Deutsche Bank AG London Branch v Petromena ASA

This is an application by the First Defendant, Petromena ASA (“Petromena”), for a declaration that this Court has no jurisdiction over this Claim. By the action, the Claimant, Deutsche Bank AG (“DB”), seeks declarations of non-liability in respect of claims which Petromena has brought against DB in Norway. The issue is where Petromena’s claims should proceed.

In summary, Petromena submits that its claims cannot be heard in England and should continue in Norway on the basis that:

DB, on the other hand, contends that its action should continue in England on the grounds that:

In so far as material, the relevant provisions of the Convention provide as follows:

“General provisions

Article 2

1.

Subject to the provisions of this Convention, persons domiciled in the State bound by this Convention shall, whatever their nationality, be sued in the courts of that State…..

Special jurisdiction

Article 5

A person domiciled in a State bound by this Convention may, in another State bound by this Convention, be sued:

1.

(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;

(b)

for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

- in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered,

- in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,

(c)

if subparagraph (b) does not apply then subparagraph (a) applies;

…….

3.

in matters relating to tort, delict or quasi-delict, in the courts of the place where the harmful event occurred or may occur;

…….

5.

as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

The basic facts were not materially in dispute for purposes of this hearing. Rather the dispute between the parties focused upon how Articles 5 and 23 applied to those facts. I summarise the undisputed facts as follows.

At all material times, Petromena was a holding company registered in Norway which undertook no operational activity of its own. It had four wholly owned subsidiaries, Petromena Limited, PetroRig I Pte Ltd, PetroRig II Pte Ltd and PetroRig III Pte Ltd. The first of these subsidiaries was registered in Cyprus and the other three were registered in Singapore. Petromena Limited owned an oil drilling ship (SS Petrolia), and the other subsidiaries were the owners of oil rigs which were being constructed for them at the Jurong Shipyard in Singapore. Petromena was listed on the Oslo Stock Exchange, but it is now in bankruptcy in Norway. It raised funds to finance the construction of oil rigs through its subsidiaries, which are now also in bankruptcy. Petromena was represented in the relevant events by its director, Mr Berge Gerdt Larsen, and by its managing director, Mr Lars Moldestad, both based in Norway.

DB is a German financial institution incorporated under the laws of Germany. It has a London branch, registered in London as such ("DB London"). Under English law, the place of registration of DB London, DB London is not a separate legal entity from DB. The complaints made by Petromena against DB, all relate to the alleged conduct of DB London. DB London was represented in the relevant events by Mr Ivan Capriello and Mr Håkan Wohlin. Mr Capriello is a structured credit trader and, at the time, was a director in DB London's Credit Solutions Group. He was based in London at DB London's office at 1 Great Winchester Street. From time to time Mr Capriello was assisted by Mr Wohlin, who was then the Co-Head of the Western Europe Desk in the Debt Capital Markets team and covered inter alia the Nordic market.

In about May 2006, Petromena issued a series of bonds ("the Bonds") in the amount of NOK 2 billion in order to raise funds that would be lent or contributed by Petromena to PetroRig 1 Pte Ltd and PetroRig II Pte Ltd in order to part-finance the rigs that were to be constructed for them. The terms of the Bonds were contained in a Loan Agreement dated 22 May 2006 (which I have already defined as "the Loan Agreement") between Petromena as borrower and Norsk Tillitsmann ASA ("Norsk Tillitsmann"), a Norwegian company based in Norway, as trustee ("the Loan Trustee") on behalf of the holders of the Bonds ("the Bondholders").

Clause 21.1 of the Loan Agreement contained a Norwegian jurisdiction and choice of law clause in the following terms:

“Disputes arising out of or in connection with the Loan Agreement which are not resolved amicably, shall be resolved in accordance with Norwegian law and in the Norwegian courts.”

By purchasing Bonds, Bondholders acceded to and became bound by the Loan Agreement (including the Norwegian exclusive jurisdiction clause). The Loan Agreement provided on page 3:

“Through their subscription in the Loan the Bondholders have acceded to the Loan Agreement (i.e.):

* The Bondholders are bound by the terms of the Loan Agreement provided that information about the accession was given in the subscription documents. …”

Clauses 3 and 4 of the Loan Agreement provided for the Bonds to be listed on the Oslo Stock Exchange and registered with Verdipapirregisteret (‘VPS’), a Norwegian depositary. The Bonds were registered with VPS, but in fact were never listed or traded on any Norwegian stock exchange. Sales of the Bonds were settled through the Euroclear trading platform, based in Brussels, Belgium.

The Loan Agreement provided that Bondholders could not sue Petromena directly to enforce the Bonds, but could only recover the Bonds through action taken by the Loan Trustee. Thus clause 15.5 provided that ‘the individual Bondholder cannot of his own accord recover his bond(s) directly from the Borrower’. However, the holder(s) of at least 10% of the Bonds had the right under clause 17.1(b) to call a Bondholder meeting and the holder(s) of at least 20% of the Bonds had the right under clause 15.3(a) to require the Loan Trustee by written demand to accelerate the Bonds on a defined Event of Default.

