Nordea Bank Norge Asa & Anor v Unicredit Corporate Banking SPA & Anor

This is a jurisdiction dispute. By application dated 30 June 2010, the defendants sought to stay the claimants’ action proceeding in this court (2009-Folio 1503) (“the English Claim”) until certain Italian proceedings (“the Italian Proceedings”) have been finally determined by the Tribunale di Genova (“the Genoa Court”), and for an order that this court will not exercise in the meantime any jurisdiction over the English Claim. The original basis of the application was that the claim or claims allegedly pending before the Genoa Court (“the Italian Claim”) is or are a “related action” with the meaning of Article 28 of Council Regulation 44/2001 (“the Jurisdiction Regulation”), and that it is expedient that the English Claim should be stayed pending resolution of the Italian Claim before the Genoa Court.

At a hearing before me on 22 October 2010, Mr. Hugh Mercer QC, counsel on behalf of the defendants, applied to add Article 27 of the Jurisdiction Regulation as an additional ground for staying the English Claim, on the basis that the Genoa Court was first seised. The hearing would not in any event have concluded on that day, and, accordingly, I granted that application on condition that the claimants were given an opportunity to adduce evidence in relation to the Article 27 issue, and also in relation to the ancillary Article 30 issue, namely as to when the Genoa Court was first seised.

The application is supported by the statements of Yasseen Gailani of Dewey & LeBoeuf, the defendants’ London solicitors and, in relation to issues of Italian law, of Professor Saletti, an Italian advocate who represents the defendants in the Italian Proceedings.

The application is opposed by the claimants. The claimants likewise rely, in relation to issues of Italian law, on statements by their Italian lawyer, Avvocato Cristoffanini.

It is unnecessary for this Court to resolve many of the points of Italian procedural law raised in the evidence of the parties’ respective Italian lawyers, neither of whom were cross-examined.

The relevant background facts are as follows (Footnote: ¹). The second claimant, Vasonia Shipping Company Limited (“Vasonia”), is a company incorporated under the laws of Cyprus. It chartered its chemical tanker, the vessel “Monte Carmelo”, which sailed under the Italian flag, to Marittima Fluviale SpA (“MF”), a company incorporated under the laws of, and having its seat in, Italy. The charterparty, dated 16 March 2006, was on amended Barecon 2001 terms, and was for a minimum period of 60 months, and a maximum period of 63 months. It was governed by English law and provided for arbitration in London under LMAA terms.

Under the terms of the charterparty, MF was required to provide a demand Guarantee to secure its obligations thereunder. Such a guarantee (“the Guarantee”) was issued on 30 May 2006 in favour of Vasonia by the second defendant, Banca di Roma SpA (“Banca di Roma”), MF’s bankers at the time. The Guarantee is governed by English law. It required Banca di Roma to pay on Vasonia’s first written demand which stated that MF was in breach of its obligations. Banca di Roma was required to pay on demand “without set off or counterclaim of any kind” and irrespective of any amendment or variation to the charterparty. By paragraph 6 Banca di Roma agreed:

“Any claims or disputes arising out of this Guarantee shall be referred to the English High Court and we hereby irrevocably submit to the non-exclusive jurisdiction of the English High Court.”

There was no dispute that it was an agreement to which Article 23 of the Jurisdiction Regulation applies

Subsequently, as a result of various mergers and corporate reconstructions, Banca di Roma’s corporate banking obligations were transferred to the first defendant, Unicredit Corporate Banking SpA (“Unicredit”), in late October/early November 2008. Unicredit has therefore assumed Banca di Roma’s liabilities under the Guarantee. It is common ground that the claimants’ claim in this action lies against Unicredit. Accordingly, save where necessary to draw the distinction between the two entities, I shall refer to Banca di Roma and Unicredit collectively as “Unicredit”.

In return for Unicredit issuing the Guarantee to Vasonia, MF provided countersecurity to Unicredit in the form of a deposit of €1m.

On 23 September 2009, Vasonia served a notice of assignment on Unicredit that Vasonia’s rights under the Guarantee had been assigned to the first claimant, Nordea Bank Norge ASA (“Nordea”), a Scandinavian financial institution which acted as Vasonia’s bankers at the relevant time, but that Unicredit was irrevocably authorised and instructed to continue to receive instructions from Vasonia, subject to payment of any sums due under the Guarantee being made to a specified bank account held at Nordea. Where appropriate, I shall refer to Vasonia and Nordea collectively as “the claimants”.

In due course, as a result of MF’s non-payment of hire payments, Vasonia made a demand on Unicredit under the Guarantee, by a letter of demand dated 21 October 2009, but not received by Unicredit until 23 October 2010. Unicredit did not honour the demand. Vasonia and Nordea therefore issued proceedings against Unicredit in the Commercial Court in England (“the English Court”). The English Claim (seeking enforcement of the Guarantee) was issued at 21.36 on 17 November 2009, but the claim form was not served on Unicredit in Italy until 11 May 2010. There is no dispute that, for the purposes of the Jurisdiction Regulation, the English Court was seised of Vasonia’s claim against Unicredit under the Guarantee, on the date when the claim form was issued, i.e. on 17 November 2009.

On 23 October 2010, Unicredit gave informal notice to MF of Vasonia’s demand under the Guarantee and of Unicredit’s intention to make immediate payment to Vasonia and to draw down on the collateral which MF had provided to Unicredit.

