Donohue v Armco Inc. & Ors [2000] EWCA Civ 94 (29 March 2000)

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Cite as: [2000] EWCA Civ 94

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Case No: QBCMI 99/0819/A3

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(AIKENS, J.)
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 29 March 2000
B e f o r e :
LORD JUSTICE STUART-SMITH
LORD JUSTICE BROOKE
and
LORD JUSTICE SEDLEY

	ROGER THOMAS DONOHUE	Claimant Appellant
	- and -
	ARMCO INC. & OTHERS	Defendant/ Respondent

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Peter Leaver QC, Robert Howe & Camilla Bingham (instructed by Messrs Simmons & Simmons for the Appellant)
Anthony Grabiner QC & Daniel Toledano (instructed by Messrs Freshfields for the Respondents)
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Judgment
As Approved by the Court
Crown Copyright ©

LORD JUSTICE STUART-SMITH:
Introduction
1. This is an appeal from a judgment of Aikens J. reported at [1999] 2 Lloyd's 649 given on 15 July whereby he dismissed the Claimant's (Mr Donohue) application for an anti-suit injunction to restrain the Defendants' from suing him in any forum other than England for claims said to arise out of the circumstances surrounding the sales of a UK based insurance business and a debt collecting business. He also dismissed an application by two individuals and four corporations, the potential co-Claimants ("PCCs"), that wish to be joined as co-Claimants in Mr Donohue's anti-suit injunction action. The PCCs are, like Mr Donohue, all defendants in proceedings which the Defendants have brought in the District Court of the Southern District of New York, NY, USA ("the NY proceedings"). There was a third application considered by the judge which was made by the Fourth and Fifth Defendants in the anti-suit proceedings (respectively "APL" and "NNIC"). They applied to set aside the proceedings against them and to discharge the permission given to serve these proceedings on them out of the jurisdiction. The judge acceded to this application. Mr Donohue and the PCCs appeal with the leave of the judge against all three of his Orders. In an annex to this judgment I set out the dramatis personae and the abbreviations adopted.
Summary of the dispute between the parties
2. I gratefully adopt in this and the following five paragraphs the judge's summary of the dispute between the parties.
3. The Defendants (collectively "Armco"), are all companies in the Armco group, which is a US based conglomerate. Armco Inc, the First Defendant, is the parent company. Armco Inc. owned, via two subsidiaries, a group of three insurance companies, known as the British National Insurance Group ("BNIG"). The assets of the insurance group were owned by the Third Defendants, AFSIL, and Armco Financial Services Europe Limited ("AFSEL"), which has since been dissolved. The insurance group went into "run-off" in 1984. In the late 1980s Armco wished to rationalise its businesses. It decided to sell off the insurance group. From 1990 Armco investigated selling the group to Armco managers in a management buy-out ("MBO"). In early 1991 negotiations began with two managers. They were Mr Donohue, who had been Managing Director but was then the Chairman of the insurance group, and Mr David Atkins, who had become the Managing Director in succession to Mr Donohue. On the Armco side the negotiations for the MBO were conducted by two executives in particular. They were Mr Patrick Rossi and Mr Larry Stinson, the two individual PCCs.
4. Armco alleges that it has been the victim of a scheme to defraud the Armco group that was devised by Mr Donohue, Mr Rossi and Mr Stinson in late 1990 or early 1991 and which Mr Atkins joined in about April 1991. The fraudulent scheme is said to be based on the MBO. The allegations are made principally as a result of statements made by Mr Atkins in April and June 1997 and September 1998, after the insurance group had been bought and then gone into liquidation.
5. Because the insurance group was in "run-off" and had many potential liabilities, it needed a large injection of cash to make it attractive to a purchaser. Armco's allegation is that the secret plan of the group of four was that Armco would be fraudulently induced to inject an extra large sum into the insurance group, totalling US$ 42.5 million. Armco say that the plan of the group of four was then to buy the insurance group through a Jersey (Channel Islands) company they owned, called Wingfield. Armco say that the four conspirators implemented this plan. Armco asserts that, as part of the plan, the conspirators fraudulently induced Armco to agree to English Exclusive Jurisdiction clauses ("EJC") in three key contracts for the sale of the shares of the insurance group companies to Wingfield. This inducement was done, it is said, during negotiations for the contracts for the transfer and sale of the insurance group in January to April 1991. Armco further alleges that the group of four has subsequently removed much of the $42.5 million that was injected into the insurance group and the four have used it for their own ends. The $42.5 million is made up of $30 million injection of cash plus $2.5 interest and transfer of securities owned by AFSEL valued at $10 million.
6. Armco also contends that, as part of the secret plan, the group of four fraudulently induced Armco to agree to debt collection contracts with a Nevis company owned by them called NPV (Nevis). Armco says that the conditions of the collection agreement were very favourable to that company and it has been used as the vehicle of the four to take exorbitant fees for themselves from the insurance group.
7. Lastly, Armco alleges that the group of four has fraudulently obtained funds from two trust funds set up to give financial protection to the Fifth Defendant, NNIC, against claims by policyholders insured by the predecessor of NNIC, Bellefonte Insurance Company ("Bellefonte"). Bellefonte's book of business was sold on to the BNIG, but it was possible that NNIC might remain liable under the policies. The two trust funds were set up to protect NNIC against those potential liabilities. But withdrawals from the trust funds could be made if the BNIG certified that the potential claims to which NNIC was exposed were less than the market value of the trust funds. Armco say that the group of four fraudulently depleted the trust funds by about $16 million after the MBO.
8. The NY Proceedings are brought by Armco to recover the damages that the group claims to have suffered as a result of the alleged fraud. Armco also claims punitive and triple damages under The Federal Racketeer Influenced and Corrupt Organizations Act: 18 USC 1962(c) ("the RICO statute"). It will be necessary to describe in more detail below the claims made in the Amended Complaint in those proceedings.
9. Mr Donohue, Mr Rossi and Mr Stinson all strenuously deny the conspiracy. They say that the allegations of secret meetings and a conspiracy to defraud Armco are the result of a fevered imagination of Mr Atkins. They have some justification in saying so. Mr Atkins made no less than three statements over a period of 18 months. The first was dated 15.4.97. It contained no suggestion of a secret agreement and the account of the negotiation for the sale accords substantially with Mr Donohue's own. In a second statement, dated 26 June 1997, Mr Atkins stated that in April or July 1991 Mr Donohue proposed to him that Mr Rossi and Mr Stinson should later join the purchasing company the following year. This proposal was made in the bar of the Waldorf Astoria Hotel. The reason given for this proposal was that it would be advantageous for Mr Rossi and Mr Stinson to deal with clients in the USA rather than sending people out from England. At this meeting Mr Atkins says he was asked to sign an agreement that all four men would be equal owners of the purchaser company; he did so sign it, but was not provided with a copy. It was not until the third statement, signed on 7 September 1998, that Mr Atkins gave an account of a meeting attended by all four alleged conspirators at the Waldorf Astoria Hotel just prior to 10 April when the arrangement for Mr Rossi and Mr Stinson to join the purchasing company was made. This last statement was signed on the same day as proceedings against Mr Atkins in the NY proceedings were settled. The settlement was subsequently renegotiated on more favourable terms on 10 November 1998 and approved by the court in the form of a consent judgment. Under that settlement judgment was entered against Mr Atkins for US$ 2 million, to be satisfied as to £95,000 paid forthwith, the transfer of his home and a percentage of his earnings in future. He agreed to co-operate with Armco. It was a term of the settlement that if it was found that the third statement of 7.9.98 contained any material misstatement or omission, Armco should have the right to terminate the settlement agreement and pursue Mr Atkins to the full extent permitted by law.
10. Moreover, in ancillary proceedings in Hong Kong in pursuit of Mareva relief against Mr Donohue, Armco's own counsel described Mr Atkins as an `habitual liar'. Mr Leaver QC, on behalf of Mr Donohue, also points to some remarkable features of the MBO in that the agreement of the sum of $30 million as the sum payable was actually agreed with Mr Askins, the Chief Financial Officer of the Armco Financial Group; it was calculated according to a formula apparently approved by accountants on both sides; moreover, the Board of Armco appear to have approved a draft of the sale and purchase agreement ("SPA") which, although it referred in the body of the SPA to the transfer of AFSEL's assets described in a schedule, the schedule was said to have been left blank at the time of approval; whereas when the SPA was signed the schedule included $10 million worth of securities. As Mr Leaver points out, those responsible in Armco, their accountants and legal advisers, would seem to have some explaining to do, if these matters were really achieved through a fraudulent conspiracy. I have referred to these matters in some detail because, while clearly the Court cannot determine the merits of the case at this stage, Mr Leaver submitted that the learned judge hardly did credit in paragraph 8 of his judgment to the strength of the criticisms of Mr Atkins' evidence. I think there is a good deal of force in Mr Leaver's criticism. And it is on Mr Atkins' evidence of the secret agreement that the whole edifice of Armco's case in respect of the MBO is built.
11 On the other hand, Lord Grabiner QC, who appears for Armco, submits that there is no other explanation of Mr Atkins' confession and submission to judgment, unless it results from a crisis of conscience; that also is a powerful submission. There are also two pieces of evidence relating to payment of sums of money and the existence of shareholders in Wingfield, other than Mr Donohue and Mr Atkins, which Lord Grabiner says can be taken as some corroboration of Mr Atkins' account. In the circumstances the Court cannot in my view take any prima facie view as to the strength of the case one way or the other at this stage.
The Parties - The Claimant and potential co-Claimants
12. Mr Donohue is a British subject who lives and works in Singapore. He worked for the First Defendant (Armco Inc.) as a banker from 1982 to 1989. He was then appointed Managing Director of BNIG. The main company in that group was British National Insurance Company Ltd (BNIC). Mr Donohue was also a director of the Fourth Defendant, APL, from 1983 to 1998. It is common ground that Mr Donohue and Mr Atkins led the bid for the MBO of BNIG in early 1991. One of the principal issues in the dispute is whether Mr Rossi and Mr Stinson were also secretly involved. Mr Donohue is a defendant in the NY proceedings. He was a party to the SPA which is the main agreement whereby the MBO was affected.
13. The potential co-Claimants are individuals and companies. The individuals are Mr Rossi and Mr Stinson. Mr Rossi is a US citizen resident in the State of Ohio. He was employed by Armco between 1968 and 20 May 1992 when he joined Wingfield. In 1991 he was Vice President and Chief Financial Officer of Armco Financial Services Group (the Armco division responsible for Armco's insurance and finance leasing subsidiaries). He was not a party to the SPA or Transfer Agreement; he is a defendant in the NY proceedings.
