JUDGMENT of Mr. Justice Fennelly delivered the 12th day of May, 2005.
This is an appeal from a judgment of the High Court (O’Higgins J) refusing
the motion of the Appellant for an order that the court decline jurisdiction,
pursuant to a number of provisions of the Brussels Regulation of 2001.
Council Regulation EC No. 44/2001 of 22nd December 2000 on
jurisdiction and the recognition and enforcement of judgments in civil
and commercial matters will be referred to as “the Brussels regulation.” It
replaced the Convention on Jurisdiction and Enforcement of Judgments in
Civil and Commercial Matters signed at Brussels on 27th September 1968
(hereinafter “the Brussels Convention”).
The Plaintiff Company (hereinafter referred to as “the Appellant”) is
an Irish company which manufactures pharmaceutical products. The
Defendant company (hereinafter “the Respondent”) is a Dutch company
registered at Haarlem in the Netherlands. The Respondent has, for many
years, supplied the Appellant with raw materials for its manufacturing
business.
Towards the end of 1998, the Respondent placed a purchase order with
the Appellant for delivery during 1999 of a total quantity of bulk molten
white soft paraffin. The order consisted of a facsimile and a differently
dated “purchase order.” The latter indicated a delivery date of “not later
than 31/12/99.” One of these documents had the Respondent’s Standard
Printed Terms and Conditions attached, but nothing turns on this. On 24th
December 1998, the Appellant replied with a form confirming acceptance
of the order and stating “Delivery: to be stated through our shipping
department.” The form concluded:
“We thank you for your order which we have accepted as follows: subject
to our general terms and conditions of sale and delivery as stated on the
back hereof.”
The Court was informed that these terms were not, in fact, printed on the
back. The Respondent claims not to have been aware of the actual printed
terms.
On or about 1st March 1999, the Respondent placed an order for a
specific quantity. Delivery took place in or about the month of April 1999.
The Respondent claims that the product was found to be contaminated
with gas oil or diesel oil, when incorporated into its pharmaceutical
product and that it affected its production process causing it loss and
damage.
The parties are not agreed upon the terms of trading between them and
in particular as to whether the Appellant’s printed conditions formed
part of their trading relationship. This controversy relates to one of its
provisions concerning jurisdiction. I will discuss the matter at a later point
in this judgment.
It is agreed that the Appellant was to deliver the product to a ship in
the Netherlands, carriage and insurance paid, for transport to tankers in
Dublin Port. The parties are not agreed as to whether this means that
delivery takes place in the Netherlands or in Ireland. However, that is
probably most relevant to the claim of the Appellant in contract and, as
will be seen, the courts of the Netherlands have decided that the courts of
that country have jurisdiction.
On 25th June 1999, the Respondent wrote to the Appellant complaining
of the alleged contamination of the product and stating that it was
looking to the latter to compensate it in full for the losses arising. It is not
appropriate, on this appeal, to discuss the merits of this claim, which was
the subject of further correspondence, except to say that the Appellant,
as conveyed in letters in 1999, denied liability. It also gave notice of its
intention to rely on “W. B.V’s standard Terms and Conditions of Sale,
relevant to this case and which are know to you.” It referred especially
to a term from those conditions limiting its liability to “the net invoice
amount relating to the Claimed Product.” The Respondent, in its letter of
reply dated 7th January 2000 made no reference to the claimed reliance
on the standard contract terms.
On 14th June 2000, the Appellant commenced proceedings against the
Respondent by Writ of Summons of the District Court of Haarlem seeking,
according to a translation exhibited in these proceedings:
A declaratory judgment of no-liability;•
Alternatively, a declaratory judgment that liability is limited to the invoice
value of the goods.•
The Dutch proceedings were duly served on the Respondent on 16th
October 2000 by pre-paid post to its registered office. The Respondent
complains that these proceedings were designed to give the Appellant
a procedural advantage. The Respondent could not now issue Irish
proceedings based on breach of contract. It is not unfair to observe,
however, that the Dutch proceedings issued almost one year after the
original letter of complaint.
