THE ALLURE OF SUBSTANTIAL DAMAGES HAS PROMPTED MANY CLAIMANTS TO SCOUR THE GLOBE FOR THE MOST ADVANTAGEOUS ARENA IN WHICH TO FIGHT THEIR LEGAL BATTLEs, REPORTS NIGEL HANSON

A s globalisation shrinks the world, lawyers are increasingly shopping around for the best forum for their clients' litigation.

Claimants who play their cards right can scoop greater damages, while expense and frustration await those unaware of the vagaries of international law.

City solicitors say the recent collapse of multinationals, such as Italian dairy giant Parmalat, has created opportunities, particularly for US firms, as global investors scramble to protect their interests - usually by joining class actions in the US.

Meanwhile, the recent decision in David Van Der Velde (deceased) v Philip Morris has driven home the limitations of forum shopping for individual litigants (see [2004] Gazette, 5 February, 6).

The claim was brought by Gabriella Van Der Velde, whose husband's illness and death were allegedly caused by smoking cigarettes manufactured and sold by US tobacco company Philip Morris.

Although her husband lived all his life in England, she tried to sue in the US, where higher damages are available.

A New York district court decided that the US was not the appropriate jurisdiction - forum non conveniens - because England had the 'most significant factual relationship' to the litigation.

Her shopping sortie failed, but it highlighted the trend for seeking an ideal forum abroad.

Adam Johnson, a litigation partner at City firm Herbert Smith, says the US has long been considered a favourable forum for claimants, particularly in personal injury (PI) cases.

Contingency fees, jury trials for all civil cases and the chance to win substantial punitive damages - often awarded as multiples of any compensatory damages - are just some of the advantages.

In addition, US discovery rules give claimants wider pre-trial disclosure, increasing pressure on defendants to settle.

Mr Johnson says: 'In the US, you have to give full disclosure of documents and oral discovery for witnesses through depositions.

'All potentially relevant witnesses are subjected to extensive cross-examination by the claimant's lawyers to fish around for evidence that might be relevant.

All these things make litigation in the US very attractive for claimants and very unattractive for defendants, and this is what gives rise to forum shopping.'

Conversely, he says Italy is often considered a good place to defend a case because bureaucratic delays may postpone the outcome for years.

Mr Johnson says more forum shopping has emerged in the wake of the financial crises engulfing Enron, Worldcom and Parmalat.

US law firms such as Milberg Weiss now specialise in securities claims on behalf of disgruntled investors.

'They will set up class actions, typically brought in New York, and invite investors from around the world to join in,' says Mr Johnson.

'Effectively, it's inviting people to forum-shop in America.'

Jeremy Sharman, a litigation partner at London-based intellectual property specialists Bird & Bird, says forum shopping can deliver specific procedural advantages.

He explains: 'In some countries, there's no obligation to produce any damaging documents.

That's completely different from the UK.

It may have an impact in cases where you didn't want certain documents to come to light.'

Defamation is a growth area for the cross-border shoppers.

Dan Tench, a partner in the media litigation department at London firm Olswang, says the recent proliferation in international claims is largely the result of the impact of Internet publishing, combined with political developments such as the 11 September 2001 terrorist attacks in the US and the fragmentation of the former Soviet Union.

The case of Gutnick v Dow Jones & Co (see [2003] Gazette, 25 April, 6) confirmed that a businessman allegedly defamed in an article published by the Wall Street Journal on-line was allowed to take proceedings in Australia against the Web site's US-based publisher, Dow Jones, because several of the Web site's subscribers lived there.

In addition to the impetus from Internet cases, the press has recently published allegedly defamatory stories linking prominent Arabs with al-Qaeda, and Russian businessmen with corruption and arms dealing.

Many such cases, says Mr Tench, have been litigated in London because, in contrast with PI, England is a better forum for defamation claims than most others, notably the US.

Moreover, many of the world's newspapers are published in London, providing a necessary jurisdictional connection.

Suing for defamation in the US is notoriously difficult because defendants are protected by the first amendment of the US constitution - which protects free speech - and the so-called Sullivan defence, which requires public figures to prove actual malice.

Mr Tench says: 'These are the factors that are driving the international claim.

Our regime in England and Wales is still pretty favourable to claimants.

We don't have the broad, "public figure" defence.

'I think people also feel there is perhaps more reliability or predictability here than in some other jurisdictions, such as France.'

But Mr Tench adds that while libel clients are flocking to London, they need to be sure that any judgment obtained will be enforceable where it matters.

'There is no point in being able to bring a defamation case in England but not being able to get enforcement abroad,' he says.

In a case in 1995, a US court in Maryland reviewed sceptically the development of English libel law down the centuries before refusing to enforce a defamation judgment obtained in London on policy grounds.

Mr Tench says it shows US judges' 'uneasiness' about English law's comparatively pro-claimant approach.

Forum shopping also pays dividends in intellectual property (IP) cases.

Until about 2010, when it is expected that a unified European Union (EU) patent system will be introduced, the EU's treatment of patents looks set to remain fragmented.

Clive Thorne, an IP partner at City firm Denton Wilde Sapte, says that under the existing European patent convention, each EU member state's approach to patent litigation is different.

'The interesting thing is that courts in each member state of the EU jurisdiction can, and do, reach different decisions on the validity of a patent,' he says.

Differences also arise over cost, speed and remedies.

'Germany is very expensive - you have to pay a very significant court fee up front,' Mr Thorne says.

'Some say the UK is expensive, but I'm not convinced.

Reforms brought in by the patent judges have got it running very smoothly and efficiently, although it is perhaps a little more expensive litigating here than in Holland.'

Dutch courts are far more likely than others to grant wide-reaching injunctive relief, intended to be enforceable in other jurisdictions.

Gill Doran, head of family law at City firm Withers, says choice of jurisdiction can affect a financial settlement following divorce.

Scandinavian countries, for example, have no concept of spousal maintenance.

Ms Doran says: 'I can think of one example where a husband definitely started proceedings in Sweden because that was a favourable jurisdiction to him compared with England, where maintenance is payable.'

Pre-empting the other side by starting proceedings in a chosen forum can be a decisive factor, particularly since the implemen-tation of a convention known widely as 'Brussels II', which requires the court first seized of certain actions to try them to the exclusion of others.

Many clients would be unaware, Ms Doran adds, that a pre-nuptial agreement signed in New York has full force there but would be given much less weight in England should the couple emigrate.

'Forum shopping can make a huge difference,' she says.

'Normally, it has to be thought about a long way ahead to get the most advantage.

It often requires someone going home for some period of time to fulfil the requirements and benefits of their own jurisdiction.

'It sounds incredibly calculated, but it is jurisdiction shopping - or jurisdiction planning.'

However, tactical awareness can mean the difference between keeping and losing children.

Marcus Dearle, another partner at Withers, says potential surrogate mothers who visit California are often 'blissfully ignorant' that their surrogacy contract will be fully binding there and they can be forced to give up the child they are carrying by the courts.

In England and Wales, however, a surrogate mother who wants to keep the baby immediately after giving birth is likely to be allowed to do so.

Forum shopping, in brief, is something nobody can afford to overlook.

As Mr Dearle says: 'It is potentially big business.

Savings or gains amounting to millions of pounds can be made.

Modern telecommunications, globalisation and cheaper travel have made the world a much smaller place.

'Lawyers and their clients will increasingly need to be internationally aware of the concept in the 21st century.'

Nigel Hanson is a freelance journalist