14. Mr Stinson was employed by Armco from 1972 to January 1992. At the time of the MBO he was the chief assistant to Mr Rossi and was involved on behalf of Armco in the negotiations for the MBO. He also lives in Ohio. He is not a party to the SPA or transfer agreements; he is a defendant in the NY proceedings.
15. The other potential co-Claimants are companies and are defendants in the NY proceedings. They are as follows:
(1) CI Services Holdings Limited ("CISHL"). The shares in the BNIG were originally owned by the Third Defendants ("AFSIL") and Armco Financial Services Europe Limited ("AFSEL"). (The latter company has been dissolved and its assets have been "transferred" to Armco Inc, a point which itself gives rise to a dispute in these proceedings). To effect the sale and transfer of the shares in the BNIG, Armco incorporated CISHL, a Channel Islands company. Then the Second Defendant ("AFSC") injected $32.5 million in cash and securities into CISHL. Securities to a value of US $10 million were transferred from AFSEL to CISHL. On 3 September 1991 AFSIL and AFSEL each executed an agreement ("the Transfer Agreements") transferring all their assets in the BNIG into CIHSL. The Transfer Agreements were expressly governed by English law and each had an English EJC. On the same day Wingfield acquired all the shares in CISHL under the SPA dated 3 September 1991, in which Wingfield was named as the Purchaser. The SPA was also subject to English law and contained an English EJC. After the sale the BNIG was renamed as the North Atlantic Insurance Group and the leading company was called the North Atlantic Insurance Company Limited ("NAIG" and "NAIC" respectively). In 1997 the Directors of NAIG (Mr Donohue, Mr Rossi and Mr Stinson) took advice on whether NAIC was able to meet its debts as they fell due. Their accountants' advice was that it could not. The directors decided to put all the NAIG companies into liquidation and a winding up petition was presented to the High Court on 6 March 1997. Provisional Liquidators have been appointed but no "scheme of arrangement" has yet been proposed.
(2) Wingfield Limited. This is a Jersey company that was bought as a "shell" by Mr Donohue and Mr Atkins for the purpose of obtaining the BNIG assets, in the manner described.
(3) International Run - off Services Inc: ("IROS"). This is an Ohio corporation. Its shares are owned by Mr Stinson. Armco alleges that the company was used to receive commission fraudulently obtained from the Fourth Defendant ("APL") through the debt collection agreements made between APL and NPV (Nevis), then via another company set up by Mr Donohue, NPV (British Virgin Islands).
(4) International Trustee and Receivership Limited or International Trustee and Receivership Services Inc: ("ITRL"). This is an Ohio company owned by Mr Rossi
The Defendants
16. The Defendants in these proceedings are all companies in the Armco group; they are the Plaintiffs in the NY proceedings. The Third Defendant AFSIL was a party to one of the Transfer Agreements by which its assets in BNIG were transferred to CISHL; it was also a party to the SPA. The Second Defendant AFSC was a party to the SPA. Although Armco Inc. is described as the successor to AFSEL having acquired its assets, it was not an original party to any of the agreements. AFSEL was a party to the SPA and one of the Transfer Agreements. There is an important dispute whether as successor to AFSEL Armco Inc. is bound by the EJC contained in the SPA and Transfer Agreement.
The Foreign Proceedings
17. The most important of these are the NY proceedings which began on 5 August 1998. I shall have to deal with these more fully later in this judgment. But other proceedings were started in other jurisdictions. First in Hong Kong on 6 August 1998 against NPV-Nevis, to which Mr Donohue was joined on 27 August. On 7 August 1998 proceedings were started in Singapore against Mr Donohue and on the same day in Jersey; on 19 August 1998 proceedings were taken in Guernsey. In all these jurisdictions the Armco Plaintiffs obtained Mareva injunctions against Mr Donohue. They have all been stayed pending the determination of the NY proceedings. But the proceedings in Hong Kong and Singapore have involved a number of applications to the Court and the generation of vast quantities of paper. It is part of Mr Donohue's case that this is a pattern of oppressive litigation which he as an individual, albeit a wealthy one, has had to face in different time zones and against opponents with seemingly inexhaustible resources.
Proceedings in New York
18. There have been two sets of proceedings in New York. In the US Bankruptcy Court for the Southern District of New York the liquidators of NAIC brought proceedings against NNIC relating to two trust funds. These proceedings have been settled subject to the approval of the High Court. The settlement is without prejudice to the right of NNIC to continue to claim against Mr Donohue and the individual PCCs in the NY proceedings.
19. As previously stated, the Plaintiffs in the NY proceedings are the five Defendants in the present proceedings. In addition, Mr Atkins was a defendant, but the proceedings against him were settled as explained in paragraph 9. NAIC was also a defendant; but the settlement referred to in the previous paragraph appears to have embraced this action too. All the defendants in those proceedings other than Mr Donohue ( who until recently has taken no part so far in the NY proceedings, that is to say the PCCs, applied by motion to dismiss the NY proceedings on the grounds of want of jurisdiction and forum non conveniens. That motion was dismissed on 19 November 1999 by Judge Schwartz. This has occurred since Aikens J's judgment and it is a matter upon which Lord Grabiner places great reliance.
20. I must try and analyse the claims made in the Amended Complaint in the NY proceedings. To an English lawyer the pleading is confusing and lacking in particularity. Not least of the problems is that no attempt is made to differentiate between the different Plaintiffs or to identify which has a cause of action in relation to which factual situations; they are all collectively referred to as the Plaintiffs. The factual basis set out in the Amended Complaint is that which I have summarised in paragraphs 3-8 above. There are 17 counts, which appear to be the equivalent of causes of action which are said to arise on the pleaded facts. They can be considered under the following heads:
(1) The secret plan to buy NAIG and induce Armco to inject excessive funds into CISHL. Counts 1 and 2 are based upon the fraudulent misrepresentations that only Mr Donohue and Mr Atkins were concerned in Wingfield and the fraudulent concealment of the participation of Mr Rossi and Mr Stinson in Wingfield pursuant to the secret agreement between the four conspirators. Count 8 alleged a conspiracy to defraud; in English law we would regard this as a conspiracy by unlawful means, namely the fraud and concealment alleged in counts 1 and 2. Count 13 alleges breach of fiduciary duty on the part of Mr Rossi and Mr Stinson in connection with the MBO. Count 14 alleges aiding and abetting by Mr Donohue of the breach of fiduciary duty by the other two. In addition count 17 (Constructive Trust) seems to arise out of these matters. The Plaintiffs who would appear to have causes of action in respect of these matters are AFSC, AFSIL and Armco Inc. The latter's claim could arise as successors to AFSEL, or possibly, though this is by no means clear, on its own account if it, rather than its subsidiaries AFSC and AFSIL, suffered loss. Neither APL nor NNIC appear to have any claim in relation to this aspect of the case. The defendants to these claims would appear to be Mr Donohue, Mr Rossi, Mr Stinson, Wingfield, CISHL and possibly Mr Rossi's and Mr Stinson's companies ITRS and IROS.
(2) The fraudulent collection agreement between APL and NPV. The allegation is that the terms of this agreement were exceptionally favourable to NPV at the expense of APL, excessive proportions of the collections being allotted to NPV and in some cases even what was due not being accounted for. This was brought about by fraudulent misrepresentation that only Mr Donohue was interested in NPV (count 3) and fraudulent concealment of the fact that Mr Rossi, who signed the agreement on behalf of APL and Mr Stinson, were beneficially interested in NPV (count 4). Breach of fiduciary duty on the part of Mr Rossi in this respect and aiding and abetting it on the part of Mr Donohue and Mr Stinson again form part of the allegations in counts 13 and 14 respectively. The only Armco plaintiff which has a cause of action in relation to the collection agreement appears to be APL; the relevant defendants are Mr Rossi, Mr Donohue, Mr Stinson and NPV which is in liquidation. This also forms part of the RICO counts.
(3) Allegations of the trust fund withdrawals. I do not think it is necessary to set this out in more detail that I have done in paragraph 7. This is because the Armco plaintiff who has a claim under the head is NNIC, and the proceedings against NAIC, which obtained the funds in respect of which NNIC was the beneficiary, have been effectively settled. It is possible that the liquidators of NAIC may have a claim against the four alleged conspirators, but that is nothing to the point. Mr Leaver asserts that there is no evidence at all that the certificates against which the trust funds were released were fraudulent; certainly the evidence to the effect that they were seems very tenuous. These matters are the subject of counts 5, 6, and 7. There is potentially a claim against Mr Donohue, Mr Rossi and Mr Stinson which has been preserved in the settlement agreement with NAIC's liquidators.
(4) The diversion of funds from NAIG to CISHL. Armco alleged that following the sale of NAIG to the four conspirators in the MBO, Messrs Donohue, Rossi, Stinson and Atkins stripped NAIG of funds via CISHL and the NPV companies. This was done by charging fees, commissions and dividends that were not justified. It is said $16 million was diverted in this way. This is the subject of counts 1, 2, 13 and 14, and the RICO counts. There are additionally counts 15 (conversion) and count 16 (money had and received) which appear to relate to this matter. On the face of it improper abstraction of NAIG's funds to the benefit of the four conspirators would appear primarily to be a matter for the liquidators of NAIG
(5) The RICO Statute Counts. The racketeering is mail fraud and wire fraud. Essentially this involves in this case alleged fraudulent misrepresentations or money transfers effected through the mail and telephone or telegraphic transfer, and is the subject of counts 9-12.
21. The issues which fall to be determined in this appeal are as follows:
(1) Which of the Armco Plaintiffs in the NY proceedings is bound by the EJCs. In particular is Armco Inc. so bound?
(2) What is the scope of the EJCs; in particular to which counts of the Amended Complaint in the NY proceedings do they apply, if any?
(3) What are the relevant principles of law if the EJCs bind some but not all of the Armco Plaintiffs in the NY proceedings and cannot be relied upon by some of the PCCs?
(4) On the basis that even if the EJCs are binding on some of the NY Plaintiffs, on what principles should the discretion to grant or refuse an anti-suit injunction be exercised? In particular:
(a) Should some or all of the PCCs be joined in this action?
(b) What is the effect of Judge Schwartz's judgment?
(c) Should service of the proceedings on the 4th and 5th Defendants APL and NNIC be set aside?
(5) Did Aikens J. correctly exercise his discretion? If not, what should this Court do?
Which of the Armco Plaintiffs are bound by the EJCs?
