H.H. Judge Richard Seymour Q. C.:
Introduction
1. This judgment is concerned with an application on behalf of the Part
20 Defendant, BF E. S.p.A. ("BF") for a declaration that this court has no
jurisdiction to entertain the claim made in the Part 20 claim form issued
on 26 February 2004 on behalf of F. Ba. Di L. Ba. & C. S.A.S. ("Ba.") and
Signor L. M. Ba.. Consequent upon the declaration sought orders were
also sought that the Part 20 claim form and the service thereof upon BF
be set aside.
2. It is necessary to set out some of the background to the application. By
an agreement made at the beginning of 1997 B. S. Plc ("B. S.") agreed
to purchase from Ba. a pulp press ("the Press") intended for use in the
processing of sugar beet at B. S.'s factory at Newark in Nottinghamshire.
The model designation of the Press was PB48S. It was envisaged that
Ba. would manufacture the Press for delivery to B. S.. The Press needed
to incorporate a gearbox ("the Gearbox"). By an agreement in writing
("the Gearbox Contract") dated 31 January 1997 and made between Ba.
and BF BF agreed to supply the Gearbox to Ba.. The Press incorporating
the Gearbox was duly delivered to B. S. and put into service. On or
about 19 December 2000 the Press failed whilst in use. It seems that the
immediate cause of the failure was a failure of the Gearbox.
3. By a claim form issued originally on 29 January 2003 proceedings
were commenced on behalf of B. S. against Ba., Signor Ba. and two
other parties. Ba. was the first defendant and Signor Ba. in his personal
capacity was the fourth defendant. The two other parties are not material
to the application with which this judgment is concerned. One of the
claims made in the action was for damages in respect of the failure of
the Press on or about 19 December 2000. The action was defended, but
was ultimately settled by an order made by consent on 28 October 2004
under which Ba. agreed to pay a total of £930,000 to B. S.. The consent
order recorded that the agreed sum, not all of which was referable to the
claim in respect of the failure of the Press on or about 19 December 2000,
had been paid before the date upon which the order was sealed or was
to be paid out of monies in court. Although Signor Ba. was a defendant
in the action in a personal capacity, under the terms of the consent order
the payment agreed to be made was made on behalf of each of the first,
second and fourth defendants and there was no continuing actual or
contingent liability of Signor Ba. in his personal capacity to B. S.. As I
understood it, the sums paid in settlement of the claims of B. S. were in
fact provided by Ba..
4. The procedural history of the action commenced on behalf of B. S.
was somewhat tortuous. It is not necessary to go into detail, but the
requirement of the defendants in the main action to serve a defence was
deferred because of an attempt, ultimately unsuccessful, on the part
of the defendants to obtain summary judgment against B. S.. The Part
20 claim form was issued prior to the service of the defence of the first,
second and fourth defendants in the main action and thus did not require
the permission of the court. However, the application with which this
judgment is concerned was made on 24 May 2004.
5. The application dated 24 May 2004 was supported by a witness
statement dated 21 May 2004 made by Mr. Nicholas Bingham, a partner
in the firm of solicitors acting on behalf of BF. …. However, Mr. Raymond
Cox Q.C., who appeared together with Mr. Edward Levey on behalf
of Ba. and Signor Ba., elected not to call Professor Borghesi to give
evidence, and thus not to rely upon the opinions contained in his witness
statements. Mr. Simon Adamyk, who appeared on behalf of BF, did call
Professor Ballarino, whose witness statements thus became part of
the evidence before me. Mr. Cox decided to cross-examine Professor
Ballarino briefly on one point, to which I shall refer further later in this
judgment. Insofar as any question of Italian law is relevant to any issue
which I have to decide in respect of the present application, I take the
material law to be as stated by Professor Ballarino. I do not do that with
any reluctance. Although my opportunity to see and to hear Professor
Ballarino give evidence was brief, I was impressed by him. Not only
that, but insofar as I was able to form a preliminary view from reading
his witness statements, I found his analysis of the relevant law of Italy
convincing.
The material terms of the Gearbox Contract
6. What I have described as the Gearbox Contract was in fact, from an
English law perspective, a document which looked like an order placed
by Ba. with BF. It was a document in a standard printed form with blanks
completed as thought appropriate for the purposes of the particular
transaction. At the bottom of the first page of the document commenced
the setting out of "Condizioni Generali D'Acquisto", which expression
was translated as meaning "General Purchase Conditions". Those were
standard printed conditions. That which was relevant to the application
with which this judgment is concerned was clause 8, to which I shall refer
in this judgment as "the Forum Clause". That clause was in these terms:-
"COMPETENZA
Per ogni controversia l'autorita giudiziaria esclusivamente competente e
quella di FORLI."
