Damages and costs

In A v B (No 2) [2007] 1 Lloyd’s Rep 358, Mr Justice Colman held that a person who brought proceedings in a forum other than that agreed by the parties was liable to pay damages to the other representing the costs incurred by that other in defending the proceedings on jurisdictional grounds. That decision related to an application to the English courts for relief in respect of an arbitration being held in Switzerland and over which the English courts had no jurisdiction. In National Westminster Bank plc v Rabobank Nederland (No 3) [2007] EWHC 1742 (Comm) the same judge has confirmed his earlier approach. The effect of these cases is that if there is an arbitration clause in the agreement between parties A and B, and B brings an action in some other jurisdiction in breach of that clause, then A is entitled to: (a) damages representing A’s costs in defending the action, assessed on an indemnity rather than standard basis; and (b) the costs of the action for damages, also assessed on an indemnity basis.