Brussels Regulation | merits test applies to claim against an anchor defendant

Written on 7 Feb 2018

In a decision which confirms the established practice of the English Courts, the English Court of Appeal held, in the recent case of Sabbagh v Khoury, that jurisdiction under the 2001 Brussels Regulation over defendants domiciled outside of the jurisdiction based on a claim against an anchor defendant is subject to a test of the merits of that claim.

The decision will continue to help prevent the forum shopping tactic of claimants bringing proceedings in England against foreign parties, where the matter and the defendants have little or no connection to England, based solely on a spurious claim against an anchor defendant.

Article 6(1) of the 2001 Brussels regulations provide that a defendant may be sued in the courts of the place where any one of his prospective co-defendants are domiciled, provided the claims are so closely connected that it is expedient to hear them together. The provision does not expressly require that a claim against the anchor defendant must have a reasonable prospect of success before foreign defendants can be drawn into the jurisdiction of another member state.

A similar provision applies at English common law in the case of defendants domiciled outside of the EU (CPR PD 6B3.1(3)). However, the common law provision contains a condition that there must be is a real issue to be tried between the claimant and the anchor defendant which it is reasonable for the court to try. The court also has a general discretion to decline jurisdiction, on forum non-conveniens grounds, in unsuitable cases. Conversely, in cases where the Brussels regime applies, the court has no discretion to decline jurisdiction if granted by the Regulation.

Whilst the established practice of the English court has been to consider the merits of the claim against the anchor defendant, there has been no conclusive authority on the point and CJEU jurisprudence had suggested that Article 6(1) should be interpreted strictly. The CJEU in Reisch v Kiesel (C-103/05) had accepted that the Austrian court had jurisdiction against foreign defendants on the basis of a claim against an anchor defendant domiciled in the jurisdiction, even though that claim was inadmissible.

Sabbagh now confirms that Article 6(1) does not preclude a consideration of the merits of the claim against the anchor defendant. The court held that where the claim against the anchor is entirely without merit, there is no risk of irreconcilable judgements, and as such it is not expedient to hear the claims against the foreign defendants and anchor defendant together.

Article 8(1) of the Recast Brussels Regulation contains an identical provision to Article 6(1) of the 2001 regulation. The Lugano Treaty also contains similar provisions. This jurisprudence therefore is also applicable to the both the Brussels regulations and Lugano regime.

Whilst providing useful clarity, the decision in Sabbagh was obiter and only a majority (rather than unanimous) decision, with a strong dissenting judgement. As such, the law remains far from settled on this important point.