On 26 October 2009, MF, prompted, it is to be inferred, by notice of Vasonia’s demand under the Guarantee, commenced arbitration proceedings under the charterparty with Vasonia, by referring the dispute to LMAA arbitration in London. The thrust of MF’s alleged claim was (in essence) that the hire had not in fact fallen due, because the parties had negotiated a variation in the charter terms. Vasonia appointed its arbitrator, and on 16 April 2010 applied for an interim final aware for sumes due to it from MF. MF’s position in the arbitration is that it has been stayed by the appointment of liquidators.

On 29 October 2009, Unicredit formally notified MF that the demand had been received from Vasonia, and that, unless MF provided proof of payment of the amount in question within 24 hours, Unicredit would make a payment to Vasonia under the Guarantee. On 30 October 2009, MF’s lawyers wrote a letter to Unicredit in which they effectively stated that if any payment was made under the Guarantee pending the arbitration proceedings, MF would challenge any attempt by Unicredit to look to the counter-security provided by MF.

Unicredit’s threat to draw down on the collateral also led to MF to apply, on 2 November 2009, to the Genoa Court, where the relevant branch of Unicredit was located, for an order against Unicredit pursuant to Article 700 of the Italian Civil Procedure Code. The application was for protective relief in the nature of an ex parte interim injunction preventing Unicredit from paying out under the Guarantee, pending the outcome of the LMAA arbitration against Vasonia. I shall refer to this application as “the Initial Proceedings”. Neither Nordea nor Vasonia were named as respondents to the Initial Proceedings at this stage. The Initial Proceedings were assigned the action, or docket, number 14507/09.

There is no dispute that the Initial Proceedings were brought by MF in order to protect its position pending the resolution of the issues which it had referred to arbitration; see the witness statement of Unicredit’s solicitor, Yasseen Gailani at paragraph 31. Article 700 is the provision of the Italian Civil Procedure Code which permits an Italian court to grant provisional relief even if there is no substantive jurisdiction. MF’s application (Footnote: ²) also made it clear that, although the Genoa Court did not have jurisdiction “in this dispute” (i.e. the substantive dispute between Vasonia and MF, the subject matter of the LMAA arbitration), the Genoa Court nonetheless had jurisdiction “to grant the emergency provision as per Article 700 of the Civil Code”, effectively because of the Genoa Court’s local jurisdiction to enforce the emergency injunction against Unicredit, as being the place where MF opened its account with Unicredit.

On 2 November 2009, the Genoa Court (Judge Dr. Gazia Casanova) granted MF an ex parte interim injunction against Unicredit. She ordered the latter: “… temporarily and as matters stand to suspend payment” of the sums demanded by Vasonia under the Guarantee. The order was served on Unicredit on 2 November 2009, and it had a return date of 17 November 2009.

At the hearing on 17 November 2009, Unicredit responded by filing a defence brief with the Genoa Court shortly after the start of the hearing at noon. Although it bore the date 12 November 2009, it was common ground that it was not filed with the Genoa Court until 17 November 2009. In that defence brief, Unicredit:

On 25 November 2009, the Genoa Court (Judge Dr Casanova), having apparently reserved her decision from the hearing on 17 November 2009, issued an order which inter alia:

On 18 December 2009, pursuant to the Genoa Court’s order, a copy of the application and the interim injunction orders were served on Vasonia.

On 21 January 2010, an inter partes interim application in the Initial Proceedings was heard before the Genoa Court. MF, Unicredit and Vasonia appeared, the latter under protest as to the Genoa Court’s jurisdiction. There is no dispute that this did not amount to a submission to the jurisdiction by Vasonia.

Having reserved her decision, on 28 January 2010, the judge confirmed the continuation of the interim injunction granted by her ex parte on 2 November 2009, preventing Unicredit from paying out to Vasonia under the Guarantee. When dealing with the question of costs, the judge expressly stated that she had to give a ruling about costs at that stage because:

“… the injunction requested against Unicredit is an anticipatory measure and therefore is not necessarily followed by trial.”

She dealt with the costs as between MF and Unicredit and then went on to say that, as to the dealings between MF and Vasonia, and, given that the arbitration proceedings “… on the merits of the case are already pending …” the associated costs of the Initial Proceedings should be dealt with in those proceedings. In coming to her conclusion that “a presumption … existed regarding MF’s claim” she expressed the view that:

“This situation therefore demonstrates that, while the parties were in the process of renegotiating their respective positions, suddenly, and entirely unexpectedly, Vasonia put forward their call for enforcement of the Guarantee, an act open to censure for the purposes of identification of exceptio doli.”

It was common ground that, under Italian law, the 28 January ruling, confirming and continuing the ex parte order made on 2 November 2009 was an interim order which remains in effect (subject to any application to discharge it) but is not a final order (Footnote: ⁵).

On 12 April 2010 (Footnote: ⁶), MF issued a writ of summons (“Atto di Citazione”) in the Genoa Court against Unicredit and Vasonia. In these proceedings (“the Final Proceedings”) MF sought the substantive determination, as between MF, Vasonia and Unicredit, of Vasonia’s rights under the Guarantee and of Unicredit’s rights in relation to the collateral lodged by MF. The writ of summons stated that:

“18.

By this writ of summons [MF] introduce the proceedings on the merits in order to preserve the order issued by such Honourable Tribunal in the procedure number 14507/2009 and, consequently, to obtain a judgement ascertaining and statement that Unicredit Corporate Banking is not bound to apply any amount in favour of Vasonia as per the said Guarantee dated 30/5/2006.”