22. The clause itself is clause 18(a) of the SPA and is in these terms: "The parties....irrevocably submit themselves to the exclusive jurisdiction of the English courts to settle any dispute which may arise out of or in connection with the [Agreement]." There are similar provisions in clause 15 of each of the two Transfer Agreements. Before the judge Armco mounted a wholesale attack on the validity of these clauses; it was said that they were inserted as part of the fraudulent conspiracy to do so. Aikens J. rejected this attack. He held that at the time Armco had good reasons for agreeing to such clauses. Nor is it surprising that such a clause should have been inserted in an agreement which involved the sale of predominantly a British insurance business to a Jersey company, Wingfield, which was controlled by two British subjects. Accordingly, Lord Grabiner now accepts that the clauses are valid and that Mr Donohue at least, can take advantage of it so far as the Second and Third Defendants, AFSC and AFSIL, are concerned.
But are Armco Inc. bound by it?
23. I regard this question as of very great importance. The judge held that they were not. Unfortunately the judge seems to have misunderstood Mr Leaver's argument on this point. He recorded in paragraph 28 that Mr Leaver had conceded that there was no question of statutory succession and that therefore the only way in which Armco Inc. could become a party was by novation. In fact Mr Leaver's argument went further than this, as Lord Grabiner accepts; I think also it may have been further developed in this Court. Mr Leaver made the following submissions which he submitted resulted in Armco Inc. being bound:
(1) Armco themselves in the Singapore and Hong Kong proceedings maintained that they sued as successors to AFSEL.
(2) It was only consistent with their being so that they accepted service on Nabarro Nathanson pursuant to the provisions of the SPA. No attempt has been made by Armco Inc. to set aside service.
(3) Armco Inc. had no independent cause of action other than one derived from AFSEL in the Far Eastern proceedings or in the NY proceedings, except perhaps the RICO counts.
(4) AFSEL's assets were at the time of its dissolution transferred to Armco Inc. These assets would include any chose in action owned by AFSEL. It is alleged that in the MBO $10 million worth of AFSEL's securities were wrongly transferred to Wingfield. If so, it would be AFSEL who would have the right to sue. Armco have declined to produce any documentation relating to the transfer of assets to Armco Inc.
(5) Clause 10 of the SPA provided that the "Agreement should be binding upon and enure for the benefit of each party's successors and assigns without written consent of the vendor." Even though there is no statutory succession in Delaware law, there is no reason why there should not have been some other transaction by way of succession or assignment to justify and support Armco's claim that they were successors of AFSEL.
24. As to the first points, in the Statement of Claim in Singapore, paragraph 19 reads as follows:
"The sale was concluded in a sale and purchase agreement, dated the 3rd day of September, 1991 (......The material points of the Sale and Purchase Agreement are, inter alia, as follows:
(a) Three members of AFSG were parties to the Sale and Purchase Agreement. These were...AFSEL, the 2nd Plaintiff and 3rd Plaintiff (the 1st Plaintiff is the successor company to AFSEL, which has now been dissolved). It is for this reason that AFSEL is not a Plaintiff to this action."
In his affidavit in support of the Mareva relief, Mr Cooper, who is a solicitor of the Supreme Court, made the matter even clearer. At paragraph 12 he said that:
"On November 9, 1994 AFSEL was dissolved and its assets were transferred to Armco."
And at paragraph 35(i) after referring to AFSEL being a party to the SPA he said:
"Armco [which must be a reference to Armco Inc.] is the successor company to AFSEL, which has now been dissolved. It is for this reason that Armco is Plaintiff rather than AFSEL."
The same statements appear in the documents in the Hong Kong proceedings. With characteristic frankness Lord Grabiner said that he could not explain why these claims were made.
25. I cannot see that Armco Inc. have any independent claim, as opposed to one derived through AFSEL in the Far Eastern proceedings and Lord Grabiner did not suggest any. As for the NY proceedings there is no evidence before this Court that in New York law a parent company can sue in respect of a subsidiary's cause of action or damage. We must assume therefore that the New York law is the same as English law in this respect. Apart therefore from the RICO claims, which may enable such claims to be brought (and although there is no evidence on the point, I am prepared to assume so), it seems to me that all Armco Inc's claims in the NY proceedings are also derivative.
26. In my judgment it is not acceptable that Armco Inc. should be able to claim and their solicitor swear in an affidavit something in one jurisdiction and seek to say in this that it is wrong without any explanation, without producing the documents relating to the transfer of assets and when in my judgment there is a perfectly feasible way in which Armco Inc. could become the successor of AFSEL. Armco had to give undertakings in damages in the Far Eastern proceedings. The undertakings were no doubt acceptable because according to Mr Cooper's affidavit the Armco Group was listed on the New York Stock Exchange and had assets in excess of US$ 1,800 million. I do not know whether the undertaking would have been acceptable in the absence of the parent company of the Group.
27. If, as I would hold, at any rate for the purpose of these applications, Armco Inc. is the successor to AFSEL, then it seems to me that Armco Inc. is bound by the EJC in the SPA. It is a case of not being able to take the plums without the duff (see also DVA v Voest Alpine [1997] 2 Lloyd's Law Reports 279).
What is the Scope of the EJCs?
28. The learned judge dealt with this matter at paragraphs 41 and 42 of his judgment. He held that the claims raised in the NY proceedings based on a pre-existing conspiracy to defraud Armco were not claims that "arose out of" either the SPA or the Transfer Agreements; they arose out of the conspiracy. He also held that the collection agreement and trust fund claims did not do so either. In the last sentences of paragraph 42 he said, "Thus at least the issues raised in counts 1 to 8 and 9-12 are not within the EJCs."
29. Mr Leaver criticises the judge's conclusion on two bases. First he submits that the judge has concentrated only on the phrase "arise out of" and ignored the words "or in connection with". These words in combination are given wide scope (see Mustill and Boyd: The Law and Practice of Commercial Arbitration. 2nd Ed. pp.119-120. Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488; Mackender v Feldia [1967] 2 QB 590 and Harbour Assurance Co (UK) Ltd v Kansa [1993] 2 QB 701). In the Ashville case Bingham LJ said at p517 in relation the arbitration clause in that case:
"I would be very slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings."
30. The judge was in error in saying that counts 1-8 were not within the scope of the EJCs. It was common ground that once the judge had decided that the EJCs had not been fraudulently introduced into the contracts and they were therefore valid, that they covered counts 1 and 2. Brooke LJ makes the point that Count 2 alleges fraudulent concealment by Mr Rossi and Mr Stinson and is not caught by the EJC. While that appears to be so, the concealment is simply the opposite side of the coin of the misrepresentations in Count 1. Furthermore the claim for damages in paragraph 82 of the Amended Complaint is against all the Defendants. I do not think it would be right now to go behind the concession clearly made by Armco's counsel. Moreover, in my judgment the conspiracy claim in count 8 is also within the EJC. The alleged conspiracy was in connection with the SPA. It is no answer to say that these claims arose out of the conspiracy. The conspiracy itself was simply an agreement to use the unlawful means of the secret agreement of April 1991, the misrepresentations and concealments in respect of it and the breaches of fiduciary duty alleged in counts 13 and 14 in so far as they related to the SPA. It should be noted that where there are allegations of fraud inducing a contract, there may be a difference between the scope of an arbitration clause and an exclusive jurisdiction clause. In the former the arbitrator cannot determine his own jurisdiction; but the court has no such inhibition.
31. In the course of the argument I had thought that the judge might have intended to refer to counts 3-8 and 9-12 in paragraph 42. But on reflection I do not think this is so, because the conspiracy to which he refers is I think the secret agreement which is the foundation of counts 1 and 2. If the EJCs are valid, binding and enforceable against the first three Defendants, it is not in dispute that they cannot pursue the RICO claims based upon the same material as is within the scope of the EJCs.
32. In my judgment the judge's error in holding that Armco Inc. was not bound by the EJC and as to the scope of the clause, means that the exercise of his discretion is flawed. This Court must therefore address the question afresh. It is therefore necessary to consider the relevant principles. Although as in all cases involving the grant of an injunction the final question of whether it should go is a matter of discretion, there is a clear distinction in the authorities between those cases where there is an EJC and those where there is not and the court is simply considering the question of alternative forum or forum non-conveniens. It is an important part of Mr Leaver's submissions that the judge confuses the two and treated the case as an alternative forum case (see para. 65(3) and the first reason given in para. 66 of his judgment). I do not find it necessary to consider the matter further because, for the reasons I have given, we must in my view approach the matter afresh.
33. Where there is a valid EJC the court will give effect to it by granting an anti-suit injunction or stay of domestic proceedings unless `strong cause' or `strong reasons' are shown why it should not be. These expressions are used interchangeably in the cases. In The Fehmarn [1957] 1 Lloyd's 511, a case in which Lord Brandon of Oakbrook, as he later became, appeared as counsel, Willmer J. said at p514:
"Clearly it requires a strong case to satisfy the court that the agreement [an express agreement to submit to a foreign tribunal] should be overridden."
In The Chaparral [1968] 2 Lloyd's 158 Diplock LJ, citing Mackender v Feldia used the expression "very strong reasons" and Widgery LJ at p164 said it required "strong grounds". In The El Amria [1981] 2 Lloyds 119 at p123, Brandon LJ, citing his own decision in The Eleftheria [1969] 1 Lloyd's 237 at 245, said:
"This discretion should be exercised by granting a stay unless strong cause for not doing so is shown."
In The Sennar [1985] 1 WLR 490 at p500 Lord Brandon affirmed in the House of Lords this statement of law.
34. In The Angelic Grace [1995] 1 Lloyd's 87 in a much quoted passage Millett LJ at p96 said:
"In my judgment, the time has come to lay aside the ritual incantation that this is a jurisdiction which should only be exercised sparingly and with great caution. There have been many statements of great authority warning of the danger of giving an appearance of undue interference with the proceedings of a foreign Court. Such sensitivity to the feelings of a foreign Court has much to commend it where the injunction is sought on the ground of forum non conveniens or on the general ground that the foreign proceedings are vexatious or oppressive but where no breach or contract is involved. In the former case, great care may be needed to avoid casting doubt on the fairness or adequacy of the procedures of the foreign Court. In the latter case, the question whether proceedings are vexatious or oppressive is primarily a matter for the Court before which they are pending. But in my judgment there is no good reason for diffidence in granting an injunction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them."
and
"I cannot accept the proposition that any Court would be offended by the grant of an injunction to restrain a party from invoking a jurisdiction which he had promised not to invoke and which it was its own duty to decline."
and
"The justification for the grant of the injunction in either case is that without it the plaintiff will be deprived of its contractual rights in a situation in which damages are manifestly an inadequate remedy. The jurisdiction is, of course, discretionary and is not exercised as a matter of course, but good reason needs to be shown why it should not be exercised in any given case."
In the latter passage Millett LJ uses the expression "good reason". I doubt whether he intended to water down what had been said in the earlier authorities which I have referred to, which do not seem to have been cited in that case. In my view we should adhere to the expressions "strong cause" or "strong reason".