In the autumn of 2008, the Petromena Group was facing considerable financial difficulties, in that significant additional funding was required in order to complete the three rigs that were under construction in Singapore. At this time, DB, through DB London, was the holder of approximately 26.3% of the Bonds, which were trading well below par.

In or around November 2008 Mr Capriello was asked by his superiors at DB London to take over responsibility for managing a portfolio of distressed assets owned by DB London, which included approximately 26.3% of the Bonds. DB London performed an internal analysis with a view to identifying the best way to maximise its recovery in respect of its holding of the Bonds. It concluded that the optimal course would be for Petromena to obtain further funding to enable the rigs to be completed and put into operation.

Mr Wohlin approached Petromena in December 2008, stating that he was "responsible for debt capital markets in Europe for [DB], based in London", and indicating that DB was supportive of Petromena’s desire to complete the construction of the rigs and to put them into operation, since, despite the steep fall in Petromena's bonds prices, DB believed in Petromena's role in the long-term future of the ultra-deepwater market. Mr Wohlin stated that DB might be willing to provide additional debt financing in order to fill Petromena's short-term liquidity shortfall and to complete the rigs. Petromena referred DB London to its financial advisers, Pareto Securities A/S ("Pareto"). In February 2009 DB London's holding was increased to 33.4%.

Thereafter, various discussions and communications took place between DB London and Pareto (and/or Petromena) regarding the possibility of DB London participating in a new US$100 million bond issued by Petromena, which would have had a different priority ranking from the Bonds themselves. However, no such additional funding was ever agreed to be, or was in fact, provided by DB, whether through its London branch or otherwise.

According to Mr Capriello (and to some extent this evidence may be in dispute) on 26 March 2009, one of the Bondholders alerted other Bondholders (including DB London) that it had been approached by a broker, Fearnley Fonds ASA ("Fearnley"), with an unsolicited offer to purchase its Bonds. After discussions between DB London, and certain other Bondholders, and the discovery that the broker was acting for Seadrill, a major Norwegian oil drilling company and a competitor of Petromena, DB London and the other Bondholders each conditionally agreed to sell their respective Bonds to Fearnley. According to Mr Capriello, the decision to sell DB London's Bonds was made by him in London, after taking instructions from his superiors in London. DB London's sale of its Bonds was made to a Bermuda affiliate of Seadrill, through the Euroclear system. According to Petromena, the agreement for sale was made without notice to Petromena.

On 2 April 2009, DB London, in its capacity as Bondholder, sent by email a written letter to Norsk Tillitsmann, the Loan Trustee, making a demand in writing for the purposes of clause 15.3(a) of the Loan Agreement requiring the Loan Trustee immediately to declare the entire remaining Loan, including accrued interest and costs, to be in default and due for payment. Other Bondholders made similar requests. In response, on 3 April 2009, Norsk Tillitsmann, as Loan Trustee, accelerated the Bonds and declared the entire outstanding amount in default and payable in accordance with clause 15.3 of the Loan Agreement.

The three rigs which were under construction were sold between 26 June 2009 and 8 December 2009, and Petromena subsequently went into bankruptcy in Norway on 21 December 2009.

On 29 December 2011, Petromena issued proceedings against DB before the Oslo Conciliation Board in Norway. Norwegian procedural law required that Petromena's claims be submitted to a Norwegian conciliation board before they were filed in court. The Norwegian conciliation proceedings apparently had a lis pendens effect under Norwegian law: only at the end of the conciliation process may the claimant (or the defendant) bring the claim (or negative claim) in the Norwegian courts.

In the Conciliation Board proceedings, Petromena claimed compensation from DB of more than NOK7.36 billion (equivalent to approximately US$800 million). Petromena’s claim was, in summary, as follows:

In answer to the Oslo Conciliation Board proceedings, DB filed a submission to the effect that those proceedings should be discontinued on the grounds that they were unsuitable for conciliation before the Board, both in terms of the amount claimed and complexity. On 20 June 2012, the Oslo Conciliation Board determined that the claim was not suitable for conciliation and made an order that the proceedings before it be discontinued. Petromena was then free to sue in the Norwegian courts.

