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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hipgnosis SFH 1 Ltd v Manilow & Anor [2025] EWCA Civ 486 (17 April 2025) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2025/486.html Cite as: [2025] EWCA Civ 486 |
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ON APPEAL FROM THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
MR JUSTICE MARCUS SMITH
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE PHILLIPS
and
LORD JUSTICE SNOWDEN
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HIPGNOSIS SFH 1 LIMITED |
Appellant |
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- and - |
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(1) BARRY MANILOW (2) HASTINGS, CLAYTON, TUCKER, INC DBA STILETTO ENTERTAINMENT |
Respondents |
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Andrew Sutcliffe KC and William Day (instructed by Wiggin LLP) for the Respondents
Hearing date: 11 April 2025
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Crown Copyright ©
Sir Julian Flaux C:
Introduction and factual background
"This Agreement and any related dispute or claim (contractual or non-contractual) shall be governed by, and construed in accordance with, English law. Each party irrevocably submits for all purposes of this Agreement (including any such dispute or claim) to the exclusive jurisdiction of the English courts. Any judgment obtained in the English courts may be enforced in any other jurisdiction. Notwithstanding the foregoing, any claims made by BM against Hipgnosis related to the Purchase Price may be brought by BM in the courts of Los Angeles, California or New York City, New York and solely in connection with such claims, Hipgnosis hereby agrees to submit to the jurisdiction of the courts located in Los Angeles, California and New York City, New York."
"This gives my client the [right] to bring a civil action for those payments in Los Angeles, but does not allow your client to bring any claims in that forum. Should we proceed to litigation, my client can and will pursue $1,500,000 plus its attorney's fees in Los Angeles, while your client can pursue a claim for peanuts in the United Kingdom."
The judgment below
"Considerable weight is attached to party autonomy and agreements as to jurisdiction. Indeed, it has been suggested (e.g, Peel, Exclusive Jurisdiction Agreements: Purity and Pragmatism in the Conflict of Laws, [1998] LMCLQ 182) that where a jurisdiction clause is valid and enforceable it should not be overridden at the discretion of the courts."
"(i) The words used in Phrase [2] are wide words and clearly can embrace claims relating to the Purchase Price. Indeed, Phrase [2] is the only means by which C can commence proceedings in relation to disputes (of whatever sort) concerning the Agreement. Where this occurs, D can perfectly easily accede to a claim so brought: indeed, Phrase [2] provides for irrevocable submission to the jurisdiction by both C and D.
(ii) The fact that Phrase [2] bites on both C and D highlights an obvious, but important, point. Viewing Phrase [2] purely on its own terms, it confers precisely the same jurisdictional rights and obligations on both C and D. It is, viewed in this way, a symmetric jurisdiction clause, and an exclusive one. Phrase [2] viewed on its own does fall within article 5 of the Hague Convention and – on this (blinkered) basis – the Application would fail.
(iii) But it is obviously necessary to eschew a blinkered approach and to construe the Agreement as a whole, and in particular clause 14 as an internally consistent, single, contractual agreement between C and D as to jurisdiction, applicable law and enforcement of judgments. I remind myself that the "phrases" I am referring to in this Judgment are no more than an ex post label, used for convenience only. Clause 14 must be read as a whole.
(iv) The opening words of Phrase [4] obviously derogate from what has gone before. The opening words of the phrase, "[n]otwithstanding the foregoing" can mean nothing else. More to the point, because Phrase [4] accords a limited jurisdiction to United States' courts, it is in particular a derogation from Phrase [2].
(v) The nature of that derogation from or qualification of the rights contained in Phrase [2] is as follows:
a) So far as claims brought by C against D relying on Phrase [2] are concerned, the clause is conferring of an exclusive jurisdiction in the sense that C cannot contend for any other contractually conferred jurisdiction.
b) However, that is not the case where C is claiming against D. In such a case, D may (but need not) sue C in the courts of Los Angeles or New York, but solely in connection with Purchase Price claims. In short, so far as Purchase Price claims are concerned, D has a choice as to whether to litigate in England pursuant to Phrase [2] or in Los Angeles/New York pursuant to Phrase [4]. Obviously, so far as C is concerned, clause 14 is not an exclusive jurisdiction clause at all.