At the time of the institution of the Dutch proceedings, the Brussels
Regulation had not yet entered into force. Since the Respondent was
clearly domiciled in Ireland, the Appellant relied on the special jurisdiction
in contract permitted by Article 5(1) of the Brussels Convention.
On 27th February 2003, the Respondent commenced the present
proceedings by issuing a Plenary Summons claiming:
Damages for negligence including breach of duty and breach of statutory
duty;•
Damages for breaches of the Liability for Defective Products Act, 1991.•
The Respondent has quantified its claim in its Statement of Claim at
almost €3.5 million.
The Plenary Summons included an indorsement alleging jurisdiction
pursuant to the Brussels Regulation, claiming jurisdiction by virtue of
Article 5(3) thereof on the basis that “the proceedings have as their
object matters relating to the Court [sic] and the place where the harmful
event occurred is within the jurisdiction of this Honourable Court.” It was
presumably intended that the foregoing read: “relating to tort,” and not
“... Court...” It also stated that the proceedings concerning this “cause
of action are the sole proceedings and are not the subject matter of
proceedings in any other Member State of the European Union between
the parties.” I have underlined the expression “cause of action.” the
Appellant’s Dutch proceedings in contract had been in existence for more
than two years.
The Appellant entered an appearance under protest and brought its
motion contesting jurisdiction in favour of the District Court at Haarlem in
the Netherlands or, alternatively, seeking an order staying the proceedings
pending the establishment of the jurisdiction of the Dutch Court.
Before O’Higgins J in the High Court, the Appellant disputed the reliance
on Article 5(3) of the Brussels Regulation, claiming that the action could
not be founded in tort or delict. It also relied on Articles 27 and 28 which
apply respectively where there is an action in being in another Member
State in respect of the same cause of action (Article 27) or which is
a connected action (Article 28) and on Article 23, claiming that there
was an exclusive-jurisdiction clause in the supply contract. O’Higgins J
rejected the Appellant’s arguments under all headings and dismissed the
application for a stay of the proceedings.
The Appellant has appealed to this court, but has effectively dropped its
claim based on Article 27. In my view, it was right to do so. The action
pending before the Dutch Courts is based on contract. The action pending
here is based essentially on tort or delict. Insofar as the Respondent’s
claim is based on the Liability for Defective Products Act, 1991, section
2 of the Act, which gives effect in the State to Council Directive 85/374/
EEC of 25th July 1985 (on the approximation of the laws, regulations
and administrative provisions of the member states of the European
Communities concerning liability for defective products) the producer
of goods “shall be liable in damages in tort…” The Court has not been
addressed at all on the basis of the Respondent’s claim under that Act or
under the Directive. I will assume for the purposes of this judgment that
the claim can be made under the Act, though section 1 would appear, at
first sight, to relate to damage suffered by a person using goods “for his
own private use or consumption.”
It is apparent that it is sufficient for the Appellant to succeed in this
appeal, if its arguments prevail under either Article 5 or Article 23. If
the claim is not properly made under Article 5(3), the Irish courts have
no jurisdiction and the other articles are irrelevant. Alternatively, if the
contract contains a term conferring exclusive jurisdiction on the Dutch
Courts, that will prevail over any claimed special jurisdiction pursuant to
Article 5.
I will examine, firstly, the claim based on Article 5(3). The underlying
policy of the Regulation, like its predecessor, the Brussels Convention, is
that jurisdiction in civil and commercial matters should be based on the
domicile of the defendant. Article 2.1 provides:
“Subject to this Regulation, persons domiciled in a Member State shall,
whatever their nationality, be sued in the courts of that Member State.”
Article 5, under the heading, “Special jurisdiction, ” so far as is relevant to
the present appeal, provides:
A person domiciled in a Member State may, in another Member State, be
sued:
1. (a) in matters relating to a contract, in the courts for the place of
performance of the obligation in question;…………….
