AMT Futures Limited, a company incorporated in the UK, acted as a broker for the purchase and sale of derivatives contracts. The contracts entered into with around 70 of its clients provided that the dealings between them were governed by English law and that the English courts were to have exclusive jurisdiction in respect of any disputes.

The German law firm, Marzillier, represented AMT's former clients in claims that they brought against AMT under German law and before the German courts. Although AMT challenged the jurisdiction of the German courts, it still entered into financial settlements with many of the former clients. AMT sought damages in the High Court against Marzillier, alleging the tort of inducement of breach of contract; that is, AMT argued that Marzillier had induced AMT's former clients to breach the exclusive jurisdiction and choice of law clauses.

AMT relied on Article 5(3) of the Brussels Regulation as its jurisdictional basis for bringing the claim against Marzillier in the High Court (see box "The Brussels Regulation"). Naturally, AMT was inclined to bring its claim in the English courts as their jurisdiction, arguably, had been displaced by the decision to proceed with the claims in Germany.

The case turned on the important issue of whether the harmful event occurred in England. In one sense, a company may be said to suffer a loss wherever it keeps its accounts, for that is where the loss is ultimately reflected. If this argument is taken to its logical conclusion, a claimant would always look to bring a tort claim in the courts of its own domicile: an exact reversal of the general rule in Article 2 of the Brussels Regulation that a defendant should be sued in the courts of its domicile.

Having reviewed the leading decisions of the European Court of Justice (ECJ) on this question, the Court of Appeal summarised five key principles:

Both the High Court and the Court of Appeal paid close attention to the decision in Dolphin Maritime & Aviation Services Ltd v Sveriges Angartygs Assurans Forening ([2009] EWHC 716). Dolphin was analogous because it concerned a situation where the defendant was alleged to have induced a contracting party not to do something. In Dolphin, a payment was expressly due to be made in London but, in fact, was made in Turkey. The High Court reached the view that the place where the harmful event gave rise to damage was England, drawing a distinction between a situation where the claimant has lost something, as opposed to a situation where a claimant suffers harm from the non-receipt of money at the place where he should have received it.

The High Court in Marzillier had found that Dolphin led to the conclusion that the harmful event occurred in England, because the relevant obligation was the positive obligation to bring proceedings in England, not merely the negative obligation not to bring proceedings in Germany.

However, the Court of Appeal disagreed, finding that the failure to bring proceedings in England did not, of itself, cause AMT any loss at all, but that its loss was attributed to the costs and expense associated with the proceedings in Germany.

Many practitioners will be surprised by the outcome reached in this case. The courts that the contract breaker agreed should have exclusive jurisdiction in respect of that contract were marginalised in favour of the courts in which the alleged inducement and breach occurred.

The decision highlights the fact that a simplistic approach to the issue of where the harmful event occurred is unlikely to prevail, especially if that leads to the conclusion that the courts of the place where the claimant is domiciled have jurisdiction. Tort cases are often complex in nature and the constituent elements may take place at different times and places. If tort proceedings are to be successfully brought in the courts other than those where the defendant is domiciled then it will be appropriate to look beyond the courts of any place where adverse consequences of the harmful event can be felt, if the effects of the harmful event are concentrated elsewhere.

In competition damages cases, claimants tend not to rely on Article 5(3) when seeking to establish jurisdiction. This is because the place where the event giving rise to the damage occurred is often difficult or impossible to determine in the context of multi-jurisdictional cartel cases. In these circumstances, the courts will instead look at the place where the damage caused by the cartel was suffered. This is usually not to the advantage of claimants whose claim will then be restricted to damages suffered in that particular jurisdiction, often representing only a small proportion of the worldwide damages. Typically, therefore, reliance is placed on the domicile of the defendant, or the domicile of a co-defendant, therefore bringing the entire claim in one jurisdiction in respect of loss sustained worldwide.

It is therefore clear that Article 5(3) cannot be used by claimants to effectively manoeuvre their cases into the jurisdiction of their preferred courts, and that a clear and proper harmful event in that jurisdiction will assist greatly in meeting the required test.