels I Regulation (Recast).

33.              By Article 1(2)(d), the Brussels I Regulation (Recast) does not apply to arbitration. D1/Sony Europe contends:

34.              Product Purchase Agreement No. 000247 (the “PPA”) is an agreement made in writing and becoming effective on 1 July 2001 (see Article 23.1) between Nokia Mobile Phones Ltd (as “BUYER”) and “Sony Corporation” i.e. D2/Sony Corporation (as “SELLER”). These parties contracted on behalf of themselves and:

“…means any other entity controlled by, or under control with, a Party[12] (or in case of BUYER, Nokia Corporation, BUYER’s parent company formed under the laws of Finland). For purposes of this definition “control” shall mean the direct or indirect ownership of fifty (50) percent or more of the shares or interests which are entitled to vote for the directors of an entity or the equivalent, for as long as such entitlement subsists, or which mean equivalent power over management of an entity.”

Appendix 1 lists various Nokia Affiliated Companies. No-one – in particular not Microsoft Mobile – sought to contend that Nokia was not bound by the terms of the PPA.

ii)                 In the case of D2/Sony Corporation, “its Affiliated Companies [are] listed in Appendix 1”. “Affiliated Companies” bears the same meaning as above, and Appendix 1 lists D1/Sony Europe.

35.              Article 25 of the PPA provides as follows:

“25.2 Any disputes related to this Agreement or its enforcement shall be resolved and settled by arbitration in the English language in United Kingdom, in accordance with the Arbitration Rules of the International Chamber of Commerce in United Kingdom. However, any disputes related to BUYER’s Intellectual Property Right(s)[13] or Confidential Information,[14] or for injunctive relief, may, at BUYER’s sole election, be resolved by a court of competent jurisdiction. The decision of the arbitrators shall be final, binding and executable. The arbitration shall be the exclusive remedy of the Parties to the dispute.”

36.              Although the scope of this arbitration clause was contested between Microsoft Mobile and D1/Sony Europe, two matters were common ground:

37.              It will be necessary to consider other provisions of the PPA in due course. For present purposes, however, all that needs to be noted is that D1/Sony Europe relied upon Article 25.2 (set out in paragraph 35 above) to contend that these proceedings should be stayed as against it pursuant to section 9 of the Arbitration Act 1996.

38.              Section 9 provides as follows:

39.              D1/Sony Europe contended that all or some of the claims pleaded against it in the Amended Particulars of Claim were matters to be referred to arbitration under Article 25.2, and it sought a stay of the proceedings against it on this basis.

40.              Microsoft Mobile disputed this, and advanced two points in response:

41.              These points are considered in turn below. There was a third point: this was a question as to who should determine these questions, this court or whatever arbitral tribunal is in due course established.[15] I should say at the outset that I have decided to determine these questions myself: my reasons for doing so are set out at paragraphs 82 to 84 below.

(4)        The approach to construction

42.              It was common ground between the parties that arbitration clauses, as contractual provisions, fall to be construed according to the precepts laid down in Investors Compensations Scheme v. West Bromwich Building Society [1998] 1 WLR 896, Rainy Sky SA v. Kookmin Bank [2011] UKSC 50 and Arnold v. Britton [2015] UKSC 36.

43.              Additionally, the parties recognised that whilst arbitration clauses had, in the past, been subject to a series of specific and technical rules, the starting point now for the construction of an arbitration clause was Fili Shipping Co Ltd v. Premium Nafta Products Ltd [2007] UKHL 40, better known as Fiona Trust (from its name before the Court of Appeal: Fiona Trust and Holdings Corp v. Privalov).[16]

44.              In Fiona Trust, Lord Hoffmann stated:[17]

“5.     Both of these defences raise the same fundamental question about the attitude of the courts to arbitration. Arbitration is consensual. It depends upon the intention of the parties as expressed in their agreement. Only the agreement can tell you what kind of disputes they intended to submit to arbitration. But the meaning which parties intended to express by the words which they used will be affected by the commercial background and the reader’s understanding of the purpose for which the agreement was made. Businessmen in particular are assumed to have entered into agreements to achieve some rational commercial purpose and an understanding of this purpose will influence the way in which one interprets their language.

6.       In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.

7.       If one accepts that this is the purpose of an arbitration clause, its construction must be influenced by whether the parties, as rational businessmen, were likely to have intended that only some of the questions arising out of their relationship were to be submitted to arbitration and others were to be decided by national courts. Could they have intended that the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court? If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.

8.       A proper approach to construction therefore requires the court to give effect, so far as the language used by the parties will permit, to the commercial purpose of the arbitration clause…”.

…

13.     In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to have entered to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction. As Longmore L.J. remarked, at para. 17: “if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.”[18]

45.              The importance of having a “one-stop-shop” for all disputes – and the likelihood that the parties to an agreement would intend this – is clear. But that is true only to the extent that disputes arise out of the parties’ relationship. Thus, absent extremely clear wording, a court would presume that the parties would have intended the same tribunal to deal with contractual disputes arising out of the relationship, as well as any “parallel” claims in tort. But, what would not be covered, absent extremely clear wording, would (to take a somewhat extreme hypothetical case) be Party A’s case against Party B (Party A and Party B being in a contract with each other containing an arbitration clause) for Party B negligently, but coincidentally and unrelated to the contract, running Party A over in the street. That would not be a dispute arising out of the parties’ contractual relationship.

46.              The spectrum of cases falling within and without a “relationship” was considered in Aggeliki Charis Compania Maritima SA v. Pagnan SpA, the “Angelic Grace” [1995] 1 Lloyd’s 87. This decision was cited to the House of Lords in Fiona Trust, but not mentioned in their Lordships’ opinions. As it pre-dates Fiona Trust, The Angelic Grace must be treated with a degree of caution. I have, nevertheless, derived some assistance from the case, in particular the following passage:[19]

“The question in a nutshell is whether the relevant claims and cross-claims arise out of the contract. It is common ground that the question must be answered in the light of The Playa Larga [1983] 2 Lloyd’s Rep. 171, in which this court upheld the dictum of Mr. Justice Mustill that a tortious claim does “arise out of” a contract containing an arbitration clause if there is a sufficiently close connection between the tortious claim and a claim under the contract. In order that there should be a sufficiently close connection, as the Judge said, the claimant must show either that the resolution of the contractual issue is necessary for a decision on the tortious claim, or, that the contractual and tortious disputes are so closely knitted together on the facts that an agreement to arbitrate on one can properly be construed as covering the other.”

47.              All of the parties before me contended that Ryanair Ltd v. Esso Italiana Srl [2013] EWCA Civ 1450 was of particular relevance to the present case, no doubt because it involved competition law claims. It is necessary to consider this decision at some length.

48.              In Ryanair Ltd v. Esso Italiana Srl, Ryanair had entered into a contract with Esso for the purchase of jet fuel in Italian airports. The contract was made on the basis of English law and the non-exclusive jurisdiction of the English courts. Subsequently, Esso and other oil companies were found to have been operating an illegal cartel in Italy for the supply of jet fuel to Italian airports in breach of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

49.              Ryanair then brought a claim in England for damages against Esso alleging breach of the fuel supply contract in relation to Esso’s cartel activities in inflating the price of the fuel at Italian airports (i.e. a contractual claim) and a claim for breach of statutory duty based upon Article 101 TFEU (i.e. a tortious claim). The question was whether (to use the terms of Eder J. at first instance) the tortious claims were so closely knitted together with the contractual claims that a rational or sensible businessman would expect them to be subject to determination by a single tribunal.

50.              Rix L.J. set out the essential facts:[20]

“1.     This appeal concerns the scope of an English jurisdiction clause and arises on a challenge to jurisdiction in the English courts. Does the clause embrace a claim against a member of an Italian cartel selling jet fuel in Italian airports, a claim advanced on the basis of a statutory tort under English law in vindication of rights arising out of article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

2.       The claimant is Ryanair Ltd (‘Ryanair’), the well-known Irish airline. The defendant is Esso Italiana Srl (‘Esso Italiana’), part of the world-wide Exxon-Mobil group. The jurisdiction clause is contained in their contract, entered into through the agency of ExxonMobil Aviation International Ltd (‘EMAIL’), for the purchase of jet fuel in Italian airports. The jurisdiction clause is found in article 12.1 of Part II of a master contract, made by EMAIL on behalf of group subsidiaries supplying fuel in various countries of the world, which was originally entered into with Ryanair back in 1999, then in a slightly different form in 2000, and subsequently renewed annually until expiry on 31 April 2009.

3.       Article 12.1 provides as follows:

‘The Agreement contains the entire agreement of the parties with respect to the subject matter hereof and there are no other promises, representations or warranties affecting it. This Agreement cannot be modified in any way except in writing signed by the parties. No claims shall be made hereunder for prospective profits or for indirect or consequential damages except as otherwise provided in the footnotes attached to the schedule. This Agreement shall be governed by the laws of England excluding its conflict of laws rules and the United Nations Convention on the International Sale of Goods Act shall not apply. For the purposes of the resolution of disputes under this Agreement, each party expressly submits itself to the non-exclusive jurisdiction of the Court of England.’

4.       Thus, the parties’ contract was made on the basis of English law and the non-exclusive jurisdiction of the English courts. Prospective profits and indirect or consequential damages were excluded. It is not clear what follows from the exclusion of English conflict of law rules, which might be said to be a large exclusion, but no point has been taken on that.”

51.              Rix L.J. noted that “[i]t is important to observe that Ryanair at no time asserted that its claim for breach of statutory duty fell within the jurisdiction clause in the absence of a concomitant contractual claim under article IV in respect of the lower quantity of fuel supplied by Esso Italiana itself, which was itself premised on Esso Italiana participating in infringing behaviour in breach of article 101”.[21] Indeed, the “whole edifice” of Ryanair’s jurisdictional argument “is built on the initial claim, the contract claim, that Ryanir had a remedy pursuant to article IV of the contract[22]…it seemed to be a necessary part of Ryanair’s argument based on the Fiona Trust presumption in favour of the rational and reasonable businessman’s preference for one-stop adjudication, that a contractual claim based on article IV for a breach of article 101 had some prospect of success. If, therefore, there was no contractual claim under article IV by reason of Esso Italiana’s supply of jet fuel at prices inflated by conduct in breach of article 101, then, at any rate arguably, it became harder to see why reasonable businessmen would interpret the jurisdiction clause as covering a separate claim for breach of statutory duty arising out of conduct in Italy in breach of article 101[23].”

52.              It was therefore necessary to consider the nature of the contractual claim being advanced. It is not necessary to set out the argument before the Court of Appeal on this point, nor even the detail of the Court of Appeal’s conclusions. For present purposes, what matters is that the Court of Appeal held that:

53.              Standing by itself, without the buttress of a contractual claim, the Court of Appeal held that the tortious claims fell outside the scope of the non-exclusive jurisdiction clause. Rix L.J. considered The Angelic Grace to be of no assistance to Ryanair in this context.[24] He referred to Fiona Trust, in particular [13] cited at paragraph 44 above, and held:[25]

“Such reasoning, however, does not carry over into a situation where there is no contractual dispute (by which I intend to include disputes about contracts), but all that has happened is that a buyer has bought goods from a seller who has participated in a cartel. I think that rational businessmen would be surprised to be told that a non-exclusive jurisdiction clause bound or entitled the parties to that sale to litigate in a contractually agreed forum an entirely non-contractual claim for breach of statutory duty pursuant to article 101, the essence of which depended on proof of unlawful arrangements between the seller and third parties with whom the buyer had no relationship whatsoever, and the gravamen of which was a matter which probably affected many other potential claimants, with whom such a buyer might very well wish to link itself.”

54.              The point is, in many respects, an obvious one. The starting assumption articulated in Fiona Trust is that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to have entered to be decided by the same tribunal. But it is difficult to see how a tortious claim can arise out of a contractual relationship when the only claim in contract that can be said to be related is unarguable.

55.              As stated in paragraph 34 above, the PPA had an effective date of 1 July 2001. I was told that there was no evidence of any prior business dealings between Nokia and Sony: the parties proceeded, and I proceed, on the basis that the first dealings for the sale and purchase of batteries between Nokia and Sony were under this PPA and would therefore have commenced on 1 July 2001.

56.              By Article 2.1 of the PPA, “[t]his Agreement contains the terms and conditions which apply globally to all sale and purchase of Product(s)”. Under Article 1, “Product(s)” means “certain lithium-ion batteries manufactured by or for SELLER subject to purchase and sale between the Parties as listed in Appendix 2.” Appendix 2 of the PPA lists only one product, the “BPS-2” battery, at a price of JPY770. Below that entry is the following note:

57.              Article 26 provides:

“26.1 This Agreement supersedes all previous arrangements, communication and agreements between the Parties in relation to the subject matter of this Agreement. This Agreement supersedes any general conditions of purchase/sale and other standard conditions. The Appendices shall be an integral part of this Agreement.[26]

26.2  Appendices 1 and 2 may be amended by a mutual written agreement (in paper, electronic or other format), even if not physically incorporated into this Agreement document. Other amendments to this Agreement shall be valid only if in writing and signed by both Parties.”

58.              Although Appendix 2 refers to only a single product, I infer from the terms of Article 2.1 and the relatively informal way in which Appendix 2 could be amended or supplemented pursuant to Article 26.2, that Appendix 2 was, in fact, so amended or supplemented from time-to-time, to reflect the products (and the prices for those products) that Sony was supplying to Nokia.[27] I further infer that all Li-ion Batteries supplied by Sony to Nokia were supplied pursuant to the PPA.

59.              Article 10 provides:

60.              Central to D1/Sony Europe’s submissions on the scope and effect of the arbitration clause was the “good faith” obligation contained in Article 10.1. One of the issues between D1/Sony Europe and Microsoft Mobile was the ambit of this good faith obligation. It was common ground that the obligation to negotiate a price in good faith applied when the price for a battery already listed in Appendix 2 was changed. That, however, was as far as Microsoft Mobile contended the obligation went. D1/Sony Europe, on the other hand, contended that the obligation to negotiate in good faith extended to all Prices agreed, even where a new Product was being added to Appendix 2 for the first time.

61.              On this point, I prefer the contentions of D1/Sony Europe:

62.              Article 19 of the PPA provides:

63.              There are two points that need to be made in respect of this clause limiting liability:

64.              Article 21 of the PPA provides:

65.              The force majeure provision is of no interest for the purposes of this Judgment: but D1/Sony Europe did rely upon the provisions of Article 21.1, as a corollary to the good faith obligation in Article 10.1, in that if it came to the attention of SELLER that changes in Prices were not being negotiated in good faith, there was an obligation to inform BUYER under Article 21.1.

