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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> McGraw-Hill International (UK) Ltd v Deutsche Apotheker -Und Arztebank EG & Ors [2014] EWHC 2436 (Comm) (18 July 2014) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2014/2436.html Cite as: [2014] EWHC 2436 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/07/2014

Mr Justice Cooke:

Introduction

1. This is an application by the fifth defendant, now called The Royal Bank of Scotland NV but at the material time known as ABN Amro Bank NV. For the sake of simplicity and because of cross-references to the proceedings begun against the fifth defendants in The Netherlands, I shall refer to them throughout as ABN Amro. ABN Amro seeks a declaration under Part 11 of the CPR that this court lacks jurisdiction to hear the claims against it and seeks an order setting aside service out of the jurisdiction.
2. ABN Amro is a public limited company domiciled in The Netherlands. The claimant McGraw-Hill International (UK) Limited is a company incorporated in England and Wales to which I refer as S&P, since the issues which arise in these proceedings relate to its function in rating instruments as Standard and Poor's at the material times. The fourth defendant is a civil law foundation domiciled in The Netherlands which describes its object as being to represent legal entities (on a not for profit basis) which had subscribed for "Constant Proportion Debt Obligations" (CPDOs) arranged by ABN Amro Bank NV. The first and third defendants are domiciled in Germany and Austria respectively, whilst the second defendant is merged into the third defendant. These defendants are said to be investors in the CPDOs issued by ABN Amro.
3. These proceedings were issued on 23rd May 2013 but not served until November 2013, by which time there was a re-re-amended Claim Form. Initially S&P sought a declaration that it was not liable to the first-fourth defendants (to which I shall collectively refer as SRR, save where it is necessary to distinguish between any of the defendants) but joined ABN Amro in the proceedings as a fifth defendant without seeking any specific relief against it. No declaratory relief was sought against ABN Amro, nor did S&P make any alternative claim against ABN Amro should S&P be found liable to SRR.
4. The re-re-amended Claim Form and the Particulars of Claim now bring into issue ABN Amro's liability to SRR. S&P, which always sought a declaration that it was not liable to SRR, now additionally claims a declaration that ABN Amro has no liability to SRR (for convenience referred to as the Principal Declaration Claim). Alternatively, and contrary to its primary case, in the event that the court should find that S&P is liable to SRR, it seeks a declaration that ABN Amro is also liable in respect of the same damage (for convenience referred to as the Alternative Declaration Claim). S&P does not however ask the court to apportion any liability as between itself and ABN Amro or seek any indemnity or contribution from ABN Amro in respect of any liability it might be under. It merely seeks, as against ABN Amro, one of the two declarations to which I have just referred.
5. Two months after S&P issued its re-re-amended Claim Form, SRR issued proceedings against S&P and ABN Amro in the District Court of Amsterdam (the Dutch Proceedings). I shall refer to a translation of SRR's 111 page Summons in the Dutch Proceedings, which sets out its claim, subsequently in this judgment but ABN Amro's solicitor, in his first witness statement, describes the proceedings in the following way, where the references to RBS and McGraw-Hill, should be taken as references to ABN Amro and S&P respectively.

"12. The Dutch Proceedings relate to the sale of certain European investors of certain financial instruments known as "Constant Proportion Debt Obligations" ("CPDO") transactions, the credit ratings of which were given by McGraw-Hill. The investors were domiciled variously in Germany, Austria and Switzerland. The relevant CPDO transactions were arranged by RBS (which at the time was called ABN). SRR seeks to establish RBS's and McGraw-Hill's liability to it on behalf of its investors, who have purportedly assigned their claims to SRR under Dutch or Swiss law without any accompanying assignment of the CPDO notes purchased by those investors (see paragraphs 14-17 of the Dutch Summons, at page 135 of PWR-1). SRR contends that liability exists variously under German, Austrian and Swiss law on a number of bases, including: tort, contract, advisory duty and prospectus liability, the applicable law depending on the domicile of each investor which has purportedly assigned its claim.

13. In section 10 of the Dutch Summons (paragraphs 334-335), SRR says that the Dutch Courts have jurisdiction with respect to the claims against RBS because RBS is domiciled in The Netherlands. The Dutch Courts are said to have jurisdiction to hear the claims against McGraw-Hill because:

"The accusation that the Foundation [SRR] level against RBS and S&P [McGraw-Hill] are based on the same events. The matter essentially concerns the promotion and marketing of CPDOs which S&P wrongly gave AAA or AA ratings. RBS and S&P are being held jointly and severally liable for the damage sustained as a result. For reasons of efficiency, a joint hearing is therefore justified. Furthermore, there is a risk of irreconcilable judgments if the matters are heard separately. Given the close connection between both actions, the Dutch Courts have jurisdiction to hear both matters (Article 6 of the Brussels 1 Regulation and section 7 DCCP.)"

…"