3. in matters relating to tort, delict or quasi-delict, in the courts for the
place where the harmful event occurred or may occur;
The Court of Justice considered the relationship between Articles 2 and 5
in its judgment in Case 168/02 Kronhofer v Maier and others, delivered
10th June 2004:
“12. It should be noted at the outset that the system of common rules of
conferment of jurisdiction laid down in Title II of the Convention is based
on the general rule, set out in the first paragraph of Article 2, that persons
domiciled in a Contracting State are to be sued in the courts of that State,
irrespective of the nationality of the parties.
13. It is only by way of derogation from that fundamental principle
attributing jurisdiction to the courts of the defendant’s domicile that
Section 2 of Title II of the Convention makes provision for certain
special jurisdictional rules, such as that laid down in Article 5(3) of the
Convention.
14. Those special jurisdictional rules must be restrictively interpreted and
cannot give rise to an interpretation going beyond the cases expressly
envisaged by the Convention (see Case 189/87 Kalfelis [1988] ECR
5565, paragraph 19, and Case C-433/01 Blijdenstein [2004] ECR I-0000,
paragraph 25).” (emphasis added).
In that passage, the Court expressly followed and largely used the
language of the Opinion of Advocate General Léger delivered on 10th
January 2004. This approach, nonetheless, is different from that adopted
by Advocate General Jacobs in his Opinion in Case 167/00 Verein für
Konsumenteninformation v Henkel, upon which the Respondent relies in
its written submissions. He rejected an argument advanced by the French
Government in that case, which appears identical with that accepted by
the Court in Kronhofer. The judgment of the Court, in Henkel also appears
to have followed the Advocate General. As it happens the judgment in
Kronhofer coincides fully with the language of Finlay CJ in Handbridge
Limited v. British Aerospace Communications Ltd. [1993] 3 I.R. 342. The
consequence is that Article 5(3) must be restrictively interpreted, if the
Kronhofer decision is to prevail. This conflict between judgments of the
Court of Justice would certainly constitute material for a reference for
preliminary ruling, if one were to become necessary in the present case.
The Respondent’s claim is made in tort or delict. It is plain, on the
other hand, that, in reality, the dispute arises from a contract and the
Respondent frankly acknowledges that this occurs because of the claimed
“procedural advantage” secured by Appellant, by instituting proceedings
in the Netherlands. In the present state of the respective proceedings, I
believe the matter must be considered on its merits as a tort claim. The
consequences of the existence of proceedings before the courts of another
Member State must be considered, if at all, by reference to Articles 27 or
28.
On its face, Article 5.3 of the Regulation lays down one rule only,
namely that jurisdiction lies with “the courts for the place where the
harmful event occurred or may occur.” However, the Court of Justice
has somewhat expanded the jurisdictional options in tort cases. Case
21/76 Bier (‘Mines de Potasse d’Alsace’) [1976] ECR 1735 concerned
a claim by a Dutch horticulturalist against a company based in France
for damage caused to its Dutch operations as a result of pollution of
the waters of the Rhine by the discharge of saline waste. The Court was
required to interpret the identical provision of the Brussels Convention.
It noted that the rule was unclear in cases where “the place which is
at the origin of the damage is situated in a state other than the one in
which the place where the damage occurred is situated, as is the case,
inter alia with atmospheric or water pollution beyond the frontiers of
a state.” (paragraph 13). The Court was of opinion that either place
could “constitute a significant connection factor from the point of view of
jurisdiction.” (paragraph 15.) It adopted a rule that, has become “settled
case law,” namely that the plaintiff should have the option to sue in the
courts of either place.
The Court later set a limit to the options available to plaintiffs. The
Appellant relies on Case C-364/1993 Marinari v Lloyds Bank plc [1995]
E.C.R. I-3719. It is stated (paragraph 14 of the judgment) that:
“Whilst it has been recognized that the term ‘place where the harmful
event occurred’ within the meaning of Article 5(3) of the Convention
may cover both place where the damage occurred and the place of the
event giving rise to it, that term cannot be construed so extensively as to
encompass any place where the adverse consequences can be felt of an
even which has already cause damage actually arising elsewhere.”
