The Judgment of His Honour Judge Peter Bowsher is as follows:-
THE APPLICATION
1. This action is brought by a Claim Form issued out of the Registry of the
Technology and Construction Court on 22 September, 1999.
2. The Claimant is an English company which manufactures gypsum
plasterboard.
3. The Defendant is a German company, domiciled in Germany which
manufactures and supplies liner paper for gypsum plasterboard.
4. By this action the Claimant claims damages "for breach of a written
or oral contract and/or breach of duty of care arising out of the supply of
lining paper by the Defendant to the Claimant on various contracts during
the period 1995 and 1996.
5. The Claim Form was served on the Defendant in Germany.
6. On 20 December, 1999, the Defendant’s English solicitors filed an
Acknowledgement of Service giving notice of intention to contest the
jurisdiction of the Court.
7. The Defendants now apply for an order declaring that the Court has no
jurisdiction and setting aside the Claim Form and its service.
THE ISSUES
8. The Claim Form was served out of this Jurisdiction in reliance on Rule
11(2):
"(2) A claim form may be served out of the jurisdiction on a defendant
without the permission of the court provided that each claim against that
defendant is either -
(a) a claim which by virtue of the Civil Jurisdiction and Judgments Act
1982 the court has power to hear and determine, made in proceedings to
which the following conditions apply -
(i) no proceedings between the parties concerning the same cause of
action are pending in the courts of any other part of the United Kingdom
or of any other Convention territory;
and
(ii) either the defendant is domiciled in any part of the United Kingdom or
in any other Convention territory, or the proceedings begun by the claim
form are proceedings to which Article 16 of Schedule 1, 3C or 4 refers, or
the defendant is a party to an agreement conferring jurisdiction to which
Article 17 of Schedule 1, 3C or 4 to that Act applies;"
9. The issue before me depends on the Brussels Convention, 1968, which
was applied to English Law by the Civil Jurisdiction and Judgments Act,
1982.
10. The question is whether under the terms of the Brussels Convention
1968 ("the Convention") the English courts have jurisdiction over this
dispute.
11. On this application the Claimant does not dispute that the Defendant
is domiciled in Germany for the purposes of Article 2 of the Convention.
12. Accordingly on the facts of this case, unless there is an agreement
for exclusive jurisdiction of the English courts under Article 17 of the
Convention the Defendant must be sued in Germany by virtue of Article 2.
13. Article 2 of the Convention provides that:
"Subject to the provisions of this Convention, persons domiciled in a
Contracting State shall, whatever their nationality, be sued in the Courts
of that State."
14. The Convention provides for certain exceptions to that over-riding
principle. Counsel for the Claimant makes it plain that he does not rely on
the exceptions in Articles 5 and 6. The Claimant does rely on Article 17.
15. Article 17 of the Convention, as amended, is in the following terms:-
"If the parties, one or more of whom is domiciled in a Contracting State,
have agreed that a court or the courts of a Contracting 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 exclusive jurisdiction. 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."
16. The Claimant’s case is that the parties contracted on the basis of the
Claimant’s terms and conditions printed on the back of its EC Purchase
Order, containing in clause 18 the following:
"These terms and conditions and any Contract incorporating the same
shall be governed by the laws of England and both parties submit to the
exclusive jurisdiction of the court of England."
17. The Claimant contends that that term was a part of the agreements
between the parties and that it satisfies conditions (a) and (b) of Article
17. The Claimant does not rely on condition (c).
18. The Defendant:
(a) denies that Clause 18 of the EC Purchase Order formed part of any
agreement between the parties; and
(b) contends that if it was part of any contract it does not satisfy any of
the conditions (a), (b) or (c) of Article 17.
THE FACTS
19. In early 1995, the Defendant approached the Claimant requesting
the opportunity to supply liner paper for the Claimant’s plasterboard.
Meetings and discussions between the parties followed. It is not
suggested that at those meetings there was any mention of any standard
conditions of trading by either party. Some letters concerning those
meetings have been put in evidence. Any mentions of terms were limited
to price, quantity and quality.
20. In its business, the Claimant orders goods on a printed form known
as an EC Purchase Order (ECPO). On the back of that form, under the
heading "Terms of Purchase", printed in English in minute type are a
number of terms including the following:-
"1. Application of Terms
This document sets out the terms and conditions on which the addressee
("the Supplier") named in the Purchase Order overleaf ("the Order")
agrees to supply to L. P. Ltd ("the Company") the goods described in
the Order ("the Goods") to the exclusion of any other terms, warranties,
representations, written or oral, express or implied, binding on the
Company whether made before or after acceptance. An Order constitutes
an offer by the Company to purchase the Goods upon the terms herein.