The writ went on to claim that the Genoa Court should:

“… ascertain and state the Unicredit Corporate Banking does not have to effect any payment in favour of Vasonia Shipping Company Limited as per the said Guarantee dated 30 May 2006, preliminarily, for substantial lack of title of Vasonia; alternatively, because such Guarantee is collateral in respect of the substantial relationship existing between the undersigned and Vasonia and the undersigned, as secured debtor, is not obliged to effect payment in favour of the same Vasonia; more alternatively, in the denied hypothesis of qualification of the concerned Guarantee as autonomous contract of security, due to the unlawful and fraudulent character of the request of payment.”

There is no dispute between the parties that the Final Proceedings are separate from the Initial Proceedings, i.e. the Article 700 protective proceedings begun on 2 November 2009 (Footnote: ⁷). The dispute is focused on whether the Final Proceedings have been derived from the Initial Proceedings and, even if so, whether there is any basis under the Regulation for treating the Genoa Court as having been seised of the claims in the Final Proceedings on 2 November 2009, when the Initial Proceedings were issued by MF or on 17 November 2009 when Unicredit responded by filing its defence brief with the Genoa Court.

On 28 April 2010 the writ of summons in the Final Proceedings was served upon Vasonia in Cyprus.

On or about 31 March or 30 April 2010 (Footnote: ⁸), an application was made to appoint a liquidator or provisional liquidator of MF. On 6/7 May 2010 MF was declared bankrupt by the Genoa Bankruptcy Court and entered into liquidation proceedings.

As already stated, on 11 May 2010, the Claimants served the claim form in the English proceedings on Unicredit. On 1 June 2010 Unicredit, in its Acknowledgement of Service, indicated that it intended to challenge the English Court’s jurisdiction over the English Claim.

On 7 July 2010 Unicredit filed its proof of debt as against MF in the Genoa Bankruptcy Court. This showed that, in addition to its contingent claim against MF for €1 million in respect of the counter-indemnity under the Guarantee, which is secured by the proceeds of a matured certificate of deposit lodged with Unicredit, the latter is an unsecured creditor of MF in the sum of €3,321,664.72.

Under Italian law a liquidator is required to adopt actions issued by the subject company before his appointment within three months (Footnote: ⁹) of the date of his appointment. It is common ground that the MF liquidator has not done so and that, on or about 23 September 2010, the deadline for MF’s liquidator to confirm his adoption of MF’s writ of summons in the Italian Final Proceedings expired. Vasonia contends that the Final Proceedings were automatically extinguished following their interruption by MF’s bankruptcy.

On 11 October 2010 Vasonia’s Italian lawyers obtained a certificate from the Genoa Court confirming that, according to the Court records, on 8 October 2010 “there are to date no proceedings brought by [Unicredit] and/or the bankrupt [MF] against [Vasonia]”.

On 16 October 2010 Unicredit’s lawyers lodged with the Genoa Court a “Statement of Defence” or defence brief, in the Final Proceedings, which effectively sought to reinstate the Final Proceedings and to continue the injunction restraining it from paying the Claimants. Paragraphs 19-21 of the brief and the prayer, are as follows:

“19.

Entering an appearance in the present statement of defence, UCB can only reiterate their position of entire extraneity with regard to the dispute between Marittima and Vasonia, a dispute in relation to which Vasonia considers that the conditions for enforcement of a guarantee issued in its favour have been fulfilled.

By virtue specifically of their extraneous position vis-à-vis this dispute, UCB finds itself entirely incapable of assessing the validity of the complaints put forward by the former and the payment claims put forward by the parties whose entitlement is under dispute.

As in the precautionary interim proceedings, the applicant Bank can only throw itself on the Court concerning the acceptance of Marittima’s claims, which seek confirmation of the injunction preventing payment under the guarantee in question.

20.

Nonetheless, UCB has an interest in seeking the establishment, in a binding judgment – in relation to all parties in the trilateral relationship created as a result of issue of the guarantee – of the existence or otherwise of their obligation to make payment under the guarantee, to enable it to take the necessary action, including claims for redress where necessary, given the existence of the necessary grounds.

21.

It is evident that, due to the Bank’s extraneous position vis-à-vis the substantive dispute, the costs of these proceedings should be awarded against the losing party, either Marittima or Vasonia, in the substantive dispute between the latter.

*.*.*.*.*

In the light of the above, Unicredit Corporate Banking SpA, as above represented and defended, files the following pleadings.

May it please the Court to rule in equity on the claim put forwarded by Marittima Fluviale de Navigazione SpA, seeking confirmation of the ruling of 28 January 2010, suspending payment under guarantee no. 3362 (now 460231318529), dismissing all other claims, filed by any party, against Unicredit corporate Banking SpA.

With the award of costs, fees and disbursements attaching to these proceedings, including the flat-rate reimbursement of overheads, CAN and VAT.”

It is to be noted that there is nothing in Unicredit’s defence brief in the Final Proceedings which advances any positive case to the effect that it has a defence under the Guarantee to a claim by Vasonia for payment.

