Introduction
1. The claimant is a company incorporated in England and Wales.
It carries on business as consultant telecommunications engineers
and systems integrators. The defendant is a company incorporated
in Germany. It carries on business as a manufacturer and supplier of
satellite antennae and related equipment. On 24 May 2002, the defendant
agreed to sell and the claimant to buy one 2.4 mm quick deploy antenna
and two 1.8 mm rugged deploy antennae together with hard cases for
Euros 82,325.40 excluding transportation, taxes and other charges. The
agreement is contained in the defendant's quotation and the claimant's
purchase order, both dated 24 May 2002. This was the first contractual
dealing between the parties; there was no prior course of dealing.
2. The antennae were delivered to the claimant in England. The claimant
purported to reject them on the grounds that they were defective. The
defendant disputed the claimant's purported rejection. The claimant
issued proceedings in the Mercantile List of the Central London County
Court claiming damages for breach of contract. The claim is for damages
in the sum of Euros 87,987.40, which was the total sum invoiced and paid
under the contract, together with a further sum of £16,331.42 which the
claimant says that it paid for testing the faulty antennae.
3. Following service of the proceedings on it in Germany, the defendant
applied for a declaration under CPR 11(1) that the English courts had
no jurisdiction. The basis for the application was that the defendant's
quotation incorporated its general terms and conditions which included
a jurisdiction clause giving exclusive jurisdiction to the court having
jurisdiction at the defendant's headquarters, namely Duisburg (DE). (...)
The substantive jurisdiction appeal
The issue
19. There are no doubt issues of liability and quantum between the
parties but this appeal is not concerned with those issues. The question
whether the English court has substantive jurisdiction is governed by the
provisions of the Brussels-I Regulation (Council Regulation (EC) 44/2001).
It is entitled "Council Regulation on Jurisdiction and the Recognition and
Enforcement of Judgments in Civil and Commercial Matters". We will call it
the Regulation. (...)
21. The claimant's case is that the English court has jurisdiction under
article 5.1(b) on the basis that England was the place where the goods
were delivered under the contract. The principal point argued before
Jack J on behalf of the defendant was that the parties had agreed that
the courts of Germany would have exclusive jurisdiction in respect of a
dispute of this kind and that the German courts have exclusive jurisdiction
under article 23. The claimant submitted to Jack J and submits to us that
there is no exclusive jurisdiction agreement which satisfies article 23 and
that the English court has jurisdiction under article 5.1(b). Jack J so held
in the circumstances described above. The defendant appeals against that
decision. We turn therefore to the question whether article 23 applies.
Article 23
22. The facts are not in dispute. By a fax dated 24 May 2002 signed on its
behalf by Mr Klaus Duespohl and Mr Christian Rustemeier the defendant
offered to sell the antennae described above to the claimant. The fax was
addressed to Mr Higgins of the claimant. It described itself as "Quotation
21/02 102" and expressly stated that the defendant was "pleased to offer
according to our general terms and conditions" the identified antennae
at specific prices. It is common ground that no copy of the general terms
and conditions was sent to the claimant.
23. Mr Higgins replied on behalf of the claimant by a fax sent later the
same day, 24 May 2002. The fax is entitled "Purchase Order" and states
"Ref Your Quotation 21/02 102". The goods ordered were precisely those
set out in the defendant's quotation and at the price quoted. It is not in
dispute that the contract between the parties was made when that fax
was sent to and received by the defendant.
24. The sole question between the parties is whether they agreed that
the courts of Germany were to have jurisdiction to settle any disputes
which might arise between them in connection with a particular legal
relationship between them within the meaning of article 23 of the
Regulation. If they did, it is common ground that such jurisdiction is
exclusive because the parties did not agree otherwise. It is not suggested
that article 23.1(b) or (c) applies. The question is therefore whether there
was such an agreement conferring jurisdiction in writing or evidenced in
writing.
25. The defendant invites an affirmative answer to that question on
the basis that the agreement between the parties was contained in or
evidenced in writing, namely in or by the quotation and the purchase
order, and that in those documents the parties expressly agreed that the
contract was subject to the defendant's general terms and conditions. The
defendant says that the quotation was expressly subject to the general
terms and conditions and that Mr Higgins on behalf of the claimant
expressly signed a purchase order accepting the quotation.
26. The claimant says that it did not agree, within the meaning of article
23.1(a), to the jurisdiction clause which is contained in the terms and
conditions. It relies upon the leading case in the European Court of Justice
in this connection, namely Salotti v RUWA Polstereimaschinen GmbH. It
is common ground between the parties that the question for decision is
governed by Community law. We therefore turn to Salotti.
