JUDGMENT-1:
LORD KEITH OF KINKEL. My Lords, I have had the opportunity of
considering in draft the speech to be delivered by my noble and learned
friend Lord Goff of Chieveley. I agree with it, and for the reasons he gives
would dismiss this appeal.
JUDGMENTBY-2: LORD ACKNER.
JUDGMENT-2:
LORD ACKNER. My Lords, I have had the opportunity of considering in
draft the speech to be delivered by my noble and learned friend Lord Goff
of Chieveley. I agree with it, and for the reasons he gives I, too, would
dismiss this appeal.
JUDGMENTBY-3: LORD GOFF OF CHIEVELEY.
JUDGMENT-3:
LORD GOFF OF CHIEVELEY. My Lords, this appeal raises a question of
jurisdiction, to be decided with reference to the Convention on Jurisdiction
and the Enforcement of Judgments in Civil and Commercial Matters 1968
(Brussels, 27 September 1968; EC 46 (1978); Cmnd 7395) (the Brussels
Convention), implemented in this country by the Civil Jurisdiction and
Judgments Act 1982.
The matter has arisen as follows. The applicants are shipowners and are,
for the purposes of the Brussels Convention, domiciled in Belgium. The
respondents claim that, by virtue of telex, fax and telephone exchanges
which took place in December 1988 in London between the respondents
and brokers acting on behalf of the appellants, a fixture was concluded
between the parties for a voyage charter of a vessel to be nominated
by the appellants, for the carriage of a cargo of telegraph poles from
Fernandina in Florida to Chalna in Bangladesh. The most relevant
provisions read as follows:
'CR. LINE VESSEL TO BE NOMINATED -- GRD MAX 15 YRS --
SINGLEDECKER OR TWEEN DECKER IN OWNERS OPTION BUT ALWAYS
SUITABLE TO LOAD TELEGRAPH POLES... LAYCAN 1/30 JAN TO BE
NARROWED TO 14 DAYS LAYCAN WITH 5 WORKING DAYS DEFINITE
ARRIVAL NOTICE... '
It was the respondents' contention that the fixture messages incorporated
by reference the terms of a previous charterparty between the parties,
which included a provision requiring payment of commission in London, a
London general average clause and a London arbitration clause; and it is
the respondents' case that the resulting charter was expressly or impliedly
governed by English law.
A dispute arose between the parties in January 1989, as a result of
which the appellants intimated that they were no longer interested
in lifting the cargo. In February 1989 the respondents commenced
arbitration proceedings in London against the appellants. They served
their points of claim on 8 March, claiming damages on the ground that the
appellants had failed to nominate a vessel. The appellants appointed an
arbitrator, but did so without prejudice to their contention that there was
no concluded contract between the parties.
Now, when an issue arises as to the existence of a charterparty containing
a London arbitration clause, the party claiming that there is such a
charterparty will usually commence proceedings in the Commercial Court
in London claiming a declaration to that effect. In the present case,
however, the Brussels Convention applied; and the appellants, being
domiciled in Belgium, which is of course a contracting state, invoked
art 2 of the convention. This provides that, subject to the provisions of
the convention, persons domiciled in a contracting state shall, whatever
their nationality, be sued in the courts of that state. It is provided in art
1 that the convention shall not apply, inter alia, to arbitration. But the
dispute in the present case arose under the shadow of the Marc Rich
litigation (see Marc Rich & Co AG v Societa Italiana Impianti PA, The
Atlantic Emperor [1989] 1 Lloyd's Rep 548). That case was concerned
with a contract for the sale of crude oil. The buyers claimed that the
oil delivered was seriously contaminated. They commenced arbitration
proceedings in London, in reliance upon a clause which provided both
for English law as the governing law and for London arbitration. The
sellers, an Italian company, disputed the incorporation of the clause in
the sale contract, and commenced proceedings in Italy. The buyers then
commenced proceedings in the Commercial Court in London, asking for
the appointment of an arbitrator; and the court gave leave for service of
the proceedings on the sellers in Italy. The sellers then asked for the leave
for service outside the jurisdiction to be set aside, on the ground that the
real dispute between the parties was whether the contract incorporated