Acceptance shall be accomplished by the Supplier’s return of a signed
copy or acknowledgement of the Order or by the Supplier commencing
delivery of the Goods in either event before expiry of the offer.
18. Law
These terms and conditions and any Contract incorporating the same
shall be governed by the laws of England and both parties submit to
the exclusive jurisdiction of the Courts of England. Nothing herein shall
prejudice any rights which the Company will otherwise be entitled under
the general law and in particular the Sale of Goods Act 1979 provided
always that the Schedules to the Uniform Laws on International Sales Act
1967 are hereby excluded."
21. Those printed terms also included other terms as to quality that are
relied on by the Claimant in the Particulars of Claim as terms breached by
alleged deficiencies in the quality of the paper supplied.
22. There was nothing on the face of the ECPO drawing attention to the
fact that there were conditions printed on the back.
23. The evidence before me also refers to another printed form used by
the Claimant, a European Consignment Note. There was nothing on the
face of that document stating that there were conditions on the back.
There were conditions on the back of the Consignment Note. Included in
those conditions was a term in English as follows:-
"The contract shall be governed by English Law. Nothing herein shall
prejudice a similar right to which the Company will otherwise be entitled
under the general law and in particular the Sale of Goods Act, 1893."
That term says nothing about the jurisdiction of any Court, and in
argument before me, Counsel for the Claimant does not rely on it.
Counsel for the Defendant, however, draws attention to the difference
between the two conditions as to choice of law and jurisdiction and to
other differences between the terms on the back of each of the Claimant’s
forms.
24. In a witness statement dated 28 March, 2000 Mr. Nigel S., the
Claimant’s Purchasing Manager wrote that he was instructed by Mr. Kevin
D., the Claimant’s Production Manager, to send a Purchase Order for trial
material to the Defendant. Counsel for the Defendant stresses that Mr.
S. was not instructed to send the Claimant’s Terms and Conditions to the
Defendant, only to send a Purchase Order.
25. In his witness statement, Mr. S. further stated that:
(a) He sent by post on 28 March 1995 to Mr N. of the Defendant, a
completed EC Purchase Order for a purchase of raw material, and he
produced a copy of his covering letter. With the same letter he sent a
blank European Consignment Note.
It had been explained to the Defendant that the Consignment Note
was to be filled in and given to the driver collecting the goods from the
Defendant’s factory in Germany.
(b) Thereafter orders were sent by fax. Only the face of the ECPO was
faxed, but the whole top copy was sent by post thereafter marked "Order
Confirmation".
(c) On receipt of the faxed copy, it was the Defendant’s practice to post to
the Claimant an Order Confirmation on the Defendant’s printed form.
26. The letter of 28 March, 1995, was in the following terms:-
"Dear Sir,
Attached is the Purchase Order to cover the material required for delivery
as per your meeting with Harald L. and Kevin D..
Could you please arrange transport for us from Peters to Lafarge. We can
accept delivery any time between 8 am and 2 pm, Monday to Friday.
It is very important that the enclosed Lafarge Plasterboard European
Consignment Note Document is fully completed and that it is sent with
the goods, failure to do so will result in us not being able to allow goods
on site. This is due to the regulations that have been enforce[d] on us by
British Customs.
Please could you identify all material as ‘Trail Paper’."
27. That letter of 28 March, 1995, was received by the Defendant on 6
April 1995. In a witness statement dated 30 March, 2000, Claudia E.,
responsible for the Defendant’s sales of liner paper, said that no Purchase
Order or Consignment Note was received with that letter. The letter was
treated as an order and processed without a Purchase Order Number (by
contrast with the paperwork on other transactions which referred to the
Claimant’s Purchase Order Number).
28. In her witness statement, Claudia E. also referred to a previous order
made by the Claimant by fax on 27 March, 1995, a free of charge sample
delivery. The Claimant’s solicitor, Mr. Bultman produced a copy of that fax,
which was not on the Claimant’s printed form and made no reference to
any contractual terms.
29. Claudia E. in her statement added:
(a) All subsequent orders were made by fax.
(b) No original Purchase Orders were ever received and there is none on
the Defendant’s files.
(c) No purchase order was ever received by mail.
(d) The Claimant’s terms and conditions are unknown to the Defendant’s
sales section to this day.
30. The Defendant’s solicitor Mr. Bultman said that he was informed
by the Defendant’s General Manager, Mr Br., that the Defendant never
received a copy of the Claimant’s terms and conditions and first read
them in the Claimant’s Particulars of Claim.
31. It is common ground, that after the two initial orders, the Claimant
placed orders by sending by fax an order written on the front of the
Claimant’s ECPO but without the printed terms on the back. The
Defendant had a stack of the Claimant’s Consignment Notes. On each
delivery, the Defendant filled in a Consignment Note and gave it to the
Claimant’s driver, the delivery being ex works.