On 21 June 2012, DB issued the Claim Form in the present proceedings ("the English proceedings"). DB was apparently unaware at that time of the order for discontinuance which had been made by the Oslo Conciliation Board on the previous day. By its Claim Form DB sought declarations of non-liability in relation to the allegations that had been made by Petromena in the proceedings before the Oslo Conciliation Board. The claim form recited the allegations made in the Oslo Conciliation Board proceedings and sought declarations in the following terms:

“(a)

save as expressly set out in the Loan Agreement, the Claimant has assumed no obligation, duty or other responsibility, whether of a contractual, tortious, fiduciary or other nature to the First and/or Second Defendants, alternatively that any such duty, obligation or responsibility undertaken by the Claimant to the First and/or Second Defendants has been lawfully performed and discharged without breach; and/or

(b)

the Claimant has not caused and/or is not liable to the First and/or Second Defendants (whether in contract or tort, under statute or otherwise) in respect of any loss or damage that they (or either of them) have suffered, including, but not limited to, as a result of the failure of the First Defendant to obtain additional funding or to secure a restructuring of its indebtedness, or as a result of the Claimant’s instruction to Norsk Tillitsmann to declare an event of default in respect of the 9.75% Bond.”

On 5 September 2012, Petromena filed proceedings against DB before the Oslo DistrictCourt ("the Oslo proceedings") which made substantially the same claims as had been made in the proceedings before the Oslo Conciliation Board. Petromena was apparently unaware at this time of the existence of the English proceedings, as these were not served upon Petromena until 21 September 2012.

The writ in the Oslo proceedings contained the same allegations, summarised by DB in its Claim Form in the English proceedings (by reference to the allegations made in the Oslo Conciliation Board proceedings), in respect of which DB seeks a declaration of non-liability. The writ also contained various statements as to the basis of the Norwegian court’s jurisdiction over Petromena's claim. As can be seen from the extracts which I have cited below, Petromena based its assertions as to jurisdiction solely upon the basis of Article 5.3 of the Convention (leaving aside the position under Norwegian domestic law). Thus, for example, in the Oslo writ Petromena asserted:

“1.1

Subject-matter – Background

This case concerns a claim for damages from Petromena …, under bankruptcy…… against [DB].. as [their] financial adviser, based on the general law of non-contractual damages

…….

Petromena maintains that the company would have been able to arrange these supplementary financing if [DB] had complied with its responsibility as financial advisor and acted loyally, including not selling their bonds in 9.75 loan at the time in question.

Petromena will claim that [DB], as their financial adviser and as bondholder, acted with negligence giving rise to entertaining liability in relation to Petromena, and the bank is thus liable to cover Petromena's losses due to this negligent behaviour.

1.2.1

Legal venue

As this is a dispute between a Norwegian and a German joint-stock company for damages outside contract, the legal venue – and thus which country’s court has competence to consider and decide in this matter – is determined by the Lugano Convention.

As this is a claim for damages outside contract[tortious damages], legal proceedings must be instituted at the place where the harmful event occurred ... cf. The Lugano Convention Art. 5.3 and the Dispute Act Section 4-5.3.

The damage arose in Norway through DB’s advice, actions and omissions in relation to Petromena, a Norwegian joint-stock public company with its registered place of business in Norway. DB’s negligent actions lead to the termination of Petromena’s bond loan, a loan subject to Norwegian law.

The effects of the harmful event definitively occurred in Norway, whereby Petromena, a Norwegian joint-stock public company with shares quoted on the Norwegian Stock-Exchange, lost the majority of its assets through the bankruptcy, which was instituted in Oslo and where the bankruptcy proceedings are still in progress.

Based on the above, Petromena presumes that Oslo is the correct forum for the legal proceedings against DB.

5.1

Claim for damages

Petromena will assert that DB has acted negligently in relation to Petromena, and that the bank through its negligent actions has caused a financial loss for the company, equivalent to the total value of the company.

In accordance with the general law of tortious damages, the claim for damages is conditional on Petromena substantiating that there is a basis of liability, i.e. a liability-inducing act or omission on the part Petromena of DB.” [Emphasis added.]

DB challenged the jurisdiction of the Norwegian court on lis pendens grounds, relying on its issuance of the English proceedings. On 19 February 2013, the Norwegian court upheld DB’s challenge and stayed the Norwegian proceedings under Article 27.1 of the Lugano Convention. The Norwegian court agreed with DB that:

I was told that Petromena intends to appeal the Norwegian court’s decision and to persuade the higher Norwegian courts, including the Norwegian Supreme Court if need be, that Aftenposten was wrongly decided. Petromena intends to argue that the Norwegian conciliation proceedings and the Norwegian court proceedings are the same ‘proceedings’ under Article 30.1, so that the Norwegian courts were seised on 29 December 2011 and were thus seised first, ahead of the English court. Petromena contends that Aftenposten necessarily has the consequence that every defendant to Norwegian proceedings may be able to shift the proceedings to another European forum by seeking negative declaratory relief abroad during the compulsory conciliation process. Petromena expects that the whole appeal process will take up to 12 months.

Under Article 27.1, the Norwegian proceedings have been stayed pending this court’s decision on jurisdiction. If this court finds that it has jurisdiction, and the Norwegian decision stands on appeal, the claim will continue here; but if this court finds that it does not have jurisdiction, the proceedings will continue in Norway.