35. One must, I think, therefore start from the position that Mr Donohue is entitled to the grant of an injunction against the first three Defendants, unless strong reasons are shown why he should not be. It follows that I do not accept Lord Grabiner's submissions that the whole question is simply one of discretion in deciding where the action should most conveniently be tried and that the EJC is simply one factor, albeit a weighty one, in the exercise of that discretion.
Are strong reasons shown here? - The burden upon Armco.
36. We have been referred to a number of cases where different factors have been considered. I do not think one can derive much assistance from them since they tend to turn on their own particular facts. But some principles can be discovered. First, many factors which may have an important bearing on an alternative forum case will be of little or no weight, because they are either irrelevant or the parties must be deemed to have taken them into account where they have deliberately chosen a forum. Thus little or no weight should be paid to the convenience or availability of witnesses (except possibly in an extreme case like The El Amria where one of the considerations was the presence of all the experts on both sides), the availability of documents, the fact that the party sought to be restrained may have a juridical advantage in the other jurisdiction, for example the RICO claims and more extensive discovery in New York, the nationality or residence of the parties. Accordingly I do not consider that the matters relied upon by Aikens J. in paragraph 65(3) are of much, if any, weight as showing strong cause. I should add in parenthesis that the sixth reason there stated, that Mr Atkins has agreed to give evidence in New York but not elsewhere, is wrong. Under the settlement agreement referred to in paragraph 9 he is clearly obliged to give evidence wherever he is required to. Furthermore, I think there is some force in Mr Leaver's criticism that although there may be considerable connection with the USA, there is little with the State of New York other than the fact that the secret agreement is said to have been made in the Waldorf Astoria Hotel. But because I do not regard the factors set out in paragraph 65(3) of the judge's judgment as of much importance in relation to the question of strong reason, in the same way I do not attach much importance to this criticism.
37. Likewise I do not think that the factors which the judge relied upon in paragraph 65(4) as showing that the connection with England was slim should carry much, if any, weight. Here too I think the judge has perhaps understated the connection with England. The MBO was concerned with the sale of a British business, the BNIG based in the UK, to a Jersey company (Wingfield) controlled by two British citizens, albeit Mr Donohue's main connection is with Singapore. The winding up of the business is taking place here and the bulk of the documents would appear to be likely to be here.
38. In paragraph 65(5) the judge considered whether the NY proceedings were vexatious and oppressive to Mr Donohue. If this was an alternative forum case then, subject to one matter, I would not necessarily disagree with the judge. But in an EJC case it is prima facie oppressive and vexatious to litigate elsewhere than in the agreed forum. And that seems to me to be particularly so where the forum which has been deliberately rejected by the parties exposes one of them to the risk of triple damages, the trial of an immensely complex action involving many documents, to the process of jury selection and jury trial, and where, even if successful, Mr Donohue is unlikely to recover his costs. The one matter where the judge was wrong in this paragraph is in saying that there was no evidence that the NY proceedings would be more costly overall than comparable proceedings in London. The evidence of Mr Passmore in his first affidavit at paragraph 93.5 that it would be, was not contradicted.
39. There are however considerations which are potentially of greater weight. If there are independent third parties, not bound by the EJC, involved in litigation elsewhere than the chosen forum in respect of the same subject matter, this may be a sufficiently strong reason. Examples of this are to be found in The El Amria and Bouygues Offshore SA v Caspian Shipping [1998] 2 Lloyd's 461. In the former case Brandon LJ gave as the second of his reasons for finding that there was strong cause not to give effect to the EJC:
".....the fact that the plaintiffs have on foot, as a consequence of the defendants' own allegations, their parallel action against the Mersey Docks & Harbour Co., and that it is essential, in order to avoid the risk of different decisions on the same issues by Courts in two different countries, that the two actions should be tried together."
40. The facts in the Bouygues case are complicated by the number of interlocutory proceedings. B were the French owners of a barge which was being towed from the Congo to Cape Town when she was driven ashore and lost. The barge was being towed by a tug registered in Azerbaijan and owned by C on time charter to U. The towage contract between B and U contained an EJC to the English Court. Portnet were the Cape Town Harbour authority. There were proceedings in both South Africa and England involving all four parties. Clarke J. had granted an anti-suit injunction to U to restrain B from proceeding in South Africa. But Morison J. had refused a similar injunction to Caspian, there being no EJC. The Court of Appeal discharged the injunction granted to U against B. Sir John Knox gave two reasons for this conclusion at p470. The first was that the refusal of an anti-suit injunction to Caspian by Morison J. "had radically altered the possibilities of avoiding multiplicity of proceedings with the attendant risk of conflicting decisions." The second was the serious involvement of Portnet in the South African proceedings which could not be prevented. Evans LJ was moved by similar considerations. At p467 he said:
".....taking account of the position of all four parties so far as I am able to do so, notwithstanding the near conclusive effect of the exclusive jurisdiction clause as between Bouygues and Ultisol, I would hold that no injunction should be granted or if properly granted should now be discharged."
41. It is plain that in the Bouygues case all four parties were independent of each other; there was an ECJ which only affected two, namely B and U, and the same subject matter, namely responsibility for the loss which would in any event be litigated in South Africa, which was the natural forum. There was therefore a risk of inconsistent verdicts.
How should these considerations be applied in the present case?
42. In the first place the subject matter of the litigation between APL and the three individual alleged conspirators arising out of the collection agreement is quite different from that involving the first three defendants arising out of or in connection with the SPA and Transfer Agreements. The issues in the APL case are whether Mr Rossi had a conflict of interest when he negotiated and signed the collection agreement because he was a secret beneficial owner of shares in NPV and whether the collection agreement was improperly favourable to NPV and whether NPV accounted to APL for the collections it made on APL's behalf. The issues in the claim of AFSC, AFSIL and the derivative claim of Armco Inc. in relation to the MBO are whether there was the secret agreement alleged, whether Mr Rossi and Mr Stinson were beneficially interested in Wingfield at the time, whether $30 million was an excessive sum and whether $10 million worth of AFSEL's assets were secretly and fraudulently transferred. If these allegations are made out, Mr Donohue, Mr Rossi, Mr Stinson and Wingfield will be liable; it matters not how thereafter they got the money into their own pockets. Apart from the fact that the three individual defendants are the same and they are said to have acted fraudulently in each case, there is very little to connect the two. This is not a case in my view of similar fact evidence, the schemes are quite different. Moreover, I can find nothing in Mr Atkins' three statements to suggest that the collection agreement was part of the overall conspiracy made in April 1991. Accordingly I do not see any risk of inconsistent verdicts. It is quite possible that Messrs Donohue, Rossi and Stinson are liable on the MBO transaction, but not the collection agreement and vice versa.
43. Furthermore I do not think a party to the EJC should be able to defeat its effect by causing its subsidiaries or affiliates to bring other actions on different subject matter against the other party to the EJC. This is what Mr Leaver calls the "friends and relations" point. Moreover, if the subject matter of the NY proceedings formed the subject of a fraud trial in England, I have little doubt that the judge would sever the collection agreement from the MBO aspect of the case. They are in any event, it seems to me, separate conspiracies. But that merely emphasises that the subject matter is different.
44. Accordingly the existence of the collection agreement claims and the fact that they may be litigated in New York is no good reason, let alone strong cause, for refusing the anti-suit injunction in respect of those matters to which it does apply. An example of severance of claims is to be found in the decision of Rix J. in Credit Suisse First Boston (Europe) Ltd. v MLC (Bermuda) Ltd [1999] 1 All ER (Comm) 237.
45. That leaves the claims in relation to the trust funds where NNIC are the Plaintiffs with a possible cause of action, although one might have thought it would be the trustees of the fund and not an ultimate beneficiary who would sue. This again seems to me to be a discrete claim. It is established if the certificates against which funds were released from the Trust to NAIC were materially false. But in my view the case is even stronger here for not allowing this aspect of the NY proceedings to dictate the forum since the proceedings have almost certainly been settled.
46. It is convenient at this point to consider the applications by the Fourth and Fifth Defendants APL and NNIC to set aside the proceedings served outside the jurisdiction. Aikens J. held that Freshfields, Armco's solicitors, did not agree to accept service of the proceedings in respect of these Defendants. Mr Leaver has not persuaded me that the judge was wrong. Nor in my judgment are the Fourth and Fifth Defendants necessary and proper parties to the anti-suit proceedings for the reasons I have sought to give in the preceding paragraphs. If Armco decide that they wish all the claims, including those of APL and NNIC arising out of the collection agreement and the trust fund claims to be tried in one forum, they can bring them in English proceedings. It will not lie in the mouth of any potential defendant, who are the PCCs in this action, to seek to resist the jurisdiction of the English Court since they have themselves sought it. Accordingly I would not interfere with the judge's Order in this respect.
47. The matter which has caused me more concern is the judgment of Judge Schwartz, dismissing the challenge to the jurisdiction of the New York District Court by the New York Defendants on the grounds of lack of personal jurisdiction and forum non-conveniens. Lord Grabiner submits that this is all but decisive in his favour; Mr Leaver says it is irrelevant or at best of very little weight. I think both sides overstate their case. Lord Grabiner relied upon what was said by Lord Goff in Airbus Industrie GLE v Patel [1999] AC 119 at p138 and following where he is dealing with the topic of comity and expressed approval of the judgment of Sopinka J. in Amchem Products Inc. v British Columbia (Workers' Compensation Board) 1993 1 SCR 897. But that was not a case where there was an EJC and Lord Goff made it plain that different considerations apply in single forum (EJC cases) and alternative forum cases.
48. More to the point are the observations of Millett LJ in the The Angelic Grace. It was urged upon the court in that case that they should not grant an anti-suit injunction where there was an arbitration clause until the Italian Court had decided whether or not to accept jurisdiction. The court rejected this submission. Millett LJ said at p96:
"We should, it was submitted, be careful not to usurp the function of the Italian Court except as a last resort, by which was meant, presumably, except in the event that the Italian Court mistakenly accepted jurisdiction, and possibly not even then. That submission involves the proposition that the defendant should be allowed, not only to break its contract by bringing proceedings in Italy, but to break it still further by opposing the plaintiff's application to the Italian Court to stay those proceedings, and all on the ground that it can safely be left to the Italian Court to grant the plaintiff's application. I find that proposition unattractive. It is also somewhat lacking in logic, for if an injunction is granted, it is not granted for fear that the foreign Court may wrongly assume jurisdiction despite the plaintiffs, but on the surer ground that the defendant promised not to put the plaintiff to the expense and trouble of applying to that Court at all. Moreover, if there should be any reluctance to grant an injunction out of sensitivity to the feelings of a foreign Court, far less offence is likely to be caused if an injunction is granted before that Court has assumed jurisdiction than afterwards, while to refrain from granting it at any stage would deprive the plaintiff of its contractual rights altogether.
