The claimants brought a claim for negative declaratory relief against the defendant, a sovereign state, arising out of certain agreements relating to the purchase of shares which provided for the exclusive jurisdiction of the English courts. The defendant contended, inter alia, that the claim was not a “civil and commercial matter”, within article 1(1) of Parliament and Council Regulation (EU) No 1215/2012, since the purpose and/or effect of the claim was to subvert criminal proceedings against the fourth claimant in the defendant state, with the consequence that the claim was outside the scope of the Regulation and that the claim should be struck out or summary judgment granted because of the criminal proceedings against the fourth claimant. The judge held that the English court had exclusive jurisdiction over the claim pursuant to article 25 of the Regulation; that the claim gave rise to a justiciable civil dispute; that it was a claim with a real prospect of success; that it would not interfere with the Vatican criminal proceedings; and that it was not abusive because the claimants had a genuine wish to obtain public vindication, but decided to impose a case management stay because the declarations claimed would serve no useful purpose. The judge took the view that the defendant had adopted a neutral position as to whether the claimants were under any liability and because the real dispute was not between the parties to the action but between the claimants and the prosecuting authorities responsible for the conduct of criminal proceedings against the fourth claimant in the Vatican City State. The claimants appealed on the grounds that the judge had erred in making a stay of proceedings on case management grounds, because the effect of his decision had been to circumvent the Regulation and to deprive the claimants of their right of access to a court having jurisdiction over bona fide claims, contrary to article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.
On the claimants’ appeal—
Held, Appeal allowed. There was no reason to doubt that it was only in rare and compelling cases that it would be in the interests of justice to grant a stay on case management grounds in order to await the outcome of proceedings abroad. After all, the usual function of a court was to decide cases and not to decline to do so, and access to justice was a fundamental principle under both the common law and article 6 of the European Convention. The court would therefore need a powerful reason to depart from its usual course and such cases would by their nature be exceptional. All of the guidance in the cases was valuable and instructive, but the single test remained whether in the particular circumstances it was in the interests of justice for a case management stay to be granted. There was not a separate test in “parallel proceedings” cases. Rather, considerations such as the existence of an exclusive English jurisdiction clause and the danger of circumventing a statutory scheme for the allocation of jurisdiction (such as Council Regulation (EC) No 44/2001 “the Judgments Regulation”) would be weighty and often decisive factors pointing to where the interests of justice lay ( paras 48–58, 59, 81, 82, 83).
The English courts had always been cautious about granting negative declarations (ie declarations that the claimant was not under any liability) because of concern about possible abuse and the need to ensure that such declarations served a useful purpose. When they did serve such a purpose, however, there was no reason why they should not be granted. Thus the court had jurisdiction to grant a negative declaration, adopting as a matter of discretion a pragmatic approach to the question of utility. The critical question in the appeal was whether the judge’s conclusion that the Secretariat had adopted a position of neutrality was tenable. On the facts the judge’s conclusion was mistaken. The Secretariat was not neutral. It followed that the basis on which the judge concluded that, at present, the grant of declarations would serve no useful purpose and therefore exercised his discretion to grant a case management stay was fundamentally flawed. Indeed the circumstances in which he envisaged that the declarations might serve a useful purpose and that the stay might be lifted, that was to say if the Secretariat adopted a partisan position in the criminal proceedings in the Vatican, already existed. The English proceedings in which the claimants sought to vindicate their position should be allowed to continue ( paras 60–63, 74, 77, 80, 81, 82, 83).
Charles Samek QC and Tetyana Nesterchuk (instructed by Withers LLP) for the claimants.
Charles Hollander QC, Samar Abbas Kazmi and James Bradford (instructed by Hill Dickinson LLP ) for the defendant.