That clause was translated on behalf of BF as meaning:-
"JURISDICTION
For any dispute, the court of exclusive jurisdiction is that of Forli."
I do not think that that translation, as a translation, was disputed on
behalf of Ba. and Signor Ba.. It was repeated, albeit without the word
"exclusive", by Mr. Cox in his skeleton argument at paragraph 15.
However, there was a difference between Mr. Cox and Mr. Adamyk as
to the effect of the Forum Clause, whatever the best way of rendering
it in English. Mr. Adamyk submitted that jurisdiction meant jurisdiction
in the sense in which that expression was used in the English language
text of Council Regulation (EC) No. 44/2001 ("the Regulation"). Mr.
Cox submitted that the Forum Clause was what he described as a
"competence clause".
7. It was common ground that the proper law of the Gearbox Contract
was the law of Italy.
8. What Mr. Cox meant by describing the Forum Clause as a "competence
clause" can best be explained by reference to some passages in the
second witness statement of Professor Ballarino. The expression
"competenza" is used in a technical sense in Italian law. As Professor
Ballarino said:-
"5. Under Italian procedural law, especially the Italian Civil Procedure
Code, the word "competenza" is used to define the Italian court in which
specific proceedings can be commenced. According to the prevalent
definition in the academic opinion of "competenza", this is the jurisdiction
given to each office which forms part of judicial power. These offices are
civil judges, criminal judges and administrative judges. Each of the offices
is empowered within the limits set out by law. When a judge sei[s]ed is
lacking the required "competenza", it is possible to apply for his judgment
to be set aside. In some cases it is said that the lack of "competenza"
amounts to a lack of jurisdiction. For example, administrative judges
cannot pronounce a criminal sentence. This would be perceived as a lack
of "jurisdiction-competence" and this would be one example of the two
words being used jointly.
6. The various factors which are relevant in deciding whether a particular
tribunal has competence include the following. Civil competence is
apportioned according to different criteria, creating a "vertical" and a
"horizontal" system. The vertical system is based on the value of the
claim; the horizontal system is based on territorial criteria.
(a) As for the vertical system (based on the value of the claim), the
value of the claim leads to actions being ordered in increasing value and
allocated to different courts depending on the value of the claim.
(b) As for the horizontal system (based on territorial criteria), territorial
competence is based mainly on the principle that the Defendant should be
entitled to defend easily. There are also "optional Courts", for example the
place where the contract was agreed.
7. Generally the parties can by agreement derogate from the competenza
which is otherwise established in favour of these tribunals. The
determination of territorial competence, either when assigned to only one
tribunal or when an alternative forum exists, can be derogated from by
the agreement of the parties (see Articles 28 and 29 of the Civil Procedure
Code …). Article 29 reads:
"the agreement of the parties for the derogation of the territorial
competence does not give to the chosen judge the exclusive competence
unless this is expressly agreed".
We can therefore infer by way of logical reasoning "a contrario" (to the
contrary) the absolute nature of the clause of exclusive competence.
Clause 8 of the Gearbox Contract specifically provides for an exclusive
competence."
Mr. Cox submitted that the Forum Clause was concerned, and concerned
only, with the selection within Italy, out of all those courts potentially
competent, of a court with competence to hear disputes arising under
a contract which incorporated that clause. Thus, submitted Mr. Cox, the
Forum Clause was of no relevance if the question arose, as it did in the
present case, what court or courts outside Italy might have jurisdiction
in relation to disputes arising under a contract which incorporated the
clause.
The Regulation
9. Within the European Union the general rule as to where a person may
be sued is that set out in Article 2 (1) of the Regulation:-
"Subject to this Regulation, persons domiciled in a Member State shall,
whatever their nationality, be sued in the courts of that Member State."
10. One of the exceptions to the general rule for which the Regulation
provides is to be found in Article 6. The part of Article 6 which is material
for the purposes of this judgment is:-
"A person domiciled in a Member State may also be sued:
…
2. as a third party in an action on a warranty or guarantee or in any other
third party proceedings, in the court seised of the original proceedings,
unless these were instituted solely with the object of removing him from
the jurisdiction of the court which would be competent in his case; …"
In the present case the Part 20 claim against BF was issued in this court
in reliance upon the provisions of Article 6 (2). It was not suggested that
that had been done from any improper motive.
11. The application before me, in the events which happened, was
essentially based on the contention that the English court had no
jurisdiction over a dispute between Ba. and BF under the Gearbox
Contract because the Forum Clause was a clause which fell within Article
23 of the Regulation. There had been a separate question at the time
the application was issued as to the claim of Signor Ba.. It was sought to
obtain the relief sought in the application as against him on the ground
that he had no cause of action in Italian law against BF. That matter
became academic once the main action had been settled on terms not
involving him personally in any actual or contingent liability, and it was
not pursued before me.