Petromena's position in relation to the issue of jurisdiction has materially changed over time. As I have already mentioned, in its writ in the Oslo proceedings, Petromena’s position was that the Norwegian courts had jurisdiction over its claim solely upon the basis of Article 5.3 of the Convention (leaving aside the position under Norwegian domestic law) on the grounds that Petromena's claim was a negligence "claim for damages outside contract[tortious damages]"; see pages 2 and 3 of the Oslo writ quoted above.

Given the formulation of the facts of the claim in the Oslo writ, and the terms of Article 5.3, it was, as Mr Richard Handyside QC, leading counsel for DB, submitted, perhaps not surprising that Petromena originally characterised its claims against DB as relating to tort, delict or quasi-delict. The essence of those claims, as set out in the writ in the Oslo proceedings, was that DB, through its London branch (i.e. DB London), had voluntarily taken on the role of financial adviser to Petromena, and that DB had breached various duties that it assumed or owed to Petromena in its capacity as financial adviser. There was no suggestion in the Oslo writ that the claims made therein arose out of, or in connection with, any contract between the parties, whether the Loan Agreement, or otherwise. On the contrary, as the emphasised words quoted from the Oslo writ show, the claim was for damages "outside contract [tortious damages]". Accordingly, there was no attempt by Petromena in the Oslo proceedings to rely upon either Article 23 of the Lugano Convention in order to confer jurisdiction on the Norwegian court pursuant to the jurisdiction clause contained in that agreement, or upon Article 5.1 on the grounds that the dispute involved "matters relating to a contract".

However, from the date of the issue of Petromena's jurisdictional challenge to the English proceedings, Petromena changed its position. Although the way in which Petromena presented its various arguments vacillated over the course of three witness statements served by Petromena's solicitor, Richard East (a partner in Quinn Emanuel Urquhart & Sullivan UK LLP), by the date of the actual hearing of Petromena's jurisdictional challenge, Mr David Wolfson QC and Mr Henry Forbes Smith, Petromena's leading and junior counsel, presented its case as follows.

Petromena's primary argument (contrary to the assertions made in its writ in the Oslo proceedings) was that the claims which it has made in those proceedings, and the mirror English proceedings issued by DB, were properly to be characterised not as matters relating to tort, delict or quasi-delict within the meaning of Article 5.3, but rather as "matters relating to a contract" within the meaning of Article 5.1. In consequence Petromena contended that the English court did not have jurisdiction because England was not “the place of performance of the obligation in question” for the purposes of Article 5.1, but rather Norway was. In detail, Petromena submitted as follows in relation to the issue as to whether its claims related to a contract:

Petromena's submissions in relation to the place of performance of the obligation in question were as follows:

Petromena's secondary argument was as follows:

A belated attempt was made by Petromena to reconcile the inconsistency between the positions which it had taken respectively in Norway and England. On 27 February 2013, some hours after Petromena’s skeleton argument had been served, DB received a two-page witness statement from one of Petromena’s Norwegian lawyers, in which it was said that, despite how the claim had been put in the Oslo writ, Petromena intended to contend before the Norwegian court “so far as necessary” that its claim against DB is one of “concurrent liability in tort and contract”, thus entitling the Norwegian court to exercise jurisdiction under Article 5.1 of the Convention.

In broad summary, Mr Richard Handyside QC and Mr David Murray, leading and junior counsel for DB, submitted as follows.

Article 5.1 of the Lugano Convention did not apply to the factual circumstances of Petromena's claims. In particular:

In any event, however, even if Petromena were correct to say that the claims it sought to pursue in Norway were “matters relating to a contract” and therefore within the scope of Article 5.1, “the place of performance of the obligation in question” was, plainly, England. In particular:

DB's primary submission remained that the English Court had jurisdiction under Article 5.3 of the Convention, on the basis that the place where the harmful event alleged by Petromena occurred was England. In particular Mr Handyside QC submitted:

DB submitted that the Norwegian jurisdiction clause contained in clause 21 of the Loan Agreement was irrelevant. Petromena's argument that the present proceedings fell within the scope of the clause was not only inconsistent with what was stated in Petromena’s writ in the Oslo proceedings, but was also misconceived. The claims made by Petromena against DB did not arise out of or in connection with the Loan Agreement. The causes of action asserted by Petromena were not founded upon any provision of the Loan Agreement. Rather, they were founded upon an allegation that DB assumed the role of an adviser to Petromena, in addition to its role as bondholder. It was DB’s (alleged) assumption of the role of adviser to Petromena, rather than any term of the Loan Agreement, that was said to have given rise to the various duties that were allegedly breached. The words “arising out of or in connection with” were not without limits. DB’s claims in the present proceedings fell well outside them.

