Where is General Average?

Jurisdiction decisions in the shipping context follow each other in close succession. Yesterday we had another, from Males J, of some interest to insurers: namely, Griffin Underwriting Ltd v Varouxakis (The Free Goddess) [2018] EWHC 3259 (Comm).

The Free Goddess, a 22,000 dwt bulker owned by Freeseas, was seized by Somali pirates while en route to Thailand with steel coils. K & R insurers Griffin, based in Guernsey but doing business in London, paid out something over $6 million to free her, whereupon she sailed to Oman. Griffin clearly had a right to take over from Freeseas a pretty cast-iron GA claim against cargo interests: on arrival it duly entered into a settlement agreement with Freeseas under which Freeseas agreed to furnish all assistance, including preservation of security, in claiming GA and also to account to Griffin for all sums received on that basis. GA, as might be expected, was settlable and payable in London.

According to Griffin’s (as yet unestablished) allegations, Freeseas did no such thing. Instead of the obvious course of oncarrying the cargo to Thailand and claiming GA in due course, it sold the ship in Oman, destroying any security for GA and providing cargo with a counterclaim for damages which was likely to dwarf the GA liability in any case. In addition it had allegedly trousered a large sum in interim GA contributions without accounting for it. 

Freeseas not being worth powder and shot, Griffin sued one Ion Varouxakis, the Greek-domiciled owner of the company, for inducing it to break the settlement agreement. They alleged that the damage had been suffered in London and therefore they could invoke Art.7, the tort article of Brussels I Recast. Mr Varouxakis insisted that he could only be sued in Greece, arguing for good measure that this was a suit by an underwriter in a matter relating to insurance under Art.14, so the other exceptions did not apply.

In fact Mr Varouxakis was held to have waived any jurisdiction point, so the claim is going ahead in London anyway. But Males J did go on to give a view on the other points. On the issue of the loss of the right to GA, he regarded the issue of where the loss had been suffered as finely balanced, but expressed the view that the direct damage had been suffered in Oman, where he opined that the right to enforce GA had been effectively lost: the fact that GA had not been paid in London he regarded as a remoter consequence and not in account because of decisions such as Kronhofer v Mayer [2004] All ER (EC) 939. So there would have been no jurisdiction. On the other hand, he thought the loss had been suffered in London as regarded the failure to account, and so would have allowed the claim under that head to go ahead on that head in any event. As for the suggestion that this was a matter relating to insurance, he smartly rebuffed the point: insurance might be the background, but this arose out of an independent settlement agreement.

The second point was fairly obvious: if someone infringes my right to an accounting in London, it is difficult to think of anywhere apart from London where the damage occurs. The third is also welcome: the insurance rules under under Art.14 are ill-thought-out even by Euro-standards, and anything that prevents their becoming any more bloated than they already are can only be a good thing.  

This blog is less sure about the first. Saying the damage occurred in Oman gets pretty close to conflating damage with the act giving rise to it; it also means that the place of the damage in cases of this sort becomes wildly arbitrary, depending on which port a vessel happens to be in at the time. On the other hand, if GA is settled and negotiated in London, it seems fairly convincing to argue that preventing it being settled and paid there causes a direct loss within the Square Mile. Unfortunately, because the claimants won in any case, we are unlikely to see an appeal here. But this shouldn’t be regarded as necessarily the last word.


Relective loss and the unsecured creditor.

 

Garcia v Marex Financial Ltd [2018] EWCA Civ 1468 is a cautionary tale of a creditor with a judgment against two companies being thwarted by their beneficial owner removing their assets from the jurisdiction before the judgments could be enforced. The creditor decided to sue the wrongdoer for the torts of knowingly inducing and procuring the two companies to act in wrongful violation of your and causing loss to you by unlawful means. But not so fast, what about the rule against recovery of ‘reflective loss’ established by the House of Lords in Johnson v Gore Wood [2002] 2 AC 1? The rule states that where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. A claim is barred if the loss suffered by the claimant would have been made good by restoration of the company’s assets. The rule is subject to an exception in Giles v Rhind [2003] Ch 618, where as a consequence of the actions of the wrongdoer, the company no longer has a cause of action and it is impossible for it to bring a claim or for a claim to be brought in its name by a third party. Here, there was a clear breach of duty owed to the company by the beneficial owner who had  asset stripped them.