c) The question is whether D's choice as to where to litigate Purchase Price claims is eliminated where C have themselves commenced proceedings pursuant to Phrase [2]. Put another way, the question is whether the effect of the combination of Phrases [2] and [4] is to create – as regards disputes regarding the Purchase Price – a "first-past-the-post" jurisdictional race, whereby the party that commences proceedings first obtains the other party's submission to that particular jurisdiction.
d) In my judgement this is an incorrect construction of clause 14. Not only do courts – for good reason – frown on parallel proceedings and the risk of inconsistent outcomes in different jurisdictions, this construction disregards and gives no meaning to the opening words of Phrase [4], "[n]otwithstanding the foregoing". If all that was intended was a limited jurisdictional choice in D, eliminated the moment C articulated a Purchase Price claim against D pursuant to Phrase [2], these words would not be necessary. That outcome – limited choice and jurisdictional race – would be achieved without these words.
e) It might be said that D would retain a choice of litigating Purchase Price claims in two jurisdictions (England and one of Los Angeles or New York) rather than just one, but this is an absurd construction. The result is a positive encouragement to parallel proceedings in relation to Purchase Price claims; and this construction disregards the significance of the submission to jurisdiction contained in both Phrase [2] and Phrase [4].
f) In my judgement, the purpose of these words is to enable Purchase Price claims to be litigated in one of England or the United States (specifically, Los Angeles/New York) at D's choice. That choice is unaffected by the commencement of Purchase Price claims by C in England pursuant to Phrase [2]. The effect of the words "[n]otwithstanding the foregoing" is to preserve that choice and to retract D's otherwise irrevocable submission to the English jurisdiction pursuant to Phrase [2]."
"It follows that although the English Proceedings were properly commenced by C and that service out was regular, that was only because D had not, at this stage, made their choice as to jurisdiction, which choice was conferred on D (but not on C) by Phrase [4]. Exercising that choice – by commencing the Los Angeles Proceedings within a reasonable time of the commencement of English Proceedings by C and by making the Application – crystallised the floating jurisdiction between England on the one hand and Los Angeles/New York on the other in favour of Los Angeles. I conclude that D is entitled to a stay as of right, but if I am wrong on this, I consider that this court should not exercise any jurisdiction which it may have."
The grounds of appeal and Respondent's Notice
(1) The judge's construction of clause 14 of the agreement between the parties dated 20 March 2020 was erroneous and not one which was reasonably capable of being adopted. The Grounds then set out detailed reasons supporting this ground, but the thrust of the points made is that the judge was wrong to conclude that, as a matter of construction of clause 14, the commencement of the Los Angeles proceedings had any effect on the English court's jurisdiction.
(2) The judge ought to have concluded that, properly construed, clause 14 conferred jurisdiction for the appellant's claim in its entirety on the English court from the outset (as he did conclude) and that the English court continued to have such jurisdiction throughout.
(3) On that basis, there were no grounds for ordering a stay of any part of the appellant's claim. No other grounds (whether by reference to forum non conveniens or otherwise) were advanced by the respondents before the judge and the judge did not suggest any other grounds existed.
(4) If the judge had construed clause 14 as he should have done (i.e., not as creating a "floating jurisdiction" but as an exclusive jurisdiction clause as regards any claims by the appellant), he would, or ought to, have concluded that clause 14 is an exclusive jurisdiction clause within the meaning of the Hague Convention, and that, as a result, the English court was prohibited by Article 5(2) from declining jurisdiction on the ground that the dispute should be decided in a court of another state.
(1) The Hague Convention does not apply to the Agreement.
(2) The Court should not exercise any jurisdiction given the risk of parallel, duplicative proceedings and inconsistent judgments, especially given that risk has been brought about by the conduct of the appellant who (having been told in correspondence that proceedings would be commenced in Los Angeles) pre-emptively began proceedings in England seeking negative declarations.
(3) The judge should have awarded the respondents their costs rather than making no order as to costs.
Summary of the submissions of the parties
"Jurisdiction
(a) The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a 'Dispute').
(b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c) This is for the benefit of the Lender only. As a result the Lender shall not be prevented from taking proceedings related to a Dispute in any other courts in any jurisdiction. To the extent allowed by law the Lender may take concurrent proceedings in any number of jurisdictions."
