Croda Europe Ltd & Ors v Agform Limited & Ors

Both sides were content to adopt the summary of the applicable principles given in QBE Europe SANV v General Espana [2022] EWHC 2062 (Comm), [10]:

Where a party derives rights by assignment from a party to a contract where the contract is subject to an EJC, the assignee will be required to enforce the assigned rights in accordance with the EJC and can be restrained by an ASI if it brings proceedings to enforce them in some other forum (see QBE, [15]).

I will adopt the summary of the applicable principles I gave in JP Morgan Securities Plc VTB Bank PJSC [2025] EWHC 1368 (Comm), [144]-[146] (a case in which an appeal is pending):

There was some debate before me as to whether the “high probability” test applied to vexatious and oppressive ASIs, but it was agreed (correctly) that this was not determinative in this case.

As I have already stated, in order to obtain an interim ASI on a contractual or derived rights (or, as it is sometimes put, quasi-contractual) basis, the claimant must show a “high degree of probability” that there is an exclusive forum agreement which applies to the subject-matter of the claim in the proceedings sought to be enjoined.

In this case, the Croda Parties seek relief which is both prohibitory and mandatory in form. In general, mandatory orders are more likely to be irreversible in their effects than prohibitory orders, and this is a relevant factor when considering whether to grant an ASI in mandatory terms.

Mr Hatt suggested that the Agform Parties had a short answer to all of the claims, which is that “the Delaware Proceedings are expressly envisaged by the terms of the Agreements and, moreover, ones which [Croda Europe] has expressly agreed to assist [AL and ATL] to pursue”. This was a reliance on clause 2(f) of the Confidentiality Agreement and clause 2(3)(f) of the Collaboration Agreement.

I am satisfied that the suggested “short answer” does not assist the Agform Parties:

I am satisfied to the requisite high degree of probability that the claims asserted by ATL against Croda Europe in the Delaware Proceedings (and those claims previously asserted in the name of AL against Croda Europe) fall within the Confidentiality Agreement and Collaboration Agreement EJCs.

As to the continuing operation of the EJCs, ATL argues that the agreements in which they are to be found have been terminated or expired. As to this:

That leads to the issue of whether the Croda Parties have established to a high degree of probability that the EJCs extend to the subject-matter of the Delaware Proceedings so far as claims by ATL against Croda Europe are concerned (AL being in the same position). The broad approach to the construction of EJCs is well-established, reflecting the inherent improbability that businesses would want disputes arising out of the same commercial relationship to be decided in different fora, with a risk of inconsistent outcomes and additional expense (Fiona Trust v Privalov [2007] UKHL 40). That principle does not depend on the particular cause of action relied upon (whether breach of contract, a claim in tort or for breach of statutory duty) but whether the facts from which the claims arise have the requisite degree of connection with the relationship to which the EJC applies.

I accept Croda Europe’s submission that the wording of the EJCs in this case is similar to that in the licence agreement in issue in Chugai Pharmaceutical Co Ltd v UCB Pharma SA [2017] EWHC 1216 (Pat), of which Carr J observed at [35] that its effect was that the parties had agreed “to submit … to the jurisdiction of the English courts all disputes under or in connection with the Licence”.

In this case, I am satisfied to a high degree of probability that the claims in the Delaware Proceedings arise from facts with the requisite degree of connection with the Confidentiality and Collaboration Agreements. I have already referred to the fact that the claims in the Delaware Proceedings are essentially those previously articulated in correspondence where they were said to involve breaches of the Confidentiality and Collaboration Agreements. The fact that the claims are articulated by reference to US and Delaware legislation does not assist the Agform Parties.

Indeed I accept the Croda Parties’ submission that the close connection between the claims being asserted in the Delaware Proceedings and the Confidentiality and Collaboration Agreements is reflected in various allusions to those agreements made in the Complaint: for example a reference to the general practice of requiring non-disclosure agreements when confidential information is shared with potential business partners (paragraph 27); the allegation that “Croda received access to Agform’s Envelop trade secrets by promising to partner with Agform and assuring that Croda could keep Agform’s trade secrets safe” (paragraph 1 - those “assurances” were the Confidentiality and Collaboration Agreements); the reference in paragraph 31 to “Agform” obtaining “additional protection from Croda with respect to its trade secrets”; in paragraph 33 to “the protections that Agform had put in place”; in paragraph 34 to disclosure with “even further bases for understanding that Croda would not misuse them” and at paragraphs 63 and 73 to requiring “assurances of non-disclosure before any external disclosures”. It is fair to say that the Complaint seeks to explain its reticence in identifying the contracts on the basis of the alleged confidentiality of the Confidentiality and Collaboration Agreements themselves. The extent to which that provides a satisfactory explanation can be explored on another occasion. For present purposes, the references are relied upon to demonstrate the close connection between ATL’s (and AL’s former) claims against Croda Europe and the Confidentiality and Co-operation Agreements.

