The “Place Where the Harmful Event Occurs”: Breach of an Exclusive Jurisdiction Clause and the Application of Article 5(3) of the EC Judgments Regulation (Regulation 44/2001)

Emma Sutton

Establishing that a contentious issue should be tried in a particular jurisdiction or under a particular governing law can be crucial to the success or failure of a case. Each jurisdiction has its own advantages and disadvantages, both procedurally, in terms of geographical and linguistic convenience, and in relation to the legal remedies and causes of action available. While the European Union has restricted the potential for forum shopping, questions are still being asked about the interpretation and application of the provisions of Council Regulation (EC) No 44/2001 (the “Judgments Regulation”).


This case concerned a UK derivatives broker, AMT Futures Limited (“AMT”), and a German law firm Marzillier, Dr Meier & Dr Guntner Rechtsanwaltgesellschaft mbH (“Marzillier”). AMT had acted as an execution only broker for a number of clients in Germany, introduced to AMT by introductory brokers. Marzillier represented 70 of these former clients of AMT (“the German clients”) who had commenced separate legal proceedings in Germany against AMT seeking to recover commissions paid and trading losses. AMT challenged the jurisdiction of the German court, relying on an exclusive jurisdiction clause in the individual contracts between AMT and each of the German clients which specified that all legal proceedings between AMT and the client were to be determined in the English courts, and that the applicable law was English.

AMT commenced these proceedings in the High Court against Marzillier seeking damages on the basis that Marzillier had committed the tort of inducing a breach of contract, viz by “induc[ing] the former clients to issue proceedings against it in Germany and to advance causes of action under German law, in breach of the exclusive jurisdiction and applicable law clauses in their contracts with [AMT]”. AMT’s claim totalled in excess of £2.1 million and included the sums paid by AMT to the former clients it had settled with (sometimes following judgment in the German courts) and legal and investigatory costs incurred by AMT as a result of the claims being bought in Germany. AMT also sought an injunction preventing Marzillier from inducing other German former clients of AMT to bring claims against them in Germany. Marzillier, in return, challenged the jurisdiction of the English courts to entertain this action and applied for a declaration that they did not have jurisdiction over it in respect of the subject matter of AMT’s claim. It was this action of Marzillier that gave rise to the relevant issues considered by the Supreme Court.

Issues Before the Supreme Court

The issues for consideration came in the form of three important questions: (i) the application of the term “where the relevant harm had occurred” under Article 5(3) of Judgments Regulation to the facts of the case; (ii) whether the facts merited a special rule of interpretation for the tort of inducing breach of contract where the contractual term breached was an exclusive jurisdiction clause; and (iii) whether the case merited a referral to the European Court of Justice (the CJEU).

The Judgments Regulation (Regulation 44/2001)

Lord Hodge noted that:

  1. The basic rule in the Judgments Regulation is that a person shall be sued in the member state of his domicile (Article 2(1)). This is not an exclusive ground of jurisdiction, and special provisions are located in other articles of the Regulation.
  2. These derogations from the basic rule must be “restrictively interpreted” in order to achieve the aims of the Judgment Regulation, and are justified because they “reflect a close connection between the dispute and the courts of a member state other than that in which the defendant is domiciled.” The close connection provided by these derogations “promotes the efficient administration of justice and proper organisation of the action”.
  3. Article 23 allows parties to agree to exclusive jurisdiction for disputes arising under a contract.

Article 5(3) – “Place Where the Harmful Event Occurred”

One such derogation on which AMT sought to rely was Article 5(3) Council Regulation (EC) No. 44/2001, which provides:

“5.  A person domiciled in a Member State may, in another Member State, be sued: …

(3)   in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur; [emphasis added]”

Lord Hodge provided a valuable summary of the caselaw on the CJEU’s interpretation of this phrase, reiterating that the focus is on “where the direct and immediate damage occurred”, and a useful discussion of specific examples at paras 15-22 of the judgment.

Applying the jurisprudence of the CJEU to the facts of the case, Lord Hodge stated that in the circumstances, it was obvious (and was not disputed between the parties) that the event occasioning damage, which was the tortious inducement by Marzillier towards the former clients of AMT to commence German legal proceedings in breach of the exclusive jurisdiction clause, occurred in Germany. However, what was disputed was what exactly the relevant damage was, and thus where it had occurred. Lord Hodge made the following points:

  • As there was no positive obligation on the former clients to sue AMT, it could not be said that the damage was the deprivation of the contractual benefit of dispute resolution in England and under English law (cf Popplewell J’s ruling at first instance);
  • Article 5(3) is not concerned with consequential loss and so AMT’s argument that their business model had been damaged was irrelevant. (AMT submitted that it had sought to preserve, via the exclusive jurisdiction clause, the focus of its business in London even when trading with overseas clients); and
  • The direct harm/relevant damage which AMT suffered from the alleged tort was the expenditure occasioned by the German proceedings.

Therefore, for the purposes of article 5(3), on the facts the place where the harmful event occurred was Germany.

Special Rule for the Tort of Inducing Breach of an Exclusive Jurisdiction Clause?

In the alternative, AMT had submitted that a special rule should be created under Article 5(3) for the tort of inducing someone to breach an exclusive jurisdiction clause in a contract.

Lord Hodge noted that such a rule would be contrary to the clear European jurisprudence. In order to rely on one of the derogations, the fact pattern needed to bring itself within that derogation, for the sake of legal certainty. Manipulating the derogation to fit it around the fact pattern or “merely invoking the justification or rationale of the ground” will not be sufficient to establish jurisdiction.

Referral to the CJEU for Guidance on the Tort of Inducing Breach of an Exclusive Jurisdiction Clause?

The Supreme Court also declined to refer the matter to the CJEU for guidance on this issue, after considering AMT’s submission that the connecting factor of the “contractual creation of a sole jurisdiction in England” had the “advantage of foreseeability … and avoid[ed] the fragmentation of disputes”. Lord Hodge disagreed with AMT’s contention, stating that the CJEU had only developed special rules in situations where the place where the direct harm had occurred had not been obvious (see e.g. eDate Advertising GmbH v X (Cases C509/09 and C-161/10) [2012] QB 654 and Cartel Damages Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV (Evonik Degussa GmbH, intervening (Case C-352/13) [2015] QB 906). In the current case however, there was no difficulty in locating where the relevant harm had occurred, as the event giving rise to the harm and the relevant harm directly caused by the event had both occurred in Germany. No special rule should be crafted where the answer to this question was straightforward.


In reaching these conclusions, the court repeatedly stressed the importance of the Judgments Regulation in promoting legal certainty in prospective litigation by providing clarity regarding jurisdiction, to prevent parallel proceedings between courts in different jurisdictions so as to avoid or limit irreconcilable judgments and the non-recognition of judgments, and to underline the mutual trust between the courts of the member states. Achieving these would meet the Regulation’s goals, even if this was at the expense of parties being required to issue related contractual and tortious proceedings in different jurisdictions, and it may be noted that when the Court of Appeal came to the same conclusion, it expressly stated that it had reached the conclusion withoutany great enthusiasm” [paras 57 and 66].

The judgment makes clear that an exclusive jurisdiction clause will protect the party seeking to rely on it to bring the contractual claim, but that it will not necessarily be the determining factor in allocating jurisdiction against a third party or in related proceedings. However, parties should be reassured that it will be a rare situation which will not fit directly within some provision in the Judgments Regulation and for which the courts would find it necessary to create any special rules for the interpretation of Article 5(3).


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