Shopping for justice
3 August 1999
8 August 2013
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Article 23 jurisdiction agreement upheld despite alleged invalidity of host contract under governing law
26 September 2013
15 October 2013
Got a Lithuanian client whose libel action could be damaged by one particular witness? No problem. Just ship the entire case over to England, have it heard by one of the most prestigious justice systems in the world, and conveniently leave the problematic witness behind.
Alternatively, plaintiffs who are afraid that they will not get much for their troubles in the personal injury courts of Wolverhampton could try Los Angeles, where damages awards tend to be larger.
According to anecdotal reports from solicitors, there has been a “radical increase” in “forum shopping”, where lawyers advise their clients to bring their cases in the most advantageous jurisdiction.
Solicitors have a duty to bring a case in the most favourable jurisdiction and are negligent if they fail to do so, as the Family Law Consortium is only too aware.
The former wife of Earl Spencer, Victoria, is pursuing a claim for £1.6m against the Consortium for alleged negligence in handling her divorce by allowing the case to be heard in South Africa. She argues that she would have won more money in the UK courts.
Forum shopping occurs for various reasons. Plaintiff lawyers prefer English courts for libel actions because they believe it is easier to demonstrate libel under English law, and also for copyright law because England takes a more rigorous view of it than many other countries.
Commercial contracts often stipulate that English law must be used to resolve any disputes. And the international nature of certain disputes, such as in shipping law, also makes forum shopping possible.
The growing use of the internet should also encourage forum shopping because, since each publication is a separate tort, a libel suit can arise wherever the information is downloaded. This is a moot point that is yet to be tested by any court.
But the traffic is not all one-way. Solicitors Family Law Association (SFLA) president David Salter predicts an increase in the amount of UK couples who will seek divorce abroad because they are reluctant to face the lengthy proceedings soon to be introduced by the Family Law Act 1997.
Contrary to the arguments of libel lawyers, the SFLA is concerned that UK lawyers will miss out on the exodus of divorce work.
Lawyers say forum shopping has existed as a concept for “decades, if not centuries”. The Lord Chancellor’s Department does not keep figures showing how many foreign plaintiffs use the UK courts, but media lawyer Mark Stephens, senior partner at Stephens Innocent, says: “There has been a tremendous upsurge in these cases in recent years, particularly in cases brought by plaintiffs from the US, Middle East and the former Iron Curtain.”
Plaintiffs are often keen to take cases through the English courts, which are regarded throughout the world as fair and objective. Winning a case in England is considered better than winning in a less renowned jurisdiction.
Stephens says that, while forum shopping might demonstrate faith in the UK court system, it can also open the gates to corruption. There are fears that foreign litigants are using the English courts in a cynical attempt to subvert justice.
Lawyers acting in a case which is forum shopped to the UK will find they cannot subpoena documents or witnesses, have difficulty investigating the case, are likely to incur problems with the translation of documents and witnesses’ statements, and the that whole affair will be lengthier and more expensive.
The advantage for the plaintiff is that they can leave any troublesome witnesses or documents behind.
Stephens says: “Sophisticated plaintiffs, mainly brigands and scoundrels, are forum shopping deliberately to seek juridical advantage. For example, in the libel field, people are taking cases where they have the most appaling reputations at home and then suing here for the harm that allegedly happened.
“They know they will be able to intimidate witnesses abroad. If you are a scallywag in the former Soviet Union, it is impossible to execute a subpoena to bring evidence before the courts unless witnesses are willing to come voluntarily.
“It is ludicrous. It may be good for business in the UK, it is not good for justice, which is best served when the court has the best information before it.”
Stephens is calling on the judiciary to take a “tougher line”, arguing that, at least in the libel field, a publication should be judged by the laws of the country that it hails from.
His complaints are backed by US lawyer Stuart Karle, associate general counsel of publishing giant Dow Jones, which publishes the Wall Street Journal. Karle claims: “Prominent Russians with very limited connections to London are choosing to sue there.”