The precise status of this document is in dispute. Vasonia contends that, under Italian law (Footnote: ¹⁰), Unicredit had three months from the date when the latter received notice of MF’s bankruptcy (which Vasonia contends was on or about 19/20 May 2010) to make an application to re-instate the Final Proceedings and that it failed to do so by the correct procedure and by 6 October 2010, when the three month plus period expired. Accordingly Vasonia contends that Unicredit is out of time for doing so now and that Unicredit’s 16 October 2010 defence brief in the Final Proceedings is incapable of reinstating the Final Proceedings. Unicredit contends that the three month period had not expired by 16 October 2010 because it had not received formal notice of MF’s liquidation.

On 18 October 2010 Unicredit obtained a certificate from the Genoa Court stating that as at 16 October 2010 the Final Proceedings had been assigned for hearing. On receipt of Unicredit’s brief, the Genoa Court also assigned the Final Proceedings with an action number 11706/2010, i.e. a different number from the Initial Proceedings.

On 4 November 2010 the MF liquidator wrote to Unicredit’s lawyers in the following terms:

“Insolvency of Marittima Fluviale di Navigazione SpA/Unicredit SpA/Vasonia (Court of Genoa, reg no 11706/2010

Further to our discussion, I am writing to you in connection with the above proceedings, originally initiated by Marittima Fluviale di Navigazione SpA in bonis, but not docketed by that company.

Following your information that Unicredit SpA has docketed the case, I can confirm that the administrators will examine the case ahead of the first hearing scheduled for 22 February 2011.”

It was common ground that this letter did not amount to an adoption of the proceedings by the liquidator.

The first hearing in the Final Proceedings has been fixed to be held in the Genoa Court on 22 February 2011. Vasonia’s Italian lawyer, Avv. Cristoffanini, is of the opinion that Unicredit’s 16 October 2010 defence brief in the Final Proceedings is incapable of reinstating the Final Proceedings as it was in the incorrect form and because Unicredit was out of time to reinstate the proceedings, and that accordingly the judge hearing the matter on 22 February 2011 will determine that they were automatically extinguished on MF’s bankruptcy and have not been reinstated. Professor Saletti, Unicredit’s Italian lawyer disagrees.

The principal issues that arise on this application can be summarised as follows:

I deal with the Article 27 issue first as, logically, if I have to exercise the mandatory jurisdiction under Article 27 to stay the proceedings brought by Vasonia, not only will there be no need to exercise the discretionary powers under Article 28 as against Vasonia, but also the fact that there has been a mandatory stay against that claimant will be a factor that informs the exercise of my discretionary powers under Article 28 as against Nordea.

Article 27 provides as follows:

“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.”

So far as is here material, Article 30 provides as follows:

“For the purposes of this Section, a court shall be deemed to be seised:

1.

at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant ….”

Mr. Mercer, on behalf of Unicredit, argued that the Genoa Court was seised of proceedings between Vasonia, Unicredit and MF before the English court was seised of the English Claim. He argued that the correct moment of seisin of the Italian proceedings with regard to Vasonia was, at the latest, shortly after noon on 17 November 2009, when Unicredit filed its brief with the Genoa Court which included a request to the Court to order MF to join Vasonia to the Initial Proceedings. Vasonia’s English Claim against Unicredit, on the other hand, was only instituted at 21.36 hrs on 17 November 2009. That, he submitted, was the effect of Article 30 of the Regulation, because all that Article 30(1) required, in the case of the joinder of Vasonia to the Italian Proceedings, was that the request for an order for joinder be lodged with the Court. This was the document which was the equivalent to the document instituting proceedings, because it was the filing of the application for joinder. He submitted that this was wholly consistent with the policy apparent from the terms of Article 30, which was that seisin must be determined by the lodging of the relevant document. At that point, the claimant has done all he can to ensure that the court is seised.

In the alternative, and as a subsidiary submission, Mr. Mercer submitted that if (contrary to his primary submission) Italian law was relevant, then the Genoa Court was first seised on 2 November 2009, when the Initial Proceedings were issued by MF against Unicredit, notwithstanding that Vasonia was not party to the proceedings at that time.

He further submitted that the Italian Proceedings and the English Claim involve the “same cause of action”, because at the heart of each case lay consideration of the issue whether or not to order payment under the Guarantee; see e.g. Gubisch Maschinefabrik KG v Guilini Palumbo [1987] ECR 4861 at §15-16. He also argued that, on the basis of Unicredit’s Italian lawyers’ evidence, the Initial Proceedings were the same as the Final Proceedings, and that, in that context, the proceedings have the same cause of action, it being important to interpret cause of action in a manner independent of the specific legal rules in each Member State: see The Tatry [1994] ECR I -3317, §47.

He submitted that the “same parties” requirement was satisfied so far as Vasonia and Unicredit were concerned and that both the Interim and the Final Proceedings were pending.

Accordingly, he sought a mandatory stay of the English Claim pending the Genoa Court’s decision as to whether to continue the Italian Proceedings, as he accepted that there had been no decision on its part to date to do so.

Mr. John Lockey QC, leading counsel on behalf of the claimants, submitted that the English Court was the Court first seised. He argued that the obligation under Article 27 is an obligation on the court second seised and applies only where there is an identity of parties; the English court was seised of the substantive dispute between Vasonia and Unicredit on 17 November 2009, but this was before the Final Proceedings were issued in Italy. As for the Initial Proceedings in Italy, the Genoa Court was not seised of any dispute between Vasonia and Unicredit until – at the earliest – 25 November 2009 when the Genoa Court directed MF to join Vasonia, or 18 December 2009, when Vasonia was served. In any event, Vasonia was not on any basis a party to proceedings in Italy until after 17 November 2009.