32. On receipt of the Claimant’s order by fax, the Defendant by post
sent an Order Confirmation on a printed form. On the back of that form
were printed, in German, also in minute type, standard conditions. In
translation clauses 1 and 13 of those conditions were as follows:-
"1: For all business transactions between us and our clients the following
terms shall apply. The content of the contract shall be determined
exclusively by our written confirmation of order and our Terms and
Conditions of Contract. Verbal agreements and sub-agreements shall
only be valid if they have been incorporated into our confirmation of
order. Contracts between us and our clients shall come only into existence
through our confirmation of orders. Client’s terms and conditions shall not
apply even if we have not repudiated them;
13. For all our business and rights and duties flowing from this contract as
well as delivery and payment the place of performance is Gelsenkirchen.
The Court of Krefeld shall have exclusive jurisdiction in all these cases on
the condition that nevertheless we are entitled to invoke any other Court
which may have legal jurisdiction; this rule as to jurisdiction applies also
to claims on cheques. In our relationship with our Client German law is to
be applied".
33. Mr. S. says that after sending an order by fax, he or a colleague would
always send by post the top copy of the order form marked in manuscript
"Order Confirmation", so that within days of the fax, the Defendant would
receive the hard top copy order form with the printed conditions on the
back. Claudia E. says the Defendant never received an order by post and
never received the Claimant’s terms.
34. There were 48 orders placed by the Claimant.
THE AGREEMENTS PLEADED
35. By the Particulars of Claim, the Claimant alleges:-
"Each of the Individual Orders was accepted by Peters on the basis of
Lafarge’s written terms and conditions when, in accordance with the term
pleaded in paragraph 5.1.1 above [condition 1 of the Claimant’s Terms
of Purchase] Peters commenced delivery of each one of the Individual
Orders ("the Individual Supply Contracts")."
STANDARD OF PROOF
36. If this action proceeds in this court, one of the issues to be
decided would be whether the parties contracted on the terms of the
Claimant’s printed conditions. Those conditions go to liability as well as to
jurisdiction. At the trial, that issue would be determined on the balance
of probabilities. It is common ground that some lower standard of proof
is required on the present application but unfortunately there is room for
argument as to what that standard should be.
37. The Defendant has a basic right under Article 2 of the Convention. The
burden is on the Claimant to show that the exception provided by Article
17 applies. The standard to be applied in the discharge of that burden has
been argued by Counsel at some length.
38. Section 3 of the Civil Jurisdiction and Judgments Act, 1982 provides:
"(1) Any question as to the meaning or effect of any provision of the
Brussels Convention shall, if not referred to the European Court in
accordance with the 1971 Protocol, be determined in accordance with the
principles laid down by and any relevant decision of the European Court.
(2) Judicial notice shall be taken of any decision of, or expression of
opinion by, the European Court on any such question.
(3) Without prejudice to the generality of subsection (1), the following
reports (which are reproduced in the Official Journal of the Communities),
namely-
(a) the reports by Mr. P. Jenard on the 1968 Convention and the 1971
Protocol; and
(b) the report by Professor Peter Schlosser on the Accession Convention;
and
(c) the report by Professor Demetrios I. Evrigenis and Professor K. D.
Kerameus on the 1982 Accession Convention; and
(d) the report by Mr. Martino de Almeida Cruz, Mr. Manuel Desantes Real
and Mr. P. Jenard on the 1989 Accession Convention,
may be considered in ascertaining the meaning or effect of any provision
of the Conventions and shall be given such weight as is appropriate in the
circumstances."
The Report by Mr. Jenard describes in some detail the amendment of
Article 17 of the Convention by later Treaties to give that article greater
flexibility and to give expression to certain decisions of the European
Court.
39. In considering the decisions of both the European Court and of
the English Courts, it is important to bear in mind that Article 17 of
the Brussels Convention is mandatory in its terms. Article 5 begins, "A
person... may... be sued", and Article 6 begins, "A person... may also...
be sued". By contrast, Article 17 provides that where parties have made
an agreement that a court or the courts of a Contracting State are to
have jurisdiction, then, provided the agreement satisfies certain formal
requirements, that court or courts "shall have exclusive jurisdiction".
40. The mandatory nature of Article 17 should also be borne in mind
when considering English authorities on the application of Order 11 of
the Rules of the Supreme Court. When considering applications under
Order 11, the court exercises a general discretion as to forum conveniens
as well as considering whether requirements of the Rule are satisfied.