6. As between S&P and SRR, S&P's claim for a negative declaration meant that the English court was first seized of the subject matter of the dispute between them. It appears that there may however be additional investors involved in the Dutch Proceedings, over and above those to whom I have collectively referred as SRR, though whether they have independent existence or have merely assigned claims to SRR is uncertain. S&P has contested the jurisdiction of the Amsterdam court in the Dutch Proceedings on the basis of Article 27 of Regulation EC 44/2001 (the Regulation), stating that the proceedings in The Netherlands involve the same cause of action as the proceedings in England and on the basis that the English court was first seized of jurisdiction. Alternatively, it seeks a stay on the basis of Article 28 of the Regulation on the basis of the close relationship of the actions, it being expedient to resolve all the issues between the parties to the English action at the same time and in the same court in England. Considerably later, on 30th April 2014, ABN Amro filed a motion to dismiss SRR's claim against it for lack of jurisdiction of the Dutch court but it did so on a conditional basis, depending upon whether or not the English court should decide that it had jurisdiction over the claim between S&P and ABN Amro, the subject of the applications before me.
7. Following service of the re-re-amended Claim Form in these proceedings, solicitors for SRR filed acknowledgements of service and in January 2014 confirmed that none of the first, third or fourth defendants would be disputing the jurisdiction of the English court to hear the claim. In a letter to ABN Amro however, dated 30th January 2014, SRR stated its intention to pursue its claim in The Netherlands against ABN Amro. On the face of it, SRR, whilst recognising in the Dutch proceedings that its claims against S&P and ABN Amro should be heard at the same time and in the same place, appeared prepared to contest S&P's liability in England and ABN Amro's liability in The Netherlands (whilst not making it clear whether it would also contest S&P's liability in The Netherlands as well).
8. ABN Amro acknowledged service of the English proceedings on 7th January 2014, indicating its intention to challenge the jurisdiction of this court but stating that its objective is not to avoid determination of the claims against it but merely to ensure that its liability and that of S&P are determined by the same court at the same time.
9. It can be seen that the parties have been jockeying for jurisdictional positions. Each states its recognition that all the disputes between SRR, ABN Amro and S&P should be resolved by the same court at the same time, but each takes a slightly different and in some cases, a nuanced, stance to the proceedings in one court or the other. S&P is clear that all matters should be determined in England. SRR began proceedings in The Netherlands because ABN Amro was domiciled there. S&P was a defendant which was claimed to be jointly and severally liable with ABN Amro but SRR now accepts the English court's jurisdiction in relation to S&P's claim for a declaration of non-liability to it. ABN Amro appears to be more ambivalent about where the proceedings should take place.
10. SRR has not indicated whether it will make any claims against any other party in the course of the English proceedings where it accepts the jurisdiction of the court to determine S&P's liability to it. In contesting that liability it would appear of necessity to be bound to bring its own claim, whether for a declaration or for damages against S&P whereupon S&P would doubtless issue a Part 20 claim against ABN Amro, seeking a declaration of entitlement to indemnity or contribution, or actual indemnity or contribution. SRR has indicated however that it would only bring a counterclaim in the English proceedings if the Dutch courts declined jurisdiction.
11. It is self-evident that it would be best for the issues of liability to SRR on the part of ABN Amro and S&P to be determined by the same court at the same time and for any claims between S&P and ABN Amro arising out of the subject matter of that dispute to be resolved at the same time in a single or combined action. Any other course would result not just in duplication of work in two jurisdictions but the possibility of one or both courts in the individual jurisdictions being deprived of the full picture when making its decision as a result of limited documentation or evidence from an absent participant in the primary events said to give rise to liability on one or both of S&P and ABN Amro. There is the possibility of inconsistent judgments which could create difficulty of enforcement under Article 34 of the Regulation. Duplicative or overlapping proceedings are obviously undesirable and it is the policy of the law to avoid this if it is possible to do so.

The nature of the relief claimed by S&P

12. The Particulars of Claim served on 6th March 2014 set out S&P's case that it is under no liability to SRR under the English law of tort which, it says, governs its liability. It denies duty, breach and damage. At paragraph 72 it sets out its case that, to the extent that ABN Amro provided SRR with the credit rating opinions and materials that S&P had published in relation to the CPDOs, ABN Amro is not liable to SRR for any losses because the credit ratings were reasonable or SRR did not rely or reasonably rely on them or that they did not cause SRR loss.
13. This is followed by the alternative case that, if, which is denied, SRR did suffer loss and damage in reliance upon the credit ratings assigned by S&P, ABN Amro is liable in respect of the same damage for which S&P is liable. S&P states its reliance, in particular, upon the following facts and matters:

"(a) ABN AMRO's London branch arranged and structured the Claim CPDOs and sought credit ratings for the Claim CPDOs from S&P;

(b) ABN AMRO's London branch provided information to S&P for S&P's use when assigning credit ratings to the Claim CPDOs;

(c) ABN AMRO marketed the Claim CPDOs and dealt directly with Investors or those acting on their behalf in relation to the Claim CPDOs (including, it is to be inferred, informing the investors of S&P's credit ratings of the Claim CPDOs and making further or additional representations to the Investors about the nature and/or implications of such credit ratings and about the Claim CPDOs); and

(d) on the hypothesis (which is denied) that the credit ratings assigned by S&P to the claim CPDOs were credit ratings that S&P could not reasonably have assigned, it is to be inferred that ABN AMRO through its London branch had knowledge through its dealings with S&P of some or all of the factors rendering the credit ratings unreasonable, but ABN AMRO is believed to have provided such credit ratings to Investors without stating this."

14. This is followed by paragraph 74 which reads:

"S&P accordingly reserves its right to claim a contribution or indemnity from [ABN Amro] if, contrary to its primary case above, it is liable to [SRR]."

15. This is then followed by the claims for declarations:

i) That in relation to the publication of credit ratings, S&P is not liable to SRR.

ii) That to the extent that ABN Amro provided SRR with the credit ratings, opinions and materials that S&P had published, ABN Amro is not liable to SRR.

iii) That, if, which is denied, S&P is liable to SRR, ABN Amro is also liable in respect of the same damage.