But does the rule also apply to unsecured creditors of the company who are not its shareholders? Until now this question was undecided, but not any longer. In Garcia v Marex Financial Ltd [2018] EWCA Civ 1468, the Court of Appeal have decided that the rule does apply to unsecured creditors of the company who are not its shareholders. On the facts the rule barred the action against the tortfeasor and the Giles v Rhind exception did not apply as the wrongdoing had not made it impossible for the companies to pursue a claim against the wrongdoer.

 

Bank references — undisclosed principals needn’t apply

Banks will, if you will forgive the pun, be laughing all the way to themselves today courtesy of the UK Supreme Court. In Banca Nazionale del Lavoro SpA v Playboy Club London Ltd [2018] UKSC 43  the question was whether a Hedley Byrne duty of care could be invoked by an undisclosed principal. The Playboy Club in London was approached by a Lebanese gentleman, a Mr Barakat, who wanted a cheque-cashing facility of £800,000 to gamble with. The Club, with its usual caution, required a banker’s reference for twice that amount. With Mr Barakat’s permission, and quite properly not wishing to divulge to the bank the reason for Mr Barakat’s desire, it got an associated company, Burlington Street Services, to make the necessary inquiries as its undisclosed agent. The bank gave a positive answer despite the fact that Mr Barakat had no substantial funds deposited with it. Over four days Mr Barakat  gratefully bought £1.25 million of chips with two cheques, won and drew a cool half-million, and then departed. He never came back. His cheques did. Playboy, relying on its position as Burlington’s undisclosed principal, sued the bank for its losses.

Upholding the Court of Appeal, the Supreme Court in short order held that an undisclosed principal, being someone whom ex hypothesi the person giving the advice knew nothing of, could not take advantage of a Hedley Byrne duty of care. Even though we might talk about a relationship akin to contract in connection with Hedley Byrne, said the majority, thise was no reason to extend the anomalous doctrine of the undisclosed principal beyond contract so as to allow the creation of a duty of care in favour of a given claimant when none would otherwise exist.

The Playboy Club will now no doubt either bite the bullet and write its own reference requests, or possibly investigate some more sophisticated device (an assignment by Burlington of its rights in favour of the Club might come to mind). But the decision may have further implications. Many professional negligence claims — for example, against insurance sub-brokers, specialists employed by professional advisers, consulting engineers employed by construction companies, or sub-agents generally — lie exclusively in tort under Hedley Byrne. It now seems that, while a direct client of a professional person may contract as undisclosed agent and give his principal the right to sue the professional in contract in the event of any blunder, the principal will have to be content with this. He will not be able to sue anyone further down the chain. Whether this can be got round by allowing the ostensible client to sue for some notional loss suffered by it is a question that will have to be left to another day: but that day, as a result of Playboy, may well come round sooner than you think.

No direct liability in tort for UK parent company. Third ‘anchor defendant’ decision in the Court of Appeal.

 

AAA v Unilever [2018] EWCA Civ 1532 is the third Court of Appeal decision in the trio of anchor defendant cases (the others being Lungowe v Vedanta and Okpabi v Royal Dutch Shell) that came before the courts last year raising the issue of when a parent company owes a duty of care to persons affected by the activities of its overseas subsidiary. The claimants were workers on a tea plantation in Kenyan who had suffered from criminal acts following the violence that followed the 2007 elections, which was on tribal lines. The issue was whether the parent company and the subsidiary owed a duty of care to people on the estate to protect them from unlawful violence. The claimants conceded that Kenyan law applied but it was accepted that English law was very persuasive in Kenya and Kenyan law would follow English law on the imposition of a duty of care on the parent company. Elizabeth Laing J admitted the possibility of a duty of care being owed by the parent company but the claim foundered on the issue of foreseeability of the type of harm suffered by the claimants.

