LLC Eurochem North-West 2 v Societe Generale SA & Ors

The starting point is that there is a good deal of authority that a “person who would not otherwise be subject to the jurisdiction of the court may be precluded by its own conduct from objecting to the jurisdiction, and thus give the court an authority over him which, but for that submission, it would not possess”. Dicey (16^th ed) at 11-063. The principle holds good both for defendants and for claimants; but to different extents because of the difference in their positions.

By instituting proceedings claimants are treated as having conferred on the Court jurisdiction to entertain counterclaims against them, even where permission to serve out might not be obtainable under CPR Part 6 were separate proceedings to be brought in respect of those cross claims: Dicey 11-064. In Balkanbank v Taher (No 2) [1995] 1 WLR 1067, CA Saville LJ said at 1072:

“it would also seem in general terms to be only fair and just that those who choose to bring proceedings in this country should be open to suit in return, so that any submission which involves the proposition that a party can seek relief in our courts without running the risk of being sued in return necessarily requires, in the interests of justice, to be very closely examined.”

This is consistent with the reality that a party instituting process in England and Wales must be taken to understand the incidents of litigating under the CPR, including that the Court’s practice is to hear claims, cross claims and additional claims together where the nexus between them is such that the ends of finality, efficiency and fairness are likely to be served by that procedural course.

As to the position of defendants, it was common ground that:

This all forms background to the highly unusual situation where we confront a party who has previously applied to intervene in or be joined to proceedings as a defendant – albeit an NCAD. The parties are agreed that there is no direct authority on this point but are at odds as to the result.

ING submits that an intervener should, like a claimant, be fixed with an appreciation of the Court’s procedures and practices, and in particular the Court’s willingness to entertain so-called “additional claims” against defendants, including – paradigmatically – claims for contributions and indemnities within the framework of Part 20.

As already noted, Tecnimont's written submission on this point was skeletal almost to the point of invisibility. Orally it submitted that the references to Briggs were to some extent misplaced because the passages cited relate to the Lugano convention and are to do with entering appearance not submission. Substantively it did not take serious issue with the tests set out above, but laid emphasis on the Maple Leaf analogy, arguing that its position was more akin to that of a defendant than a claimant and that it did not submit regarding the claim when it entered an appearance as an interested party. It emphasised that it did not invoke the court’s jurisdiction. As Mr Maclean KC put it: “it was not our choice to be involved in proceedings in England … our commercial interests demanded that we show up.” In essence Tecnimont’s position was that it was not willing in the relevant sense.

On this issue I am quite persuaded that ING is correct. The authorities seem clear that for the willing participant submission cannot be done by halves. A good example can be seen in the case of Glencore International A.G. v Exter Shipping Ltd [2002] EWCA Civ 528. That was a case where there were proceedings in England and an anti-suit was sought on the basis that US proceedings were vexatious in that they duplicated issues in the English proceedings in which all of the respondents were involved and were claiming or counterclaiming against the applicant. The respondents argued that the court had no jurisdiction to grant such an injunction since, as a result of various settlements and discontinuances, the issues raised in the US proceedings no longer formed any part of the English proceedings. At [45] Rix LJ said:

“In my judgment a distinction has to be made between the case of a foreign party who invokes the jurisdiction of the English court by claiming here, and the case of a foreign party who is brought to this jurisdiction by answering a claim within England's long−arm statute (formerly RSC Order 11 and now CPR 6.20). In the first case the foreign claimant submits himself willingly to the jurisdiction. He does so, and in my judgment must do so, without reservation, and is subject, so far as territorial jurisdiction is concerned, to all the incidents of litigation in this country, including, for instance, his amenability to a counterclaim. He cannot say: ‘I came here only for the purpose of my claim. I am not willing to accept this jurisdiction for the purpose of my defendant's counterclaim.’ ... In the second case, however, the foreign defendant is brought here against his will and … can limit his submission to the jurisdiction and prima facie is regarded as doing so on a claim by claim basis. I believe that the authorities to which the court has been expressly or implicitly referred in this appeal are consistent with this distinction.”

