Top Optimized Technologies SL (A Company Incorporated Under the Laws of Spain) & Anor v Vodafone Group Services Ltd & Or…

(1) What I shall term the Madrid Proceedings, being proceedings commenced by TOT against Vodafone and Huawei Technologies Co (Huawei) in the Commercial Court in Madrid. These proceedings were commenced on 29 July 2016. Prior to the trial of the Madrid Proceedings, Vodafone successfully mounted a jurisdictional challenge to various claims TOT made against it. The basis for that challenge was that some of TOT’s claims against Vodafone were the subject of exclusive jurisdiction clauses in favour of the courts of England and Wales. To the extent that the claims were the subject of exclusive jurisdiction clauses, the contention succeeded, and the Spanish courts declined jurisdiction. However, TOT’s claims against Huawei continued, as did some claims against Vodafone for patent infringement.

(2) What I shall term the First UK Proceedings, being proceedings commenced by Vodafone against TOT under claim number HC-2017-000399. By the First UK Proceedings, Vodafone sought declarations that:

(a) Various claims (similar to those brought by TOT against Vodafone in the Madrid Proceedings) were time-barred. To be clear, Vodafone was seeking declarations that claims similar to those being advanced in Spain in the Madrid Proceedings would, if advanced in England and Wales, be subject to a limitation defence.

(b) The Madrid Proceedings were brought in breach of various exclusive jurisdiction clauses in agreements between Vodafone and TOT.

“In my opinion [the test in Canada Trust] is a serviceable test, provided that it is correctly understood. The reference to ‘a much better argument on the material available’ is not a reversion to the civil burden of proof which the House of Lords had rejected in [Vitkovice Horni a Hutni Tezirstvo v. Korner]. What is meant is (i) that the claimant must supply a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. I do not believe that anything is gained by the word ‘much’, which suggests a superior standard of conviction that is both uncertain and unwarranted in this context.”

(4) The First UK Proceedings

(a) That the issues in the Madrid Proceedings are directed against Huawei and are informed by Spanish law. On the other hand, the issues in the Second UK Proceedings are directed against Vodafone and will be informed by English law. There is a danger in overstating the degree of overlap.

(b) That Huawei and Vodafone are distinct parties in these proceedings. Although it was quite clear that Vodafone was maintaining a keen interest in the Madrid Proceedings and that Huawei was similarly maintaining a keen interest in the Second UK Proceedings – and that to that end there were communications between their respective lawyers – what unites Huawei and Vodafone is a common desire to defeat TOT’s claims. That common front will rapidly unravel were TOT to succeed in its claims either against Huawei or Vodafone, as no doubt the paying defendant (be that Huawei or Vodafone) would seek to recover some form of contribution to damages from the other.

(c) That whilst Huawei (as opposed to Vodafone) will have incurred costs in defending the Madrid Proceedings, it will be Vodafone (as opposed to Huawei) that will incur costs in defending the Second UK Proceedings. Of course, it may be that Huawei would be brought into the Second UK Proceedings, but (as I shall describe) the issues that would arise would be very different from those arising in the Madrid Proceedings.

“…[abuse of process] concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right thinking people. The circumstances in which abuse of process can arise are very varied…It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power.”

(d) Although, in his submissions, Mr Raphael, QC, leading counsel for Vodafone, denied it, this looks suspiciously like having one’s cake and eating it: I do not consider that Vodafone can suggest abusive conduct, and invite a stay on that basis, without establishing the abuse. The potentiality for an abuse argument is not enough. That is particularly the case where the potential for abuse is, as here, elusive. For my part, I can see nothing abusive in TOT litigating its claims against Vodafone, whilst at the same time litigating similar claims against Huawei. Had TOT quite deliberately engineered related claims in different jurisdictions against different parties, then that might be a relevant factor. But, as I have described, that is not this case. It is Vodafone that has forced the fragmentation of what was once a unitary set of proceedings before the Spanish courts.

“…success in the Madrid Appeal for the sums claimed would on TOT’s own case in Madrid compensate TOT fully for the entirety of the Huawei Infrastructure claim in UK2 against Vodafone because it would satisfy TOT’s entire claim for what is said to be a single overall commercial loss.”

