Summary
There was a share sale agreement. The seller, FKI, was domiciled in England. It sold its shares in a German company, DWG, to an English company, DWL. Various financial and declaratory claims were brought by FKI against DWL and DWG. The English proceedings were initiated on 6th July 2006; the German proceedings commenced on 20th July 2006. The claimants based their claim on Art. 6(1) of Brussels I.
The defendants challenged the jurisdiction of the English courts, submitting that the claims must be brought in Germany under Article 22(2) of Brussels I. The defendants’ arguments were that the proceedings were concerned with an issue of validity of manager’s decision as well as with an issue of validity of decision of a shareholder’s decision which was why, they argued, that the German courts had exclusive jurisdiction.
The English court dismissed the defendants’ jurisdictional challenge, holding that the claims were principally concerned with contractual claims. Consequently, it was stated that Article 22 was not relevant. The FKI’s main claim was characterised as a claim for breach of the share sale agreement (i.e. failing to provide financial info). The assessment of damages could not have been undertaken, without deciding whether the claim advance by DWG is valid. Therefore, the claim for negative declaration against DWG had to be determined as well. Both claims were closely linked, and thus within the scope of Article 6(1) of Brussels I. On 25th January 2007. Mr Justice Steel held that:
“26 I am not persuaded that the substance of the claims advanced in Germany and in respect of which the claimants seek declaratory relief involve the validity of a decision of the organ of DWG. To the contrary, they are principally concerned with contractual claims and thus not within the scope of Art.22.” [26]
On 28th February 2008, the defendant’s appeal was dismissed by the English Court of Appeal. In this context, Lord Justice Tuckey held:
“15 […] Article 6(1) requires one to identify the anchor claim and then the claim against the person domiciled in another member state and see whether they are so closely connected so as to make it expedient to determine them together. The claim in each case must be the whole claim; so a claim for breach of contract involves consideration of the breach relied on, causation and loss. It is not enough simply to look at the contract itself and see whether it is closely connected with the subject matter of the claim against the non-domiciled party.
16 With these considerations in mind I turn to the facts of this case. What is the anchor claim made by FKI? It is a claim for breach of the share sale agreement for failing to provide financial information. The cause of action has already arisen as Mr Samek conceded. There is nothing contingent about it. The loss is claimed on the basis that, but for the breach, the €25.6 million which FKI owed to DWG would have been shown as an asset among the net tangible assets which appeared in the completion statement in which case, DWL would have had to pay this amount to FKI. Damages of this amount are claimed, but no assessment of such damages is possible without deciding whether or not DWG's claim for the €25.6 million is valid. That is the question raised by the claim against DWG for a negative declaration. Exactly the same question is raised by DWG in its claim in the German proceedings. The claims are, it seems to me, inextricably linked, and so it must be expedient to hear them together to avoid the risk of irreconcilable judgments. No question of forum convenience arises when one is applying the provisions of the Judgment's Regulation .
17 Accordingly, this court has jurisdiction to hear the claim against DWG under Art.6(1) and its jurisdiction challenge must, I think, fail. This was the judge's conclusion which he expressed shortly and I agree with it.” [15-17]