There is force in ING’s argument that those who start or consent to join proceedings in England and Wales are willing participants, and it is that willingness which justifies a more expansive approach to “submission” than the claim by claim analysis applied to unwilling participants in proceedings.

Reference was made to sections of Briggs dealing with foreign judgments, where the author posits that while in general a claimant will be taken to have opened himself to a counterclaim, there may be limits to the principle, particularly in circumstances where it may be mere happenstance whether a party is claimant or defendant. Briggs in this context suggests a quasi “plums and duff” approach:

“It would be rational to limit the extent of this automatic or deemed submission to claims which are in some way related to the claim made … to those matters to which a fair minded [person] would say that [it] had laid itself open.”

Standing back and viewing this case in the light of the principles, there is no reason why a litigant who applies to join as a defendant should be in a different position. Like a claimant that litigant has volunteered to be part of proceedings here. Like a claimant it thereby renders itself amenable in principle to such claims as the Court considers ought to be heard against it simultaneously. This approach of calibrating by willingness was urged by ING and was not really disputed as an approach by Tecnimont, its submission being that it was not willing in the right sense. But if willingness is indeed the right dividing line – as the authorities would seem to suggest, Tecnimont offered no principled division to calibrate between relevant and irrelevant willingness. This is not a promising start.

This would be the case even before one looks at the facts. When one does so it becomes particularly difficult for Tecnimont to evade the conclusion that it has submitted generally. The facts have been outlined above, but the following points emerge and are relevant here.

Tecnimont was already involved in proceedings in this jurisdiction: the arbitration with EuroChem (under the Construction Contracts). It seems likely that the reason EuroChem had not joined Tecnimont to the Main Proceedings against the Banks was because on the face of it any dispute between it and Tecnimont had to be resolved in the London-seated arbitration.

The potential claim by ING against Tecnimont was plainly present to Tecnimont’s mind. The stated basis for Tecnimont’s application was that: (i) “it is desirable for [sc Tecnimont] to be joined so the court can resolve all the matters in dispute in the [sc Main Proceedings]” and (ii) “there is an issue involving [sc Tecnimont], the Claimant and the Defendants which is connected to the matters in dispute in the [sc Main Proceedings], and it is desirable for [sc Tecnimont] to be joined so that the court can resolve that issue”. Tecnimont’s evidence in support of its joinder application expressly identified the connection between Tecnimont’s obligations under the Facility Agreement and ING’s potential liability in the Main Proceedings, as follows:

“The bonds issued by the Defendants are in turn secured by way of counter-guarantees issued by the Applicants through other banks. If the Defendants are found liable to pay the Claimant in response to a call on the Bonds, the counter-guarantees will be, or are more likely to be, called upon… the Applicants have (by reason of the counter-guarantees) a significant financial interest in the outcome of the Bank Proceedings”.

It is also quite clear from the submissions made that Tecnimont regarded entry into these proceedings as necessary. That was echoed before me by Mr Maclean: “ our commercial interests demanded that we show up and lead the cheering for the banks in those proceedings.”

Having taken that approach and joined the proceedings Tecnimont has not sat on the sidelines and simply cheered. It has played an active role:

It follows from these facts that on any view Tecnimont must be seen as a “willing” participant and that its actions amply meet the “disinterested bystander” test, as well as that of willingness. It sought joinder. It indicated no hedge or limitation to its entry into proceedings which it itself said were proceedings which “can resolve all the matters in dispute”. It actively participated. The Facility Agreement was integral to the issues and was indeed invoked as a reason for entry.

Even if the willingness analysis were not to be accepted as the test, and even if Tecnimont were to be regarded as partaking more of the character of defendants than claimants, in my judgment they would still fall the side of the line which would indicate that the claim against them should proceed. This is a case where the claim advanced is not different to that which prompted entry into the proceedings. It is the very claim which motivated that entry. This is a million miles from the situation where a defendant enters an appearance to a claim in contract, which is later abandoned and a claim in (say) nuisance advanced in its place. It is a country mile from the interpleader cases where the nature of the proceedings puts substantive claims in a different basket to the interpleader claims. This is a case where it cannot sensibly be said that the claim is distinct. This is truly a “plums and duff” case. Tecnimont has entered the litigation for its commercial interest – to secure the plums of resisting the claim which would trigger the indemnity; it must therefore take the duff of the corresponding indemnity claim.

