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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Chadha & Osicom Technologies Inc v Dow Jones & Co Inc  EWCA Civ 1415 (14 May 1999)
Cite as:  EWCA Civ 1415
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE POPPLEWELL)
B e f o r e :
LORD JUSTICE OTTON
LORD JUSTICE PILL
|CHADHA & OSICOM TECHNOLOGIES INC|
|- v -|
|DOW JONES & CO INC|
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD, Tel: 0171 421 4040
Official Shorthand Writers to the Court)
MR G ROBERTSON QC with MR G MILLAR (Instructed by Messrs Stephens Innocent, London EC4A 1AP) appeared on behalf of the Respondent
Crown Copyright ©
Lord Justice Roch:
The respondents, Dow Jones & Co Inc a company incorporated in the State of New York, publish a journal known as Barrons Magazine. Barrons Magazine is a magazine concerned with business, finance and stock market affairs, principally in the United States of America. In the edition published on the 25th August 1997, there appeared an article which, on the face of it, was defamatory of the appellants. The 2nd appellant is a company operating in the electronics field incorporated in the State of California and the first appellant, who is domiciled and resident in the United States, is the chief executive of that company. The article alleged that both appellants had been involved in fraudulent conduct. It is not disputed that the allegations are seriously defamatory, unless the respondents can justify them, which they intend to attempt to do.
On the 29th December 1997 the appellants obtained leave ex parte from Master Murray to issue and serve a writ on the respondents out of the jurisdiction. The respondents applied to Mr Justice Popplewell on the 10th July 1998 to set aside service of that writ. That application was successful and this appeal is from the judge's decision.
It is not disputed that the article of which the appellants complain was published within the jurisdiction. The total sales of that edition of the magazine were 294,346 of which 283,520 were sold in the United States, 408 copies were sent to subscribers living in the United Kingdom and some further 849 copies were sold from news stands in the United Kingdom making a total of 1,257 copies taken up by persons in this country. The judge concluded that such persons would predominately be American business people or those with a close interest in the American Stock Market. Like the judge we were provided with a full copy of that edition of the magazine and it is clear that the overwhelming proportion of its contents, including articles, advertising and quotations from stock markets relates to the United States.
The question which the judge directed himself that he had to decide was "Whether I should stay the proceedings on the ground that the courts of the United States have jurisdiction to try the action and it would be more appropriate for them so to do?" The conclusion that the judge reached was "That it would be wholly inappropriate for this case to be tried in the United Kingdom rather than in the US. I do not need to decide this on burden of proof because I think this is an overwhelming case for trial in the United States. Accordingly I shall set aside the Master's order."
The appeal mounted by Mr Price QC is that the judge's formulation of the law was incorrect, as is demonstrated by the decision of this court in Berezovsky & Glouchkov -v- Forbes Inc & Others decided on the 17th November 1998 and as yet unreported. As the judge misdirected himself on the law, this court should consider the matter anew and exercise our discretion. The correct exercise of our discretion would be to restore the order of the Master.
Mr Price argued that the judge committed the error of treating the publication of the article as a single publication and looked only at the question where the issues which will arise on that single publication can most appropriately be tried. The judge twice rejected the submission of Mr Price that once publication of the alleged libel within the jurisdiction was established, that there was a separate tort of defamation committed within the jurisdiction and as a consequence, there was a presumption that it would be most appropriately tried here. Mr Price accepted that that presumption could be displaced, but submitted that it could only be displaced in extreme cases such as Kroch -v- Rossell  1 All ER 725 CA, where the complainant has no connection with the jurisdiction or reputation within the jurisdiction to protect or where because of the slender links between the complainant and this country, it cannot be supposed that such reputation as he has here has suffered any significant harm or where the circulation of the alleged libel has been so minimal that it cannot be supposed that the complainant's reputation in this country has suffered in any significant way.
Mr Price accepted that the fundamental principle remained that stated by the House of Lords in Spiliada Maritime Corporation -v- Cansulex Ltd  1 AC 460 but went on to submit that the decision of this court in Berezovsky [above] has exposed the global publication leading to a global tort fallacy and has, moreover, introduced in cases where there has been significant publication within the jurisdiction, a presumption that the courts of this country will entertain an action based on the publication here unless the case is one of those rare and extreme cases identified above. The judge had twice rejected that submission in the course of his judgment: first at page 7 when the judge said
"But I do not read anything in that decision (referring to Schapira -v- Ahronson & Others [unreported but decided on the 21st March 1997 by this court consisting of Peter Gibson and Phillips LJJ] to support the proposition that where as in the instant case the plaintiff could only commence his action with leave of the court, there is some presumption favourable to the plaintiff."
