Duncan Bagshaw, a dispute resolution partner, at this firm recently commented for an article published in Lexis Nexis. Please see below a copy of the article.
The Supreme Court has dismissed hotel company FS Cairo’s appeal against the lower court’s decision to grant Lady Brownlie permission to serve proceedings relating to her husband’s fatal car crash on the company out of the jurisdiction. Comment on the judgment is provided by Chirag Karia QC, barrister at Quadrant Chambers, and Duncan Bagshaw, partner at Howard Kennedy LLP, who assess the implications of the judgment.
FS Cairo (Nile Plaza) LLC v Brownlie (as Dependant and Executrix of Professor Sir Ian Brownlie CBE QC [2021] UKSC 45
Background
In January 2010, Lady Brownlie and her husband, Sir Ian Brownlie QC, were on holiday in Egypt. They stayed at the Four Seasons Hotel Cairo at Nile Plaza. On 3 January 2010, they went on a guided driving tour which Lady Brownlie booked through the hotel. The vehicle they were travelling in during the tour crashed, killing Sir Ian and seriously injuring Lady Brownlie.
Lady Brownlie issued a claim in England seeking damages in contract and tort. The case reached the Supreme Court which found that the company sued by Lady Brownlie was not the operator of the hotel and remitted the matter to the High Court.
Lady Brownlie successfully sought permission to substitute the present defendant and to serve the proceedings on them out of the jurisdiction. The defendant appealed on the question of whether permission should have been given to serve the proceedings out of the jurisdiction. The Court of Appeal dismissed the appeal.
The defendant raised two issues before the Supreme Court. The first (the ‘tort gateway issue’) is whether Lady Brownlie’s claims in tort satisfy the requirements of the relevant jurisdictional ‘gateway’ in the Civil Procedure Rules. The second (the ‘foreign law issue’) is whether, in order to show that her claims in both contract and tort have a reasonable prospect of success, Lady Brownlie must provide evidence of Egyptian law.
Judgment
The Supreme Court dismisses the appellant’s appeal on both issues. In relation to the tort gateway issue, Lord Lloyd-Jones (with whom Lord Reed, Lord Briggs, and Lord Burrows agree) gives the lead judgment. Lord Leggatt dissents and would have allowed the appeal on that issue. As to the foreign law issue, Lord Leggatt gives the unanimous judgment.
The tort gateway issue
Before permission may be given for service of a claim form outside the jurisdiction, the claimant must establish that: (1) the claim falls within one of the gateways set out in CPR PD 6B, para 3.1; (2) the claim has a reasonable prospect of success; and (3) England and Wales is the appropriate forum in which to bring the claim [25]. Those conditions are the domestic rules regarding service out of the jurisdiction; they may be contrasted with the EU system [28-29].
Lady Brownlie submits that her tortious claims meet the criterion for the gateway in CPR PD 6B, para 3.1(9)(a), namely that ‘damage was sustained… within the jurisdiction’ [30]. The appellant submits that CPR PD 6B, para 3.1(9)(a) only founds jurisdiction where the initial or direct damage was sustained in England and Wales. Lady Brownlie instead maintains that the requirements of the gateway are satisfied if significant damage is sustained in the jurisdiction [33-34].
The Supreme Court considers that the word ‘damage’ in CPR PD 6B, para 3.1(9)(a) refers to actionable harm, direct or indirect, caused by the wrongful act alleged [81]. Its meaning should not be limited to the damage necessary to complete a cause of action in tort because such an approach is unduly restrictive [49-51]. The notion that CPR PD 6B, para 3.1(9)(a) should be interpreted in light of the distinction between direct and indirect damage which has developed in EU law is also misplaced [81]. It is an over generalisation to state that the gateway was drafted in order to assimilate the domestic rules with the EU system. In any event, there are fundamental differences between the two systems [52-56]. The additional requirement that England is the appropriate forum in which to bring a claim prevents the acceptance of jurisdiction in situations where there is no substantial connection between the wrongdoing and England [77-79]. Lady Brownlie’s tortious claims relate to actionable harm which was sustained in England; they therefore pass through the relevant gateway [83].
Lord Leggatt dissents on this issue. He favours a narrower interpretation of CPR PD 6B, para 3.1(9)(a) [208]. He considers that Lady Brownlie’s tortious claims do not pass through the relevant gateway because Egypt is the place where all of the damage in this claim was sustained [209].
The foreign law issue
It is common ground that Lady Brownlie’s claims are governed by Egyptian law [98]. One of the requirements for obtaining permission for service out of the jurisdiction is that the claim as pleaded has a reasonable prospect of success [99-100]. The appellant argues that Lady Brownlie has failed to show that certain of her claims have a reasonable prospect of success because she has not adduced sufficient evidence of Egyptian law. Lady Brownlie submits that it is sufficient to rely on the rule that in the absence of satisfactory evidence of foreign law the court will apply English law [102-103, 105-106].
