T HE T HEORY AND P RACTICE OF THE D AMAGES R EMEDY FOR B REACH OF C HOICE OF C OURT A GREEMENTS Mukarrum Ahmed LLB (Hons), LLM, Barrister (Lincoln’s Inn) PhD Researcher in Law Centre for Private International Law School of Law University of Aberdeen 5 September 2015

Theory - Legal Basis 1 Is an exclusive choice of court agreement capable of being breached? What are the remedies? Primary remedy: Specific enforcement via an Anti-suit injunction Secondary remedy: Common law remedy of Damages ‘Separation of Functions’ within a Choice of Court Agreement: International Allocative or Distributive Function – Prorogation and Derogation of jurisdiction of courts - the allocation or distribution of regulatory authority or adjudicatory authority: See Alex Mills, The Confluence of Public and Private International Law (CUP 2009) Chapter 1 National Private Law Enforcement Function – the domestic private law enforcement of the contractual obligation not to sue in a non elected forum - Freedom of contract and pacta sunt servanda as potential candidates for a ‘system transcendent rationale’?: See Thomas Raphael, The Anti-Suit Injunction (OUP 2008) Chapter 1 What makes choice of court agreements different from ordinary contracts? Is there a distinction between a contract to sell and a contract to sue? Cf Adrian Briggs, Agreements on Jurisdiction and Choice of Law (OUP 2008) 195 (‘Agreements’)

Theory - Legal Basis 2 Deconstructing the ‘separation of functions’ and ‘the principle of relative effect’ of choice of court agreements (See Briggs, Agreements page 526): – Separating the in personam contractual obligation from the in rem procedural effects of the choice of court agreement – cf Penn v Lord Baltimore (1750) 1 Ves Sen 444 – Does a subsisting, independent and enforceable contractual obligation not to sue in a non-contractual forum exist? – Is a choice of court agreement valid as a source of legal obligation despite being declared procedurally invalid or ineffective by a foreign court? – In effect, in the English common law of conflict of laws the contractual obligation not to sue in a non-contractual forum operates as a ‘unilateral private international law rule’ with a controversial and confrontational allocative function of its own. – The private law redistributive will of the parties premised on principles of corrective justice is allowed to override and distort the international allocative function of private international law as a set of secondary rules for the public ordering of regulatory authority. – The principle of relative effect will work well in the variable geometry that is represented by a ‘jungle of separate, broadly based, jurisdictions all over the world’ (Airbus Industrie GIE v Patel [1999] 1 AC 119, ) but what about a multilateral conception of private international law?

Theory - Legal Basis in the Brussels I Regulation The Separation of Functions or the Relative effect of Choice of Court Agreements – Compatibility with the Brussels I Regulation? The continental civil law ‘procedural contract’ conception of choice of court agreements: – The in personam obligation cannot be dissociated from the effects the choice of court agreement can produce under a public law rule – The symmetry or congruence of both the primary procedural and substantive functions of choice of court agreements places international allocative or distributive concerns at the center stage within a multilateral jurisdiction and judgments order such as the Brussels I Regulation Is Private International Law about ‘Dispute Resolution’ or the ‘Regulation of Civil Relations’? (Briggs, Agreements Preface, viii) The private law enforcement of choice of court agreements has been referred to as the ‘privatization of court access’ within a ‘commercial dispute resolution’ focused English common law of conflict of laws: See Horatia Muir Watt, ‘Party Autonomy in International Contracts: From the Makings of a Myth to the Requirements of Global Governance’ (2010) 3 European Review of Contract Law 1, 29-32

