Advent Capital Plc v GN Ellinas Imports- Exports Ltd & Anor

In recent years the Commercial Court has increasingly been called upon to resolve complex jurisdictional issues which have arisen even in the face of binding law and jurisdiction clauses. Such disputes arise because of the apparent inability of the parties even to attempt to apply commonsense to the choice of venue for resolution of their disputes. Parties to the Brussels, Lugano and San Sebastian Conventions and ultimately to EU Regulation 44/2001 have at least established a jurisdictional regime of reasonable certainty for international commercial disputes connected with the courts of member states. Once outside that regime, the opportunities for disruption of the resolution of substantive claims by time-consuming and costly jurisdictional ancillary litigation are far too often relentlessly and needlessly pursued to the prejudice of all parties. The applications now before this court exemplify the futility of this kind of ancillary litigation and point up the urgent need for an international jurisdiction and judgments convention of the widest possible application.

There are here two applications made in two separate actions. Both actions arise out of the same events.

The events in bare outline are as follows.

The Claimants were insurers of two consignments of cargo said to have been put into seven containers loaded on board the vessel LYNN in Cyprus in August and September 2001 for carriage to Thessaloniki. I refer to the Claimants as “the Insurers”.

The Defendants claim to have been the owners of such contents and that two certificates of insurance covered such goods. I refer to the Defendants as “the Assured”.

The vessel departed from Cyprus on 6 September 2001 and sank within 12 hours, water having entered the engine room and other parts. It and the contents of the seven containers were a total loss. The Assured claim under the certificates of insurance.

The Insurers intend to deny liability on the grounds that they are entitled to avoid the contracts of insurance for misrepresentation and non-disclosure of material facts and further, if they are bound by those contracts, on the grounds that the Assured has made a fraudulent claim by reason of the fact that the vessel was wilfully sunk with the complicity of the Assured.

There is no doubt that both certificates of insurance contained an exclusive English jurisdiction clause thus:

“This insurance shall be subject to the exclusive jurisdiction of the English Courts.”

The First Defendants were insured under one certificate of insurance and the Second Defendants under the other.

On 13 May 2002 the two Assureds issued proceedings in two separate actions in the District Court of Nicosia against those of the Insurers identified by their solicitors as leading underwriters - P D Upton and Others. I refer to those actions as “the Nicosia Proceedings”. The Assured obtained leave from the Nicosia court to serve those underwriters outside the jurisdiction.

There can be no doubt that in issuing those proceedings and in seeking leave to serve the Insurers outside Cyprus the Assured acted in breach of the Jurisdiction clause. The Assured’s Cypriot lawyer, Mr Andreas Theophilou of Limassol has stated in his first witness statement that the two certificates of insurance were issued to the Assured by their brokers, Vatyliotis Underwriting Agency Limited, and that they knew that they were insured by Lloyd’s Underwriters in accordance with the certificates, but that they knew nothing of the identity of the placing brokers, the underwriters or how the risks were placed. There is, however, no question but that the Assured were from the outset well aware that their cover was subject to exclusive English jurisdiction.

It seems, however, that P D Upton were not the correct Insurers and in due course with effect from 28 January 2003 the Assured joined Advent Capital as second defendants in the Nicosia Proceedings. The Insurers applied to strike out the claim on the grounds that service was invalid, that there should not have been an order for substituted service on Vatyliotis Underwriting Agency Ltd, failure of the Assured to disclose material facts on their ex parte application for service out, the wrong identity (“P D Upton” etc) of the defendants as Insurers and failure to serve documents translated into English. By a judgment dated 27 May 2003 the Nicosia Court rejected all these grounds as regards the claim against P D Upton. A similar jurisdictional challenge in respect of the proceedings against Advent Capital was raised on 7 July 2003 and was to be heard on 16 October 2003, but, in the light of prior indications given by the designated judge, this was withdrawn.

It is to be noted that neither in relation to the application on behalf of P D Upton nor in that on behalf of Advent Capital did the applicant rely on the exclusive English jurisdiction clause. The view was taken that the applications should be confined at that stage to formal matters relating to service. However, when on 16 October 2003 the Insurers’ representatives sought leave to withdraw their application, they indicated they intended to issue a new application in Cyprus disputing jurisdiction on the grounds of the jurisdiction clause and forum non conveniens. Mr Theophilou then indicated that the point had not previously been taken and that he would submit that the Insurers had submitted to the jurisdiction of the Nicosia Court.

In the meantime, Insurers had, on 12 September 2003, started the first of the two English proceedings against the Assured. I refer to this as “the Injunction Action”. In it they claimed a permanent anti-suit injunction to prevent the Assured from continuing the Nicosia proceedings. Leave was given to serve the Assured out of the jurisdiction. The Insurers relied on the Jurisdiction Clause and forum non conveniens. The Assured filed an acknowledgment of service indicating an intention to dispute the jurisdiction of the English Court. On 4 November 2003 the Assured issued an application notice for a declaration that the Commercial Court had no jurisdiction, or should not exercise it, to try the Insurers’ claim in the Injunction Action. They relied on Mr Theophilou’s first witness statement both in support of that application and in defence to the claim for an anti-suit injunction. In that evidence he repeated the submission that the Insurers had, by their previous procedural steps in the Nicosia Proceedings, submitted to the jurisdiction of the Nicosia court. In particular, they had at no stage reserved their right to rely on the Jurisdiction clause or forum non conveniens. He relied on provisions of the Cyprus Foreign Judgments (Reciprocal Enforcement) Law and decisions of the Cyprus courts to the effect that a defendant who wishes to dispute the jurisdiction of the Cyprus Court must file an application to set aside the writ or service of it or for a stay on the basis of contesting jurisdiction simultaneously with the filing of its entry of appearance or within the time limits of any court order allowing it to enter a conditional appearance. It was a requirement of Cyprus law on the authorities that a party who wished to dispute jurisdiction must put forward all his grounds at the outset within the time limits specified by the Rules and by the same application. This the Insurers had failed to do by holding back on their jurisdictional challenge. Accordingly, a Cyprus court would consider it oppressive and an abuse of process to make a fresh application to stay the Nicosia Proceedings.

On 19 November 2003 the Insurers launched further applications in both the Nicosia Proceedings seeking a stay on the grounds of the Jurisdiction clause and forum non conveniens.

Therefore, at that point there were in progress two separate parallel applications by the Assured and the Insurers in both England and Cyprus in both of which the Insurers claimed relief to enforce the English Jurisdiction clause and in both of which the Assured, while acknowledging that they were insured on terms of that clause, contended that English jurisdiction should not be enforced either because there was no jurisdiction in the English Courts to decide the threshold issue of an injunction to restrain the Cyprus proceedings or because the Insurers had submitted to Cyprus jurisdiction or on forum non conveniens grounds.

The first judicial determination was that of Morison J. in the Injunction Action on 28 November 2003. He rejected the Assured’s submission that the English Court had no jurisdiction to determine the claim for an anti-suit injunction. In the course of that hearing the court was informed by counsel that the main reason that there had been a delay in commencing the Injunction Action was that those advising the Insurers had been investigating the possibility that the claim was fraudulent.