The jurisdiction issues

16. The jurisdiction issues which arise between ABN Amro and S&P differ in respect of the second declaration referred to in the preceding paragraph (the Principal Declaration Claim) and the third declaration referred to (the Alternative Declaration). S&P relies on Articles 5.3 and 5.5 of the Regulation in relation to both but on Article 6.2 in relation to the Alternative Declaration only. ABN Amro submits that there is no lis between itself and S&P on either declaration. This last point is effectively a threshold point taken by ABN Amro.
17. ABN Amro submits that, since it is domiciled in The Netherlands, and the basic principle of the Regulation is that a defendant is entitled to be sued in his domicile, the burden is on S&P to establish one of the grounds for Special Jurisdiction which are based on the existence of a particularly close connection between the dispute and the courts of a country other than those of the defendant's domicile. In support of this, ABN Amro relies upon paragraphs 11 and 12 of the Recitals to the Regulation and upon the terms of Article 2.1 and Article 3.1 of the Regulation itself. About this there is no issue between the parties.
18. In Kalfelis v Schröder Case 189/87 [1988] EWCR 5565, the ECJ made it clear at paragraph 19 that the "special jurisdictions" enumerated in Articles 5 and 6 of the Convention (as it then was) constitute derogations from the principle that jurisdiction is vested in the courts of the State where the defendant is domiciled and as such must be interpreted restrictively. It went on to point out in paragraph 20 that, although disadvantages arise from different aspects of the same dispute being adjudicated upon by different courts, a plaintiff is always entitled to bring his action in its entirety before the courts of the domicile of the defendant and that Article 22 (now 28) allowed the court first seised, in certain circumstances, to hear the case in its entirety, provided that there was a sufficient connection between the actions brought before the different courts.
19. In Dumez France v Hessische Landesbank Case 228/88 [1990] ILPr 299, the ECJ set out the exceptional nature of the special jurisdictions at paragraphs 16-19. At paragraph 17 it stated the following:

"Only by way of exception to the general rule that the court of the State of the defendant's domicile has jurisdiction does Section 2 of Title II provide for a number of special jurisdictions, which include that of Article 5(3). As the Court has already held, the special jurisdictions, which can be chosen at the plaintiff's option, are based on the existence of a particularly close connection between the dispute and the courts other than those of the defendant's domicile, which justifies conferring jurisdiction on those courts on grounds of the efficient administration of justice and the proper organisation of the action."

20. At paragraph 18, the court drew attention to the need to avoid the multiplication of competent courts which increases the risk of irreconcilable judgments which could create a ground for refusal to enforce a judgment under the Convention (now the Regulation).
21. Although the underlying rationale for special jurisdictions is thus expressed by reference to "the existence of a particularly close connection" between the dispute and the court which is not that of the defendant's domicile, that connection is obviously itself not enough to establish jurisdiction. The claimant must bring itself with in the terms of the relevant part of Article 5 or 6 as the case may be.
22. It is also true to say that, whilst the policy of the Regulation is to avoid a multiplicity of proceedings in relation to the same subject matter or overlapping issues, it is well recognised that this may not always be achievable as dicta in The Tatry Case 406/92 [1999] QB 515 and in Kalfelis (at paragraph 20) show. The courts remain bound by the terms of the Articles which confer jurisdiction, whilst being able to take account of the connection of the parties and the dispute to the court in question when applying the terms of Articles 5 and 6.
23. Article 5, insofar as relevant, provides as follows:

"A person domiciled in a Member State may, in another Member State, be sued:

…

3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

…

5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated; …"

24. Article 6 of the Regulation provides:

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

…

2. as a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case; …"

25. It is also common ground between the parties that, as far as possible, the terms of the Regulation are to be given autonomous meaning. The jurisdictional question must be answered by the use of independent or autonomous or delocalised definitions of terms and not by recourse to national law.
26. The test which the court has to apply in deciding whether jurisdiction is established under the Special Jurisdiction grounds of Articles 5 and 6 has been established by decisions such as Shevill v Presse Alliance (Case-68/93) [1995] 2 AC 18 (ECJ) and Canada Trust v Stolzenberg No. 2 [1998] 1 WLR 547. The claimant must show a good arguable case that the terms of those Articles are satisfied, which means that it must have much the better of the argument on the point at issue.
27. ABN Amro refers to Cheshire & North's Private International Law, 14th edition, at pages 226-7 where it is said that there is also a threshold requirement in cases of Special Jurisdiction that the claimant must satisfy the court that there is a serious issue on the merits to be tried. Authorities cited by Mr Yeo for ABN Amro refer to the need for "a genuine and real dispute" or to a "credible claim". The purpose of this requirement is to avoid breach of the fundamental domiciliary principle without good and sufficient reason and the proliferation of proceedings which could give rise to the possibility of irreconcilable judgments.
28. It is accepted by Mr Yeo that a claim for negative declaratory relief of the kind advanced here by S&P can be the basis for an assertion of jurisdiction but he submits rightly that the relevant allegations which fall to be considered in determining whether Special Jurisdiction grounds exist under Articles 5 and 6 are those of the party which alleges liability – see the decision of the Court of Appeal in Boss Group Ltd v Boss France SA [1997] 1 WLR 351 at page 356F-357C. For present purposes, the key issues for the court relate to the way SRR frames its claims against ABN Amro and S&P since it is to these matters that the negative declaration sought by S&P refer. As ABN Amro points out, care must be taken when applying the Boss principle in a tripartite situation such as the present where the declaration sought does not relate to the liability of ABN Amro to S&P or vice versa. The fact remains however that the issue of their respective liability to SRR is closely bound up with the interrelationship between them and the part that each played in the rating of the CPDOs and the publication of those ratings as part of a marketing presentation to SRR.

The lis issue

29. As to the lis issue, ABN Amro refers to the Boss decision again, where a negative declaration was being sought. Saville LJ (as he then was) in a judgment with which the other members of the Court agreed, said at page 356H that it was incumbent on a claimant to satisfy the court at least that there was a good arguable case that the essential prerequisites for jurisdiction existed. At page 358E-G he said the following:

"It is of course the case that the English courts look very carefully at proceedings for negative declarations: see Guaranty Trust Co. of New York v. Hannay & Co. [1915] 2 K.B. 536 and Camilla Cotton Oil Co. v. Granadex S.A. [1976] 2 Lloyd's Rep. 10, 14, per Lord Wilberforce. This does not, however, mean that caution in this regard can be used as a substantive ground for declining jurisdiction under the Convention, for this would derogate from the Convention. What it does mean is that the court will be astute in such cases to prevent the article from being used in frivolous or vexatious cases, just as it is astute to stop summarily cases where the plaintiffs seeking to establish a contract cannot show that there is a serious issue which calls for a trial for its proper determination: see Tesam Distribution Ltd. v. Schuh Mode Team G.m.b.H. [1990] I.L.Pr 149. In such cases the court is simply preventing the party concerned from abusing its process."