Last week the Court of Appeal dismissed the claimant’s appeal on the grounds that there was no arguable case that the parent company owed a duty of care to the claimants. Sales LJ, giving the judgment of the Court, held that a parent company could owe a direct duty of care to those affected by the activities of its subsidiary in two situations: (i) where the parent has in substance taken over the management of the relevant activity of the subsidiary in place of, or jointly with, the subsidiary’s own management; or (ii) where the parent has given relevant advice to the subsidiary about how it should manage a particular risk.

The appellants accepted that they could not say that their claim was within the first category as the management of the affairs of Unilever’s Kenyan subsidiary, UTKL, was conducted by the management of UTKL. Instead, they sought to bring their claim within the second category, relying upon advice which they say was given by Unilever to UTKL in relation to the management of risk in respect of political unrest and violence in Kenya.  However, the witness evidence and the documentary evidence, showed that UTKL did not receive relevant advice from Unilever in relation to such matters, and that UTKL understood that it was responsible itself for devising its own risk management policy and for handling the severe crisis which arose in late 2007, and that it did so.

So far, the three anchor defendant cases on whether a parent company owes a duty of care in respect of the activities of its subsidiary company have seen two decisions against the claimants, and one Vedanta v Lungowe in their favour. In Vedanta  permission to appeal to the Supreme Court was granted on 23 March 2018, and in Okpabi the claimants have stated their intent to apply for permission to appeal to the Supreme Court. We are likely to see a lot more on this question in the coming months.

 

 

Insurance fraudsters, look out! There are punitives about.

Can an insurer get punitive damages against fraudsters and fraudulent claimants? Until today the matter was doubtful. Although such damages had since Kuddus v Leicestershire Chief Constable [2002] 2 AC 122 been available on principle for all causes of action, they were still subject to Lord Devlin’s other limits in Rookes v Barnard [1964] AC 1129: statute aside, there had to be either public authority wrongdoing or an intent to make gains exceeding any compensation payable. The former was not relevant: as for the latter, even if the fraudster made a gain his liability was not less than but equal to, or — once other heads of damage such as investigation were thrown in — greater than, that gain.

Logical, but from today not correct, courtesy of some slightly tortuous reasoning from the Court of Appeal.

 Axa Insurance UK Plc v Financial Claims Solutions Ltd & Ors [2018] EWCA Civ 1330 (15 June 2018) involved a couple of fraudulent fender-bender-cum-whiplash claims against Axa. Axa, to their credit, smelt a rat. They paid nothing and instead sued the lawyers responsible for making the claims in deceit. In this action they claimed their costs in investigating, and superadded a claim for punitive damages. Reversing the trial judge, the Court of Appeal said they could have the latter, and mulcted each defendant in the sum of £20,000. The requirement for calculation of gains exceeding liabilities was satisfied, it was said, because even if the fraudsters knew they were liable for the full amount of their ill-gotten gains they hoped never in fact to pay; this hope was sufficient to generate the element of hoped-for profit.

The result is welcome, even if the reasoning is a bit surprising. It is also highly significant, since it seems to mean that almost any fraudulent claim against an insurer is now capable of generating a punitive damages liability in the person bringing it if the court thinks fit to exercise its discretion in favour of an award. This presumably includes cases where the fraudster is the claimant himself; although fraudulent claims by policyholders are now dealt with by Part 4 of the Insurance Act 2015, it seems unlikely that this provision was intended to pre-empt the right of the underwriter to sue in tort for deceit if he so wished.

As to when such awards will be made, this is not yet clear. At a guess they are most likely where the whole, or a large proportion, of the claim is bogus: it seems doubtful whether simple exaggeration cases will attract them. But all we can do now is wait and see.