Morison J. decided that he did have jurisdiction to determine the claim for an injunction. He observed that:

“What I can say is that if there has been a submission to jurisdiction of the court in Cyprus, it does not appear to have been an intentional submission by the insurers, and I think also that the insured cannot have been misled into thinking that the insurers were intending to submit to the jurisdiction. At most it can be said that there is a strong possibility that there has been a technical submission to the jurisdiction, for the reasons advanced by Miss Troy-Davies to which I have just referred.

Later in his judgment he said:

“The question as to whether there has been a submission to the jurisdiction of the Cyprus court as a result of the activities which I have described is obviously not a matter which I should rule on, because it seems to me that that is a matter for the Cyprus court. There is a real dispute between the parties on this question, but I obviously must take into account the possibility – perhaps the strong possibility – that there has been an inadvertent unintentional submission to the jurisdiction of the Cyprus court when I come to exercise my discretion.”

He then went on to hold that a trial in London would not be less convenient than a trial in Cyprus. Accordingly, by reference to the decision of the Court of Appeal in The Angelic Grace [1995] 1 Lloyd’s Rep 87, he concluded that an anti-suit injunction should be granted. In particular, the Insurers’ delay in claiming an injunction and raising the issue of jurisdiction was not such as to disentitle them to the exercise of the court’s discretion in their favour.

In reaching that conclusion Morison J. considered whether he should adjourn the application in order to permit the Nicosia court first to decide whether under Cyprus procedural law the Insurers had submitted to Cyprus jurisdiction. He decided against that course. He further left open the question whether the Insurers had so submitted. No doubt he took the view that whichever way the point was decided made no difference to the exercise of his discretion. At paragraph 45 of his judgment Morison J. observed:

“I say nothing about the effect that this will have on the court in Cyprus, except to say that I am sure that they will understand that this court does not lightly make anti-suit injunctions where other proceedings are extant in other jurisdictions, but I am sure that they will respect the fact that where such an application is made, it is incumbent upon the court to deal with it and I grant the injunction confident that this jurisdiction will be the place where the substantive dispute between the parties will in due course take place, and that the courts in Cyprus will not seek to cause a conflict between their jurisdiction and this one.”

The order of Morison J. provided as follows:

“Each of the First and Second Defendants, whether by themselves or through their servants or agents, be restrained from continuing or assisting in the continuation of proceedings brought in Cyprus against the Claimants relating to goods allegedly lost on the vessel “LYNN” on 7 September 2001 (and, in particular, action nos 5974/02 and 5975/02 in the District Court of Nicosia) and from the instituting or pursuing such proceedings in any jurisdiction other than England and Wales.”

The Assured applied to the Court of Appeal for permission to appeal and for a stay of the injunction in case the Nicosia Court proceeded with the pending application by the Insurers to stay the Nicosia proceedings, for if the injunction were in place the Assured could not oppose that application.

In the meantime, the Insurers’ solicitors sent to the Assured’s then English solicitors a sealed order of Morison J. endorsed with a penal notice.

On 20 January 2004 the Assured filed notices of intention to oppose the Insurers stay applications in both Nicosia Proceedings. The grounds included the submission of Insurers to Cyprus jurisdiction. At a directions hearing of the stay application in the action against G N Ellinas Trading which took place on 29 January 2004, the terms of the order of Morison J. were brought to the attention of the court.

On 3 February 2004 the Court of Appeal refused leave to appeal against the order of Morison J. At that point, therefore, there was a final judgment granting an anti-suit injunction against the Assured in respect of the Nicosia Proceedings in which the Assured had outstanding notices of intention to oppose.

On 27 February 2004 the Insurers applied to the Nicosia court for registration, recognition and enforcement of the Order of Morison J. They joined Mr Theophilou. A date for a hearing on 29 March 2004 was obtained.

On 5 March 2004 there took place the hearing of the Insurers’ stay application in the Nicosia Proceedings. It was opposed by the Assured. Mr Theophilou, on behalf of the Assured, argued against the stay mainly on two grounds:

Judgment was reserved.

The registration application was withdrawn by the Insurers and a further registration application was subsequently made.

With effect from 1 May 2004 Cyprus, having become a member of the European Union, became bound by the Judgments Regulation.

On 25 May 2004 Judge Michaelidis gave an Interim Decision in which she dismissed the Insurers’ stay application against G N Ellinas Trading. She decided the issue solely on the grounds that the Insurers had submitted to the jurisdiction of the Nicosia Court because they had failed to rely on the Jurisdiction Clause in their original applications or when they had entered an appearance under protest. She further held that in holding back reliance on the Jurisdiction Clause the Insurers presumably had the purpose of delaying the claim against them and that was an abuse of process. A copy of the full judgment, as well as of the order of Morison J., was provided to Judge Michaelidis, after the conclusion of the argument.

On 27 May 2004 the Assured issued applications in the Nicosia Proceedings for judgment in default of defence. These applications have not so far been heard because it was agreed between counsel that they should be left pending until after determination of the appeal against the ruling of Judge Michaelidis.

On 8 June 2004 the Insurers lodged an appeal against the judgment of Judge Michaelidis. In the Nicosia Proceedings relating to Standard Trading an order was made that on 27 October 2004 there should be a hearing of the issue as to the effect of the decision of Judge Michaelidis on the Insurers’ parallel stay application in those proceedings.

On 8 July 2004 the Insurers’ English solicitors, Clyde & Co, issued a notice of commencement of assessment of the bill of costs in respect of Insurers’ costs (claimed at £124,559.67) in the Injunction Action.

On 19 July 2004 Clyde & Co wrote to both G N Ellinas and Standard Trading stating that the Insurers would contend that the claim under the certificates of insurance was fraudulent, the vessel having been deliberately sunk. The Insurers further avoided both policies for non-disclosure and tendered return of premium.

Then on 22 July 2004 the Insurers commenced the second English claim with which these applications are concerned. They claimed declarations that the contracts of insurance evidenced in the certificates of insurance had been duly and lawfully avoided and/or that the Insurers had no liabilities to either of the Assured. In the alternative the Insurers claimed damages for breach of the Jurisdiction Clause. On the following day Moore-Bick J. gave permission to serve the Assured outside the jurisdiction.

At that point the Assured’s then London solicitors A Nicolaou, ceased to act for them. Clyde & Co obtained issue of a default costs certificate, the Assured having decided not to be represented at the detailed assessment. Copies of this were then sent to A Nicolaou and to Mr Theophilou with a demand for payment within 14 days. Service of the claim in the Declaration Action on both the Assured had been effected by 28 August 2004. The Assured instructed their present London solicitors, Fladgate Fielder, who filed acknowledgment of service, indicating an intention to challenge jurisdiction.

On 17 September 2004 at a directions hearing in Standard Trading’s Nicosia Proceeding it was agreed that the hearing of all further applications in both of the Nicosia Proceedings, including the Insurers’ stay application, should be postponed until after the Cyprus Court of Appeal had given judgment in the Insurers’ appeal against the judgment of Judge Michaelidis.