And at page 9 where the judge said:
"This being a case where both plaintiff and defendant are outside the jurisdiction I am wholly unpersuaded that there is any presumption in favour of the plaintiff or that the authorities as to where the cause of action arises are of any assistance in the instant case."
For the respondents Mr Robertson submitted that the judge had not misdirected himself on the law. Mr Robertson argued that the underlying fundamental principle remains that identified by the House of Lords in the Spiliada and that the court's task is that expressed by Lord Kinnear in Sim -v- Robinow 19 R 665 at 668 namely:
"To identify the forum in which the case can be suitably tried for the interest of all the parties and for the ends of justice ......."
that being identified by Lord Goff in the Spiliada case as the "underlying fundamental principle" see page 482 E. Mr Robertson relied on the provision in Order 11 Rule 4 (2)
"No such leave (to serve a writ abroad) shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under this order."
The correct approach was that identified by Lord Wilberforce in Amin Rasheed Shipping Corporation -v- Kuwait Insurance Company  AC 50 at page 72 namely:
"The intention must be to impose on the plaintiff the burden of showing good reasons why service of the writ calling for an appearance before an English Court, should, in the circumstances, be permitted upon a foreign defendant. In considering this question the court must take into account the nature of the dispute, the legal and practical issues involved, such questions as local knowledge availability of witnesses and their evidence and expense ......."
Popplewell J had adopted this approach and had identified and considered the relevant factors and reached a decision which on the material before him was one which he in the exercise of his discretion, was entitled to reach. Popplewell J had taken account of those authorities prior to the decision of this court in Berezovsky [above] on which the appellants were seeking to rely, namely Distillers -v- Thompson  AC 458, the Albaforth  2 Lloyds LR 91 Metall and Rostovv -v- Donaldson  QB 391 and Schapira -v- Ahronson [above].
Before considering the decision of this court in Berezovsky it is necessary to look at the facts in this appeal, particularly the connections of the appellants with this jurisdiction.. The first appellant is domiciled and resident in the United States. He founded the second appellant in 1981 and has been Chief Executive Officer of the second appellants ever since. The second appellants had a UK subsidiary, Osicom UK Ltd which was sold to a British Virgin Islands company called Saturn Enterprises Ltd in 1992. Saturn Enterprises Ltd sold that company on to a company called Scorpion Technology's Inc, an American Corporation.. The 1st appellant was directly and personally involved in the day to day management of Osicom UK Ltd and negotiated its sale to Saturn Ltd. It would appear that Osicom UK Ltd is still in existence and is situated in the city of Cardiff, but no longer has any links with either appellant. In January 1996 the 2nd appellant acquired Rockwell Networks Systems, a United States Corporation and took over its United Kingdom Division which was based at Windsor. Since April 1997 this subsidiary has been named Osicom Technologies Europe Ltd. It is said that the 2nd appellants' european sales are effected through Osicom Technologies Europe Ltd from offices in Windsor. In his first affidavit the 1st appellant states that sales to UK customers are an important and growing portion of the 2nd appellant's business. It is said that the 2nd appellants have a new product, called Gigamux, a dense wave division multiplexing product which is designed to add capacity to a telephone company's already laid fibre optic cable. It is also stated that the majority of the company's customers purchased the 2nd appellants' products through intermediaries. Mr Chadha in his affidavit expresses concern over the effect on sales of the 2nd appellant's products in the United Kingdom of the article published in Barron's Magazine and on the ability of the 2nd appellant's and the 2nd appellants' subsidiary to attract investment in the United Kingdom. Mr Chadha claims to have many friends and business contacts in the United Kingdom, only one of whom he names. Mr Chadha last visited this country in 1995. In his second affidavit Mr Chadha lists those companies with whom he maintains the 2nd appellant's English subsidiary does business and exhibits purchase orders representing purchases by some of those companies from the English subsidiary. Those purchase orders predate and post-date the publication of the offending article and no where in the affidavits filed on behalf of the appellants is there any evidence of a customer of the 2nd appellants or its United Kingdom subsidiary cancelling an order because of the Barron's Magazine article. On the contrary in his 2nd affidavit Michael Joseph Cawley, the Sales and Marketing Director of the 2nd appellants UK subsidiary Osicom Technologies (Europe) Ltd sworn on the 19th April this year deposes that "Osicom Technologies (Europe) Ltd is continuing to grow." Mr Cawley exhibits the financial statements of the company for the year ending the 31st May 1998 in which it is stated: "The company is not quite as far forward as had been anticipated at this stage but the directors continue to look forward with optimism". Those accounts show no turnover for the year ending 31st May 1997 but a turnover of £119,601 for the year ending the 31st May 1998.