66.              Microsoft Mobile disputed this, and suggested that there was a relationship as between Article 21.1 and 21.2, which caused Article 21.1 to be confined, in some way, to cases of Force Majeure. I reject that submission:

i)                   What links Articles 21.1 and 21.2 is the fact that they relate to an inability to meet (in the case of Article 21.1) or failure to perform (in the case of Article 21.2) “any of its obligations” under the PPA. That is no doubt why they appear in a single Article.[28]

ii)                 Of course, it may be that a Force Majeure event will signal itself before actually occurring, thus triggering the duty to inform under Article 21.1: but that is not a reason to read Article 21.1 as confined to those cases where SELLER’s inability to meet any of its obligations is due to Force Majeure.

(6)        The scope of the arbitration clause

67.              D1/Sony Europe contended that the PPA was a “relational” contract, and that its terms should be read in this light. The reference to a “relational” contract was a reference to the analysis of Leggatt J. in Yam Seng Pte. Ltd v. International Trade Corporation Ltd [2013] EWHC 111 (QB). In Yam Seng, Leggatt J. stated at [142]:

“In some contractual contexts the relevant background expectations may extend further to an expectation that the parties will share information relevant to the performance of the contract such that a deliberate omission to disclose such information may amount to bad faith. English law has traditionally drawn a sharp distinction between certain relationships – such as partnership, trusteeship and other fiduciary relationships – on the one hand, in which the parties owe onerous obligations of disclosure to each other, and other contractual relationships in which no duty of disclosure is supposed to operate. Arguably, at least, that dichotomy is too simplistic. While it seems unlikely that any duty to disclose information in performance of the contract would be implied where the contract involves a simple exchange, many contracts do not fit this model and involve a longer term relationship between the parties [to] which they make a substantial commitment. Such “relational” contracts, as they are sometimes called, may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties’ understanding and necessary to give business efficacy to the arrangements. Examples of such relational contracts might include some joint venture agreements, franchise agreements and long term distributorship agreements.”

68.              I did not find D1/Sony Europe’s reference to Yam Seng of particular assistance:

69.              I therefore proceed on the basis that the PPA is not a relational contract, and that no question of implication of terms arises. However, it is necessary to have regard to the express terms of the PPA, which I have considered and construed in paragraphs 59 to 61 above.

70.              It is very difficult to see how a party to the PPA, like D1/Sony Europe, could knowingly engage in cartelist behaviour of the sort alleged by Microsoft Mobile without at the same time breaching Article 10.1 and triggering the obligation to inform under Article 21.1. For present purposes, I regard the second of these provisions as less important than the first. Plainly, as Mr. de la Mare, Q.C. submitted, were D1/Sony Europe to comply with Article 21.1, and disclose in writing an intention to negotiate prices in bad faith because of an agreement with other cartelists, the cartel would end before it began.

71.              Assuming, for present purposes, the existence of the Cartel alleged by Microsoft Mobile, it is much more likely that D1/Sony Europe would (and did) breach Article 10.1 and so, incidentally, Article 21.1. But it is the provision in Article 10.1, containing the obligation to negotiate in good faith, that would be key.

72.              In this context, it is necessary to consider whether any contractual claims arising out of the PPA would be sufficiently closely related to the tortious claims actually advanced by the Claimant so as to render rational businessmen likely to have intended such a dispute to be decided (like a contractual dispute) by arbitration pursuant to Article 25.2 of the PPA. I conclude that they are for the following reasons:

vi)               Rix L.J. found that there was “no answer to Mr. Beard Q.C.’s powerful submissions”[29] and – in the context of a case where no contractual claim analogous to the tortious one being advanced is possible – I respectfully agree. But that is not this case. There may be many reasons why a change in price might not be negotiated by SELLER in good faith, and so amount to a breach of Article 10.1 of the PPA. No doubt some of these might require consideration only of the conduct of SELLER, unrelated to SELLER’s interactions with third parties. But, equally, SELLER’s failure to act in good faith may (as would appear to be the case here, based upon Microsoft Mobile’s pleaded case) have been actuated by SELLER’s dealings with third parties, in the form of a cartel or other (illegal) combination. In such a case, the overlap between the contractual claim, the cartel claim and the combination claim will be considerable:

a)                  The contractual claim will not sound in debt (it will not be for the price), but for damages – just as the tortious claims.

b)                 The extent to which the negotiated price was above the “good faith” price will inevitably involve an examination of the dealings between SELLER and the various other cartelists. The arrangements and dealings between protagonists not party to the PPA will be relevant.

c)                  BUYER’s loss and damage will have to take account of any pass-on (if any) and (if higher prices were passed on) volume effects will come into play – as part of the ordinary process of assessing damages.

vii)             It is true that the claim that BUYER has against SELLER will be confined to SELLER. There can – because of the arbitration clause – be no bringing in of other parties to the cartel. For this reason, questions of contribution from other cartelists will not arise, in the arbitration at least. Neither will the question of competing jurisdiction/arbitration clauses.

viii)           Of course, it would remain open to the BUYER to select a claim against a different defendant, such that other parties involved in the cartel could be brought in to such proceedings. The feasibility of such a course would depend on all the circumstances.

ix)               I am also conscious that the parties to the PPA gave careful thought to the allocation of risk and liability as between themselves:

a)                  The provisions of Article 19 of the PPA are set out in paragraphs 62 and 63 above. It is clear that SELLER’s primary responsibilities and so liability lie in providing Products free of defects, and these aspects of performance are carved out of the Article 19 exclusion clause.

b)                 All other aspects of liability – apart from cases where damage is caused by gross negligence or wilful misconduct – fall within Article 19, including the negotiation of Prices.

c)                  If, at the time of the conclusion of the PPA, the prospect of liability in respect of an innocent participation or involvement in a cartel had been mooted, I consider that rational businessmen would have expected such a claim (even though sounding in tort) to fall within Article 19.

73.              I therefore hold that Article 25.2 extends to all pleaded claims made by Microsoft Mobile against D1/Sony Europe, save for those (if any) pre-dating the commencement of the PPA. To the extent that such pre-PPA claims are or can be advanced against D1/Sony Europe, they would fall outside the scope of the arbitration clause. As a continuing tort – or single, continuous infringement – the right of action (under English law at least) accrues afresh every day, but damages can be recovered only for the period covered by the proceedings.

74.              Microsoft Mobile contended that if, contrary to its submissions, Article 25.2 covered all or part of its claims, it should not be applied, either pursuant to section 9(4) of the Arbitration Act 1994 (which can be invoked to deal with an incompatibility between an arbitration clause and EU law[30]) or (by virtue of EU law) in order to give effect to the primacy of EU law.[31]

75.              D1/Sony Europe did not seek to deny that it was possible, as a matter of law, to disapply Article 25.2 in this way, provided that an incompatibility with EU law could be shown. What was disputed, however, was that application of the arbitration clause in this case was in any way incompatible with EU law.

76.              Microsoft Mobile’s contention was that the operation of the Brussels I Regulation (Recast) must permit the effective protection of rights derived from competition law, including private law rights of action for infringement, these being rights accorded by EU law, and that an arbitration clause which caused the fragmentation of such rights of action was, for that reason, in breach of EU law.

77.              It should be said at the outset that it was not disputed by D1/Sony Europe, and is accepted by me, that the application of the arbitration clause in this case is likely to cause fragmentation, in at least two respects:

78.              The question is whether this fragmentation, caused by the arbitration clause, is an infringement of EU law such as to render the application of the clause ineffective or inoperable. In this regard, Microsoft Mobile placed considerable reliance upon the opinion of the Advocate General (AG Jääskinen) in Case C-352/13, Cartel Damage Claims (CDC) Hydrogen Peroxide SA v. Evonik Degussa [2015] QB 609, and rather less reliance on the subsequent decision of the Court of Justice. It is therefore appropriate to set out in a little more detail than would normally be appropriate the reasoning of the Advocate General (emphasis supplied in all quotations):

i)                   The Advocate General noted that the reference, by the Landgericht Dortmund, unusually involved the interplay between the Brussels Regulation and Article 101 TFEU.[32] The Advocate General also noted that:

“8.     …it appears to me that the Brussels I Regulation, the aim of which is to create a system of rules of jurisdiction for the Union in respect of cross-border disputes in civil and commercial matters, is not fully geared towards ensuring effective private implementation of the Union’s competition law (or ‘private enforcement’, as it is usually called in this field) in circumstances such as those in this case.

9.       The application of certain provisions of that regulation is likely to lead to a territorial division of jurisdiction between the courts of the Member States which might, on the one hand, be inadequate from the point of view of the geographical scope of EU competition law or, on the other hand, make it more difficult for persons adversely affected by unlawful restrictions of competition to seek and obtain full reparation for the damage that they have suffered. It seems to me, therefore, possible that the authors of such restrictions could use those provisions of international private law to bring about a situation in which the civil-law consequences of a single, serious infringement of Union competition rules are to be determined in the context of a series of actions scattered across the various Member States.

10.     The general conclusion that I shall draw from this request for interpretation is that, de lege ferenda, because of the particular repercussions which cross-border anti-competitive practices are likely to have in terms of judicial cooperation in civil matters, especially when they are complex, as they are in the main proceedings, it would be advisable for the EU legislature to envisage incorporating in the Brussels I Regulation a rule of jurisdiction apt to cover such practices, on the lines of the conflict-of-laws provision which usually applies specifically to obligations deriving from acts restrictive of competition under the regulation usually known as ‘Rome II’.”

ii)                 The Advocate General’s starting point was, therefore, his appreciation of what he regarded as certain inadequacies in the Brussels I Regulation when dealing with a single, continuous, infringement of competition law. He sought, through interpretation of the Brussels I Regulation, to resolve these perceived inadequacies by unifying causes of action in a single forum:

“27.   …I consider that the interpretation and application of the Brussels I Regulation must make it possible to preserve the full effectiveness of provisions of EU competition law, which are vitally important for the internal market and constitute a fundamental element of the EU economic constitution because, as the Court has already stressed, Article 85 of the EC Treaty, now Article 101 TFEU, is a ‘fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community, and, in particular, for the functioning of the internal market’. Furthermore, the procedural rules of EU law must, to a certain extent, serve the substantive rules of EU law, in the sense that the former are an instrument which enables the rights and obligations of private and public persons to be made tangible, particularly in terms of the right to an effective remedy and to a fair trial, as affirmed in Article 47 of the Charter of Fundamental Rights of the European Union.

…

52.     In conclusion, by analogy with the Court’s ruling in Besix, I consider that the special jurisdiction rule in matters of tort, delict or quasi-delict, laid down in Article 5(3) of the Brussels I Regulation, is inoperative when, as in the case in the main proceedings, the place where the harmful event allegedly occurred cannot be determined, by virtue of the fact that the infringement of Article 101 TFEU on which the action is based consists of actions notable for the multiplicity of places where they were agreed and/or performed, with the result that it is not possible to determine clearly and usefully what court has a particularly close link with the dispute as a whole.

53.     In my opinion, in such a case jurisdiction must be determined either by applying the general rule in Article 2(1) of the Brussels I Regulation or by applying other special jurisdiction rules specified in that regulation, such as the rule in Article 6(1), which allows actions brought against several defendants to be combined before a single court, provided that the conditions for applying one or other of those rules are satisfied in the case in point. In that connection, it must be pointed out that it is possible for account to be taken of the connection between actions against several defendants, as a basis for establishing jurisdiction, only in the context of Article 6(1), which provides for that possibility solely where there is the strong connecting link of the domicile of one of the defendants, but not in the context of a provision such as Article 5(3) of the Brussels I Regulation whose application depends on the place where an event occurred.

…

56.     In accordance with Article 6(1) of the Brussels I Regulation, all the claims on the part of a single applicant against a number of defendants may be brought before a court of a Member State in whose jurisdiction at least one of those defendants, who will be referred to here as the ‘anchor defendant’, is domiciled, provided always that there is a connecting link between those heads of claim. In this regard, the relevant provision expressly states that the claims must be ‘so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’.

57.     By allowing actions to be centralised before a single court and by extending the jurisdiction of the latter to cover defendants vis-à-vis whom the court would not have been able to give a ruling failing that extension, Article 6(1) reflects the objectives of sound administration of justice, by eliminating unnecessary proceedings and preventing the concomitant risk of concurrent proceedings and conflicting decisions, as referred to in the Brussels I Regulation.

…

71.     I would emphasise that, if it were to be held that Article 6(1) of the Brussels I Regulation was not applicable to proceedings such as the main proceedings in this case, that would mean that different courts would have to examine the alleged damage, without any consultation, in the light of the various domestic legal orders, with the attendant risk that each of the participants in the same unlawful cartel might be ordered to pay different amounts of damages, when it would be desirable, not to say necessary, to rule uniformly on the claims submitted by the same applicant.

72.     As the Commission points out, in my view rightly, ‘the effectiveness of this provision would be undermined if it were to be interpreted so strictly that it would render impossible, in such circumstances, the bringing of joint actions against all the participants in a cartel before a court which is situated in the domicile of one of the defendants belonging to the cartel, on the sole grounds that it lacked international jurisdiction.’

73.     In the light of these factors, I consider that a situation in which several companies established in different Member States are tried separately, before different courts, and not before a single court, for the purpose of obtaining damages in respect of the same infringement of EU competition law, resulting from acts committed at different times and in different places but constituting a single and continuous infringement, is liable to lead to irreconcilable judgments, within the meaning of Article 6(1) of the Brussels I Regulation, if the cases are judged separately.

74.     In accordance with the Court’s case law, it will be for the referring court to assess, in the light of all the elements in the case, whether there exists such a risk in the proceedings before it.