As Lord Goff made clear in Seaconsar Far East Limited v. Bank Markazi
[1994] AC 438 different standards of proof are required in respect of
different requirements of the order. To prove jurisdiction the plaintiff must
show "a good arguable case", but to satisfy the requirement of Rule 4
of Order 11 that the plaintiff has a good cause of action he need only
show that there is a serious issue to be tried. Mr. Nicholas Stewart Q.C.
for the Claimant in this case submitted that it was not necessary for the
Claimant to show that the Claimant’s arguable case was much better than
the Defendant’s arguable case. In this connection, it is of interest that
Lord Goff when citing the decision of the House of Lords in Vitkovice Horni
v. Korner [1951] AC 869 (a decision on the standard of proof required
to establish whether jurisdiction had been sufficiently established under
Order 11 rule 1(1)) compared the expression " a good arguable case" with
other expressions used by their Lordships, "a strong case for argument"
and "a strong argument". Lord Goff commented, "There is no reason
to suppose that there is any material difference between these various
expressions, from which is derived the ‘good arguable case’ test which
has been applied in innumerable cases since".
41. In Canada Trust Co. v. Stolzenberg [1998] 1 WLR 547, Waller L.J.
considered earlier authorities in the light of the Seaconsar Case. Canada
Trust was a case on the Lugano Convention and R.S.C. Order 11 rule 1(1)
(c), but Waller L. J. took the opportunity to reconsider an earlier decision
of his at first instance regarding Article 17 of the Brussels Convention.
42. At page 555, Waller L. J. interpreted the "good arguable case" term in
a manner strongly relied on by Mr. Timothy Otty for the Defendant:
"Lord Goff was not concerned to explore in the Seaconsar case [1994]
1 W.L.R. 438 the application of the standard "good arguable case" to
all various factors that can arise. It is I believe important to recognise,
as the language of their Lordships in Korner’s case [1951] A.C. 869
demonstrated, that what the court is endeavouring to do is to find a
concept not capable of very precise definition which reflects that the
plaintiff must properly satisfy the court that it is right for the court to take
jurisdiction. That may involve in some cases considering matters which
go both to jurisdiction and to the very matter to be argued at the trial,
e.g. the existence of a contract, but in other cases a matter which goes
purely to jurisdiction, e.g. the domicile of a defendant. The concept also
reflects that the question before the court is one, which should be decided
on affidavits from both sides and without full discovery and/or cross-
examination, and in relation to which therefore to apply the language of
the civil burden of proof applicable to issues after full trial is inapposite.
Although there is power under Ord. 12, r. 8(5) to order a preliminary
issue on jurisdiction, as Staughton L.J. pointed out in the Attock Cement
Co. case [1989] 1 W.L.R. 1147, 1156D, it is seldom that the power is used
because trials on jurisdiction issues are to be strongly discouraged. It is
also important to remember that the phrase which reflects the concept
"good arguable case" as the other phrases in Korner’s case "a strong
argument" and "a case for strong argument" were originally employed
in relation to points which related to jurisdiction but which might also be
argued about at the trial. The court in such cases must be concerned not
even to appear to express some concluded view as to the merits, e.g.
as to whether the contract existed or not. It is also right to remember
that the "good arguable case" test, although obviously applicable to the
ex parte stage, becomes of most significance at the inter partes stage
where two arguments are being weighed in the interlocutory context
which, as I have stressed, must not become a "trial". "Good arguable
case" reflects in that context that one side has a much better argument
on the material available. It is the concept which the phrase reflects
on which it is important to concentrate, i.e. of the court being satisfied
or as satisfied as it can be having regard to the limitations which an
interlocutory process imposes that factors exist which allow the court to
take jurisdiction.
The civil standard of proof has itself a flexibility depending on the issue
being considered and the concept "good arguable case" has a similar
flexibility. It is natural, for example, in a case concerned with a contract
where the jurisdiction depends on whether the breach took place within
the jurisdiction, but where the issue to be tried will be whether there
was a contract at all, not to wish to give even the appearance of pre-
trying the central issue, even though the concept of being satisfied must
apply both to the existence of the contract and the place of the breach.
It is equally natural for the court in the process of being satisfied to
scrutinise most jealously that factor which actually provides jurisdiction.
It is equally natural that where the foundation of jurisdiction is domicile,
i.e. an issue that will not arise at the trial, that particular scrutiny of the
material available takes place in the context of the limitations applied to
an interlocutory process."
Mr Otty stresses the words "‘Good arguable case’ reflects in that context
that one side has a much better argument on the material available." It
is not open to Mr. Stewart to argue, as he did that to require "a much
better argument" is the same as or higher than applying the balance of
probabilities.