27. In Salotti there was a written contract for the supply by a German
undertaking to an Italian undertaking of machines for the manufacture of
upholstered furniture. The contract was signed in Milan by both parties
on commercial paper bearing the letter head of the German undertaking.
General conditions of sale of the German undertaking were printed on
the back but were not referred to on the front. The general conditions
included a German jurisdiction clause.
28. The court's general approach is set out in para. 7 of its judgment. The
court first observed that the effect of conferring jurisdiction by consent
was to exclude the jurisdiction determined both by the general jurisdiction
conferred by article 2 and by the special jurisdiction conferred by articles
5 and 6. It held that, in those circumstances, the requirements of article
17 must be strictly construed. It added:
"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 strictly 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."
29. The first question referred to the court was 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. Its
reasoning is entirely contained in paras 9 and 10 as follows:
"9. 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.
10. 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."
30. On the basis of that reasoning it was held that, although the contract
was signed by both parties, the terms on the back were not "a writing"
within the meaning of article 17 (now 23) in circumstances where they
were not referred to on the front. However, the second part of paragraph
9 and paragraph 10 show that, where the contract signed by both parties
expressly refers to general conditions which include a clause conferring
jurisdiction, article 17 (now 23) is satisfied. They do not suggest that
the general conditions have themselves to form part of the contractual
document. An express reference to the general conditions in the contract
is enough. There is no suggestion in those paragraphs that in such
circumstances there must be an express reference, not only to the
general conditions which contain the jurisdiction clause, but also to the
jurisdiction clause itself.
31. The position was clarified by the decision of this court in Credit Suisse
Financial Products v Societe Generale d'Entreprises, which (as it happens)
was an appeal from the same judge as in the instant case, then His
Honour Judge Raymond Jack QC. In that case the contract signed by the
parties expressly provided for the application of the terms of a master
agreement (to which they were not parties) which contained a jurisdiction
clause. After referring to Salotti and quoting the second part of paragraph
9 which we have set out above, Saville LJ, with whom Aldous and Simon
Brown LJJ agreed, said at page 172 B-D:
"It seems to me to be clear from the judgment in Salotti that the court
considered that a ‘guarantee' of real consent does exist where there is
an express reference in the written contract by way of incorporation of
other written terms which include a term conferring jurisdiction. Indeed,
given such an express reference, it seems to me self evident that the
profferee of the written contract, by signing without reservation, has
agreed in writing the incorporated terms (and thus the clause conferring
jurisdiction) for the simple reason that the very words of the signed
written contract itself are to that effect. To my mind the fact that Mr
Mossler in the present case did not have a copy of the master agreement
in his possession and readily available to him, or, as he said in his
affidavit, that he thought the reference to the master agreement was
a ‘standing clause' is neither here nor there; for in truth Mr Mossler, by
signing the confirmation, did agree in writing that the terms of the master
agreement formed part of the contract he was making."
32. In that passage Saville LJ thus emphasised two points which are
of some importance in the instant case. The first is that what the court
in Salotti had called in the first part of para. 9 a guarantee that the
relevant party has "really consented to the clause" exists where there
is an express reference to the terms and conditions which include the
jurisdiction clause. It is not necessary for there to be a specific reference
to the jurisdiction clause itself. The second is that the fact that the
relevant party does not have a copy of the terms and conditions or the
jurisdiction clause in his possession is not relevant. So, in the Credit
Suisse case, although he did not have a copy of the master agreement
in his possession or readily available to him, Mr Mossler, by signing the
confirmation, was held to have agreed in writing that the terms of the
master contract formed part of the contract.
33. If those principles were applied to this case on the basis that the
quotation and the purchase order together form the contract between the
parties, it would follow that they agreed that the contract was subject to
the defendant's general terms and conditions and, if there is a German
jurisdiction clause in the terms and conditions, that the claimant (as well
as the defendant) gave its real consent to the jurisdiction clause and
moreover that it did so even though it did not have a copy of the general
terms and conditions.
34. However, the claimant's case is that this is not a case in which the
parties signed a contract, as in Salotti or indeed Credit Suisse. It submits
that in these circumstances neither the principles stated by the Court of
Justice in answer to the first question in Salotti nor the principles stated
by Saville LJ in the passage just quoted apply to the facts in this case.
The question is therefore whether the fact that the parties did not sign
one but two documents is a critical distinction.
35. We have reached the clear conclusion that it is not. If both parties
had signed the original quotation as evidencing the contract between
them, there can be no doubt that the principles stated above would apply
and that the quotation would be, in the words of the Court of Justice, "a
writing" evidencing a contract on the terms of the defendant's terms and
conditions, including the German jurisdiction clause, and that both parties
including the claimant would be bound by the clause, just as Mr Mossler
was bound by the clause in Credit Suisse, even though he had not seen
and did not have a copy either of the relevant terms or of the jurisdiction
clause.