75.     Like the Commission, I note that such an interpretation has the not inconsiderable advantage of reflecting the intention expressed by the legislature in the Rome II Regulation, especially in Article 6 entitled ‘Unfair competition and acts restricting free competition’, paragraph 3 of which sets out the possibility, for a claimant suing several defendants in the context of a dispute in this field, of centralising his claims before a single court ‘in accordance with the applicable rules on jurisdiction’ and of basing his claims on the law of that court. To my mind, due account should be taken of this legal guideline, in the interests of coherence between the instruments of Union law applicable to cross-border disputes, despite the fact that, as the defendants in the main proceedings contend, the Rome II Regulation is not, ratione temporis, applicable in this case.”

iii)               Thus, through interpretation, the Advocate General effectively sought to bring the Brussels I Regulation into line with Rome II, in order to ensure a single forum. He then considered the effect of jurisdiction and arbitration clauses, as possible derogations from the regime he had thus constructed.

iv)               The claim in the Landgericht Dortmund was in fact an agglomeration of claims. A number of victims of the cartel had assigned their claims to a single claimant entity, which was bringing these proceedings. Of course, these victims had purchased the cartelised product (hydrogen peroxide) pursuant to a variety of contracts containing a variety of different arbitration and jurisdiction clauses, which (no doubt) pointed in various jurisdictional directions.[33] As to choice of jurisdiction and arbitration clauses, the Advocate General showed a high degree of hostility to these, particularly if they pointed to a jurisdiction outside the EU:

“97.   …In the first place, it must be recalled that choice of jurisdiction clauses, under which the parties, at least one of which had its domicile in the territory of a Member State, have designated a court of a Member State to hear and determine disputes arising or likely to arise out of a particular legal relationship, fall within the ambit of Article 23 of the Brussels I Regulation.

98.     On the other hand, arbitration clauses are, as a matter of principle, excluded from the scope of that regulation. It follows that questions relating to the validity of, and the possibility of relying on, those clauses ought to be governed by the national law of each of the Member States and by the international conventions binding the latter. Nevertheless, the Court has held that if, because of the main subject-matter of the dispute, that is to say, the nature of the rights to be protected in proceedings, such as a claim for damages, the proceedings brought before a national court fall within the scope of the Brussels I Regulation, then an incidental preliminary issue concerning the applicability of an arbitration agreement, including its validity, falls within the scope of that regulation too and it is, therefore, exclusively for that court to rule on the objection of lack of jurisdiction based on the existence of an arbitration agreement and on its own jurisdiction under the provisions of that regulation.

99.     Despite this difference in terms of the applicability of the Brussels I Regulation, it must be recalled that the two categories of clause at issue have the common effect of derogating from the rules on jurisdiction laid down in that regulation, by reason of respect for the autonomy of the parties concerning the determination of the court, whether national or arbitral as the case may be, to which they mean to entrust the task of settling their disputes.

100.   Nevertheless, a clause conferring jurisdiction in accordance with Article 23 of the Brussels I Regulation may confer jurisdiction only on the courts of Member States of the European Union and by extension, under the Lugano Convention, on the courts of the Parties to that Convention, whereas an arbitration clause may provide that arbitration is to take place in any third State whatsoever. The likelihood of provisions of EU competition law not being applied, even by way of public policy rules, is much greater when jurisdiction is conferred on arbitrators or courts of States not bound by the Lugano Convention.”

v)                 The Advocate General considered that a distinction needed to be drawn between (i) jurisdiction clauses falling within Article 23 of the Brussels I Regulation, on the one hand, and (ii) jurisdiction clauses outside Article 23 and arbitration clauses, on the other.

vi)               As regards clauses to which Article 23 applied:

“109. I would, in particular, recall that it follows from the Court’s case-law in relation to Article 23 of the Brussels I Regulation, on the one hand, that the validity of a jurisdiction clause inserted in a contract is dependent on the parties that concluded it having clearly indicated their agreement to that clause and, on the other hand, that the court seised is required to examine whether that clause was the subject of consensus between the parties.

…

111.   Like CDC, I very much doubt that a clause conferring jurisdiction, included in contracts such as those at issue, could satisfy the requirement of clear unvitiated consensus, because the point is the attribution of jurisdiction to the court designated to settle a case relating to the tortious liability of one of the contracting parties deriving from an unlawful cartel when, at the time it concluded the agreement, the person allegedly injured was unaware of the existence of the cartel.

112.   On the other hand, it could, to my mind, be accepted that the person injured should enter into an agreement conferring jurisdiction after it had learned of the existence of the unlawful cartel agreement prohibited by Article 101 TFEU, the former agreement being entered into after the dispute arose, and hence accepted in full knowledge of the facts.”

vii)             As regards jurisdiction clauses outwith Article 23 and arbitration clauses:

“118.   With regard to the clauses conferring jurisdiction to which Article 23 of the Brussels I Regulation proves not to be applicable and to arbitration clauses, the problem raised by the referring court is more complex, for it must be tackled by applying, not the provisions of that regulation, as interpreted by the Court, but rules of national law, whose implementation must be consistent with the binding provisions of EU primary law, and in particular with Article 101 TFEU.

119.     In this connection, I would recall that, according to its consistent case-law in the judgments in Courage and Crehan and Manfredi and Others, the Court has held that, failing EU legislation in that sphere, it is for the domestic legal system of each Member State to prescribe the detailed rules for exercising the right to compensation for damage resulting from an agreement, decision or concerted practice prohibited under Article 101 TFEU,  subject to observance of the principles of equivalence and effectiveness which require, in particular, that those national rules should not hinder the full effectiveness of Union competition law and should take account, more specifically, of the objective contained in that article. In my opinion, it therefore follows in this case that the application of national rules may not allow the jurisdiction and/or arbitration clauses at issue to prejudice that full effectiveness.

120.     Furthermore, the Court has held that the full effect of Article 101 TFEU and, in particular, the effectiveness of paragraph 1 thereof would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or conduct liable to restrict or distort competition, such as the unlawful cartel agreement which, in this case, forms the basis for CDC’s claims. The guarantee that individuals may seek such compensation is likely to discourage agreements or practices of this nature, which are often concealed, and it therefore contributes significantly towards maintaining effective competition within the Union.

121.   As a general rule, when faced with an arbitration clause, a court of a Member State should decline jurisdiction and refer the parties to arbitration, at the request of one of the parties, unless that court finds that the arbitration agreement relied upon has lapsed, is inoperative or cannot be applied in the dispute before it, following scrutiny within the scope of its own jurisdiction, in the light of the requirements of domestic law, since the Brussels I Regulation does not regulate the conditions governing the validity of such a clause. The same would apply to clauses designating a national court which are not covered by Article 23 of the regulation.

122. However, the principle requiring effective implementation of the prohibition under EU law of agreements, decisions and concerted practices, to which the Landgericht refers, can, in my view, be invoked vis-à-vis the jurisdiction or arbitration clauses at issue for the purpose, in particular, of ensuring that all persons have the right to seek full compensation for losses resulting from a prohibited agreement, such as those alleged in the main proceedings.

123.   In this connection, it is to be observed that the Court held in the judgment in Eco Swiss, which concerns the relationship between arbitration and the competition rules under EU law, that Article 85 of the Treaty, now Article 101 TFEU, ‘may be regarded as a matter of public policy’. The Court held that ‘where its domestic rules of procedure require a national court to grant an application for annulment of an arbitration award where such an application is founded on failure to observe national rules of public policy, it must also grant such an application where it is founded on failure to comply with [that article]. Community law requires that questions concerning the interpretation of the prohibition laid down in [that article] should be open to examination by national courts when asked to determine the validity of an arbitration award and that it should be possible for those questions to be referred, if necessary, to the Court of Justice for a preliminary ruling’.

124.   By analogy, I consider that national courts are required by EU law not to apply an arbitration clause, or a jurisdiction clause not governed by Article 23 of the Brussels I Regulation, in cases where the implementation of such a clause would hamper the effectiveness of Article 101 TFEU. In this connection, it may with advantage be noted that the judgment in Eco Swiss predates those in Courage and Crehan and Manfredi and Others, which upheld the recognition in EU law of a right to compensation for all damage suffered by persons adversely affected by unlawful barriers to free competition, not only in the interests of those persons but above all in order to preserve the general interests bound up with that freedom. The case-law after those two judgments has further reinforced that approach, by encouraging the private implementation of those competition rules (commonly known as ‘private enforcement’), particularly following the removal of the potential obstacles deriving from national provisions.

125.   It is true that the application of jurisdiction or arbitration clauses is not in itself an obstacle to the effectiveness of Article 101 TFEU within the meaning of the case-law cited. In particular, the fact that clauses of this type may, if they are valid and applicable to the dispute concerned, entail the ousting of the special bases of jurisdiction provided for in Articles 5 and/or 6 of the Brussels I Regulation does not necessarily have the effect of depriving the persons allegedly adversely affected by damage caused by an unlawful cartel agreement of the possibility of obtaining full compensation on that basis, given that they are not prevented from bringing actions before each of the appointed national or arbitration courts, even though, given the wide variety of clauses relied upon in this case, their application would certainly be likely to render such a course of action more difficult.

126.   None the less, I consider that it is a matter of some delicacy to put that theoretical position into practice in the particular context of an unlawful cartel agreement, involving numerous participants and persons allegedly adversely affected, whose implementation has generated a multitude of individual supply contracts, possibly concluded between different companies in the group to which a vendor or purchaser belongs. In the case of a horizontal restriction of competition, such as that on which the main proceedings are based, I find it difficult to accept an exclusion of the normal forms of judicial protection, unless the parties allegedly adversely affected have expressly entered into an agreement to that effect and the national arbitration courts to which jurisdiction has been assigned in this way are required to apply the provisions of EU competition law as rules of public policy.”

viii)           The Advocate General’s conclusion at [132] was as follows:

“In consequence, I consider that Article 101 TFEU must be interpreted as meaning that, in the context of an action for compensation for damage caused by an agreement declared to be contrary to that article, the implementation of jurisdiction and/or arbitration clauses does not in itself compromise the principle of the full effectiveness of the prohibition of agreements, decisions and concerted practices. In so far as a clause of one or other of those categories  could be declared applicable, pursuant to the law of a Member State, in a dispute concerning liability in matters of tort, delict or quasi-delict that might follow from such an agreement, that principle, in my view, precludes jurisdiction over that dispute being attributed under a clause of a contract whose content had been agreed when the party against whom that clause is relied on was unaware of the cartel agreement in question and of its unlawful nature, and could not, therefore, have foreseen that the clause could apply to the damages sought on that basis.”

79.              I have quoted extensively from the opinion of AG Jääskinen because there was considerable resonance between the submissions of Microsoft Mobile and the opinion of AG Jääskinen. Basing itself on the Advocate General’s opinion, Microsoft Mobile contended for a single jurisdiction – England and Wales – to hear all claims, apart from those U.S. claims it had itself brought. Factors – like the arbitration clause – which stood in the way of this outcome were to be set aside pursuant to this higher object.

80.              Opinions of Advocates General are advisory only, and are neither binding on the Court of Justice, nor on me. In a case where the Court of Justice has followed the opinion of an Advocate General, in terms of outcome or (more importantly) reasoning, the opinion of the Advocate General can be of importance in elucidating the judgment of the Court. In this case, however, the Court of Justice took a different approach from that of AG Jääskinen, and placed little (if any) weight on the concerns regarding the fragmentation of actions in competition claims that so troubled AG Jääskinen, and which Microsoft Mobile associated itself with:

iii)               The Court then turned to jurisdiction and arbitration clauses, and noted that it did “not have sufficient information at its disposal in order to provide a useful answer to the referring court”.[34] The Court said nothing about jurisdiction clauses outside Article 23 nor arbitration clauses. As regards jurisdiction clauses within Article 23, the Court simply noted:

“59.   …it is to be observed that, in the context of the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, signed in Brussels on 27 September 1968…, the Court has stated that, by concluding an agreement on the choice of court under Article 17 of the Brussels Convention, the parties may derogate, not only from the general jurisdiction under Article 2 thereof, but also from the special jurisdiction laid down in Articles 5 and 6 of that convention…

60.     Since the interpretation given by the Court in respect of the provisions of that convention is also valid for those of Regulation No. 44/2001 whenever the provisions of those instruments may be regarded as equivalent, it must be found that such is the case as regards the first paragraph of Article 17 of the Brussels Convention and Article 23(1) of Regulation No. 44/2001, which are drafted in almost identical terms…

61.     It must therefore be concluded that the court seised of a matter can, in principle, be bound by a jurisdiction clause derogating from the rules of jurisdiction laid down in Articles 5 and 6 of Regulation No. 44/2001, which was concluded by the parties under Article 23(1) of that regulation.

62.     That conclusion cannot be called in question by the requirement of effective enforcement of the prohibition of cartel agreements. First, the Court has already held that the substantive rules applicable to the substance of a case must not affect the validity of a jurisdiction clause agreed in accordance with Article 17 of the Brussels Convention…In accordance with the case-law referred to in paragraph 60 above, that interpretation is also relevant to Article 23 of Regulation No. 44/2001.

63.     Second, it must be considered that the court seised of the matter cannot, without undermining the aim of Regulation No. 44/2001, refuse to take into account a jurisdiction clause which has satisfied the requirements of Article 23 of that regulation solely on the ground that it considers that the court with jurisdiction under that clause would not give full effect to the requirement of effective enforcement of the prohibition of cartel agreements by not allowing a victim of the cartel to obtain full compensation for the loss it suffered. On the contrary, it must be considered that the system of legal remedies in each Member State, together with the preliminary ruling procedure provided for in Article 267 TFEU, affords a sufficient guarantee to individuals in that respect…”.

81.              In conclusion, whilst I accept that it is possible for the provisions of EU law to permit a court to sideline or declare ineffective an arbitration clause, there is nothing in the decision of the Court in CDC to mandate such a course. Indeed, to the contrary, to do so, would be to disregard the entire trend and direction of the approach of the Court.  I appreciate that the Court did not consider arbitration clauses specifically. However, that fact cannot disguise the basic truth that the Court’s approach to the risk of “fragmentation of claims” was fundamentally different to that of the Advocate General, and involved a wholesale rejection of his approach. I can see nothing in the decision of the Court to require me to displace the effect of the arbitration clause as something inimical to EU law. Accordingly, I reject Microsoft Mobile’s contention that the arbitration clause should be set aside or disregarded on the grounds of EU law.

82.              I have already held that the court should determine the scope of the arbitration clause in this case (see paragraph 41 above) and have done so. I set out here my reasons for deciding the issue myself, rather than referring the point to the arbitral tribunal.

83.              The approach to determining an application for a stay under section 9 of the Arbitration Act 1996 was set out by Aikens L.J. in Joint Stock Company “Aeroflot-Russian Airlines” v. Berezovsky [2013] EWCA Civ 784 at [72] to [74] and Popplewell J. in Golden Ocean Group Ltd v. Humpuss Intermoda Transportasi Tbk Ltd [2013] EWHC 1240 (Comm) at [59].

