Scotchstone Capital Fund Ltd and Piotr Skoczylas v Ireland and The Attorney General

• Jurisdiction: Ireland
• Judge: Donnelly J.,Faherty J.,Ní Raifeartaigh J.
• Judgment Date: 31 January 2022
• Neutral Citation: [2022] IECA 23
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2020/149

Between/

Scotchstone Capital Fund Ltd and Piotr Skoczylas

Plaintiffs/Appellants

and

Ireland and The Attorney General

Defendants/Respondents

[2022] IECA 23

Donnelly J.

Faherty J.

Ní Raifeartaigh J.

Appeal Number: 2020/149

THE COURT OF APPEAL

Damages – Infringement of EU law – Frivolous or vexatious proceedings – Respondents seeking an order striking out the proceedings on the grounds that they were frivolous or vexatious or bound to fail – Whether the appellants’ claim was frivolous, vexatious and bound to fail

Facts: The High Court (Sanfey J), on 2nd April, 2020, dismissed the claim of the appellants, Scotchstone Capital Fund Ltd and Mr Skoczylas, on the basis that it was frivolous or vexatious and bound to fail. The appellants’ claim consisted of a “Köbler claim”: C-224/01 Köbler v Osterreich (Case C-224/01) [2003] E.C.R. I-10239. Such a claim amounts, in essence, to a claim against the State for damages for loss caused by a manifest infringement of a litigant’s EU law rights in circumstances where a decision of the State’s court of final instance is alleged to constitute or contain the infringement in question. The appellants appealed to the Court of Appeal from the judgment and order of the High Court.

Held by the Court that: the jurisdiction to strike out a case as being frivolous, vexatious or bound to fail applies to a Köbler claim as it does to other claims; Sanfey J correctly identified the test to be applied on a strike out motion even though he did not refer to each and every case cited on behalf of the appellants; the burden was on the respondents, Ireland and the Attorney General, to show that the appellants’ case was bound to fail; the appellants’ Köbler claim, although formulated in various ways, fundamentally rested upon an issue of law, namely the correct interpretation of the CJEU decision in Dowling v Minister for Finance (Case C-41/15) [2016] E.C.R I-836; a court is entitled to strike out a case as being bound to fail where the case rests entirely upon one key legal issue and it is clear that the claimant’s legal arguments on this legal issue are bound to fail; the CJEU decision in Dowling was clear and unequivocal; the ratio of the CJEU ruling in Dowling was that the direction order of the 26 July 2011 was compatible with EU law; the courts in the Dowling litigation – including the Supreme Court, which was the court of final instance for the purpose of the Köbler doctrine – applied the correct interpretation of the CJEU decision in Dowling; the courts in the Dowling litigation did not infringe the appellants’ EU law rights let alone “manifestly” infringe them (“manifest” infringement being an essential condition of Köbler liability); accordingly, the appellants’ case was bound to fail; there was no necessity to refer any questions to the CJEU because the answers to the points of law upon which the appellants sought ‘clarification’ had already been decided and/or were clear under EU law; and the appellants’ claim pursuant to article 6(1) of the European Convention on Human Rights was bound to fail because the Supreme Court addressed the arguments raised by the appellants in accordance with domestic law and EU law and in particular the CJEU decision in Dowling.

The Court held that Sanfey J was correct to strike out the appellant’s proceedings and the appeal should be dismissed. Given that the appellants had been entirely unsuccessful in their appeal, the Court held that the respondents were entitled to the costs of the appeal, to be adjudicated in default of agreement.

Appeal dismissed.