DB also submitted that, although it would not be appropriate for this Court to rule upon the jurisdiction of the Norwegian courts, Petromena’s attempt to rely, in the Oslo writ, upon Article 5.3 of the Convention to confer jurisdiction upon the Norwegian courts, was without foundation. DB so submitted on the basis that the loss claimed by Petromena was derived from the loss of value of the drilling contracts that it claimed would have been performed using the rigs; however, the evidence showed that the rigs were not owned by Petromena, but were owned by subsidiaries of Petromena that were incorporated in Singapore or Cyprus; further, the drilling contracts were entered into by another company, Larsen Oil and Gas UK Inc, on behalf of Petromena’s rig-owning subsidiaries.

Mr Handyside QC submitted that, as Mr East confirmed in his second witness statement, Petromena’s own alleged loss was based upon the (alleged) diminution in value of its shareholdings in its subsidiaries, which was in turn caused by the insolvency of the subsidiaries and the sale of their rigs. Mr Handyside submitted that Petromena’s indirect loss was not jurisdictionally significant – in other words, it did not ‘count’ for the purposes of Article 5.3: see Briggs & Rees, paragraph 2.184, citing Dumez France SA v Hessische Landesbank (Case C-220/88) [1990] ECR I-49. Mr Handyside submitted that it followed that Article 5.3 could not confer jurisdiction upon the Norwegian courts and that, accordingly, Petromena should have brought any proceedings against DB either in England pursuant to Article 5.5 of the Convention or in Germany pursuant to Article 2.

It was effectively common ground that the burden was on DB to show a good arguable case that the jurisdictional facts upon which it relied for the purposes of demonstrating that the English Court had jurisdiction existed (whether under Article 5.1 or Article 5.3) and that this meant that DB had to have a much better argument than Petromena on the material before the court for this purpose. As Lord Rodger said in Bols Distilleries v. Superior Yacht Services [2007] 1 WLR 12, at [28]:

“…it appears to be Board that, if the standard of "a good arguable case" is properly understood and applied, there is no risk that the effectiveness of the Regulation will be impaired. The rule is that the court must be satisfied, or satisfied as it can be having regard to the limitations which an interlocutory process imposes, that factors exist which allow the court to take jurisdiction. In practice, what amounts to a "good arguable" case depends on what requires to be shown in any particular situation in order to establish jurisdiction.”

See also per Toulson LJ (as he then was) in WPP Holdings Italy v. Benatti [2008] 1 Lloyds Rep 396, at [37] - [44].

It was likewise not in contention between the parties that DB, as a claimant seeking declaratory relief as to its non-liability, is entitled to rely on the jurisdictional facts which Petromena was asserting against DB in the Norwegian proceedings, notwithstanding that DB denies the claim. It is, however, instructive to bear in mind what Saville LJ said in Boss Group at 357B in this respect (in relation to a case where the plaintiff was seeking to establish the English court's jurisdiction on the basis of Article 5.1, notwithstanding that it denied that any such contract existed):

“To my mind there are “matters relating to a contract” in the present case. There is a lively dispute between the parties as to whether there is a contract between them under which the defendants are the exclusive distributors for the plaintiffs in France. It is true that the plaintiffs, who seek to sue here, are asserting that no such contract exists, but equally the defendants are asserting the contrary. In my judgment, the fact that it is this way round does not make the article inapplicable. Article 5(1) is not confined to actions to enforce a contract or to obtain recompense for its breach, but refers generally to “matters relating to a contract.”

The defendants submit that assertions are not enough, since the court must be satisfied that the essential prerequisites for jurisdiction exist. Building on this, they submit that it is incumbent on a plaintiff to satisfy the court at least that there is a “good arguable case” that such prerequisites do exist, and rely on authorities such as New England Reinsurance Corporation v. Messoghios Insurance Co. S.A. [1992] 2 Lloyd's Rep. 251 for that proposition. Since the plaintiffs are claiming that there was no contract, the defendants submit that it inevitably follows that the plaintiffs cannot fulfil this requirement.

I agree with the premise on which this argument is based, but to my mind the conclusion does not follow. The article allows a party to be sued in matters relating to a contract in the courts for the place of performance of the obligation in question. That party in the present case is the defendants. It seems to me that it is entirely illogical and wrong for that party to assert that there is a contract and that the plaintiffs have broken it (which is what the defendants have done in France, where they have themselves relied on article 5(1)) whilst simultaneously contending the contrary here in order to avoid the application of article 5(1). To my mind, in a case such as the present, the plaintiffs establish a good arguable case that there is a matter relating to a contract by relying on the fact that this is what the defendants are contending against them. Unless the defendants withdraw their contentions (which they have not done) it seems to me that they cannot challenge the jurisdiction on the basis that they should not be sued here because there is (contrary to those contentions) no contract. Once one has removed the self-contradictory stance taken up by the defendants, it seems to me that it is self-evident that there are matters “relating to a contract” between the parties.”