I turn to the decision of this court in Berezovsky. In that case the judgment shows that Mr Berezovsky and Mr Glouchkov had much closer and stronger links with this country than either appellant. Moreover none of the material before this court in Berezovsky "even begins to show a connection with the United States in the case of either plaintiff comparable to their connections in England". This is another striking difference between the facts in Berezovsky and the facts in the present case. One further difference is that in this case both the appellants and the respondents are domiciled, reside and carry on business principally in the United States.
In Berezovsky this court said that:
"The fundamental principle is that the court must identify the jurisdiction in which the case may be tried most suitably for the interests of all the parties and for the ends of justice. The burden of proof in an Order 11 Case lying upon the plaintiff to establish that English jurisdiction clearly satisfies this test."
This court then went on to consider the application of the fundamental principle in the field of torts committed in England.
This court then cited the case of Distillers Company -v- Thompson  AC 458 a decision of the Judicial Committee of the Privy Council concerning the principle by which the question "where did a cause of action in tort arise?" had to be decided. The court reminded themselves of two passages from the judgments of Ackner LJ and Goff LJ in The Albaforth [supra] to the effect that "the jurisdiction in which a tort has been committed is prima facie the natural forum for the determination of the dispute", per Ackner LJ and "if the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the courts of that jurisdiction are the natural forum" per Goff LJ. This court went on to refer to the case of Metall & Rostovv -v- Donaldson, Lufkin & Jenrette Inc  1QB 391 where it was stated in the judgment of the court at page 488 that:
"this country, being in our view the place where the substance of the alleged tort of inducement of breach of contract was committed, London must be regarded as the appropriate forum for the determination of this English tort unless the defendants show sufficiently strong factors to compel a contrary conclusion."
Hirst LJ then turned to consider the judgments of Peter Gibson and Phillips LJJ in Schapira -v- Ahronson [above] and referred to the case of Kroch -v- Rossell [above]. Having considered that case Hirst LJ said; at page 25 D of the transcript:
"The contrasting outcomes of Kroch -v- Rossell and Schapira -v- Ahronson demonstrate very clearly how important it is, once the correct principle is established, to concentrate on the facts of the individual case."
This court in Berezovsky had been given the facts and decisions at first instance in the present case and in another case Wyatt -v- Forbes. Hirst LJ in his judgment was careful not to make any comment on the propriety of the decisions at first instance in either of those cases, save to observe they were by no means on all fours with the Berezovsky case. Hirst LJ recorded that this court had been referred to Oraro -v The Observer unreported but decided on the 10th April 1992, a case where Drake J set aside service of a writ under Order 11 Rule 4 in a libel action by a plaintiff who was a Kenyan lawyer. In that case the judge had held that Mr Oraro had had only a minimal connection with this country and that the damage to Mr Oraro's reputation occurred substantially in Kenya and that there was no likelihood Mr Oraro had suffered significant damage in this country. Hirst LJ did not comment adversely on that decision although the main place of publication of the Observer newspaper was in this country and not in Kenya. His Lordship felt that that case offered him little assistance in resolving the appeal he was hearing.
Hirst LJ went on to reject the global approach urged on him by Mr Robertson saying:
"There is nothing anomalous in treating significant publications of a libel in more than one country as separately actionable in different countries."
I would respectfully agree with that conclusion of Hirst LJ. Hirst LJ went on in his judgment:
"Consequently I come back to Mr Price's central argument based on the English authorities. It goes without saying that where, as in a case like Kroch -v- Rossell, there is no complaint of substance as regards an English tort at all, either because there is only an insignificant English circulation, or because the plaintiff has no connection with or reputation to protect in this country, or perhaps on both counts, he will inevitably fail the Spiliada test.
What we have to consider is the case where there is a substantial complaint as regards an English tort, having regard to the scale of the publication and the extent to which the plaintiff has connections with and a reputation to protect in this country."
When applying those principles to the Berezovsky case Hirst LJ said:
"For the reasons already given, in my judgment both Mr Berezovsky and Mr Glouchkov particularly the former, have demonstrated that they amply meet the above criteria and therefore have very strong prima facie cases that England is the appropriate forum."