30. In Messier-Dowty Ltd v Sabena SA [2000] 1 WLR 2040 (CA) at 2048C-G Lord Woolf MR stated:

"… in view of the primacy which the Convention gives to the jurisdiction which is first seised of proceedings, it is not proper to criticise a claimant, who is in a position to bring perfectly appropriate proceedings, for commencing those proceedings earlier than he would otherwise do, so as to obtain an advantage under the Convention. As Saville L.J. stated in Boss Group Ltd. v. Boss France S.A. [1997] 1 W.L.R. 351, 358:

"the charge of forum shopping can only be made good by assuming that a party which takes advantage of the Convention exceptions to the general rule of domicile is somehow doing something illegitimate; but that assumption cannot be sustained if in truth one of the exceptions is applicable."

The position is different if a defendant is added to the proceedings, despite the absence of any credible claim, solely to claim jurisdiction against a party who could otherwise not be joined in the proceedings. Such tactics are an abuse of the process of the court, as was held by the Supreme Court of Ireland in Gannon v. British and Irish Steampacket Co. Ltd. [1993] 2 I.R. 359."

31. In Brown v Innavatorone [2010] EWHC 2281 (Comm) a bank domiciled in Switzerland applied for an order declaring the English courts had no jurisdiction to hear claims for negative declaratory relief against it. The claimant had relied upon Article 6.1 of the Lugano Convention. Hamblen J held, inter alia, that as a threshold issue it was necessary for there to be a genuine claim between the claimant, seeking to rely on Article 6(1), and the defendant who would be affected by the application of Article 6(1) and not just as between the claimant and the "anchor" defendant); and that there was no genuine claim because, having regard to the limits of the English court's power to grant declaratory relief, there was no seriously arguable claim that the English court would grant the declaratory relief sought."
32. The first declaration sought, as set out earlier in this judgment, relates only to the position as between S&P and SRR and does not concern ABN Amro as such. The second declaration sought is the Principal declaration, which does involve ABN Amro because it is to declare that ABN Amro is not liable to SRR at all. There is, however, as ABN Amro states, no issue at all between S&P and ABN Amro on this point since they both contend this is the case, let alone a serious issue on the merits to be tried. Whilst it is suggested by S&P that making such a declaration has utility and it is open to the court to make a declaration in such circumstances, this does not meet the jurisdiction point which arises in the context of showing Special Jurisdiction grounds, as contrasted with the domiciliary principle.
33. On this point alone this court cannot accept jurisdiction over the Principal Declaration Claim. The basis for jurisdiction in respect of it does not exist and there is therefore no reason to consider the provisions of Article 5.3 or Article 5.5 in relation to it.
34. On the Alternative Declaration Claim, ABN Amro submits that there is no dispute which could constitute a lis because the claim consists of two elements. The first is the contingency, namely S&P's liability to SRR, whilst the second, which is subject to the fulfillment of the contingency, is the liability of ABN Amro to SRR which is said to be in respect of the same damage for which S&P is liable.
35. This is not, as it is labeled by S&P, a Contribution Claim. S&P merely seeks a conditional declaration as to any liability of ABN Amro to SRR without claiming any contribution or indemnity. At paragraph 74 of the Particulars of Claim, S&P expressly reserves its right to bring such a claim for contribution or indemnity at a future time. The current claim for a declaration does not include any request to the court to apportion liability or award any damages, indemnity or contribution to S&P from ABN Amro: nor is there any claim for a declaration that S&P is entitled to be indemnified by ABN Amro in respect of any liability which S&P has to SRR.
36. It does not however follow from this, as Mr Yeo submits, that the Alternative Declaration Claim is, in substance, no more than the inverse of the relief in the Principal Declaration Claim. On S&P's primary case, the question of ABN Amro's liability to SRR is not in dispute as between S&P and ABN Amro, but the Alternative Declaration Claim is. Mr Yeo submits that the question of ABN Amro's liability to SRR is not a matter in dispute between S&P and ABN Amro, whether expressed in terms of positive or negative declaratory relief and so, it is said, if this court has no jurisdiction over ABN Amro in relation to the Principal Declaration Claim, then the Alternative Declaration Claim cannot be a valid freestanding claim because there is no lis between ABN Amro and S&P, neither party suggesting, either in the English proceedings or the Dutch proceedings, that the other is liable for damage for which itself is not liable.
37. I cannot accept this submission. I asked Mr Yeo whether ABN Amro accepted that, if S&P was liable to SRR, ABN Amro was liable for the self-same damage. Inevitably, he answered in the negative. It is self-evident that, if ABN Amro is required to plead to the Particulars of Claim, it will deny this allegation. There is therefore a lis between ABN Amro and S&P on this point – a serious issue to be tried as between them in the event that the contingency comes into play.

The Special Jurisdiction Grounds

38. I turn then to the Special Jurisdiction grounds in relation to the Alternative Declaration Claim, taking first the Article 6.2 issue which only applies to the Alternative Declaration Claim. The other Articles are said to apply also to the Principal Declaration Claim. If there had been a lis on the Principal Declaration, my decision on those grounds would apply mutatis mutandis.

Article 6.2

39. ABN Amro submits that S&P's reliance on Article 6.2 is flawed for three reasons:

i) Article 6.2 cannot be invoked by a claimant;

ii) the Alternative Declaration claim is not "third party proceedings" within the meaning of Article 6.2; and

iii) the object of joining ABN Amro is to remove ABN Amro from the courts of its domicile, namely the courts in Amsterdam.