 

Foreign banks breathe easier in the US after Supreme Court’s decision on scope of the Alien Tort Statute.

 

 

The US Judiciary Act of 1789, 28 U. S. C. §1350. which is now known as the Alien Tort Statute, provides: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of of the law of nations or a treaty of the United States.” For nearly forty years it has been used as the gateway to bring suits in the US District Courts against individuals and corporations based on alleged violations of norms of international law. The Supreme Court has twice considered the scope of the ATS, in Sosa in 2004, and in Kiobel in 2013, each time limiting its scope. It has now spoken for a third time in Jesner v Arab Bank when it gave judgment last Tuesday, in a majority decision that foreign corporations could not be subject to liability under the ATS.

In Jesner v Arab Bank  foreign plaintiffs sued a Jordanian bank, Arab Bank, alleging that it had helped facilitate financial transactions to terrorist organisations which had then committed attacks in Israel, West Bank and Gaza Strip between 1995 and 2005 during which plaintiffs or their family members were injured. It was alleged that Arab Bank had used its New York branch to clear US dollar transactions which had led to money being sent to the terrorist organisations.

The question framed before the Supreme Court was whether corporations could be held liable under the Alien Tort Statute. The Second Circuit in 2010 in Kiobel had found that corporations could not be held liable under the ATS, and the question was referred to the Supreme Court. However, in 2013 the Supreme Court left the question unanswered and affirmed the Second Circuit’s dismissal by reference to a new question it had raised during argument before it in 2012 concerning the extra-territorial scope of the ATS. The Supreme Court concluded that the presumption that US statutes should not have extra-territorial effect applied to the ATS and would only be rebutted if the claim were to ‘touch and concern the territory of the United States…with sufficient force’.

In Jesner, the Supreme Court gave a partial answer to the question initially framed in Kiobel. The Supreme Court referred to its 2004 decision on the scope of the ATS in Sosa  which set out a two part test. First, was the alleged violation of the law of nations a violation of a norm that  is ‘specific, universal and obligatory’?  Second, would allowing the case to proceed be an appropriate exercise of judicial discretion?

On the first question of whether there is a specific, universal and obligatory norm that corporations are liable for violations of international law, Justice Kennedy expressed the view that there was not such norm, citing the fact that international criminal tribunals had never been given jurisdiction over corporations, but only over natural persons. Justice Roberts and Thomas concurred but this view did not obtain majority support.

The case was decided on the basis of the application of the second Sosa test. By a 5-4 majority the Supreme Court concluded that extending liability under the ATS to foreign corporations should be a matter for Congress to decide, rather than the judiciary. Congress’s intent could be deduced from the fact that a similar statute, the 1991 Torture Victims Protection Act, had been specifically limited to suits against ‘individuals’.  Accordingly, the Supreme Court affirmed the Second Circuit’s dismissal of the suit under the ATS against Arab Bank, a foreign corporation.

The upshot of the decision is that the scope of the Alien Tort Statute has been further restricted in that it no longer permits claims against foreign corporations. The decision may put the final nail in the ATS coffin. However, claims against US corporations, and foreign and US natural persons, could still be made, although the ‘touch and concern’ requirement set out in Kiobel means that there must be a strong link to the US for the claim to proceed. Some Circuits have interpreted the ‘touch and concern’ requirement to mean that the primary violation of international law must have taken place within the US, so excluding claims based on secondary violations for aiding and abetting by US corporations. The Supreme Court has twice denied certiorari to clarify this issue.

What a waste. The hazards of ship recycling.

