On 30 January 2020, Christopher Hancock QC (sitting as a Deputy High Court Judge) rejected Barclays’ application to stay Commercial Court proceedings brought against it by one of the world’s largest reinsurance companies, SCOR, for breach of confidence and trade secrets.
The judgment is available here.
The application was brought under Article 30 of Regulation (EU) 1215/2012 on the basis that SCOR's claims in the Commercial Court were "related to" criminal proceedings brought in Paris. The case focuses attention on an apparent tension between the recent Court of Appeal decision in Privatbank v Kolomoisky  EWCA Civ 1708 and the later decision in Euroeco Fuels v Sczezin and Swinoujscie Seaports Authority  EWCA Civ 1932 as to how the question of whether proceedings are "related" should be addressed. Pursuant to the decision in Privatbank, cases may be related even if they cannot in theory be consolidated. Euroeco however would appear to suggest that actions can only be related if they can be tried together.
Mr Christopher Hancock QC did not seek to resolve the tension between the two Court of Appeal judgments. However, he applied the lower test established in Privatbank but nevertheless exercised his discretion to reject the application for the Commercial Court proceedings to be stayed.
SCOR's proceedings before the Commercial Court are one of three sets of proceedings commenced by SCOR arising out of an unsolicited offer made in August 2018 by one of its shareholders, Covéa, to acquire a controlling shareholding in SCOR. Barclays was one of Covéa's financial advisers and prospective lenders in relation to this offer. SCOR alleges that one of its directors, Mr Derez, who was also CEO of Covéa, acquired confidential and highly sensitive information in his capacity as a director of SCOR, which he passed on to Barclays to support its work on Covéa's intended acquisition. In January 2019 SCOR commenced criminal proceedings in France against Mr Derez and Covéa. Later on the same day, it started a claim in the Commercial Court against Barclays for breach of confidence. In February 2019 it started civil proceedings in France against Mr Derez and Covéa. All three sets of proceedings commenced by SCOR are brought under French law.
It was common ground between the parties that the French court (in respect of the criminal proceedings) was first seised. Barclays applied under Article 30 to stay the Commercial Court proceedings on the basis that those proceedings were related to the French criminal proceedings.
Analysis of the authorities: Are the Commercial Court proceedings related to the French criminal proceedings?
The Court rejected Barclays' application for a stay. In undertaking his analysis as to whether the proceedings were indeed "related" for the purposes of Article 30, Christopher Hancock QC engaged in a thorough analysis of recent authority and quoted at length in his judgment from Lord Saville's leading judgment in the House of Lords decision in Sarrio SA v Kuwait Investment Authority  1 AC 32, where the House of Lords had rejected the Court of Appeal's finding that it was only where the primary facts in the two cases might be found differently that the Article came into play. He reviewed the nature of the comparative exercise to be undertaken, as considered by the Court of Appeal in Research in Motion UK v Visto  2 All ER (Comm) 560 and the debate in the authorities as to the meaning of "expedient" within Article 30, which the parties agreed had been resolved by the Court of Appeal in Privatbank v Kolomoisky  EWCA Civ 1709 at paragraph 191 where the Court of Appeal said:
“…The word “expedient” is more akin to “desirable” as Rix J put it, that the actions “should” be heard together, than to “practicable” or “possible”, that the actions “can” be heard together.”
The Judge had only been referred to the more recent Euroeco decision after the hearing which appears to suggest that actions are related only where it is possible for them to be heard and determined together.
The Judge derived certain principles from the authorities, as follows (paragraph 15): Firstly, the question of whether two actions are related is to be approached on a broad common sense basis as per Lord Saville in Sarrio. Secondly, whether actions will be treated as related will depend on whether they are sufficiently closely connected that it is expedient to hear them together (Research in Motion).
He flagged the uncertainty thrown up by the line of cases leading to Privatbank and the more recent decision in Euroeco as to whether the question of the true meaning of expediency in this context is to be treated as meaning "desirability" or instead deployed as a jurisdictional requirement of the grant of a stay that the two cases could be heard together. He noted however that he did not need to resolve the tension to reach his decision, since the outcome would be the same whichever test is applied, although he preferred the test as set out in Privatbank. On that basis, if it would be desirable for the claims to be tried together then they would be treated as related even if they could not in fact be tried together. The Judge accepted that the risk of inconsistent findings of fact as submitted by Barclays was sufficient for these purposes and rejected the suggestion that the fact that one set of proceedings is criminal (albeit with a civil claim attached) and the other civil of itself removed the desirability for the proceedings to be tried together.
Given the above, the Judge concluded that applying the common sense approach advocated in Sarrio as interpreted in later cases including in particular Privatbank, the French criminal proceedings and the English proceedings are related.
Exercise of discretion
In exercising the discretion that the application of the test in Privatbank afforded him, the Judge analysed whether hypothetically it would be desirable to try the two actions together in order to avoid the risk of inconsistent judgments. In doing so he applied the three non-exhaustive factors relevant to the exercise of discretion as expounded by Advocate General Lenz in Owens Bank v Bracco  QB 509: (1) the extent of the relatedness of the proceedings and the risk of mutually irreconcilable decisions; (2) the stage reached in each set of proceedings; and (3) the proximity of the courts to the subject-matter of the case.
The Judge found that none of the considerations identified by the ECJ in Owens Bank militated strongly in favour of a stay so as to amount to a compelling reason. Whilst some of the issues which will arise in both proceedings are common, he did not consider the "degree of relatedness" to be great due to distinct legal issues and differing burdens and standards of proof between the criminal and civil proceedings. He also found that, as the parties accepted, the fact that the two sets of proceedings cannot be tried together is a compelling reason not to grant a stay and that the fact that the first case is criminal and the second civil made it less appropriate for the civil proceedings to be stayed pending determination of the earlier proceedings.
In assessing the impact of the stage reached in the different sets of proceedings, the Judge noted that the English proceedings are not far advanced, in comparison with the French criminal proceedings which are due to be heard in May 2020 with judgment to follow shortly in July. He found that substantial prejudice would be suffered by SCOR if the Commercial Court proceedings were stayed, whereas the prejudice to Barclays if they were not would be limited. He rejected Barclays' suggestion that the English proceedings are of themselves an abuse of process as they amount to a back door attempt to obtain disclosure; SCOR is entitled to sue Barclays in the UK pursuant to the Regulation and part of that entitlement is an entitlement to documentation.
Whilst the Judge accepted the Commercial Court action's proximity to France, he found it of limited relevance given the clear connections to this jurisdiction.
Overall, the Judge decided against ordering a stay of the English proceedings.
Enyo partner Edward Allen and associate Daniel Mills acted for SCOR in successfully defending Barclays' application, instructing Daniel Jowell QC and Fred Hobson of Brick Court Chambers.