I note that, as ING submitted, the result accords not only with common sense but with the scheme established by Part 20.6 and Part 11. Jurisdiction challenges pursuant to Part 11 are structured by reference to the service of claim forms and the filing of acknowledgements of service. Yet Part 20.6 read with CPR Rule 20.8(2) makes clear that no claim form is needed where an existing party is to be served with an additional claim, and there exists no High Court Form for the acknowledgement of service of a Part 20.6 claim. This would seem to reflect the fact that logically any existing foreign party to proceedings is already properly before the Court; either because permission to serve them out of the jurisdiction has been granted or because they have submitted to the jurisdiction by entry of appearance at common law, or made a statutory submission under Part 11. It is not suggested that ING was obliged to seek permission to serve the Part 20 Claim out of the jurisdiction.

I should note that no specific reference was made to the cases of Commonwealth of Australia v Peacekeeper International [2008] EWHC 1220 (KB) and Stephenson Harwood LLP v Medien AG [2020] EWCA (Civ) 1743 [2021] 1 WLR 1775 (footnoted in Dicey). This absence might at first blush seem strange since they both concern interpleader/stakeholder proceedings, which are to some extent analogous. However, the first case concerns the position of a defendant in such proceedings and is analysed by reference to specific interpleader authorities. It therefore offers no assistance. As for the second case, the narrowness of the issue on the appeal and the facts of the case (where the claim explicitly submitted to unavoidably involved the merits) precludes it being of much assistance. It might however be said that the result (a conclusion that a party submitting had submitted for the purposes of the claim on the merits and could not accept the court’s jurisdiction “in two separate tranches”) aligns with the approach which I have adopted.

It follows that the forum conveniens arguments do not arise; but particularly in a case where this first issue is one on which there was no established law it is right to consider those issues fully.

It was common ground that the test applicable in a forum non conveniens application remains that outlined by Lord Goff in Spiliada Maritime Corp v Cansulex [1987] AC 460 whereby:

It is also common ground that if it is established that the English proceedings have been commenced in breach of an exclusive jurisdiction clause, the Court will:

“ordinarily exercise its discretion (whether by granting a stay of proceedings in England, or by restraining the prosecution of proceedings in the non-contractual forum abroad, or by such other procedural order as is appropriate in the circumstances) to secure compliance with the contractual bargain, unless the party suing in the non-contractual forum (the burden being on him) can show strong reasons for suing in that forum . . . Where the dispute is between two contracting parties, A and B, and A sues B in a non-contractual forum, and A’s claims fall within the scope of the exclusive jurisdiction clause in their contract, and the interests of other parties are not involved, effect will in all probability be given to the clause.”: Donohue v Armco [2002] 1 All ER 749 at [24-25].

The test for overriding an exclusive jurisdiction clause is often placed as being one of exceptionality or of “very strong reasons indeed” by reference to (inter alia) Donohue [75] and UBS AG v HSH Nordbank AG [2009] 1 CLC 934 at [101.

Factors relevant to whether a claimant can show those very strong reasons were considered in The Eleftheria [1970] P 94 at p. 99-100 and are listed in Dicey, Morris & Collins at paragraph 12-107 – 110. They include: (i) the country in which the factual evidence is likely to be situated; (ii) whether foreign law applies; (iii) which country the parties are connected to, and how closely; (iv) whether the claimant would be prejudiced in having to sue in a foreign court, e.g. being unable to enforce judgment, facing a time-bar not applicable in England, or otherwise unlikely to get a fair trial. Those factors of course have an overlap with standard forum conveniens factors.

