UK Supreme Court Affirms Jurisdiction Based on Indirect Damage

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On 20 October 2021, the Supreme Court of the United Kingdom delivered its judgment in FS Cairo (Nile Plaza) LLC (Appellant) v Brownlie (as Dependant and Executrix of Professor Sir Ian Brownlie CBE QC) (Respondent).

The most important issue before the court was whether English court should be able to retain jurisdiction in tort cases on the ground that an indirect damage was suffered in the United Kingdom. The applicable provision (CPR Practice Direction 6B) refers to “damage” suffered in England, and the court held that as it does not distinguish between direct and indirect damage, it should be considered as including both.

Interestingly, the argument was made that the English rule was drafted on the model of EU law, which limits jurisdiction to the court of the place of direct damage. It is rejected as an overgeneralisation.

So much for those who thought that EU law would continue to influence the development of English private international law.

Bye bye Brussels, bye bye Marinari.

Background

On 3 January 2010, Lady Brownlie’s husband was killed in a car accident in Egypt during an excursion booked through the Four Seasons Hotel Cairo, a hotel operated by FS Cairo. Lady Brownlie was injured in the same accident. The driver was convicted of involuntary manslaughter. In December 2012, Lady Brownlie brought claims in tort and contract in the High Court against Four Seasons Holdings Incorporated, a Canadian company, for damages for injury and losses suffered as a result of the accident.

In 2018 the Supreme Court held that the evidence showed that Four Seasons Holdings Incorporated was a non-trading holding company which neither owned nor operated the Hotel and that therefore the courts of England and Wales had no jurisdiction to try the claims against it. The Supreme Court remitted ancillary matters to the High Court and ordered that the Claimant had permission to apply to correct the name of the Defendant, to substitute or to add a party to the proceedings.

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Lady Brownlie applied to the High Court to amend her claim so that it could be brought against FS Cairo instead. Permission to amend her claim was granted but, because FS Cairo is an Egyptian company, Lady Brownlie also requires permission to serve her claim out of the jurisdiction.

In order to serve her claim outside the jurisdiction, English law requires Lady Brownlie to show, in respect of each claim in contract and tort, that: (1) it falls within a ‘jurisdictional gateway’ under CPR Practice Direction 6B; (2) it is a claim that has a reasonable prospect of success; and (3) England and Wales is the proper place in which to bring the claim. The High Court and a majority of the Court of Appeal (Arnold LJ dissenting) decided that Lady Brownlie had met all three elements of this test in respect of her claims in tort and contract. Lady Brownlie was therefore granted permission to serve her claims on FS Cairo. FS Cairo appeals to the Supreme Court only against the decisions concerning the first two elements of the test.

Judgment
The tort gateway issue

Before permission may be given for service of a claim form outside the jurisdiction, the claimant must establish that: (1) the claim falls within one of the gateways set out in paragraph 3.1 of Practice Direction (“PD“) 6B to the CPR; (2) the claim has a reasonable prospect of success; and (3) England and Wales is the appropriate forum in which to bring the claim [25]. Those conditions are the domestic rules regarding service out of the jurisdiction; they may be contrasted with the EU system [28-29].

Lady Brownlie submits that her tortious claims meet the criterion for the gateway in paragraph 3.1(9)(a) of PD 6B, namely that “damage was sustained… within the jurisdiction” [30]. The appellant submits that paragraph 3.1(9)(a) only founds jurisdiction where the initial or direct damage was sustained in England and Wales. Lady Brownlie instead maintains that the requirements of the gateway are satisfied if significant damage is sustained in the jurisdiction [33-34].

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The Supreme Court considers that the word “damage” in paragraph 3.1(9)(a) refers to actionable harm, direct or indirect, caused by the wrongful act alleged [81]. Its meaning should not be limited to the damage necessary to complete a cause of action in tort because such an approach is unduly restrictive [49-51]. The notion that paragraph 3.1(9)(a) should be interpreted in light of the distinction between direct and indirect damage which has developed in EU law is also misplaced [81]. It is an over generalisation to state that the gateway was drafted in order to assimilate the domestic rules with the EU system. In any event, there are fundamental differences between the two systems [52-56]. The additional requirement that England is the appropriate forum in which to bring a claim prevents the acceptance of jurisdiction in situations where there is no substantial connection between the wrongdoing and England [77-79]. Lady Brownlie’s tortious claims relate to actionable harm which was sustained in England; they therefore pass through the relevant gateway [83].

Lord Leggatt dissents on this issue. He favours a narrower interpretation of paragraph 3.1(9)(a) [208]. He considers that Lady Brownlie’s tortious claims do not pass through the relevant gateway because Egypt is the place where all of the damage in this claim was sustained [209].

The Foreign Law Issue

It is common ground that Lady Brownlie’s claims are governed by Egyptian law [98]. One of the requirements for obtaining permission for service out of the jurisdiction is that the claim as pleaded has a reasonable prospect of success [99-100]. The appellant argues that Lady Brownlie has failed to show that certain of her claims have a reasonable prospect of success because she has not adduced sufficient evidence of Egyptian law. Lady Brownlie submits that it is sufficient to rely on the rule that in the absence of satisfactory evidence of foreign law the court will apply English law [102-103, 105-106].

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The Supreme Court distinguishes between two conceptually distinct rules: the ‘default rule’ on the one hand and the ‘presumption of similarity’ on the other. The default rule is not concerned with establishing the content of foreign law but treats English law as applicable in its own right when foreign law is not pleaded [112]. The justification underlying the default rule is that, if a party decides not to rely on a particular rule of law, it is not for the court to apply it of its own motion [113-116]. However, if a party pleads that foreign law is applicable they must then show that they have a good claim or defence under that law [116-117]. The presumption of similarity is a rule of evidence concerned with what the content of foreign law should be taken to be [112]. It is engaged only where it is reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue [126]. The presumption of similarity is thus only ever a basis for drawing inferences about the probable content of foreign law in the absence of better evidence [149]. Because the application of the presumption of similarity is fact-specific, it is impossible to state any hard and fast rules as to when it may properly be employed (although some general observations may nonetheless be made) [122-125, 143-148].

Lady Brownlie’s claims are pleaded under Egyptian law. There is thus no scope for applying English law by default [118]. However, the judge was entitled to rely on the presumption that Egyptian law is materially similar to English law in concluding that Lady Brownlie’s claims are reasonably arguable for the purposes of establishing jurisdiction [157-160].

Culled: EAPIL

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