In my judgment once it is established that there has been an "English tort" that is to say that there has been a significant publication of prima facie defamatory matter concerning the plaintiff within the jurisdiction, the English courts have jurisdiction with regard to that English tort. Where the perpetrator of the tort is not within the jurisdiction but is abroad, then leave to serve process abroad under Order 11 is required and the fundamental principle identified by the House of Lords in the Spiliada applies. If there is a substantial complaint with respect to the English tort, having regard to the scale of the publication within the jurisdiction and the extent to which the plaintiff has connections with and a reputation to protect in this country as against the inconvenience to the defendant in being brought here to answer for his alleged wrong doing then service of the writ abroad is to be ordered. The onus of showing that the plaintiff has sufficient connections with and a sufficient reputation to protect in this country is on the plaintiff, c.f. Lord Wilberforce in Amin Rasheed Shipping Corporation -v- Kuwait Insurance Company [above] in the passage I have cited. The principle may have been better stated than I have stated it, by Lord Buckmaster in Johnson -v- Taylor Brothers & Co Ltd  AC 144 at 160:
"It must, however, be remembered that the issue of the writ, even in a case within the words of the rule, can only be made by leave of the court, and, in granting such leave, regard ought to be had to the real breach in respect of which the action is brought, and not merely to a breach on which it is necessary to rely, not to obtain relief, but only to found jurisdiction under the rule."
In his judgment in Kroch -v- Rossell [above] at page 731 Scott LJ having cited the passage from the speech of Lord Buckmaster cited above, said:
"..... but the point of the observation is that the reality of the question ought to be looked at, and, if the reality of the cause of action is one which belongs to a foreign country, and not to this country, and above all, where it is a question which probably would be better tried, for any particular reason which appears in the circumstances of the case, in the foreign country, leave ought not to be granted."
The facts in the case of Schapira -v- Ahronson & Others were very different from the facts in the present appeal. In that case Mr Schapira was not only resident in England he was also a citizen of the United Kingdom, married to a wife who was English by birth. His children attended school in England, and at the material time Mr Schapira was conducting business through a company incorporated in England. Although the articles said to be defamatory were published in a newspaper printed in Israel in Hebrew, copies of the articles were published in the weekly edition of the newspaper available in the United Kingdom. In that case, as appears from the judgment of Peter Gibson LJ at page 12 E of the transcript, it was common ground that the court had to conduct a balancing exercise, weighing the factors which told in favour of a trial in England against the factors which told in favour of a foreign trial. It was in those circumstances that Peter Gibson LJ said at page 19 D of his judgment:
"Where the tort of libel is allegedly committed in England against a person resident and carrying on business in England by foreigners who were aware that their publication would be sent to subscribers in England, that English resident is entitled to bring proceedings here against those foreigners and to limit his claim to publication in England, even though the circulation of the articles alleged to be defamatory was extremely limited in England and there was a much larger publication elsewhere."
Returning to the judgment of Popplewell J he said at page 9 of the transcript of his judgment:
"This being a case where both plaintiff and defendant are outside the jurisdiction I am wholly unpersuaded that there is any presumption in favour of the plaintiff or that the authorities as to where a cause of action arises are of any assistance in the instant case."
In my judgment there is nothing objectionable in that way of stating the law in this particular case. Here the appellants and the respondents were and are outside the jurisdiction and consequently it was for the appellants to show that they had sufficient connections with this country and a reputation to protect in this country. The judge had earlier in his judgment at page 2 of the transcript accepted that the allegations were defamatory and were serious allegations and moreover that the article had been published within the jurisdiction so that Order 11 Rule 1(1)(f) had been satisfied namely that "the claim is founded on a tort and the damage was sustained or resulted from an act committed within the jurisdiction".
The judge reached the conclusion that he did by considering the facts of the case set out in the material before him. He paid attention to the personal status of the first appellant and his connections with this country, the business status of the second appellants and their connections with this country, the status of the defendants, the extent of publication, the nature of the publication, the meanings which the appellants attached to the article and the juridical advantages and disadvantages in the case being heard in this country as opposed to the appellants being left to sue to vindicate their reputations in the United States. At no point did the judge decide that there had not been significant publication of the article within the jurisdiction or that there was not a prima facie case of an English tort having been committed by the respondents against the appellants.
Whereas the appellants in 1997 had reputations worthy of vindication in the United States, the evidence that they had such a reputation in this country in August 1997, a mere four months after the name of their English subsidiary was changed to include the word "Osicom" is in my view vague and imprecise. Still more problematical is the evidence that such reputations as the appellants had at that time within the jurisdiction was harmed by such publication of the article as occurred in this country.
Briefly my conclusion is that the judge did not in the circumstances of this case misdirect himself as to the law. The conclusion that he reached was a permissible one in that there was ample material for him to decide that it would be inappropriate for this case to be tried in the United Kingdom rather that in the United States. Consequently I would dismiss this appeal.
Lord Justice Otton: I agree.
Lord Justice Pill: I also agree.
ORDER: Appeal dismissed with costs; application for leave to appeal to the House of Lords to be notified in writing to the parties.