Summary
The claimants, Lonsdale, were two UK companies. The defendant, Leofelis, was a Swiss company. The dispute was in respect of a Licence Agreement, which incorporated an exclusive English jurisdiction clause. On this basis, proceedings were initiated in England. Lonsdale sought a declaration that the licensing agreement was validly terminated. The claimant also sued for the payment of royalties in the sum of €1,675,000, and for damages of €3,500,000.
The defendant sought a stay of the English proceedings on the ground of Article 28, submitting that there were related proceedings in Milan, Italy.
The English court refused to grant a stay, and put forward three important reasons to do so. These were summarised as follows:
“45. […] As to the risk of irreconcilable judgments, Lonsdale’s evidence, which was unchallenged by Leofelis, is that if the termination of the Licence Agreement (i.e., when, by whom and on what ground) should have to be determined in the Milan Proceedings, the issue will be decided by the Milan court as a matter of English law, not least because, as I have mentioned, the Licence Agreement contains an English choice of law clause, and the Milan court will look to experts in English law to assist it to determine the issue. Indeed, the evidence continues, the Milan court would treat any decision by the English court on when and by whom the Licence Agreement was terminated as conclusive of that issue. Mr Leggatt submitted, and I agree, that in the light of that evidence a stay, so far from reducing the risk of inconsistent decisions, would increase that risk in that, without a stay, the decision of the English court (in the 2009 Proceedings) on the issue will be accepted by the Milan court.
46 […] On Lonsdale’s unchallenged evidence, the trial of the Milan Proceedings is not likely to be completed before early 2013 and if there is an appeal before late 2015. This is so whether, as Leofelis contends but Lonsdale disputes, the Milan court has already rejected Lonsdale’s challenge to the assertion of jurisdiction over it, since, according to Leofelis’s evidence, the Milan court envisaged that Lonsdale might wish to reopen the question. If that happens, a decision on jurisdiction is not likely to be given before early 2011. In short, Lonsdale’s unchallenged evidence is to the effect that the claims in the Milan Proceedings, which are contested, will take several years to conclude assuming Lonsdale’s challenges to the jurisdiction of the Milan court are unsuccessful. By contrast, in the 2009 Proceedings, even though it is not at all clear what matters Leofelis intends to rely upon in support of its contention that it was entitled to terminate the Licence Agreement on September 28, 2007 on grounds other than the one on which it in fact relied, the great likelihood must be that this can be determined within a relatively short period and, in all probability, long before it would come to be determined in the Milan Proceedings. In short, time favours the refusal of a stay.
47 As to “proximity”—the third of the factors identified by the Advocate General in Owens —namely, which court is the more suitable to determine the issue which could give rise to inconsistent judgments, the English court is obviously in the better position to do so as the issue is one of English law. Moreover, it comes ill from Leofelis which agreed, by cl.13.6 of the Licence Agreement, that the English court should have exclusive jurisdiction to seek by the stay the exercise in its favour of a discretion to enable a court other than the English court to reach a conclusion on the matter.” [45-47]