40. I am unable to see how the claim brought by S&P against ABN Amro can properly be described as "third party proceedings", whether the matter is viewed from the perspective of an English lawyer alone (which it should not be) or through an "autonomous" or "independent" or "international" eyeglass. ABN Amro is one of a number of defendants to S&P's claim for declarations with no distinction drawn between it and other defendants. S&P is the claimant and there is no claim made by it against ABN Amro for indemnity or a contribution in respect of any liability that it might be under to SRR as is plain from paragraph 74 of the Particulars of Claim to which I have already referred.
41. Article 6.1 is the relevant provision that would apply to a party seeking jurisdiction over an additional non-domiciled defendant in circumstances where it sought relief against a domiciled defendant. Article 6.1 allows a person domiciled in a Member State to be sued "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". Here, England is not a place where any of the defendants who are being sued are domiciled, so Article 6.1 cannot apply and is not relied on.
42. The proceedings cannot be seen as third party proceedings nor treated as, in substance, a third party claim, as S&P submits. It is true that if SRR had sued S&P in this country, S&P could have made a Part 20 claim against ABN Amro but SRR chose to sue ABN Amro in The Netherlands and, by bringing a claim in England, whether to preempt any claim against it in The Netherlands under Article 6.1 or to ensure that its liability was determined in its country of domicile, S&P cannot redefine a named defendant, ABN Amro, as a third party, whether regard is had to the substance or the form of the proceedings in English or autonomous eyes.
43. It is no answer to assert, as S&P does, that, but for bringing this claim alongside a claim for negative declaratory relief, S&P itself would be a defendant because SRR chose to sue in the courts of ABN Amro's domicile and add S&P as a non-domiciled defendant under Article 6.1, rather than suing S&P in the courts of its domicile and adding ABN Amro as a non-domiciled defendant under the same Article. S&P is not a defendant in this jurisdiction and SRR has not brought any suit against it here. It is only a defendant to the suit brought by SRR in the Dutch proceedings which is irrelevant when considering whether Article 6.2 applies in the English proceedings. S&P has to establish jurisdiction by reference to its actual capacity in the English proceedings, rather than by reference to some hypothetical capacity and/or capacity in foreign proceedings.
44. The fact that jurisdictional issues between SRR and S&P proceed on the footing of the putative basis of liability of S&P to SRR, as if SRR was claimant and S&P was defendant, does not assist S&P. As has been said, negative declarations can lead to procedural complications because of the necessary reversal of the usual roles, but the court cannot proceed on the basis that SRR has made a claim against S&P here (which it plainly has not) to which S&P seeks to join ABN Amro in third party proceedings. It cannot do so (as is recognised by paragraph 74 of its Particulars of Claim) unless and until SRR does bring its counterclaim here and S&P claims over against ABN Amro for contribution or indemnity. Such a counterclaim might appear to S&P to be inevitable and if such a counterclaim is pursued by SRR no doubt the contribution/indemnity claim itself is inevitable, but the court cannot work on any other basis than the current state of the proceedings as they stand.
45. In my judgment ABN Amro cannot be seen as a third party nor the claim for a declaration against it as third party proceedings. Whilst I do not need to find that the proceedings against ABN Amro were brought with the object of removing ABN Amro from the jurisdiction of the Dutch courts which are competent in its case because its domicile is in The Netherlands, that does appear to be the primary purpose of including ABN Amro in the action, even though this was effected with the motive of avoiding duplication or overlapping proceedings in two jurisdictions. The object was to secure the appearance of SRR and ABN Amro here rather than in a suit in The Netherlands. The negative declarations sought against SRR give rise to justifiable jurisdiction over SRR, as it has recognised, but this is not sufficient to justify the inclusion of ABN Amro in the same proceedings as third party, on the basis that the claim against it is to be treated in substance as third party proceedings. The effect of S&P's success in this argument would be to allow a claimant to bring proceedings in the court of its own domicile against a defendant and to subvert the domiciliary principle, the terms of Article 3 and the terms of Articles 5 and 6.1. The effect of these provisions cannot be evaded by labeling the claim against ABN Amro as third party proceedings when it is not that in either form or substance.

Article 5.3

46. The ECJ in Kalfelis (ibid.) at paragraph 18 made it plain that the term "matters relating to tort, delict or quasi-delict" must be regarded as an independent concept covering all actions seeking to establish liability which are not related to a contract within the meaning of Article 5.1.
47. There is no dispute that the claim framed by SRR in The Netherlands is essentially a claim for negligent misrepresentation. At paragraph 343 of the Summons in the Dutch Proceedings, SRR states that "the tort essentially consists of issuing statements about the misleading AAA and AA ratings since these ratings lacked reasonable grounds and were not the product of the exercise of reasonable care. Those statements did not disclose the deficiencies in the rating." I shall return later to the form and nature of the statements issued in connection with Article 5.5.
48. The question arises as to the location of "the place where the harmful event occurred or may occur". In Bier v Mines de Potasse d'Alsace Case 21/76 [1978] 1 QB 708, the ECJ considered this issue in circumstances where the defendant was alleged to have polluted the river Rhine in France which had led to increased salt content in the water which affected the claimant's seed beds in The Netherlands. The court referred to the choice given to a claimant under Article 5 in the following way:

"11 This freedom of choice was introduced having regard to the existence, in certain clearly defined situations, of a particularly close connecting factor between a dispute and the court which may be called upon to hear it, with a view to the efficacious conduct of the proceedings.

12 Thus in matters of tort, delict or quasi-delict Article 5 (3) allows the plaintiff to bring his case before the courts for 'the place where the harmful event occurred'.

13. In the context of the Convention, the meaning of that expression is unclear when the place of the event which is at the origin of the damage is situated in a State other than the one in which the place where the damage occurred is situated, as is the case inter inter alia with atmospheric or water pollution beyond the frontiers of a State.

14. The form of words 'place where the harmful event occurred', used in all the language versions of the Convention, leaves open the question whether, in the situation described, it is necessary, in determining jurisdiction, to choose as the connecting factor the place of the event giving rise to the damage, or the place where the damage occurred, or to accept that the plaintiff has an option between the one and the other of those two connecting factors.