36. Equally, as it seems to us, if instead of accepting the faxed quotation
in a separate fax entitled ‘Purchase Order', the claimant had simply
acknowledged its acceptance of the offer by signing the quotation and
faxing it back to the defendant, the position would have been the same.
In these circumstances it makes no commercial or other sense to hold
that the position is different because, instead of signing the quotation, the
claimant accepted the offer by signing the purchase order and sending
it back to the defendant. In both cases there would, as Saville LJ put it,
be a ‘guarantee' of real consent on the part of the claimant and, as it
was put in para. 7 of the judgment in Salotti, the consensus between the
parties would in fact be established. In our judgment, no distinction in
principle is to be drawn between a case in which a contract is contained
in one document signed by both parties and a case in which a contract is
contained in or evidenced by two documents, one of which is signed by
one party and one by the other, at any rate in a case like this, where an
offer is made in writing signed by the offeror and that offer is accepted in
writing signed by the offeree.
37. It follows that, in our judgment, contrary to the conclusion reached
by Jack J, there was here an agreement that the relevant courts in
Germany had exclusive jurisdiction to settle the dispute which has arisen
in connection with the contract between the parties within the meaning of
article 23. It further follows that the English court has no jurisdiction.
38. However, the claimant says that this is not a case of the kind referred
to in the first question asked in Salotti but a case of the kind referred
to in the second question, which asked whether the requirement of
writing under the first paragraph of article 17 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.
39. The court answered the second question in paras 12 and 13 as
follows:
"12. 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.
13. Thus it should be answered that in the case of a contract concluded
by reference to earlier offers, which were in 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."
40. The claimant submits that this is such a case and that article 23 was
not satisfied because neither the terms and conditions nor the jurisdiction
clause were provided to the claimant when the contract was made. In
Credit Suisse Saville LJ said at page 172 H:
"In the present case there is an express and direct reference to the
master agreement in the written contract itself. To my mind the terms of
this reference alone make it certain that the clause conferring jurisdiction
was ‘part of the subject matter of the contract properly so-called'.
Where, as in the case discussed by the court in the context of the second
question, the reference is to earlier correspondence, which in turn is
said to incorporate other terms, I readily accept that, depending on
the circumstances, it may be necessary, in order ‘clearly and precisely'
to demonstrate that the clause conferring jurisdiction was in fact the
subject of a consensus between the parties, to establish that the items in
question were supplied to the party concerned. But that is not the case,
and in my view the judge erred in treating it as if it was. To my mind the
consensus is incontrovertibly established by the express reference in the
written contract itself."
41. Some reliance was placed on the facts of Salotti. The facts were
these. As stated above, the signed contract did not expressly refer to
the terms and conditions which were on the back. The Advocate General
summarised the further facts in this way. The contract stated that that the
purchaser was placing an order with the vendor for the ‘machines offered,
in accordance with your letter of 18 September 1969'. The letter of 18
September had been sent with seven offers of sale dated 11 September
each of which referred to the general conditions of sale printed on the
back of the letter but there was no corresponding reference in the letter
of 18 September.
42. After the hearing of the appeal, thanks to the good offices of Adrian
Jack, we were shown the decision of the Bundesgerichtshof in Germany,
namely Decision of 7 May 1977 case VIII ZR 14/75, when it considered
Salotti in the light of the opinion of the Court of Justice. The German
court held that it had jurisdiction in accordance with the Court of Justice's
opinion on the second question in circumstances in which the general
conditions had in fact been supplied. The German court said this:
"The parties on 31 October 1969 made an agreement in writing
concerning the delivery of the "machines offered in the letter of 18
September 1969". The offers attached to this letter contained in
both German and Italian an express mention of the supplied General
Conditions of the plaintiff, which in turn contained a jurisdiction clause.
The defendant was accordingly without doing anything further in a
position to inform himself about the General Conditions of the plaintiff, to
which its attention was expressly drawn, and thus about the jurisdiction
clause. The plaintiff had thus satisfied the requirement of writing of in Art
17(1) of the Brussels Convention (...)"
43. The facts of Salotti were thus very different from the facts here. For
the reasons already given we are of the opinion that this is an example of
the situation identified by the first question in Salotti and not the second
question. The contract here, comprising the quotation signed by the
defendant, which expressly referred to the terms and conditions including
the German jurisdiction clause, and the purchase order accepting the
quotation which was signed by the claimant amounts to a writing which
complies with article 23.