In my judgment, where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law, the English Court need feel no diffidence in granting the injunction, provided that it is sought promptly and before the foreign proceedings are too far advanced."
Lord Grabiner submits that Mr Donohue has delayed here; the foreign court has accepted jurisdiction, and even if according to English law principles it was wrong to do so, as a matter of comity we should give effect to that decision by exercising our discretion not to grant the injunction. If we do not exercise restraint there is a danger of conflicting jurisdictions, which the Court will strive to avoid. Mr Donohue should have acted sooner says Lord Grabiner and this situation would not have occurred. I see the force of this submission. On the other hand I do not think that Mr Donohue can be seriously blamed for delay in the context of having to deal with ancillary proceedings in four other jurisdictions. The fact is that Armco delayed eighteen months after they discovered the alleged fraud. They then struck more or less simultaneously in five different jurisdictions, blows which came out of the blue without any warning. Moreover, to give way to this argument puts a premium on a race in different jurisdictions, where the individual, albeit a wealthy one, may be at a disadvantage against a corporation with assets of over $1800 million.
49. Furthermore, if Judge Schwartz had had the advantage of what I consider should have been a correct decision by Aikens J. giving effect to the EJCs against the first three Armco Plaintiffs, he might well have come to a different conclusion. It is clear that Judge Schwartz considered himself free to disregard the EJCs for two reasons. First, he held that they were not applicable to the New York litigation because the claims asserted in the complaint do not fall within the clause's scope and, secondly, because the clauses had been induced by fraud. As to the first of these grounds, for the reasons which I have set out I respectfully disagree in relation to the first three Armco companies' claims arising out of or in connection with the MBO and SPA. And it is to be noted that Judge Schwartz took comfort from what I consider to be the erroneous conclusion of Aikens J. on this point (including the fact that not even counts 1 and 2 fell within the clauses). The scope of the clause is a matter of construction and as such is a matter of English law.
50. As to the second ground, I am not entirely clear whether Judge Schwartz reached his conclusion on the basis that the inclusion of the EJC was itself part of the fraudulent conspiracy, the point on which Aikens J. found against Armco, or whether the mere fact that the substance of the claim was a fraudulent conspiracy is enough. In either event it appears from the citation of the case of Evolution Online Sys Inc v Konin Klijke PTT Nederland NV 145 F 3rd. 505, 510 (2nd Cic 1998) that "a party seeking to avoid enforcement of [a forum selection clause is] entitled to have the facts viewed in the light most favourable to it and no disputed fact should be resolved against that party until it has an opportunity to be heard." If this means that merely by alleging fraud a party can avoid an EJC, I have to confess to finding it a surprising doctrine and is certainly not consonant with English law. If on the other hand Judge Schwartz decided the matter on the assumption that the clauses themselves were fraudulently introduced, he does not seem to have paid any regard to Aiken's J's convincing reasons for finding that this was not so, but that the clauses were introduced to suit Armco's own interests and that the clauses were valid.
51. The question therefore is whether this Court as a matter of comity should exercise its discretion and refuse to grant injunctive relief to Mr Donohue to which he would otherwise be entitled in deference to a foreign judgment with which it disagrees. I think not. Thomas J. faced a somewhat similar problem in Akai Pty Ltd v People Insurance Co Ltd [1998] 1 Lloyd's 90. In that case PIC issued an insurance policy to Akai which contained an English EJC. Akai began proceedings in Australia and England. On 23 December 1996 the High Court of Australia, reversing the New South Wales Court, refused to stay the Australian proceedings on the ground that the EJC was contrary to Australian statute law and therefore void. Thomas J. refused to stay the English proceedings and granted an anti-suit injunction restraining Akai from pursuing the Australian proceedings. His judgment contains a valuable statement of the applicable principles at pages 104 and 105 in paragraphs numbered 1-10. The only reservation I would have is that he adopts the phrase "good reason" as opposed to "strong cause" or "strong reason", in paragraphs (1) and (4), although referring to "strong cause" in paragraph (3). I do not think the expression "good reason" is to be found in The Chaparral; and for the reasons I have given I think it is preferable to stick by the use of "strong cause" or "strong reason". At p107 Thomas J. deals with the question of comity. He said:
"Finally I have taken into account the fact that in refusing to stay these proceedings, the effect may be that there is simultaneous litigation here and in New South Wales with the inevitable and undesirable consequences that follow. Although the Court will always lean against that, it is the consequence of Akai not abiding by a freely negotiated jurisdiction clause; it would not be just that they should be entitled to take advantage of their own breach of contract to achieve this result."
The PCCs
52. It remains to consider the parties to the PCCs. Mr Leaver submits that they can and should properly be joined under CPR Pt 19.1(2) which provides
"The court may order a person to be added as a new party if -
(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue."
Mr Leaver submitted that having regard to the way the case is pleaded against the NY defendants, all the PCCs came within the scope of the rule. Lord Grabiner on the other hand submits that none of the PCCs should be joined unless they have a claim for substantive relief, otherwise it is said that the provisions of Order 11 in relation to service out of the jurisdiction are evaded. I confess that I have not followed this last point, since the joinder of the Claimants does not involve service out of the jurisdiction (except so far as the 4th and 5th Defendants are concerned, and for reasons I have already explained, I would set aside that service), since the first three Defendants are before the Court having been properly served. In my judgment the decision of Langley J. in Amoco (UK) Exploration Co. v British American Offshore Ltd [1999] 2 All ER (Comm) 201 has no bearing on this point. The facts of that case are somewhat complex. But the Court was dealing with an application under RSC Order 12 Rule 8 by American companies to set aside service of proceedings out of the jurisdiction. The Claimants, Amoco, and the Defendants, BAO, were parties to a hire contract which contained an EJC. Amoco sued BAO in England for breach of the contract, but the proceedings had not been served on BAO at the time that Amoco sought and obtained leave to serve proceedings on the Applicants out of the jurisdiction. The Applicants together with BAO had begun proceedings in Texas alleging against Amoco and associated companies inter alia wrongful interference with business. But BAO accepted that they had made a mistake in so doing and that they were bound by the EJC. Amoco sought to justify service out of jurisdiction on the Applicants (who were not in contractual relationship with Amoco and not bound by the EJC) on the basis of RSC Order 11 Rule 1(c). But this failed because BAO had not been served with the English proceedings. They also failed under Order 11 Rule 1(b) and (d). In these circumstances, there being no substantive basis for the claim against the Applicants, other than that Amoco were seeking an anti-suit injunction to restrain the Texas proceedings, there was no basis for permitting service out of the jurisdiction. But that is not the position here, the PCCs are not seeking to serve the first three Defendants out of the jurisdiction. They are seeking under CPR Part 19 to be joined as Claimants in proceedings properly constituted here against those Defendants. We are therefore only concerned with joinder as against the first three Defendants in relation to the claims arising out of or in connection with the SPA and Transfer Agreements. Wingfield and CIHSL have the benefit of the EJCs in respect of these claims in the same way as Mr Donohue; these are substantive claims in the anti-suit litigation. Accordingly I would permit their joinder.
53. So far as Mr Rossi and Mr Stinson are concerned they do not have the benefit of an EJC. But in my view they clearly fall within CPR Part 19 if the claims arising out of or in connection with the SPA and Transfer Agreements are to be tried here. They wish these matters to be litigated here and are therefore willing to submit to the jurisdiction of the English Court. In these circumstances it seems to me that the English Court is the forum conveniens for the first of these issues. I can find nothing in the Amoco case which precludes this.
Summary
54. In summary therefore I would hold that:
(1) The First, Second and Third Defendants, Armco Inc, AFSC and AFSIL are bound by the EJC.
(2) The scope of the EJC is wide enough to include all claims arising out of or in connection with the SPA. This includes all claims relating to the MBO and specifically includes Counts 1, 2, 8 and Count 14 in so far as it relates to the MBO and the secret agreement of April 1991, and the RICO claims relating to the MBO.
(3) That the EJCs do not cover the claims in relation to the collection agreement or the claims relating to the trust funds being claims by the 4th and 5th Defendants ALP, NNIC respectively, and that an anti-suit injunction should not extend to them.
(4) The service of proceedings on the 4th and 5th Defendants should be set aside.
(5) Neither severally nor collectively do the following amount to strong reason or strong cause such that the Court should not exercise its discretion in favour of granting to Mr Donohue an anti-suit injunction in respect of the claims referred to in subparagraph (2) above, namely:
(a) the matters relied upon by Aikens J. in paragraph 65(3) and (4) of his judgment.
(b) the fact that litigation may proceed in New York in respect of the collection agreement and the trust fund claims, since this relates to different subject matter and different Plaintiffs and can properly be severed.
(c) that comity does not require the Court to give effect to the judgment of Judge Schwartz when it does not agree with his conclusion as to the effectiveness, validity and scope of the EJC.
(6) Accordingly an anti-suit injunction should be granted to Mr Donohue in respect of the claims referred to in sub-paragraph (2) above against the first three Defendants.
(7) The PCCs, CISHL, Wingfield, Mr Rossi and Mr Stinson should be joined as claimants in the present proceedings and granted a similar injunction to that granted to Mr Donohue.
LORD JUSTICE BROOKE:

55. I will start my judgment by identifying the principles which the English courts will follow when an anti-suit injunction restraining the continuation of foreign proceedings is sought in a case where the parties have by consent granted the English courts exclusive jurisdiction.

56. The first governing principle is that the English courts possess jurisdiction to grant such an injunction in order to protect their own jurisdiction, to which the parties have by agreement entrusted the adjudication of their disputes. This principle is recognised within the stricter standard that is required before an anti-suit injunction may be granted in three of the federal circuits of the United States, which Lord Goff generally adopted in his speech in Airbus Industrie GIE v Patel [1999] 1 AC 119 at pp 136E - 137A and 139G - 140B. Lord Goff expressly excluded from his consideration of issues of comity in that speech "those cases in which the choice of forum has been, directly or indirectly, the subject of a contract between the parties" (see p 138F). This was presumably because the Airbus Industrie case was not such a case and because prima facie the parties to a contract should be held to their bargain.