15. As regards this, it is well to point out that the place of the event giving rise to the damage no less than the place where the damage occurred can, depending on the case, constitute a significant connecting factor from the point of view of jurisdiction.

16. Liability in tort, delict or quasi-delict can only arise provided that a causal connexion can be established between the damage and the event in which that damage originates.

17. Taking into account the close connexion between the component parts of every sort of liability, it does not appear appropriate to opt for one of the two connecting factors mentioned to the exclusion of the other, since each of them can, depending on the circumstances, be particularly helpful from the point of view of the evidence and of the conduct of the proceedings.

To exclude one option appears all the more undesirable in that, by its comprehensive form of words, Article 5 (3) of the Convention covers a wide diversity of kinds of liability.

19. Thus the meaning of the expression 'place where the harmful event occurred' in Article 5 (3) must be established in such a way as to acknowledge that the plaintiff has an option to commence proceedings either at the place where the damage occurred or the place of the event giving rise to it.

20. This conclusion is supported by the consideration, first, that to decide in favour only of the place of the event giving rise to the damage would, in an appreciable number of cases, cause confusion between the heads of jurisdiction laid down by Articles 2 and 5 (3) of the Convention, so that the latter provision would, to that extent, lose its effectiveness.

21. Secondly, a decision in favour only of the place where the damage occurred would, in cases where the place of the event giving rise to the damage does not coincide with the domicile of the person liable, have the effect of excluding a helpful connecting factor with the jurisdiction of a court particularly near to the cause of the damage."

49. Thus, bearing in mind the rationale of the provision to cover situations where there is a particularly close connection between a dispute and the court which may be called on to hear it, Article 5.3 could be interpreted to mean either the place where the damage occurred or the place of the event giving rise to it. Here, there is no contention that the damage occurred in England so the focus is on the place of the event which gave rise to the damage as the place where the harmful event occurred.
50. In Domicrest Ltd v Swiss Bank Corporation [1999] QB 548, Rix J (as he then was) held at pages 567-8, in the context of the Lugano Convention, that "the place where the harmful event occurred" in the case of misrepresentations by telephone was to be approached in the same way as defamation. The place was therefore the place where the misstatement was made rather than the place where it was received. It was there, he said, that the negligence, even if not every element of the tort, was likely to be committed. The place from which the misstatements were put into circulation was as good a place in which to found jurisdiction as the place where the misstatement was acted on, even if receipt of the misrepresentations and reliance were essential parts of the tort. He considered that there was no difference in this respect between a written misrepresentation and an oral or instantaneous communication. In the latter category, although the misstatement occurred as much where it was heard as spoken, it was the misrepresentor's negligent speech or instantaneous communication, rather than the hearer's receipt of it, which best identified the harmful event which set the tort in motion. He drew attention to the distinction drawn in Bier between the place where the damage occurred and the place where the event giving rise to it took place. He pointed out that the former was likely to be the place of receipt and reliance.
51. In Anton Durbeck GmbH v Den Norske Bank ASA [2003] QB 1160 at first instance, it was decided that the decision taken in London to enforce a mortgage by arrest was not the harmful event which gave rise to the damage which was alleged to be wrongful interference with a bill of lading. This was not the subject of appeal. To my mind the proposition which the deputy judge (as he then was) rejected, was wholly unrealistic. The harmful event was the interference which was the arrest of the ship. Whilst therefore the court is not looking to see where the substance of the tort or delict is committed (c.f. the test formerly applicable under Order 11 RSC) the court is looking to ascertain where the substance of the event took place which gives rise to the damage.
52. On the case made by SRR in The Netherlands, the place of communication of the misstatements was not in England. At section 10 of the Summons, SRR asserts jurisdiction over ABN Amro by virtue of its domicile in The Netherlands under Article 2 of the Regulation and over S&P as a co-defendant being held jointly and severally liable for the damage sustained as a result of the same event, namely "the promotion and marketing of CPDOs to which S&P wrongly gave AAA or AA ratings". Having set out at paragraph 343 the essence of the tort as issuing misstatements, SRR pleaded that all the statements were issued in the relevant States in which the various investors were domiciled. It then listed these for each individual investor as Germany, Austria and Switzerland in paragraphs 344-347. In each case, express mention was made of the "Surf Presentation" or the ABN Amro prospectus or other ABN Amro marketing material which, on the evidence, originated in England.
53. Relying upon Domicrest (ibid.) S&P does not contend that England is the place where the damage occurred since it accepts that the CPDOs were marketed and purchased by the investors in their country of domicile. It relies simply on SRR's pleaded case that the origin of the rating lay in London and in the creation of the marketing material there. It submitted that this is where "the misstatements originated".
54. The fact that the written marketing material originated in England in the sense that it was created there cannot however assist S&P in relation to Article 5.3 because SRR pleads that there were meetings or contacts with the investors in their countries of domicile where the marketing material was delivered to them and discussed. The debate in Domicrest was whether the harmful event occurred in the place from which the communication was made or the place in which it was received. When speaking of written documents, Rix J had in mind the place from which it was sent, as opposed to the place in which it was received. The place in which it was composed fell outside the ambit of the discussion.
55. In my judgment, the place where the harmful event occurred here is therefore only susceptible of one answer. It is the place where the meetings and contacts took place at which the written materials were both delivered and received. On the material available to this court, the negligent communications all took place in Germany, Austria and Switzerland both in terms of making and receipt of them. In the case of negligent misrepresentation, that must be where the harmful event occurred.
56. S&P cannot therefore succeed in establishing jurisdiction against ABN Amro in respect of ABN Amro's putative liability to SRR under Article 5.3.