Although ING points out that the distinction between exclusive and non-exclusive jurisdiction clauses is not necessarily a bright line one, citing BNP Paribas S.A. v. Anchorage Capital Europe LLP [2013] EWHC 3073 (Comm), Males J at [88], the true question being said to be whether the commencement and pursuit of the relevant proceedings are things which a party has promised not to do, some distinction remains and indeed absent an exclusive jurisdiction clause the Court may well only decline the exercise of its jurisdiction on forum conveniens grounds if there are exceptional or very strong reasons for doing so: see Deutsche Bank AG v Sebastian Holding Inc [2009] 2 CLC 949.

Here questions of Italian law arise on the question of whether Article 19 is an exclusive jurisdiction clause as a matter of Italian law.

There was no issue between the parties as to the correct approach to dealing with questions of foreign law.

The key question here is whether Article 19 imports a promise by ING not to sue elsewhere than in Italy (as Tecnimont contends) or whether (as ING maintains) ING has reserved to itself the right to bring proceedings before any other competent Court – inside or outside of Italy.

The parties agree that the following interpretive rules are applicable as a matter of Italian law:

With one exception, the principles are broadly analogous to well-established principles of construction as a matter of English law. The exception (not relevant here) is that under Italian law, the courts are entitled to consider post-contractual conduct in order to determine the true meaning of an agreement.

The experts also agree that by Article 1341 ICC, contractual derogations from the competence of a particular Italian court (i.e. a derogation within Italy) contained in general terms and conditions must be specifically accepted by the parties, in addition to the general signing of the contract.

Article 19 of the Facility Agreement states as follows;

“Art. 19 – LEGGE APPLICABILE E FORO COMPETENTE

1.

Il presente contratto è soggetto alla legge italiana. Per qualunque controversia relativa al presente contratto sarà esclusivamente competente il Foro di Milano.

2.

Sarà peraltro facoltà della sola Banca di chiamare a giudizio le Società avanti ad ogni altro Foro competente.

[Agreed translation]

Article 19 – APPLICABLE LAW AND COMPETENT COURT

1.This agreement is governed by Italian law. The Court of Milan shall have exclusive competence for any dispute arising out of or in connection with this agreement.

2.[Furthermore] [However], the Bank alone shall be entitled to bring proceedings against the Companies before any other competent Court.”

The argument of Tecnimont is run at two levels – (i) special technical meaning, resulting in an exclusive jurisdiction clause and (ii) contractual construction resulting in a conclusion that the parties intended a Milan/domestic courts asymmetric clause. The arguments to a considerable extent overlap because some of the construction arguments are deployed to feed into the argument about technical meaning.

The key dispute between the experts on the exclusive jurisdiction clause argument is about whether, as Tecnimont maintains, the phrase “Foro competente” in Article 19.2 has a special “unambiguous technical meaning” as a matter of Italian law and refers exclusively to competent Italian courts, or whether, as ING suggest, the phrase “Foro competente” can comprehend “any court having jurisdiction” outside Italy; the word “competente” not having any relevant technical meaning but rather being capable of embracing international jurisdiction as well as local territorial competence.

The experts agree that linguistically the word “competente” used in both Article 19.1 and 19.2 of the Facility Agreement is best interpreted as referring to “competence” rather than “jurisdiction”. That does not however answer the question, and neither party suggests matters are so simple as this.

The dispute between the parties is therefore as to the scope of “any other competent Court” (or “Foro competente”), and how far Article 19.2 derogates from Article 19.1. Tecnimont maintains that it has a special meaning under Italian law that only permits ING Milan to bring proceedings against Tecnimont in other Italian courts insofar as they are competent under the Italian Code of Civil Procedure.

Professor Consolo's position in his report is that there is a fundamental distinction in Italian law between (i) the concepts of “competent court” and “competence” (respectively, “foro competente” and “competenza”) and (ii) the concept of “jurisdiction” (“giurisdizione”). Tecnimont therefore says that “The words “Foro competente” in Article 19.2 therefore have a special, technical meaning in Italian law”. However that is to assume the truth of what Professor Consolo argues. One must examine the reasons why he reaches this conclusion.