The Appellant submits that the initial damage suffered by the Respondent,
if there was any, occurred upon the delivery to the Respondent of an
allegedly defective consignment of product in the Netherlands. In the
later case of Kronhofer, cited above, the Court was asked by an Austrian
Court to rule on whether ‘the place where the harmful event occurred’
is to be so widely interpreted that, in cases of purely financial damage
affecting part of the victim’s assets invested in another Member State, it
also encompasses the place of the victim’s domicile and thus the place
where his assets are concentrated. The Austrian plaintiff claimed to have
lost money invested in Germany through the negligence and negligent
advice of the German defendants. He instituted proceedings in Austria,
claiming that he had suffered consequential financial loss in that country.
It was clear that the place where the primary damage occurred and
the place of the event giving rise to it were both in Germany. Citing
Marinari, referred to above, the Court ruled, at paragraph 18, that there
was “nothing in such a situation to justify conferring jurisdiction to the
courts of a Contracting State other than that on whose territory the event
which resulted in the damage occurred and the damage was sustained,
that is to say all of the elements which give rise to liability.” “To confer
jurisdiction in that way would” it held, “not meet any objective need as
regards evidence or the conduct of the proceedings.”
In order to apply these principles to the present case, as submitted
by the Appellant, this Court would have to decide that the Respondent
suffered initial damage upon the delivery of the goods to it in the
Netherlands. Certainly, the origin of the alleged damage occurred,
upon the manufacture of the goods in that jurisdiction. However, the
Respondent’s claim is in negligence. It is not in contract. Any claim
that the Respondent might bring based on damage occurring in the
Netherlands would relate to the alleged defective quality of the goods
themselves, not to any independent damage caused by their defective
quality either to person or to property. The ordinary understanding of the
tort of negligence is that it requires proof of physical injury to person or
to property. Where consequential economic loss is recoverable, this is
normally where physical damage has first been established. The present
case does not come within one of the exceptional categories such as
negligent misstatement. Any claim based on the defective quality of the
goods delivered in the Netherlands would be for pure economic loss.
This understanding of the law is reflected in the Act of 1991. Sec 1(1)
defines “damage” (other than for death or personal injury) as “loss of,
damage to, or destruction of property other than the defective product
itself….” (emphasis added).
I am not convinced that the Appellant can deprive the Respondent of its
option to sue in Ireland by fixing it with a damages claim for delivery of
a defective product in the Netherlands. The claim before the courts of
this jurisdiction relates to alleged damage to the finished product and
the manufacturing process arising from the negligent manufacture of the
product in the Netherlands. While the case law of the Court of Justice
is very helpful and seems to point in favour of the Respondent, I am
not sure that the matter is sufficiently clear to absolve this Court of its
obligation to refer the matter by way of preliminary ruling to that Court
unless the Court, for other reasons, determines that it is unnecessary to
do so.
Accordingly, I will proceed to consider the question of the exclusive-
jurisdiction clause and Article 23 of the Brussels Regulation.
That Article provides:
“1. If the parties, one or more of whom is domiciled in a Member State,
have agreed that a court or the courts of a Member State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connection with a particular legal relationship, that court or those courts
shall have jurisdiction. Such jurisdiction shall be exclusive unless the
parties have agreed otherwise. Such an agreement conferring jurisdiction
shall be either:
(a) in writing or evidenced in writing; or
(b) in a form which accords with practices which the parties have
established between themselves; or
(c) in international trade or commerce, in a form which accords with a
usage of which the parties are or ought to have been aware and which
in such trade or commerce is widely known to, and regularly observed
by, parties to contracts of the type involved in the particular trade or
commerce concerned.
As already stated, the Appellant’s acceptance of the Respondent’s order
contained reference to the “general terms and conditions of sale and
delivery as stated on the back hereof.” Counsel for the Respondent stated,
at the hearing of the appeal, that the Respondent had not seen the
conditions before their production in Court. They were, nonetheless,
before the High Court. O’Higgins J dealt specifically with the contention
that these terms did not form part of the contract between the parties.
He decided that they did. He referred to the High Court judgment of
McGuinness J in Clare Taverns trading as Durty Nelly's v. Charles A. Gill
trading as Universal Business Systems and others [2000] 1 I.R. 286. He
held that the Respondent “knew or should have known [of these terms]
and are attached with the knowledge of the terms of the contract.”