Mr. Lockey further submitted that Unicredit’s Article 27 case depends on the proposition that Unicredit’s defence brief filed on 17 November 2009 satisfied the requirements of Article 30(1): i.e. was a document instituting the proceedings, or an equivalent document; but once one appreciates that the brief invited the Court to exercise its powers to order MF to join three new parties, it is impossible to hold that the brief was itself a document instituting proceedings against one of those parties or an equivalent document.

Second, Mr. Lockey submitted that the stay under Article 27 is only available where the proceedings involve the same parties and the same cause of action. He submitted that, in this context, “cause of action” has an autonomous Jurisdiction Regulation meaning, viz. – “the facts and the rule of law relied on as the basis of the action”, which requires an examination of the cause of action and its “objet” , and, as per The Tatry (supra) at paragraphs 39-40, “the end the action has in view”.

He submitted that, as at 17 November 2009, even if Vasonia was then joined, the Initial Proceedings remained an application for interim relief only, with no substantive claim on the merits. It is simply impossible to assert that the Initial Proceedings, for interim relief, concerned the same cause and “objet” as the English proceedings, for substantive relief. Accordingly, the Initial Proceedings cannot be used to satisfy Article 27.

Third, Mr. Lockey submitted that Article 27 is only available if the proceedings involving the same cause of action and same parties, in the court first seised, are still pending. Here, he submitted that, on any view, the Initial Proceedings were no longer pending; they had been determined, with the confirmation of the interim injunction in January 2010; the fact that an interested party could now apply to set aside or revoke the interim injunction did not alter the fact that the Initial Proceedings were no longer pending for the purposes of Article 27.

He also submitted that the Final Proceedings were no longer pending because of the liquidator’s failure to adopt them within the three month period following his appointment; and because Unicredit had also lost the right to reinstate the Final Proceedings because it was out of time. Moreover, even if, contrary to Vasonia’s submission, the Final Proceedings were still pending, the English Court was first seised before the Final Proceedings were issued, and so there is no power to stay the English Claim under Article 27 in favour of the Final Proceedings.

Accordingly, in order for this Court to grant a mandatory stay under Article 27, it has to be satisfied:

Moreover, although the word “pending” does not appear in Article 27 (Footnote: ¹²), it is also, in my judgment, implicit in Article 27 that the proceedings in both jurisdictions must be “pending” in order for the article to be engaged. This is obvious not only from the title to the section “Lis pendens-related actions”, but also from the application of common sense. If, for example, proceedings have been concluded, dismissed or discontinued in the first-seised jurisdiction, at the time when judgment on the Article 27 issue came to be given, there would be no lis pendens in relation to which the article could apply. This was the conclusion reached by Mance J (as he then was) in Grupo Torras SA v Al Sabah [1995] 1 Lloyd’s Rep 374 at page 418 (right column) (albeit a case on the Brussels Convention, where there was no equivalent to Article 30); see also Dicey, Morris and Collins, The Conflict of Laws, 14^th Edition, paragraph 12-062.

I also take the view, which was common ground before me, that national law is not determinative of the moment of seisin. Article 30 effectively provides an autonomous Jurisdiction Regulation regime as to when this takes place. It provides that a court is seised when “the document instituting proceedings or an equivalent document” is lodged with the court. As Beatson J said Syndicate 980 v SINCO SA [2008] EWHC 1842 (Comm) at paragraph 64:

64.

The purpose of Article 30 is to have a uniform interpretation of the date on which a court is regarded as seised. Recital 11 to the Regulation states that the rules of jurisdiction must be "highly predictable" and Recital 15 that there "must be a clear and effective mechanism for resolving cases of lis pendens". Of particular significance in the present context is the statement in Recital 15 that:

‘for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously’.

Grupo Torras SA v Al-Sabah shows that, in the context of the Convention and now the Regulation, including Article 30, any domestic procedural doctrine of relation back (such as that in CPR 17.3.4) does not apply.”

In my judgment, Unicredit’s defence brief cannot on any basis be characterised as “a document instituting proceedings” in the Genoa Court as against Vasonia or as “an equivalent document”, for the purposes of Article 30. On its terms, it was a responsive defence brief; all it requested was that MF should be ordered by the Genoa Court to join Vasonia and the other parties; it was not a summons of the type referred to in paragraph 22 of Avv. Cristoffanini’s first witness statement, whereby, after leave has been granted by the court, a defendant may issue a summons to join a third party; it was not even an application for leave for Unicredit to do so. There is nothing, in my judgment, in either side’s Italian law evidence to support the proposition that the mere lodging of Unicredit’s defence brief on 17 November amounted to the lodging of a document “instituting proceedings against” Vasonia or “an equivalent document” for Jurisdiction Regulation purposes, whether by MF or Unicredit. That the defence brief was not such a document is underlined by the fact that the Genoa Court did not require MF to serve it on Vasonia.

