The Factortame Litigation

As economic crisis plagues the world today, matters of jurisdiction is on the rise. In this global economy of commerce the forum chosen or designated for the hearing of a matter can significantly change the outcome especially with regards to the available remedies. Of course, there are many practical difficulties encountered depending on the forum used. These include, location of parties; witnesses and the use of foreign languages. Consequently, parties increasingly lock horns over which court should hear their dispute. In England, there are two multifarious jurisdictional regimes, namely, the common law and European Union Law.

These two regimes are like 'oil and water'. Their laws lack the thread of unity. For example, whether English courts will hear a dispute is discretionary and depends largely upon whether they, or the courts of another country, are the most appropriate forum (or "forum conveniens"). In order to make that decision, they will consider and balance the relevant factors. The European regime however is synonymous with a formula of sorts. Whereby the factors are applied in a hierarchy which ties the dispute to a particular member state.

According to Article 22(1) of Regulation (EC) No 44/2001 and Article 16(1) of the Lugano Convention a dispute concerning the validity of a company which had its seat in a European State is always heard in the court where the company's seat is located. Similarly, a contractual exclusive jurisdiction clause in favour of one European State will "trump" other factors. The ruling of the European Court of Justice in Owusu v Jackson (t/a Villa Holidays Bal Inn Villas)1 "(ironically made in the interests of certainty) has served only to exacerbate the problems, leading to further litigation.

"2 Owusu v. Jackson Case C-281/02 Mr. Owusu was a British national domiciled in the UK and he brought a suit in the UK against Mr. Jackson and some other defendants for injuries he sustained while vacationing in Jamaica. Mr. Jackson was also domiciled in the UK but he was the owner of a holiday villa in Jamaica which had access to a private beach. The other defendants were domiciled in Jamaica, one owned the beach and the other had a licence in connection with its use. Mr. Owusu's injuries occurred when he dived from the beach onto a submerged sandbank.

The defendants asked that the judge decline jurisdiction such that the case will then be heard in the Courts of Jamaica, on the basis of the doctrine of forum non conveniens, the judge refused on the grounds that, article 2 of the Brussels Convention in Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (as amended; now Council Regulation No 44/2001 Brussels I) obliged him to assume jurisdiction with reference to the first defendant in view of the defendant's domicile, despite the connecting factors with Jamaica and that if he did not try the action against the other defendants also, there would be a risk of conflicting decisions in different jurisdictions.

On a preliminary reference to the ECJ, "the principal question referred was whether, where the case before a court of a Brussels Convention contracting state had connecting factors with a non-contracting state but none with any other contracting state, the court could exercise a discretionary power, available under its national law, to decline jurisdiction in favour of the courts of the non-contracting state. " The Front Comor owned by West Tankers and chartered by Erg Petroli SpA (Erg) collided with a jetty in August 2000 in Syracuse owned by Erg, causing damage. Allianz was the insurer. The charterparty was governed by English law and contained a clause providing for London based arbitration. Naturally, Erg claimed compensation from their insurer Allianz claiming the full cover and commenced arbitration in London against West Tankers for the excess and this was in pursuant to the terms of the charterparty. West Tankers however, denied liability but Allianz had already compensated Erg under the insurance policy.

Allianz consequently brought proceedings on July 30, 2003 against West Tankers in Syracuse (place where the damage occurred) for the moneys paid to Erg under Italian Insurer's statutory right of subrogation under art. 1916 of the Italian Civil Code. West Tankers sought an anti-suit injunction from the English courts (which was granted) restraining the Italian insurer from taking any further steps in relation to the dispute except by way of arbitration in London in accordance with the charterparty. Allianz in turn directly appealed to the House of Lords contending that the injunction was contrary to Regulation 44/20015. Noteworthy, English law provides under s. 37 of the Supreme Court Act 1981 that the High Court may order injunctive relief.