Next, there is the question of whether it is the case that relief could be sought under the US and Delaware statutes in this jurisdiction, and, if not, whether that is a reason for concluding that such claims are not subject to the EJCs. I am willing to assume that relief cannot be claimed under those statutes in English court proceedings, albeit there is no material to suggest equivalent relief cannot be obtained in this jurisdiction through claims for breach of contract and confidence. Mr Hatt relied on the oft-cited passage from Lord Scott in Donohue v Armco Inc [2001] UKHL 64, [68], to the effect that “it cannot … be supposed that in submitting to the exclusive jurisdiction of the English courts the parties had in mind claims which an English court would have no jurisdiction to entertain”. That paragraph is not easy to reconcile with Lord Bingham’s statement at [29] in the same case that “on agreement of the exclusive jurisdiction clause [Mr Donohue] could reasonably have felt confident that no RICO claim arising out of or in connection with the agreements could be pursued against him and it would represent an obvious injustice if he were now to be exposed to those claims”. The other members of the court, including Lord Scott, expressed agreement with Lord Bingham’s judgment. The recognition that very often a choice of forum will be intended to prevent certain types of claim being pursued which might be available in other jurisdictions (or at least have this as an anticipated effect) is recognised in a number of cases, which I summarised in Riverrock Securities Ltd v International Bank of St Petersburg [2020] EWHC 2483 (Comm), [58]-[66] and NDK Ltd v Huo Holding Ltd [2022] EWHC 1682 (Comm), [61]. Having agreed that the English court should have exclusive jurisdiction in respect of the Confidentiality and Collaboration Agreements which provided the framework for confidential information to be exchanged and protection for that confidentiality, ATL (and, should it subsequently wish to do so, AL) cannot complain that the forum to which they agreed provides different legal mechanisms for enforcing its right of confidence than other jurisdictions which they did not chose.

Nor am I persuaded by Mr Hatt’s attempt to involve the Moçambique rule on the basis that the English court would not have jurisdiction to decide the validity of a foreign patent (British South Africa Co v Companhia de Moçambique [1893] AC 602 and IBM United Kingdom Limited v LZLABs Ltd [2022] EWHC 2094 (TCC), [126]). As Mr Hatt himself submits, “the Delaware Proceedings are not a patent enforcement action” and I have seen nothing to suggest that any issues of the validity of foreign patents are engaged. Assuming that the Moçambique principle extends to the validity of patents, it is not arguable it extends to rights of confidentiality or trade secrets.

AgLLC was not formed until 27 May 2025 and it does not appear to have acquired any licence in relation to the Envelop Technology until 14 June 2025. In his witness statement, Mr Misselbrook stated that AgLLC “is party to the DTSA proceedings because it, as the US entity which having the exclusive-US IP rights, is the one suffering the most direct loss in the US”. However, the legal basis on which AgLLC is able to claim for any wrongful acts occurring prior to its acquisition of the exclusive US-IP rights remains unexplained.

To the extent that it brings claims in respect of matters occurring prior to the latter date (and in the Complaint, it does), it is difficult to see on what basis it can do so other than through rights derived from others (and none was explained). On the material before the court, those rights appear to have been derived from ATL who assigned its claims against Croda Europe to AgLLC by an “assignment and enforcement consent clause” dated 14 June 2025. I was not referred to any other bases for the claims asserted by AgLLC in the Delaware Proceedings. It follows that on the material before me, I am satisfied that there is a high probability that the claims asserted by AgLLC in the Delaware Proceedings comprise rights derived from AL which rights are subject to the EJC. For the same reasons as in relation to ATL, I am satisfied interim ASI relief is appropriate on quasi-contractual grounds against AgLLC in respect of claims against Croda Europe.