Professor Consolo's primary position is that this special meaning of “Foro competente” was explained by the Italian Supreme Court of Cassation, Sixth Division in Banca Popolare dell’Emilia Romagna v Banca Leaonardo S.p.A. Tecnimont contends that the court there considered a materially similar clause which provided that “for any disputes arising from this contract, the Court of Milan shall be exclusively competent, without prejudice to the Bank’s right to sue in any other competent Court”. Professor Consolo's reading is that the Supreme Court stated that such a clause could not be interpreted as giving the Bank “the right to choose the judge ad libitum” because “it is clear that the expression ‘any competent Court’ is intended to attribute the bank the sole right to choose between one of the alternatively competent Courts on the basis of the ordinary criteria of the law (Articles 18, 19 and 20 of the Code of Civil Procedure)”. This reference to those articles, which deal with points which go to domestic factors only, is said to point the way to the conclusion.

Tecnimont says that on this basis the reasoning is clear and wholly inconsistent with ING's suggestion that Article 19.2 of the Facility Agreement permits ING Milan to bring proceedings in England. It contends that the Supreme Court of Cassation gave a “clear definition of what the term ‘any other competent Court’” means in a choice-of-court clause under Italian law – namely, “it clearly means only that Italian courts that are competent based on the ordinary criteria of the Code of Civil Procedure”. Consequently, Tecnimont says that the word “competenza” itself tells you that the clause is domestic. Competence, in essence, is a subset which is peculiar to Italian domestic jurisdiction.

However, the matter is not quite so simple or so clear. The parties are actually agreed that the Banca Popolare case is not on all fours with the present one, and given the weight put on the case by Tecnimont it is necessary to unpick it in some detail.

The Supreme Court was in that case determining a dispute as to whether the courts of Milan or Bergamo were the proper forum; in other words it was a competition between jurisdiction provisions which both related to which domestic court was appropriate, in a dispute that had been commenced by a special application to challenge “competence” (so called “regolamento di competenza”). As the case records: “Banca Popolare dell’Emilia Romagna soc. coop. (formerly Meliorbanca S.p.A.) brought an action for a declaration of competence”.

The facts of the case are rather complex. The question before the court in that case was whether the court of Bergamo had been jurisdictionally competent to adjudicate a dispute arising between Banca Popolare on the one hand, an Italian bank, and two Bergamo domiciled guarantors of an account held at Banca Popolare in circumstances where a credit line had been extended to the holder of the account and that credit had not been repaid. Both of the guarantors were domiciled in Bergamo, so Bergamo was, on any view, a competent court.

There were four documents in play.

Banca Popolare sued the guarantors in Bergamo and obtained an injunction freezing the guarantors' assets and registered a charge against those assets. The guarantors protested that the Bergamo court lacked jurisdiction on the basis that the proceedings should have been brought in Milan, as contemplated by the summary document annexed to the credit line agreement. They were supported by another bank which was a creditor of the guarantors and stood to be prejudiced by enforcement of the charge. The Supreme Court upheld the Bergamo court's competence, effectively saying that it was wrong to allow the tail of that summary document to wag the dog of the credit line agreement itself.

Thus there was no issue before the court as to whether or not proceedings could have been brought outside of Italy consistently with the clause at issue, nor did the Court state in any section of the judgment that the bank could not bring proceedings outside Italy. The reference to the domestic jurisdiction provisions in the Italian Civil Procedure code is logical and inevitable in the circumstances. That reference does not more than say “in this context, this is where you can look for competent courts”. Altogether I conclude that the case really provides no support for Tecnimont in relation to the issue in this case. Certainly, it does not provide a clear technical meaning as Professor Consolo would argue.

I therefore turn to the other arguments deployed by the experts. The second point on which Professor Consolo relies is the absence of the word “giurisdizione”/"jurisdiction". In effect he says that that is the more natural word to use and that the absence of its use means that competenza should be understood as domestic competence. This is echoed in his second report where he says that competence cannot apply to both internal competence and jurisdiction.

In my judgment that is an argument which has certain attractions until one comprehends that there is no adjective in Italian which covers jurisdiction. Professor Briguglio notes that in terms of competence based words Italian offers “competenza” (the noun) and “competente” (the adjective). But there is no adjective which correlates to jurisdiction (“giurisdizione”). Professor Briguglio therefore contends that the adjective “competente” has a broader meaning than the noun “competenza” such that the former encompasses both the concepts of competence and jurisdiction.