I fully agree with this conclusion of O’Higgins J. It is well established
that it is for the national court to determine the terms of the contract. I
so stated in my judgment, delivered in this court, with which the other
members of the court agreed, in Bio-Medical Research Ltd. V Delatex S.A.
[2000] 4 I.R. 307. I relied on the decision of the European Court in Case
C-420/97 Leathertex Divisiione Sintetici SpA v. Bodetex BVBA 1 E.C.R.
6747.
The following is the dictum of McGuinness J upon which O’Higgins relied:
“In the submissions made before this Court, it was not seriously
suggested that the practice of printing general conditions of sale on
the reverse side of invoices and similar documents, with a reference
on the face of the document to the said conditions, was not a common
commercial practice in the type of international trade with which we are
concerned here. Indeed, from the point of view of practical experience
every ordinary consumer, and still more anyone engaged in trade or
commerce, must be familiar with this type of document.
In the instant case the defendant had regularly traded with the first third
party both from 1987 to 1989 and subsequently from 1995 onwards. It
is established by the affidavit of Mr. Dodd and the exhibits thereto that
the defendant had repeatedly received invoices, which included clause
19, the jurisdictional clause. At no stage had the defendant even raised a
query in regard to this clause. Still less had he refused to be bound by it.
It seems to me, therefore, that the contract entered into by the defendant
and the first third party, whether it be a written contract or a contract
partly in writing and partly oral, incorporated the terms and conditions
set out repeatedly on the invoices sent out by the first third party in the
course of trade. In these circumstances the Court must hold that there
was consensus between the parties as to the jurisdictional clause and that
it came within the terms of art. 17 of the Convention.” [Article 17 of the
Convention corresponds with Article 23 of the Regulation.]
It is not in dispute that the Respondent was on notice of the standard
terms and conditions upon which the Appellant traded. The Appellant’s
Order Confirmation referring to them was exhibited in the Respondent’s
own affidavit. Indeed the Respondent purported to rely on standard
conditions of its own. I am quite satisfied that O’Higgins J was correct
to conclude that the Respondent was fixed with the general terms and
conditions of sale. It was put expressly on notice of their existence
and thus put on inquiry as to their terms. The parties were engaged
in international trade. It is a very general practice of suppliers in
international trade to impose conditions relating to applicable law and
jurisdiction.
It remains to decide whether the clause in its terms comes within the
terms of Article 23, which applies to agreements “that a court or the
courts of a Member State are to have jurisdiction to settle any disputes
which have arisen or which may arise in connection with a particular legal
relationship…….”
Clause 36 of the conditions reads:
“Any disputes arising out of or on account of a contract including those
which are only considered as such by one of the parties, shall be
adjudicated, with exclusion of any other courts, by the court having
jurisdiction at Haarlem.”
The Respondent submits that this clause does not prevent it maintaining
its action in this jurisdiction, which is based on tort. It is beyond dispute
and is not in fact disputed that the clause confers exclusive jurisdiction
on the Haarlem Court insofar as any claim is based on contract. I
confess to some sympathy with the Respondent’s assertion that it was
an extraordinary move for the Appellant to sue for negative relief in the
Dutch courts. Clearly, the Appellant succeeded in pre-empting any move
by the Respondent in the Irish Courts. Against that, it is fair to make
a number of observations. Firstly, the primary rule confers jurisdiction
on the courts of the domicile of the defendant, which, for such an
action would have been the Netherlands. Secondly, Article 5(1) confers
jurisdiction in contract cases on the courts of the “place of performance
of the obligation…” While it is unnecessary to decide the matter, there
is one plausible view that the obligation of the Appellant was to deliver
the goods to the Respondent in the Netherlands. Thirdly, it is by no
means unusual in commercial matters for potential defendants to initiate
proceedings claiming negative relief in the courts of their chosen forum.
Advocate General Tesauro, in his Opinion in Case 406/92 “The Tatry” [ ]
E.C.R. I-5439, at paragraph 23, described such proceedings as “generally
allowed under the various national procedural laws and entirely legitimate
in every respect…”
I now turn to consider the terms and scope of application of clause 36.