84.              Essentially:

c)                  Microsoft Mobile contended that the EU issues it raised – and which have been considered in paragraphs 74 to 81 above – are matters more appropriately dealt with by a court, and not an arbitral tribunal.[35] 

C.        STAY OF THE PROCEEDINGS AGAINST D2/SONY CORPORATION IN FAVOUR OF ARBITRATION

85.              The position of D2/Sony Corporation is materially the same as that of D1/Sony Europe so far as the arbitration clause in the PPA is concerned. The PPA is actually between D2/Sony Corporation and Nokia Mobile Phones Ltd as contracting parties, and Article 25.2 falls to be construed in exactly the same way. Equally, there is no reason for holding the arbitration clause effective in the case of D1/Sony Europe and ineffective in the case of D2/Sony Corporation (or vice versa).

86.              This is a case where D1/Sony Europe was sued as of right pursuant to Article 4 of the Brussels I Regulation (Recast). All of the other Defendants – including D2/Sony Corporation – are foreign companies not domiciled in the EU. Jurisdiction over the claims against them is determined by English national law, pursuant to Article 6(1) of the Brussels I Regulation (Recast).

87.              The relevant provisions in the Civil Procedure Rules are CPR Parts 6.36 and 6.37. These provide, insofar as is material, that:

“6.36 In any proceedings to which rule 6.32 or 6.33 does not apply,[36] the claimant may serve a claim form out of the jurisdiction with the permission of the court if any of the grounds set out in paragraph 3.1 of Practice Direction 6B apply.

6.37  

(1)     An application for permission under rule 6.36 must set out –

(a)     which ground in paragraph 3.1 of Practice Direction 6B is relied on;

(b)     that the claimant believes that the claim has a reasonable prospect of success; and

(c)     the defendant’s address or, if not known, in what place the defendant is, or is likely, to be found.

 (2)    Where the application is made in respect of a claim referred to in paragraph 3.1(3) of Practice Direction 6B, the application must also state the grounds on which the claimant believes that there is between the claimant and the defendant a real issue which it is reasonable for the court to try.

(3)     The court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim.

…”

88.              Three requirements must be shown before the Court will permit service of claims out of the jurisdiction:[37]

i)                   The claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both.

ii)                 The claimant must satisfy the court that there is a good arguable case that the claim falls within one or more of the Gateways.

iii)               England and Wales must be clearly and distinctly the proper forum for the trial of the claims.

89.              There is naturally a close nexus between these three requirements and the procedural requirements of CPR Part 6.37. Thus:

i)                   The requirement under CPR Part 6.37(1)(a) that the ground relied upon be set out must be established to the standard of a “good arguable case” (as stated in paragraph 88(ii) above).[38]

ii)                 The requirement under CPR Part 6.37(1)(b) that the claimant believes the claim has a “reasonable prospect of success” equates to the “serious issue to be tried on the merits test” referenced in paragraph 88(i) above.[39]

iii)               The requirement in CPR Part 6.37(3) that England and Wales be the proper place in which to bring the claim equates to the test that England and Wales must be clearly and distinctly the proper forum for the trial of the claims (as stated in paragraph 88(iii) above).[40]

(2)        The duty to make full and frank disclosure

90.              Because the parties in question have ex hypothesi not been joined, applications to serve out of the jurisdiction are generally made ex parte. There is, on such applications, a duty on the applicant to make full and frank disclosure of the material facts, including adverse facts.[41] The question of whether Murray 1 was full and frank is considered in Section H below.

(3)     Challenging an order permitting service out of the jurisdiction

91.              If a party served pursuant to such an order is minded to challenge it, this will be done on the inter partes return date of the applicant’s original ex parte application for permission to serve out of the jurisdiction. At this point, the court will reconsider, and decide de novo, by way of rehearing, whether permission to serve out should be given. It is for the party seeking to serve out – Microsoft Mobile – to demonstrate that this is a proper case for service out. The position is clearly explained in Briggs, Civil Jurisdiction and Judgments, 6^th ed. (2015) (hereafter “Briggs”) at p.460:[42]

“The application is made without the opponent’s being notified that it is being made; the court will almost always grant permission unless there is a very obvious flaw in the application. If permission is granted, as in practice it almost always is, and service is effected in accordance with it, the defendant may dispute the jurisdiction by challenging the order which granted permission, and the service which was made pursuant to it, by applying under CPR Part 11. The inter partes procedure which then follows marks the point in the process at which the court will investigate whether permission to serve should have been granted. The fact that permission was granted to the claimant in the first place is largely irrelevant at this point: it leaves no footprint; no onus is placed upon the defendant who applies to have the permission set aside; the application is in effect a rehearing of an application for permission, with the onus lying on the party who needed the permission in the first place. The court is not inhibited from discharging or varying the order, and for which the claimant now in substance (if not in form) reapplies, by reason of the fact that it has already been made.”

92.              However, the question on the re-hearing is whether it was proper to grant permission on the date upon which the order to serve out was granted, not (in the light of changed circumstances or fresh evidence) whether it would be right to grant it as at the time of the inter partes application. In ISC Technologies Ltd v. Guerin [1992] 2 Lloyd’s Rep. 430 at 434, Hoffmann J. stated:[43]

“Mr. Crystal said I should look at the position today. An application under R.S.C. O.12, r.8 is a rehearing of the application to the Master and the exercise of a fresh discretion. It should therefore take into account whatever has since happened. I do not agree. The application is under R.S.C. O.12, r.8(1)(c) to discharge the Master’s order giving leave to serve out. The question is therefore whether that order was rightly made at the time it was made. Of course, the court can receive evidence which was not before the Master and subsequent events may throw light upon what should have been relevant considerations at the time. But I do not think that leave which was rightly given should be discharged simply because circumstances have changed. That would mean that different answers could be given depending upon how long it took before the application came on to be heard. The position is quite different when the application is for a stay on grounds of forum non conveniens. In such a case, the appropriate time to consider the matter is the date of the hearing.”

93.              As Evans L.J. noted in Mohammed v. Bank of Kuwait and the Middle East KSC [1994] 1 W.L.R. 1483 at 1492, “[t]he question for the court is whether the evidence in support of the application justifies the order which is applied for being made. The evidence may be produced then or subsequently, but it must be directed at the situation at the date when the application is made.”[44]

94.              It is now necessary to consider the three requirements set out in paragraph 88 above in greater detail.

95.              The requirement that there be a “serious issue to be tried” has been held to be the same as the “reasonable prospect of success” test contained in CPR Part 6.37. In Bas Capital Funding Corp v. Medfinco Ltd [2003] EWHC 1798, Lawrence Collins J. held at [153]:

“It was held by the House of Lords in Seaconsar (Far East) Ltd v. Bank Markazi [1994] 1 A.C. 438[45] that the standard of proof in respect of the cause of action relied on was whether, on the evidence, there was a serious question to be tried, i.e. a substantial question of fact or law, or both, which the claimant bona fide desired to have tried. There is no reason to believe that the standard introduced under CPR 6.21(b) of a “reasonable prospect of success” differs in any material way from the “serious issue to be tried” test.”

96.              In Carvill America Incorporated v. Camperdown UK Ltd [2005] EWCA Civ 645, Clarke L.J. stated at [24]:

“It is common ground between the parties that the merits test under CPR 6.20 is in substance no different from the test of a real prospect of success under CPR 3.4 or 24.2…the underlying rationale is that the court should not subject a foreign litigant to proceedings which the defendant would be entitled to have summarily dismissed. It is, however, important in my opinion to have in mind that the test is not a high one. A claimant has a real prospect of success if its chances of success are not fanciful.”

(2)        The parties’ agreement to “park” the issue

97.              Before me, the parties were agreed that I should proceed on the basis, for purposes of the Applications, that the “serious issue to be tried” requirement was met. However, the agreement that they made was incomplete, in that it left certain issues open. Essentially, the position was as follows:

98.              The parties were agreed that this issue did not have to be determined by me now, and I do not do so. The upshot, however, was that the agreement between the parties was not complete: an important element was unresolved, and I am being asked to deal with an important element going to jurisdiction on the basis of this incomplete agreement. In the circumstances, whilst I proceed on the basis that there is a serious issue to be tried, and that the first requirement is satisfied, I should make absolutely clear – particularly given the terms of paragraph 100 of Microsoft Mobile’s written submissions, which seek to suggest that the issue was open-and-shut – that I am making no determination on this point. It is simply that, given the agreement of the parties, I am not going to consider the question and will not set aside the Master’s order on this ground.

99.              At common law, the court had no power to permit claims to be served abroad. Power to do so was introduced by the Common Law Procedure Act 1852; was from 1883 in Order 11, rule 1 of the Rules of the Supreme Court; and since 2000 has been provided for by CPR 6.36 and paragraph 3.1 of Practice Direction 6B.

100.          All of the Gateways listed in the Practice Direction presuppose some connection – apart from mere presence in the jurisdiction when served – with England and Wales. It is fair to say that the connection is between the pleaded causes of action and this jurisdiction – not any wider jurisdiction, like the EU or the EEA.

101.          The burden of demonstrating that a claim falls within one of the Gateways lies on the party seeking to serve out of the jurisdiction:

a)                  The relative test is whether, on the evidence before the court, the applicant has much the better of the argument. In Canada Trust Co v. Stoltenberg (No. 2) [1998] 1 WLR 547 at 555, Waller L.J. articulated the test as follows:[46]

“It is, I believe, important to recognise, as the language of their Lordships in Korner’s case [1951] AC 869 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 Order 12, rule 8(5) to order a preliminary issue on jurisdiction, as Staughton L.J. pointed out in the Attock Cement Co. case [1989] 1 W.L.R. 114, 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’s case “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 itself has a flexibility depending on the issue being considered and the concept “good arguable case” has a similar flexibility.”

b)                 The absolute standard was described by Arden LJ in Brownlie v. Four Seasons Holdings Inc [2015] EWCA Civ 665 at [23]:[47]

“As submitted on behalf of Lady Brownlie, when looking for “the much better argument” the court is concerned with the question of relative plausibility. But there is also an absolute standard to be met. The words used by Waller L.J., namely a “much better argument”, mean more than that, on the material available, the case is arguable. There must be some substance to it: since we are deciding a question of jurisdiction, the evidence must achieve an acceptable level of quality and adequacy. However, the standard to be attained is not that of succeeding on a balance of probabilities because there is no trial…”

ii)                 Where there is a pure point of law, not involving a factual dispute, on which jurisdiction depends, the court should normally decide it: Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7 at [81] (per Lord Collins).

(2)        The Gateways relied upon by Microsoft Mobile

102.          In its application to serve the Defendants out of the jurisdiction, Microsoft Mobile relied upon Gateways (3) and (9)(a) of paragraph 3.1 of Practice Direction 6B.

103.          The relevant parts of Practice Direction 6B on service out of the jurisdiction provide:

104.          It is, of course, trite that Microsoft Mobile must show that each claim pleaded in the Amended Particulars of Claim falls within one or other of these Gateways. To the extent that service out can be authorised for some, but not for other, claims, those claims must be removed so far as any defendants out of the jurisdiction are concerned.[48]

(3)        Gateway (3): whether D2/Sony Corporation,[49] D4/LG Chem and/or D6/ Samsung are necessary or proper parties to Microsoft Mobile’s claims against D1/Sony Europe

(i)         Requirements that have to be satisfied

105.          In Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7, Lord Collins considered this Gateway in general terms:

“73.   The necessary or proper party head of jurisdiction is anomalous, in that by contrast with the other heads, it is not founded upon any territorial connection between the claim, the subject matter of the relevant action and the jurisdiction of the English courts: The Brabo [1949] A.C. 326, 338, per Lord Porter. Piggott, Foreign Judgments and Jurisdiction (3rd ed, 1910), pt III, p 238, said: “This is perhaps the most important of the sub-rules, for it throws the net of jurisdiction over a wider area; and the principle of considering the nature of the cause of action which pervades the whole subject, appears here to be ignored.” Consequently as Lloyd LJ said in The Golden Mariner [1990] 2 Lloyd’s Rep. 215 at 222:

“I agree…that caution must always be exercised in bringing foreign defendants within our jurisdiction under O.11 r.1(1)(c). It must never become the practice to bring foreign defendants here as a matter of course, on the ground that the only alternative requires more than one suit in more than one different jurisdiction.”

74.     Among the questions which arise on this appeal are these: When is an action “properly brought” against the defendant served within the jurisdiction (and outside the jurisdiction under the English rules), referred to here as D1, or “the anchor defendant”? When will the foreign additional defendant, or D2, be a “proper party”? In particular, what is the merits threshold for each of those claims? Is the claim not “properly brought” against D1 if the motive of the claimant in suing D1 is to add D2? Does it matter that in practice the claimant will not recover against D1?

75.     The leading decisions are the decisions of the House of Lords in Improvement Commissioners v. Armement Anversois SA (The Brabo) [1949] A.C. 32 and Derby & Co Ltd v. Larsson [1976] 1 W.L.R. 202, and of the Court of Appeal in Massey v Heynes & Co. (1888) 21 QBD 330 and Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258. The members of those tribunals do not all speak with one voice, but the following propositions may be derived from them.

The motive in suing the anchor defendant

76.     First, the mere fact that D1 is sued only for the purpose of bringing in D2 is not fatal to the application for permission to serve D2 out of the jurisdiction: The Brabo [1949] A.C. 326, 338-9, per Lord Porter; Derby & Co Ltd v. Larsson [1976] 1 W.L.R. 202, 203, per Viscount Dilhorne.

77.     The question was discussed extensively (and somewhat discursively) in Multinational Gas and Petrochemical Co. v Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258, but without reference to the relevant passages in The Brabo and without any citation to the court of Derby & Co. Ltd v. Larsson.

78.     The point arose in Multinational Gas because D1 was in liquidation and therefore the plaintiff had no real prospect of recovery against D1. Lawton L.J. did not treat as fatal to the application the fact that the sole, or predominant, reason for beginning the action against a party duly served within the jurisdiction was to enable an application to be made to serve the parties outside the jurisdiction. It was instead a relevant factor in the exercise of the discretion: at 268. Dillon L.J. said (at 285) that an action was not to be regarded as properly brought against D1 if the true inference from all the facts was that the sole reason for suing D1 was to found an application to join foreign defendants in the action. But although he held that the predominant reason for the action against D1 was to enable foreign defendants to be joined, he regarded the action as bona fide and properly brought: at 286-287. May L.J. considered that if there was a good arguable case against D1 in an action in which any judgment obtained against that defendant might or would not be met owing to lack of funds, the fact that the main or predominant purpose of keeping D1 in the proceedings was to enable the plaintiff to bring in D2 was not a ground for saying that the proceedings were not properly brought against D1: see at 273-279. See also Goldenglow Nut Food Co Ltd v. Commodin (Produce) Ltd [1987] 2 Lloyd's Rep. 569, 578 (CA).

