Websense International Tecnology v ITWAY SpA

italian-flag-palace_largeThe High Court, McGovern J, stayed summary judgment proceedings in this case until an Italian court had reached a determination, in related proceedings, as to whether it would accept jurisdiction and combine the proceedings. Websense International appealed that decision to the Supreme Court on the grounds that the proceedings are not related and there is a clause in the contract between the parties granting exclusive jurisdiction to the Irish courts. The Court dismissed the appeal and affirmed the decision of the High Court. The Court held that, in line with ECJ jurisprudence on Council Regulation (EC) no 44/2001, where there are related proceedings in courts of different Member States any court other than the court first seized should stay proceedings. And even in a case such as this, where the parties have contractually agreed that the Irish Court’s have exclusive jurisdiction to resolve the dispute, the Irish courts should stay proceedings until the court first seized determines whether it can accept jurisdiction to hear the dispute.

Background

Websense International is part of a group of companies (Websense Group) in which there is an Italian sister company, Websense Italia SrL. The Websense Group supplies ITWAY, an Italian company, with goods for which ITWAY is contractually obliged to pay Websense International, and the contract states that the Irish Court’s have exclusive jurisdiction to settle any dispute. Websense International is seeking a summary judgment against ITWAY
for €1.3 million. However, ITWAY is taking proceedings in an Italian court against Websense Italia claiming a sum of €3 million for breach of contract and causing it to be in the position whereby it cannot pay Websense international. ITWAY’s proceedings in the Italian court commenced one month before the Irish proceedings.

Law

Council Regulation (EC) No 44/2001 aims “to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States”.

Article 28 states that:

  1. Where related actions are pending in the courts of different Member States, any court other than the court first seized may stay its proceedings.
  2. Where these actions are pending at first instance, any court other that the court first seized may also, on the application of one of the parties, decline jurisdiction if the court first seized has jurisdiction over the actions in question and in it’s law permits the consolidation thereof.

Article 23 relates to jurisdiction clauses and states that they will be binding.

Decision

MacMenamin J states (judgment) that the test as to whether two actions are sufficiently related is:

  1. is there a connection between the two sets of proceedings?
  2. is there a significant overlap between the witnesses in the two cases?
  3. will a determination in one have a significant bearing on the outcome of the other?

He held that the answer to all three questions was yes and that both cases should be heard by the one court. On the issue of jurisdiction, he held that the court first seized must determine if it has jurisdiction to hear the joined proceedings, and the court other than the court first seized must, as a general rule, stay its proceedings in order that there is certainty as to jurisdiction.

MacMenamin stated that this leads to an unsatisfactory conclusion that the Irish courts must put a stay on proceedings which they may in future have to re-instigate and that expediency is being sacrificed to certainty.

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