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Forum Non Conveniens

Author: Nicola Sharp  19 July 2021
3 min read

Posted in: Commercial Litigation.

Nicola Sharp of Rahman Ravelli details the issues relating to serving out of the jurisdiction that arose in a recent case.

The recent case of Samsung Electronics Co. Ltd & Ors v LG Display Co. Ltd & Anor [2021] EWHC 1429 (Comm) explored the thorny issue of applications for permission to serve out of the jurisdiction. In particular, it provides useful guidance as to navigating settlement agreements where contribution applications may be contemplated with a cross-border element. 

Background 

This case arose out of the finding by the European Commission (the Commission) that Samsung and LG Display (LGD) and others were party to a cartel, infringing Article 101 on the Treaty of the Functioning of the European Union (TFEU). Following this finding by the Commission, 42 UK local authorities issued proceedings in UK courts against some of the claimants by way of a "follow-on claim”, alleging that they had suffered damage as a result of the cartel. Samsung entered into a confidential settlement agreement with the local authorities. A substantial sum was paid in settlement of the local authorities' claims. This settlement included all claims of the authorities, incorporating any against LGD.

In this case, Samsung brought a claim against LGD for contributions under the Civil Liability (Contribution) Act 1978 (CL(C)A 1978) for payment of damages agreed by Samsung in the settlement. The claimants were given permission to serve out of the jurisdiction of Taiwan and Korea. LGD argued that such proceedings should have been brought in Taiwan or Korea, rather than the UK, and accordingly applied for the order granting permission to serve out of the jurisdiction to be set aside. 

The Gateways

Samsung’s case was based on the tort gateway, pursuant to CPR PD 6B, para 3.1(9):

"The claimant may serve a claim form out of the jurisdiction with the permission of the court... where... A claim is made in tort where – (a) damage was sustained, or will be sustained, within the jurisdiction; or (b) damage which has been or will be sustained results from an act committed.... within the jurisdiction."

And, additionally, on the restitution and statutory gateways under CPR PD 6B, para 3.1(16) and (2).

LGD, however, argued that only the statutory gateway was available, and Samsung did not qualify for the statutory gateway.

The High Court in this case agreed that the contribution in this case was “a claim in tort” when interpreted purposively. The court also concluded that if the tort gateway was not applicable, the restitution gateway applied (the unjust enrichment, in that Samsung by its agreement was paying more than its fair share of its liability). The statutory gateway did not arise because one of the other gateways (in tort or restitution) was available.

Forum Non Conveniens

The common law doctrine of forum non conveniens allows a court to dismiss a civil action (even though the forum or venue is proper and the court has jurisdiction over the case and the parties) where an appropriate and more convenient alternative forum exists in which to try the action.

In this case, the claimant had to show the court that England was clearly the most appropriate forum for the proceedings to take place. 

Samsung, in summary, argued that:

  1. The claim was brought pursuant to English law.
  2. Two of the claimant companies were English.
  3. The settlement agreement had been finalised in England (and was governed by English law affecting English parties).
  4. The English courts had already taken jurisdiction over other actions relating to the same cartel (Iiyama (UK) Ltd and others v Samsung Electronics Co Ltd and others [2016] 5 CMLR 16)

LGD, however, argued that the courts in Taiwan and Korea were the appropriate forums, not the UK courts. The level of responsibility between the tortfeasors had not been decided and so remained a matter of dispute to be decided in Korea and Taiwan. LGD put forward that in order to resolve this dispute, consideration of documents and examination of witnesses should be required to take place in Korea and Taiwan. LGD also gave undertakings to accept in any proceedings that LGD was bound by the Commission's decision and that it was liable in respect of the same damage (s1(1) CL(C)A).

Conclusion

The judge accepted LGD’s arguments and held that the courts of Taiwan and Korea were more appropriate forums in which to resolve the issues at hand. Therefore, even though the court had found in favour of Samsung on the gateway issue, the court set aside the order granting permission for Samsung to serve the proceedings out of jurisdiction.  

This case in the Commercial Court gives us useful insight into the jurisdictional gateway options available when bringing contribution proceedings, as well as overseas litigation. 

Practically, it may be worth any party joining any other potential defendants to a contribution claim before settling the original proceedings in the UK, in order that the gateway of "necessary and proper party'" can be achieved. This can be done by way of Part 20 proceedings and would ensure that the UK courts remain as the most appropriate forum for the litigation to continue. This prevents, as in the case of Samsung v LGD, the court from deciding that the defendants’ own jurisdiction is the proper place.

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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