 

On 15 March 2018 in the Rotterdam District Court, Seatrade were heavily fined and  two of its executives have been banned from working as a director, commissioner, advisor or employee of a shipping company for one year. The court declined to impose prison sentences on the directors, as requested by the prosecutor. The criminal charges arose out of the sale of four reefer vessels for scrapping which was done in Bangladesh, India and Turkey, in contravention of Regulation (EC) No 1013/2006 of 14 June 2006 on shipments of waste, which implements the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal”. The Regulation prohibits E.U. Member States from exporting hazardous waste to countries outside the OECD. Ships sailing to their final destination will contain large quantities of hazardous substances such as bunker oil, lubricating oil, PCBs and asbestos and, in the case of reefer vessels, HCFCs. The court determined that the four ships were to be categorised as waste as the decision to dismantle them had been made when they sailed from Rotterdam and Hamburg in 2012 and that their sale was in contravention of the Regulation. Seatrade intend to appeal.

In another development relating to the sale of ships for dismantling in Asia, London solicitors Leigh Day announced in December 2017 that they will be bringing a claim in tort for injuries sustained by a metal cutter while dismantling a container ship in Chittagong. The claim is being brought against the ship’s managers, Zodiac Maritime, who had sold the vessel for scrap. Leigh Day maintain that Zodiac knew the methods involved in dismantling vessels in Chittagong, yet it sold the vessel in the full knowledge that it would be broken up in unsafe conditions.

Judgment creditors can celebrate in England — UK Supreme Court.

English courts are not very keen on judgment debtors who spirit assets away out of sight of our enforcement officers. The Supreme Court today showed they meant business when faced with this scenario. They confirmed in JSC BTA Bank v Khrapunov [2018] UKSC 19 that anyone who in England does anything to help a debtor do this can find himself at the receiving end of a civil claim from the judgment creditor.

Mukhtar Ablyazov, a colourful Kazakh politician, dissident and businessman who used to run the biggest bank in Kazakhstan, was successfully sued here by the bank for the moderate sum of US$4.6 billion. The court issued the usual congeries of worldwide freezing orders in aid of enforcement, which were disobeyed. In 2012 Mr Ablyazov, facing the prospect of time inside for contempt, fled England and continued with a large degree of success to move his assets around to make them inaccessible.

The Ablyazov cupboard being bare, the bank then turned to an associate, one Ilyas Khrapunov, who had allegedly agreed in England to help Mr Ablyazov to cause his assets to vanish and later done just that. It sued Mr Khrapunov in tort, alleging that the above acts amounted to an unlawful means conspiracy. Mr Khrapunov applied to strike, arguing that if (as is clear) contempt of court cannot give rise to damages, the bank shouldn’t be allowed to plead conspiracy to get a similar remedy by the back door. He also argued that in any case he was safely tucked up in Switzerland; that the assets were outside England; and that the mere fact that he had conspired in England to make those assets disappear did not take away his right under the Lugano Convention to be sued in his country of domicile.

Mr Khrapunov lost all the way in the Supreme Court. There was no reason why the fact that he had acted in contempt of court should not count as unlawful means for the purposes of conspiracy. Furthermore, the jurisprudence under the Brussels I / Lugano system made it clear that for the purpose of non-contractual liability, where jurisdiction laywas “either in the courts for the place where the damage occurred or in the courts for the place of the event which gives rise to and is at the origin of that damage”, an agreement amounted to an ” event which gives rise to and is at the origin of that damage.”

Good news, in other words, for judgment creditors: bad news for friends of fugitive tycoons.

“Everywhere you go, you can be sure with Shell.” No arguable duty of care in respect of Nigerian oil pollution leaks.

 

The issue of a parent company’s potential direct liability in tort in respect of acts of one of its subsidiary companies has recently come before the Court of Appeal in Okpabi v Royal Dutch Shell and Shell Petroleum Development Company of Nigeria Ltd , [2018] EWCA Civ 191. The Nigerian claimants suffered from harm from pollution arising from oil leaks from Nigerian land pipelines due to the illegal process of “bunkering” by which oil is stolen by tapping into the pipelines.