Tecnimont does not dispute the semantic point as to the absence of a jurisdiction based adjective but contends that the point is artificial. Further given the fact that Professor Briguglio expressly accepts that “from a legal standpoint” the word “giurisdizione” denotes “jurisdiction” whereas “competenza” “can be used to denote local jurisdiction or venue and thereby refers to the various Italian courts situated within the national (Italian) territory” Tecnimont says that the argument is strained – or as Professor Consolo terms it, illogical.

However substantively, Professor Consolo’s position is based firmly in his view that there is a technical meaning of “foro competente” which refers in the context of an Italian law jurisdiction clause, “exclusively to the identification of the Italian courts that can hear a dispute based on internal competence rules, and not to foreign courts”. It is therefore circular and relies on the argument which I have found not to be substantial.

A final point relied on by Tecnimont is the fact that ING “demanded specific approval of Article 19 under Article 1341 of the Italian Civil Code” and accordingly there “are no grounds to validly believe that Italian parties (or their lawyers) would have added this additional signature if their intention had been to agree on a clause conferring jurisdiction on a foreign court”. In other words because Article 1341 covers a derogation from domestic jurisdiction (ie jurisdiction of a particular Italian court) and Article 1341 approval is not required for international jurisdictional choices, the Article 1341 approval is evidence that the parties considered it to have a domestic, not international, ambit. This seems to be a considerable overreach in circumstances where Article 19(1) of the Facility Agreement did have international reach. As Ms Bingham KC put it “on any and every reading … that article does derogate from the competence of the Italian courts”. Article 19(1) provided that Tecnimont should sue ING in Milan and hence deals with jurisdiction – and in doing so it uses the word competente not giurisdizione. Another reason for concluding that the argument is overambitious is the sheer variety of inapt clauses included in the derogation. This indicates a highly precautionary approach to the operation of Article 1341, which means that inclusion cannot really be said to correlate to a view as to the domestic nature of the clause.

Therefore simply looking at Tecnimont's arguments, I consider them to fall some way short of a compelling argument either for the exclusive jurisdiction clause or for construction more generally. Given the facts it might well be the case that competenza has to cover both competence and jurisdiction and that the meaning has to be judged by the context.

ING via Professor Briguglio relies on three examples to support its contention. These do not, individually or together, clearly resolve the point. He refers to the judgment of the Court of Milan in DeJure (17 April 2014), which referred in terms to the Court of the Federal Republic of Germany as being “competent to hear the case”. Although this is not completely clear because, as Tecnimont points out the case concerned a case under the 1956 Geneva Convention on the Carriage of Goods by Road (the official language of which is English), the point remains that the Italian court used the word competence in the context of a dispute about international jurisdiction – in exactly the way that Professor Briguglio suggests would happen.

ING's second example is the fact that “competente” is used interchangeably with “giurisdizione” in Italian legislation and case law. The primary example relied on is Article 669-ter of the Italian Code of Civil Procedure which uses the word “competente” in the context of conferring jurisdiction on the Italian courts to determine interlocutory injunctions (see the official translation and commentary). Tecnimont says that this concerns domestic territorial competence, and so takes matters no further. But the same point cannot be made for the second example of interchangeability given by Professor Briguglio: Article 66 of the Italian Act on Private International Law (Law No. 218/1995) dealing with the recognition of certain foreign court judgments. This refers to “foreign court orders […] issued by an authority which is competent pursuant to criteria corresponding to those applicable in Italy” [Original Italian text: “provvedimenti stranieri […] pronunciati da un'autorità che sia competente in base a criteri corrispondenti a quelli propri dell'ordinamento italiano”]. That is a genuine example of interchangeable use. ING also notes that the usage for which it contends is consistent with Article 10 of model clauses provided by the Italian Chambers of Commerce where the word “competente” plainly embraces the competence of Italian Courts as well as all other Courts within the CEE. Although not strictly legislation, and not case law, that provides some limited further support.