For example, Karle was involved in a libel case between a Russian businessman and Dow Jones’ US business magazine Barrons. The case was thrown out of the London courts by a High Court judge last summer after both parties had expended considerable amounts of money on it. Mr Justice Popplewell dismissed the case on the basis that the plaintiff had no substantial connection with the UK and therefore no business to be here. His decision is due to be appealed in April.
Karle says the magazine sells 300,000 worldwide but only 1,000 in the UK. He adds: “The issue eventually becomes whether or not magazines want to sell an extra few copies in the UK when they face the risk of litigation in that forum.”
Karle says potential litigants increasingly threaten action in the UK, knowing the expense involved will encourage early settlement.
According to Biddle solicitor Emily Pomeroy: “Magazines and newspapers are now published all over the world and businessmen aim to establish a worldwide reputation when they bring libel cases, therefore the first thing a lawyer will do is find out if the magazine sells any copies in the UK.”
Pomeroy predicts that a Court of Appeal decision in a case last year, Berezovsky and Glouchkov v Forbes, will encourage forum shopping.
In this case, US business magazine Forbes allegedly defamed two Russian businessmen, Berezovsky and Glouchkov.
The Russians began an action in the UK even though the article in question had no English content, all witnesses and documents would come from abroad, and Forbes’ circulation in England is less than 2,000 copies. Forbes, represented by Biddle, argued that England was not the appropriate forum for the action. But a Court of Appeal judge held that the Russians were entitled to bring the action in the UK and the case is now ongoing in the High Court.
Many British lawyers take a more sanguine view on forum shopping, arguing that it is good for British business. Simons Muirhead Burton partner Razi Mireskandari, a well-known media lawyer, says: “At the end of the day, it is a UK industry that we are very good at.
“You would never see this with a car factory stopping producing so many cars because foreigners keep buying them. The only argument is the cost, but court fees have been hiked up - it’s now £500 to file a writ whereas it was only £100 just a few years ago.”
David Goldstone, of commercial and shipping chambers 4 Field Court, says: “UK courts and lawyers make a lot of money as a result of foreigners coming here to litigate. The UK courts are perceived as being unbiased and the standard of lawyers is generally perceived as being among the best in the world.”
A guide to commercial forum shopping for in-house lawyers
International commercial lawyers usually conduct their forum shopping in advance of desputes, avaoid the US and, as a result of the Woolf reforms, are now more likely to use the UK courts.
Since the early 1990s, commercail courts in the European Union have allowed parties to bring actions in the forum of their choosing.
The US courst, on the other hand, are considered by lawyers to be “parachial”, tending not to allow action unless a US company is involved, although the rules vary from state to state.
John Beechey, partner in charge of international commercail arbitration at Clifford Chance, advises every client to choose the forum for dispute resolution when drawing up a commercial contract between two parties. However, he says lawyers frequently do not choose the forum until a late stage in the proceedings -the so-called “midnight clause”-or contradict the choice elsewhere in the contract-the “pathological clause”.
He says the “surprisingly often” lawyers omit a forum clause altogether, causing a delay and extra expense when the parties fall out and then have to compete for the forum of their choice.
Simmons & Simmons international litigation partner Karyl Nairn predicts the Woolf civel justice reforms will spur a rise in the amount of commercial forum shopping in the UK as European lawyers “realise the new rules are stacked in favour of the claimants”.
Nairn says that new rules, which require defendants to produce documents, give reasons for their defence and comply with deadlines, will stop defendants withholding documents and employing delaying tactics.
Nairn says the Brussels and Lugano conventions on forum shopping lay down strict guidelines for litigation in EU countries, preventing parties from switching jurisdiction once proceedings are issued. This discourages lawyers from issuing letters before action since this could incite the other side to serve a writ in a particular court, fixing the forum.
Nairn says:”A lot of people don’t act quickly enough and come a cropper as a result because they end up before a Norwegian judge who specialises in family law”.