I do not consider that there is anything in this point: it assumes that TOT succeeds in the Madrid Proceedings. That is by no means a given. It is quite possible that TOT loses in Spain, in which case the question of double-recovery does not arise. It certainly cannot be said that were TOT to lose in the Madrid Proceedings, TOT’s claim against Vodafone would be doomed to fail. Vodafone did not go so far as to assert this, and rightly so: I cannot properly presume TOT’s claims to be unarguable – and if that is Vodafone’s position, then Vodafone should apply to strike out the Second UK Proceedings.

(3) Claims against Huawei. Although this aspect of the litigation did not feature largely in Vodafone’s written submissions, it was considered in Vodafone’s evidence before me:

(a) The point was made that Vodafone had potential claims for contribution against Huawei in the event that Vodafone was found liable to TOT. I was not taken in detail to the basis for such claims, but I understand that they arise out of contractual indemnities provided by Huawei to Vodafone in the contracts between them.

(b) In Hoar 1 and Hoar 2, Vodafone asserted an intention – if the Second UK Proceedings progressed – to join Huawei as a third party to those proceedings for the purposes of contribution or indemnity pursuant to these provisions. However, as was explained in Hoar 3/§7, the position was not as straightforward as asserted in Hoar 1 and Hoar 2:

“Having sought to reconfirm that position last night and during the course of today, it appears that the position is more complicated than I, and our instructing client, had understood, there being over one hundred contracts governing the relationship globally between Huawei and Vodafone. Some of those contracts are subject to arbitration clauses while others may not be. The question of which contracts are relevant to any claim by Vodafone for indemnity/contribution from Huawei in relation to the breaches of confidence alleged by TOT in UK2 and which (if any) have been revised, is being investigated. The exercise is complicated by the fact that I understand TOT’s breach of confidence claims not to be limited, as concerns Huawei’s products, to the use of those products in the UK or to particular or identified models of Huawei equipment. That investigation is ongoing and during the course of the day it has become apparent that, given its scope, it may take some time to be resolved.”

“…it remains the case that the UK2 Confidence Claims appear to be an attack on Huawei through Vodafone and/or relitigate the position against Huawei, giving rise to abuse. It also remains the case that as and when Vodafone do pursue Huawei for contribution/indemnity (if such was refused), there is a real prospect that Huawei would seek to rely on the Madrid decisions…”

There is a great deal wrong with this assertion, which I reject:

(ii) It is entirely wrong to characterise TOT’s claims against Vodafone as an attack on Huawei. TOT’s claims are against Vodafone, and they will stand or fall on their own merits. Vodafone has an independent (albeit related) claim for an indemnity or contribution against Huawei in relation to its own liability to TOT.

(iii) If and to the extent that the contribution claim by Vodafone against Huawei constitutes an abuse, that is a point that Huawei, and not Vodafone, should advance at the appropriate time.

E. ANALYSIS AND CONCLUSIONS

“Article 30 is best thought of as the provision which may apply if the English court is seised second but the conditions for the application of Article 29 are not met. It contributes to the coordination of adjudication, but in a discretionary fashion. It permits a court seised second simply to stay its proceedings to await the outcome of an action which is still pending in the court seised first, whether it is pending at first instance or on appeal. It also allows it to decline jurisdiction over the action before it, if this action may be consolidated into the action which is pending at first instance in the court seised first, though only if the court seised first would have, independently, jurisdiction over the action which is proposed to be dismissed: this is because Article 30 does not provide a ground for jurisdiction over the second claim but provides only a mechanism for consolidation of two actions over each of which the first court does or would have jurisdiction. And, of course, it also allows the court to conclude that neither of these things is appropriate, but to press on and adjudicate. In particular, if proceedings in the court seised first are going to be slow, and especially if the foreign court will take proper account of an English decision given in the meantime, it may well be correct to refuse to grant relief but require the parties to get on with it in England.”