79.     The better view, therefore, is that the fact that D1 is sued only for the purpose of bringing in the foreign defendants is a factor in the exercise of the discretion and not an element in the question whether the action is “properly brought” against D1, provided that there is a viable claim against D1.

“Bound to fail”

80.     Second, the action is not properly brought against D1 if it is bound to fail: The Brabo [1949] A.C. 326, 338-9, per Lord Porter. He also put the point (echoing Witted v Galbraith [1893] 1 QB 577) on the basis that leave will not be granted if the lack of a plausible cause of action against D1 shows that the presence of D1 in the jurisdiction is being used as a device to bring in D2. See also Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258, 268, 273-274.”

106.          As Lord Collins identified, there are two very distinct requirements to this Gateway:

i)                   First, the claim against the anchor defendant – against whom no jurisdictional issue arises – must give rise to “a real issue which it is reasonable for the court to try”. In Vitol Bahrain EC v. Nasdec General Trading LLC [2014] EWHC 984 (Comm), Popplewell J. considered Altimo and observed at [46]:[50]

“The starting point when considering the necessary or proper party head of jurisdiction is to examine the nature of the claim which arises against the anchor defendant(s). That is the claim to which it must be necessary or proper for the additional defendant(s) to be party. At this first stage, the approach requires consideration of such claim in isolation, that is to say assuming that there will be no joinder of the additional foreign defendant(s).”

ii)                 Secondly, and assuming the claim against the anchor defendant does give rise to “a real issue which it is reasonable for the court to try”, the defendants out of the jurisdiction must be “necessary or proper parties” to that claim.

(ii)        The first requirement: the claim against the anchor defendant

107.          I do not consider – in light of the agreement reached by the parties regarding the existence of a serious issue to be tried – that it is open to me to debate whether there is a “real issue” – in the sense of an arguable issue – between Microsoft Mobile and D1/Sony Europe.[51]

108.          However, the first requirement goes beyond a requirement of mere arguability. In Erste Group Bank AG, London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379, the Court of Appeal considered Lord Collin’s statement in [79] of Altimo Holdings. Gloster L.J. stated:[52]

41.     …We do not accept Mr. Salzedo’s submissions that Lord Collins’ statement in paragraph 79, together with his statement in paragraphs 65 and 66 that, in effect, the changes in the wording of English rules made no difference to the old law relating to what was meant by ‘properly brought’, lead to the conclusion that the only criterion which had to be satisfied at the first stage under paragraph 3.1(3)(a) of PD6B is whether there is an arguable claim against the anchor defendants. Such a construction would in our view unjustifiably restrict the wide ambit of the phrase ‘which it is reasonable for the court to try.’ Nor do we consider that Lord Collins was attempting any such exclusive or exhaustive definition of the phrase ‘which it is reasonable to try’ as used in paragraph 3.1(3)(a) of PD6B of the English CPR, when he addressed the meaning of ‘properly brought’ and ‘proper party’, or the issues of ‘the motive in suing the anchor defendants’ and ‘bound to fail’ in the context of the Isle of Man provisions. If the Board has been attempting to do so, it clearly would have been obiter since the only issues that the Board were addressing in the context of the relevant Isle of Man ‘properly brought’ provision were (a) whether the relevant claims were bound to fail and (b) whether the motive for the defendants in bringing their counterclaim (viz for the sole or predominant purpose of establishing jurisdiction against the other defendants to counterclaim, as opposed to suing the anchor defendants) was an issue that fell to be considered as part of the question whether the action had been ‘properly brought’: see paragraphs 127 and 128. There was no consideration of the separate question whether there were real issues which it was reasonable to try.

42.     Accordingly in our view AK Investment is not to be regarded as even persuasive authority for the proposition that the court is precluded from considering wider issues of reasonableness at stage one of the process under paragraph 3.1(3)(a) of PD6B.”

109.          It is, therefore, necessary to consider wider issues regarding the “reasonableness” of the claim brought by Microsoft Mobile against D1/Sony Europe. The Defendants contended that the claim brought by Microsoft Mobile against D1/Sony Europe was unreasonable on the following grounds:

110.          I consider that the sole reason that Microsoft Mobile’s action is structured as it is, with D1/Sony Europe as the “lead defendant”, has been to found jurisdiction in England against the other Defendants. Apart from D1/Sony Europe, all of the other Defendants are the ultimate parent companies of their respective corporate groups, claimed against as a part of a “single economic unit” or “undertaking”.[53] D1/Sony Europe is the exception: it is a subsidiary of D2/Sony Corporation, which is the parent company of the entire Sony group.[54] I can discern no other, additional, reason or benefit accruing to Microsoft Mobile for pursuing this course of action, and it is significant that in Microsoft’s proceedings in the United States, which involved similar issues and similar parties, D1/Sony Europe was not joined.

111.          The Defendants pointed to some (old) authority which they contended suggested that the joinder of an anchor defendant in such circumstances was unreasonable.[55] I do not consider that it is open to me on the (later) authorities on this point to reach such a conclusion, and I do not, therefore, consider these authorities further. In Altimo Holdings, Lord Collins considered that the fact that a party had been joined solely for the reason of bringing in other parties as defendants was relevant only to discretion, and not to the question of whether the Gateway was satisfied. In Erste Group Bank AG, Gloster L.J. stated at [43]:[56]

“It was obvious from the evidence that the commercial (and indeed only) driver behind the Bank’s issue of proceedings in England against D1 and D2 was to enable a claim to be brought against D3 and D5 and to attempt to execute against their assets, whether in Russia or elsewhere. However, we do not consider that in the present case it is necessary or appropriate for this court to revisit the question whether the fact that a claimant’s motive in bringing proceedings against the anchor defendants was only for the purposes of enabling a claim to be brought against the foreign defendants is a factor which is relevant to the question whether the threshold criteria under paragraph 3.1(3) of PD6B have been satisfied. To do so would involve reconsideration of this court’s decision in Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd [1983] Ch. 258 and the various authorities there cited. That would be a task for the Supreme Court. Accordingly, even if we have reservations on this point, we must accept for the purposes of this case the Board’s conclusion, as expressed in paragraph 79 of AK Investment, that the fact that the anchor defendant is sued only for the purpose of bringing in the foreign defendants is not an element in deciding the question whether the gateway requirements of paragraph 3.1(3)(a) or (b) have been satisfied. That factor is only for consideration under the wider discretionary head of Issue 4.”

On the state of the law as it presently stands, therefore, my conclusion that D1/Sony Europe was joined for the sole purpose of bringing into the proceedings the other Defendants does not render the claim against D1/Sony Europe one that it is unreasonable for this court to try.

The arbitration clause and section 9 of the Arbitration Act 1996

112.          For the reasons given in Sections B and C above, I have concluded that the arbitration clause in the PPA is sufficiently wide to embrace the claims brought by Microsoft Mobile against D1/Sony Europe and D2/Sony Corporation. For the reasons I have given, I have stayed the proceedings against these Defendants.

113.          The question is whether this determination – made after Microsoft Mobile’s application to serve out of the jurisdiction, and after that application was determined in Microsoft Mobile’s favour by the Master – is relevant to the question of reasonableness.

114.          Microsoft Mobile contended that such a determination was not relevant, because it post-dates the order for service out, and matters need to be assessed as at that date. I do not accept this contention, for two, related, reasons.

115.          First, it is clear from the terms of Murray 1 that the arbitration clause was a matter that was before the Master on the application for service out of the jurisdiction:

116.          Secondly, and relatedly, it matters not that the position of D1/Sony Europe quoad the arbitration clause was unknown at the time of the hearing, because it should have been assumed that any point on jurisdiction properly available to D1/Sony Europe would be taken by it. In Tyne Improvement Commissioners v. Armement Anversois S/A, “The Brabo” [1949] A.C. 32, Lord Simonds stated at 347:

117.          Accordingly, I find that the effect of the arbitration clause on the lis between Nokia and D1/Sony Europe is a factor to be considered on the present Applications. The question whether, in these circumstances, the claim against D1/Sony Europe gives rise to “a real issue which it is reasonable for the court to try”, is straightforward to answer. Given the scope of the arbitration clause, and the fact that D1/Sony Europe is asserting it and seeking arbitration of the claims against it, there is simply no real issue between Microsoft Mobile and D1/Sony Europe for this court to try. The point is so fundamental, it goes beyond any question of reasonableness.

118.          This finding is sufficient to determine the argument in relation to Gateway (3) against Microsoft Mobile.  However, in case I am wrong on the question of a stay in favour of arbitration, I consider the alternative scenario where the proceedings against D1/Sony Europe continue. That brings me to the third point: whether – given the manner in which the various claims advanced by Microsoft Mobile have been aggregated – it can be said that the claims against D1/Sony Europe are unreasonable or (if this makes a difference) not reasonable.

119.          As I have already noted, I do not consider that it is open to me to set aside the Master’s order on the basis that the claims advanced by Microsoft Mobile against D1/Sony Europe are unarguable. That is a matter – if at all – for a later and different hearing on summary judgment.[57]

120.          However, there is a secondary issue, on the question of reasonableness. I have described above the aggregated nature of the claims being made by Microsoft Mobile, in that claims are made by Nokia and Microsoft Mobile generally, against the various Defendants generally, such that it is not possible to define or identify specific aspects of a claim against (for example) D1/Sony Europe by a specific entity within Nokia.

121.          Although it is true to say that the claims being advanced by Microsoft Mobile are in this sense vague, I do not consider that it can be said that this renders the claims unreasonable. It is perfectly proper to advance claims in the alternative – alternative claimants and alternative defendants – and in this case, of course, any Defendant participating in the Cartel will be jointly and severally liable for the acts of the other participants of the Cartel – whether joined as defendants or not.

122.          Microsoft Mobile has alleged, in terms, that D1/Sony Europe participated in the Cartel, although it has done so by advancing that allegation generally against all of the Defendants. See, for example, the following paragraphs in the Amended Particulars of Claim:

“37.   …the Defendants and/or the undertakings of which they were a part, together with other undertakings (collectively the ‘Cartelists’) in the period from at least August 1999 to May 2011 entered into agreements and/or arrangements and/or concerted practices by which they or two or more of them…[58]

…

63.     In summary, beginning no later than 1999, the Cartelists began communicating with each other bilaterally and/or multilaterally with a common goal of cooperating to prevent, restrict or distort competition on the relevant market for Li-ion Batteries.

…

174.   By reason of the Defendants’ participation in and/or implementation of the Cartel as described hereinabove…

…

181.   As an intended and/or foreseeable consequence of the conduct set out above, the Defendants and the undertakings of which they formed part caused the Claimant loss and damage…”

123.          In short, there is a clearly pleaded case against D1/Sony Europe, by way of which all of the claims pleaded in the Amended Particulars of Claim are advanced. I reject the contention – set out most clearly in paragraph 64 of D6/Samsung’s written submissions – that “Sony Europe was not alleged to have directly participated in the cartel or even to have known of the cartel. Instead Sony Europe was sued simply on the basis that it was part of the same economic unit as Sony…and was said to be jointly and severally liable with Sony and the rest of the Japanese and Korean Defendants for the damages caused by the cartel”.

124.          Although, of course, I accept that D1/Sony Europe might be found to be liable in damages to Microsoft Mobile on the basis of what can be termed “group liability” – i.e. because D1/Sony Europe, although not involved in the Cartel, was liable because it was part of the same undertaking, entities within which did participate in the Cartel – that is not the case that is pleaded by Microsoft Mobile. The case that is pleaded, which is verified by a statement of truth and by the witness statements of Mr. Murray, is that D1/Sony Europe itself participated in the Cartel. I conclude that, but for the arbitration clause, the claim against D1/Sony Europe gives rise to real issues which it is reasonable for the court to try.

125.          It is, for this reason, unnecessary for me to determine what the parties called the “Provimi” point. The Provimi point only arises if D1/Sony Europe’s liability is based solely on its being a part of the same undertaking as its parent D2/Sony Corporation – in short, if the claim against D1/Sony Europe is predicated solely on a theory of group liability, without any allegation that it knew or directly participated in the Cartel. Were the case against D1/Sony Europe to be solely a group liability case, very difficult questions of whether D1/Sony Europe was, or was not, a part of the same undertaking as D2/Sony Corporation might arise, in addition to difficult questions of attribution of conduct within an undertaking.[59] As it is, my conclusion regarding the nature of the allegations made by Microsoft Mobile against D1/Sony Europe means that I do not have to venture into these difficult waters, and I do not consider the Provimi question further in this Judgment.

(iii)       The second requirement: necessary or proper party

Introduction

126.          The next question which arises is whether the Defendants, apart from D1/Sony Europe, are persons who are “necessary or proper” parties to the claim against D1/Sony Europe. It is important to note that “necessary” and “proper” are disjunctive.

127.          Microsoft Mobile did not contend that the Defendants were necessary parties to the action – the Defendants quite rightly pointed out that there is no need to sue every member of a cartel: joint and several liability means that only one cartelist needs to be joined in an action such as this.

128.          Microsoft Mobile did, however, contend that the Defendants were proper parties. Microsoft Mobile contended that the test for being a “proper” party was simply whether – on the assumption that the foreign defendant was within the jurisdiction – that defendant could be joined pursuant to CPR Part 19. This was disputed by the Defendants, who submitted that:

129.          Two questions therefore arise:

130.          The Defendants relied upon a test propounded by Lindley L.J. in Witted v. Galbraith [1893] 1 QB 577 at 579:[60]

“The rule that now applies is Order XI, r.1(g), and it is said that the present case comes within that rule. There is a very easy method of testing whether this is true. Supposing that both the defendant firms were resident within the jurisdiction, would they both have been joined in the action? I cannot think so; there is no plausible cause of action against the brokers. I come to the conclusion that the brokers have been brought into the action simply to enable the plaintiff to bring the other defendants within the jurisdiction. It is not a bona fide case of an action properly brought against a person who has been served within the jurisdiction. Consequently there is no right to proceed under the order, and the appeal must be allowed.”

131.          The Defendants submitted that there was significance in the use of the word “would” in Lindley L.J.’s test. The question was not whether the claim could have been brought, but whether it would have been on the assumption that all parties were resident within the jurisdiction. This, of course, is a much narrower and more stringent test than simply whether a defendant could be joined pursuant to CPR Part 19.