Practice – Damages Remedy Endorsed by the English Court of Appeal The Alexandros T [2013] UKSC 70; [2014] EWCA Civ 1010 – Specific enforcement of the obligation not to sue in a non contractual forum is not possible – C- 159/02 Turner v Grovit [2004] ECR I-3565 – A claim for damages has been employed as an alternative to the anti-suit injunction in the English courts – Both anti-suits and a claim for damages are based on the same contractual obligation and arguably both interfere with the principle of mutual trust and the principle of the effectiveness of EU law (effet utile) Interference with the Member State court’s determination of jurisdiction Interference with the Member State court’s subsequent judgment – Damages remedy had an effect very similar to that of an anti-suit injunction in this case rendering the proceedings in the Greek courts futile – Longmore LJ adjudicated that the damages remedy is compatible with European Union law – Cf What would have happened if a preliminary reference had been sent to the CJEU? Marzillier v AMT Futures [2015] EWCA Civ 143: Christopher Clarke LJ cited with approval and reiterated the landmark decision of Longmore LJ in [2014] EWCA Civ 1010 The Present State of the Law: Damages remedy survives at least until it is finally laid to rest by the CJEU on a preliminary reference from the English courts under Article 267 TFEU.

Practice - Recast Regulation and the Damages Remedy Gasser reversed Reverse Lis pendens mechanism accords priority to the chosen court Article 31(2) Recast Regulation and the lacunas in the legal regulation of choice of court agreements: – Sham agreements and reverse torpedoes – Threshold issues – What if the proceedings in the another Member State progress beyond a Prima Facie review of the choice of court agreement? – Asymmetric or Unilateral choice of court agreements are not covered Preliminary issue: Are asymmetric or unilateral choice of court agreements valid in the first place? cf Banque Rothschild case [2013] ILPr 12 Article 25 of the Recast Regulation refers matters of substantive validity to the law of the forum prorogatum including its rules of private international law – Party may not want to commence proceedings in the chosen court to trigger the protective cover of Article 31(2) and instead rely on a claim for damages – Damages remedy bequeathed a new lease of life in the Recast Regulation post The Alexandros T [2014] EWCA Civ 1010? – Permission to appeal granted by the UK Supreme Court in AMT Futures Ltd v Marzillier and others (Case No: UKSC 2015/0091) on 28 July 2015: Do the English courts have jurisdiction to adjudicate on a claim for damages for the tort of inducing breach of an English exclusive choice of court agreement under the Brussels I Regulation? If they do possess jurisdiction over the matter then it may become necessary to re-examine the compatibility of the damages remedy with EU law?

Practice - Hague Convention on Choice of Court Agreements and the Damages Remedy Briggs, Agreements Chapter 13: Choice of court agreements under the Hague Convention are ‘contractual in nature, and should be enforced because contracts should be enforced.’ A system of ‘partial’ or ‘qualified’ mutual trust may permit the Damages remedy if it furthers the objective of the Hague Convention What about Intra EU Hague Convention cases? Anti-suit injunctions? Cf C-159/02 Turner v Grovit [2004] ECR I-3565 The principle of mutual trust and the principle of effectiveness of EU law (effet utile) Analogy with Brussels I Regulation and Arbitration interface: C-185/07 West Tankers EU:C:2009:69; Analogy with Brussels I Regulation and CMR Convention interface - Case C-452/12 Nipponkoa ECLI:EU:C:2013:858 Damages? cf The Alexandros T [2014] EWCA Civ 1010

Assessment The variable geometry of international civil and commercial litigation may allow the English courts to unilaterally enforce the contractual obligation not to sue in a non-contractual forum outside the EU private international regime. The relative effect of a choice of court agreement and the inherent incompatibility with multilateral jurisdiction and judgments orders such as the Brussels I Regulation. The CJEU on the damages remedy: It is highly unlikely that the remedy would survive a reference to the CJEU. Cf The Alexandros T [2014] EWCA Civ 1010 Recast Regulation and the scope for the continued viability of the remedy post The Alexandros T [2014] EWCA Civ 1010 Hague Convention may permit the contractual enforcement of exclusive choice of court agreements if such enforcement furthers the objective of the Convention but arguably not in intra EU Hague Convention cases From the standpoint of practice, the damages remedy is an imperfect solution for the effective and efficient resolution of disputes. Dispute resolution is in fact protracted and delayed by litigation about where litigation should have taken place. A comparison with the practical utility of an anti-suit injunction reveals the practical limitations of the secondary enforcement of choice of court agreements.