44. In these circumstances we leave for consideration in a future case in
what (if any) circumstances it might be necessary to show that the terms
and conditions were supplied to both parties. For the reasons given by
Saville LJ in Credit Suisse, there was no such necessity in the instant case
because there was in this case (as he put it at page 172 H on the facts
of that case) an express and direct reference to the relevant terms in the
written contract itself.
45. We should add that we were referred to a number of textbooks and
English cases. The textbooks included Layton & Mercer on European Civil
Practice 2nd edition, 2004 at page 718, Dicey & Morris on Conflict of Laws
14th edition at para. 12-112 and Briggs & Rees on Civil Jurisdiction and
Judgments 4th edition, 2005 at page 118. They do not all speak with one
voice but none of them has persuaded us to reach a different conclusion
from that expressed above. The English cases to which were referred
included AIG Europe SA v QBE International Insurance Ltd and Siboti
K/S v BP France SA, both of which seem to us to be supportive of our
conclusion in the instant case. We were also referred to a recent decision
of the Privy Council in an appeal from Gibraltar, namely Bols Distilleries
BV v Superior Yacht Services Ltd, which follows Salotti.
46. For these reasons, we conclude that (as stated above) there was
here an agreement that the relevant courts in Germany had exclusive
jurisdiction to settle the dispute which has arisen in connection with the
contract between the parties within the meaning of article 23. It follows
that the appeal against Jack J's decision to the contrary must be allowed.
The English court must decline jurisdiction in favour of the relevant court
in Germany.
Article 5
47. This conclusion makes it unnecessary to consider the further point
taken on behalf of the defendant that the English courts do not in any
event have jurisdiction under article 5. It was submitted on behalf of
the defendant that, although the actual place of performance of the
defendant's obligation was England because the antennae were delivered
to the claimant in England, article 5.1(b) provides that the place where
the goods "were delivered" is only the place of performance "unless
otherwise agreed". It was submitted that, since the terms and conditions
provided for Duisberg as the place of performance under the contract,
although the antennae were in fact delivered in England the place of
performance was "otherwise agreed", with the result that the English
courts do not have jurisdiction under article 5. If that were correct it
would follow that the only courts which would have jurisdiction would be
the German courts, under article 2.
48. Although it is not necessary to determine this issue, we should
note that we were referred to the decision of the Court of Justice in
Mainschiffahrts-Genossenschaft eG (MSG) v Les Gravières Rhénanes
SARL. The first question considered by the court was whether an oral
agreement, which is designed not to determine the place where the
person liable is actually to perform the obligations incumbent upon
him, but solely to establish that the courts for a particular place have
jurisdiction, is valid under article 5.1.
49. The court said this in para. 31:
"31. It should be noted, however, that whilst the parties are free to
agree on a place of performance for contractual obligations which differs
from the that which would be determined under the law applicable to
the contract, without having to comply with specific conditions as to
form, they are nevertheless not entitled, having regard to the system
established by the Convention, to designate, with the sole aim of
specifying the courts having jurisdiction, a place of performance having
no real connection with the reality of the contract at which the obligations
arising under the contract could not be performed in accordance with the
terms of the contract."
In para. 35 the court answered the first question in the negative. It held
that an agreement made in such circumstances is not effective to confer
jurisdiction unless the requirements of article 17 (now 23) are complied
with.
50. In the instant case it was never contemplated that Duisberg would
be, in the words of the first question, the place where the defendant was
actually to perform the contract. Although, in the light of our conclusions
under article 23, it is not necessary for us finally to determine the
question, this appears to us to be a case in which Duisberg was chosen
solely to establish that the courts there had jurisdiction. On that basis it
follows that if (contrary to our view) the requirements of article 23 were
not satisfied, the defendant would not be able to defeat the claimant's
case that the English court had jurisdiction under article 5.1(b).
51. In any event it appears to us that the fact that actual delivery
took place in England is strong evidence that, whatever the terms and
conditions provided, the parties agreed that the place of performance
would be in England. It follows that, if we had concluded that the
requirements of article 23 were not satisfied, we would have held that the
claimant had established jurisdiction in England under article 5.
Conclusions
52. For the reasons given above we allow the claimant's appeal against
the decision of Jack J on the appellate jurisdiction issue. Since Rafferty
J had given the claimant permission to appeal on the substantive
jurisdiction issue, Jack J should have heard that appeal. Jack J in fact
determined the substantive issue, albeit obiter. He determined that the
English court had jurisdiction. He should have held that the requirements
of article 23 of the Regulation were satisfied and that the parties had
submitted the dispute to the exclusive jurisdiction of the relevant court
in Germany. We accordingly allow the defendant's appeal from that
determination and, subject to hearing submissions as to the appropriate
form of declaration, we will make a declaration to that effect. (...)"