I dealt with a not dissimilar problem in my judgment in Bio-Medical
Research Ltd. V Delatex S.A., already cited. I pointed out there that
the Court of Justice requires national courts to scrutinize the effects of
exclusive jurisdiction clauses. At page 319 of the report, I cited a passage
from Case 24/76 Ditta Estasis Salotti di Colzani Aimo e Giamano Colzani
v RUWA Polstereimaschinen GmbH [1976] 3 E.C.R. 1831, dealing with
Article 17 of the Brussels Convention at para. 7:-
"The way in which that provision is to be applied must be interpreted in
the light of the effect of the conferment of jurisdiction by consent, which
is to exclude both the jurisdiction determined by the general principle laid
down in Article 2 and the special jurisdictions provided for in Articles 5
and 6 of the Convention.
In view of the consequences that such an option may have on the
position of the parties to the action, the requirements set out in Article 17
governing the validity of clauses conferring jurisdiction must be strictly
construed.
By making such validity subject to the existence of an 'agreement'
between the parties, Article 17 imposes on the court before which
the matter is brought the duty of examining, first, whether the clause
conferring jurisdiction upon it was in fact the subject of a consensus
between the parties, which must be clearly and precisely demonstrated.
The purpose of the formal requirements imposed by Article 17 is to
ensure that the consensus between the parties is in fact established."
On page 317 of my judgment in Bio-Medical Research Ltd. V Delatex
S.A, I referred to the judgment of McGuinness J already cited and to
one English decision dealing with the interpretation of such a clause.
The clause in the Clare Taverns case read: “Any contract of which these
conditions form part shall be governed by the laws of England and
the buyer hereby submits to the jurisdiction of the English Courts.”
McGuinness J approved the approach adopted by Steyn LJ in the case
next cited. She went on at page 299:
“It seems to me that this is the correct approach and is, indeed, in
accordance with business common sense. The defendant's claims of
negligence, of misrepresentation, and indemnity are ‘closely knitted’ to
the contractual claim, and indeed it appears that very much the same
evidence would be used in support of all the claims. If, as I have held,
the contractual claim falls to be decided by the English courts under
clause 19, it would be extremely difficult and costly to pursue separate
proceedings in tort before the Irish courts. In my view all these inter-
related claims must be tried together.”
It seems to me that the approach of Steyn LJ is particularly helpful
and, like McGuinness J, I would adopt and approve it. The case was
Continental Bank N.A. v. Aeokos Cia Naviera S.A. [1994] 1 W.L.R. 588.
There was a loan agreement between an American bank and a number of
Greek shipping companies. It contained a clause, which, the court held,
conferred exclusive jurisdiction on the English courts. It was argued on
behalf of the borrowers that the proceedings, which they had commenced
in the Greek courts, fell outside the scope of the agreement. The Greek
proceedings were based on a provision of the Greek Civil Code, which
provided for damages for violations of “the commands of morality.”
Steyn L.J., having held the clause contemplated the submission of
disputes to the English courts went on to say at p. 592:-
"But what disputes does it cover? The answer is not to be found in the
niceties of the language of cl. 21.02. It is to be found in a common sense
view of the purpose of the clause. We are emboldened to adopt this
approach by the observation of Lord Diplock in Antaios Cia Naviera SA v.
Salen Rederierena AB, The Antaios [1984] 3 All ER 229 at 233, [1985]
A.C. 191 at 201, that – 'if detailed semantic and syntactical analysis of
words in a commercial contract is going to lead to a conclusion that flouts
business common sense, it must be made to yield to business common
sense...’
The only sensible construction of clause 21.02 is that it is a submission
of disputes in connection with the loan facility to the jurisdiction of the
English courts.
Prima facie, therefore, clause 21.02 covers the Greek proceedings.
