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$6 Million Debt Claim Stayed Pending Outcome of French Proceedings

ship2English proceedings in respect of an alleged $6 million debt have been stayed pending the outcome of closely connected proceedings in France. Although the contract under which the claim was made conferred exclusive jurisdiction on the High Court of England and Wales, the court ruled that it was appropriate that the French proceedings should be determined first.

The parties had made a series of agreements governed by English law under which a debt of $42 million was recorded as owing by the defendant, a French shipping company, to the claimant, the former subsidiary of Lehman Brothers in Germany which was in liquidation. It was agreed that the debt would be treated as satisfied if the defendant paid $36 million by instalments so long as those instalments were paid when due. The $36 million had ultimately been paid by the defendant. However, the claimant argues that the instalments time table was not adhered to and that a balance of $6 million therefore remains outstanding.

Given that the agreements were expressed to be under English law and contained an English exclusive jurisdiction clause, the court acknowledged that it had jurisdiction to hear the dispute. The court accepted that the cause of action to be tried in France is not the same as that pursued in the English proceedings. However, granting the defendant’s application for a stay, the court ruled that the French and English proceedings were so closely connected that there was a real risk of irreconcilable judgments being given were they to be tried at the same time. The French proceedings had been launched prior to the English proceedings and it was expedient in the circumstances that they be tried first.