The first limb of the Spiliada test: ‘natural or ‘appropriate’ forum

It is common to refer to the court proposed by the defendant under the first limb of the Spiliada test, as ‘the natural forum’. It is more correct, though still not quite right, to refer to it as ‘the forum with which the action has a closer and more real connection than it has with England’.^[1] In VTB Capital Pic v Nutritek International Corp,*¹ the court referred to ‘the appropriate forum’, which is probably the best choice. But whichever is used, a number of preliminary points may be made about it.

First, it is clear that there may be cases in which there is no court which can be said to be the most appropriate, or the natural, forum: this is not fatal to the application for a stay. In an international commercial dispute, there may be points of contact with a number of possible courts, but distributed in such a way that no single court can be said to be the most appropriate forum. That, however, is not what the first limb of the Spiliada test requires. The defendant, applying for the stay, is required to show that the court pointed to is ‘clearly or distinctly more appropriate than England’ for the resolution of the dispute. If that cannot be done there will be no stay of proceedings.^[2] But it also follows that, if the other forum is clearly or distinctly more appropriate than England, a stay should be granted, or should not be ruled out, even though that forum could not easily be described as the most appropriate forum, or the natural forum. At least, it would appear to follow; one can, however, understand that a court might conclude that the defendant had not sufficiently discharged the burden of proof upon him by showing the foreign court to be something less than the appropriate forum. To put it another way, although the Spiliada test is expressed in comparative terms, it may be understood and applied in more absolute terms.

Second, there may be cases in which the foreign court is the natural forum, at least when this expression is assessed in terms of the strength of connection between the facts of the particular case and the court or country in question, but in which it cannot be said that the foreign court is clearly more appropriate than England for the trial. This may be because the particular dispute is part of a larger picture, which puts the English proceedings in perspective. It may also be argued that the foreign court cannot be more appropriate than England if the foreign country is one in which a fair trial is not possible, for how could it be more appropriate that the trial take place in a corrupt court?

Third, although every case, and every set of facts, is individual, there are rules of thumb which, more or less overtly, allow answers to be predicted. So, for example, the natural forum for a claim in tort is liable to be the place where the tort occurred; the natural forum for proceedings concerned with the governance, management and control of a company, and with some at least of the consequences of those matters, will be the place of incorporation of the company. Likewise, the natural forum for a dispute about the right to be registered or acknowledged as a shareholder in a company is likely to be the place of incorporation or (if it is different) where the register is kept. The natural forum for an insurance or reinsurance claim, or other commercial contract, which is governed by English law will be England; the inverse proposition is probably, though perhaps less certainly, true. The court in which all the issues between all of the parties can be disposed of in a single proceeding by which all will be bound is likely to be the appropriate forum for the resolution of those matters. The natural forum for the determination of issues concerning title to land, if the English court has jurisdiction to adjudicate such issues, is the situs of the land; the natural forum for the investigation of the legal validity and interpretation of rights of intellectual property is the law of the place under which the right is created or protection is awarded. In the paragraphs which follow the complexity of the case law, such as it is, will be explored; but in the majority of cases, the view of first impression proves to be the conclusion of the analysis as well.

The terminology of the ‘natural forum’ has become so embedded in the language of the law that it serves no purpose to object to it. But that does not alter the law: the test is a comparative one, not an absolute one.

• [1] [1998] AC 854. 2 [2000] 1 WLR 1545, reversing [2000] 1 Lloyd’s Rep 139, and affirming, but on different grounds, [1998] CLC 1559. It is to be noted that Lord Bingham was well aware of the potential impact of the ECHR in such a case. Lungowe v Vedanta Resources Pic [2019] UKSC 20, [2020] AC 1045 makes the same general point, but in the context of service out with permission, not stays of proceedings. 3 Deutsche Bank AG v Highland Crusader Offshore Partners LP [2009] EWCA Civ 725, [2010] 1 WLR 1023, [55]. 4 [2013] UKSC 5, [2013] 2 AC 337. 5 Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd [2020] UKSC 37, [94].
• [2] Spiliada. at 477. For illustration, European Asian Bank v Punjab & Sind Bank [1982] 2 Lloyd’s Rep 356; MacSteel Holdings Ltd v Thermasteel (Canada) Inc [1996] CLC 1403. 2 On whether the test should be framed in terms of (the proper place for the trial of) the claim or the case, see Lungowe v Vedanta Resources pic [2019] UK.SC 20, [2020] AC 1045, [74], for the conclusion that it should be understood as the case, notwithstanding the language of the (judge-made) rule. However, Unwired Planet International Ltd v Huawei Technologies ( UK) Co Ltd [2020] UKSC 37, [94], preferred to refer to ‘the dispute between the parties’, which seems altogether better. 3 Wrongly, as it is suggested: see the previous paragraph and the following footnote. 4 However, in the case of stay applications, it is clear that complaints of this kind do not arise at the first stage of the enquiry at all; they do not affect the debate whether the foreign court is clearly more appropriate than England. Instead, they arise at the second, corrective, stage of the Spiliada test. This conclusion is not affected by Cherney v Deripaska [2009] EWCA Civ 849, [2010] I All ER (Comm) 456, or A К Investment CJSC v Kyrgyz Mobil Tel [2011] UKPC 7, [2012] 1 WLR 1804, which are service out cases.