The present case is not on all fours with Boss Group since: (a) Petromena is now additionally contending that there was indeed a contract between the parties (and intends so to argue in the Oslo proceedings); (b) DB itself in its claim form is seeking a negative declaration that it has no contractual liability; and (c) as the authorities referred to in paragraph 32 (v) above demonstrate, and as Mr Handyside accepted, Articles 5.1 and 5.3 are mutually exclusive, so that, if the case falls within Article 5.1, it necessarily does not fall within Article 5.3, because it is not possible for the same issue to be classified under both heads.

Although I was originally tempted to do so, on the grounds that, at the time that jurisdiction was seised by the English court, the only basis upon which Petromena had formulated its claims was in tort, I do not propose to conclude that Petromena is bound by its characterisation of its claims in the Oslo proceedings and thus precluded from arguing the point that the existence of special jurisdiction is exclusively determined by Article 5.1. The correct characterisation of a claim for the purposes of the Convention must necessarily be an objective one which is reached by the court determining the jurisdiction issue. Nonetheless, necessarily Petromena’s original, and apparently firm, view as to the nature of its claims is a factor which I have taken into account in my characterisation of its claims.

As was common ground, the expression "matters relating to a contract", as used in Article 5.1 of the Convention, has an autonomous meaning. But my analysis of the European Court authorities does not go anywhere near to supporting Petromena’s assertion that Petromena's claims are to be characterised as "matters relating to a contract". While Article 5(1) does not require the conclusion of a contract which is valid under any particular system of national law, it does require that the obligation in question should have arisen by virtue of an agreement. Petromena's contention that, where an alleged obligation was "freely entered into", that requirement is sufficient for the purposes of Article 5.1, is not sustainable; its approach would annihilate the difference between contractual and tortious obligations. Moreover none of the authorities cited support the proposition.

Thus in Handte a manufacturer sold a piece of machinery to a buyer, who had sold it on to a sub-buyer. When the machine proved to be unfit for the purpose for which it had first been sold, the sub-buyer sued the manufacturer in the French courts, where the claim was held to be a contractual one. But the ECJ disagreed on the basis that there was no "undertaking freely entered into by one party in relation to another". As explained in Briggs & Rees at paragraph 2.14:

“In Handte the manufacturer had not, so far as he knew, entered into any form of undertaking to or with the sub-buyer, with the result that the sub-buyer’s relationship with him, and claim against him, was not one which related to a contract. That was so even though the original contract of sale had triggered the dispute, and the claim in some sense⁴ related to it, and even though the French courts would have understood the claim of the sub-buyer to have been contractual in nature. It follows that “matters relating to a contract” will describe cases which can be said to be founded on an agreement between claimant and defendant. However, it does not necessarily follow that every case in which there is such an agreement, or involves the voluntary assumption of a risk by one in relation to another, proceedings between the parties are to be seen, for special jurisdictional purposes, as brought in a matter relating to a contract.

At a general level, the decision in Handte may be thought to have been supported by the distinction found in civilian systems between contractual and non-contractual obligations⁵. In French law in particular there is a distinction between “contracts, or obligations arising from agreement in general”,¹ “obligations which arise without agreement”.² It is, therefore, part of the infrastructure of French law to distinguish between obligations which arise from the agreement the parties made (which are seen as being contractual), and those where the law attaches consequences to the act of a person (which are seen as being non-contractual).

⁴Cf for a very different approach to a rule worded similarly, Greene Wood & McLean LLP v Templeman Insurance Ltd [2009] EWCA Civ 65, [2009] 1 CLC 123.

⁵ That article 5(1) is confined to the law of obligations appears to follow from the decision in C-261/50 Reichert v Dresdner Bank (No 2) [1992] ECR I-2149, discussed at paras 2,172 et seq., below, for the further view, that Rome I and Rome II regulations divide the whole of the law of obligations into contractual and non-contractual, see below para 2,172.

¹ Covered by Articles 1101-1369 of the Civil Code.

² Covered by Articles 1370-1386.”

In other words, as emphasised by Briggs & Rees, the critical feature is that the obligation assumed has to be based, or founded, upon some sort of consensual agreement, notwithstanding that it may not be a contractually binding one. In Handte the Court effectively held that in the absence of any agreement or "contractual link" between seller and sub-purchaser, the case did not relate to a contract for the purposes of Article 5.1 notwithstanding that the point in issue related to whether the machinery was fit for the purpose for which it had originally been sold.

Nor do the other cases cited by Mr Wolfson assist Petromena's submission that these were claims which should be characterised as "matters relating to a contract" and that Article 5.1 does not in fact require an agreement between the parties. In Engler, the essence of the Court's reasoning was that the claimant was the recipient of a unilateral prize offer made by the defendant in circumstances where, if the offer was accepted by the claimant’s conduct in claiming the prize, a contractual type-relationship would come into existence between the parties, which was sufficient to engage Article 5.1; see paragraphs 51-56. Indeed, paragraph 56 could be read as suggesting that only from the moment of acceptance of the offer in such a case was Article 5.1 engaged. But that latter factual point (i.e. whether or not a unilateral offer had actually been accepted) is not an essential one for the purposes of Mr Handyside’s argument that no assistance can be derived in the present case from Engler.