the London arbitration clause; they contended that that dispute fell
within the scope of the Brussels Convention and should therefore be
tried by the Italian courts, as the courts of the country where they were
domiciled. Hirst j held that the convention was not applicable; but the
sellers appealed to the Court of Appeal, which referred the matter to the
Court of Justice of the European Communities. Under s 3 of the 1982 Act,
reference is made to reports by Mr P Jenard and Professor Peter Schlosser
((1979) OJ C 59, pp 1, 66, 71); and the contention of the sellers received
support from opinion by them, though (as the Advocate General was later
to observe) the opinion of Professor Schlosser put forward a view 'which
in every respect contradicts the official report signed by him concerning
application of the Convention to disputes relating to arbitration before
national courts'. Faced with this situation, the respondents in the present
case decided to commence fresh proceedings in the Commercial Court,
claiming damages for breach of charterparty, relying upon art 5(1) of the
convention, which provides:
'A person domiciled in a Contracting State may, in another Contracting
State, be sued: (1) in matters relating to a contract, in the courts for the
place of performance of the obligation in question... '
It was the contention of the respondents that the place for performance
of the obligation to nominate a vessel was London, and therefore that, in
accordance with art 5(1), the appellants could be sued in this country.
In point of fact, in the Marc Rich case the European Court, following the
powerful opinion of Advocate General Marco Darmon, and rejecting the
opinions of Mr Jenard and Professor Schlosser, held on 25 July 1991
that the contracting parties, by excluding arbitration from the scope of
the convention, intended to exclude arbitration in its entirety, including
proceedings brought before national courts; and the court therefore ruled,
in the case before it, that art 1(4) of the convention must be interpreted
as meaning that the exclusion of arbitration therein provided for extends
to litigation pending before a national court concerning the appointment
of an arbitration, even if the existence of validity of an arbitration
agreement is a preliminary issue in that litigation (see (1991) Times, 20
September). It seems unlikely therefore that parties to arbitrations or
putative arbitrations in London will in future find themselves in the same
predicament as the respondents found themselves in at the beginning of
1989.
I return to the present appeal. When the respondents commenced
proceedings against the appellants by action in the Commercial Court,
they claimed damages from the appellants on the grounds that, in
breach of contract, the appellants failed to nominate or to provide a
vessel. The addition of the second ground of claim gave the appellants
an opportunity to argue that, since the obligation to provide a vessel was
not to be performed in England, the respondents were unable to found
jurisdiction under art 5(1) of the convention. They therefore applied to
the Commercial Court for an order setting aside the writ and service of
the writ. That application was dismissed by Evans J on 16 February 1990;
and an appeal by the appellants from that decision was dismissed by the
Court of Appeal on 3 October 1990, leave to appeal to the House of Lords
being then refused (see [1991] 2 Lloyd's Rep 48). It is from that decision
of the Court of Appeal that the appellants now appeal, with the leave of
your Lordships' House.
Section 3(1) of the 1982 Act provides that any question as to the
meaning and effect of any provision of the convention shall be determined
in accordance with the principles laid down by the European Court.
Accordingly, your Lordships, like the courts below, turn to the judgments
of the European Court for guidance. Applying the principles laid down
by that court, in particular in Shenevai v Kreischer Case 266/85 [1987]
ECR 239 at 256, both Evans J and the Court of Appeal ([1991] 2 Lloyd's
Rep 48 at 51-52), found no difficulty in concluding that, in the present
case, the obligation in question was the obligation to nominate a vessel,
and further that (as is now no longer in dispute) the place for the
performance of that obligation was London. Accordingly the English courts
had jurisdiction under art 5(1) of the convention. I myself have reached
the same conclusion, for substantially the same reasons.