On 8 October 2004 Fladgate Fielder on behalf of the Assured invited Clyde & Co to agree to a stay of the Declaration Action and immediate discharge of the anti-suit injunction with effect from 1 May 2004 but without prejudice to any issue arising out of the Assured’s conduct before that date. Because the Assured were concerned not to take any course amounting to a submission to the jurisdiction of this court they invited Clyde & Co to apply to discharge the anti-suit injunction and to make an application to stay the Declaration Action pending the decision of the Cyprus Court of Appeal.

In the meantime the order in the Injunction Action had still not been registered in Cyprus. There had been a number of directions hearings and substantial evidence had been filed.

On 15 October 2004 the Assured issued their application to set aside service in the Declaration Action. They relied on Articles 27 and 28 of the Judgments Regulation on the grounds when that Action was started there was a lis alibi pending, namely the Nicosia Proceedings, and that therefore this court had no jurisdiction or should not exercise it.

The grounds for the application are as follows:

“When the Claim Form herein was issued, there were proceedings involving the same cause of action and between the same parties and/or related proceedings pending in the District Court of Nicosia, Cyprus, and this Court accordingly, by reason of article 27 and/or 28 of Regulation No. 44/2001, has no jurisdiction or should not exercise any jurisdiction that it may have to try any of the claims in this case; and/or 2. the Claimant failed to make full disclosure in relation to these matters when it applied to the Court, without notice, for permission to serve the Claim Form on the Defendants out of the jurisdiction.”

On 14 January 2005 the Assured issued and served an application notice for an order setting aside with effect from 1 May 2004 the anti-suit injunction ordered by Morison J.

The grounds for that application were stated as follows:

“1.

The said paragraph refers to and restrains the Defendants from continuing pending proceedings in the District Court of Nicosia, Cyprus.

2.

Cyprus acceded to the European Union, and Council Regulation (EC) No. 44/2001 thus acquired direct effect both in and in relation to Cyprus on 1 May 2004.

3.

The continuation of the said paragraph of the said Order on and/or after 1 May 2004 thus is contrary to the jurisdictional regime codified in the CJJ Regulation, when the CJJ Regulation is properly interpreted in accordance of the jurisprudence of the European Court of Justice, in particular its decision in Turner v. Grovit, Case C-159/02 dated 27 April 2004.

4.

On 8 October 2004 and thereafter the Claimant was requested to make an uncontested application to have the said paragraph of the said Order set aside with effect of 1 May 2004, without prejudice to any allegation that the Claimant might wish to pursue that the Defendants in the interim had acted in contempt of the anti-suit injunction therein contained, but has failed and/or refused to do so.”

On the same day the Assured issued and served an application notice for an order setting aside the default costs certificate in the Injunction Action. That application is to be heard on 20 July 2005 before a costs judge.

The appeal in Cyprus against the judgment of Judge Michaelidis remains to be determined.

The structure of the proceedings before this court on these applications may therefore be summarised as follows:

In both cases the Assured maintain that, in consequence of the accession of Cyprus to the EU on 1 May 2004, the regime of the Judgments Regulation operates on the Injunction Action and the Declaration Action to the effect that, the Nicosia Proceedings having been commenced on 13 May 2002, before either of the Injunction or the Declaration Action were commenced, the effect of Articles 27 and 28 of the Judgments Regulation is that the Nicosia court is the court first seised of the same cause of action (Article 27) or of a related cause of action (Article 28) and accordingly this court must stay its proceedings (Article 27) or decline jurisdiction (Article 28) as the case may be.

Article 27 of the Judgments Regulation provides:

“1.

Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

2.

Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.”

Article 28 provides:

“1.

Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.

2.

Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

3.

For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

It is submitted on behalf of the Insurers that because the order made by Morison J. granting the anti-suit injunction in the Injunction Action was a final judgment in the form of a permanent injunction this court has no jurisdiction to set it aside. The only way in which such an order could be set aside would be by way of appeal to the Court of Appeal and permission to appeal against the order of Morison J. has already been refused. If the application were renewed, it would still be refused because, at the time when the order was made, Cyprus was not a party to the Judgments Regulation. At that time the principle expressed in the decision of the ECJ in Turner v. Grovit [2004] 2 Lloyd’s Rep 169 could have no application to a decision granting an anti-suit injunction in relation to pending proceedings in a non-Contracting State for such proceedings would be outside the regime of the Judgments Regulation and, as held by the Court of Appeal in Through Transport Mutual Insurance Association v. New India Assurance Co Ltd [2005] 1 Lloyd’s Rep 67, the approach in Turner v. Grovit is inapplicable and is not inconsistent with the exercise of the anti-suit injunctive jurisdiction of the English courts.

It is further argued that the Injunction Action falls outside the express transitional provisions of the Judgments Regulation. These are contained in Article 66. This provides:

“1.

This Regulation shall apply only to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after the entry into force thereof.

2.

However, if the proceedings in the Member State of origin were instituted before the entry into force of this Regulation, judgments given after that date shall be recognised and enforced in accordance with Chapter III,

(a)

if the proceedings in the Member State of origin were instituted after the entry into force of the Brussels or the Lugano Convention both in the Member State of origin and in the Member State addressed;

(b)

in all other cases, if jurisdiction was founded upon rules which accorded with those provided for either in Chapter II or in a convention concluded between the Member State of origin and the Member State addressed which was in force when the proceedings were instituted.”

Specifically, the decision of the ECJ in Von Horn v. Cinnamond [1997] ECR 5451 did not apply to a case where, as here, at the time of coming into force of the Regulation there had already been a final and binding determination of the claim for an anti-suit injunction. Further, that case was directed to the situation where one set of proceedings has been commenced before and one after the accession to the Regulation of one of the states concerned and is therefore not applicable in this case. Even if it were to apply, the underlying concept is that Article 27 applies only if its application serves the objective of avoiding irreconcilable decisions in different jurisdictions. In the present case, there would be the risk of irreconcilable judgments if both a judgment in the Nicosia Proceedings and one in the English proceedings were to be given. That may be the case unless Article 27 was not applied to prevent an anti-suit injunction.

For these reasons, it is submitted that there has been no material change of circumstances which could justify re-opening the judgment and order of Morison J., even if that were permissible in this court.

Further, any judgment obtained by the Assured in Cyprus in breach of the injunction would not be recognised or enforced in England under Article 66(2) for its enforcement would be contrary to public policy and the jurisdiction of the Nicosia court would not be within that Article because the jurisdiction of that court would not be founded upon rules which accorded with those provided for in Chapter II, viz Articles 2 to 31 of the Regulation.