57. In his speech in South Carolina Insurance Co v Assurantie NV [1987] 1 AC 24 Lord Brandon appeared to group all anti-suit injunctions together as a single generic class at p 40D. A close examination of the text, however, shows that where the parties to a contract have given the English courts exclusive jurisdiction, the case falls within what Lord Brandon called "Situation (1)" at p 40C and does not fall to be considered in the subsequent passage of his speech at p 40E-G. This point is important because when Lord Mustill in Mercedes-Benz AG v Leiduck [1996] 1 AC 284 at p 301 categorised as sui generis "the injunction inhibiting foreign proceedings granted in the South Carolina case" he could not have been referring to an injunction which restrained a party to an English exclusive jurisdiction clause from breaking his bargain by commencing or continuing proceedings elsewhere. He appears to have been referring to the general run of anti-suit injunctions granted by English courts to restrain foreign proceedings on forum non conveniens grounds, which do not fall within Lord Brandon's Situations (1) and (2).
58. This rule that the parties to an exclusive jurisdiction clause are prima facie to be held to their bargain has been repeated again and again in recent years. It was restated eloquently by Rix J in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 All ER (Comm) 237 at p 256a-b:
"... [In] the case of an exclusive jurisdiction clause the jurisdiction to enforce by injunction is discretionary and is not to be exercised as a matter of course, but good reason needs to be shown why it should not be exercised; [and ... in other cases the ultimate test is that of the interests of justice]. That does not of course mean that in the former case the interests of justice are not sought, merely that as a general rule and barring good reason to the contrary it is thought to be just that the agreement of an exclusive jurisdiction clause should be upheld."
59. The second governing principle is that if an English exclusive jurisdiction clause is present, the party seeking to avoid its effect must show strong cause for being permitted to do so. The words "good reason" seem to have crept into the caselaw by way of illustrating the fact that the court's jurisdiction to grant an injunction is discretionary. They were used by Millett LJ in The Angelic Grace [1995] 1 Lloyd's Rep 87 at p 96 when this court was concerned to turn the tide of judicial non-intervention which was tending to give greater primacy to the tender feelings of a foreign court (where proceedings had been started in defiance of an exclusive jurisdiction clause) than to the bargain made by the parties. Leggatt LJ at p 94 had said that the case of The Angelic Grace was a paradigm case for the prompt issue of an injunction:
"The charter here is governed by English law. According to English law, the arbitration clause extends to claims in tort. Proceedings in a foreign court are in breach of contract, so an injunction can issue to restrain them."
In Mediterranean Shipping Company SA v Atlantic Container Line AB (CAT 3rd December 1998) Buxton LJ said:
"In my judgment when Millett LJ referred to `good reason' he was referring to good reasons not to grant injunctive relief, that is, discretionary relief. No doubt what his lordship said is an indication that the court should tend to consider that relief should be granted unless the circumstances are unusual, and should look with care at the reasons given for not granting relief. But that, in my judgment, is as far as it goes."
60. Given that the parties have agreed to be bound by the exclusive jurisdiction of the English courts, I agree with Stuart-Smith LJ that the authorities show how in the exercise of its discretion the English court should grant an anti-suit injunction restraining foreign proceedings in such cases unless strong cause is shown why those proceedings should be allowed to continue. If and in so far as Thomas J in Akai Pty Ltd v People's Insurance Co Ltd [1998] 1 Lloyd's Rep 90 at pp 104-105, by loyally adopting the language of Millett LJ in The Angelic Grace, might appear to be suggesting that the test was a different one from that adopted on an application for a stay in the converse case (where a plaintiff sues in England in breach of a foreign jurisdiction clause), this in my judgment gives the wrong impression of the applicable principles. In The Chaparral [1968] 2 Lloyd's Rep 158 Diplock LJ said at p 164 that the same principles should be applied whether the forum of contractual choice is England or some other country. Although he used the expression "strong grounds", the expression "strong cause" received the implied approbation of the House of Lords in The Sennar [1985] 1 WLR 490 at p 500F-G.
61. In Bouyges Offshore SA v Caspian Shipping Co [1998] 2 Lloyd's Rep 461 Evans LJ spoke appositely of the "near-conclusive effect" of the [English] exclusive jurisdiction clause as between two of the parties. He was nevertheless able to identify strong cause on the facts of that case why the proceedings commenced by one of those parties in South Africa should be permitted to continue. This approach mirrors the equally powerful language used by Waller J in British Aerospace Plc v Dee Howard Co [1993] 1 Lloyd's Rep 368 at p 376 and by Steyn LJ in Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588 at pp 597H - 598A and 598E - 598G.
62. In determining whether strong cause has been shown why an injunction should not be granted, the court will take into account all the circumstances of the case. Thomas J in his judgment in Akai at p 105 has brought together in one place a number of the matters which a court is likely to consider in deciding how to exercise its discretion, and I need not repeat them here.
63. The third governing principle is that the applicants for an anti-suit injunction based on their rights under an English exclusive jurisdiction clause should apply promptly for the relief they seek. An injunction is an equitable remedy, and equity has never come to the assistance of those who sleep on their rights. In The Angelic Grace [1995] 1 Lloyd's Rep 87 Millett LJ articulated this principle when he said at p 96 that in such a case the English Court need feel no diffidence in granting the injunction "provided that it is sought promptly and before the foreign proceedings are too far advanced".
64. So far as the second branch of this proviso is concerned, the English Court should examine whether any lack of advance since the commencement of the foreign proceedings has been caused by the dilatoriness of the plaintiffs in those proceedings or by active steps taken by the defendants which have had the effect of delaying their progress. The same gloss should be added to the passage of the judgment of Clarke LJ in Mediterranean Shipping Company SA v Atlantic Container Line AB (CAT 3rd December 1998) when he said that among the matters to be considered before a court grants this equitable remedy are "the promptness with which the relevant application is made and how far the competing proceedings have progressed at the time the application is made".
65. This, then, is the general approach an English court should adopt when invited to exercise its discretion to grant an anti-suit injunction in such a case. I turn now to consider the scope of the clauses which gave the English courts exclusive jurisdiction in the present case. In the sale and purchase agreement, to which AFSC, AFSIL, AFSEL, Wingfield, Mr Atkins and Mr Donohue were parties, Clause 18 provides, so far as is material, that:
"(a) ... this Agreement shall be governed by and construed in all respects in accordance with the laws of England and the parties hereby irrevocably submit themselves to the exclusive jurisdiction of the English Courts to settle any dispute arising out of or in connection with the agreement.
(b) [AFSIL, AFSEL and AFSC] hereby irrevocably appoint [Messrs Nabarro Nathanson] as agent for the service of process in England ..."
66. In the AFSIL - CISHL and AFSEL - CISHL transfer agreements, whereby earlier on the same day AFSIL and AFSEL transferred to CISHL the assets which then formed part of CISHL's assets when it was sold to Wingfield under the sale and purchase agreement, the "applicable law" clause was in a rather different form, although it contained the stipulation that each party submitted to the exclusive jurisdiction of the Supreme Court of Judicature of England. No separate argument was addressed to us, however, about the different language contained in those clauses.
67. Although I did not find the issue an easy one, I have eventually come to agree with Stuart-Smith LJ, for the reasons set out in paragraph 23-27 of his judgment, that Armco Inc must be treated for the purposes of this application as the successor to its dissolved subsidiary company AFSEL. They have consistently behaved throughout this linked international litigation as if they were, and they have derived benefits from that stance. They have also been given ample opportunity to explain why it would be wrong to view them in this light, and they have declined to take that opportunity. In paragraph 36 of his second affidavit Mr Cooper, Armco's English legal adviser, notably failed to respond to the challenge made to him by Mr Passmore, who is Mr Donohue's solicitor, in paragraph 16.3 of his second affidavit.
68. Since both Wingfield and CISHL wish to be joined as claimants in these proceedings it would be wrong to take a point, which at one time attracted me, that Mr Donohue's own status as a party to the sale and transfer agreement was a very minor one. The next task that confronts the court, therefore, is to consider the language of the sale and purchase agreement and determine which of the claims made in the New York proceedings fall within the ambit of the English exclusive jurisdiction clause.
69. Before I undertake that task, it is worth bearing in mind the judge's findings, which were not subject to any appeal, as to the reason why the parties decided to adopt English law and exclusive jurisdiction clauses in these contracts. Mr Gleason, Armco's in-house counsel, and Mr Askins, Armco's chief financial officer and a member of its board, were present at a meeting in late 1990 when concern was raised about any potential challenge to the validity of the sale of the North Atlantic Insurance Group ("NAIG") if the companies subsequently went into liquidation. Armco was particularly concerned about the risk of third party claims against it if NAIG became insolvent following the sale (as in the event occurred), and Mr Ziman, a partner in Armco's English solicitors, advised Armco about this in January 1991.
70. The drafts of the three agreements that were current at the start of that month all provided for New York law. In January 1991 Mr Ziman was then told by Mr Rossi that he would prefer to have the sale and purchase agreement "in English form rather than American". This apparently led to the introduction of a provision in that agreement giving non-exclusive jurisdiction to the English courts. The change to an English exclusive jurisdiction clause in all three contracts was inspired by a suggestion made in April 1991 by Mr Heyes, of Linklaters and Paines' New York office, who was then acting for Mr Donohue. Mr Ziman considered this suggestion, and he made further amendments to the drafts before forwarding them to four Armco employees, including Mr Gleason. The Armco lawyers concluded that English law gave Armco greater protection in the event of a NAIG insolvency, and after Mr Askins obtained further advice from Mr Ziman's firm in July and August 1991 the agreements proceeded on this basis. The judge concluded that all this evidence suggested that Armco had its own good reasons to have English law and jurisdiction clauses in the three contracts.
71. It is now well settled that as a matter of English law exclusive jurisdiction clauses are to be construed in the same generous manner as has traditionally been accorded to arbitration clauses. There is a "presumption in favour of one-stop adjudication", and the courts will be very slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings (see Continental Bank v Aeakos [1994] 1 WLR 588, where Steyn LJ reviews the authorities at p 593A - G). In the present case our courts have been granted exclusive jurisdiction to settle any dispute "arising out of or in connection with the agreement". I agree with Stuart-Smith LJ that the disputes between Wingfield and Mr Donohue on the one hand and Armco, AFSC and AFSIL on the other which are disclosed in Count 1 and part of Count 8 of the New York proceedings are disputes which arise "in connection with" that agreement within the meaning of the parties' exclusive jurisdiction clause.
72. Count 1 is an allegation that Mr Donohue and Wingfield, among others, made fraudulent misrepresentations to [Armco, AFSC and AFSIL] to the effect that Mr Atkins and Mr Donohue were the sole owners of Wingfield, and that the sale would never have proceeded if the Armco companies had known that Mr Rossi and Mr Stinson were their undisclosed partners. Count 8 contains allegations that Mr Donohue and Wingfield conspired with others to defraud the Armco companies by inflating the amount of the cash contribution made by Armco to the North Atlantic Group, and to obtain the inflated proceeds of the sale for their benefit.