The third example which ING gives is the fact that “competente” is used to refer to a court “having jurisdiction”, see for example the Italian text of article 26(1), sentence 2, EU Regulation 1215/2012, Brussels Regulation Recast. This point seems to me to have less force than the other two examples. As Tecnimont pointed out, that document is not an original Italian document, but an EU document, translated by the EU authorities.

So much for textual arguments, on which it is fair to say that ING has the better of the argument. Turning to contextual considerations, Tecnimont says that its understanding of Article 19.2 is entirely consistent with the general commercial purpose of such clauses, which is to enable the lender to enforce its security where the debtor has its assets. However, there is no evidence that this is the general commercial purpose of such clauses. Indeed, the position is rather the converse. As ING submits, this clause looks and reads very much like a fairly standard asymmetric jurisdiction clause such as are common currency in banking documentation, cf Dicey at paragraph 12-075.

“It has become common, especially in financial transactions, for one party to be bound to bring proceedings in one designated forum, while the other party is free to bring proceedings in any available forum. For example, a loan agreement may allow the lender to sue wherever it can, the better to be able to secure repayment from the debtor in any available form where the debtor has assets, while the borrower is required to bring any proceedings in a single forum.”

These points all push more compellingly in favour of ING's argument. That tentative conclusion for ING is reinforced by the background of this case. In particular I have in mind here the fact that this is not an unequivocally domestic contract; even if ING NV Milan Branch is capable of contracting on its own behalf (a question for future hot debate) it is on any analysis not a purely Italian entity but a branch of a major international bank based in the Netherlands. Such a situation would at least suggest a need or desire to cover off the international side of jurisdiction. Further as already noted, it would seem that Article 19(1) does exactly that (not least as it includes a choice of Italian law) and does it by using the wording “competente”. If Tecnimont were right on the point of construction there would apparently be an inconsistency between limbs 1 and 2 of Article 19. That would be a very surprising situation.

In short I conclude that “Foro competente” in Article 19.2 does not have a special meaning in Italian law and as a matter of construction is not an exclusive jurisdiction clause. It confers jurisdiction not only on Italian courts that are competent under the Code of Civil Procedure but on any court which is jurisdictionally apt – national or international. ING would, on this approach, break no contractual promise by making a claim in this jurisdiction.

On the basis that the correct analysis, absent submission, is that no contractual promise has been broken by ING in issuing the Part 20 Claim, the stay application requires a conventional forum conveniens analysis (with the burden on Tecnimont).

The relevant factors are set out in the skeleton for ING and although challenged to some extent by Tecnimont, they certainly retain considerable force – more than enough to make it clear that absent an exclusive jurisdiction clause, Tecnimont's challenge must fail.

A key factor is the centrality of the Main Proceedings and the undesirability of creating a fragmentation of proceedings with consequent risk of inconsistent judgments. On one possible outcome, the High Court could determine that ING is liable to pay EuroChem and the Italian court could determine that Tecnimont is not liable to indemnify ING. Such an outcome would be manifestly unjust and undesirable.

There is no inevitability of a multiplicity of proceedings because of the pending arbitration. Owing to the timetable for the arbitration, which has proceeded more slowly than the court proceedings, these proceedings will constitute the single forum in which all of the critical factual and legal disputes – arising out of the question of whether EU sanctions entitle any party to withhold a payment made to or for the benefit of EuroChem – will be resolved.

Then there is linkage of issues: the Main Proceedings are, as I have already noted, inextricably linked to ING’s Part 20 Claim. Leaving aside the common factual and legal issues in respect of sanctions, the resolution of the Main Proceedings in favour of ING will render the Part 20 Claim academic: ING will be under no liability to EuroChem to be indemnified by Tecnimont.

It follows that all parties will stand to benefit from a single consistent determination on, among others, the question of whether: (i) EuroChem is owned or controlled by Mr and/or Mrs Melnichenko; (ii) such ownership or control makes any payment to or for the benefit of EuroChem illegal as a matter of EU law; and (iii) whether such illegality affords a contractual defence to an obligation to make such payment.

