Choice of Jurisdiction: Top Optimized Technologies v Vodafone

Audiencia Nacional, Madrid

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Jane Lambert

Patents Court (Mr Justice Marcus Smith) Top Optimized Technologies SL and another v Vodafone Group Services Ltd and others [2021] EWHC 46 (Pat) (14 Jan 2021)


This was an application by Vodafone Group Services Limited, Vodafone Group plc and Vodafone Limited ("Vodafone") to stay, either on jurisdictional grounds or for case management reasons, proceedings that had been brought against them by Top Optimized Technologies SL and TOT Power Control SL ("TOT") for patent infringement and other causes of action.  TOT had also brought proceedings against Vodaphone and Huawei in Madrid which Vodafone had challenged with some success on the ground that several causes of action were subject to agreements conferring exclusive jurisdiction on the English courts.  The proceedings that Vodaphone sought to stay were referred to as "the second UK proceedings" and the proceedings in which the Spanish proceedings had been challenged were called "the first UK proceedings".

The relief sought in the application was "[a]n order under CPR Part 11 that the Court does not have/shall not exercise its jurisdiction, and that the proceedings shall be stayed; alternatively, a case management stay, on the terms of the draft order attached" on the grounds that those proceedings were related to proceedings already pending before the courts of Spain for the purpose of art 30 of Regulation (EU) No 1215/2012 and/or it was appropriate to grant a stay for case management reasons.  Art 30 provides:

"1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
2. Where the action in the court first seised is pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.
3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."

The application was launched on 5 March 2020 and heard by Mr Justice Marcus Smith on 17 and 19 Nov 2020 during the transition period provided by art 126 of the Agreement on the withdrawal of the UK from the EU and Euratom when EU law continued to apply to the UK pursuant to art 127 (1).

Mr Justice Marcus Smith noted at para [5] of his judgment that Vodafone really only wanted a stay of the second UK proceedings pending the outcome of a substantive appeal by TOT in the Madrid Proceedings. Vodafone contended that a stay was appropriate in that the claims against it in London were substantially a re-run of the Madrid Proceedings, but against Vodafone, not Huawei, which was in itself abusive.  The learned judge pointed out two difficulties with that argument at para [38] of his judgment. First, success in the appeal against Huawei in Spain was not going to translate into any kind of cause of action or issue estoppel as between Vodafone and TOT because TOT would have to make out its case all over again were it to proceed against Vodafone.   Secondly, had only itself to blame for two sets of proceedings because it could have submitted to the Spanish proceedings instead of challenging them in the first UK proceedings.  His lordship summarized the issue before him as "whether, in light of these issues, the progression of the Madrid Proceedings and the Second UK Proceedings at the same time is such as to render a stay of the Second UK Proceedings appropriate."

The judge's starting point was art 30 of Regulation (EU) No 1215/2012 and para 2.282 of Briggs Civil Jurisdiction and Judgments, 6th ed (2015):

"Article 30 is best thought of as the provision which may apply if the English court is seised second but the conditions for the application of Article 29 are not met. It contributes to the coordination of adjudication, but in a discretionary fashion. It permits a court seised second simply to stay its proceedings to await the outcome of an action which is still pending in the court seised first, whether it is pending at first instance or on appeal. It also allows it to decline jurisdiction over the action before it, if this action may be consolidated into the action which is pending at first instance in the court seised first, though only if the court seised first would have, independently, jurisdiction over the action which is proposed to be dismissed: this is because Article 30 does not provide a ground for jurisdiction over the second claim but provides only a mechanism for consolidation of two actions over each of which the first court does or would have jurisdiction. And, of course, it also allows the court to conclude that neither of these things is appropriate, but to press on and adjudicate. In particular, if proceedings in the court seised first are going to be slow, and especially if the foreign court will take proper account of an English decision given in the meantime, it may well be correct to refuse to grant relief but require the parties to get on with it in England."

He said that a great deal turns on when actions can be said to be "related".  There was a definition in art 30 (3) which in his lordship's judgment had to be interpreted widely for the following reasons:

"(1) The wording of Article 30 (3) impels a wide reading: it is actions – not causes of action – that are deemed to be related where it is expedient – not necessary – to hear and determine them together in order to avoid the risk – not anything higher than that – of irreconcilable judgments.
(2) Briggs notes [at para 2.293]:

"Though it is easy enough to understand in principle, and is often a matter of common ground Between the parties, the application of this definition to the facts of actual cases may sometimes give rise to difficulty. It was held in The Tatry the actions are related for the purpose of what is now article 30 if they would involve the risk of conflicting decisions, without necessarily involving the risk of giving rise to mutually exclusive legal consequences. This gives the expression 'irreconcilable' as used in Article 30 a relatively loose meaning. This is perfectly sensible – a flexible rule which is designed to prevent the occurrence of conflicting judgments is perfectly comfortable alongside a narrow and restrictive one applicable when it is sought to withhold recognition from a judgement which is already, after what may be much effort and cost, being given."