Finally, it is submitted that the Assured are in breach of the injunction in a number of respects and are accordingly in contempt of court. Their contempt consists of resisting the Insurers’ applications for a stay of the Assured’s Nicosia Proceedings and seeking summary judgment on their claim in those proceedings. By opposing the Insurers’ application for a stay the Assured continued or assisted in the continuation of that action. According to the evidence of Mr Theophilou, he advised the Assured that the orders of Morison J. were not effective in Cyprus unless and until they had been registered. In paragraph 31 of his witness statement in the Declaration Action in support of the Assured’s challenge to the jurisdiction of this court he stated as follows:

“I believed, and had advised the Defendants, that neither of them had submitted to the jurisdiction of this Court in Claim No. 2003 Folio 809 and that the Order of Mr Justice Morison, in respect of which the Defendants were then still awaiting the result of their applications to the Court of Appeal, therefore could have no effect in Cyprus unless and until it was registered in Cyprus [2ee, 30 paragraph 14(B)]. I also believed, and also had advised the Defendants, that the Order of Mr Justice Morison, which I had read together with his judgment, in any event did not either require the Defendants to discontinue their Cypriot actions against Advent and other represented underwriters or prohibit the Defendants from responding to the pending applications for stays of their actions, in contrast to taking further positive steps to advance those actions. It appeared to me to be quite clear, and I in turn had advised the Defendants, that Mr Justice Morison had intended that the District Court of Nicosia should decide whether Advent and other represented underwriters had submitted to its jurisdiction [see, 30, paragraph 14(C)]. If I misunderstood the scope or intended effect of the Order of Mr Justice Morison I personally apologise to this Court without reservation. Each of the Defendants also had instructed me to tender its sincere and unreserved apologies to this Court, if it should find that, in acting on the advice that I gave to each of them, either or both of the Defendants unwittingly acted in breach of the Order of Mr Justice Morison either in declining to discontinue their Cypriot actions against Advent and other represented underwriters or in opposing the stay applications that already were pending before the District Court of Nicosia when the anti-suit injunction was granted.”

It is submitted on behalf of the Insurers that this court should not accept that explanation as an excuse for the conduct of the Assured. Mr Theophilou, as an English speaker who had pursued post graduate studies in English law, must have appreciated that the advice he was giving was wrong and that there was a clear distinction between the consequence of registration which went to the enforceability of the injunction in the Cyprus courts and the giving of notice of the order which could involve the Assured being in contempt should they deliberately disobey it. That this must have been appreciated at the time was clearly shown by the fact that when the Assured applied for permission to appeal from the order of Morison J. and for a stay of the effect of the injunction pending determination of the appeal, one of the main grounds was that, as long as it was in place, they were prevented from pursuing their claims in Cyprus and were even prevented from responding to the Insurers’ applications to stay the Nicosia Proceedings. Since on the evidence Mr Theophilou was closely concerned with the content of that appeal application, he clearly understood that if the Assured did take the steps contemplated in the Nicosia court they would be disobeying the order of this court.

The Insurers further rely on the failure of the Assured to satisfy the costs order which, although not a contempt, goes to this court’s discretion as to whether to permit the Assured to be heard on their application in the Injunction Action. They further draw attention to the steps taken by the Assured to block the registration of the injunction in Cyprus, thereby interfering with its enforceability there.

For these reasons, the Insurers submit that, absent the Assured purging their contempt (for which it would be necessary for them at least to desist from all opposition in Cyprus to the Insurers’ stay and registration applications) this court should exercise its discretion against permitting them to be heard in support of their application for discharge of the injunction.

As to the Declaration Action, it is submitted that, the Assured being in continuing contempt of the English court in relation to the Injunction Action, which proceedings are parallel to the Declaration Action and which involve subject-matter similar to the application as to the jurisdiction in the Declaration Action, the Assured should not be heard in that application because they have failed to purge their contempt.

It is submitted by Miss Karen Troy-Davies on behalf of the Assured that the fact that the order of Morison J. was final does not operate as a bar to the further supervisory jurisdiction of this court and that further supervisory jurisdiction has been engaged by the twin effects of firstly, the accession of Cyprus to the EU and its thereby becoming party to the Judgments Regulation with effect from 1 May 2004 and secondly the decision of the ECJ in Turner v. Grovit [2004] 2 Lloyd’s Rep 169 on 27 April 2004. These brought about a fundamental change of circumstances which would justify the intervention of this court to release the effect of the injunction from 1 May 2004.

In support of this approach to jurisdiction Miss Troy-Davies advances the following propositions.

“1.

This Court can vary or discharge a final injunction Order made in this Court when the injuncted activity has been legalised by statute or, it is submitted, the coming into force of an EU Regulation.

2.

It is at least probable that this Court also can vary or discharge a final injunction Order made in this Court if further compliance with is rendered legally or physically impossible.

3.

Liberty to apply is implicit, if not expressed, in any final injunction Order that requires some “working out” or “carrying out”, and equally, it is submitted, any final injunction Order that is subject to a contingency, and such liberty to apply permits this Court later to vary or revoke such a final Order made in this Court, at least if that final Order was not made by consent and there is a subsequent fundamental and/or unforeseen change in circumstances and/or the eventuation of the contingency affecting the Order so demands.

4.

This Court can discharge a final injunction Order made in this Court if there has been any abuse by the applicant of the grant of the injunction and in any event can take account of any such abuse by refusing any relief in respect of any contempt on the part of the injuncted party.

5.

CPR Rule 3.1(7) permits this Court to vary or revoke a final Order made in this Court, including a final injunction Order, if the circumstances of the case render this appropriate.”

CPR 3.1(7) provides:

“A power of the court under these Rules to make an order includes a power to vary or revoke the order.”

That provision comes against the background of a number of decisions to the effect that the court does have power to revoke its own final order, including that granting an injunction, if there has been a material change in the sense of a fundamental change of circumstances relevant to the making of the original order. A number of the authorities involve orders including liberty to apply which, even in a final order, reflects a judicial perception that it may be necessary to apply to the court for directions as to effectuating the order. However, I do not believe that there is any support for the proposition that the inclusion of those words alone normally provides a facility, which would not otherwise be available, to revoke the order.

Accordingly, it is necessary to approach the authorities as to whether such a power exists in the absence of liberty to apply.

In Cristel v. Cristel [1951] 2 KB 725, an express liberty to apply case, it was contemplated, obiter, that had there been a “change of circumstances” the court might have considered a substantial change in the terms of an order for possession of a matrimonial home: see Somervell LJ. at p730 and Denning LJ. at p731, the latter referring to “an unforeseen change of circumstances”.

In Jordan v. Norfolk County Council [1994] 1 WLR 1353, a “liberty to apply” case, Sir Donald Nicholls VC did identify an unforeseen change of circumstances – that the cost of remedial works, which by the original mandatory injunction were left to be identified by an expert engineer, was out of all proportion to the value of the land and therefore the order could not have been intended by the trial judge to operate in those circumstances.

In Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd [1998] AC1 it was argued that if a mandatory injunction because oppressive or difficult to enforce, an application could be made for it to be varied or discharged. Lord Hoffmann rejected that submission with these remarks:

“But the order would be a final order and there is no case in this jurisdiction in which such an order has been varied or discharged, except when the injuncted activity has been legalised by statute. Even assuming that there was such a jurisdiction if circumstances were radically changed, I find it difficult to see how this could be made to apply. Difficulties of enforcement would not be a change of circumstances. They would have been entirely predictable when the order was made. And so would the fact that Argyll would suffer unquantifiable loss if it was obliged to continue trading.”