Mr Forwood QC, for the appellants, assisted your Lordships with a full
citation of the relevant European cases. I only find it necessary to refer
to three decisions of the European Court. The first is Ets A de Bloos SPRL
v Societe en commandite par actions Bouyer Case 14/76 [1976] ECR
1497. That case was concerned with an exclusive distribution agreement,
under which Bouyer, a French company, conferred on de Bloos, a Belgian
company, exclusive distribution rights for Bouyer's products in Belgium,
Luxembourg and Zaire. De Bloos commenced proceedings against Bouyer
in Tournai in Belgium claiming, on the ground that Bouyer had committed
a unilateral breach of the contract, an order for the dissolution of the
agreement and damages. Bouyer invoked the contention. The court held
that the place where the goods were to be delivered and where bills
were payable was Bouyer's registered office in France, and on that basis
the court declined jurisdiction. On appeal, the Court of Appeal at Mons
referred the matter to the European Court. The European Court held
that the word 'obligation' in art 5(1) refers to the contractual obligation
forming the basis of the legal proceedings, and that, in a case such
as de Bloos, where the plaintiff asserts the right to be paid damages
and seeks dissolution of the contract on the ground of the wrongful
conduct of the other party, the obligation referred to in art 5(1) is still that
which arises under the contract, the non-performance of which is relied
upon to support such claims. It followed that regard must be had to the
contractual obligation under consideration, and not to the contract as a
whole.
Next I wish to refer to Ivenel v Schwab Case 133/81 [1982] ECR 1891.
That case was concerned with a contract of employment. The plaintiff
Ivenel was a Frenchman living at Strasbourg. He was employed by the
defendants, Schwab Maschinenbau, a German company established at
Oettingen in Germany. The plaintiff commenced proceedings in France
against the defendants, claiming payment of commissions outstanding
under the contract of employment, and of allowance arising on the
termination of the contract. The defendants invoked the convention,
claiming that the place for the performance of the obligations was
Oettingen. The French Court of Cessation referred the question to the
European Court. The court rejected the test in the de Bloos case as
inapplicable in the case of contracts of employment. It answered the
question as follows (at 1902):
'The obligation to be taken into account for the purposes of the
application of Article 5(1) of the Convention... in the case of claims based
on different obligations arising under a contract of employment as a
representative binding a worker to an undertaking is the obligation which
characterizes the contract.'
This was a remarkable decision. It was based upon an examination of the
objectives of the convention and the general scheme of its provisions,
with special reference to contracts of employment. It was on its face
a departure from the principle established in the de Bloos case. It was
however later to be recognised by the Rome Convention (Convention
on the law applicable to contractual obligations (Rome, 19 June 1980;
Misc 5 (1982); Cmnd 8489) set out in Sch 1 to the Contracts (Applicable
Law) Act 1990) as a specific exception; and, as subsequent authority
confirms, it should be read as restricted to contracts of employment, and
not regarded as of general application.
This appears from the decision of the European Court in Shenevai v
Kreischer Case 266/85 [1987] ECR 239. That case was concerned
with a claim to fees by the plaintiff Shenevai, an architect practising
at Rockenhausen in Germany, against the defendant Kreischer, whose
domicile was in Holland. The defendant, who in any event denied the
existence of the contract, also claimed that the place for payment of
the fees was in Holland. The Amtsgericht Rockenhausen accepted the
argument of the defendant, and held that it had no jurisdiction under art
5(1) of the convention. The plaintiff appealed to the Landgericht, which
referred the question to the European Court. The crucial question was
whether, for the purpose of ascertaining the place of performance of the
obligation in question, the court should have regard to the contractual
obligation which forms the actual basis of the legal proceedings (in this
case a debt payable under German law at the place where the defendant
was domiciled), or by reference to the obligation typical of the contract
and characterising the contractual relationship as a whole (in this case the
place where the architect had his practice and/or the site of the planned
building). In other words, the Landgericht was inquiring whether it should
apply the principle originally laid down in the de Bloos case Case 14/76
[1976] ECR 1497, or the test subsequently established in Ivenel v Schwab
Case 133/81 [1982] ECR 1891 for contracts of employment. The court
preferred the approach in the de Bloos case. The following paragraphs
from the judgment of the court explain its conclusion ([1987] ECR 239 at
255-256):
'16. In that connection it should first be observed that contracts of
employment, like other contracts for work other than on a self-employed
basis, differ from other contracts -- even those for the provision of
services -- by virtue of certain particularities: they create a lasting
bond which brings the worker to some extent within the organizational
framework of the business of the undertaking or employer, and they are
linked to the place where the activities are pursued, which determines
the application of mandatory rules and collective agreements. It is on
account of those particularities that the court of the place in which the
characteristic obligation of such contracts is to be performed is considered
best suited to resolving the disputes to which one or more obligations
under such contracts may give rise.
