English court intervenes in foreign proceedings to stop potential unfairness

In a recent application before Mr Justice Langley in the Commercial Court in London, two of the world’s largest reinsurance broking houses came head to head in a claim concerning the due process of an overseas court. The dispute between broking giants Benfield and Aon arose from the procedural steps taken to gather evidence in dual proceedings in the fall out from the resignation of a number of Benfield’s facultative team. The Commercial Court demonstrated that it will be prepared to intervene in the due process of a foreign court where potential unfairness could be caused by the normal application of the procedures of that court.

The underlying dispute in both jurisdictions is essentially the same and centres on the allegations made by a number of Benfield companies against its former facultative team and Aon. In summary, Benfield claims that Mr Richardson (Head of the Facultative Unit) and Aon jointly conspired to injure its business by poaching/inducing a number of its highly regarded team to move employment to Aon.

Aon’s defence is primarily that the team moved out of choice and their recruitment was part of its normal hiring process.

The first/lead trial is due to commence on 5th March in the English Commercial Court, having been expedited by agreement between the parties.

The second/concurrent dispute was issued by another Benfield company in the United States District Court for the Southern District of New York. This court has jurisdiction as two members of Benfield’s former facultative team are residents in New York and the Benfield entity pursuing this action is incorporated under the laws of Delaware with its principal place of business in Minnesota. The basis of these proceedings is essentially the same as the English trial, albeit narrower in scope. We understand that, to date, no timetable for this hearing has been fixed.

In a recent application, Mr Justice Langley was asked to consider whether the taking of depositions in the US action could be halted pending the hearing of the English trial on grounds of overlap.

The jurisdiction of an English court to affect the procedure of a foreign court can be attained on grounds of ‘unconscionable conduct’, or the threat of unconscionable conduct, by the party seeking to be retained. Mr Justice Langley said “…unconscionable conduct may be found where the pursuit of the overseas proceedings is vexatious or oppressive or interferes with the due process of this court”. So the primary question to be considered in this matter was whether the taking of depositions for the New York hearing interfered with the due process of the first claim?

In front of the New York court, Benfield had argued that the depositions of a number of Aon Limited’s executives were required in order to support an application for a preliminary injunction to be sought in New York as a matter of urgency. However, at the time of Aon’s application in England, this injunction had not been made and furthermore, Aon’s executives had, in the interim, provided a number of undertakings to give Benfield sufficient protection, including undertakings not to solicit Benfield employees, not to disclose any trade secrets of Benfield etc.

In front of the Commercial Court, Aon submitted that Benfield’s real purpose in seeking depositions was to: (a) obtain evidential advantages; and (b) cause disruption to the preparations for the English trial. Aon highlighted that the four witnesses who were subject to the present injunction were all due to submit formal witness statements in the Commercial Court trial and had confirmed they were available to give evidence at it.

Mr Justice Langley concurred with Aon’s reasoning. His short and succinct judgment Mr Justice Langley said:

“The risks of unwarranted double cross-examination and interference with the trial are of course particularly acute where, as here, the depositions are sought from those who might be expected to be and are witnesses for the opposing not deposing party”.

Therefore in order to secure fairness and equality between the parties and avoid the “one sided disruption to trial preparation and double cross-examination”, Mr Justice Langley concluded that the Aon witnesses did not have to face US depositions prior to the Commercial Court hearing, within which they were due to testify. Mr Justice Langley stated that to order depositions would be too disruptive of the English proceedings and “procedurally and forensically unfair and oppressive to Aon”.

This case demonstrates two interesting points:

1. The English courts will intervene in the due process of a foreign court where potential unfairness could be achieved through the normal application of that courts procedures; and
2. The grounds for intervention, although rarely enforced, are in place to protect both the conduct of the English proceedings and the balance of interests between the parties to those proceedings.

Law: Benfield Holdings Limited & Oths. v. Elliot Richardson, Aon Limited & Aon Corp. [2007] EWHC 171 (QB)