Lord Hoffmann’s reference to an exception – the injuncted activity having been legalised by statute – is consistent with the existence of a jurisdiction to revoke an order where a change in the law has removed the entitlement of the claimant to be protected by the court’s order.

In David Rosling v. David Pinnegar (unrep) CCRTI98/0968/2 (9 Oct 98) another “liberty to apply” case, Mummery LJ. observed that:

“For the purposes of this appeal, I would be prepared to assume: (1) that an express “liberty to apply” gives the Court power to review the terms of a final order in relation to the working out, or carrying out of it; (2) that in very exceptional cases, such as where there has been a fundamental and unforeseen change of circumstances, the Court has a residual power to review the exercise of its discretion granting a final injunction; and (3) that Order 45 Rule 11 is applicable in a case such as this. The critical question on this appeal is not whether the Court has jurisdiction to make the order, but whether the matters put before the Court by Mr Pinnegar are such a change of circumstances that this Court should reconsider and review the terms of the final injunction granted on 28 November 1986.”

In relation to CPR 3.1(7) in Lloyds Investment (Scandinavia) Ltd v. Christen Ager-Hanssen [2003] EWHC 1740 (Ch), Patten J. stated his understanding of the effect of that provision in the following passage:

“It seems to me that the only power available to me on this application is that contained in CPR Part 3.1(7), which enables the Court to vary or revoke an order. This is not confined to purely procedural orders and there is no real guidance in the White Book as to the possible limits of the jurisdiction. Although this is not intended to be an exhaustive definition of the circumstances in which the power under CPR Part 3.1(7) is exercisable, it seems to me that, for the High Court to revisit one of its earlier orders, the Applicant must either show some material change of circumstances or that the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. The latter type of case would include, for example, a case of material non-disclosure on an application for an injunction. If all that is sought is a reconsideration of the order on the basis of the same material, then that can only be done, in my judgment, in the context of an appeal. Similarly it is not, I think, open to a party to the earlier application to seek in effect to re-argue that application by relying on submissions and evidence which were available to him at the time of the earlier hearing, but which, for whatever reason, he or his legal representatives chose not to employ. It is therefore clear that I am not entitled to entertain this application on the basis of the Defendant’s first main submission, that Mr Berry’s order was in any event disproportionate and wrong in principle..”

In so far as it goes I entirely agree with that analysis. It is, however, necessary to add that if a permanent prohibitory injunction is granted on the assumption that the private rights of the party to be protected will continue to exist into the future and to require such protection but yet as matters turn out, those rights do at some future time cease to exist or to be enforceable either by statute or operation of law, that would normally be a situation where the jurisdiction of a judge of first instance could be engaged upon an application to revoke the original order and it would not be necessary or appropriate to appeal the original order out of time. Thus in this case, if by a change in the law which occurred after the making of the order of Morison J. the rights which it was the purpose of that order to protect ceased to exist, the underlying assumption of that order would have gone and it would be open to this court to decide whether in consequence the order should be revoked. To be more specific, if it were a consequence of the accession of Cyprus to the EU and its having become bound by the Judgments Regulation that the Insurers’ right expressed by the Jurisdiction Clause to be sued only in the English courts had been rendered void or unenforceable from a given date against the Assured, that would be a case where this court would, as a matter of discretion exercise its jurisdiction under CPR 3.1(7) or its inherent jurisdiction to revoke the injunction.

There can be no doubt, in my judgment, that the Assured failed to comply with the order of Morison J. by their conduct committed through their counsel and agent, Mr Theophilou, in continuing and assisting in the continuation of the Nicosia Proceedings.

The order was dated 28 November 2003 and was served on the Assured’s then London solicitors in the course of December/January 2003. Any step taken for the purpose of obstructing that application would be a breach of the injunction in as much as it would facilitate the continuation of the Nicosia Proceedings.

The submission made on behalf of the Assured that the order of Morison J. has to be treated as permitting the Assured to continue to justify the Nicosia Proceedings or to deploy in those proceedings the submission that the Cyprus Court had jurisdiction because of a submission to its jurisdiction on the basis of what he said in paragraph 30 of his judgment is, in my judgment, misconceived. The terms of the order could not be clearer. They admit of no assertion in the Nicosia Proceedings whether founded on the procedural rules of the Cyprus Courts or on the local concept of submission to the jurisdiction which, if established, would allow the Nicosia court to continue hearing the existing proceedings. Morison J. might have thought that the Assured might in future advance that argument in those proceedings, but the order which he made clearly prohibited any such conduct. Morison J. was clearly correct not to treat the issue of submission to the jurisdiction of the Cyprus Court in the manner submitted as a bar to injunctive relief in the English court. It is for the lex fori to determine whether as a threshold bar to relief there has been a submission to a jurisdiction other than that contended for in the anti-suit proceedings.

That being so, the question of submission in the course of foreign proceedings has to be tested by English conflict rules. The relevant test is whether the party has by his conduct in the proceedings acted in such a way which is only necessary or only useful if objection to the jurisdiction of the court in question has been waived or has never been entertained at all: see Williams & Glyn’s Bank v. Astro-Dinamico [1984] 1 WLR 438 at p444 approving Rein v. Stein (1892) 66 LT 469 at p471. The essence of the test is that – reflected in the word “only” – there has to be an unequivocal representation by word or conduct that objection is not taken to the relevant jurisdiction. In the present case the Insurers’ conduct in not relying on the jurisdiction clause to exclude Cypriot jurisdiction at the time of their original challenge to jurisdiction in September 2002, following entry of appearance in the Nicosia Proceedings or thereafter until they issued proceedings in England in the Injunction Action on 12 September 2003, was clearly not such as to satisfy the test of conduct unequivocally referable to submission to the jurisdiction. Reliance on more technical points, such as the identity of the Assured, and the omission to raise the jurisdiction clause could not seriously be regarded as such. Before Morison J. both parties appear to have concentrated on the issue whether there had, in Cypriot law, been a submission to the local jurisdiction. Indeed, at paragraph 21 of his judgment he recorded that it was no part of the Assured’s case that as a result of the way the Insurers were conducting themselves in the Cyprus courts, they believed that the Insurers were intending to submit to the jurisdiction of the Cyprus court.

The order of Morison J. therefore imposed an unqualified prohibition on facilitating the continuance of the Nicosia Proceedings whether on the basis of a submission to the Nicosia court’s jurisdiction or otherwise. That must have been quite clear to a lawyer such as Mr Theophilou.

In so far as he suggests the contrary I reject his evidence. The grounds relied upon for the application to the Court of Appeal for a stay of the injunction pending determination of an appeal show a clear appreciation of the effect of the injunction: it prevented those representing the Assured from taking any steps in Cyprus to promote or continue the Nicosia Proceedings.

Following the making of that order, on 20 January 2004 both the Assured filed notices of intention to oppose the Insurers’ stay applications currently pending in the Nicosia Proceedings. The main ground was that the Insurers had submitted to the jurisdiction by not relying on the jurisdiction clause at the outset.