The claimants wanted to sue  Shell’s Nigerian subsidiary SPDC, who operated the pipelines, in the English courts rather than in Nigeria. To this end they sued the English holding company, Royal Dutch Shell (‘RDS’), in the English courts. RDS would now serve as an ‘anchor defendant’ and the claimants obtained leave to serve SPDC out of the jurisdiction under para 3.1 of Practice Direction 6B, on the ground that there was between the claimant and RDS a real issue which it was reasonable for the court to try and the claimant wished to serve SPDC as a necessary or proper party to that claim.

RDS applied under CPR Part 11(1) for orders declaring that the court had no jurisdiction to try the claims against it, or should not exercise such jurisdiction as it had. At first instance Fraser J found that there was no arguable duty of care owed by the parent company Royal Dutch Shell Plc to those affected by the operations of its subsidiary in Nigeria.( [2017] EWHC 89 (TCC), noted in this blog on 2 February 2017. The governing law would be that of Nigeria, but the issue was decided under English law, because the legal experts for the parties were agreed that the law of Nigeria would follow, or at least include as an essential component, the law of England in this respect.

The Court of Appeal has now upheld the decision by a 2-1 majority, Sales LJ dissenting. The Court of Appeal applied the three stage Caparo Industries v Dickman test for assessing novel duties of care[1990] 2 AC 605 (HL) which set out three requirements, all of which had to be satisfied. (1) Was it foreseeable that if the defendant failed to take reasonable care, the plaintiff would be injured by the acts or omissions of the defendant (the foreseeability factor)? (2) Was there a relationship between the plaintiff the defendant characterized by the law as one of “proximity” or of being “neighbours” one to another (the proximity factor)? (3) as a matter of legal policy it would be fair and just to impose a duty of care on the defendant (the policy factor)? The duty of care argued for by the claimants foundered on the proximity requirement.

The claimants’ based their case on the duty of care owed by RDS to them on the fact that

“… [RDS] exerts significant control and oversights over [SPDC’s] compliance with its environmental and regulatory obligations and has assumed responsibility for ensuring observance of proper environmental standards by [SPDC] in Nigeria. [RDS] carefully monitors and directs the activities of [SPDC] and has the power and authority to intervene if [SPDC] fails to comply with the Shell Group’s global standards and/or Nigerian law.”

The claimants relied on five main factors to demonstrate RDS’s arguable control of SPDC’s operations: (1) the issue of mandatory policies, standards and manuals which applied to SPDC, (2) the imposition of mandatory design and engineering practices, (3) the imposition of a system of supervision and oversight of the implementation of RDS’s standards which bore directly on the pleaded allegations of negligence, (4) the imposition of financial control over SPDC in respect of spending which, again, directly relevant to the allegations of negligence and (5) a high level in the direction and oversight of SPDC’s operations.

Having reviewed the evidence submitted by the claimants Simon LJ concluded that none of the claimants’ five factors, either individually or cumulatively demonstrated a sufficient degree of control of SPDC’s operations in Nigeria by RDS to establish the necessary degree of proximity. There was no arguable case that RDS controlled SPDC’s operations, or that it had direct responsibility for practices or failures which were the subject of the claim. Simon LJ noted an important distinction between a parent company which controls, or shares control of, the material operations on the one hand, and a parent company which issues mandatory policies and standards which are intended to apply throughout a group of companies in order to ensure conformity with particular standards. “The issuing of mandatory policies plainly cannot mean that a parent has taken control of the operations of a subsidiary (and, necessarily, every subsidiary) such as to give rise to a duty of care in favour of any person or class of persons affected by the policies. [88]”.

A similar point was made by Sir Geoffrey Vos. The issue of mandatory policies, standards and manuals were of a highlevel nature and did not indicate control; control rested with SPDC which was responsible for its own operations.