The Supreme Court distinguishes between two conceptually distinct rules: the ‘default rule’ on the one hand and the ‘presumption of similarity’ on the other. The default rule is not concerned with establishing the content of foreign law but treats English law as applicable in its own right when foreign law is not pleaded [112]. The justification underlying the default rule is that, if a party decides not to rely on a particular rule of law, it is not for the court to apply it of its own motion [113-116]. However, if a party pleads that foreign law is applicable they must then show that they have a good claim or defence under that law [116-117]. The presumption of similarity is a rule of evidence concerned with what the content of foreign law should be taken to be [112]. It is engaged only where it is reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue [126]. The presumption of similarity is thus only ever a basis for drawing inferences about the probable content of foreign law in the absence of better evidence [149]. Because the application of the presumption of similarity is fact-specific, it is impossible to state any hard and fast rules as to when it may properly be employed (although some general observations may nonetheless be made) [122-125, 143-148].
Lady Brownlie’s claims are pleaded under Egyptian law. There is thus no scope for applying English law by default [118]. However, the judge was entitled to rely on the presumption that Egyptian law is materially similar to English law in concluding that Lady Brownlie’s claims are reasonably arguable for the purposes of establishing jurisdiction [157-160].
Comment
Chirag Karia QC, barrister at Quadrant Chambers
In its much-anticipated decision in FS Cairo (Nile Plaza) LLC v Brownlie (as dependant and executrix of Professor Sir Ian Brownlie, CBE, QC) [2021] UKSC 45 handed down today, the Supreme Court has helpfully clarified two disputed conflict of laws issues.
The first issue concerned the scope of the tort jurisdictional gateway in CPR PD 6B, paragraph 3.1(9), which permits the English Court to assume jurisdiction in a case where ‘damage was sustained … within the jurisdiction’. The Supreme Court held (by a majority of 4 to 1, Lord Leggatt dissenting) that 'damage' in that provision simply refers to any actionable harm, whether direct or indirect, caused by the wrongful act alleged, and it is not necessary for the 'direct' or 'initial' damage to have been suffered within the jurisdiction. In so holding, the Supreme Court rejected the analogy sought to be drawn between the domestic jurisdictional gateway in paragraph 3.1(9) and the equivalent provision in the EU law previously applicable, namely article 7(2) of the Brussels Recast Regulation and its predecessors. The result of this decision is that this gateway will be satisfied in a greater number of cases, and courts will likely have to focus greater attention on ensuring that the English court is indeed the forum conveniens for the dispute.
The second issue concerns the scope of the rule that, where foreign law governs an issue before the English court, that foreign law is presumed to be the same as English law in the absence of proof to the contrary. The Supreme Court explained that there are in fact two separate rules ‘which are conceptually quite distinct’. The first is the ‘default rule’ under which the court will apply English law to issues which would otherwise be governed by foreign law if none of the parties pleads that foreign law applies. The second rule is the ‘presumption of similarity’, which applies where one or more parties have pleaded that foreign law applies but have failed to prove the content of that law. The court will apply English law in this latter case if, in the circumstances, it is reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue.
Duncan Bagshaw, partner at Howard Kennedy LLP
The decision of the Supreme Court on the tort gateway issue, that the ‘damage’ includes damage suffered as a consequence of the accident (and not merely directly in the accident), leaves wide open the ‘gateway’ to jurisdiction in tort cases, which requires damage to have been sustained in England and Wales. This may be welcomed by claimants who prefer the English courts, but it may seem to some (including Lord Leggatt, who dissented on this) to defy the apparently restrictive wording of the rule. It also represents a clear divergence, following Brexit, of approach from the prevailing European attitude to this issue.
The decision on the foreign law issue (which was unanimous) also may raise some eyebrows. The problem was, what happens when a foreign law applies but there is no clear evidence of what that law says? Both parties admitted that Egyptian law should apply to all of the claims. Lady Brownlie had to show that the claims had a reasonable prospect of success, in order for the court to agree to exercise jurisdiction. The court found that there was no scope for applying English Law here in the absence of a pleading of foreign law (the 'default rule') because the claims were pleaded under Egyptian law, even though the pleading was incredibly brief and did not mention any rule or provision of Egyptian law. However, the court was willing to find (after some scrutiny) that Egyptian law was likely similar to English law, in the absence of other evidence (the 'evidentiary rule'), and so followed English law to fill in certain gaps, and decided that the claim had reasonable prospects of success.
The case serves as a warning to parties advancing cases under foreign law that the court may not follow the default rule when a party acknowledges and pleads that a foreign law applies, and may not always follow the evidentiary rule to fill in gaps in the pleaded law, unless satisfied that the foreign law is likely to be similar to English law. Even greater care is therefore needed, since this judgment, when pleading and proving a claim in England under foreign law.
Source: FS Cairo (Nile Plaza) LLC (Appellant) v Brownlie (as Dependant and Executrix of Professor Sir Ian Brownlie CBE QC (Respondent)
Interviewed by Dom Kiralfy
The background and judgment sections of this content are based on the case summary published by the UK Supreme Court and is published with permission. The original summary can be found here.
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