“Though it is easy enough to understand in principle, and is often a matter of common ground Between the parties, the application of this definition to the facts of actual cases may sometimes give rise to difficulty. It was held in The Tatry the actions are related for the purpose of what is now article 30 if they would involve the risk of conflicting decisions, without necessarily involving the risk of giving rise to mutually exclusive legal consequences. This gives the expression ‘irreconcilable’ as used in Article 30 a relatively loose meaning. This is perfectly sensible – a flexible rule which is designed to prevent the occurrence of conflicting judgments is perfectly comfortable alongside a narrow and restrictive one applicable when it is sought to withhold recognition from a judgement which is already, after what maybe much effort and cost, being given.”

(3) Thus, Article 30 may apply to cases where the same cause of action is in dispute, but between different parties, or where there are different causes of action in proceedings between the same parties.

(5) A wide approach correlates with Article 8(1). Article 8(1) provides:

“A person domiciled in a Member State may also be sued:

(1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

The similarity in wording between Article 8(1) and Article 30(3) is striking, and it seems to me that (a) the words ought to be read similarly and (b) Article 8(1) reinforces the need to read Article 30(3) widely. The whole point of Article 8(1) is to enable claims (not actions) against multiple defendants to be pooled before the courts of the domicile of any one of those defendants.

(b) TOT fails in the Madrid Proceedings. There is absolutely no reason why TOT cannot succeed in the Second UK Proceedings in this case, and it seems to me that a stay imposed on TOT against its will would be contrary to the basic principle that a claimant ought – absent good reason – to be entitled to bring its claim as expeditiously as possible (consistent, of course, with the interests of other court users). Again, for the reasons I have given, I do not consider that either Vodafone or Huawei have reason to complain if the Second UK Proceedings are progressed without a stay.

(3) This accords with my conclusion that the Second UK Proceedings are in no way an abuse of process, at least on the facts as they stand.

(4) Moreover, this is a case where Vodafone has avoided – entirely properly – the jurisdiction of the Spanish courts by invoking the exclusive jurisdiction clauses in favour of England and Wales. Vodafone could have submitted to the jurisdiction of the Spanish courts under Article 26, but instead elected to invoke Article 25. As a result, proceedings involving all relevant parties (Vodafone and Huawei) and so eliminating any risk of irreconcilable judgments have not been possible. No criticism can be made of Vodafone in this: but, conversely, it seems to me perverse now to prevent the progression of the Second UK Proceedings in circumstances where the fragmentation of the originally constituted Madrid Proceedings against Huawei and Vodafone has occurred at Vodafone’s insistence.

(5) Yet further, the parties have agreed that the contractual claims that TOT has against Vodafone are to be litigated in this jurisdiction. That is an agreement to which this court attaches considerable weight (even if Vodafone had not used those provisions to extract itself from the Madrid Proceedings). The fact is that TOT’s claims are being heard in the jurisdiction where the parties have agreed they should be heard. Of course, Vodafone’s point is that it is in no way seeking to prevent the litigation in England, but merely to put it off until the outcome of the Madrid Proceedings is known. But, given that the Madrid Proceedings can in no way give rise to any kind of estoppel that would bind TOT, and given my assessment in paragraphs 45(1) and (2) above, I can see no point in awaiting the outcome of the Madrid Proceedings unless TOT and Vodafone were together to agree that was an appropriate course. A court would, without blindly following such an agreement, attach some weight in granting a case management stay in such circumstances. But that is not this case: here, TOT wishes to proceed, and that, as it seems to me, is a right that Vodafone cannot unilaterally thwart by advancing the jurisdictional arguments that it has.

“…if for any reason there is a technical gap in Article 30, which does not give a basis for a stay although one would be required consistently with the overriding objective, one should be granted.”

I agree. This is not a case where Article 30 of Brussels I Recast has failed to operate on the grounds of a technicality. It confers on me the jurisdiction to stay the Second UK Proceedings, but (for the reasons I have given) it is entirely inappropriate for that jurisdiction to be exercised. In these circumstances, there is no basis for granting a stay outside Article 30 because of what is going on in another jurisdiction. Indeed, I consider that were I to grant a case management stay in this case, I would be thwarting rather than furthering the objectives of Article 30.