132.          The Defendants’ contention places a great deal of weight on a single word. Other cases take a different approach. In Massey v. Heynes (1888) 21 QBD 330 – another decision of the Court of Appeal, pre-dating Witted v. Galbraith, and where Lindley L.J. was a member of the court – Lord Esher M.R. said at 338:[61]

“The question, whether the person out of the jurisdiction is a “proper party” to an action against a person who has been served within the jurisdiction, must depend on this, - supposing both parties had been within the jurisdiction would they have been proper parties to the action? If they would, and only one of them is in this country, then the rule says that the other may be served, just as if he had been within the jurisdiction.”

Lindley L.J. did not dissent from this test.

133.          Lord Esher M.R.’s test in Massey v. Heynes is altogether wider than Lindley L.J.’s “counter-factual” “would” test in Witted v. Galbraith. The touchstone of Lord Esher M.R.’s test is whether a defendant would be a “proper” party assuming that party to be within the jurisdiction. That comes very close to the test propounded by Microsoft Mobile: could the defendant be joined pursuant to CPR Part 19?

134.          This wide approach is confirmed by a number of cases relied upon by the Defendants, where service out of the jurisdiction was set aside on the ground that the claim against the anchor defendant had not bona fide been brought. In these cases, the claim against the anchor defendant was no more than a device or sham to enable claims to be brought against other defendants who were out of the jurisdiction.[62] Given these findings, it is easy to see that (in these cases) the joinder of the foreign defendant would be “improper” according to the test propounded by Lord Esher M.R.

135.          I conclude that the circumstances in which a party is a “proper” party to proceedings already commenced or to be commenced against an anchor defendant are significantly wider than those contended for by the Defendants. I consider the test simply to be whether the foreign defendant could, if within the jurisdiction, properly have been joined pursuant to CPR Part 19.

136.          There is a further reason why I reject the approach contended for by the Defendants. Ex hypothesi, if the sole reason for bringing D1/Sony Europe into the proceedings was to found jurisdiction against the other Defendants, then (assuming the other Defendants were already amenable to the court’s jurisdiction) D1/Sony Europe would never have been joined. Such a test is not only inconsistent with the law as I have described it, but also it is not open to me, given Lord Collins’ statement in Altimo Holdings at [79] and the Court of Appeal’s view of that statement in Erste Group Bank AG at [43] (see paragraph 111 above). This approach to what is a “proper” party brings into play precisely the same “reasonableness” arguments in relation to forum-shopping as Lord Collins rejected in Altimo. This is very clear from paragraph 120 of D6/Samsung’s written submissions:

137.          It seems to me that questions as to the propriety of the claim against the anchor defendant are more properly considered at the stage of the first requirement (a reasonable issue for the court to try) and not at the stage of the second requirement (necessary or proper party).

138.          In conclusion, the law is well-described in Dicey, Morris & Collins, The Conflict of Laws, 15^th ed. (2012) at paragraph 11-165:

139.          I have no doubt that the Defendants are, according to the test that I have described, “proper” parties to the proceedings against D1/Sony Europe:

iii)               In these circumstances, there are strong reasons for concluding that there would be real advantage in joining the Defendants. They are jointly and severally liable with D1/Sony Europe; investigating the Cartel is, effectively, a single investigation; and it makes no sense to duplicate this investigation and run the risk of inconsistent findings. It is clear from the case law that this is a particularly powerful factor – indeed, it may be said to be one of the essential functions of this particular Gateway.[63]

(4)        Gateway (9)(a): damage within the jurisdiction

(i)         The wording of the Gateway

140.          The wording of this Gateway has changed over time. Prior to 1987, the predecessor to paragraph 3.1(9) was RSC O.11 r.1(h), which applied where the claim was “founded on a tort committed within the jurisdiction”. The focus was thus on the place where the wrongful act was done.

141.          In 1987, rule 1(h) became rule 1(f) and was changed substantially to its present form, referring separately to:

142.          This change was made from a desire to incorporate into the common law rules of jurisdiction the effect of what is now Article 7(3) of the Brussels I Regulation (Recast) as interpreted by the Court of Justice in Bier [1978] QB 708. As a result, it may be appropriate (as Ms. Demetriou, Q.C., leading counsel for D4/LG Chem, contended) to take into account, when construing this Gateway, other case-law emanating from the Court of Justice, even though the Gateway is an English and not an EU jurisdictional rule.[64] Whilst it might be appropriate to keep an eye on non-English case law as being of potentially persuasive force, in my judgment it would be inappropriate to go further than this: the Gateway is an English and not an EU jurisdictional rule, and must be construed on that basis.

143.          In this case, Microsoft Mobile based its contentions as regards this Gateway entirely on the basis that damage had been sustained within the jurisdiction i.e. paragraph 3.1(9)(a) of Practice Direction 6B. It is not necessary, for present purposes, to consider further the alternative ground of acts committed within the jurisdiction.

144.          The factual basis on which Microsoft Mobile sought to demonstrate jurisdiction turned on the following aspects, which were set out in paragraph 33 of Murray 1:

145.          In its written and oral submissions, Microsoft Mobile appeared to supplement or extend these three bases. Thus, paragraph 116.2 of Microsoft Mobile’s written submissions states that “[t]he entities within Nokia that made purchases of Li-ion Batteries, in respect of whose purchases the claim is brought, include Nokia UK Ltd which is established in the UK”. The significance of Nokia UK Ltd is that it would have its registered office within the jurisdiction which (assuming the approach in CDC is applicable, which I do) could be the place where damage was sustained.

146.          It will be necessary to consider all of these bases, together with the additional evidence relied upon by Microsoft Mobile (Murray 1 being the evidence deployed before the Master: it was supplemented by Murray 2 before me). Before doing so, however, something needs to be said about the nature of the Gateway itself.

147.          There are a number of points that fall to be considered:

148.          These various aspects are considered in turn below. Thereafter, I turn to the specific contentions of Microsoft Mobile.

149.          Clearly, a good arguable case needs to be shown regarding the applicability of the Gateway: see paragraph 101 above. The question is, what law should apply when seeking to determine whether the criteria demanded by a Gateway are met. Briggs at pp.466 to 467 says this:

150.          I was referred to no authority on this question. In a straightforward case, where the facts are clear, it might be possible to determine the applicable law as a matter of law; in other cases, the facts may be capable of determination on the “good arguable case” test, and the applicable law then determined on the basis of those facts.

151.          The present case is, however, altogether more complex. Unsurprisingly, very little has been said before me about the operation of the Cartel, and it is clear from the exchanges with Mr. Beal, Q.C. recorded in paragraph 20 above, that the facts relating to the sale and purchase of the Li-ion Batteries will be difficult to establish, as regards place of purchase; the identity of the vendor; the identity of the buyer; whether there was a “chain” of purchases within Nokia; and how the Li-ion Battery was, in the end, on-sold by Nokia.

152.          The difficulty of the point is stated very clearly in Murray 2:

153.          In these circumstances, it is simply not possible to make any determination as to what might be the applicable law in the present case; still less have I received factual evidence in relation to all of the potentially applicable laws. None of the Defendants sought to contend that the inability of Microsoft Mobile to identify the applicable law, and so identify more specifically the places where damage had been sustained by Nokia, was fatal to Microsoft Mobile’s contention that its claims fell within Gateway (9)(a). In my judgment, they were right not to do so. In a case such as this, the question of where damage has been sustained must be informed by the jurisdictional rules of the lex fori – by which I mean, the manner in which the Gateway has been formulated and construed, plus (when dealing with questions such as “what is damage?” and “where did that damage occur?”), the sort of “broad internationalist spirit” described by Lord Mance in Raiffeisen Zentralbank Österreich AG v. Five Star General Trading LLC [2001] QB 825 at [27].

154.          Adopting this broad internationalist spirit, I take the approach that if Microsoft Mobile can show damage sustained within the jurisdiction on the basis of any of the candidates described in paragraph 139 of Murray 2, the requirements of Gateway (9)(a) will be satisfied.

155.          The White Book 2016 says this at paragraph 6.37.15.1:

156.          In Saipem S.p.A. v. Dredging VO2 B.V., the “Volvox Hollandia” [1988] 2 Lloyd’s Rep. 361 at 371-372, Kerr L.J. stated:

157.          Each claim that is advanced by a claimant and which that claimant seeks to pursue against a defendant outside the jurisdiction must fall within one or more of the Gateways. The question which arises is how this applies where – as here – there has been an assignment of claims. In such a case, it may – and in this case will – be necessary to consider “who is the claimant?”. Where there has been an assignment, there are two candidates – the person who originally had the claim, the assignor, and the person who now has the claim, the assignee.

158.          In my judgment, where the identity of the person whose “claim” is being considered for the purposes of a Gateway matters, that person is the original holder of the claim, and not the last person to whom that claim was transferred. The jurisdictional rules must be applied not in relation to the claim as assigned (where the ultimate assignee would be regarded as the claimant) but to the claim as it originally subsisted (so that the original assignor would be regarded as the claimant).

159.          This is clearly the approach of English national law. The assignee cannot, by virtue of the assignment, be in a better position than the assignor would have been in. This is reflected in the damages that the assignee can recover if a cause of action is assigned to him (where the rule is that the assignee cannot recover more than the assignor could have done[65]) and in the fact that an assignee is bound by choice of jurisdiction and arbitration clauses.[66]

160.          Such an approach is, I have no doubt, entirely consistent with Lord Mance’s “broad internationalist spirit”. In the CDC case considered in paragraphs 78ff above, the Court of Justice considered that, for jurisdictional questions, it was necessary to have regard to the status of the original claimant and that jurisdiction clauses binding on an original claimant were also binding on that claimant’s successor in title:

161.          In Berezovsky v. Forbes [2000] 1 WLR 1004 at 1012, Lord Steyn – considering the old formulation of the Gateway – held that “a tort committed within the jurisdiction must be a real and substantial one”.

162.          Unlike the equivalent jurisdictional base under the Brussels I Regulation (Recast), where jurisdiction only exists in respect of such damage as was sustained within the jurisdiction, this Gateway gives jurisdiction in respect of damages sustained both within and without the jurisdiction. In Metall und Rohstoff A.G. v. Donaldson Lufkin & Jenrette Inc. [1990] 1 Q.B. 391 at 437, the Court of Appeal noted:[67]

“As the rule now stands it is plain that jurisdiction may be assumed only where (a) the claim is founded on a tort and either (b) the damage was sustained within the jurisdiction or (c) the damage resulted from an act committed within the jurisdiction…Condition (b) raises the question: what damage is referred to? It was argued for A.C.L.I. that since the draftsman had used the definite article and not simply referred to “damage”, it is necessary that all the damage should have been sustained within the jurisdiction. No authority was cited to support the suggestion that this is the correct construction of the Convention to which the rule gives effect and it could lead to an absurd result if there were no one place in which all the plaintiff’s damage has been suffered. The judge rejected this argument and so do we. It is enough if some significant damage has been sustained in England.”

163.          In this case, when approaching the question of whether Microsoft Mobile can show substantial damage sustained within the jurisdiction, two points must be borne in mind:

164.          It is clear that the damage that needs to be established under this Gateway is direct, and not indirect or consequential, damage. In Erste Group AG, London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379, Gloster L.J. stated:[68]

“106. …it seems to us that the tort gateway is not satisfied in any event on the claim pleaded because, largely for reasons already given in relation to applicable law, we have reached the clear view that the relevant damage for this purpose was sustained in New York rather than London. None of the first instance cases had treated as relevant damage a non-payment of money in England which is simply and precisely dependent upon an earlier non-payment outside England, in circumstances where there were prior arrangements, for example with an agent, that the offshore payment would be followed by an onward payment to an account within the jurisdiction. On the contrary, the damage successfully relied upon was, in each of those cases, ‘direct’ damage, whether it consisted of payment of funeral expenses or a continuing loss of earnings, arising afresh month by month when salary would otherwise have been paid to the victim, but for his injury.

107.   In the present case, the relevant loss was the destruction of the value of the Bank’s receivables under the Loan Agreement and Guarantee which, for reasons already given, is properly to be regarded as having occurred in New York, that being the place of payment. The knock-on consequence, namely non-payment by the Facility Agent to the Bank’s facility office in London was merely reflective of that earlier loss. In relation to the Bank’s share of repayments it was, dollar for dollar, the same. It was not in any rational sense a fresh, different or separate loss. Nor was it a continuing loss, like loss of earnings.”

165.          In Brownlie v. Four Seasons Holdings Inc [2015] EWCA Civ 665, the Court of Appeal also drew a distinction between direct losses and indirect/consequential losses. A claim for damages brought by the claimant on her own behalf and on behalf of her husband’s estate for injuries suffered as a result of an accident in Egypt was consequential loss; on the other hand, the claimant’s claim under the Fatal Accidents Act 1976 had been sustained within the jurisdiction, as it was a separate statutory cause of action brought to recover compensation for the claimant’s loss of dependency, and was not consequential loss. At [91], Arden L.J. stated:

“To sum matters up on this issue, concerning Lady Brownlie’s tort claims, therefore, I would agree with the doubts expressed by this court in Erste Group Bank AG London Branch v. JSC “VMZ Red October” [2015] EWCA Civ 379 about claims for consequential loss for foreign accidents being within the tort gateway. I would allow the appeal in respect of Lady Brownlie’s personal claim and in respect of the LRMPA34 claim…However, for the reasons given above, I would dismiss the appeal in so far as it relates to Lady Brownlie’s own tort claim under the FAA76.”

(iv)       Application in the present case

166.          I turn to consider whether Microsoft Mobile has demonstrated a good arguable case that, as a result of the tortious claims alleged by it, damage has been sustained within the jurisdiction.

167.          The relevant part of Murray 1 – paragraph 33(a) – was set out in paragraph 144 above. Essentially, it is said that 12.1 million units of Li-ion Batteries were purchased from D1/Sony Europe by one or more companies within the Nokia group and/or Microsoft Mobile, without differentiating between these entities. No further information is provided.

168.          This point is very clearly highlighted in Wheeler 2:

169.          Taking a point against himself, Mr. Wheeler identified (in paragraph 15 of Wheeler 2) “at most €592,659 worth of the relevant products (i.e. approximately 200,000 units) to Nokia companies in the UK in the relevant period (all between 2002 and 2009)”, which Mr. Murray seized upon in paragraph 142 of Murray 2 to bolster Microsoft Mobile’s arguments. Before me, it was common ground that some €250,000 of these sales – being sales to a former Nokia subsidiary, Vertu Ltd – could not count, but apart from these sales to Vertu Ltd, I take these additional sales in the UK into account.