The Assured opposed registration in Cyprus of the order of Morison J. Had the order been registered, it could have been enforced in Cyprus and had it been enforced I infer that the Nicosia court would have had at least to take it into account in deciding whether to stay the Nicosia Proceedings. Although the registration proceedings were distinct from the Nicosia Proceedings, for the Assured to oppose them was indirectly to assist in the continuation of those Proceedings and a breach of the injunction.

At a hearing on 5 March 2004 of the stay application in the Nicosia Proceedings Mr Theophilou orally opposed the Insurers’ stay application mainly on the grounds of submission to the jurisdiction in Cyprus. There was no other conduct on the part of the Assured prior to the accession of Cyprus to the EU and coming into force of the Judgments Regulation which could amount to a breach of the injunction.

After the accession of Cyprus to the EU the Assured took further steps to oppose the Insurers’ registration applications. Further, on 27 May 2004 the Assured filed applications in the Nicosia Proceedings for judgment in default of defence. In the course of the remainder of 2004 there were a number of steps by the Assured in opposition to the Insurers’ registration applications. However, in view of the judgment of Judge Michaelidis on 25 May 2004 and the Insurers’ stated intention to appeal, it was later agreed that all further pre-trial applications in relation to the Nicosia Proceedings should be stood over until after determination of the appeal.

That remains the position.

Accordingly, the Assured’s conduct in breach of the injunction from the time when they first had notice of the injunction spans the period before and after accession to the EU. If, therefore, this court is now to decide whether to exercise its discretion against permitting counsel on behalf of the Assured to address it in support of its application in the Injunction Proceedings, it can do so only if it first reaches a conclusion on the measure of gravity of the breaches of the injunction. If the consequence of the accession of Cyprus to the EU were such that, as submitted by Miss Troy-Davies, with effect from 1 May 2004, the Nicosia Court, having been first seised of the claim on the certificates of insurance became exclusively an available forum and, in spite of the Jurisdiction clause, the English courts ceased to be the appropriate forum and by reason of Article 27 came under a duty to stay their proceedings, although conduct inconsistent with the injunction would be technically a contempt, the gravity of that contempt would be much diminished: the contemnors would be doing what by EU law they were entitled to do. The only conduct which, in that event, would be unaffected by EU law would be that between the time of the injunction and the date of accession.

In these circumstances, I have no doubt that it is strongly in the interests of justice that counsel for the Assured should have been entitled to address this court not only, as normally would be the case, on the nature of the conduct, and therefore its gravity, said to amount to contempt, but also generally on the effect of the coming into force of the Judgments Regulation. The issue as to the Assured’s entitlement to be heard and the issue raised by the Assured’s application in the Injunction Action very substantially overlap.

It is submitted on behalf of the Assured that Article 66, set out in paragraph 54 above, operates in this case in the following manner.

It is first necessary to consider the decision of the ECJ in Von Horn v. Cinnamond [1997] ECR 1-5467.

The ECJ there decided that Article 29 of the San Sebastian Convention (equivalent save in one striking aspect to Article 66 of the Regulation) had the effect that where, prior to accession, the first proceedings were commenced in a non-member state and after accession of that state the second proceedings involving the same cause of action and between the same parties were commenced in a member state and both sets of proceedings were still pending, the second court must apply the equivalent of Article 27 if the court first seised has already assumed jurisdiction on the basis of a rule which accords with the provisions of Chapter II of that (Regulation) or in a convention in force between the two states when the proceedings were instituted and must provisionally apply Article 27 if the court first seised has not yet ruled on its own jurisdiction. Where the court first seised has assumed jurisdiction on the basis of a rule which does not accord with Chapter II or another binding convention, the court second seised could not apply Article 27. It is for the court second seised to decide whether the first court has or has not satisfied this condition. However, this last determination must be subject to the following qualification, at paragraph 25:

“In the particular case where the jurisdiction of the court first seised derives, in accordance with Article 4 of the Brussels Convention, from the law of the State of that court, which would thus undeniably be better placed to rule on the question of its own jurisdiction, the court seised should restrict itself to ascertaining whether the conditions for the application of that provision are satisfied, namely that the plaintiff is domiciled in a Contracting State and the defendant is not domiciled in such a State. In no case, therefore, may the court second seised assess the jurisdiction of the court first seised in the light of the law of the State of that court.”

The main rationale for this construction is to be found in paragraphs 13, 14 and 15, the underlying purpose of their part of the Regulation being to prevent parallel proceedings and inconsistent decisions in different member states. The court deployed this objective in giving a purposive construction to the provisions of the equivalent of Article 66 which on the face of it is concerned only with the recognition and enforcement of judgments and does not expressly relate to how jurisdiction in pending proceedings is to be allocated as between competing courts.

The limits of the application of this approach were explored by the Court of Appeal in Davy International Ltd v. Voest Alpine Industrianlagenbau Gmbh [1999] 1 All ER 103. It was there held that the purposive approach to construction adopted in Von Horn did not lead to the conclusion that where competing proceedings had both been commenced before the accession to the Lugano Convention of the state of the court second seised and where both sets of proceedings were still pending, the equivalent provision to Article 66(2) operated on the second set of proceedings.

The Court of Appeal approved the following passages from the judgment of May J.

“In my judgment, von Horn’s case should not be extended to a case such as the present where the proceedings in both contracting states were instituted before the convention came into force. I reach this conclusion for two principal reasons. Firstly, a robust, purposive application of art 54(1) to art 21 of the convention (with the assistance of the German and Dutch language versions) was possible where the proceedings in the court second seised were instituted after the entry into force of the convention in the state first seised. But it would be, in my view, rewriting art 54(1) entirely and unacceptably if art 21 were to apply even where neither proceedings were instituted after the entry into force of the convention as between the two contracting states. Secondly, I do not read the European Court’s decision in von Horn’s case as saying that the aim of avoiding two irreconcilable judgments in two contracting states is to dictate the application of the convention notwithstanding and even in defiance of all other considerations. The European Court in von Horn’s case implicitly acknowledged that the aim of reducing the risk of irreconcilable judgments could not be achieved in every case. To say that “it is essential to interpret art 29(1) of the San Sebastian Convention in the light of the structure and aims of that convention and the Brussels Convention” does not, I think, mean that in cases more extreme than von Horn’s case itself we have to shut our eyes completely to other considerations than those considered in that case. One such consideration in cases where the competing proceedings were both instituted before the convention came into force is the possibility to which I have referred that, if the court second seised were obliged of its own motion to apply art 21, it could be required to do so at a stage in those proceedings which was in practical terms nonsensically inconvenient.’

"The mere coming into force of the Lugano Convention would mean that a certain class of pending proceedings in one state would have to be stayed, whatever stage they had reached, in favour of other proceedings in another state whatever stage those proceedings had reached. The stay would have to be imposed by the court second seised of its own motion. In theory, such a stay would have to be imposed part way through a final hearing (or even part way through an appeal?) in favour of proceedings in another State which might have got nowhere although they had been instituted earlier. Such a problem could scarcely arise in a case, such as von Horn’s case, where the proceedings before the court second seised were instituted after the convention came into force. Those second proceedings would have been instituted in the face of the convention in force and the court’s obligation to stay these proceedings would arise at the outset.”