As to Italian links, while certainly the centre of gravity is in Italy in terms of parties and witnesses as well as performance, that is a less strong factor than is often the case. The scope for witness evidence on the Tecnimont issues (as opposed to the Main Proceedings, which Tecnimont on any analysis wants to participate in) is very limited. All other parties will be preparing for trial here.

The foreign governing law factor is not a material consideration. Contrary to what Tecnimont submits, it is unlikely that expert evidence on Italian law is likely to be needed. This application has established the essential similarity of the relevant principles of construction, and the relevant sections of the Civil Code have been agreed. As for expert evidence on sanctions, that point has essentially been determined against Tecnimont already. At the first CMC, Foxton J and the parties proceeded on the basis that no party was contending “that the legal rules that determine whether it is lawful or unlawful to make these payments are different in France and Italy than they would be as a matter of EU law applying the relevant regulations”. The Court concluded that no expert evidence was required to resolve issues of EU law. Accordingly, Tecnimont’s reliance on the fact that the Facility Agreement is governed by Italian law whilst the ING Bond is governed by English law is misplaced.

A stay of the Part 20 Claim will run contrary to the Court's general wish to promote efficiency, convenience or clarity where consistent with principle. In addition to the risk of inconsistent judgments there would be increases in costs consequent on the need to instruct Italian legal teams. The existence of Italian proceedings would seem likely (in the absence of a confirmation by Tecnimont that it would accept the decision in the Main Proceedings as binding) to lead to res judicata arguments which would not otherwise arise.

Finally, there is the risk of delay – the evidence suggests that Italian proceedings would be determined some years after the Main Proceedings here will (even allowing for appeals) be completed.

Accordingly, as indicated, there is really no sustainable argument that Italy is clearly and distinctly the forum conveniens. If (contrary to my primary finding) Tecnimont had not submitted to the jurisdiction this would in any event be the forum conveniens.

This point only arises if (i) Tecnimont had not submitted to the jurisdiction and (ii) Article 19 is an exclusive jurisdiction clause. It arises therefore only on a double contingency and can accordingly be dealt with briefly.

The factors relevant to the exercise of the Court’s discretion whether or not to order a stay are not dissimilar to those discussed above, but there are some distinctions, and the burden of proof shifts very considerably.

The law is summarised in Dicey at 12-108 by reference to the seminal judgment of Brandon J (as he then was) in The Eleftheria [1970] P. 94 (subsequently affirmed by Brandon LJ in The El Amria [1981] 2 Lloyd’s Rep. 119):

“In exercising its discretion whether to grant a stay, the court considers all the circumstances of the case, and the following formulation of the particular factors to be taken into account has been much relied upon: (1) in which country the evidence is available, and the effect of that on the relative convenience and expense of a trial in England or abroad; (2) whether the contract is governed by the law of the foreign country in question, and if so, whether it differs from English law in any material respect; (3) with what country either party is connected, and how closely; (4) whether the defendants genuinely desire trial in a foreign country, or are only seeking procedural advantages; (5) whether the claimants would be prejudiced by having to sue in the foreign court because they would be deprived of security for their claim, or be unable to enforce the judgment in their favour, or be faced with a time-bar not applicable in England, or for political, racial, religious or other reasons be unlikely to get a fair trial.”

Although there is some overlap with the usual forum conveniens issues the range is narrower. In particular the otherwise important question of inconsistent judgments drops out of the equation. As Colman J held in Konkola Copper Mines Plc v Coromin Ltd [2006] EWHC 1093 (Comm); [2006] 2 Lloyd’s Rep 446 at [32]:

“it should not be open to a party seeking to justify service outside the jurisdiction in contravention of a foreign jurisdiction to rely as grounds for strong cause or reasons the risk of inconsistent decision of different courts when he ought to have appreciated the existence of that risk at the time when he entered into the exclusive jurisdiction clause”.

Dealing solely with the Eleftheria factors:

Overall were the double contingency to arise I would not regard this as a case where very strong reasons meant that it was appropriate to disregard the exclusive jurisdiction clause. However, as already noted, the contingency does not arise.

For the reasons given above, this application falls to be dismissed.