12. The Regulation is, so far as is presently material, the successor to
the Brussels Convention. Article 23 of the Regulation is in terms not
materially different from those of Article 17 of the Brussels Convention.
I was referred to a number of authorities under the Brussels Convention.
I was also referred to the authoritative reports concerning the Brussels
Convention of M. Jenard ("the Jenard Report") and Professor Schlosser
("the Schlosser Report"). I shall return to relevant authorities later in this
judgment.
13. The English text of the part of Article 23 of the Regulation which is
material for present purposes is:-
"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; …"
14. It is convenient at this stage also to set out the Italian text of that
part of Article 23 quoted in the preceding paragraph. That is:-
"Qualora le parti, di cui almeno una domiciliata nel territorio di uno Stato
membro, abbiano attribuito la competenza di un giudice o dei giudici di
uno Stato membro a conoscere delle controversie, presenti o future, nale
da un determinato rapporto giuridico, la competenza esclusiva spetta a
questo giudice o ai giudici di questo Stato membro. Detta competenza
e esclusiva salvo diverso accordo tra le parti. La clausola attributiva di
competenza deve essere conclusa:
(a) per iscritto o oralmente con conferma scritta, "
The issues between the parties
15. The principal issue between the parties was whether Article 23 of the
Regulation had any application in the circumstances of the present case.
I shall set out in more detail the submissions of the parties in relation
to this issue later in this judgment, but broadly the issue was whether,
properly construed in accordance with the relevant principles, the Forum
Clause sought to regulate choice of tribunal in the event of a dispute
arising which had an international dimension to which Article 23 applied,
or whether its focus was purely domestic and confined to regulating the
court in Italy in which proceedings could be brought in the event that
proceedings were commenced in Italy. Mr. Cox submitted that it was
essential that the clause should seek to cover disputes with such an
international dimension. Mr. Adamyk submitted, first, that the present
case had such a dimension, but, second, that actually such a dimension
was not necessary.
16. The only other issue with which I need deal in this judgment was
whether Part 20 proceedings were appropriate in any event now that the
main action has settled. It was not in dispute that the Forum Clause was
a clause which fell within Article 23 of the Regulation if it meant what
Mr. Adamyk contended that it meant. A point was taken on the form of
certification on the Part 20 claim form, which referred to the Brussels
Convention, and not to the Regulation. However, it was accepted at the
hearing before me that, if that were the only point which arose, it could
be dealt with by an appropriate amendment.
The main issue
17. There was a considerable amount of common ground concerning the
principal issue argued before me, that of the applicability of Article 23 at
all. It is convenient to set out that common ground before coming to the
submissions on behalf of the parties in relation to matters in contention
between them.
18. It was agreed between the parties that a clause which fell within
Article 23 took precedence over a claim which fell within Article 6(2).
Whether that was so was considered by Rix J, as he then was, in the
context of the provisions of the Brussels Convention which were the
predecessors of Articles 6(2) and 23 of the Regulation, respectively also
Article 6(2) and Article 17, in Hough v. P & O Containers Ltd. [1999] QB
834. Rix J dealt with that question in his judgment starting at page 842F.
Having rehearsed the arguments advanced to him and considered the
authorities cited to him, the learned judge set out his conclusions on page
845 at C to G:-
"These two decisions may be said to indicate that, where it can, the
European Court will seek to mitigate the divisive tendency of article 17
to create multiplicity of proceedings. They could also be said to promote
the rationale behind article 6. As such they do not really in themselves
support the views of the Jenard Report, Dicey & Morris and Advocate
General Capotorti as to the precedence of article 17 over article 6.
Be that as it may, it seems to me that they do not undermine those
views either. Blohm + Voss have not chosen to appear without protest,
but have sought to rely upon their contractual jurisdiction clause and
article 17. The mandatory terms of article 18 cannot therefore be given
effect. Similarly, it would not be within "the letter and spirit of the clause
conferring jurisdiction" (to quote Meeth v. Glacetal (Case 23/78) [1978]
ECR 2133, 2143) for the English court to retain jurisdiction over P & O's
third party proceedings against Blohm + Voss. The mandatory precedence
of article 17 over article 6 is also supported by Kaye, Civil Jurisdiction and
Enforcement of Foreign Judgments (1987), pp 643-644, 650, 1088 and
by O'Malley and Layton, European Civil Practice (1989), pp 446-447, 450,
551-552. In my judgment, much as the court might regret multiplicity
of proceedings, it is bound to recognise P & O's valid agreement to
litigate its claim in Hamburg. In any event, not that this is a relevant
consideration in applying the Convention in such circumstances, it cannot
be said that Hamburg is an inappropriate or inconvenient jurisdiction for
that claim. What one sees here are the irreconcilable differences between
the right of Mr. Hough to sue P & O in England, where P & O are to be
found, and the right of Blohm + Voss to be sued by P & O in Hamburg,
where P & O had agreed to litigate. "
While I incline to the same view as Rix J, the question whether Article
23 of the Regulation took precedence over Article 6 (2) was not argued
before me. For the purposes of this judgment I simply proceed on the
basis of the agreement of the parties that Article 23 takes precedence
over Article 6 (2).