UNAPPROVED

JUDGMENT of the Court delivered on the 31st day of January, 2022

Table of Contents

SECTION 1: INTRODUCTION	3
The Nature of this Appeal	3
Brief Overview of The Dowling Litigation	5
SECTION 2: THE PLEADINGS, THE TWO MOTIONS AND THE HIGH COURT JUDGMENT	7
The Pleadings	7
The two motions	12
The Motion Judge's Analysis	12
SECTION 3: SOME GENERAL OBSERVATIONS ABOUT THE ARTICLE 267 PROCEDURE	21
The obligation to refer	21
Interpretation v. Application: Decisions of the CJEU on Preliminary References	24
A failure to give reasons for a refusal to refer pursuant to Article 267 might constitute a breach of article 6(1) of the European Convention on Human Rights	28
SECTION 4: THE GENERAL CONTOURS OF A KÖBLER CLAIM	30
Köbler	30
Traghetti	34
The Opinion of Advocate General Leger in Traghetti	35
The CJEU's decision in Traghetti	36
Ferreira	39
Summary of the Key Features of the law governing Köbler claims	41
SECTION 5: THE PRELIMINARY REFERENCE AND THE CJEU DECISION IN DOWLING	42
The Article 267 Reference from the High Court in the Dowling litigation	42
The decision of the CJEU in Kotnik	47
The Opinion of the Advocate General in Dowling	50
The Grand Chamber decision in Dowling	55
SECTION 6: THE DOWLING CASE UPON ITS RETURN TO THE DOMESTIC COURTS	59
The Second High Court judgment in the Dowling litigation	59
The Third High Court judgment in the Dowling litigation	62
The Court of Appeal judgment in the Dowling litigation	62
The Supreme Court Determination in the Dowling litigation	68
SECTION 7: THE STRIKE OUT JURISDICTION	75
Ought the motion judge have heard the strike out motion prior to the motion for judgment in default of defence?	75
Identifying the issues in this appeal concerning the motion judge's approach to the “bound to fail” jurisprudence	77
Did the motion judge ignore or fail to engage with the case-law?	78
Did the motion judge fail to correctly identify or apply the relevant jurisprudence regarding the jurisdiction to strike out a plaintiff's case?	79
Can a motion to dismiss under the inherent jurisdiction be utilised where a plaintiff's claim is made under the Köbler doctrine?	89
SECTION 8: WAS THE MOTION JUDGE CORRECT IN STRIKING OUT THE APPELLANTS' CASE?	95
The keystone of the appellants' claims is their contention that the Irish courts (including the court of final instance) misinterpreted the CJEU decision in Dowling	95
Res judicata does not apply in determining this legal question	98
What is this Court's view of what the CJEU decided (or did not decide) in its decision on the preliminary reference in Dowling?	98
What are the consequences of our interpretation of the CJEU decision in Dowling in the present context? Is the appellants' claim in its various formulations bound to fail?	103
The appellants' claim pursuant to article 6(1) of the European Convention on Human Rights	106
The appellants' request to this Court to make a preliminary reference to the CJEU	107
SUMMARY OF CONCLUSIONS	109

SECTION 1: INTRODUCTION

The Nature of this Appeal

1 . This appeal arises from a judgment and order of the High Court dismissing the appellants' claim on the basis that it was frivolous or vexatious and bound to fail. The phrase “frivolous or vexatious” has a technical meaning in this legal context. We will later be discussing the jurisprudence as to the appropriate tests when applying the concepts of “frivolous and vexatious” and “bound to fail”; at later points in this judgment we will refer to both lines of authorities as the “bound to fail” jurisprudence.

2 . The appellants' claim in these proceedings consists of what will be referred to in this judgment as a “ Köbler claim”. This is a claim of a very particular nature which was identified by the CJEU in a judgment bearing that title. Such a claim amounts, in essence, to a claim against the State for damages for loss caused by a manifest infringement of a litigant's EU law rights in circumstances where a decision of the State's court of final instance is alleged to constitute or contain the infringement in question.

3 . A Köbler claim is therefore a unique type of EU law claim which has at its core the claim that a particular court (a court of final instance) has engaged in a particular kind of error (a manifest error of EU law) thereby causing damage to the litigant's interests for which he is entitled to reparation if the claim is successful.

4 . A Köbler claim is in and of itself, therefore, quite a complex type of claim involving, of necessity, a second set of proceedings in which a complaint is made about a first set of proceedings; a court (or courts) in a second set of proceedings (the “ Köbler proceedings”) must engage in a review of the decision of the court of final instance in prior proceedings (the “base proceedings”) to ascertain whether there was a “manifest infringement” of EU law by the court of final instance. It will also be readily apparent from this brief characterisation of a Köbler claim that it is a claim which amounts to an exception to the normal operation of the principle of res judicata. This will of course be discussed in further detail below.

5 . The complexity is increased in the present case by reason of the fact that the State brought a motion to strike out the proceedings for being bound to fail and/or frivolous or vexatious, which is itself an exceptional jurisdiction or procedure. Thus, the situation presenting itself in this case involves the interaction between not one, but two, exceptional jurisdictions or procedures.

6 . Although the Court considers that the entirety of the case ultimately resolves itself into a net legal point, we have dealt here with the matter at some length for a variety of reasons. First, this is, to the best of the knowledge of the Court, the first time a Köbler claim has been brought in this jurisdiction and it is, as already observed, an exceptional form of claim. Secondly, as already observed, because the State brought a motion to strike out the claim, the Court must concern itself with the interaction between a Köbler claim and the “strike out” jurisdiction....