170.          In paragraph 24 of Botteman 1, an attempt is made to put the volume of UK sales into perspective:

171.          Apart from referencing the Sanyo sales mentioned in Wheeler 2 (see paragraph 142 of Murray 2), paragraphs 138 to 141 of Murray 2 really only repeat the facts stated in Murray 1, and no further substantive factual point is made.

172.          In these circumstances, I hold that Microsoft Mobile has not made out a good arguable case that the requirements of Gateway (9)(a) have been met:

173.          It is common ground that the PPA between D2/Sony Corporation is governed by English law: see paragraph 35 above. Other PPAs are also governed by English law, albeit not all.

174.          Article 4 of Rome II provides:

175.          Microsoft Mobile is thus relying on the second alternative choice of applicable law – what Recital (18) of Rome II refers to as an “escape clause” – as indicating that English law is the applicable law. The reason it is said the escape clause is triggered is because there is a manifestly close connection between the torts pleaded in the Amended Particulars of Claim and the English choice of law provisions in (some of) the PPAs.

176.          I find this argument entirely unpersuasive, and I reject it for the following reasons:

177.          The third contention advanced in paragraph 33(c) of Murray 1 is that Nokia and/or Microsoft Mobile sold substantial quantities of handsets in England and Wales over the Cartel Period and Run-Off Period, and that there is the potential that Nokia and/or Microsoft Mobile suffered loss through “volume effects”.

178.          By volume effects, I mean that Nokia and/or Microsoft Mobile may have passed on to their customers (the ultimate purchasers of the handsets containing the Li-ion Batteries) any overcharge paid by them to the Cartelists. To this extent, therefore, neither Nokia nor Microsoft Mobile would have sustained any loss through the overcharge, but they might have sustained a loss by selling fewer handsets because of the higher price that was passed on to consumers.

179.          Damages arguments of this type are fairly common in competition cases. But in my judgment, in order to found a good arguable case that the claims fall within the Gateway, something more than a theoretically possible contention must be advanced. Whilst, for the sake of argument, I am prepared to accept that Nokia and/or Microsoft Mobile sold considerable volumes of handsets in the UK market, there is no evidence before me of:

180.          Indeed, it is important to note that both in the Amended Particulars of Claim and in Murray 1, damage of this sort is expressly disavowed. All Microsoft Mobile does is keep open the option of taking the point (for whatever it may be worth) later on. Paragraph 33(c) of Murray 1 states:[69]

“While the Claimant does not consider that there has been any “pass on” of the cartelised prices to its own customers, if the Defendants were, on the contrary, to show that its higher prices had been passed on to the Claimant or Nokia’s own customers, then any higher sales prices that resulted from an increase in the costs of its component products would have caused the Claimant and/or Nokia to suffer lower volume of sales…That would in turn have caused loss to be sustained by them within England and Wales. Moreover, in that event, it would also be the case that UK consumers and/or businesses also suffered significant damage as a result of the Defendants’ unlawful conduct.”

181.          I reject the suggestion that a contention that a claimant is in terms not advancing can amount to a good arguable claim. Furthermore, were Microsoft Mobile to make such a positive case, then it would once again be important to understand at least something of the factual basis for the assertion that damage has been sustained within the jurisdiction. For instance, I have been told nothing about how Nokia sold its handsets to the ultimate consumer; nor has there been any kind of explanation as to how such volume effects might manifest themselves.

182.          Paragraph 116.2 of Microsoft Mobile’s written submissions states that “[t]he entities within Nokia that made purchases of Li-ion Batteries, in respect of whose purchases the claim is brought, include Nokia UK Ltd which is established in the UK”, and has its registered office in the UK.

183.          Microsoft Mobile has pleaded that Nokia UK Ltd was a part of the Nokia group: see Appendix 1 to the Amended Particulars of Claim. It may be that (as pleaded) Nokia UK Ltd purchased Li-ion Batteries – but beyond that it is impossible to go. It is not said how many units were purchased; it is not said from whom these units were purchased or where; it is not said whether these purchases were direct purchases or indirect purchases, or at what prices. The only point that is of any evidential substance is the fact that Appendix 1 of the PPA lists various Nokia “manufacturing centres”. None are UK based; all save one (which is based in Germany) are outside the EU. One “distribution centre” is identified: it is based in Hong Kong. Nokia UK Ltd is not listed, and the inference must be that Nokia UK Ltd did not purchase Li-ion Batteries directly from D1/Sony Europe or D2/Sony Corporation.

184.          I do not consider the bare assertion that Nokia UK Ltd purchased some Li-ion Batteries somewhere from someone to be sufficient to bring the claims in the Amended Particulars of Claim within Gateway (9)(a).

185.          For the reasons I have given, Microsoft Mobile cannot demonstrate that the claims pleaded in the Amended Particulars of Claim, or any of them, fall within either Gateway (3) or Gateway (9).

186.          The claimant must show that England and Wales is clearly and distinctly the proper forum for the trial of the claims. The test derives from the well-known decision of the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd, [1987] 1 A.C. 460 at 481:

187.          The factors that need to be taken into account are easily stated in general terms. They comprise:[70]

i)                   The personal connection which the parties have to England;

ii)                 The factual connections which the events have with England;

iii)               The question which law should apply. The possibility of there being a lis pendens in another court; and

iv)               The possibility that other persons may become party to, and affect the overall shape of, the litigation.

188.          In the present case, the status of the proceedings against D1/Sony Europe polarised the submissions of Microsoft Mobile on the one hand and the Defendants on the other. Microsoft Mobile stressed that with a claim commenced as of right against D1/Sony Europe in this jurisdiction, the natural jurisdiction for the rest of the claims against the other Defendants was this jurisdiction too. In paragraph 125 of its written submissions, Microsoft Mobile stated:

189.          The Defendants, by contrast, stressed the following points:

a)                  Whilst accepting that “the variety of circumstances is infinite” and that the over-arching principle is as stated in Spiliada,[71] the Defendants stressed the importance of the place of the commission of the tort. The relevant authorities are set out by Lord Mance in VTB Capital plc v. Nutritek International Corp, [2013] UKSC 5:

“14.   In the present case, VTB relies upon the words of Robert Goff L.J. in an earlier Court of Appeal case: Cordoba Shipping Co. Ltd v. National State Bank, Elizabeth, New Jersey (The Albaforth) [1984] 2 Lloyd’s Rep. 91, and the acceptance of that case as consistent with The Spiliada by the House of Lords in the later case of Berezovsky v. Michaels [2000] 1 WLR 1004. In The Albaforth [1984] 2 Lloyd’s Rep. 91, 96 Robert Goff LJ deduced from earlier case law that:

“where it is held that a court has jurisdiction on the basis that an alleged tort has been committed within the jurisdiction of the court, the test which has been satisfied in order to reach that conclusion is one founded on the basis that the court, so having jurisdiction, is the most appropriate court to try the claim, where it is manifestly just and reasonable that the defendant should answer for his wrongdoing. This being so, it must usually be difficult in any particular case to resist the conclusion that a court which has jurisdiction on that basis must also be the natural forum for the trial of the action. If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the courts of that jurisdiction are the natural forum. Certainly, in the present case, I can see no factors which could displace that conclusion.”

15.     In Berezovsky v. Michaels [2000] 1 WLR 1004 a challenge to the consistency of this approach with The Spiliada was rejected by Lord Steyn in a speech with which the other two members of the majority agreed: speaking of a line of authority in which the approach taken in The Albaforth had been followed, he said, at p.1014:

“The express or implied supposition in all these decided cases is that the substance of the tort arose within the jurisdiction. In other words the test of substantiality as required by Kroch v. Rossell [1937] 1 All E.R. 725 was in each case satisfied. Counsel for Forbes argued that a prima facie rule that the appropriate jurisdiction is where the tort was committed is inconsistent with The Spiliada [1987] AC 460. He said that The Spiliada admits of no presumptions. The context of the two lines of authority must be borne in mind. In The Spiliada the House examined the relevant questions at a high level of generality. The leading judgment of Lord Goff of Chieveley is an essay in synthesis: he explored and explained the coherence of legal principles and provided guidance. Lord Goff of Chieveley did not attempt to examine exhaustively the classes of cases which may arise in practice, notably he did not consider the practical problems associated with libels which cross national borders. On the other hand, the line of authority of which The Albaforth is an example was concerned with practical problems at a much lower level of generality. Those decisions were concerned with the bread and butter issue of the weight of evidence. There is therefore no conflict. Counsel accepted that he could not object to a proposition that the place where in substance the tort arises is a weighty factor pointing to that jurisdiction being the appropriate one. This illustrates the weakness of the argument. The distinction between a prima facie position and treating the same factor as a weighty circumstance pointing in the same direction is rather a fine one. For my part the Albaforth line of authority is well established, tried and tested, and unobjectionable in principle.””

b)                 In his oral submissions, Mr. Beard Q.C. emphasised that the centre of gravity of the torts pleaded by Microsoft Mobile pointed away from England and Wales:[72]

“Without wishing to sound trite, it is important to remember that the mischief of a conspiracy tort, an unlawful means tort, or indeed a breach of Article 101 TFEU, is the coming together of people. If you think about a 101 case where an overcharge is alleged, the allegation is not that the actual price of the goods is inherently unlawful. It is not inherently unlawful to price at 110p rather than a pound. What is unlawful is where people agree who are competitors that the pricing should be at 110p. It is where that agreement is going on, it is where that concerted practice or agreement occurs that is the essence of the tortious behaviour for the purposes of breach of statutory duty that is found at least in English law on the basis of Article 101.

We say the same applies in relation to issues of conspiracy, or unlawful means, in the context of these allegations, where the claims are being brought that people got together in these company groups and coordinated their behaviour. Those people were at least primarily, probably almost completely, in Japan and Korea, and possibly China. When we look at the dramatis personae, we see 60 people who are Japanese and Korean.

Where the meetings took place, where the communications were: those were in Japan and Korea…

We say the answer here, actually the only answer we need to give is not England and Wales. That is the only answer, not England and Wales. We can go further, and say it is Japan and Korea. We do not need to. We just have to say it is not England and Wales…”

c)                  Against this, Microsoft Mobile could say relatively little: plainly, the centre of gravity of the Cartel is not England and Wales. The best that Microsoft Mobile could say (in paragraph 131.1 of its written submissions) was that “[i]t is not correct that all the cartel conduct complained of took place in Asia”, pointing to events allegedly occurring in Finland, occasionally in Europe and to an extent in Weybridge, Surrey. Of course, I take these facts fully into account – particularly those connecting with England – but Microsoft Mobile’s submissions make the Defendants’ point for them: the torts have a rather nebulous connection with England and Wales.

d)                 Perhaps Microsoft Mobile’s best point was that this was a multi-jurisdictional cartel operating perhaps globally, with “no unique natural home for any particular litigation”. I recognise that there is some force in this, perhaps diluting the weight of this factor in this particular case. But even so, the jurisdictions centrally engaged were not England and Wales, which was peripherally involved.

iii)               That the language and location of the parties’ witnesses and documents pointed away from England and Wales. As to this:

a)                  The vast majority of the companies and natural persons (from whom the factual witnesses are drawn) involved in the Cartel are not present in England and Wales. Their documents will not be in English (they will likely be in Japanese or Korean) and – although these documents can be translated – the fact is that nuance and some meaning is always lost in translation, however good the translator.

b)                 Microsoft Mobile did not contest this, but emphasised that Nokia’s and Microsoft Mobile’s documents would be in English, “which is the language in which Nokia and Microsoft conduct their business. The witnesses in question will speak English (but not Korean or Japanese)”.[73]

c)                  The point, therefore, goes both ways. Microsoft Mobile submitted that “it is the interests of C’s witnesses which should take priority. The D’s witnesses have – by admission, D4 to the DoJ and D6 to the Commission – participated directly in serious infringements of competition law and their interests should not outweigh those of the witnesses representing the victims of those infringements”.

d)                 I am disinclined to treat this as a question for a “court of morals”. The issue is not who is the wrongdoer, but where best these claims may be tried. Like it or not, an understanding of how the Cartel operated – in which, ex hypothesi, Nokia and Microsoft Mobile did not participate and of which they say they knew nothing – will be critical to the claims pleaded, and it will be a disadvantage for a court to deal with these complex factual issues through the medium of translation. By contrast, the factual questions in which Nokia and Microsoft were involved are likely to be highly technical (what was purchased; where; and for how much), but more susceptible of translation.

e)                  In short, this is a factor that goes both ways, and I attach relatively less weight to it for that reason. On balance, however, I consider that it points away from England and Wales as the proper forum. 

iv)               That the applicable law pointed away from England and Wales. None of the parties encouraged me to make any findings in respect of the applicable law – that being a matter for another time and one which (as I have noted) it is actually not possible to resolve at this stage. Although I accept that this is a factor that can be relevant,[74] I consider the point to be a neutral one in this case:

a)                  As can be seen from the table at paragraph 16(iv) above, Microsoft Mobile contends for a whole variety of applicable laws, of which English law is but one.

b)                 It is clear from Microsoft Mobile’s case that multiple other laws – apart from English law – will have to be considered by this court. But that would equally be true of a court of another jurisdiction hearing these claims.

v)                 That no point had been taken about the non-availability of a foreign forum. On this, Mr. Beard, Q.C. stated:[75]

“There is one other factor that I highlighted at the outset: alternative fora. As this is a service out case, the burden, as I have emphasised, is on Microsoft to show that England is clearly the proper forum. It is not on Samsung to show that there is an available alternative forum where the case can more appropriately be tried.

Just to be clear, Microsoft has not suggested that it cannot obtain fair justice in Japan, which we say is the natural forum, or indeed Korea, which is a far more natural forum than here…”

It was D6/Samsung’s case that Japan was the natural forum, closely followed by Korea;[76] D4/LG Chem regarded Japan and Korea as equally good.[77] Clearly, a potent indicator in favour of England and Wales would be an absence of other fora in which the dispute could be tried. Microsoft Mobile made no such contention.

190.          As Microsoft Mobile has stressed, and as cannot be gainsaid, proceedings have been commenced against D1/Sony Europe as of right. However:

191.          It follows that, on the basis of these findings, we do not actually get to the third requirement: Microsoft Mobile’s claim to serve out of the jurisdiction fails at the second hurdle, and the order of the Master permitting service out of the jurisdiction will have to be set aside. However, it follows from what I have said so far, that were I to decide the third requirement, I would conclude that Microsoft Mobile had failed to show – let alone show clearly – that England and Wales is clearly and distinctly the proper forum.