19. The next matter which was agreed between the parties was that the
approach which I should adopt to considering whether the Forum Clause
fell within the ambit of Article 23 of the Regulation was that laid down
by the European Court of Justice in Powell Duffryn Plc v. Petereit [1992]
ECR I-1745. The material part of the judgment of the Court was in these
terms:-
"11. The question therefore arises whether the concept of "agreement
conferring jurisdiction" in Article 17 of the Brussels Convention must be
given an independent interpretation or be construed as referring to the
national law of one or other of the States concerned.
…14. Accordingly, as the Court has held for similar reasons as regards,
in particular, the concept of "matters relating to a contract" and other
concepts, referred to in Article 5 of the Convention, which serve as criteria
for determining special jurisdiction (see the judgment in Case 34/82
Peters v. ZNAV [1983] ECR 987, paragraphs 9 and 10), the concept of
"agreement conferring jurisdiction" in Article 17 must be regarded as an
independent concept."
Although the decision of the European Court of Justice does clearly
establish that the concept of an "agreement conferring jurisdiction" for
the purposes of Article 17 of the Brussels Convention and Article 23 of
the Regulation is one which needs to be considered independently of the
national law of any Member State, the Court gave almost no guidance
as to the criteria which should be applied to determining whether any
particular agreement was one falling within Article 17 or Article 23, as the
case might be. …
20. It was also common ground between the parties that although,
strictly, the effect of the decision of the House of Lords in Canada Trust
Co. v. Stolzenberg (No. 2) [2002] 1 AC 1 was that the standard of
proof to be satisfied by a party contending that the English court has
jurisdiction in relation to a particular dispute is that of a "good arguable
case" that there was jurisdiction, as the question of jurisdiction in the
present case depended upon a question of law, namely the proper
construction and effect of the Forum Clause, it was necessary for me to
decide that question finally at this stage. That approach was adopted
by Lawrence Collins J in Chellaram v. Chellaram (No. 2) [2002] 3 All ER
17. The learned judge explained his reasoning at paragraph 136 of the
judgment:-
"Where jurisdiction depends on a question of law or construction, the
court will decide it rather than apply the good arguable case test (see
cases in Dicey & Morris p 309 (para 11-127, n34). That approach has
consistently been applied to cases where jurisdiction has depended on the
applicable law of a contract for the purposes of what is now CPR 6.20(5)
(c). In such cases the court does not consider whether the claimant has
a good arguable case that the contract is governed by English law, but
rather whether the contract is governed by English law. Some of the most
important cases on the applicable law of a contract at common law were
decided under predecessors of this rule (see, for example, Amin Rasheed
Shipping Corp v. Kuwait Insurance Co., The Al Wahab [1983] 2 All ER 884,
[1984] AC 50) and I do not consider that anything in the Seaconsar case
is intended to throw doubt on their approach. Accordingly in a case such
as this, the claimant would have to satisfy the court that the applicable
law was English law, and the good arguable case test would only have
a role to play if there were a relevant factual issue (for example, if an
express choice of law were said to be ineffective on the facts of the
case)."
I respectfully agree with the approach of Lawrence Collins J. It reflects, as
the learned judge said in the passage quoted, long-established practice
and the reality that a court which has heard full argument on a point of
law does no service to anyone by not deciding the question argued.
21. The first matter as to which there was not unanimity between Mr.
Adamyk and Mr. Cox to which it is appropriate to refer is the issue of what
was called in argument the "international element".
22. Mr. Cox submitted that the Regulation, and therefore in particular
Article 23, had no application unless there was present in an agreement
an international element. In his written skeleton argument he developed
the point in this way:-
"24. In order to fall within the ambit of Article 23, an agreement must
have the necessary "international element". That such a requirement
exists can scarcely be doubted given that it is a concept referred to and
approved of in both the Jenard and the Schlosser reports.
