Law-Now
March 2007
English court intervenes in foreign proceedings to stop
potential unfairness
In a recent application before Mr Justice Langley in the Commercial
Court in London, two of the world’s largest reinsurance broking
houses came head to head in a claim concerning the due process of an
overseas court. The dispute between broking giants Benfield and
Aon arose from the procedural steps taken to gather evidence in dual
proceedings in the fall out from the resignation of a number of Benfield’s
facultative team. The Commercial Court demonstrated that it will be
prepared to intervene in the due process of a foreign court where potential
unfairness could be caused by the normal application of the procedures
of that court.
The underlying dispute in both jurisdictions is essentially the same
and centres on the allegations made by a number of Benfield companies
against its former facultative team and Aon. In summary, Benfield claims
that Mr Richardson (Head of the Facultative Unit) and Aon jointly conspired
to injure its business by poaching/inducing a number of its highly regarded
team to move employment to Aon.
Aon’s defence is primarily that the team moved out of choice and
their recruitment was part of its normal hiring process.
The first/lead trial is due to commence on 5th March in the English Commercial
Court, having been expedited by agreement between the parties.
The second/concurrent dispute was issued by another Benfield company
in the United States District Court for the Southern District of New
York. This court has jurisdiction as two members of Benfield’s
former facultative team are residents in New York and the Benfield entity
pursuing this action is incorporated under the laws of Delaware with
its principal place of business in Minnesota. The basis of these proceedings
is essentially the same as the English trial, albeit narrower in scope.
We understand that, to date, no timetable for this hearing has been fixed.
In a recent application, Mr Justice Langley was asked to consider whether
the taking of depositions in the US action could be halted pending the
hearing of the English trial on grounds of overlap.
The jurisdiction of an English court to affect the procedure of a foreign
court can be attained on grounds of ‘unconscionable conduct’,
or the threat of unconscionable conduct, by the party seeking to be retained.
Mr Justice Langley said “…unconscionable conduct may be
found where the pursuit of the overseas proceedings is vexatious or oppressive
or interferes with the due process of this court”. So the primary
question to be considered in this matter was whether the taking of depositions
for the New York hearing interfered with the due process of the first
claim?
In front of the New York court, Benfield had argued that the depositions
of a number of Aon Limited’s executives were required in order
to support an application for a preliminary injunction to be sought in
New York as a matter of urgency. However, at the time of Aon’s
application in England, this injunction had not been made and furthermore,
Aon’s executives had, in the interim, provided a number of undertakings
to give Benfield sufficient protection, including undertakings not to
solicit Benfield employees, not to disclose any trade secrets of Benfield
etc.
In front of the Commercial Court, Aon submitted that Benfield’s
real purpose in seeking depositions was to: (a) obtain evidential advantages;
and (b) cause disruption to the preparations for the English trial. Aon
highlighted that the four witnesses who were subject to the present injunction
were all due to submit formal witness statements in the Commercial Court
trial and had confirmed they were available to give evidence at it.
Mr Justice Langley concurred with Aon’s reasoning. In his short
and succinct judgment Mr Justice Langley said:
“The risks of unwarranted double cross-examination and interference
with the trial are of course particularly acute where, as here, the
depositions are sought from those who might be expected to be and are
witnesses for the opposing not deposing party”.
Therefore in order to secure fairness and equality between the parties
and avoid the “one sided disruption to trial preparation and
double cross-examination”, Mr Justice Langley concluded that
the Aon witnesses did not have to face US depositions prior to the
Commercial Court hearing, within which they were due to testify. Mr
Justice Langley stated that to order depositions would be too disruptive
of the English proceedings and “procedurally and forensically
unfair and oppressive to Aon”.
This case demonstrates two interesting points:
- The English courts will intervene in the due process of a foreign
court where potential unfairness could be achieved through the normal
application of that courts procedures; and
- The grounds for intervention, although rarely enforced, are in
place to protect both the conduct of the English proceedings and
the balance of interests between the parties to those proceedings.
Law: Benfield Holdings Limited & Oths. v. Elliot Richardson,
Aon Limited & Aon Corp. [2007] EWHC 171 (QB)
Provided by CMS Cameron McKenna LLP - www.cms-cmck.com
CMS Cameron McKenna LLP is a member of the CMS alliance of independent European law firms.
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