At this point, the burden moves to ATL to show strong reasons why the court should nonetheless refuse Croda Europe ASI relief. Three are relied upon.

The first is the suggestion that Croda Europe has delayed in seeing relief. I am not persuaded that there is anything in this objection:

The suggestion that “Croda had over two weeks of normal Court term after issue of the Delaware Proceedings in which to issue an application and have it heard” does not address the issues raised by the moratorium and, in any event, is (with respect) wholly unrealistic as to the time which it would take to prepare the application and the court’s ability to hear it in what is always a period when there are particularly significant demands on the court’s resources.

The second suggested “strong reason” is that granting relief will lead to fragmentation of claims (in circumstances in which, as will be apparent below, claims against Croda Plc and Croda Inc, and by Delsys against Croda Europe, will continue anyway). I accept that this will be the result of the ASIs. However, that outcome follows from (i) the terms in which the parties chose to contract, which expressly contemplated that confidential information might be provided by or to non-signatories, without seeking to bring claims by or against such parties within the agreed jurisdiction scheme and (ii) the Afgorm Parties’ decision to bring claims falling outside the EJCs in Delaware. The first of those points is made by Mr Misselbrook, who states that the terms of the Confidentiality and Collateral Agreements:

“support my belief that there is no assumption that the Croda and Agform parties would expect that all disputes between them would be resolved on forum ….”.

There are numerous cases which make it clear that appeals to the need to avoid the fragmentation of disputes will have limited traction when they follow inexorably from the contractual arrangements the relevant parties have put in place: see SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] 2 Lloyd’s Rep 99, [66] and Nori Holding Ltd v Public Joint Stock Co [2019] Bus LR 146, [113].

Further, in this case it is wholly unclear which Agform Parties have realistic claims against which Croda Parties, and which claims will be the most significant in financial terms. The parties between whom the contracts regulating the transfer of the relevant information were entered are, prima facie, the more obvious candidates in both regards, and it would not be appropriate lightly to deprive those parties of their agreed exclusive forum.

Third, it is suggested that the balance of convenience between now and the final hearing justifies refusing to grant relief, because the Agform Parties face considerable cashflow difficulties. While the timing of any hearing for final relief will be a matter for the Judge in Charge of the Commercial Court, it is in my view realistic to proceed on the basis that this can be determined in six months. The Delaware Proceedings will proceed during that period as regards the other claims, and even if there is a delay in obtaining a final decision as between ATL/AL and Croda Europe in Delaware if a final ASI is refused, that prejudice can be compensated for by interest. The Croda Parties have offered an undertaking in damages, and placed group interim results before the court for the six months ending 30 June 2025 showing net assets of £2.231 billion and £157.8m of cash. By contrast, there is little to flesh out what disadvantage the Agform Parties will suffer from the fact that some of the claims in the Delaware Proceedings are injuncted for a six-month period.

By contrast, if no injunction is granted, the Delaware Proceedings will continue, and the Delaware court will become more embroiled in a dispute which the English court may later be required to grant ASI relief in respect of and devote time and resources to those claims. The longer the proceedings in the foreign court continue, the greater the comity concerns engaged by the decision to grant ASI relief.

For the same reasons, I can see no strong reason not to grant ASI relief against AgLLC on the “derived rights” basis (nor, had AL continued to bring claims against Croda Europe in the Delaware Proceedings, not to grant ASI relief against AL).

I am satisfied that the English court has a sufficient interest in this matter and that this preliminary requirement for an ASI on vexatious and oppressive grounds is met. The relief sought concerns information provided by two English companies to a third under agreements governed by English law and subject to exclusive English jurisdiction. Five of the seven original parties (and four of the six current parties) are English, the others wholly owned subsidiaries of English companies.

However, the remaining aspects of this part of the applications are more challenging, and there are a number of features of the Confidentiality and Collaboration Agreements which make it particularly so in this case:

However, claims by or against affiliates provide an easy means for seeking to circumvent choice of forum clauses, and for that reason may in appropriate circumstances be vexatious and oppressive (particularly when the claims have no recognisable legal basis and are in substance an attempt to enforce one signatory’s claims against its contracting party). The court will look carefully at the basis of the claim and the circumstances in which it is brought in answering that question. My attempt to do so led me to conclude that the proceedings against affiliates were vexatious and oppressive in the VTB case but not in the WeRealize case. Equally, however, the court must be wary of attempts to use the vexation and oppression jurisdiction simply as a means of broadening the practical effect of a chosen forum clause beyond its reach as a matter of privity of contract, not least because there are a number of means of documenting and structuring transactions which could achieve that outcome if it was desired.