25. In relation to Article 17 of the Brussels Convention (the equivalent of
Article 23 in the Judgment Regulation) the Jenard Report clearly states at
page 38:
The first paragraph of Article 17 applies only if at least one of the parties
is domiciled in a Contracting State. It does not apply where two parties
who are domiciled in the same Contracting State have agreed that a
court of that State shall have jurisdiction, since the Convention, under
the general principle laid down in the preamble, determines only the
international jurisdiction of courts.
26. This, it is submitted, is because a clause by which two parties
domiciled in one state have agreed that a court of that State shall have
jurisdiction does not of itself involve any international element.
27. Similarly, according to Schlosser at paragraph 174:
Article 17, applying as it does only if the transaction in question is
international in character …. which the mere fact of choosing a court in a
particular State is by no means sufficient to establish …
28. The very purpose of the Conventions and the Judgment Regulation
is to allocate and determine jurisdiction as between the courts of the
contracting states; they simply have no relevance to or bearing on
matters of a purely domestic nature.
29. The ECJ has never disapproved of or cast doubt on the notion that,
in the absence of an "international element", at least not so far as Ba. is
aware.[sic]
30. In all the circumstances, it is submitted that there would have to be
extremely cogent and powerful reasons for the court in this case not to
accept the authoritative views as set out above, according to which there
must be an "international element" in order for a clause to fall within
Article 23. It is submitted that no such reasons exist and the court is
bound to accept that requirement as a matter of principle."
23. Mr. Cox went on to submit that the relevant international element was
lacking in the present case. The kernel of his contention was expressed in
his skeleton argument in this way:-
"32. The agreement is simply a choice of a particular court (i.e. the Courts
of Forli) as between two parties domiciled in Italy. This is on all fours
with the situation referred to by Jenard and Schlosser in their respective
reports.
33. Clause 8 has no "international element". Of course, had the parties
expressed their agreement in terms of a choice of jurisdiction in favour
of the Italian courts and the exclusive competence of the courts of Forli,
that would have provided the agreement with the necessary international
character to fall within Article 23; but they did not, and so article 23 has
no application."
24. Mr. Cox's submission thus involved the propositions that whether an
international element was present fell to be determined as a matter of
construction of the relevant clause and at the time the contract in which it
was included was made, and not at any later time. Clauses like the Forum
Clause are not uncommon in contracts made between parties at least one
of whom is Italian or German or French. That was the point which Mr. Cox
sought to establish by cross-examination of Professor Ballarino. The logic
of the position for which Mr. Cox contended was that no such clause was
ever relevant for the purposes of Article 23 of the Regulation unless it
stated in terms that in the event that the contract gave rise to a dispute
involving a party in another Member State of the European Union it was
the wish of the parties that such dispute be litigated in the identified
court. In other words, in the present case the effect of the Forum Clause
was that it only applied if the dispute between Ba. and BF arose and was
being litigated in Italy. If, as was the case, Ba. had been made a party to
litigation in England in respect of which the question of a breach by BF
of the terms of the Gearbox Contract had arisen, BF could be made to
litigate that dispute in England.
25. Mr. Cox submitted that a clause in a contract said to satisfy the
requirements of Article 23 of the Regulation must be strictly construed.
He referred me to a decision of the European Court of Justice on the
construction of Article 17 of the Brussels Convention, Estasis Salotti di
Colzani Aimo e Gianmario Colzani v. RUWA Polstereimaschinen GmbH
[1976] ECR 1831. At paragraph 7 of its judgment in that case the Court
commented:-
"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."
Mr. Cox contended that what was required by that passage was that I
should enquire into whether Ba. and BF had in fact addressed their minds
to the risk of proceedings between them in a non-Italian jurisdiction
and positively determined that in the event of such proceedings being
commenced or threatened what they each wanted was that any litigation
between them be determined in the courts of Forli.
26. …
27. In support of his submission that the existence of any international
element must be considered in the context of proceedings pending in a
particular court Mr. Adamyk relied upon a passage in Chapter III of the
Jenard Report under the rubric "I. International Legal Relationships":-
"As is stressed in the fourth paragraph of the preamble, the Convention
determines the international jurisdiction of the courts of the Contracting
States.
It alters the rules of jurisdiction in force in each Contracting State only
where an international element is involved. It does not define this
concept, since the international element in a legal relationship may
depend on the particular facts of the proceedings of which the court is
seised. Proceedings instituted in the courts of a Contracting State which
involves [sic] only persons domiciled in that State will not normally be
affected by the Convention; Article 2 simply refers matters back to the
rules of jurisdiction in force in that State. It is possible, however, that
an international element may be involved in proceedings of this type.
