In Traxys Europe SA v Sodexmines Nigeria Limited and Basem El Ali, Teare J provided helpful guidance on how the court will balance the burden of proof and assess the usual competing factors when determining the forum conveniens for a claim. The court also considered how exclusive jurisdiction clauses may apply to a contracting party’s alter ego.
Background to the dispute
The dispute concerned the alleged dishonest substitution by Sodexmines Nigeria Limited (the first defendant) of a worthless product in place of a valuable tin commodity, which it had agreed to sell to Traxys Europe SA (the claimant) in Nigeria. Mr Basem Ali (the second defendant) was the alter ego of the first defendant, but was not a party to the supply contract.
The contract included an exclusive jurisdiction clause, which provided that England and Wales was the agreed jurisdiction for any claims against the first defendant. The claimant issued proceedings in the Commercial Court in London for breach of contract or restitution (against the first defendant only) and in the tort of deceit and unlawful means conspiracy (against both the first defendant and the second defendant).
Burden of proof
The first issue the judge had to determine was where the burden of proof lay. While it is typical for a defendant to demonstrate that there is a more appropriate forum, matters had been complicated by the nature of the second defendant’s application.
The judge sought the guidance of Lord Templeman and Lord Goff in the seminal decision of Spiliada Maritime Corp v Cansulex Ltd. As in Spiliada, he identified two distinct groups of claims where forum non conveniens arguments are made:
- In the first group, a claimant is entitled to commence a claim in England and Wales and the court will only stay the proceedings if the defendant persuades the court that some other forum is more appropriate. In such circumstances, the burden of proof would rest with the defendant.
- In the second group, a claimant is not entitled to serve out of the jurisdiction absent the court’s exercise of its discretionary power to allow such service. In those circumstances (and contrary to the first scenario), the burden is upon the claimant to show that the forum of England and Wales is best placed to serve the interests of the parties.
The judge considered that the claim fell into the second group of cases. Notwithstanding that, as a matter of form and language, the second defendant was seeking a stay (and he had not sought to challenge the court’s decision to permit service out of the jurisdiction), the claimant had not been entitled to commence the proceedings against the second defendant “as of right”; the claimant had been required to persuade the court that (amongst other things) England was the most appropriate forum. The judge concluded, at paragraph 11, that:
“…once the battle lines were drawn as to whether England was the forum conveniens the burden lay on the Claimant to establish that England was the forum conveniens.”
In reaching his decision, the judge made it clear that he was considering the “substance of the matter”, as opposed to simply the form of the second defendant’s application. This was a departure (albeit a modest one) from the stricter two group interpretation set out in Spiliada.
Assessment of competing factors
The judge then went on to assess the competing factors put forward by the parties. It was noted that the assessment of the relevant competing factors should be “summary” (as set out in Lungowe v Vedanta) so that the application could be disposed of at proportionate expense.
The judgment contains a concise consideration of the competing factors. Ultimately, the judge considered that the connection between the alleged tort and Nigeria was the most persuasive. The vast majority of the relevant events occurred in Nigeria and most of the witnesses were located there. This led the judge to conclude that the claimant had failed to establish that England and Wales was the appropriate forum for the hearing of the tort. The judge noted that, had the burden of proof been reversed and it had been incumbent upon the second defendant to establish that the correct jurisdiction was that of Nigeria, it would not have changed his decision.
Somewhat surprisingly, the second defendant had previously submitted sworn evidence to the Nigerian courts that the civil elements of the dispute between the parties ought to be resolved in England and Wales. This glaring inconsistency in the second defendant’s testimony was a competing factor relied upon by the claimant. While the judge noted that the second defendant seemed “content to say whatever suits his interests”, he was not persuaded that it showed that England and Wales was the appropriate forum for the case to be tried. After all, this was for the claimant to prove.
This case is a helpful reminder that when determining where the burden of proof lies in relation to forum conveniens, the court will look to the substance, rather than the form, of the jurisdictional challenge. Where the claimant has to obtain permission to serve out, the defendant should apply to set aside the order granting permission, but if the defendant instead applies for a stay, the burden of proof in respect forum conveniens will nevertheless fall on the claimant.
Perhaps more importantly, parties must take care to distinguish between a party and their alter ego, if that alter ego is a separate legal entity. In this case, while the first defendant may have agreed to an exclusive jurisdiction clause, this did not mean that the second defendant was so bound.
Interestingly, the claimant also argued that England’s reputation for good video conferencing facilities should be considered a competing factor in circumstances where (regardless of the forum) there was likely to be evidence by video link at trial. This was promptly rejected by the judge, and rightly so in circumstances where no evidence was submitted as to the quality of Nigerian video facilities and the measures taken by the Nigerian court in light of the COVID-19 pandemic. Where properly evidenced, it will be interesting to see how much weight the court gives to such arguments in future, especially given the continuation of lockdown measures across the globe.