73. It appears to me that with the possible exception of Count 14 none of the remaining counts are caught by the exclusive jurisdiction clause, and as I have observed, the two counts that do fall within the language of that clause also include claims made by the Armco companies against others, and in particular their two former employees, Mr Rossi and Mr Stinson.
74. Count 2 is not in my judgment caught by the clause, although Lord Grabiner addressed no argument to us to this effect and appeared willing to concede that prima facie it was embraced by the clause. I regard this point as an important one, and I regret that I am unable to agree with the views expressed on this matter by Stuart-Smith and Sedley LJJ, whose judgments I have had the opportunity of reading in draft.
75. Count 2 contains allegations that Mr Rossi and Mr Stinson fraudulently deceived the Armco companies in connection with the sale and purchase agreement. This is an internal, all-American, dispute in which the Armco companies allege that while they were still employed as senior officers in the group Mr Rossi and Mr Stinson dishonestly concealed from them that they were themselves active participants and collaborators in what appeared in form to be a management buy-out by the officers of a British subsidiary.
76. By no stretch of the imagination can this be regarded as a dispute between Wingfield and/or Mr Donohue on the one hand and AFSIL and/or AFSC and/or Armco vice AFSEL on the other. Because this court is being invited to re-assert jurisdiction in spite of the fact that the District Court of the Southern District of New York has asserted jurisdiction over this Count, it would in my judgment be quite wrong not to look behind Armco's English leading counsel's concession if there is clearly no sound basis on which he could have made that concession. The fact that this concealment is simply the opposite side of the coin of the misrepresentations in Count 1 is in my judgment irrelevant if the parties to the Count 2 dispute are not, on one side at least, parties to a contract with an English exclusive jurisdiction clause.
77. I do not consider that Paragraph 82 of the amended complaint in New York can possibly be interpreted so as to embrace a claim against Wingfield and/or Mr Donohue. After pleading the facts relied on to support the allegations of fraudulent concealment against Mr Rossi and Mr Stinson, whose senior status in the Armco Group is explained in paragraphs 74 and 75, Count 2 ends as follows:
"81. As a result of, and in reliance on, the fraudulent concealment made by Rossi and Stinson, and in ignorance of facts concealed by Rossi and Stinson, Plaintiffs have suffered losses in an amount to be proven at trial.
82. Because of the deliberate, malicious and wilful conduct of Rossi and Stinson in defrauding Plaintiffs in connection with the sale of the North Atlantic Group, Plaintiffs are entitled to punitive damages, in an amount that will serve to punish Defendants and deter them and others from future similar acts."
The word "Defendants" in this context cannot properly, in my judgment, be taken to refer to any of the defendants other than Mr Rossi and Mr Stinson.
78. These are the reasons why I differ from the approach adopted by Stuart-Smith LJ to this count in paragraph 30 of his judgment. Sedley LJ suggests in paragraph 97 of this judgment that the exclusive jurisdiction clause on its "true" construction embraces "all Armco's allegations about the management buy-out, fraud included". Even on the more generous approach now adopted by the English courts to the interpretation of exclusive jurisdiction clauses I am unable to agree that on any recognised principles for the interpretation of such clauses the language of the clause in the Sale and Transfer Agreement is wide enough to embrace an internal dispute within the ranks of one of the parties to the agreement.
79. I agree with Stuart-Smith LJ that the issues that arise for decision under Counts 3 and 4 do not fall within the exclusive jurisdiction clause. They are concerned with allegations that Mr Rossi abused his position within the Armco group so as to allow the fourth defendants APL (of which, incidentally, he and Mr Donohue were both directors) to enter into a very disadvantageous contract with NPV, a company in which he was said to have an undisclosed interest. Unparticularised allegations are made against "the individual defendants", an expression which includes Mr Donohue, but in my judgment the matters complained of in those counts are too far away from the sale and purchase agreement of September 1991 for them to be naturally categorised as a dispute arising out of or in connection with that agreement.
80. I also agree with Stuart-Smith LJ that in so far as Counts 5, 6 and 7, and 15, 16 and 17 still give rise to live issues (a matter on which Lord Grabiner was unable to give us a clear response) they are too far away from the exclusive jurisdiction clause to be embraced within its terms. Like Stuart-Smith LJ, I would set aside the service of the writ against the fourth and fifth defendants for the reasons he gives. For the purposes of this judgment I am disregarding the RICO claims in Counts 9-12, as both counsel appeared to accept that if England was the appropriate forum, the existence of these counts ought not to deflect us from that conclusion.
81. It follows that (putting Counts 5, 6 and 7 on one side) there are two sets of parallel claims which the Armco companies wish to bring. In one of them their dispute is with their former employees, Mr Rossi and Mr Stinson. In the other, their dispute is with Mr Donohue and Wingfield (and also with Mr Atkins, before their claim was compromised) although they also make substantive allegations against Mr Rossi and Mr Stinson in this part of their claim (see paragraphs 68 and 72 in Count 1 and paragraphs 116(i) and 117(a-g) in Count 8).
82. Even if Counts 3 and 4 are severable, Counts 2 and 13 (which allege fraud against Mr Rossi and Mr Stinson in connection with the sale and purchase agreement and breach of fiduciary duty in connection with that agreement and also with the APL/NPV collection agreement) are also connected with the allegations made against Mr Donohue and Wingfield. Count 14, which alleges that Mr Donohue aided and abetted Mr Rossi's and Mr Stinson's breach of fiduciary duty, relates not only to their activities in relation to the sale and purchase agreement but also in connection with the APL/NPV collection agreement.
83. In my judgment, there is a considerable risk of inconsistent verdicts if different courts on either side of the Atlantic were to try some (but not all) of the issues raised in Counts 1, 2, 8, 13 and 14 of the claim in the New York proceedings, and the claims in Counts 2, 8, 13 and 14 are by no means all caught by the English exclusive jurisdiction clause. Indeed, they are principally involved with an all-American dispute between Armco and its two former employees. There therefore seem to me to be great problems in envisaging that the different parts of this dispute might be tried in different places.
84. I turn to the question whether Mr Donohue (and Wingfield) have applied promptly for the relief they now seek. The New York proceedings were started on 6th August 1998, and on 4th September 1998 by an agreed order Mr Donohue stipulated and agreed that he had been served with the summons and complaint. It then appears that he changed his US attorneys in mid-September 1998 and then sought to distance himself from that stipulation (compare Mr Passmore's first affidavit, paragraphs 38-40, with paragraph 2 of Schedule B to Mr Cooper's first affidavit). He thereafter took no further steps in the proceedings until after Judge Schwartz's order in September 1999. He has certainly made no application that they should be stayed or dismissed in reliance on the exclusive jurisdiction clause, although Wingfield did make such an application. In other words, he was maintaining a more or less consistent stance of denying that the New York court had jurisdiction, while leaving it to Wingfield to make an express challenge.
85. Mr Donohue did not apply promptly for relief in this jurisdiction. The writ in these proceedings was not issued until 15th February 1999, more than six months after the New York proceedings commenced, and his application for an anti-suit injunction was not made until 8th March 1999. His solicitor Mr Passmore has given some reasons for this delay in paragraph 14 of his second affidavit, but they are not very impressive reasons for a delay of more than half a year. They would certainly not cut much ice in judicial review proceedings, in which an applicant is required by Order 53 to apply "promptly and in any event within three months". Wingfield, for its part, did not apply to be joined to these English proceedings until 20th May 1999, over nine months after the New York proceedings were commenced.
86. I am wholly unimpressed by the arguments that Mr Donohue and/or Wingfield should for some reason or other be excused for sleeping on their rights for six months because the Armco group are wealthy, or because it took the Armco group 18 months to prepare the evidence they needed in order to commence their proceedings, or because Mareva relief was sought against Mr Donohue in August 1998 in a number of different jurisdictions. The evidence shows that Mr Donohue at all material times possessed ample means with which to instruct lawyers to advise him how to protect his rights. It was, in my judgment, inexcusable for him to allow six months to pass, while the court in New York was devoting time and resources to policing the early stages of the proceedings brought by the Armco companies, if he wished to assert his rights under the English exclusive jurisdiction clause. Those proceedings, indeed, would have progressed further by February 1999 but for the challenge to the jurisdiction of the New York court brought by other defendants. The rule that an English court should stay its hand if relief is not sought promptly and if a foreign court has engaged itself in the same proceedings is simply a reflection of the principles of comity in another guise.
The position at this stage of the analysis, therefore, is that:
(1) Mr Donohue and Wingfield can only rely on the protection of the English exclusive jurisdiction clause in relation to the matters pleaded in Count 1, part of Count 8 and, fairly tangentially, part of Count 14 in the New York proceedings, and they have delayed inexcusably in asserting their right to rely on this clause in an English court;
(2) There are no good reasons why the issues raised in Counts 3-4, 5-7 (if live), other parts of Count 8, parts of Counts 13 and 14, and Counts 15-17 should not be tried in New York;
(3) Notwithstanding (2) above, Mr Donohue, Wingfield and their co-claimants would like the matters pleaded in Count 2, part of Count 8 (so far as the alleged conspiracy embraces Mr Rossi and Mr Stinson and the sale and purchase agreement), and part of Count 13 (so far as it relates to Mr Rossi and Mr Stinson's alleged breach of fiduciary duty in relation to the sale and purchase agreement) tried in London along with the issues prima facie embraced by the exclusive jurisdiction agreement.
87. Judges on each side of the Atlantic have now decided a forum non-conveniens plea on the basis that New York is the appropriate forum for these proceedings. We are, however, adopting a different approach to them on the question whether Armco should be treated for the purposes of these applications as an assign of AFSEL and on the importance to be attached to the exclusive jurisdiction clause. Are these differences (which give this court an original discretion, in so far as Aikens J misdirected himself on material matters) sufficient to swing the balance in favour of an English forum for the issues I have identified under (1) and (3) above?
88. In my judgment they do not, although the answer might have been different if Mr Donohue and Wingfield had applied to this court promptly. I have already said that there would be a risk of inconsistent verdicts if the issues in categories (1) and (2) were not tried by the same court. By much the same token, there would be a risk of inconsistent verdicts if the category (2) issues were not tried by the same court as is trying the APL/NPV issues, since it is an important part of the Armco companies' case that the confusing machinery which facilitated that part of the alleged fraud was created by the alleged conspirators at about the same time as the sale and purchase agreement was executed. In my judgment, powerful though is the link to England created by the English exclusive jurisdiction clause, Lord Grabiner's clients have shown the strong cause necessary for the English courts to desist from "protecting their jurisdiction" and to allow the whole of these proceedings to continue in New York, including the claims made against Mr Donohue and Wingfield.