I remind myself of the high test (“necessity” in the interests of justice) and the need for caution and circumspection before injuncting the pursuit of proceedings before another national court. I have not placed weight on the “single forum” principle addressed in Bourlakova v Bourlakov [2024] EWHC 929 (Ch), [40]-[50] and JP Morgan v WeRealize.Com, [107]-[110] because no attempt was made to show that there was no substantially equivalent cause of action available in England, and, at first sight, a party with confidentiality or trade secrets rights in information provided to another party would have claims under English law in the event of misuse of that information, including by third parties.

So far as affiliate claimants are concerned, it is necessary to consider the position of Delsys:

Indeed Mr Gourgey KC accepted that if Delsys had brought its own claims in a complaint which did not include those claims which I have held should be the subject of contractual and “derived rights” ASIs, and the complaint identified the basis of the claim, he would “have difficulty” in arguing the claim was vexatious and oppressive. His submission was that the fact that the Complaint was pleaded in such a way as not to permit the identification of which claims fell within the EJCs and which did not and which, he says, was deliberately done for this reason, has the effect of making all of the claims vexatious and oppressive. He said that the form of pleading was the result of “a deliberate plan … to try to circumvent and undermine the exclusive jurisdiction agreement by throwing in … companies that were not parties to the [EJCs]”, and that the entire proceedings should be restrained on the vexatious and oppressive ground as a result.

I am not persuaded by this argument for a number of reasons:

What of Croda Plc and Croda Inc? There is no arguable basis for suggesting that they have the benefit of the EJCs (the relevant contracts, as I have said, contemplating Croda Europe might pass on the information to Related Parties who would come under legal liability for misuse but who would not be parties to the EJCs). The high point of the Croda Parties’ argument is that Complaint says almost nothing about the factual basis of their liability. Nor does Mr Misselbrook’s evidence:

I am persuaded that it is a necessary adjunct to the orders I am willing to grant that the Complaint in the Delaware Proceedings should be amended to make it clear that it does not extend to claims by ATL and AgLLC against Croda Europe. It will also need to remove AL as a plaintiff. If AL wishes to become a plaintiff, it will have to be done on a basis which made it clear that AL is not bringing any claims against Croda Europe.

I have decided that this is best done by requiring the amendment of the Complaint to give effect to these requirements, in a form to be approved by the court (solely for the purpose of ensuring that the amended Complaint is compliant with the court’s orders). Mr Gourgey KC suggested that I should simply dismiss the entire claim and require the Agform Parties to start again. However, that would not be appropriate in circumstances in which the application for injunctive relief in respect of the entire Complaint has failed; it would involve additional costs and delay; and may well lead to further proceedings before this court if the newly filed complaint was alleged to breach the ASIs granted.

The Croda Parties seek an order requiring the Agform Parties to withdraw the Delaware Proceedings on a basis which would allow them to be recommenced if the Agform Parties prevail when the application for a final ASI is heard. In circumstances in which the Delaware Proceedings have already been commenced and the evidence shows that the Croda Parties will be required to engage with them if the Agform Parties seek to prosecute them, I am satisfied this is the relief best calculated to “hold the ring” so far as the ASIs I am willing to grant are concerned.

I do not believe permission to serve out is required for a claim for a “derived rights” ASI against AgLLC, given the terms of CPR 6.33(2B)(c). If it is required, then I am satisfied that it is appropriate to grant permission to serve proceedings out of the jurisdiction on the basis that AgLLC is a necessary or proper party to the same relief being sought in respect of the same actions against ATL. The merits test for “derived rights” relief is met for the reasons set out above, and England and Wales is clearly the appropriate forum to determine those claims which concern the effect of contract governed by English law and which contains an EJC in favour of this jurisdiction (particularly in circumstances in which the applications will be proceeding against ATL).

It was confirmed at the hearing that if I was satisfied permission to serve out was appropriate, the solicitors on the record for the other Agform Parties had authority to accept service.