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Forum non conveniens.

WHERE ONE SIDE IN DISPUTE HAS FIRST FILED ITS FRAUD CASE IN U.S. FEDERAL COURT, IRISH SUPREME COURT DECIDES THAT, WHERE CLOSEST PRECEDENT FROM EUROPEAN COURT OF JUSTICE (ECJ) DID NOT DECIDE THE APPLICABILITY UNDER BRUSSELS I REGULATION OF COMMON LAW DOCTRINES OF FORUM NON CONVENIENS AND LIS ALIBI PENDENS ON HOW TO PROCEED WHERE FIRST FILED CASE LAY IN U.S. FEDERAL COURT RATHER THAN IN EC MEMBER STATE COURT; THUS IT SHOULD REFER LEGAL QUESTION TO ECJ BEFORE RULING ON MERITS OF CASE BEFORE IT

Goshawk Dedicated Ltd., and Kite Dedicated Ltd. (formerly known as Goshawk Dedicated (No.2) Ltd.) along with Cavell Management Services Ltd. and Cavell Managing Agency Ltd. are the Plaintiffs in this case before the Irish Supreme Court. The Defendant is Life Receivables Ireland Ltd. is a subsidiary of International Investment and Underwriting The Plaintiffs are English companies and the Defendant is an Irish company.

Defendant, however, has already filed proceedings against Plaintiffs here, in a Georgia federal court. The present Defendant (as plaintiff), sought certain reliefs against the present Plaintiffs (as defendants) and against others who are not party to these Irish proceedings.

The U.S. proceedings sought relief for, inter alia, alleged misrepresentation, fraud, securities fraud, and other relief. The prior U.S. proceedings, therefore, related to the same dispute being raised here. The Defendant moved the Irish High Court for an order staying the Irish proceedings pending the final determination of the Georgia litigation. The High Court rejected the application and the Defendant appealed.

The significant procedural issue that arose between the parties related to the proper interpretation of the Brussels I Regulation and its application to the circumstances of this case. It also involved the common law doctrine of forum non conveniens. More particularly, it focused on the extent and application of the doctrine of us alibi pendens to this case, under the Brussels I Regulation to proceedings concerning the same cause of action when the earlier proceedings had been commenced in a non-Member State.

The parties and the court examined and analysed the key decision of the Eq in Owusu v. Jackson (t/a :/Villa Holidays Bal-Inn Villas et al. (C-281/02) [2005]; E.C.R.I. I-1383; [2005] Int. Lit. Proc.25 but the ECJ has not given a ruling on the precise question at issue here.

The Irish High Court found the following facts. In June 2005, the Defendant bought a partnership interest in a Delaware partnership known as Life Receivables II, LLP. The Defendant and Life Receivables Holdings are the only partners but in which the Defendant would appear to be the only partner with a financial stake.

The partnership is, in turn, a beneficiary of Life Receivables Trust (LRT) whose commercial value derives from trust property; these consist of life insurance policies bought in the early years of this decade together with a contingent cost insurance issued by Goshawk in respect of those policies. As Plaintiff in the U.S. proceedings, Defendant here alleged that the Georgia defendant had fraudulently induced it into buying into the partnership.

The complaint in the U.S. proceedings alleges securities fraud, common law fraud, negligent misrepresentation and conspiracy to commit fraud in connection with a transaction valued at a figure in excess of U.S. $14 million. The primary jurisdiction invoked is in respect of the securities fraud pursuant to U.S. law, and a supplemental jurisdiction is alleged over the U.S. common law claims, on the grounds that the same facts and circumstances gave rise to all daims.

Apart from the securities claims, one of the major allegations made is that Goshawk, relying on material furnished through or by an actuarial company, American Viatical Services, located in Atlanta, Georgia, made representations appearing on the face of the life policies, to persons including Life Receivables, the defendant in the Irish proceedings. It is also alleged that Cavell, acting through one of its principals, devised a run off scheme to commute Goshawk's obligations to, inter alia, Life Receivables. It is alleged that, at certain times, that principal, acting on behalf of both Goshawk and Cavell, made material misrepresentations and omissions.

The proceedings filed by the defendant in Georgia, U.S.A., on June 29, 2007, are clearly first in time. The plaintiffs have later commenced these Irish proceedings; they seek declarations that the plaintiffs did not make the misrepresentations, together with other similar relief, on September 6, 2007. The Irish proceedings are a mirror image of the Georgia proceedings, except that none of the additional co-defendants in Georgia are parties in the Irish proceedings.

On September 5, 2007, the plaintiffs in these proceedings moved in the U.S. District Court to dismiss the defendant's complaint, on the basis that the court lacks subject matter jurisdiction over the defendants since the transactions in issue in the case are predominantly foreign and lack the necessary domestic conduct or effects to permit the application by that court of American securities laws. The defendant in these proceedings resisted that motion, and a ruling by the U.S. District Court was, at the time of this appeal, awaited.

The Irish trial judge referred to the undisputed EC law. He quoted from the ECJ's judgment in the Owusu case. There a person was injured while on holiday in Jamaica. It was submitted that Jamaica would be a more convenient forum for the conduct of litigation. The ECJ rejected the travel agent's effort to stay the proceedings first filed against him in England despite his Jamaican domicile and the convenient access to local eye witnesses that would result from allowing the proceedings to take place in Jamaica.

"Counsel for the plaintiffs relies squarely on the decision of the ECJ in Owusu and argues that the failure to respond to the second question posed is merely the adoption of the normal formula found in the case law of the ECJ. Senior counsel, submits that Owusu answered the issue in its entirety."

"The issue which arose in Owusu was whether the third country was a more appropriate forum, and that is also the issue in these proceedings. There is, he contends, no point of principle calling for the application of a different approach to existing foreign proceedings and to intended proceedings. Lis alibi pendens is not a doctrine, but a rule adopted by jurisdictions, to resolve a practical problem, namely to avoid conflicting judgments.'"

"There were formerly two solutions in being for that problem, the first being the common law discretionary approach, and the second the civil law approach which applies the 'first in time' rule. The Irish courts, following on from Owusu, have a mandatory jurisdiction, pursuant to the ReguLation and may not decline this, unless there is provision for a derogation from the application of that Article, in the Regulation itself."

"Owusu is the most relevant case law, but it was limited to the facts of that case, which are not similar to the circumstances of this case, and indeed the circumstances of this (the pending case) are expressly excluded. In this case, there is a pending proceeding which is first in time in a non-Contractual State. It is a situation identified in Owusu, but expressly not answered. In these circumstances the issue may not be considered acte clair."

"This Court is satisfied that it is necessary to refer the legal question to the ECJ. The exact format of the reference may be considered in submissions by the parties after the delivery of this judgment. However, in essence, such a reference would query whether, when a defendant is sued in its country of domicile, it is inconsistent with the Regulation for the court of a Member State to decline jurisdiction or to stay proceedings on the basis that proceedings between the same parties and involving the same cause of action are already pending in the courts of a non-Member State and therefore first in time."

"It may be necessary also, having regard to the absence of any clear guidance, to pose an additional question concerning the criteria to be applied by a Member State [which is] coming to a decision whether to stay pending proceedings in a Member State, depending on the response to the first, primary, question to be posed."

CITATION: Goshawk Dedicated Ltd v Life Receivables Ireland Ltd [2009] I.E.S.C. 7; [2009] I. L. Pr. 26 (Sup. Ct. Ire. 2009)
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Publication:International Law Update
Date:Sep 1, 2009
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