Likewise no assistance can in my view be derived Ilsinger. That was a case which did not concern Article 5.1, but rather Article 15 (which relates to consumer contracts). It concerned a unilateral offer to pay a prize which had been notified to the claimant consumer and which she had accepted by sending off the coupon attached to the offer to the mail order company - a situation where the Court considered that there had indeed been a concluded contract (which was a necessary prerequisite for the purposes of Article 15). The remark upon which Mr Wolfson relied was in paragraph 57 of the judgment, where the Court was contrasting the situation in the case before it, where a contract had been concluded, with one where, in a similar situation involving an offer of a prize, no contract had actually been concluded. The Court said:

“In that latter case, such a situation would at least be liable to be classified as pre-contractual or quasi contractual and might therefore, where appropriate, be covered solely by Article 5.1 all that regulation [ Regulation No 44/2001], a provision which must be acknowledged as having, on account of its wording and its position in the scheme of that regulation, a broader scope than that of Article 15 thereof (see, by analogy, with regard to the Brussels Convention, Engler, paragraphs 44 and 49).”

However, that statement cannot in my view be regarded as laying down a rule that there is no requirement under Article 5.1 that there should be some sort of actual or envisaged agreement or consensus between the parties, which gives rise to the relevant obligation, albeit that the agreement itself may be at the pre-contractual stage or not contractually concluded.

The claim advanced in the Norwegian proceedings is not based on any form of agreement between DB and Petromena, whether contractual or otherwise. The claim is rather that DB foisted itself upon Petromena and undertook unilaterally to act as its “advisor”, in order to mitigate its own exposure to Petromena’s bonds. The essence of the claim is that DB London became active (along with other bondholders) in Petromena’s restructuring discussions with the Loan Trustee in relation to the possibility of a refinancing to fund the completion of the construction of one or both of the rigs, and that such participation in some way gave rise to an obligation imposed upon DB not to sell its Bonds. That this was the substance of the claims was supported by the correspondence between the parties which was in evidence before me. The facts, whether as pleaded by Petromena in the Oslo proceedings, or asserted by its witness statements in the English proceedings, simply do not rely upon allegations that DB was acting pursuant to any form of agreement between the parties or that Petromena accepted any kind of offer from DB. Moreover, as Mr Handyside submitted, whilst the absence of consideration is not necessarily fatal to the engagement of Article 5.1, it is nonetheless relevant to the proper characterisation of the parties' relationship that DB was not to be paid for its alleged "services".

In conclusion, neither the formulation of Petromena’s claim in the Oslo proceedings, nor the evidence before this Court, in any way supports Petromena’s assertion that its claim falls to be characterised as one involving "matters relating to a contract". The mere fact that DB, in its claim form, sought to include a negative declaration that it had no liability in contract cannot, in my view, on its own bring the claim within Article 5.1.

Nor, contrary to Mr Wolfson's submissions, is this, in my judgment, a case where, on the case as pleaded in the Oslo proceedings, or as amplified in the evidence before me, there is any genuine parallel liability in both contract and in tort, such as that referred to by Briggs & Rees at paragraph 2.153 and quoted above. Whilst Briggs & Rees suggest, in the second limb of the passage cited that, in the context of negligent misstatement (such as was the case in Hedley Byrne), where there is "privity" - i.e. direct contact - between the advice-giver and advice-recipient, Article 5.1 is engaged, no authority is supported for the proposition, which was in effect the high watermark of Mr Wolfson's case in this context. Furthermore, apart from the absence of any pleading of an agreement between the parties, this was not a negligent misstatement case.

Petromena’s last-minute attempt to assert that it will seek to rely upon both alleged contractual, as well as tortious, claims in the Oslo proceedings cannot detract from the fact that, at the time the English court was first seised, Petromena’s claims were fairly and squarely grounded in tort. Whilst I accept (without deciding the point) that this is not ultimately determinative, it nonetheless is a factor which I have relied upon in reaching my conclusion.

But, even on the assumption that I were wrong in reaching the conclusion that Article 5.1 was not engaged, I accept Mr Handyside's alternate submission that, for the purposes of Article 5.1, the place where the services were provided under the "contract" alleged by Petromena was England.

