Legal Briefing

Spoilt for choice? Selecting the correct UK court for IP, media and technology disputes

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Corporate and commercial | 15 March 2016

When a business has a dispute, it is important for it to properly evaluate its options in terms in how best to resolve the matter on a commercial basis. This should involve a review of any relevant contract(s) giving rise to the issues in dispute for any applicable choice of law and jurisdiction provisions, as well as provision for any alternative methods of dispute resolution. Some examples of the latter can be formal negotiation, formal or informal mediation or arbitration, as well as expert referral. The existence and the content of provisions like this in any such contract(s) will clearly affect the appropriate mechanics and procedure to adopt, as well as possibly (if proceedings are needed) constrain, the ability to forum shop between different courts and different jurisdictions.

Such provisions may also override the legal considerations surrounding the principles of choice of law and ‘forum non conveniens’. In the absence of such constraints, or indeed any relevant contractual provisions, the potential claimant or pursuer may have a choice of several competent jurisdictions in which to bring its claim. Forum non conveniens is a term which summarises the evaluation of which court is the most convenient one; which having competent jurisdiction, is the most appropriate forum for the trial of the action. Broadly, this will be the court in which the case concerned may be tried more suitably than the interests of all the parties and the ends of justice.

Although forum shopping may frequently be an international exercise as between competing jurisdictions in Europe or even on a global basis, often too there are purely domestic UK cases where both the Scottish and English courts have concurrent jurisdiction. Scotland and England are, of course, separate legal jurisdictions. However, this is a fact which is frequently forgotten or indeed not even recognised, particularly when parties and their lawyers are based outside of the UK and/or are not familiar with its judicial systems. It is an important principle to bear in mind particularly in that geographical context and this has been highlighted by the two recent cases in the English High Court. These cases have clarified the rules on forum shopping as between the courts and different jurisdictions within the UK – in particular, between the Scottish and English courts. Businesses needed to be aware of the rules applicable as to fall foul of these may well result in a considerable waste of costs and resources, as well as a significant cost liability to the other party or parties concerned.

The two cases, Cook v Virgin Media Ltd and McNeil v Tesco plc [2015] considered whether and how the principle of forum non conveniens can apply in the purely domestic context of the UK and its various jurisdictions. They demonstrate how forum shopping can drastically backfire on parties who opt for the Scottish or English courts when one or other is not judged as the more appropriate or convenient forum in the particular circumstances concerned in which to resolve the dispute. Although these were personal injury cases, these principles are equally applicable to more general commercial as well as IT and media related disputes. In addition they are highly relevant to technology disputes including intellectual property infringement and/or validity actions.

In such cases, it can often be possible to use either of the Scottish or English UK jurisdictions and their respective courts to bring action. Dealing with IP cases as an example, these courts are the Court of Session in Scotland and the High Court and Intellectual Property Enterprise Court (IPEC) in London. As far as jurisdiction is concerned, a party can be sued, broadly speaking, in the courts of the country where it is based/domiciled or where it is committing the allegedly infringing acts or threatens to do so. Often those acts are UK wide. This means that in many cases, a choice of either the English or Scottish courts is available. However, as in the Cook/McNeil cases, where the matters were wholly internal to the UK and there was no international element, this meant that the 2001 Brussels Regulation (Regulation (EC) 44/2001) on jurisdiction, which precludes the operation of forum non conveniens, did not apply.

Section 49 of the Civil Jurisdiction & Judgements Act 1982 provides that nothing in that Act shall prevent any court from staying or dismissing any proceedings on the grounds of forum non conveniens or otherwise, where to do so is not inconsistent with the Brussels Convention (now largely superseded by either the 2001 Brussels Regulation or by the Recast Brussels Regulation (Regulation (EU) 1215/2012). As the Cook and McNeil cases were purely domestic to the UK, that qualification was not applicable and the effect of Section 49 was to maintain the applicability of the forum non conveniens doctrine.

In those recent cases, two sets of proceedings were brought in the English court, claiming damages for personal injuries, which the claimants alleged they had sustained in Scotland due to the defender’s negligence. Liability was actually admitted in one of the cases. Both of the claimants were based in Scotland, whereas the defendants were based in England. In the defences it was argued that Scotland was the correct court to hear the claims, but the defendants did not go as far as to actively challenge jurisdiction. Despite this, the court on its own initiative dismissed the cases on the grounds that the proceedings should have been raised in Scotland on the basis that it was the more appropriate forum. Ultimately, the matter was appealed to the Court of Appeal by the claimants but the appeal was dismissed and the initial decision was upheld as above.

Key to this decision to dismiss the cases was that the issues were purely domestic to the UK and there was no international angle involved. Importantly, the initial Court of Appeal decisions made it clear that the court can strike out claims of its own motion, even where no jurisdiction challenge was submitted by the defendants. This is because the court has an overriding duty to actively manage cases and ensure they are dealt with for the convenience of all concerned, including witnesses.