"This [Article 17] does not confer on Kaupthing an entitlement to "renounce" a jurisdiction clause in its entirety and to dispute the jurisdiction of proceedings properly brought by the other party in accordance with the clause. The article merely provides that the beneficiary of the clause is permitted to elect to bring proceedings arising out of, or in connection with, those agreements in another court of competent jurisdiction, in addition to England. But that provision is clearly, given the wording "in any other court which has jurisdiction by virtue of this Convention" without prejudice to the "first seised" rules of Article 21. It does not entitle Kaupthing unilaterally to challenge proceedings previously brought by Lornamead against Kaupthing in England in accordance with the terms of the English jurisdiction clause and in conformance with Lornamead's contractual obligation thereunder. Nor do the English jurisdiction clauses confer any such right. They make it clear that Kaupthing can take concurrent proceedings in other jurisdictions only "to the extent permitted by law." It was not disputed by Kaupthing, that if the English Court was indeed entitled to maintain jurisdiction, it was the Court first seised, and that accordingly it was no longer open to Kaupthing to bring proceedings against Lornamead in relation to the same cause of action in Iceland by virtue of Article 21."
"The argument is that clause 24.1(c) operates defensively to enable MCB to resist any suit brought by Hestia or Sujana in England because it provides that 24.1(a) is only for MCB's benefit. Accordingly, it is said, the clause is entirely one-sided because it confers no rights on Hestia or Sujana to sue in any forum whilst subjecting them to any forum at the suit of MCB. That too is, in my view, an erroneous reading of the clause. Clause 24.1(c) refers to the lender taking proceedings. Clause 24.1 is for the benefit of MCB in the sense that Hestia and Sujana are obliged to sue in England but MCB is not. But that does not disapply clause 24.1(a) to MCB completely. Where it is Hestia or Sujana which brings suit against MCB in England, clause 24.1(a) is not disapplied by the operation of clause 24.1(c). MCB is thereby agreeing to be sued in England subject to the liberty conferred by clause 24.1(c). In those circumstances MCB has agreed to be subjected to the exclusive jurisdiction of the English courts, subject to its right to bring claims (which may overlap) abroad pursuant to clause 24.1(c). Were it otherwise, clause 24.1(a) would be superfluous: if clause 24.1(c) permitted MCB to insist on suing or being sued anywhere, or anywhere of competent jurisdiction, that would include England (given that this is an English law agreement and forum conveniens is conclusively determined by sub-clause (b))."
"In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction. As Longmore LJ remarked, at para 17: "if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.""
"66. As stated in the passage from Dicey, Morris and Collins at §12–110 cited above, where there are interlinked contracts between the same parties, each containing its own jurisdiction clause, "the point of departure will be that it is improbable that a jurisdiction clause in one contract, even expressed in ample terms, was intended to capture disputes more naturally seen as arising under a related contract." As Lord Collins said in UBS v HSH Nordbank at [84], "sensible business people" are unlikely to intend that disputes between them should fall within the scope of two inconsistent jurisdiction clauses. As Longmore LJ observed in Savona at [1], where there are theoretically competing jurisdiction clauses, "one's natural reaction is that it should be possible to assign any particular dispute to one or other such clause and that there should be no overlap between them".
67. In Savona the Court cited with approval the following passage from the judgment of Popplewell J in Monde Petroleum S.A. v Westernzagros Ltd [2015] 1 Lloyd's Rep 330 at [35]-[36]:
"35. Where there is more than one agreement between the same parties, and they contain conflicting dispute resolution provisions, the presumption of one-stop adjudication dictates that the parties will not be taken to have intended that a particular kind of dispute will fall within the scope of each of two inconsistent jurisdiction agreements. They will fall to be construed on the basis that they are mutually exclusive in the scope of their application, rather than overlapping, if the language and surrounding circumstances so allow …
36. Nevertheless the possibility of fragmentation may be inherent in the scheme of the parties' agreements and clear agreements must be given effect to even if this may result in a degree of fragmentation in the resolution of disputes between the parties."
76. This conclusion is further borne out by the implausibility of sensible business people agreeing inconsistent jurisdiction clauses and the presumption of mutual exclusivity. As discussed further below, there is no clear language displacing that presumption."