43. Waller L. J. then discussed decisions of the Court of Appeal in Tesam
v. Schuh Mode Team [1990] I. L. Pr. 149 and Mölnlycke A. B. v. Procter
and Gamble Ltd [1992] 1 WLR 1112 and disapproved of some of the
terms there used. At page 558 he said:
"In the light of the Seaconsar case [1994] 1 A. C. 438 it seems to me
that in the Order 11 context it can now be seen that it was probably
inappropriate to use the phrase "serious question to be tried" as if it was
equated with "good arguable case". The Seaconsar case demonstrates
that what has to be sufficiently shown for the purpose of establishing
jurisdiction both in relation to the argument as to whether the contract
existed or not (which may arise more fully at the trial) and as to where
the breach took place (which will not) has to be shown to the standard of
a "good arguable case". As further appears from the Seaconsar case, that
is a threshold below "proved on a balance of probabilities," because that
is the civil burden after a full trial, but higher than "serious question to be
tried," which relates of the plaintiff’s claim relative to the contract. But,
as I have sought to stress, "good arguable case" is a concept with some
degree of flexibility depending on the issue."
44. Finally, Waller L. J. considered the position regarding Article 17 of the
Brussels Convention. At page 559 he said:-
"I ought finally to refer to a decision of my own relied on by Mr.
Hochhauser, I.P. Metal Ltd. v. Ruote O.Z. S.p.A. [1993] 2 Lloyd’s Rep.
60, and to the ruling of the Court of Appeal refusing leave to appeal from
that decision, I.P. Metal Ltd v. Ruote O.Z. S.p.A.(No. 2) [1994] 2 Lloyd’s
Rep. 560. That case was concerned with article 17 (agreements as to
jurisdiction) and as to whether that article, if applicable, in effect overrode
articles 21 and 22. I expressed the view that article 17 did override, but
that the English court would want to be as clear as possible, and at least
form the view that it was highly likely that if the matter were tried out the
plaintiff would succeed in his argument on the jurisdiction clause, before
concluding that article 17 applied. I was referred to the Tesam [1990]
I.L.Pr. 149 and Mölnlycke [1992] 1 W.L.R. 1112 cases and Mr. Gaisman
for the plaintiffs in that case was seeking to persuade me that "a good
arguable case" was the appropriate test. I rejected "good arguable case"
as the appropriate test when dealing with article 17, and preferred what
I conceived to be a higher test because the question of whether there
was a consensus within the terms of that article was likely only to be of
relevance when jurisdiction was being decided. In addition, I applied what
I conceived to be a higher test, because I was dealing with a situation in
which another court was seised and where it was being argued that it was
that court which should decide the question of jurisdiction, not the English
court. When leave to appeal was refused Saville L.J. referred to my
formulation "highly likely," but I do not read the judgment as approving or
disapproving of the words I used.
I, too, was dealing with the matter without the benefit of Lord Goff’s
analysis in the Seaconsar case [1994] 1 A.C. 438. I think I was probably
wrong to reject "good arguable case" as being the appropriate test. I
say "probably" because the court may be in a slightly different position
when faced with whether article 17 should apply and override article 21
or 22 than it is when considering whether it has jurisdiction under articles
5 or 6. But I rather suspect that in truth "good arguable case" is the
appropriate standard which I should have adopted, and that I failed to
appreciate that that language would have enabled me to take the attitude
that I did."
Waller L.J. there said only that he thought he was "probably" wrong to
reject the "good arguable case" test. His reason for rejecting that test
at first instance in I.P. Metal was because he felt a more stringent test
was required because another court was already seised of the matter and
hence the question was not whether Article 17 applied simpliciter as in
the present case, but whether Article 17 applied so as to over-ride Articles
21 and 22. I understand Waller L.J. to be saying that the flexibility of the
"good arguable case" test, to which he had earlier referred, could have
been employed by him in the I.P. Metal Case. I think it must follow that
when, as here, one is considering Article 17 without the complication of
another court being seised of the case, there is no difficulty in saying that
the "good arguable case" test is to be applied.
45. However, whatever the test for the standard of proof, there will be
difficulties in applying that test in pre-trial hearings where, as here, there
is a direct conflict of evidence in the affidavits of the opposing parties and
it would be undesirable for there to be cross-examination on the written
evidence.
46. It seems to me that the requirement of the formalities specified in
Article 17 is designed to help the Court in its difficulties. Counsel here
suggested that I should first look to see if there is an agreement applying
the well known common law principles and then to consider whether that
agreement satisfies the formalities required by Article 17. The better
approach however, in my view, is to look first at the formal requirements
of Article 17 to see whether by the route of those formal requirements a
consensus can be established. Only if a consensus, an agreement, can be
established by that route does Article 17 apply to give jurisdiction. In the
event that one cannot find that a consensus has been established by that
route, one would then be able to answer the question as to jurisdiction
without trespassing on the function of the ultimate trial court in deciding
whether an agreement was proved by some other route in relation to
the merits of the case. On the other hand, if the formal requirements of
Article 17 are satisfied, there is unlikely at the trial on the merits to be
much of an issue as to whether there was an agreement.