Forum non conveniens involves considering what factors point towards the other forum as being more suitable. These can include factors relevant to convenience, expense, the relevant law applying and where the parties have their places of business.

While these cases were related to personal injury cases, they are, as above, nonetheless of great significance in IT, technology, media and IP disputes. Accordingly, all UK lawyers advising their clients on how best to pursue or defend any such internal UK disputes would be wise to consider as a priority whether one jurisdiction is clearly the more appropriate forum for any proceedings. Again, taking IP and libel cases as examples, forum shopping is very common in cases relating to these, even within the UK. Therefore the issue of a convenient forum is one which should be considered particularly seriously when deciding whether to bring such proceedings north or south of the border, particularly given the risk of a court deciding the matter of its volition.

There is precedent for a successful application of the forum non conveniens in a UK patent case, namely (1) Vetco Gray UK Ltd; and (2) Vetco Gray Inc v FMC Technologies Inc [2007]. Here, an action for infringement of various patents had been raised in Scotland in the Court of Session in Edinburgh by the claimant FMC. Defences were filed in Scotland arguing non-infringement and also raised a challenge to the validity of the patents concerned, which rested upon certain items of prior art such as previous patents and published papers and articles. No formal counterclaim to revoke the patents as invalid was made in the Scottish action. However in the defences, they claimed invalidity and alternatively a declaration of non-infringement. English proceedings were then brought in the High Court somewhat later by the defendants in the Scottish action, claiming invalidity and alternatively seeking a declaration of non-infringement. The invalidity revocation claim effectively mirrored the defences in the Scottish action so far as they dealt with the issue and thus included the items of prior art relied upon in the Scottish proceedings. All in all, what this meant was that there were two separate sets of proceedings in different courts within the UK running in parallel. Both of these were dealing with the same legal and factual issues and substantive dispute. The only difference was in terms of formal remedies sought in each, as in Scotland, the defenders had not gone as far as to formally counterclaim to revoke the patents, whereas in England, they clearly had. This was, on any view, an artificial difference as the Scottish court would still be forced to consider the validity issues as the defences included reference to these same arguments and evidence.

FMC applied to the English courts for the English proceedings to be stayed on grounds of forum non conveniens. As the cases and issues in both sets of proceedings were of substantial identity, the argument was that Scotland was the more appropriate forum as the infringement was happening there and the Scottish defendant had a manufacturing base there, as did FMC. Importantly, the court indicated that it was important that the infringing acts were in Scotland and that this was the appropriate court in which to seek relief for that.

There were various practical arguments made and relied upon, such as for example, there was a cost comparison made as between the two jurisdictions. If anything, however, it was suggested that the Scottish courts would be less expensive. Differences in potential timing to reach trial were considered not material. The court considered it also important to take into account the outcome if the stay was not granted. In that event as above there would be two substantial, identical sets of proceedings running in parallel which was likely to mean a race to judgement. It would also create a risk of inconsistent decisions and a clear duplication of costs and effort.

In the circumstances, Scotland was held to be the most appropriate forum for the proceedings and the main patent infringement cases in England were stayed. A revocation counterclaim could easily be added to the Scottish action in order that all issues could be dealt with in the most efficient manner. Notably the chronological order in which the two proceedings were raised did not make any difference to the consideration here applicable to the principle of forum non conveniens.

The Judge stated that:

‘… the positive feature of the whereabouts of the infringement is a positive, and indeed the principal positive feature making Scotland the more appropriate forum for an infringement dispute’.

While the defendants applied for leave to appeal the decision, the Judge refused it, and noted that as a discretionary decision the prospects of success at any appeal were very limited.

Although in the FMC case, an active application by one of the parties to the litigation based on forum non conveniens was made, the principles are similar to those applicable in the more recent cases of Cook/McNeil, where the English Courts decided to dismiss the cases, but without any prompting and within their own discretion.

The result is that in conducting an IT or media related dispute or intellectual property claim or indeed any form of commercial claim forum shopping exercise as between England and Scotland (where there is no international element) the issues around forum non conveniens should be factored in at an early stage to inform the overall strategy. These recent cases make it clear that irrespective of whether the party takes the point, the court may itself raise it and deal with it on a discretionary basis.

Often assumptions are made that the claimants have an absolute right to bring proceedings wherever they choose to bring them, subject to the court being one of competent jurisdiction. What this recent case makes clear is that that right is subject, insofar as a choice of Scotland and England is concerned, to the principles of forum non conveniens applying and being applied irrespective of parties’ wishes. Getting it wrong could be costly and psychologically damaging to a party at the outset of what might be otherwise a very strong case. Notably too, such a decision is likely to be ‘un-appealable’ and so there may realistically be only one chance at the start to get this choice of jurisdiction right. Potential claimants and their legal advisors should bear all this in mind at the outset to avoid their claim being stayed or dismissed, with wasted costs and potential cost liability following.