"This Agreement shall be governed by, and construed in accordance with, English Law and you irrevocably submit to the jurisdiction of the English courts in respect of any matter arising out of this Agreement, or our services to or Transactions with you under this Agreement."
"It would make no sense, in my judgment, to construe the clause as permitting Anchorage, so long as it submits to the jurisdiction of the English court, also to bring a claim of its own in New York in respect of essentially the same matters as arise here. It cannot sensibly be supposed that the parties would have regarded such a prospect as acceptable. On the contrary they would rightly have regarded it as a procedural nightmare."
Mr Sutcliffe KC pointed out that BNP Paribas v Anchorage had been followed in three later cases. He placed emphasis on the judge's point that parallel proceedings would be a procedural nightmare.
(1) The LMA wording does not require the borrower to submit to the jurisdiction of any other court where the lender brings proceedings. This was a point made by Popplewell J in Mauritius Commercial Bank at [37]. In contrast the second part of the fourth sentence in clause 14 is an express and mandatory promise by the appellant to submit to the jurisdiction of the courts of Los Angeles or New York.
(2) The LMA wording provides that the exclusive clause is wholly for the benefit of the lender, so that the lender is not bound by it. It thus reflects the wording of what was Article 17 of the 1968 Brussels convention.
(3) The LMA wording expressly refers to the possibility of concurrent proceedings in a number of jurisdictions, without qualification, which would rebut the one-stop shop presumption. There is no equivalent in clause 14 so that the starting point was that the parties here were unlikely to have intended that there would be the same dispute about the purchase price on both sides of the Atlantic.
(4) The LMA wording permits the lender to litigate in any jurisdiction worldwide. In contrast the fourth sentence of clause 14 simply allows the respondents to sue in Los Angeles or New York. This was a point made by Popplewell J in Mauritius Commercial Bank at [38].
(5) The LMA wording does not limit the types of action which can be brought outside England. Here the fourth sentence only dealt with purchase price claims. It was in effect saying that the parties intended purchase price claims to be litigated in Los Angeles or New York if that is what the respondents want. If that was not express it was implicit as if the officious bystander had asked if that was what was intended, the parties would have answered; "Of course".
(6) The LMA wording contains an express confirmation that the courts of England are the most convenient forum and a promise not to argue the contrary.
(7) The LMA wording contains an express provision for service in England, lacking in the Agreement here.
"I do not regard it merely as convenient that the two actions, in which many of the same issues fall to be determined, should be tried together; rather that I regard it as a potential disaster from a legal point of view if they were not, because of the risk inherent in separate trials, one in Egypt and the other in England, that the same issues might be determined differently in the two countries."
Discussion
"The result [of the clause] is that Air Berlin was bound to invoke the exclusive jurisdiction of the English courts in order to settle any dispute arising from the Facility Agreement, but Etihad was free to take proceedings in any other (i.e. non-English) courts with jurisdiction. That is the nature of the asymmetry. So far as Air Berlin was concerned, it had entered into a choice of jurisdiction agreement which compelled it to litigate any disputes in England, but the same was not true of Etihad, which on the face of it reserved an unfettered freedom to 'take concurrent proceedings in any number of jurisdictions.'"
Furthermore, there are only parallel proceedings because the respondents chose to exercise the option in the fourth sentence when they did not have to do so and then included in the California proceedings the fraud and misrepresentation claims in breach of the exclusive jurisdiction provision in the second sentence.
69. The sixth ground of distinction is that the LMA wording contains an express provision that it is agreed that England is the most appropriate forum. Such an express provision was probably not necessary in the case of clause 14 given the wording of the second sentence: "Each party irrevocably submits for all purposes of this Agreement…" which would preclude any attempt to run an argument of forum non conveniens. The seventh ground of distinction concerns the LMA wording containing a service provision which can have no bearing on the width and scope of the jurisdiction clause. In any event, Mr Sutcliffe KC stated in argument that his sixth and seventh grounds of distinction were not determinative.
"It is unnecessary to decide the issue for the purpose of disposing of the appeal. In general, it is unwise to deliver judgments on points that do not have to be decided. There is no point in cluttering up the law reports with obiter dicta, which could, in some cases, embarrass a court having to decide the issue later on."
Conclusion
Lord Justice Phillips
Lord Justice Snowden