Article 5.5

57. S&P has to show that it has much the better of the argument that the dispute arises out of the operations of a branch, agency or other establishment in England in order to satisfy the requirements of Article 5.5.
58. In Anton Durbeck (ibid.) the Court of Appeal considered the test to be applied in relation to this head of potential jurisdiction. Lord Phillips MR, in referring to earlier authority, said that there had to be such a nexus between the branch and the dispute as to render it natural to describe the dispute as one which had arisen out of the activities of the branch in question. Where the claim is in contract, he said that nexus could be derived from the negotiations between the other party and the branch which gave rise to the contract of which breach was alleged. In relation to tort or delict, he said this:

"41 The events which give rise to liability in tort can vary widely—compare the liability of the publishers of a defamatory book with the vicarious liability of a company for the negligent driving of an employee in the course of his employment. In these circumstances, I do not think it desirable to attempt to formulate any test to determine whether a dispute has arisen out of the activities of a branch. The answer to that question must depend on the facts of the individual case. I would, however, venture some general observations.

42 As Laws LJ observed in the course of argument, paragraph 5 of article 5 differs from the other paragraphs of that article. The other paragraphs address different specific causes of action. Paragraph 5 is of general application. It would seem designed to cover situations where the connection of the claim with the activities of the branch, agency or other establishment is such as to make it appropriate in the interests of the due administration of justice to permit suit to be brought in the state where the branch, agency or other establishment is situated.

43 I would endorse the conclusions of the Advocate General in the Lloyd's Register case [1995] ECR I-961 that one purpose of article 5(5) is to approximate the place where a branch carries on business with third parties to the point of departure of the first paragraph of article 2. Article 5(5) provides a quasi defendant's domicile basis for jurisdiction. Once the existence of an entity which qualifies as a "branch, agency or other establishment" of the defendant is established in a state, it accords with the due administration of justice from the view point of the defendant, the claimant and the court to permit suit to be brought in that state in relation to disputes which arise out of the activities of the branch, agency or establishment, regardless of where those activities take effect."

59. Lord Phillips then pointed out that, when considering the application of Article 5.5, the degree of connection, which comes into play as an underlying policy reason for the country of the branch accepting jurisdiction, is to be compared, not with another possible forum conveniens but with the country of domicile of the relevant defendant. When applied to the matter before this court, the comparison is not with Austria, Germany or Switzerland where the harmful event and damage occurred, but with the country of domicile of the subject of the Alternative Declaration Claim at issue, where that declaration relates to the liability of ABN Amro to SRR. The comparison is therefore with The Netherlands where no relevant activities are said to have occurred at all.
60. Anton Durbeck is a good example of a case where the location of the harmful event which took place was in one country, Panama, but where the dispute was held to arise out of the operations of a branch of the defendants in London:

"The actions giving rise to the dispute arose out of London banking business, conducted by the defendants' London branch. The loan in respect of which the security over the vessel was taken was negotiated in London. The decision to enforce the security was taken in London. The London branch gave instructions to enforce the security and the power of attorney to enable it to be done. Giving the words of article 5(5) their natural meaning, the dispute in this case has arisen out of the activities of the London branch. It is true that in this case these factors do not point to London as the most convenient forum. If the jurisdiction to stay is soundly based, the action will be fought in Panama and not here. It seems to me, however, that if considerations of, or akin to, domicile are to govern the available forum, it makes good sense and accords with the due administration of justice that London should be available to the parties as an alternative to Norway."

61. Here, the material before the court contained in SRR's 111 page Summons in The Netherlands and the first statement of Ms Freeman, in particular, establish to my satisfaction that the dispute arises out of the operations of ABN Amro's London branch and that the connecting link is extremely strong because all the marketing material came into existence by reason of the activities of personnel there.
62. I do not need to set out in extenso the passages in SRR's Summons in The Netherlands which make good the point that the nub of the case turns less on the exact form of what was said at the meetings in Germany, Austria and Switzerland but much more on the content of the literature delivered to the investors which was the creation of ABN Amro's London personnel. On SRR's pleading, ABN Amro personnel misled S&P as to the historic volatility of the CDX and iTraxx indices with reckless indifference and developed a strategy designed to cause S&P to believe that 15%, rather than 35% was the appropriate input for S&P's modelling of the CPDOs. Section 7 of the Summons sets out the conduct of ABN Amro personnel who were based in London, (other than Mr Drexler) in developing a strategy "to do whatever it took" to secure a AAA rating from S&P so that it could start marketing the CPDOs. At section 7.3-7.4 appear details of the strategy adopted to dissuade S&P to lower the volatility assumption and the action taken to achieve that. As pleaded, ABN Amro influenced S&P in this rating, provided it with false figures and knew that the rating which it had procured from S&P was based on the false information provided. Both S&P and ABN Amro are said to be liable in respect of the false ratings thus produced.
63. In section 8 of the Summons appeared details of the dissemination and marketing of the notes to the investors, essentially by means of the "Surf Presentation" and the "Term Sheet". Paragraph 233 of the Summons refers to S&P authorisation of ABN Amro to disseminate its rating of the CPDOs to potential investors and the principal means by which ABN Amro did this in marketing them by using the "Surf Presentation" and the "Term Sheet" for each issuance. It is then said at paragraph 235 that the Surf Presentation represented that the risk of default of the CPDO was commensurate with the risk of default of a AAA rated bond and represented that S&P's opinion was that this rating could safely be relied on. At paragraph 237, it is said that a version of the Surf Presentation and/or the Term Sheet disclosing the meeting was provided by ABN Amro to each of the investors who relied thereon.
64. The Surf Presentation included a detailed discussion of S&P's rating methodology which, as set out earlier in the Summons, was the subject of inference by ABN Amro.
65. A summary of the case as put by SRR against ABN Amro appears at section 1.2 of the Summons, it reads as follows:

"2. The Foundation's claims against RBS are based on the following grounds:

ABN AMRO procured S&P's AAA and AA rating of the CPDO (named Castle I and Chess II Notes) respectively, by providing S&P with false information that was central to S&P's modelling of the CPDO;

S&P relied on that false information and ABN AMRO was aware of that fact;

ABN AMRO was aware that because S&P had relied on the false information ABN AMRO had supplied, the ratings S&P assigned to the CPDO were flawed;

Notwithstanding, ABN AMRO promoted the CPDO using the AAA and AA rating as a central aspect of its promotion of the product to investors;

ABN Amro failed to tell potential investors that the AAA and AA rating was not the product of the exercise of reasonable care and was not based on reasonable grounds;

ABN AMRO failed to tell potential investors that they should not rely upon the AA or AA rating S&P had assigned to the Notes;

ABN AMRO's promotion of the AAA and AA rating for the CPDO in marketing the product to investors was misleading and deceptive."