“The promulgation of group standards and practices is not, in my view, enough to prove the “imposition” of mandatory design and engineering practices. There was no real evidence to show that these practices were imposed even if they were described as mandatory. There would have needed to be evidence that RDS took upon itself the enforcement of the standards, which it plainly did not. It expected SPDC to apply the standards it set. The same point applies to the suggested “imposition” of a system of supervision and oversight of the implementation of RDS’s standards which were said to bear directly on the pleaded allegations of negligence. RDS said that there should be a system of supervision and oversight, but left it to SPDC to operate that system. It did not have the wherewithal to do anything else.[205]”

 

Opkabi is one of three transnational tort claims involving attempts to sue a foreign subsidiary company using the English parent company as an ‘anchor’ defendant. In Lungowe v Vedanta and AAA v Unilever the court accepted that there was an arguable case that the anchor defendant owed a duty of care, although in AAA the claim foundered on the lack of foreseeability of the harm suffered by the claimants at the hands of third parties in the post-election violence in Kenya after the 2007 elections. An appeal is due to be heard later this year.

As a sidenote, in similar proceedings brought against SPDC in the Netherlands, using RDS as an ‘anchor defendant’, the Dutch Court of Appeal in December 2015 concluded that the claims against RDS were not bound to fail. They reasoned.

“Considering the foreseeable serious consequences of oil spills to the local environment from a potential spill source, it cannot be ruled out from the outset that the parent company may be expected in such a case to take an interest in preventing spills (or in other words, that there is a duty of care in accordance with the criteria set out in Caparo v Dickman [1990] UKHL 2, [1990] 1 All ER 56), the more so if it has made the prevention of environmental damage by the activities of group companies a spearhead and is, to a certain degree, actively involved in and managing the business operations of such companies, which is not to say that without this attention and involvement a violation of the duty of care is unthinkable and that culpable negligence with regard to the said interests can never result in liability.”

 

The claimants’ solicitors in Opkabi, Leigh Day, have indicated their intention to apply for leave to appeal to the Supreme Court.

 

 

Carry on suing in England – at least if you’re suing a non-European

In matters of tort foreign defendants domiciled in the EEA are reasonably well-protected from the exorbitant jurisdiction of the English courts. Both Brussels I Recast and Lugano II limit jurisdction to cases where where the act leading to liability, or the harm done by it, happened in England: furthermore, Euro-law makes it clear that the reference to harm here is fairly restrictive, referring only to direct harm and not to the financial effects of it, such as the straitening of an English widow’s circumstances following a wrongful death abroad.

By contrast, there is no such luck for defendants domiciled outside the EEA. For some time conflicts lawyers have remarked that English claimants, especially personal injury claimants, find it remarkably easy to establish jurisdiction against them. This is because CPR, PD6B 3.1(9), allows service out not only where damage results from an act “committed … within the jurisdiction” but also in all cases of damage “sustained …within the jurisdiction.”, and in a series of cases such as Booth v Phillips [2004] 1 WLR 3292 and Cooley v Ramsey [2008] ILPr 27 this has been held to cover almost any loss, even consequential, suffered in the jurisdiction. And in Four Seasons Holdings Inc v Brownlie [2017] UKSC 80 the Supreme Court by a majority (Lords Wilson and Clarke and Lady Hale vs Lords Sumption and Hughes) has now weakly upheld this distinction.

International law enthusiasts will know that this case arose out of a car accident in Egypt in which the late Prof Ian Brownlie was tragically killed and his widow was injured. The actual decision was in the event a foregone conclusion: by the time the case reached the Supreme Court it was clear that the defendants, the franchising company behind the Brownlies’ Egyptian tourist hotel which had organised the fatal car ride, had never contracted with the Brownlies and was not liable in tort for the acts of the hotel itself. Nevertheless, the majority in the Supreme Court, doubting the decision of the Court of Appeal on this point, made it clear that, while not finally deciding the issue, they were not prepared to condemn the older authorities. It seems likely that future cases will follow their lead.

One further point. Lord Sumption and Lady Hale made the point that the decision whether a contract was made in England, another of the “gateways” in non-EEA cases (see CPR, PD6B 3.1(6)), was in the light of cases like Entores v Miles Far East Corpn [1955] 2 QB 327, pretty arbitrary and could do with a look from the Rules Committee. They were right. Let’s hope something gets done.