47 There are helpful decisions of the European Court on the formalities
required by Article 17.
48. The first decision to which I refer was, as appears from the judgment,
a decision on Article 17 in its original unamended form. In Estasis Salotti
v. RUWA [1976] ECR 1831, the judgment included the following at page
1840:-
"On the interpretation of Article 17 of the Convention in general
The first paragraph of Article 17 of the Convention provides: ‘If the
parties, one or more of whom is domiciled in a Contracting State, have,
by agreement in writing or by an oral agreement confirmed in writing,
agreed that a court or the courts of a Contracting State are to have
jurisdiction to settle any disputes which have arisen or which may arise in
connexion with a particular legal relationship, that court or those courts
shall have exclusive jurisdiction’.
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.
The questions referred to the Court by the Bundesgerichtshof must be
examined in the light of these considerations.
On the question referred by the Bundesgerichtshof
The first question asks whether a clause conferring jurisdiction, which
is included among general conditions of sale printed on the back of a
contract signed by both parties, fulfils the requirement of a writing under
the first paragraph of Article 17 of the Convention.
Taking into account what has been said above, it should be stated that
the mere fact that a clause conferring jurisdiction is printed among the
general conditions of one of the parties on the reverse of a contract drawn
up on the commercial paper of that party does not of itself satisfy the
requirements of Article 17, since no guarantee is thereby given that the
other party has really consented to the clause waiving the normal rules of
jurisdiction.
It is otherwise in the case where the text of the contract signed by both
parties itself contains an express reference to general conditions including
a clause conferring jurisdiction.
Thus it should be answered that where a clause conferring jurisdiction
is included among the general conditions of sale of one of the parties,
printed on the back of a contract, the requirement of a writing under
the first paragraph of Article 17 of the Convention is fulfilled only if the
contract signed by both parties contains an express reference to those
general conditions.
The second question asks whether the requirement of a writing under
the first paragraph of Article 17 of the Convention is fulfilled if the parties
expressly refer in the contract to a prior offer in writing in which reference
was made to general conditions of sale including a clause conferring
jurisdiction.
In principle, the requirement of a writing under the first paragraph
of Article 17 is fulfilled if the parties have referred in the text of their
contract to an offer in which reference was expressly made to general
conditions including a clause conferring jurisdiction.
This view of the matter, however, is valid only in the case of an express
reference, which can be checked by a party exercising reasonable care,
and only if it is established that the general conditions including the
clause conferring jurisdiction have in fact been communicated to the other
contracting party with the offer to which reference is made.
But the requirement of a writing in Article 17 would not be fulfilled in the
case of indirect or implied references to earlier correspondence, for that
would not yield any certainty that the clause conferring jurisdiction was in
fact part of the subject-matter of the contract properly so-called.
Thus it should be answered that in the case of a contract concluded by
reference to earlier offers, which were themselves made with reference to
the general conditions of one of the parties including a clause conferring
jurisdiction, the requirement of a writing under the first paragraph of
Article 17 of the Convention is satisfied only if the reference is express
and can therefore be checked by a party exercising reasonable care."
49. The words underlined by me in that citation in my view support what I
have said about this approach to be adopted by the court.
50. The judgment in Salotti also contains the important requirement
directly relevant to the present case that:
"where a clause conferring jurisdiction is included among the general
conditions of sale of one of the parties, printed on the back of a contract,
the requirement of a writing under the first paragraph of Article 17 of the
Convention is fulfilled only if the contract signed by both parties contains
an express reference to those general conditions."
Even accepting the Claimant’s evidence at its highest and ignoring the
conflicting evidence, the Claimant does not satisfy that requirement of
Salotti and so, on the unamended version of Article 17, the Claimant’s
case in this application must have failed unless there is some principle to
mitigate the strictness of the decision in Salotti:.
51 The Claimant relies on the decision of the European Court in Segoura
v. Bonakdarian [1976] ECR 1851. In that case, after the parties concluded
an oral contract of sale, the vendor stated that he wished to rely on his
general conditions of sale (which included a clause conferring jurisdiction)
and later confirmed the contract in writing to the purchaser annexing his
general conditions of sale. The ruling of the Court, again based on the
original form of Article 17, was:
"In the case of an orally concluded contract, the requirements of the
first paragraph of Article 17 of the Convention of 27 September 1968 on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial
Matters as to form are satisfied only if the vendor’s confirmation in writing
accompanied by notification of the general conditions of sale has been
accepted in writing by the purchaser.
The fact that the purchaser does not raise any objections against a
confirmation issued unilaterally by the other party does not amount to
acceptance on his part of the clause conferring jurisdiction unless the
oral agreement comes within the framework of a continuing trading
relationship between the parties which is based on the general conditions
of one of them, and those conditions contain a clause conferring
jurisdiction."