In my judgment the earliest date on which any document “instituting proceedings against” Vasonia, or “an equivalent document”, could possibly be said to have been lodged with the Genoa Court was on 25 November 2009 when the Genoa Court made its order directing MF to serve Vasonia so that it could be joined as a party to the Initial Proceedings . However, it is not necessary for me to decide whether, or not, such order was indeed a document satisfying Article 30, or to decide precisely when such a document was lodged. Certainly, whatever may be the position under Italian domestic law (Footnote: ¹³) as to the relation back to an earlier date of Vasonia’s joinder to the proceedings, there is no basis under Article 30 for treating the Genoa Court as first seised on 2 November 2009, when the Initial Proceedings were issued by MF against Unicredit, as Mr. Mercer sought to contend in the alternative.

Although I have reached the above conclusion independently, to a large extent based on the terms, function and stated purpose of Unicredit’s defence brief, in the context of the Italian Proceedings, my conclusion as to the application of Article 30 is supported by the following:

Accordingly, I hold that the Genoa Court was not seised of any proceedings as against Vasonia on 17 November 2009. That being so, it follows that the English Court was the Court first seised, so far as the proceedings as between Vasonia and Unicredit are concerned, as it is common ground that the English Claim was issued in the evening of that day.

In the light of my decision in relation to the first seised issue, it is not strictly necessary to decide this issue. However, since I heard full argument on the point, and in case my conclusion in relation to seisin were held to be wrong, it is right that I should state my conclusions on this issue also.

There is no dispute, at least so far as Vasonia and Unicredit are concerned, that the Italian Proceedings involve the same parties as the English Claim and that, accordingly, if Article 27 were engaged, the mandatory stay would have to be invoked as between those parties. It was also common ground that “cause of action” in Article 27 has an autonomous Jurisdiction Regulation meaning, it being important to interpret the phrase in a manner independent of the specific legal rules in each Member State: see The Tatry at §47.

It is clear from paragraphs 39 – 41 of The Tatry that, for Regulation purposes, what is required is an examination of the “cause of action” – namely “the facts and the rule of law relied on as the basis of the action”, as well as the “objet” or purposeof the proceedings, and “the end the action has in view”. Thus what is involved under Article 27 is a comparison of claim documents to see whether the causes of action in two documents are the same: see per Lawrence Collins LJ in Kolden Holdings v Rodette Commerce Ltd [2008]EWCA Civ 10 at paragraph 93, as cited in Research in Motion UK Ltd v Viso Corporation [2008]EWCA Civ 153at paragraph 36.

It is also clear in my judgment that for this purpose one has to look at the position at the date that the English Claim was issued, namely on 17 November 2009 (Footnote: ¹⁴). In my judgment it is impossible to say that, as at that date, the Italian Proceedings and the English Claim had the same purpose or end in view, or were based on the same cause of action. For the purposes of this argument, I assume, contrary to my earlier conclusion, that the Genoa Court was indeed seised of proceedings against Vasonia (as a result of the lodging of Unicredit’s defence brief) as at this date.

As Mr. Lockey submitted, as at 17 November 2009, the Initial Proceedings were merely protective proceedings, claiming provisional measures, which (it was common ground) could be brought as ancillary to MF’s claim in the arbitration proceedings. MF had disavowed any intention at that stage of invoking Italian substantive jurisdiction against Vasonia. The nature of Unicredit’s defence brief to MF’s application for interim relief was effectively an attempt at a neutral interpleader, inviting the Genoa Court to make an order that MF (and not Unicredit) should join Vasonia (and others) to the emergency protective proceedings, so that the latter, rather than Unicredit, should have to argue whether that protective relief should continue. No direct, or indirect, claim was made by Unicredit in that brief as against Vasonia to the effect that it was not liable under the Guarantee, or indeed to any other effect. On the contrary, at no time did Unicredit ever positively assert that it had any defence to Vasonia’s (or Nordea’s) claim under the Guarantee, let alone make any positive allegation of fraud or doli mali as against either. The Genoa Court itself, in its rulings dated 25 November 2009 and 28 January 2010 recognised that the Initial Proceedings were only temporary in nature and might never be followed by any trial, or by any substantive proceedings on the merits. In those circumstances, it is in my view impossible to characterise the Italian Proceedings as at 17 November 2009 as having the same object or purpose, or same cause of action, as the English Claim started later the same day. The English Claim sought payment under, and the substantive enforcement of, the Guarantee as against Unicredit, without any claim as against MF. At that date (even on the hypothesis that the Genoa Court was seised of a claim against Vasonia on that date), the only relief that was effectively being sought in the Italian Proceedings was that MF should join Vasonia as a party to MF’s claim to have the protective injunction continued.

The fact that, subsequently, in April 2010, substantive proceedings were issued by MF in the Genoa Court seeking a judgment that Unicredit was not bound to pay any amount in favour of Vasonia under the Guarantee and the Court’s determination, as between MF, Vasonia and Unicredit, of Vasonia’s rights under the Guarantee, and of Unicredit’s rights in relation to the collateral, is, in my judgment, irrelevant to the issue as to whether, as at 17 November 2009, the Genoa Court was seised of an action involving the same cause of action as the English Court. Unicredit accepts (Footnote: ¹⁵) that the Final Proceedings are “technically” separate from the Article 700 protective Initial Proceedings. Even if, as Unicredit alleges, and Vasonia denies (Footnote: ¹⁶), Italian law treats its jurisdiction over the Final Proceedings as having been “derived from” the Initial Proceedings, there is, in my judgment, no basis under the Jurisdiction Regulation for treating the Genoa Court as having been seised of the claims in the Final Proceedings on 2 November 2009, when the Initial Proceedings were commenced by MF, or on 17 November 2009.