In my judgment, the applicability of Article 66(2) to lis alibi pendens situations has been conclusively determined by the ECJ in Von Horn to be confined to cases where institution of the first proceedings in the non-Member State before accession is followed by the institution of a second set of proceedings in the jurisdiction of a Member State which takes place after the date of accession of the state of origin. There is no justification for extending the reasoning in Von Horn to a second set of proceedings also commenced before accession, much less to a second set of proceedings which goes to final judgment before accession. Those proceedings would not have been started or judgment in them obtained in the face of the jurisdiction regime prescribed by the Convention/Regulation as applicable to both sets of proceedings. That, however, leaves intact the applicability of Article 66(2)(b) where, even in the face of an inconsistent decision in a final judgment given in a Member State before accession, the court of origin of a non-Member State in which proceedings have also been commenced before accession gives judgment after accession. There are then, unavoidably, two inconsistent judgments provided that the jurisdiction of the court of origin was founded in accordance with Article 62(2)(b).

Accordingly, in the present case, the final judgment in the Injunction Action having been given in proceedings upon which the Regulation has not operated, does not yield to the Nicosia Proceedings commenced before the Injunction Action, either at the date of accession of Cyprus or subsequently. Nor, in my judgment, is there anything in Von Horn or the provisions of Article 66 to suggest that the injunction was rendered ineffective as from the date of accession by Cyprus, as argued on behalf of the Assured.

At the time when the order of Morison J. was made there were pending substantive proceedings in the Nicosia Court in which there had not yet been a determination whether the Insurers had submitted to the jurisdiction. There was also a final judgment in the English court in proceedings which were not parallel proceedings in the sense that they raised the same cause of action as that in the Nicosia Proceedings since they were concerned only with the enforcement of the Jurisdiction Clause. Once judgment was given, the effect was conclusively to determine as between the parties that the Assured was under a continuing duty to give effect to the Jurisdiction Clause and, consistently with that duty, to refrain from acting in the manner prohibited by the order. To the extent that the in personam duty was expressed in those prohibitory terms it was enforceable as an order of the court bearing upon the Assured over whom the court had decided that it had jurisdiction. That therefore remained the position up to the time of accession on 1 May 2004.

It has, however, also been submitted on behalf of the Assured that the effect of the decision of ECJ in Turner v. Grovit [2004] 2 Lloyd’s Rep 169 would be to render the order of Morison J. ineffective or unenforceable as from accession. The essence of that judgment is to be found in paragraphs 24 to 27 as follows:

“24 At the outset, it must be borne in mind that the Convention is necessarily based on the trust which the contracting states accord to one another's legal systems and judicial institutions. It is that mutual trust which has enabled a compulsory system of jurisdiction to be established, which all the courts within the purview of the Convention are required to respect, and as a corollary the waiver by those states of the right to apply their internal rules on recognition and enforcement of foreign judgments in favour of a simplified mechanism for the recognition and enforcement of judgments: Erich Gasser GmbH v MISAT Srl (Case C-116/02) [2004] 3 WLR 1070, para 72.

25 It is inherent in that principle of mutual trust that, within the scope of the Convention, the rules on jurisdiction that it lays down, which are common to all the courts of the contracting states, may be interpreted and applied with the same authority by each of them: see, to that effect, Overseas Union Insurance Ltd v New Hampshire Insurance Co (Case C-351/89) [1992] QB 434, 458, para 23, and Gasser, at p 1082, para 48.

26 Similarly, otherwise than in a small number of exceptional cases listed in the first paragraph of article 28 of the Convention, which are limited to the stage of recognition or enforcement and relate only to certain rules of special or exclusive jurisdiction that are not relevant here, the Convention does not permit the jurisdiction of a court to be reviewed by a court in another contracting state: see, to that effect, Overseas Union Insurance, para 24.

27 A prohibition imposed by a court, backed by a penalty, restraining a party from commencing or continuing proceedings before a foreign court undermines the latter court's jurisdiction to determine the dispute. Any injunction prohibiting a claimant from bringing such an action must be seen as constituting interference with the jurisdiction of the foreign court which, as such, is incompatible with the system of the Convention.”

From these observations it is clear that the underlying concept upon which this judgment is founded is that it is an essential feature of the Convention and Regulation that the courts of Member States trust each other to apply the Convention/Regulation in accordance with its terms. Thus, if it is necessary to determine whether the courts of a particular Member State have jurisdiction, it is in general not for the courts of any other Member State to determine that issue, much less to make an order purporting to prevent a party from referring that issue to the courts seised of the claim. The decision to grant an anti-suit injunction which interferes with the determination of jurisdiction by the courts of the Member State where the claim is located is thus incompatible with the Convention/Regulation regime. Had the injunction in the present case been ordered the day after accession of Cyprus, there could therefore be no doubt that it would have been incompatible with the Regulation and therefore without effect.

That, however, is not this case.

The decision to grant the injunction was taken at a time when Cyprus was not a Member State and when therefore there could be no question of that decision representing an unacceptable derogation from the principles of mutual respect as between Member States identified in Turner v. Grovit or an undermining of the jurisdiction of the courts of a member state. Indeed, it is open to the English courts to grant anti-suit injunctions restraining proceedings in the courts of non-Member States for the purpose of giving effect to English jurisdiction clauses: see the recent decision of this court in Konkola Copper Mines v. Coromin [2005] EWHC 898 (Comm).

Given that, as I have held, it is against the initial making of the order granting an anti-suit injunction that the reasoning in Turner v. Grovit is directed, does that reasoning extend also to the continuing enforceability of a judgment giving such an order already made prior to accession? In my judgment, the answer to that question must be No. That is so particularly because for the order to be rendered ineffective from the date of accession would involve the destruction of the accrued and continuing right of the party to enforcement in the EU of the order giving effect to the Jurisdiction clause. It is not the function or effect of the Regulation to take away such accrued rights. There is no transitional provision which goes anywhere near that. Had that been the intention of the Regulation it is inconceivable that it would not have been made expressly the subject of a transitional provision. Yet the Regulation contains nothing which could, even with the most purposive construction, disturb or revoke a pre-accession judgment, however inconsistent with the principles of jurisdiction and mutual trust underlying the Regulation.

So far, therefore, there is nothing in the impact of accession on the injunction which could amount to a sufficiently fundamental change of circumstances to justify my revoking that order.

That, however, is not the end of the matter because in order to review the position of the injunction it is also necessary to resolve the issue raised by the Assured’s application to stay the Declaration Action. That is because, if the Assured were entitled to a stay of those proceedings and yet were also prohibited by the injunction from pursuing the Nicosia Proceedings the effect would be to close down both sets of proceedings thereby removing from the parties any prospect of having the Assured’s substantive claim determined in subsisting proceedings. Therefore, if a stay of the Declaration Action were granted it would at least be a matter for consideration whether there had been so fundamental a change in circumstances as would justify this court’s intervention to revoke the injunction in the interests of justice.

I therefore turn to consider the Assured’s stay application.