This would be the case, for example, where the defendant was a foreign
national, a situation in which the principle of equality of treatment laid
down in the second paragraph of Article 2 would apply, or where the
proceedings related to a matter over which the courts of another State
had exclusive jurisdiction (Article 16), or where identical or related
proceedings had been brought in the courts of another State (Articles 21
to 23."
Mr. Adamyk contended that it was plain from that passage that M. Jenard
was contemplating that the issue of an international element could only
arise in the context of particular proceedings and not, for example, be
a matter which could be addressed simply as a matter of construction
of a choice of forum clause. Moreover, submitted Mr. Adamyk, M. Jenard
in terms envisaged that, while proceedings instituted between persons
domiciled in a state before the courts of that state would not normally be
affected by the Brussels Convention, circumstances could arise in which
such proceedings could be affected.
28. Mr. Adamyk also relied, in support of his submission that the presence
of any requisite international element fell to be addressed only at the
time of proceedings before a court the jurisdiction of which was in issue,
upon the decision of the European Court of Justice in Sanicentral GmbH
v. Collin [1979] ECR 3423. In that case what was in contention was a
jurisdiction clause in a contract of employment of a French national by
a German company. The clause in question provided for a German court
to have jurisdiction. At the time the contract was made a clause ousting
the jurisdiction of a French court was contrary to French law. However,
the relevant French law was itself contrary to Article 17 of the Brussels
Convention. After the Brussels Convention had come into force the
employee commenced proceedings in a French court in apparent breach
of the jurisdiction clause in his contract. In the course of its decision the
Court held:-
"6. By its nature a clause in writing conferring jurisdiction and occurring in
a contract of employment is a choice of jurisdiction; such a choice has no
legal effect for so long as no judicial proceedings have been commenced
and only becomes of consequence at the date when judicial proceedings
are set in motion.
That is therefore the relevant date for the purposes of an appreciation of
the scope of such a clause in relation to the legal rules applying at that
time.
The judicial proceedings were instituted on 27 November 1973 and the
Convention thus applies in pursuance of Article 54 thereof.
The effect of that article indeed is that the only essential for the rules of
the Convention to be applicable to litigation relating to legal relationships
created before the date of the coming into force of the Convention is that
the judicial proceedings should have been instituted subsequently to that
date, which is the position in the present instance."
29. At paragraph 21 of his written skeleton argument Mr. Adamyk
identified the factors which he contended amounted to the international
dimension in the present case:-
"In the Main Claim, the Claimant was domiciled in England and the four
Defendants are domiciled in Italy. In the Part 20 Claim, all parties are
domiciled in Italy. The Main Claim is proceeding in England. There is a
dispute as to whether the Part 20 Claim should proceed in England or
in Italy. The Gearbox Contract is governed by Italian law, and Mr. Ba.'s
claim is based on an Article in the Italian Civil Code. It is hard to imagine
a situation which could more plainly be said to include an "international
element". The mere fact that both parties to the Gearbox Contract are
domiciled in Italy is only one factor (out of many) to be considered
when deciding whether or not there is an "international element" to the
dispute."
…
30. In support of his submission that in fact no international element
was needed Mr. Adamyk emphasised that in the passage from the Jenard
Report which I have already quoted M. Jenard relied on the fourth
preamble to the Brussels Convention as defining the legitimate scope of
the Convention. That preamble was in these terms:-
"Considering that it is necessary for this purpose to determine the
international jurisdiction of their courts [that is, the courts of the
Contracting States], to facilitate recognition and to introduce an
expeditious procedure for securing the enforcement of judgments,
authentic instruments and court settlements;"
Mr. Adamyk drew attention to the fact that the Regulation contains
no similar preamble. In place of the four preambles to the Brussels
Convention the Regulation contains 29 recitals. Those which were relevant
to his argument Mr. Adamyk identified as numbers one and seven:-
"(1) The Community has set itself the objective of maintaining and
developing an area of freedom, security and justice, in which the free
movement of persons is ensured. In order to establish progressively
such an area, the Community should adopt, amongst other things, the
measures relating to judicial co-operation in civil matters which are
necessary for the sound operation of the internal market.
…
(7) The scope of this Regulation must cover all the main civil and
commercial matters apart from certain well-defined matters."
31. For the consequences which flow from the difference in the terms
of the relevant recitals as between the Brussels Convention and the
Regulation Mr. Adamyk relied, first, upon a comment in the Fourth
Supplement to Dicey & Morris at paragraph 12-089 that:-
"It is unlikely that the application of the Judgments Regulation is
restricted to cases with an "international character"."
Then Mr. Adamyk put before me the unreported judgment of Aikens J
in Provimi Ltd. v. Aventis Animal Nutrition SA handed down on 6 May
2003 and the neutral citation of which is [2003] EWHC 961 (Comm). In
that case a question which was debated to an extent was the effect of
jurisdiction clauses contained in contracts between German companies.