Accordingly, I determine the “same cause of action” issue against Unicredit and in favour of Vasonia.

“Pending”: In the light of my conclusions on the above two issues, I do not consider that, in the circumstances, it is necessary for me to decide whether the Initial Proceedings or the Final Proceedings are currently pending in Italy. It seems to me that their “pending” or “non-pending” status is essentially a matter of Italian procedural law and without cross-examination of the two Italian lawyers, or, preferably, the assistance of an independent expert’s evidence on the topic, I am reluctant to decide the point. If this matter were to go further in this jurisdiction, the view of the Genoa Court, if it considered appropriate to express a view as to the “pending” issue, might be of assistance.

Article 28 provides as follows:

“1.

Where related actions are pending in the courts of different Member Sates, 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.”

In summary, Mr. Mercer, on behalf of Unicredit argued that:

In summary, Mr. Lockey, on behalf of Unicredit submitted as follows:

In my judgment it is clear from the wording of Article 28, and relevant authority, that this court has no power, or jurisdiction, to exercise any Article 28 powers to stay the English Claim, unless it is the court second seised of one of the two related actions. In other words there is no power or obligation, under Article 28, for the court first seised to stay its proceedings.

I also take the view that, in order to decide which court is first seised, one has to ask the question “since when, in the particular jurisdiction, has the court been seised of proceedings which can be described as “related” proceedings to proceedings previously, or subsequently, issued in the other jurisdiction”. This appears to be the approach adopted by Mance J in Grupo Torras SA v Al Sabah (supra) at page 418 (right column); by Burton J FKI Engineering Ltd v Stribog Ltd (supra) at paragraphs 34, 38 and 39; and by Beatson J in Syndicate 980 v SINCO SA (supra) (albeit in the Article 27 context). In my judgment this approach, linguistically consistent with the wording of Article 28, best achieves the concepts of predictability and clarity stipulated for in Recitals 11 and 15 in the Jurisdiction Regulation as well as best avoiding the risk of conflicting judgments.

Accordingly, I accept Mr. Lockey’s submission that, in order to decide whether the English Court was the court first or second seised, one has to ask oneself the question whether, as at the time the English Court was seised on 17 November 2009, the proceedings already started in the Genoa Court on 2 November 2009 could be described as “related proceedings” for the purposes of Article 28.

It is clear from the decision of the House of Lords in Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32 at 38H et seq. that the test of “relatedness” is straightforward in principle and that Article 28.3 applies an autonomous test. As Lord Saville says at pp 38H and 41F:

“The essential debate between the parties is whether the actions are related, and the debate is concentrated on whether there is a risk of irreconcilable judgments relating from the two sets of proceedings”.. and

“there should be a broad commonsense approach to the question whether the actions in question are related …and refraining from an over-sophisticated analysis of the matter”.

Further guidance is provided by the Court of Appeal in Research in Motion UK Limited v Visto Corporation (supra) at paragraphs 36-37, where the Court said:

“[i]ts effect [i.e. of article 28] is not entirely mechanical. It requires an assessment of the degree of connection, and then a value judgment as to the expediency of hearing the two actions together (assuming they could be so heard) in order to avoid the risk of inconsistent judgments. It does not say that any possibility of inconsistent judgments means that they are inevitably related. It seems to us that the Article leaves it open to a court to acknowledge a connection, or a risk of inconsistent judgments, but to say that the connection is not sufficiently close or the risk is not sufficiently great, to make the action related for the purposes of the Article. Mechanics do not, for once, provide a complete answer.”

In my judgment, applying the above common-sense, and non-mechanistic, approach to the question, the Italian Proceedings cannot be characterised as a “related action”, at any time up to and including 17 November 2009, when the English Claim was issued and the English court became seised. Although, in a very loose sense there was, as at 17 November 2009, a connection in that MF was seeking, on an interim basis to prevent Unicredit from paying under the Guarantee the beneficiary of which was Vasonia/Nordea, on the basis of allegations as to dolus etc. on the part of the latter, the Initial Proceedings consisted only of a claim by MF against Unicredit for interim protective relief, pending the determination of the English arbitration, with no substantive claim against Vasonia or Nordea. Vasonia/Nordea’s claim, in the English Proceedings, on the other hand, was a claim based on an autonomous payment obligation, on the part of Unicredit, which was contained in a Guarantee to which MF was not a party. In my judgment, although at that date there was a loose connection between the two sets of proceedings, there was an insufficient degree of relatedness between the protective claim by the customer, MF, against the bank, Unicredit, and by the beneficiary, Vasonia/Nordea against the bank.

Moreover, at that stage the possible risk of inconsistent judgments, although present, was slight. Prior to the joinder of Vasonia to the Initial Proceedings on 18 December 2009 (or, arguably, at the earliest on 25 November 2009), there was no question of any irreconcilable judgments. Even after Vasonia was added, on Unicredit’s application, to allow the case for and against interim relief to be argued, there was no real risk of irreconcilable judgments. The Initial Proceedings did not ask the Genoa Court to resolve any substantive issues, whether between MF and Vasonia, or between Vasonia and Unicredit. If the English Court were to determine, as between Vasonia and Unicredit, the substantive issue between the relevant contracting parties, and were to hold that there is no defence to Vasonia’s claim under the Guarantee, there would be no actual inconsistency with the interim injunction granted by the Genoa Court. A judgment in the English proceedings would not breach the interim injunction and would not be inconsistent with it. The interim injunction was not, and did not purport to be, a decision on the merits. It was a provisional order, made on provisional findings. It would not, per se, provide Unicredit with a defence to an English law claim.