The case of Wood Floor Solutions, relied upon by DB, establishes inter alia the following propositions relevant to the identification of the place where services are deemed to have been provided:

Since there is no evidence of any contract having been concluded in the present case, nor of any term prescribing where performance is to take place, the provisions of the contract provide no assistance in this respect. What the evidence before this Court does clearly show, however, is that the place where DB for the most part carried out its activities in relation to the matters in issue in the proceedings was London. The relevant DB employees spent the overwhelming majority of their time in London, and carried out nearly all of their activities there. I accept Mr Handyside's submission that it is immaterial that Petromena may have received DB’s alleged "advice" in Norway. The focus, according to Wood Floor Solutions, is where the relevant work was done by the provider of the service. The location of the recipient of the service is insignificant.

Accordingly, even if, contrary to my primary conclusion, DB's claim is to be characterised as raising "matters relating to a contract" for the purposes of Article 5.1, I conclude that the English court has special jurisdiction over the claim pursuant to the second indent of Article 5.1 (b).

It necessarily follows from my conclusion in relation to Article 5.1 that both DB's claim for negative declaration and Petromena’s claims in the Oslo proceedings fall within Article 5.3 - there can, in my view, be no doubt that they are claims in tort/delict.

The issue which arises for the court's determination is whether, for the purposes of Article 5.3, DB can establish that England is "the place where the harmful event occurred", so as to engage the jurisdiction of the English court. It was common ground that these words had an autonomous European meaning.

It was also common ground that, in the light of Bier, a claimant was entitled to choose to sue either (a) in the courts for the place where the damage occurred; or (b) in the courts for the place of the event giving rise to the damage; see Briggs & Rees, paragraph 2.183. There was no question here of Petromena having suffered any damage in England, and thus the debate in the evidence as to where Petromena had in fact allegedly suffered damage was irrelevant. There was thus no issue as to whether the first limb of Bier was engaged - it demonstrably was not. The issue for the court's determination was whether DB could successfully argue that the second limb was engaged and that England was the place where the event giving rise to the damage had (allegedly) occurred.

The first factor which I take into account is that, in its writ in the Oslo proceedings, Petromena clearly alleges that DB renders its services from London; see, for example, paragraphs 5.2 and 5.4.2 of the writ. The second factor which I take into account is that, on my reading of the relevant e-mail correspondence in evidence before me, it is obvious that all communications from DB formally emanated from DB London, irrespective of where the sender of the particular e-mail was on the particular date; for example, the summary of the indicative term sheet in relation to DB’s proposed underwriting of a new $100 million bond, appended to Mr Wohlin's e-mail dated 20 January 2009, (in addition to stating that the indicative term sheet was "intended for information and discussion purposes only and is not an offer, advice, recommendation or commitment of any kind") made it absolutely clear that the proposal was one emanating from DB London and that the term sheet was

"not intended to, and shall not give rise to, any legally binding obligations on the part of Deutsche Bank AG, London branch and/or its affiliates"

and that it should be governed by and construed in accordance with English law.

None of the cases relied upon by Mr Wolfson persuaded me that England was not the place where the event giving rise to the damage had (allegedly) occurred, even applying the standard that DB had to demonstrate that it had the much better argument than Petromena on the material before the court.

Mr Wolfson submitted that, where the damage occurred in more than country, the courts of each country might have Article 5.3 jurisdiction under the first limb of Bier; but, under the second limb of Bier, where the events giving rise to the damage were spread across state borders, the damage caused would be held to be localised in a single state which alone would have Article 5.3 jurisdiction, and that a "centre of gravity approach" would be applied to identify the relevant state with jurisdiction. On the other hand, Mr Handyside submitted that none of the cases established that, under the second limb of Bier, only one court could have jurisdiction. I do not consider that, for the purposes of this application, it is necessary for me to resolve this issue of European law. On either basis, the cases relied upon by both counsel support the proposition that, in the particular circumstances of this case, the events giving rise to the damage, for the purposes of the second limb of Bier, occurred in England.

Thus:

I accept Mr Handyside's submission that the exclusive jurisdiction clause in the Loan Agreement has no relevance to the present dispute. The current dispute does not relate to anything arising out of or in connection with the Loan Agreement. There is nothing in the formulation of Petromena's claims in the Oslo writ, or as amplified in the English proceedings, which suggests that DB's alleged breaches of duty are in contravention of, or amount to breaches under, the provisions of the Loan Agreement. Rather, the causes of action asserted by Petromena are founded on an allegation that DB assumed the role of an adviser to Petromena, in addition to the former's role as bondholder. As Mr Handyside submitted, the words "arising out of or in connection with" in the jurisdiction clause must be construed as subject to some sort of limitation.

Accordingly I reject Petromena's argument based on the exclusive jurisdiction clause in the Loan Agreement.

I do not consider that it is appropriate for me to rule upon the issue as to whether the Norwegian Courts have any jurisdiction. That is a matter exclusively for the jurisdiction of those courts. Accordingly I do not address Mr Handyside's submissions in relation to this issue further.

It follows that I dismiss Petromena's application for a declaration that the English court has no jurisdiction to hear this claim.