About that question Aikens J commented:-
"74. In his first report for both groups of actions Professor Wolf raised
a further argument. This is that because the contracts were between
German companies, the jurisdiction clause is confined to where, as
between possible German courts, disputes should be heard. He argued
that the clause does not determine issues of international jurisdiction,
eg. between English and German courts. Therefore, he submitted, Article
23 of Regulation 44 does not apply at all. So, issues of the validity and
scope of the clauses must be dealt with exclusively by German law. Dr.
Seiler and Professor Welter responded to this in detail and Professor Wolf
returned to the matter in his second reports.
75. In his oral submissions Mr. Carr did not take up the arguments of
Professor Wolf that the clauses dealt only with national jurisdictional
issues, so that Article 23 was irrelevant. He was, in my view, correct not
to do so. First, Article 23 of Regulation 44 does not contain a requirement
that the "agreement conferring jurisdiction" should expressly relate to
international jurisdiction issues. Nor is there any case law of the ECJ
that has held that Article 23 (or its predecessor Article 17) only applies
to jurisdiction clauses that refer expressly to international jurisdiction
issues. In my view the wording of Article 23 is sufficiently broad to apply
to all jurisdiction agreements. It would be contrary to the objective of
providing legal certainty if some jurisdiction agreements were within
Article 23 but some fell outside of its scope and their validity were to be
determined by national laws. Therefore, secondly, all issues of formal
validity and, I think, material validity of the jurisdiction clauses, must be
dealt with by reference only to the requirements of Article 23, rather than
the requirements of any system of national law."
32. In the Provimi Ltd. case Aikens J was concerned in the passage which
I have just quoted with an argument very similar to that advanced by
Mr. Cox before me. Mr. Adamyk submitted that not only should I derive
assistance from the consideration by Aikens J of the question of the need
for an international element, but I should be helped by his consideration
of the whole argument on its merits. Mr. Cox, very decorously, pointed
out that the passage from the judgment of Aikens J which I have set
out was obiter and that the views expressed were reached without the
benefit of argument from English Counsel in support of the analysis of
Professor Wolf. He also took the point that, although undoubtedly entitled
to respect, the views of Aikens J were not binding upon me in any event.
33. In furtherance of his submission that the law of Italy was relevant
for me to consider in determining in the context of the guidance of the
European Court of Justice in Powell Duffryn Plc v. Petereit the effect
of the Forum Clause, Mr. Adamyk relied upon the opinion of Professor
Ballarino. Professor Ballarino explained at paragraph 9 of his second
witness statement the distinction in Italian law between the concepts of
"competenza" and "giurisdizione", each of which can be translated into
English as "jurisdiction":-
"It is true that under Italian law, as in many other European systems
of procedural law, there is a fundamental distinction in theory between
"jurisdiction" and "competence".
(a) The former expression ("jurisdiction") is an expression of the
sovereignty of the state and acquires significance in practice when facts
are brought before the judges of the state which are not completely
reducible to the "elements" of the sovereignty of the state. This might
include, for example, a summons against a foreigner, a claim under a
contract when that contract came into existence outside the territory of
that state, etc.
(b) The latter expression ("competence") on the other hand divides the
judicial power between the various offices or tribunals within a state which
exercise that power (along the lines which I outlined in section A above)."
Having explained that in his view the distinction was foreign to the
Brussels Convention and to the Regulation, he went on to consider
what he described as the "principle that an express choice of the Court
with "competenza" is automatically also a choice of the Court with
"giurisdizione"":-
"12. Clause 8 of the Gearbox Contract determines the competence of
the Court of Forli to hear the case as intended by the parties in order to
decide swiftly a potential dispute in relation to the supply of the gearbox
from BFE to Ba. SAS. These kinds of clauses are usually incorporated so
that a dispute can be heard by a "convenient" court, easily reached by the
lawyers of the company and by potential witnesses.
13. In section B above I explained that I agree with Professor Borghesi
that there is a fundamental distinction in theory between "jurisdiction"
and "competence". I also explained, however, that such a distinction
is foreign to the system of the Brussels Convention (now replaced to a
large extent by EC Regulation 44/2001). Furthermore, in my view there
is no doubt that an express choice of the Court with "competenza" is
automatically also a choice of the Court with "giurisdizione". In every case
when establishing the territorial competence of any given Italian Court,
there is implied acceptance of the fact that the specific Court also has
Italian jurisdiction. Given that in civil commercial matters the parties have
a very wide power to choose a foreign judge or an arbitrator (whether
Italian or foreign), when they agree the competence of the Italian judge
they recognize that that judge also has Italian jurisdictional power. The
parties' express choice would make no sense otherwise. This is the result
of standard logical reasoning. The Part 20 Claimants' position seems to be
that there is a possibility to choose the judge with territorial competence
without addressing the issue of jurisdiction. As I have said, in my view
this makes no sense.