There would have been, in my judgment, no expediency at that stage in hearing what were two entirely separate actions, between different parties, and of a different nature (one a claim for purely protective measures, the other a substantive claim), together in order to avoid the risk of inconsistent judgments.

On that basis I conclude that, as at 17 November 2009, any connection between the Italian Proceedings and the English Claim was not sufficiently close and the risk of irreconcilable judgments was not sufficiently great, to make the actions related for the purposes of Article 28.

Furthermore, I accept Mr. Lockey’s submission that the fact that the Final Proceedings, introducing a claim on the merits, were subsequently issued, (which, as already stated, bear a different action number and which are on Unicredit’s own evidence (Footnote: ²⁰) “technically separate” from the Initial Proceedings), does not, in my judgment, mean that the Initial Proceedings are to be treated for Jurisdiction Regulation purposes as having always encompassed the claim for substantive relief introduced for the first time in April 2010, after the English Court was first seised of the substantive issues. As in the Article 27 context, so too in the Article 28 context, I reject Mr. Mercer’s argument, based on the different context in Italian procedural law, that the Final Proceedings should be treated as in some way “relating back” to the date when MF began the Initial Proceedings. For reasons which I have already given, such a doctrine can have no applicability under the Jurisdiction Regulation.

Accordingly I conclude that this Court had no power to exercise any powers under Article 28 because:

For similar reasons as those set out in paragraph 68 above, I do not consider that it is necessary or appropriate for me to address (in the context of jurisdiction) the issue whether the related Italian Proceedings were pending as at the date of this judgment.

However, even if I were wrong in my conclusion that this Court had no power to exercise any powers under Article 28 on the grounds that the English Court was the Court first seised of related proceedings, and the actual position was that the Genoa Court was indeed the court first seised of related proceedings, I have concluded that, as a matter of discretion, it would not be appropriate for this Court to make any order staying the English Claim.

My reasons can be stated as follows.

It was common ground that English courts regularly had regard to what was said by the Advocate General his opinion in Owens Bank Ltd v Bracco (supra)as to the principles governing the exercise of the discretion under what is now article 28 of the Jurisdiction Regulation. In paragraphs 75- 79 ibid, he said:

“75.

The decision required in the context of article 22 of the Convention is a discretionary decision. It goes without saying that the circumstances of each individual case are particularly important here. The national courts must bear in mind that … the aim of this provision is

‘to prevent parallel proceedings before the courts of different contracting states and to avoid conflicts between decisions which might arise therefrom.’

It would therefore be appropriate in case of doubt for a national court to decide to stay its proceedings under article 22: see in this regard the judgment of the High Court (Ognall J) of 31 January 1990 in Virgin Aviation Services Ltd v CAD Aviation Services [1991] ILPr 79 in which the court held that there was a strong presumption in favour of allowing an application for a stay (see at page 88: “Commentary on the Jenard Report on article 22 signifies the strong presumption where an application is made for a stay, lies in favour of the applicant.”)

76.

Furthermore, there are three factors which may be relevant to the exercise of the discretion vested in national courts by virtue of article 22, but this does not mean that other considerations may not also be important. Those three factors are (1) the extent of the relatedness and the risk of mutually irreconcilable decisions; (2) the stage reached in each set of proceedings, and (3) the proximity of the courts to the subject matter of the case.

77.

Clearly, the closer the connection between the proceedings in question, the more necessary it would appear for the court second seised to stay its proceedings. If other factors are of some relevance to the proceedings pending before the court first seised, it may be appropriate for the court second seised not to stay its proceedings …. The more the proceedings are related, however, and the greater the risk of the courts arriving at irreconcilable decisions, the more likely it will be that the court second seised should stay it proceedings in accordance with article 22.

78.

… it is also legitimate for the court second seised to have regard, when reaching its decision regarding a possible stay, to the stage reached in the parallel proceedings. The proceedings before the court first seised should of course have reached a more advanced stage than the proceedings before the court subsequently seised of a related action. Where this is not the case, however, and where there is no prospect of a decision in the first set of proceedings, there is nothing to prevent the court subsequently seised from taking account of this when arriving at its discretionary decision.

79.

Finally, it goes without saying that in the exercise of such discretion regard may be had to the question of which court is in the best position to decide a given question ….”

However, as Rix J stated in Centro Internationale Bank AG v Morgan Grenfell Trade Finance Limited (supra) at 891-2: “there is no presumption in favour of a stay” and that “the burden of proof or persuasion is on the applicant”, where the preconditions for the Article 28 power have been satisfied. Accordingly, I accept Mr. Lockey’s submission that Unicredit bears the burden of persuading the English Court that it should stay the English Claim.

I have taken into account the following factors in reaching my conclusion that I should not exercise the Court’s powers to stay the English Claim under Article 28:

Accordingly, for all the above reasons, even if the pre-conditions for the exercise of this Court’s powers under Article 28 were satisfied, I would not, in the exercise of my discretion consider it appropriate to grant a stay of the English Claim. Unicredit’s application for a stay must be refused under this head also.

Unicredit’s application for a stay of the English Claim is dismissed.

I am grateful to all counsel and solicitors for the assistance which I have had from the written and oral presentation of the arguments on both sides.