17. When no such particularities exist, it is neither necessary nor
appropriate to identify the obligation which characterizes the contract and
to centralize at the place of performance thereof jurisdiction, based on
place of performance, over disputes concerning all the obligations under
the contract. The variety and multiplicity of contracts as a whole are such
that the above criterion might in those other cases create uncertainty
as to jurisdiction, whereas it is precisely such uncertainty which the
Convention is designed to reduce.
18. On the other hand, no such uncertainty exists for most contracts
if regard is had solely to the contractual obligation whose performance
is sought in the judicial proceedings. The place in which that obligation
is to be performed usually constitutes the closest connecting factor
between the dispute and the court having jurisdiction over it, and it is
this connecting factor which explains why, in contractual matters, it is the
court of the place of performance of the obligation which has jurisdiction.'
To those paragraphs, the court added the following:
'19. Admittedly, the above rule does not afford a solution in the particular
case of a dispute concerning with a number of obligations arising under
the same contract and forming the basis of the proceedings commenced
by the plaintiff. However, in such a case the court before which the matter
is brought will, when determining whether it has jurisdiction, be guided
by the maxim accessorium sequitur principale; in other words, where
various obligations are at issue, it will be the principal obligation which
will determine its jurisdiction. That complication does not, however, arise
in the case referred to in the question raised by the Landgericht Kaisers
lautern.'
it was these principles, and notably that stated in para 19, that the
courts below applied in the present case. Both concluded that, of the two
obligations pleaded by the respondents, the principal obligation was the
obligation to nominate a vessel. That obligation was to be performed in
London, and accordingly the English courts had jurisdiction under art
5(1). Evans J said (in a passage quoted with approval by the Court of
Appeal ([1991] 2 Lloyd's Rep 48 at 51)):
'What I have to consider and decide in the present case is whether the
principal obligation is to nominate a vessel in which case the subsequent
failure to provide a vessel was a necessary consequence or whether the
position is vice versa. The point which I wish to emphasise is that the
present charterparty, being one which called for tonnage to be nominated,
does not identify the vessel and it is fundamentally different to one with a
named vessel. If there had been breach of the notices provision followed
by a failure to tender the vessel, I can well see that the true analysis
would be that the substantial breach would be the failure to provide a
vessel. The present case is not of that sort; the process could not begin
until the vessel was nominated. Nomination was necessary to identify
the vessel. It may or may not have been necessary for the charterers
to register it with the load port authorities. Be that as it may, it was
an essential preliminary to identify and nominate. It seems to me the
failure to nominate does constitute the principal or substantial failure.
In the present case, the principal obligation -- the obligation in question
for the purposes of art 5(1) -- was the failure to nominate. Therefore,
the plaintiffs establish jurisdiction. It follows, because it is implicit in
the European Court decision, that the jurisdiction includes the other
obligations which on this reasoning are the accessory obligations.'
I entirely agree that a charter which calls for tonnage to be nominated --
a tbn charter -- is for present purposes quite different from a charter of a
named vessel. Nomination of a vessel under such a contract is not a mere
naming of a vessel; it is rather the identification of the subject matter of
the contract, with the effect that the name of the vessel, once nominated,
becomes written into the contract. Furthermore, as Mr Veeder QC for the
respondents pointed out, nomination of the vessel triggers certain other
obligations under the contract, notably in the present case obligations on
the respondents to keep the appellants and their agents fully informed of
the position of the vessel so nominated, and to give advance notice of her
arrival on each of the five days preceding her arrival at the loading port.
