Lehman Brothers Finance AG v Klaus Tschira Stiftung GmbH & Anor
2014
CHANCERY DIVISION
United Kingdom
CORAM
- MR JUSTICE DAVID RICHARDS
Areas of Law
- Civil Procedure
- Conflict of Laws
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
The judgment by Mr Justice David Richards discussed the application for a stay of English proceedings based on earlier Swiss conciliation proceedings. The court found that these Swiss proceedings could be considered within the scope of 'proceedings before a court' under Article 27(1) of the Lugano Convention, which requires a broad interpretation to prevent parallel proceedings. Although the Swiss courts dismissed the Swiss proceedings, the Swiss conciliation authorities were deemed part of the judicial process, making the Swiss court first seised under Article 30. A stay in English proceedings would otherwise be warranted.
Judgment
Mr Justice David Richards :
Introduction
The defendants apply for a stay of these proceedings on the grounds that proceedings involving the same cause of action and between the same parties were commenced in the Swiss courts before the issue of the claim form in the present proceedings. Accordingly, the Swiss courts were first seised in respect of the proceedings and the English court is required to stay the present proceedings under article 27(1) of the Lugano Convention of 30 October 2007 until such time as the Swiss courts determine their jurisdiction.
The issue is whether the procedure initiated in Switzerland constituted “proceedings” before a “court” within the meaning of article 27(1) of the Lugano Convention. The procedure in question was ein Schlichtungsversuch vor einer Schlichtungsbehörde, translated for the purposes of this application as “an attempt at conciliation before a conciliation authority” (conciliation procedure) pursuant to article 197 of the Swiss Civil Procedure Code.
The claimant, Lehman Brothers Finance AG (LBF) is a Swiss-incorporated subsidiary of Lehman Brothers Holdings Inc (LBHI). The defendants are two entities established under German law (the KT parties).
Claims
The claims between the parties arise out of an International Swaps and Derivatives Association (ISDA) Master Agreement (Multicurrency-Cross Border; 1992 version) between the parties dated as of 16 May 2007 and subsequent agreements. It is common ground that the filing by LBHI of proceedings under Chapter 11 of the US Bankruptcy Code on 15 September 2008 gave rise to the automatic early termination (as defined) of the agreements in accordance with their terms. This required the KT parties to calculate Loss (as defined) in accordance with the terms of the agreements. The ISDA Agreement is governed by English law and contains an English jurisdiction clause.
It is the KT parties’ case that the calculation of Loss results in an aggregate amount of €411,130,000 due to them. It is the case of the liquidators of LBF, appointed in Switzerland, that the calculation of Loss leads to an aggregate amount of €186,120,000 owing to LBF.
Proceedings
In the English proceedings, LBF claims the amount of Loss which it asserts is due to it from the KT parties. The claim advanced in Switzerland by the KT parties is for a negative declaration that nothing is due from the KT parties to LBF in respect of Loss. No agreement was reached before the conciliation authority a