I have already set out much of the argument of Miss Troy-Davies on behalf of the Assured in support of the application for a stay: see paragraph 88 above. In summary, she submits that because the Declaration Action was begun by the Insurers after the date of accession, namely 22 July 2004 with service effected in Cyprus on 20 and 28 August 2004, there were in this case be two parallel proceedings involving the same cause of action, one (the Nicosia Proceedings) commenced before accession and one after it. Consequently, in accordance with the decision in Von Horn, supra, Article 66 applies to the following effect. The Nicosia Court, being first seised, the English Court, being second seised, must stay the proceedings or decline jurisdiction once the jurisdiction of the court first seised is established, such jurisdiction being in accordance with the jurisdiction regime of the Regulation. Under Article 24 (set out at paragraph 88 above) a court of a Member State has jurisdiction if a defendant has entered an appearance except an appearance to contest jurisdiction. As held in Von Horn at paragraph 25, set out at paragraph 90 above, it is for the court first seised as distinct from the court second seised to decide upon its own jurisdiction where that is derived from the law of that state. In the present case, as appears from the judgment of Judge Michaelidis, the law relating to whether an entry of appearance is conditional or unconditional and, if the latter, a submission to the jurisdiction, is derived from the procedural law of Cyprus and accordingly that is a matter for the decision of the Cyprus courts. That decision has been made, subject to the pending appeal, and accordingly Cyprus jurisdiction has been established and the English proceedings must be struck out or stayed in accordance with Article 27.

Mr Michael Howard QC, on behalf of the Insurers, submits that given, as I accept, that the Assured in participating and in challenging the Insurers’ stay application in Cyprus was acting in contempt of the English court, it would be contrary to public policy to give effect to the decision of Judge Michaelidis.

I am not able to accept this submission.

Public policy in this connection has to be viewed in the light of the provisions of the Regulation which are binding on this court and which inform what amounts to public policy. Thus, the relationship between the Nicosia Proceedings and the Declaration Action is to be determined by application of Article 66 as explained by the ECJ in Von Horn. That involves that, regardless of the existence of the Jurisdiction Clause, this court may be obliged at least to stay the Declaration Action if the Nicosia Court, being the court first seised, has jurisdiction on the basis of the jurisdiction regime in the Regulation but that necessarily involves investigation of whether the effect of the Jurisdiction clause has been displaced by an unconditional entry of appearance. That is essentially a matter to be determined by the court first seised because it depends on domestic procedural law. If the English court were to ignore a determination of that threshold issue by the Cyprus court, it would in substance be rendering inoperable the Article 66 regime. Until the matter has been determined by that court, there is no other competent tribunal capable of resolving the issue.

Further, if the issue remained permanently unresolved, this court would still be obliged to stay the Declaration Action under Article 28. The position would then be that the Insurers’ negative declaration claim and the Assured’s indemnity claim would both in effect by permanently frozen.

I therefore have no doubt that the public policy of this court must be consistent with the achievement of justice to both parties and with its obligations as a court of a Member State bound by the Judgments Regulation. Only by taking account of the judgment of the Cyprus Court on the entry of an appearance can those purposes be achieved.

I conclude therefore that since, subject to the Cyprus Court of Appeal reaching a conclusion contrary to that of Judge Michaelidis, it has been established that for the purposes of the application of Article 66, this court must yield jurisdiction to the court first seised, namely the Nicosia Court., this court must decline jurisdiction in respect of the Insurers’ Declaration Action.

The Assured’s application for a declaration in the Declaration Action and for those proceedings to be stayed or struck out therefore succeeds.

The conclusion that the effect of Article 66 is that this court has no jurisdiction in respect of the Declaration Action which must be stayed or struck out leaves the Nicosia Court as the only tribunal with jurisdiction in relation to the Assured’s substantive claim. If the Assured continue to be prohibited from presenting their claim in that tribunal, the claim cannot be determined anywhere unless the Assured abandon the Nicosia proceedings and start again in England in accordance with the Jurisdiction Clause. That course would in effect be to ignore the jurisdiction regime established by the Regulation in as much as the effect of the continuance of the injunction would be to force the Assured to abandon the court first seised notwithstanding its having been held by this court that the effect of the Regulation is to confer jurisdiction on that court in priority to this court. On the face of it that might seem to put this court in conflict with the jurisdiction regime of the Regulation.

However, in order to ascertain whether there has been a change of circumstances so fundamental as to justify revocation of the order granting the injunction, it is necessary to compare the position immediately following and created by the accession of Cyprus to the Regulation with that which existed when the order was made.

At the date of the order of Morison J. the only pending proceedings in which the issue of liability under the certificates of insurance was raised were the Nicosia proceedings. The consequence at that time for those proceedings of the making of the order, assuming it to be performed, would be that the Assured would have to pursue their claims by starting fresh proceedings. Obviously they could not start such proceedings in Cyprus, so those proceedings would have to be in England. At the moment of accession, the injunction being still in force and, as I have held, of continuing effect, the only extant proceedings in which the Assured’s claim was advanced remained, as before, those in Cyprus, but, just as before accession, the Assured could not pursue those proceedings without being in breach of its pre-existing duty to the Insurers and to the English Court. It is true that the effect of Article 66 would be that, provided the Nicosia Court had jurisdiction on a basis consistent with the jurisdiction regime in the Regulation, any judgment of that court following accession would have to be recognised by the English courts, whereas prior to accession, that would not have been so, the Assured would not be in a position to obtain such a judgment if they were to comply with the injunction. Accordingly, there would not be any effective change in material circumstances by reason of accession. Both before and after accession the only course open to the Assured consistent with compliance with the injunction was to start fresh proceedings in the English courts.

Against this background the commencement by the Insurers after accession of the Declaration Action is entirely irrelevant. The fact that the English Courts are obliged not to exercise jurisdiction in those proceedings by reason of the effect of Article 66 does not mean that the English courts are precluded from hearing the Assured’s claim if the Assured were now to invoke English jurisdiction as they are perfectly entitled and, indeed, obliged to do, if they wish to prosecute their claim.

Accordingly, I have no doubt that the incidence of accession has not been a change of circumstances such as would justify revocation of the injunction by this court.

It follows that the Assured’s application for the revocation of the injunction must be refused.

This judgment has been prepared on the basis that the judgment of Judge Michaelidis is upheld on appeal. If it is reversed, the consequence will be that Article 66 will not lead to Articles 27 or 28 becoming applicable, with the result that the Jurisdiction Clause will prevail by reason of the effect of Article 23. Much of the reasoning in this judgment would then be rendered unnecessary. In those circumstances, it is appropriate that the question of this court’s jurisdiction with regard to the Declaration Action should be reconsidered by this court.

Secondly, Article 66, although substantially similar to Article 54 of the Lugano and San Sebastian Conventions, omits one crucial paragraph of those Conventions, namely:

“If the parties to a dispute concerning a contract had agreed in writing before the entry into force of this Convention that the contract was to be governed by the law of Ireland or of a part of the United Kingdom, the courts of Ireland or of that part of the United Kingdom shall retain the right to exercise jurisdiction in the dispute.”

Had that been repeated in the Judgments Regulation, the deplorably costly and time-consuming manoeuvres carried out by both parties in the present case would never have occurred.