Jurisdictional Challenges in Professional Negligence Claim against Solicitors
Problem: Société Générale S.A. (SocGen), a global banking entity headquartered in France, argued that a professional negligence claim against Clifford Chance LLP should be decided by the High Court of Paris, not the UK courts, due to an exclusive jurisdiction clause in the retainer with the law firm.
Outcome: The High Court of England and Wales rejected SocGen’s contention, maintaining jurisdiction over the professional negligence claim.
Summary of Issues
SocGen brought a claim against Clifford Chance LLP in the High Court of Paris, alleging negligent conduct in handling a legal dispute with Goldas Kuyumculuk Sanayi Ithalat Ihracat AS, which involved significant misappropriations of gold bullion. Clifford Chance LLP however, pre-emptively in the High Court issued a claim seeking declarations asserting their non-liability and contending that Clifford Chance Europe LLP, their subsidiary, had no retainer with SocGen for this matter.
The Breach of Contract Dispute
Clifford Chance was instructed by SocGen between 2008 and 2017 to sue Turkish jewellers Goldas in London in relation to 15.725 metric tons of gold bullion.
In March 2008, SocGen started legal action in the UK against Goldas by alleging the jewellery company based in Istanbul, Turkey, failed to make payment for a supply of gold bullion. To secure its position, the bank also obtained freezing orders that applied worldwide, with a commitment to serve the legal proceedings without delay.
The bank relied on believing that they had served the legal documents to three defendants in Turkey. Similarly, proper service had not taken place in Dubai, where the fourth defendant was located. In 2008, the defendants raised concerns about the service of legal documents. SocGen decided to initiate bankruptcy proceedings in Turkey, (instead of pursuing UK proceedings), which turned out to be a lengthy process.
In 2016, the defendants successfully applied to have the bank’s claims struck out and the freezing orders lifted. They also requested an investigation into the damages they suffered due to the freezing orders being put in place by SocGen.
SocGen’s case against Goldas was thrown out after a High Court judge ruled that claim forms had not been served against the defendant and that SocGen’s claims were time-barred. This prompted the bank to accuse Clifford Chance of negligence.
The Professional Negligence Claim & Jurisdiction Argument
Clifford Chance LLP & Clifford Chance Europe LLP v Société Générale S.A.
On 23 February 2022, Société Générale (SocGen) sent a formal letter known as a “letter de mise en demeure” to Clifford Chance Europe LLP (CC LLP), which is equivalent to a Letter of Claim, alleging the firm had acted negligently and in breach of duty in its conduct of the litigation.
In response, Clifford Chance initiated legal proceedings against SocGen in the High Court in London by filing a claim form and particulars of claim which stated that the firm acted “reasonably and professionally throughout” the case, including working with SocGen’s Turkish lawyers. They further expressed “The non-pursuit of the English proceedings was the result of SocGen’s deliberate informed decision. The outcome was not affected by any negligent act or omission on the part of Clifford Chance”. This was a pre-emptive step taken by Clifford Chance given that there was a significant threat of negligence claim against them following the letter before claim.
The law firm also requested a judge to formally declare that Clifford Chance LLP, not Clifford Chance Europe, represented SocGen in the litigation. They further asked the judge to confirm that neither Clifford Chance LLP nor Clifford Chance Europe should be held responsible for any claims of negligence made by SocGen.
The bank initiated legal proceedings against Clifford Chance in the High Court of Paris for professional negligence, with a hearing set for March 2024, where they aim to seek compensation exceeding €140 million (£122 million).
However, on 13 September 2023, there was a hearing to determine the bank’s application stop or dismiss the proceedings on the grounds that the French courts were more appropriate for the case to be heard.
The High Court saw The Honourable Mr. Justice Henshaw firmly reject SocGen’s objection to the English court’s jurisdiction stating:
“I do not accept those submissions. I have concluded that CC LLP has the better of the argument that it was not bound by the Framework Agreements, and (in any event) that the choices of law and jurisdiction which they contain do not form part of the contract of retainer in relation to the Goldas Dispute. Even if the Framework Agreements have any application, they have no real bearing on the critical issues between the parties. The dispute concerns whether or not an English firm of solicitors were negligent in their conduct of English law litigation in the English High Court. The retainer was governed by English law. To the extent that the Framework Agreements have any relevance at all, they can be considered in translation.
Further, the events that form the subject matter of that dispute all took place here. The large number of documents involved, primarily those on CC LLP’s file, are in England and written in English. They would need to be translated were the proceedings to take place in France. The eight Clifford Chance personnel working on the Goldas Dispute were all based in London. Except for Mr Brock, who now lives in Hong Kong, they are all understood still to be in this jurisdiction. CC LLP’s two main contacts at SocGen, Mr Pinnell and Mr Williams, were and are also based in England. CC LLP is headquartered in London and SocGen has a substantial presence in London.
Consequently, it has not been shown that the courts of France are clearly and distinctly the more appropriate forum. To the contrary, this court is that forum.”
Comments from Expert Professional Negligence Lawyers in London
This case serves as a reminder to ensure that claim forms are served on time and follow the correct procedure. Failing to serve a claim form properly will be fatal to any claim. This ruling is also very useful in understanding the significance of jurisdiction clauses in international legal service agreements.
It emphasises the need for precision in drafting such clauses and underscores the potential for differing interpretations when multiple related contracts are in play. For those in professional services, particularly within the legal sector, this case serves as a cautionary tale.
If you have a professional negligence dispute, please do not hesitate to call our expert professional negligence lawyers in London for a Free Consultation today on 0207 459 4037 or schedule a consultation using our booking form.
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