192.          If, however, I am wrong on the application of the arbitration clause or on its relevance to the application of Gateway (3), then matters take on a different complexion. There are two possibilities:

b)                 There is no power to stay the proceedings against D1/Sony Europe, because of the decision of the Court of Justice in Owusu v. Jackson [2005] QB 801.

The question that arises on this basis is whether – at the third stage of the inquiry, and given that the proceedings against D1/Sony Europe will inevitably continue – England and Wales is clearly and distinctly the proper forum for the trial of the claims against the other Defendants. It is to this question that I now turn.

193.          The problem is that, whereas under the English rules, a claim commenced as of right against a defendant could, in appropriate circumstances, be stayed, under the Brussels I Regulation (Recast) there is no such power. The proceedings against D1/Sony Europe will continue and there is at least the prospect:

194.          Both of these are powerful points indicating in favour of this jurisdiction, and they clearly would need to be taken into account when deciding the proper forum for trial as against the Defendants apart from D1/Sony Europe.

195.          Two questions arise:

196.          Briggs suggests (at p.473) that the “correct analysis may be that if the court would have set aside service if it had not been for the decision in Owusu, it should still generally set it aside notwithstanding the effect of Owusu”. In effect, the approach suggested by Briggs is – as regards defendants not subject to the Brussels I Regime (Recast) – to pretend that the anchor defendant who is subject to that regime is not so subject. That, as it seems to me, is a denial of reality which has the consequence of causing the court simply to disregard the very real adverse consequences of proceedings continuing against the anchor defendant but not against the other defendant(s). This is an approach that I accordingly reject.

197.           On the other hand, it would be wrong to allow the fact that proceedings will inevitably continue against the anchor defendant automatically and without more to determine what should happen in relation to the other defendants.

198.          The proper course, as it seems to me, is to apply the forum conveniens test as I have described it, but taking these factors into account. Obviously, this has the effect of skewing the scales in favour of proceedings continuing in this jurisdiction (since the proceedings against the anchor defendant cannot be stayed), but it is not the case that these weighty factors cannot be outweighed by factors going the other way. There have been a number of cases where – notwithstanding the continuation or threatened continuation of proceedings against the anchor defendant – a court has been prepared to decide that the proceedings against the other defendants should not so continue:

i)                   In OJSC Oil Company Yugraneft v. Abramovich [2008] EWHC 2613 (Comm) at [490], Christopher Clarke J. noted:

“Owusu mandates that any claim, if valid, against Millhouse must be determined here. But that is not a ground for bringing in a defendant if England is an inappropriate forum. It is obvious to me that the primary reason for suing Millhouse, with minimal net assets, is to provide the anchor on which to tether a claim against Mr. Abramovich. Had it been relevant, I would have loosed the chain.”

ii)                 In Pacific International Sports Clubs Ltd v. Soccer Marketing International Ltd [2009] EWHC 1839 (Ch), Blackburne J. stated:

111.   …It follows, therefore, that neither the doctrine of forum non conveniens nor the application “reflexively” of articles of the Judgments Regulation provides grounds for staying the pursuit by Pacific in this jurisdiction of its claims against SMI. Does this mean that, given Pacific’s wish to pursue its claims against SMI in this jurisdiction, this court should allow Pacific to continue to pursue its claims against the other defendants in this jurisdiction notwithstanding that, as against those other defendants, application of the doctrine of forum non conveniens, unaffected in the case of those other defendants by the impact of the Judgments Regulation, indicates that Pacific’s claims against those others should be pursued in Ukraine?

112.   I am not persuaded that it does. According to the particulars of claim in this action, SMI is, like the BVI defendants, a relatively minor player in the dispute: it was no more than the means whereby Mr. Surkis held and was able to take control of Dynamo. The principal dispute is undoubtedly between Pacific on the one hand and Mr. Surkis and Mr. Zgursky on the other. To allow the fact that the doctrine of forum non conveniens cannot be applied to SMI to dictate where the dispute as a whole must be tried would be, in my view, to allow the tail to wag the dog. In particular, I see no reason why, given my conclusions in relation to the application of the doctrine of forum non conveniens to the other defendants, I should not stay the action against Mr.Surkis and set aside the permission order, and with it service of the claim form on the BVI defendants, leaving it to Pacific to pursue its dispute with those persons (and SMI if it wishes) in the courts of Ukraine…”

iii)               In OJSC TNK-BP Holding v. Beppler & Jacobson Ltd [2012] EWHC 3286 (Ch) at [313], Mr. Andrew Sutcliffe, Q.C. sitting as a Deputy High Court Judge stated:

“It is necessary to consider the possibility of parallel proceedings in England and Russia. Mr. Kitchener accepts that Owusu v. Jackson [2005] QB 801 prevents this court from declining jurisdiction over the claim against BJUK on forum conveniens grounds. Accordingly, if the claim against this anchor defendant is viable it may continue even if permission to sue the Applicants is refused. The result might be the existence of parallel proceedings in Russia and England. However, as Mr. Kitchener points out, if this is of concern to Holding, the solution is in its own hands. It can join BJUK as a defendant to any Russian proceedings…This is a case where it is important to have regard to Lloyd L.J.’s observation in The Golden Mariner [1990] 2 Lloyd’s Rep. 215 at 222…The fact that Russia is the natural forum means that the claim against BJUK should not dictate the location of trial against the Applicants.”

199.          Considering, therefore, whether England and Wales is clearly and distinctly the proper forum for the hearing of the claims against D2/Sony Corporation, D4/LG Chem and D6/Samsung on the assumption that the proceedings against D1/Sony Europe continue in this jurisdiction, it would have been my conclusion that this third requirement was satisfied and that the Master’s order should stand. My reasons are as follow:

200.          Accordingly, had my decision regarding the section 9 stay been otherwise, my decision on this part of the Applications would have been different also. As it is, I set aside the order of Master Clark and with it the service of these proceedings on D2/Sony Corporation, D4/LG Chem and D6/Samsung.

201.          It follows that I do not need to determine whether the order of the Master should be set aside on the ground of material non-disclosure by Microsoft Mobile. However, because I was addressed on the point, and in case the matter goes further, I deal with it.

202.          The relevant principles that I must apply were set out by Warby J. in Sloutsker v. Romanova [2015] EWHC 545 (QB) at [51]:

“The relevant general principles are these:

i)       An applicant for permission to serve proceedings outside the jurisdiction is under a duty of full and frank disclosure which applies on all applications without notice.

ii)      The duty requires the applicant to make full and fair disclosure of those facts which it is material for the court to know: Brinks Mat v. Elcombe [1988] 1 W.L.R. 1350, 1356 (1) and (2) (Ralph Gibson L.J.). Put another way, disclosure should be made of “any matter, which, if the other party were represented, that party would wish the court to be aware of”: ABCI v. Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep. 485, 489 (Waller J.).

iii)     Non-disclosure of material facts on an application made without notice may lead to the setting aside of the order obtained, without examination of the merits. It is important to uphold the requirement of full and frank disclosure.

iv)     But the court has a discretion to set aside or to continue the order. Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues that were to be decided. The answer to the question whether the non-disclosure was innocent is an important, though not decisive, consideration. See Brinks Mat at pp1357 (6) and (7) and 1358 (Balcombe L.J.).

v)      In the context of permission for service outside the jurisdiction the court has a discretion to set aside the order for service and require a fresh application, or to treat the claim form as validly served and deal with the non-disclosure by a costs order: NML Capital Ltd v. Republic of Argentina [2011] UKSC 31, [2011] 2 AC 495, [136] (Lord Collins).”

203.          A helpful distillation of the correct approach was given by Kerr J. in B.P. Exploration v. Hunt [1976] 3 All E.R. 879 at 894:[78]

“…the court should not consider the supporting affidavit as though it were marking an examination paper, deciding one way or the other merely on the basis of the extent to which the affidavit could have been improved. The primary question should be whether in all the circumstances the effect of the affidavit is such as to mislead the court in any material respect concerning its jurisdiction and the discretion under the rule.”

204.          In DSG Retail Ltd v. Mastercard Inc. [2015] CAT 7 at [44], Roth J. noted:

“44.   This application was heard without notice, as is usually the case for an application for permission to serve out. As on any application without notice, the applicant is under a duty to make full and frank disclosure of matters material to the application. That means not only that care needs to be taken in setting out the factual basis for the application, but also that the Tribunal's attention should be drawn to any significant objections to the application that the defendants could reasonably be expected to raise if they were before the Tribunal. The duty does not require disclosure to the same degree as on an application for a without notice injunction, such as a freezing order, where granting the application has immediate and potentially serious consequences for the defendant. The factors relevant to an application to serve out are only those which relate to the limited inquiry the Tribunal carries out in determining whether to grant such permission. Nonetheless, within the limited scope of that inquiry, if the claimant is aware of such factors as might cause the Tribunal to doubt whether permission should be granted, they should be clearly disclosed...

45.     In applications before the Tribunal, it will often be more appropriate for such disclosure to be made in a statement accompanying the claim form and similarly attested by a declaration of truth, rather than in the claim form itself. The Tribunal cannot be expected to go through a long claim form or Particulars of Claim teasing out material objections to service out of the jurisdiction. Moreover, since the Tribunal will generally seek to deal with such applications on the papers, compliance with the duty of full and frank disclosure cannot be left to counsel's skeleton argument for a hearing since in most cases there will not be a hearing.”

205.          Four points were taken by the Defendants in relation to what were said to be material deficiencies in the evidence before Master Clark:

“In iiyama v. Schott AG [2016] EWHC 1207 (Ch), Mann J. recently set aside an order permitting service out of the jurisdiction on the ground inter alia that the claimants had not complied with their duty of full and frank disclosure. That claim was also a cartel damages claim brought mainly against defendants domiciled in Asia in respect of cartel conduct in Asia. Mann J. held that the claimants had failed properly to set out for the court the factual position in relation to purchases of the cartelised product in the EEA and had also failed to draw the court’s attention to the fact that the defendants were likely to raise as a defence that the claim fell outside the territorial scope of Article 101 TFEU…Mann J. held that these omissions were “serious” and went “to the heart of the case”.”

206.          In response, Microsoft Mobile could do little more than refer me to Murray 1 and suggest that these matters – to the extent they needed to be drawn to the attention of the court – had been properly adverted to in Murray 1. I have, therefore, reviewed this statement with particular care bearing in mind the points raised by the Defendants. I have also borne in mind that the mere fact that the statement might be improved upon is not the point. The question is whether the court has been misled.

207.          The points raised by the Defendants are all connected to the fact that – in reality – the centre of gravity of the Cartel was actually Asian, whether one has regard to the participants (both corporate and individual); the sales of the cartelised products (the Li-ion Batteries); and many of the purchasers. Microsoft Mobile, in my judgment, wrongly downplayed these important matters by:

i)                   Aggregating the claims of Nokia (as a group of companies) and not differentiating between them. As a result, it was possible to present purchases from D1/Sony Europe as by a single (legal) entity, and to avoid all mention of the potential that there were chains of purchasers within the Nokia group. This was a matter which only emerged during Mr. Beal Q.C.’s oral submissions (see paragraph 20 above); which is significant; and which was certainly not disclosed in Murray 1. Indeed, when seeking to distinguish Emerald Supplies v. British Airways [2015] EWCA Civ 1024 in paragraph 41 of Murray 1, Mr. Murray says at paragraph 41(a):[79]

“Nokia was a direct purchaser of Li-ion Batteries, whereas in Emerald the purchasers were indirect (that is, the defendants sold the relevant product to third parties, who then re-sold it to the claimants.”

This statement is incomplete at best, and positively misleading at worst. Nokia can only be described as a “direct” purchaser when viewing matters at the level of the Nokia group. Viewed at the more granular level of the individual companies within the Nokia group, matters might well be different. The fact is that Microsoft Mobile simply does not know, and this undermines the boldness of the plea (at paragraph 150.1 of the Amended Particulars of Claim, paragraph 19(i) above) that Nokia was a direct purchaser of Li-ion Batteries. As far as it goes, this is right: but the certainty of the averment is only achieved through the broad definition of “Nokia”. This should have been drawn to the Master’s attention.

ii)                 A consequence of this would have been that the Master would have been able to probe a little more deeply into who was purchasing Li-ion Batteries from D1/Sony Europe. As it was, all that Murray 1 says (at paragraph 33(a)) is:

“In the Cartel Period and the Run-Off Period, Nokia and/or the Claimant purchased 12.1 million units from the First Defendant, which, as set out above, is a company located in the UK and incorporated under English law.”

iii)               No mention is made of the fact that Microsoft Mobile was unable to say who had purchased these 12.1 million units – save that it was some company in the Nokia group. It is worth noting – although it is a minor point[80] – that this paragraph (and also paragraph 5(e)) makes no mention of the fact that 12.1 million units is a drop in the ocean when considered in relation to the overall sales of Li-ion Batteries.

iv)               It is entirely right to say that Murray 1 is silent on factors pointing in favour of a non-English jurisdiction. Murray 1 makes the point that D1/Sony Europe is, inevitably, going to be sued in England and that it would be hugely disadvantageous to have parallel relating proceedings going on elsewhere. That, as I have already noted is an entirely fair point of great force. But – even disregarding the effect of the arbitration clause – the point is not a conclusive one, as the authorities described in paragraph 198 above demonstrate. Murray 1 should have set out the factors pointing in the other direction. Paragraphs 45 to 50 of Murray 1 do not come close to a fair statement of the points that the Defendants could deploy, and before me did deploy, in favour of a jurisdiction other than England and Wales.

208.          These are major criticisms, going to the heart of the issue that the Master had to decide. I consider that Murray 1 fell far short of what should have been said to the Master on the application to serve out.

209.          In The Arena Corporation Ltd v. Schroeder [2003] EWHC 1089 (Ch) at [213], the principles according to which the court should exercise its discretion in this case are helpfully set out:

“On the basis of the foregoing review of the authorities, I would summarise the main principles which should guide the court in the exercise of its discretion as follows:

(1)     If the court finds that there have been breaches of the duty of full and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial.

(2)     Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order.

(3)     That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.

(4)     The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally, there is no general rule that a deliberate breach will attract that sanction.

(5)     The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.

(6)     The court can weigh the merits of the plaintiff’s claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff’s case is allowed to undermine the policy objective of the principle.

(7)     The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice.

(8)     The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence.

(9)     There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.”

210.          In all the circumstances, given the seriousness of the non-disclosure and importance of the issues it went to, I would have discharged the order of the Master and set aside the service out on the grounds of non-disclosure.

211.          For the reasons given in this Judgment:

ANNEX 1

ANNEX 2