66. Likewise, its claim against S&P is summarised at section 1.3 in paragraphs 3-10. By giving AAA or AA ratings to the CPDOs, it is said that S&P intended to and did represent that the capacity of the issuer to pay scheduled interest and the principal amount was very strong or extremely strong and that its conclusion was based on reasonable grounds following the exercise of reasonable care and skill which it had not in fact exercised. In particular, in paragraph 9 it is said that no reasonably competent rating agency would have assigned a AAA or AA rating with the information that it had and that the methodology used by it to assess the CPDOs could not reliably form the basis for the conclusions that it reached.
67. In her first witness statement, Ms Freeman sets out at paragraph 21(a) and paragraphs 22-24, in uncontested evidence, the involvement of ABN Amro's London branch in the creation and marketing of the CPDOs and in particular the creation of the marketing documents. There, she states that ABN Amro's activities, in particular those of its London branch, lie at the heart of the issues which arise in the proceedings. ABN Amro's London branch devised, arranged and structured the CPDOs and then sought ratings for them from S&P's London office, providing information to S&P which it utilised in its rating process. ABN Amro, through its London branch, acted as the arranger, calculation agent, dealer and swap counterparty for each of the CPDOs.
68. It was the London branch which engaged S&P to rate the CPDOs and it was through its London branch that it principally dealt with and communicated with S&P in London in relation to S&P's rating of the CPDOs. Six individuals are named, all of whom were based in London except Mr Drexler who was based in New York. ABN Amro's dealings with S&P in relation to the rating of the CPDOs included the supply of information, including information on the nature and operation of CPDOs and their terms. S&P used this information as part of the materials it relied upon in carrying out its own analysis of the credit rating to be assigned to the CPDOs. ABN Amro's London branch was made aware of the modelling assumptions and parameters utilised by S&P in determining its credit ratings and the vast majority of the rating work was carried out by personnel based in England. The decision in respect of the credit rating to be assigned to the CPDOs was made by S&P's credit committees predominantly based in London. The decision to issue the credit ratings took place in London. It was ABN Amro's London branch which received confirmation of the ratings which ABN Amro then used in marketing the CPDOs to investors, referring to the modelling parameters that it said S&P had used. It was ABN Amro's London branch which prepared the Surf Presentations which were used to market the CPDOs which included representations as to the credit rating opinions of S&P as well as other representations about the nature and/or implications of such credit ratings, the terms of the CPDOs, the level of returns, the key risk factors and other matters of interest to investors. ABN Amro, therefore, principally through its London branch was closely involved with all aspects of the CPDOs including devising them, obtaining ratings for them and marketing them.
69. In these circumstances, I have no doubt that, so far as ABN Amro is concerned, the nexus between its London branch and the dispute is such as to render it natural to describe the dispute as one which has arisen out of the activities of the branch. It could not be said to have arisen out of the activities of ABN Amro in The Netherlands, nor anywhere else in the world. London was the centre and focus of all its relevant actions, though it was domiciled elsewhere, though Mr Drexler was based in New York, and the marketing took place in the three European countries to which I have already referred. S&P have therefore established jurisdiction under Article 5.5.

Forum conveniens

70. Although this has no relevance to the question whether or not S&P could bring itself within the terms of Articles 5.3, 5.5 or 6.2, I note that any consideration of the issue of forum conveniens would, on the material available to me, result in a decision that the English court was the appropriate forum because of the inter-relationship between ABN Amro and S&P's personnel in London. It was this which led to the rating of the CPDOs which lies at the heart of SRR's claim.
71. As matters stand, S&P's claim for a declaration of non-liability to SRR will proceed in this country and SRR will, if defending that, have to do so by asserting S&P's liability to it, doubtless on the same basis that it has pleaded it in The Netherlands. S&P's alternative claim against SRR for a declaration that, if it is liable to SRR, ABN Amro is also liable for the self-same damage, will also proceed here which will involve this court determining not only S&P's liability but ABN Amro's liability to SRR as well.
72. In these circumstances it is obvious that, since the respective liabilities of S&P and ABN Amro to SRR are in issue in this country, it would make sense for the liability of S&P and ABN Amro to each other to be determined here also. Whilst the parties have been jockeying for position jurisdictionally, each appears to have accepted at one time or another the obvious point that the claims between the three are so intrinsically connected that they should be heard by the same court, wherever that court should be. If SRR defends itself here and counterclaims against S&P, then, as I have already said earlier in this judgment, S&P would doubtless seek to issue a Part 20 claim against ABN Amro as paragraph 74 of its Particulars of Claim intimates.

Conclusion

73. In the circumstances, ABN Amro's applications will be dismissed. Although there is no lis between ABN Amro and S&P on the Principal Declaration Claim, so that the court has no jurisdiction between S&P and ABN Amro on this aspect, the relevant material will be deployed in support of the lis which does exist between S&P and SRR. It will necessarily arise in relation to the lis between S&P and ABN Amro on the Alternative Declaration Claim.
74. The limited success on the "lis issue" in relation to the Principal Declaration Claim is therefore of no practical importance. Subject to any further submissions, it seems to me that costs should follow the event. If there are matters which need to raised, whether in relation to costs or otherwise I will hear submissions at the time of formally handing down judgment.