But Miss Dohmann submits that the clause cannot be construed as
extending to a claim in tort. It seems to us to be useful on this point to
consider the approach adopted nowadays in the closely analogous field
of arbitration clauses. In Empresa Exportadora de Azucar v. Industria
Azucarera Nacional S.A., The Playa Larga [1983] 2 Lloyds Rep. 171 the
arbitration clause covered 'any dispute arising out of this contract'. The
question was whether it covered only contractual claims or also a claim in
conversion. In giving the judgment of the court Ackner L.J. concluded, at
183,
'... the contractual and tortious claims were so closely knitted together
on the facts, that the agreement to arbitrate on one can properly be
construed as covering the other.'
Moreover, if Miss Dohmann is right, it would mean that a claim for
damages for a negligent misrepresentation inducing the contract (a tort)
would be outside cl 21.02 but a claim seeking rescission of the contract on
the ground of the same misrepresentation (a contractual claim) would be
covered by it. If the appellant's contention is accepted, it follows that the
two claims might have to be tried in different jurisdictions. That would be
a forensic nightmare."
The reference in that passage to the interpretation of arbitration clauses
echoes the remarks of Geoghegan J in Gulliver v Brady and others
(Supreme Court unreported 19th December 2003). In that case, the
relevant clause was: “arising out of or in relation to this agreement.” The
court gave it a broad, purposeful and practical interpretation.
It is my view that the Respondent’s claim in tort clearly falls within
the scope of clause 36 of the terms and conditions. It is impossible to
consider that claim independently of the contractual relationship between
the parties. The clause applies to disputes “arising out of or on account
of a contract.” Paragraph 3 of the Statement of Claim commences the
narrative by pleading the “purchase order” placed by the Respondent with
the Appellant in December 1998. The affidavit of Mr Peter Young speaks of
the parties having had “a trading relationship for many years.” It says that
they “traded under standard terms and conditions.” All of this relates to a
contractual relationship. One then poses the question: what is the dispute
about? It is about the alleged delivery by the Appellant of defective
product. How did that product come to be delivered? Answer: it arose out
of a contract. If we are to understand words in their commonsense and
ordinary meaning rather than some meaning contrived for the purpose of
avoiding the obvious, the dispute arises out of a contract.
Accepting, as I must, the requirement that the application of Article 23 of
the Brussels Regulation should be strictly construed, I am, nonetheless,
satisfied that clause 36 formed part of the trading relationship between
the parties. I am also satisfied that it is a clause conferring jurisdiction on
the Courts at Haarlem, where jurisdiction has already been established
and accepted. In the terms of Article 23, that is exclusive jurisdiction.
Accordingly, it is unnecessary to consider the application of Article 28. I
would say, however, that, for reasons largely analogous to those which
have influenced me on the interpretation of clause 36, it seems perfectly
clear to me and beyond any doubt that the Dutch and the Irish actions
are related. Article 27 deals with cases where the two actions concern
the same cause of action. The Appellant has abandoned reliance on that
provision. Nonetheless, it is relevant to bear it in mind when reading
Article 28. What would be the point of Article 28 if, as argued by the
Respondent, it cannot apply where one action is based on contract and
the other on tort? Of course, Article 28 merely confers discretion to
stay the proceedings. If the Court had to find that the Article applied it
would have to consider whether to grant such a stay. If I had to consider
that matter, it would have to bear in mind that the Dutch Courts have
established indisputable jurisdiction for the contract claim. Furthermore,
the Court has been informed by the Appellant that the Respondent will be
allowed to bring a counterclaim for damages for negligence in that action.
However, it is unnecessary to consider granting a stay, when the effect of
this judgment is that the Dutch courts have exclusive jurisdiction.
I would conclude by stating that the exclusive jurisdiction clause in clause
36 of the general terms and conditions of sale and delivery comes within
Article 23 of the Brussels Regulation. Consequently, the jurisdiction of the
District Court at Haarlem is exclusive and the Court should stay the Irish
proceedings.
In these circumstances, it is unnecessary to reach any final conclusion
on the interpretation of Article 5(3) of the Regulation and, consequently,
there is no obligation on the Court to refer any question for preliminary
ruling pursuant to Article 234 of the Treaty Establishing the European
Community.
I would allow the appeal and make the order I have proposed.