52. The Claimant relies on that ruling, contending that there was a
continuing trading relationship between the parties based on the general
conditions of one of them. That reliance on Segoura is flawed. Firstly, in
Segoura there was an oral agreement, and different requirements apply
to oral agreements. Secondly, although there was a continuing trading
relationship between the parties, it cannot be said that the relationship
has been shown to be based on the general conditions of one of them
when one party habitually (on the Claimant’s evidence) sent to the other
two sets of conditions (one on the back of the ECPO and the other on
the back of the Consignment Note) and the other party habitually sent
a third set of conflicting conditions. Thirdly, as was explained in the
judgment, the continuing trading relationship concept was based on the
requirements of "good faith". In the judgment the Court stated:
"It follows from the foregoing, in both of the alternative cases suggested
by the Bundesgerichtshof, that a unilateral declaration in writing such as
the one in the present case is not sufficient to constitute an agreement on
jurisdiction by consent.
However, it would be otherwise where an oral agreement forms part
of a continuing trading relationship between the parties, provided also
that it is established that the dealings taken as a whole are governed by
the general conditions of the party giving the confirmation, and these
conditions contain a clause conferring jurisdiction.
Indeed, in such a context, it would be contrary to good faith for the
recipient of the confirmation to deny the existence of a jurisdiction
conferred by consent, even if he had given no acceptance in writing."
It was submitted by Mr. Otty, and I agree, that the concept of good faith
is not unlike our concept of estoppel. So, for example, if a party relied on
the other party’s terms for some such purpose as terms of payment, it
would be contrary to good faith for the party so relying on the terms to
deny the existence of a jurisdiction given by the same terms. There is no
suggestion of such an element in the present case.
53. One therefore turns to examine whether the Claimant can pray in aid
any words added by amendment to the Convention. The Claimant relies
on Article 17(b) and disavows reliance on 17(c). Article 17(b) refers to an
agreement "in a form which accords with practices which the parties have
established between themselves".
54. It is evident from section 6 of the report of Mr. De Almeida Cruz and
Mr. Desantes Real and Mr. Paul Renard that Article 17(b) was added to
take account of such decisions as Segoura to which express reference was
made in their Report. Accordingly, for the reasons already given when I
was discussing Segoura the addition of Article 17(b) does not carry the
matter any further in favour of the Claimant.
55. The Claimant also relies on the decision of the European Court in
F. Berghoefer Gmbh v. ASA case 221/84. That also was a ruling on the
validity of an oral jurisdiction agreement confirmed in writing by one party
only and judgment restates the law to which I have already referred. The
judgment contains the following:-
"According to settled case-law (judgment of 14 December 1976 in Case
24/76, Salotti v RüWA, [1976] ECR 1851; judgment of 14 December 1976
in Case 25/76, Segoura v. Bonakdarian, [1976] ECR 1851; judgment of 6
May 1980 in Case 784/79, Porta-Leasing v Prestige International, [1980]
ECR 1517; judgment of 19 June 1984 in Case 71/83, Tilly Russ v. Haven
en Vervoerbedriif Nova [1984] ECR 2417), the requirements set out in
Article 17 governing the validity of jurisdiction clauses must be strictly
construed since the purpose of Article 17 is to ensure that the parties
have actually consented to such a clause and that their consent is clearly
and precisely demonstrated.
It must be pointed out that, unlike the provisions concerning persons
domiciled in Luxembourg contained in the second paragraph of Article 1 of
the Protocol annexed to the Convention, Article 17 of the Convention does
not expressly require that the written confirmation of an oral argument
should be given by the party who is to be affected by the agreement.
Moreover, as the various observations submitted to the Court have rightly
emphasised, it is sometimes difficult to determine the party for whose
benefit a jurisdiction agreement has been concluded before proceedings
have actually been instituted.
If it is actually established that jurisdiction has been conferred by express
oral agreement and if confirmation of that oral agreement by one of
the parties has been received by the other and the latter has raised no
objection to it within a reasonable time thereafter, the aforesaid literal
interpretation of Article 17 will also, as the Court has already decided
in another context (see judgment of 19 June 1984, cited above), be
in accordance with the purpose of that article, which is to ensure that
the parties have actually consented to the clause. It would therefore
be a breach of good faith for a party who did not raise any objection
subsequently to contest the application of the oral agreement. It is not
necessary in this case to decide the question of whether and to what
extent objections raised by the other party to the written confirmation
of an oral agreement could, in an appropriate case, be taken into
consideration."