Of course, it is true that a voyage charterparty is a contract of services
under which the owners make available the services of their vessel and
her crew for the carriage of the relevant cargo from the loading port
to the discharging port; and it is also true that, under a tbn charter,
the owners have to cause the vessel, once nominated, to proceed to
the loading port in accordance with the terms of the charter. But the
question in the present case is whether, on the principles stated by the
European Court in Shenevai v Kreischer Case 266/85 [1987] ECR 239, the
nomination of the vessel or the causing of the vessel (once nominated) to
proceed to the loading port is to be regarded as the principal obligation.
For the reasons given by Evans J, I have no doubt that it is the former.
I would add that it is plain that the failure to nominate was regarded
by the respondents as the principal ground of complaint, the failure to
provide a vessel being added, it appears, because of some point which
might be taken by the appellants (which I understand to have been a
point of waiver) with regard to the allegation of failure to nominate.
Furthermore under such a charter, I do not see how, until there has been
a nomination, there can be any duty to cause any particular vessel to
proceed to the loading port. However, like the Court of Appeal, I do not
reach this conclusion on the ground that the performance of the obligation
to nominate precedes in point of time the performance of the obligation to
provide the vessel; I do so because the obligation to nominate is, for the
reasons I have given, the more fundamental obligation.
For the appellants, it was submitted that the proper course for your
Lordships' House was to identify the principal obligation, and that for
that purpose your Lordships should identify the real complaint, and
not a complaint contrived for the purpose of founding jurisdiction. In
this connection, Mr Forwood stressed that the exceptional possibility
given to a party under art 5(1) to sue in a court other than the court
of the defendant's domicile was based on the presumption that there
would be a particularly close relationship between the dispute and the
court which may be the most convenient to take cognisance of the
matter. On that basis, it was suggested, the principal obligation should
be identififed as the obligation to provide a vessel at the loading port.
However, for the reasons I have already given, I am unable to accept
this submission. In my opinion, the real ground of complaint by the
respondents was inded the failure to nominate. In no sense was this an
allegation contrived for the purpose of founding jurisdiction. Furthermore,
the conclusion in the present case that the failure to nominate is the
principal obligation leads to the desirable conclusion that the dispute
will indeed be litigated in a forum which is clearly the most appropriate
for the resolution of the dispute. For that will depend on the application
of English law (as the putative proper law of the contract) to a series
of communications which passed between offices in London, in the
English language, in the form which such communications usually take
when a fixture is negotiated in London, in order to ascertain whether a
concluded tbn charter came into existence which was thereafter broken
by the appellants' failure to nominate a vessel. In truth, the appellants'
argument seemed to me to be straying back towards the test adopted by
the European Court in Ivenel v Schwab Case 133/81 [1982] ECR 1891 in
relation to contracts of employment, which was subsequently rejected by
the court as inapplicable to other contracts. For the appellants were, I felt,
in reality seeking to persuade your Lordships to look for the obligations
which characterised the contract as a contract for the carriage of goods
by sea, rather than for the principal obligation in question and the place
where that obligation was to be performed.
For these reasons, I would dismiss the appeal with costs.
JUDGMENTBY-4: LORD JAUNCEY OF TULLICHETTLE.
JUDGMENT-4:
LORD JAUNCEY OF TULLICHETTLE. My Lords, I have had the opportunity
of considering in draft the speech to be delivered by my noble and learned
friend Lord Goff of Chieveley. I agree with it, and for the reasons he gives
I, too, would dismiss this appeal.
JUDGMENTBY-5: LORD LOWRY.
JUDGMENT-5:
LORD LOWRY. My Lords, I have had the advantage of reading in draft the
speech of my noble and learned friend Lord Goff of Chieveley. I agree with
it and, for the reasons which he gives, I, too, would dismiss the appeal.
DISPOSITION:
Appeal dismissed.