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By Michael Coyle, Lawdit Solicitors
This is Part 3 of a series on the High Court route for UK Amazon sellers whose accounts have been deactivated and whose funds have been withheld. In Part 1 we set out, in outline, why a coordinated claim is, in our view, properly arguable. In Part 2 we looked at the two-contracts, two-companies structure Amazon has built around its sellers and at why the standard defence Amazon has been running before the Financial Ombudsman Service is weaker than its behaviour suggests. In this part we turn to a more technical but unavoidable question: where, as a matter of jurisdiction, we can bring the claim.
Why this matters
If a UK seller is going to sue Amazon, the seller needs to know two things at the outset: which English court has jurisdiction, and whether the Luxembourg side of the Amazon structure can be brought into the same proceedings. Get that wrong, and the case is exposed before it has properly started — to a strike-out application, to a stay of the English proceedings, or to the cohort being forced into parallel litigation in two countries at twice the cost. Get it right, and the case proceeds on the right footing in the right forum, with disclosure powers and a costs regime that materially favours the claimant compared with anything available before the Ombudsman.
This episode is not the most exciting part of the series. It is, however, the part on which the rest of it depends.
Suing APUK in England is straightforward
The English law half of the structure is the easier part. Amazon Payments UK Limited is incorporated in England and Wales. Its registered office is in London. The Selling on Amazon Payments The User Agreement is governed by English law and contains an English jurisdiction clause. There is no jurisdictional obstacle to suing APUK in the Business and Property Courts of England and Wales, and we would expect any claim of this kind to be issued in the Commercial Court or, where the sums and complexity warrant it, the King’s Bench Division.
That much is settled before the case begins. The contractual claims we discussed in Part 2 — the Braganza-flavoured argument that APUK’s discretion under the operative provision has to be exercised reasonably and rationally, the relational-contract good-faith argument, and the challenge to the breadth of the exclusion clause under the Unfair Contract Terms Act 1977 — all sit comfortably within the English jurisdiction over APUK.
Suing the Luxembourg entity is the live question
The harder question is whether Amazon Services Europe Sàrl, the Luxembourg entity that operates the marketplace and made the operational decision to deactivate the seller’s account, can be brought into the same English proceedings.
The starting position is not encouraging for the seller. ASE is incorporated in Luxembourg. Its contract with the seller — the Business Solutions Agreement — is governed by Luxembourg law and contains a jurisdiction clause for Luxembourg. On the face of it, ASE is not amenable to English jurisdiction in respect of a claim under the BSA.
That is not, however, the end of the analysis. English law has developed a route by which a foreign defendant can be joined to English proceedings where the claim against the foreign defendant is sufficiently bound up with a claim properly anchored against an English defendant. The route is the necessary or proper party gateway under Practice Direction 6B of the Civil Procedure Rules. The court must grant permission to serve the claim form on the foreign defendant out of the jurisdiction, and in deciding whether to do so it applies the Spiliada framework: which country is, in the interests of all the parties and the ends of justice, the appropriate forum for the dispute to be tried in?
For a cohort of UK Amazon sellers whose funds are held by an FCA-regulated English entity, on the instructions of a Luxembourg affiliate, with the documentary record split between the two, with disclosure and witness evidence required from both, and with the real risk of inconsistent judgements if the litigation is fragmented across two jurisdictions, that is a serious argument. It is not a guaranteed one. The Luxembourg jurisdiction clause in the BSA is significant in the Spiliada balance. But the modern Supreme Court has shown a clear willingness to permit the joinder of foreign group companies where the connection with the anchor defendant is real and not contrived.
Vedanta and Okpabi: the modern authorities
The two leading recent decisions are Lungowe v Vedanta Resources plc and Okpabi v Royal Dutch Shell plc. Both are tort cases, both concerned alleged environmental harm caused by foreign subsidiaries, and both saw the Supreme Court reverse lower-court refusals to permit the joinder of the foreign subsidiary into English proceedings against the English parent.
The cases do not match the facts of the Amazon case. They are, however, illustrative of a wider point: where the English defendant and the foreign defendant are genuinely involved in the matters complained of, where the documentary and evidential record straddles both, and where the alternative is parallel litigation in two countries on a single underlying set of facts, the modern English courts have been willing to read the necessary-or-proper-party gateway generously. The argument is not that Vedanta and Okpabi dictate the result. The argument is that the appetite is there, the principles are settled, and the Amazon structure produces precisely the kind of factual interweaving the gateway was designed for.
What if jurisdiction is refused?
A responsible note on this question has to acknowledge the possibility that permission to serve it out is refused. The Luxembourg jurisdiction clause is a real point. The court may take the view that the BSA dispute belongs in Luxembourg and that the right course is to leave the seller to pursue ASE there.
That is not a litigation-ending event. The claim against APUK proceeds in England regardless of what happens to ASE. The English court has full disclosure powers against APUK, and APUK’s documentary record will include its communications with ASE, which is the central evidential question in any event. Whether ASE is a party to the English proceedings or not, the court will see what ASE told APUK and when. We can present and decide the case against APUK on the basis of those communications and the contractual analysis we have already explored.
What this ruling does mean is that the cohort must be prepared to litigate the jurisdictional question as a discrete preliminary issue. Amazon’s lawyers will fight it. They will be entitled to be heard on it. The cohort and any litigation funder need to have factored that into the cost budget at the outset.
Why the cohort matters here too
In Part 1 we discussed the case for a coordinated claim brought by a meaningful cohort of sellers. The jurisdictional question is a further illustration of why the coordinated approach is the right one.
A single seller pursuing a single claim faces the prospect of running the jurisdictional argument once, at full cost, with the result binding nobody else. A coordinated claim spreads that cost across the cohort and, more importantly, produces a determination that resolves the question for every seller behind it. If permission to serve out is granted, every seller in the cohort proceeds on that footing. If it is refused, every seller knows where they stand and proceeds against APUK on a narrower but still substantial basis. Either way, the result is procedural certainty achieved once, on shared funding, rather than relitigated again and again on each individual claim.
Where the series is going
We have now set out, across three parts, the structural and procedural foundation of the case: the corporate architecture, the contractual analysis, and the jurisdictional position. The next part turns from the framework to the substantive claims that sit within it — in particular, the claim in unjust enrichment for the time value of money wrongly retained and the more novel question of how APUK’s safeguarding obligations under the Payment Services Regulations 2017 interact with its asserted right to hold a seller’s funds on the instructions of an unregulated affiliate. The latter is, so far as we are aware, a point that has not yet been determined by an English court and is precisely the kind of question on which a High Court judgement would be of real value not only to the cohort but also to the wider community of UK Amazon sellers.
If your account has been deactivated
If you are a UK-established Amazon seller whose selling account has been deactivated and APUK is still holding funds that have not been released to you, we would like to hear from you. Act quickly — the Limitation Act 1980 limits older claims, so the sooner you provide documentation, the better we can evaluate your case’s timeline and its fit within our cohort.
Please contact Michael Coyle at michael.coyle@lawdit.co.uk or via the contact form at lawdit.co.uk.