(3) Thus, Article 30 may apply to cases where the same cause of action is in dispute, but between different parties, or where there are different causes of action in proceedings between the same parties.
(4) The "wide" approach to Article 30 is consistent with the case law: the preference appears – entirely understandably – to be for a simple and wide test, that is not burdened by undue sophistication or complexity [such as the approach of the House of Lords in Sarrio SA v. Kuwait Investment Authority [1999] AC 32, [1997] 3 WLR 1143, [1997] 4 All ER 929, [1997] UKHL 49, [1999] 1 AC 32]
(5) A wide approach correlates with Article 8 (1). Article 8 (1) provides:

'A person domiciled in a Member State may also be sued:

(1) where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.'

The similarity in wording between Article 8 (1) and Article 30 (3) is striking, and it seems to me that (a) the words ought to be read similarly and (b) Article 8 (1) reinforces the need to read Article 30 (3) widely. The whole point of Article 8 (1) is to enable claims (not actions) against multiple defendants to be pooled before the courts of the domicile of any one of those defendants."

The judge found that this was indeed a case involving "related actions" within the meaning of art 30 (3) and that he had to consider whether it was appropriate as the court second seised of a related action to stay these proceedings pending the outcome of the Madrid proceedings.

His lordship concluded that it would be inappropriate to stay these proceedings for the following reasons:

"(1) It seems to me that although I accept that there is a "risk" of irreconcilable judgments resulting from the separate Madrid Proceedings and these proceedings (as a result of which I have jurisdiction to consider staying these proceedings) that risk is actually a very attenuated one. The fact is that Huawei is being sued under Spanish law in Madrid and Vodafone is being sued under English law in this court. Even if TOT were to succeed against Vodafone and fail against Huawei (or vice versa), I do not see how differently framed causes of action, against different defendants, gives rise to outcomes that are in any way problematic.

(2) It is worth considering the permutations in a little greater detail:

(a) TOT succeeds in the Madrid Proceedings. In this case, it may well be that TOT – by virtue of its success in Spain – would be inclined to, or even obliged, to end these proceedings before trial. In such a case, TOT would obviously be at risk of paying Vodafone's costs, but if TOT is willing to run that risk – as obviously it is – I can see no reason in preventing TOT from pressing ahead with the Second UK Proceedings. As I have explained in paragraph 39(1) above, I do not consider the fact that the Second UK Proceedings and the Madrid Proceedings run in parallel rather than in sequence (thus involving what Vodafone contended was 're-litigation') to be a source of undue or inappropriate hardship to Vodafone or (to the extent that this matters) Huawei.
(b) TOT fails in the Madrid Proceedings. There is absolutely no reason why TOT cannot succeed in the Second UK Proceedings in this case, and it seems to me that a stay imposed on TOT against its will would be contrary to the basic principle that a claimant ought – absent good reason – to be entitled to bring its claim as expeditiously as possible (consistent, of course, with the interests of other court users). Again, for the reasons I have given, I do not consider that either Vodafone or Huawei have reason to complain if the Second UK Proceedings are progressed without a stay.

(3) This accords with my conclusion that the Second UK Proceedings are in no way an abuse of process, at least on the facts as they stand.
(4) Moreover, this is a case where Vodafone has avoided – entirely properly – the jurisdiction of the Spanish courts by invoking the exclusive jurisdiction clauses in favour of England and Wales. Vodafone could have submitted to the jurisdiction of the Spanish courts under Article 26, but instead elected to invoke Article 25. As a result, proceedings involving all relevant parties (Vodafone and Huawei) and so eliminating any risk of irreconcilable judgments have not been possible. No criticism can be made of Vodafone in this: but, conversely, it seems to me perverse now to prevent the progression of the Second UK Proceedings in circumstances where the fragmentation of the originally constituted Madrid Proceedings against Huawei and Vodafone has occurred at Vodafone's insistence.
(5) Yet further, the parties have agreed that the contractual claims that TOT has against Vodafone are to be litigated in this jurisdiction. That is an agreement to which this court attaches considerable weight (even if Vodafone had not used those provisions to extract itself from the Madrid Proceedings). The fact is that TOT's claims are being heard in the jurisdiction where the parties have agreed they should be heard. Of course, Vodafone's point is that it is in no way seeking to prevent the litigation in England, but merely to put it off until the outcome of the Madrid Proceedings is known. But, given that the Madrid Proceedings can in no way give rise to any kind of estoppel that would bind TOT, and given my assessment in paragraphs 45(1) and (2) above, I can see no point in awaiting the outcome of the Madrid Proceedings unless TOT and Vodafone were together to agree that was an appropriate course. A court would, without blindly following such an agreement, attach some weight in granting a case management stay in such circumstances. But that is not this case: here, TOT wishes to proceed, and that, as it seems to me, is a right that Vodafone cannot unilaterally thwart by advancing the jurisdictional arguments that it has."

He added that a stay for case management reasons would only be granted where one was unavailable under art 30 (1) but the overriding objective still required it. The judge handed down his judgment with an interim order pending a further hearing on 19 Jan 2021 on 14 Jan 2021.

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