56. The case of M. S. Tilly Russ [1985] 1 QB 931, cited in Bergerhoefer
also includes a useful summary of the relevant law at page 952:
"14. As the court held in its judgments of 14 December 1976 Estasis
Salotti di Colzani Aimo e Gianmario Colzani v. Rüwa Polstereimaschinen
G.m.b.H. (Case 24/76) [1976] E.C.R. 1831, and Galeries Segoura
S.p.r.l. v. Rahim Bonakdarian (Case 25/76) [1976] E.C.R. 1851 and
of 6 May 1980 (Porta-Leasing G.m.b.H. v. Prestige International S.A.
(Case 784/79) [1980] E.C.R. 1517, the requirements set out in article 17
governing the validity of jurisdiction clauses must be strictly construed
since the purpose of article 17 is to ensure that the parties have actually
consented to such a clause, which derogates from the ordinary jurisdiction
rules laid down in articles 2, 5 and 6 of the convention, and that their
consent is clearly and precisely demonstrated.
15. In order to decide whether the conditions laid down in article 17 are
satisfied, it is necessary to consider separately whether the agreement
of the parties to the choice of jurisdiction was expressed in the form of
a written agreement or in the form of an oral agreement evidenced in
writing.
16. In the first place, it must be observed that, where a jurisdiction clause
appears in the conditions printed on a bill of lading signed by the carrier,
the requirement of an "agreement in writing" within the meaning of
article 17 of the Convention is satisfied only if the shipper has expressed
in writing his consent to the conditions containing that clause, either in
the document in question itself or in a separate document. It must be
added that the mere printing of a jurisdiction clause on the reverse of
the bill of lading does not satisfy the requirements of article 17 of the
Convention, since such a procedure gives no guarantee that the other
party has actually consented to the clause derogating from the ordinary
jurisdiction rules of the Convention.
17. Secondly, if it was established that the jurisdiction clause contained
in the conditions printed on a bill of lading was the subject of a prior
oral agreement between the parties expressly relating to the jurisdiction
clause and that the bill of lading, signed by the carrier, was regarded
as the written confirmation of that oral agreement, such a clause would
satisfy the conditions laid down in article 17 of the Convention, even if
it was not signed by the shipper and therefore bore only the signature
of the carrier. In fact, not only is the letter of article 17, which expressly
provides for the possibility of an oral agreement evidenced in writing,
thereby observed but in addition its function, which is to ensure that the
agreement of the parties is clearly established, is also fulfilled.
18. Finally, such a jurisdiction clause not signed by the shipper may still
satisfy the requirements laid down in article 17 of the Convention, even
in the absence of a prior oral agreement relating to that clause, providing
that the bill of lading comes within the framework of a continuing business
relationship between the shipper and the carrier, in so far as it is thereby
established that that relationship is governed as a whole by general
conditions containing the jurisdiction clause drawn up by the author of
the written confirmation, in this case the carrier (see Segoura’s case
[1976] E.C.R. 1851), and provided that the bills of lading are all issued
on pre-printed forms systematically containing such a jurisdiction clause.
In those circumstances, it would be contrary to good faith to deny the
existence of a jurisdiction agreement."
57. As has repeatedly been said, the requirements of Article 17 must be
strictly construed. In order to decide whether the conditions of Article
17 are satisfied it is necessary first to consider whether the agreement
was expressed in the form of a written agreement or in the form of an
oral agreement evidenced in writing. No oral agreement is alleged in
the present case, so the Claimant can only rely on a written agreement.
By the Particulars of Claim, the Claimant alleges an agreement partly
in writing and partly by conduct, that is, offer in writing accepted by
conduct by delivery of the goods. There is no document in which the
Defendant has expressed in writing consent to the conditions containing
the jurisdiction clause.
58. In the circumstances, can the Claimant rely on "practices which
the parties have established between themselves"? Even if one accepts
without question the whole of the Claimant’s evidence, I see nothing in
the circumstances of this case which make it contrary to good faith for the
Defendant to deny the existence of a jurisdiction agreement.
59. Whatever standard of proof is required, and even if it were only at the
low level for which Mr. Stewart contends, the Claimant has failed to show
that Article 17 of the Convention applies to this case.
60. Accordingly, Article 2 of this Convention applies and the Defendant,
being domiciled in Germany, must be sued in the Courts of that State.
61. In reaching this conclusion, I make it clear that I express no view as
to:
(a) whether the Claimant can establish by some other route than that
prescribed by Article 17 that the parties contracted on the terms of the
Claimant’s "Terms of Purchase";
(b) whether the law to be applied by the German court is English law
(as required by the Claimant’s "Terms of Purchase") or German law (as
required by the Defendant’s terms).
CONCLUSION
62. I find in favour of the Defendant upon its application. I declare that
this Court has no jurisdiction over the subject matter of this action. I
order that in Claim form and the service of that Claim form be set aside.
Subject to any argument to the contrary, it will follow that the Claimants
must pay the Defendant’s costs of this application and of the proceedings.