89. In any event, I accept Lord Grabiner's submission that there are no grounds for allowing any of the American defendants in the New York proceedings to be joined as claimants in the present action. This is an action in which Mr Donohue and, if joined, Wingfield are claiming damages against the first three Armco defendants for unspecified breaches of the sale and purchase agreement, together with an anti-suit injunction to restrain proceedings in New York. As I have said at the beginning of this judgment the source of the English court's jurisdiction to grant an injunction, in a case involving an English exclusive jurisdiction clause, stems from its power to protect its own jurisdiction to which the parties have entrusted the adjudication of their disputes.
90. No such considerations are present, so far as Mr Rossi and Mr Stinson and their companies are concerned. It is inconceivable that they could have brought an independent action against the Armco companies in this jurisdiction, and the recent judgment of Langley J in Amoco (UK) Exploration Co v British American Offshore Ltd [1999] 1 All ER (Comm) shows that freestanding proceedings cannot be brought in England for the sole purpose of obtaining an injunction to restrain foreign proceedings in the absence of an exclusive jurisdiction clause or a claim which falls within Order 11 Rule 1(1).
91. It is clear from the affidavits sworn by Mr Rossi and Mr Stinson on 14th May 1999 that the reason why they and their companies seek to join as co-claimants in these proceedings is to obtain the benefit of an anti-suit injunction themselves restraining the Armco companies from proceeding against them in New York. They do not suggest that they have any other motive, and in my judgment the mere fact that the first three defendants have been served effectively in England (pursuant to the effect of the relevant clause in the sale and transfer agreement) does not permit this court to allow these other would-be claimants to be joined to these proceedings as necessary or desirable parties in order to claim relief to which they have no possible entitlement.
92. Because of the different approach I have adopted in relation to Count 2, and the different approach I have adopted in relation to the delays on the part of Mr Donohue and Wingfield, I am unable to agree with Stuart-Smith and Sedley LJJ that it is appropriate to allow Mr Rossi and Mr Stinson and their companies to be joined as claimants in these proceedings. I do not consider that the fact that the first three defendants have submitted to the jurisdiction of this court for the purpose of the resolution of any disputes that might arise under or in connection with their contract with Wingfield and/or Mr Donohue can put Mr Rossi and Mr Stinson in a better position than they would have enjoyed if no such contractual tie with England had existed in relation to these other parties. The convenient forum for the resolution of all their disputes with their former employers (including Count 2) is clearly, in my judgment, situated on the other side of the Atlantic, and I for my part would not have allowed them to be joined to these proceedings for the sole purpose of requiring the Armco companies to litigate, if anywhere, in an inconvenient forum.
93. For these reasons I would dismiss this appeal.
LORD JUSTICE SEDLEY:
94. At the back of our decision in this problematical appeal is the fact that an orderly use of available national forums depends upon a combination of mutual respect and self-denial on the part of their respective courts. The risk inherent in an anti-suit injunction, if it is unwisely granted, is that it will not succeed in stopping a party whose assets are located outside the jurisdiction from litigating abroad nor dissuade the courts of other countries from entertaining the litigation. Against this, it is universally contrary to comity for courts to stand by while a party who has contracted to litigate in one country reneges on the agreement. Comity creates an expectation that the courts of other countries will collaborate in holding the parties to the terms of an exclusive jurisdiction clause.
95. The present case poses these problems sharply because in a carefully reasoned judgment Judge Schwartz has already accepted jurisdiction on behalf of the courts of the state of New York in all the matters in contention before us. As between two independent justice systems no question of issue estoppel can arise; but equally it cannot be right that the first party to get to court can by that means alone determine the nationality of the forum. In my view the correct approach for us is to give real and respectful weight to the decision of Judge Schwartz in coming to what is nevertheless our own conclusion as to whether an anti-suit injunction is appropriate. This means not only accepting the integrity of his reasoning (a different thing from examining its basis) but recognising that, unless the courts of the state of New York voluntarily accept any contrary view reached by this court, no anti-suit injunction granted here can frustrate his acceptance of jurisdiction. To this extent the principle "first served, first come" will in practice operate; but for the reasons I have given it cannot be determinative. The remark of Millett LJ in Crédit Suisse Fides Trust SA v Cuoghi [1998] QB 818, 827, that "it is becoming increasingly widely accepted that comity between the courts of different countries requires mutual respect for the territorial integrity of each other's jurisdiction" serves in the present case only to highlight the dilemma: who should be deferring to whom?
96. It is in the light of this approach to comity, and not because we sit in any sense as a court of appeal from Judge Schwartz, that I have reached the conclusion that the course proposed by Stuart-Smith LJ is the right one. I agree in particular that the weight to be given to the judgment of Judge Schwartz is less than it would otherwise be to the extent that he has based himself on aspects of the judgment of Aikens J which we are overruling. For the rest my reasons are essentially those of Stuart-Smith LJ. I would add to them, if I may, that the RICO allegations, while peculiar to the United States in form, are not so in content. Substantively they are all allegations of fraud which are as justiciable in England as in New York. As I understand them, the statutory offences of wire fraud and mail fraud are constructs designed to give federal (and in the event extra-territorial) jurisdiction over frauds which would otherwise be justiciable only state by state. What distinguishes them is not the nature of the fraud but the technical means by which it is perpetrated, and this is a matter of indifference in English law. The "pattern of racketeering activity" which RICO requires is two or more such acts, while English law - though not penalising it in triple damages - requires only one.
97. Like Stuart-Smith and Brooke LJJ I consider that the three Armco companies are bound by their agreement with Mr Donohue - Armco Inc by its own implicit admission. I consider too that the EJC on its true construction embraces all Armco's allegations about the management buyout, fraud included, though not the collection agreement or trust fund claims. In these circumstances, and shorn of the 4^th and 5^th defendants, these proceedings should be pursued, if at all, in the English courts. I agree that in the circumstances of this appeal neither Judge Schwartz's decision nor the separate continuance of the non-EJC litigation is sufficient to contra-indicate the clear contractual provision.
98. I concur in the joinder of Wingfield and CIHSL as co-claimants on the injunction. But I have been troubled about the propriety of joining Mr Rossi and Mr Stinson, as they wish to be joined, as claimants in the injunction proceedings. Neither of them has a discrete claim to the benefit of an anti-suit injunction, and it is not a sufficient reason for joining them that without their joinder the effectiveness of an injunction in favour of the other claimants will dissolve. What persuades me that it is right to join them is that once the case for giving effect to the EJCs in the case of the other claimants is made out, England becomes the forum conveniens for the trial of the material issues. This, it seems to me, is a different test from an effectiveness test, and one which, in agreement with Stuart-Smith LJ, I consider decisive in relation to the joinder of these two individuals.
99. I do not agree with Brooke LJ that the other claimants are shut out by delay: Stuart-Smith LJ gives reasons, with which I agree, for not holding against Mr Donohue in particular the time which went by between the issue of Armco's multilateral proceedings in August 1998 and the issue of the present writ in February 1999. It was not until November 1999 that Judge Schwartz gave his judgment on a motion which, albeit Mr Donohue was not a party to it, might have made the present application a very different one.
100. For these reasons I would allow this appeal on the basis spelt out in the concluding paragraph of Stuart-Smith LJ's judgment.

Order: Appeal allowed; draft order not to be drawn up until 12^th April; the Claimants to have 95% of the costs here and below; permission to appeal to House of Lords refused.
(Order does not form part of the approved judgment)

Annex
Dramatis Personae and Acronyms
A. Armco Group of Companies
1. Armco Inc. Parent company of Armco Group. Incorporated in Ohio.
1st Defendant and Plaintiff in NY proceedings.
2. Armco Financial Services Corporation (AFSC). Wholly owned subsidiary of Armco Inc. Incorporated in Delaware. Guarantor under SPA. 2nd Defendant and Plaintiff in NY proceedings.
3. Armco Financial Services International Limited (AFSIL). Wholly owned subsidiary of Armco Inc. Incorporated in Delaware. Vendor under SPA. 3rd Defendant and Plaintiff in NY proceedings.
4. Armco Pacific Limited (APL). Wholly owned subsidiary of AFSIL. Incorporated in Singapore. 4th Defendant and Plaintiff in NY proceedings.
5. Northwestern National Insurance Company (NNIC). Wholly owned subsidiary of AFSC. Incorporated Wisconsin. 5th Defendant and Plaintiff in NY proceedings.
6. Armco Financial Services Europe Ltd (AFSEL). Dissolved. Wholly owned subsidiary of Armco Inc. which is described as successor. Party to SPA.
B. Individuals
1. Roger Donohue. Claimant. Defendant in NY proceedings. British citizen resident in Singapore. Party to SPA.
2. Patrick Rossi. Potential Co-Claimant. Defendant in NY proceedings. US citizen resident in Ohio. Armco employee till he moved to Wingfield in 1992.
3. Larry Stinson. Potential Co-Claimant. Defendant in NY proceedings. US citizen resident in Ohio. Alleged to be a conspirator with Donohue and Rossi.
4. David Atkins. Defendant in NY proceedings; now settled. Alleged co- conspirator with Donohue, Rossi and Stinson. UK citizen resident in England.
5. Mr Askins. Chief Financial Officer of Armco Financial Group involved in MBO on behalf of Armco.
C. Other potential Co-Claimants
1. Wingfield Limited (Wingfield). Defendant in NY proceedings. Incorporated in Jersey, Channel Islands. Purchaser under SPA.
2. CI Services Holdings Ltd (CISHL). Defendant in NY proceedings. Incorporated in Jersey, Channel Islands. Party to Transfer Agreement.
3. International Run-Off Services Inc. (IROS). Defendant in NY proceedings. Incorporated in Ohio. Owned and controlled by Stinson.
4. International Trustee and Receivership Services Inc. (ITRS). Defendant in NY proceedings. Incorporated in Ohio. Owned and controlled by Mr Rossi.
D. British National Insurance Group (BNIG)
Subsequently North Atlantic Insurance Group (NAIG). Principal subsidiary company British National Insurance Company (NAIC). Companies incorporated in England. Now in liquidation. Business sold in MBO.
E. Acronyms
MBO Management buy-out of BNIG effected by Transfer agreements and SPA.
EJC Exclusive jurisdiction clause - contained in SPA and Transfer Agreements.
SPA Sale and Purchase agreement of 3 September 1991.
PCCs Potential Co-Claimants in these proceedings.
NY Proceedings Proceedings begun on 5 August 1998 in Southern District Court of New York, USA.
RICO Racketeer Influenced and Corrupt Organisations Statute

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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Donohue v Armco Inc. & Ors [2000] EWCA Civ 94 (29 March 2000) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/94.html Cite as: [2000] EWCA Civ 94