14. There was no need to refer to international element at the time of
executing the Gearbox Contract because the contract was only between
parties incorporated in Italy for the supply of goods within Italy. It was
inconceivable that any dispute between the parties should be tried
anywhere other than in Italy.
15. In my view there is no doubt that the election by the parties of a
specific territorial court of a country (such as the court of Forli as referred
to in the Gearbox Contract) is a valid forum selection clause for the
purposes of Article 23 of EC Regulation 44/2001. The choice of one
specific court to deal with all disputes arising out of a contract implies an
exclusive selection of the Court of a specific country. This is confirmed
by the Corte di Cassazione (Sez. Un. 24 April 2002 n. 6040) … which
specifically said in a very similar forum selection clause in an agreement:
"the dispute belongs to the German court if the parties have expressly
indicated in the agreement the Court of Berlin to be the competent court
[verbatim: foro competente]".
16. Furthermore, the words used in Article 23 of EC Regulation 44/2001
are:
"abbiano attribuito la competenza di giudice o dei giudici di uno Stato
membro …"("have agreed that a court or the courts of a Member State
are to have jurisdiction …")
Article 23 of EC Regulation 44/2001 therefore clearly contemplates
as falling within its scope not only a choice by the parties of "the
courts" (plural) of a particular Member State, but also a choice by the
parties of "a court" (singular, i.e. a particular court) of a Member State,
which is exactly the scenario which we have here. Article 23 therefore
refers to two different cases:
(a) A situation in which the parties have agreed the competence of the
Italian Courts in general. (In this case the choice of the Italian Courts
in general satisfies the requirements of Article 23, and the competence
of a specific court within Italy will be determined in accordance with
the internal rules on the distribution of competence amongst the Italian
Courts).
(b) The parties have agreed the competence of a particular specified court
within Italy (for example, the Court of Turin or the Court of Forli). (In this
case the choice of a specific court satisfies the requirements of Article 23,
and whether such a choice is permitted according to the internal rules on
the distribution of competence amongst the Italian Courts will be decided
according to those internal rules)."
Consideration of the Main Issue and conclusions concerning that issue
34. It seems to me that it is important to be clear what one is concerned
with in considering whether an international element is necessary
before the Regulation can apply and, if so, what sort of international
element is required. It is manifestly not the case that no provision of the
Regulation is of any relevance unless there is an international element,
because Article 2(1) in terms sets out the general rule that, subject to
the provision made by the Regulation, persons domiciled in a Member
State are to be sued in that state. In other words, it is prescribing
what is to happen internally within a Member State. Other provisions
of the Regulation are concerned with exceptions to that general rule,
that is to say, circumstances in which a person can be sued other than
in the Member State in which he is domiciled. In that sense all of the
provisions which set out circumstances in which a person can be sued
in a state other than the Member State in which he is domiciled have an
international dimension. It seems to me that it is essentially only in that
sense that M. Jenard and Professor Schlosser were envisaging that there
should be an international element before there could be any question
of the Brussels Convention applying. Quite simply, without some issue
arising in a given case of someone being sued in a jurisdiction other than
the state in which he was domiciled there was nothing upon which the
provisions of the Brussels Convention, other than Article 2, could bite. If
that is the correct understanding of what was meant, the debate as to
whether the omission from the recitals to the Regulation of the reference
to the international jurisdiction of the courts of Member States and the
substitution of references to the sound operation of the internal market
is rather sterile. The substance of the matter appears to be that what is
relevant to the application of most of the provisions of the Regulation or
the Brussels Convention is whether whatever conditions are prescribed
for a person to be liable to suit in a state other than that in which he is
domiciled are met.
35. I reject the submission of Mr. Cox that the time at which the question
whether a particular clause dealing with forum falls within Article 23 of
the Regulation needs to be addressed is when the relevant contract is
made. As a matter of logic, as it seems to me, that issue can only arise
when a question has been raised as to the effect of the Article upon
particular proceedings. That conclusion is supported, in my judgment, as
Mr. Adamyk submitted, by the decision of the European Court of Justice
in Sanicentral GmbH v. Collin and the opinion of M. Jenard in the passage
upon which Mr. Adamyk relied.
36. It is, in my judgment, a misunderstanding of the judgment of the
European Court of Justice in Estasis Salotti di Colzani e Gianmarco Colzani
v. RUWA Polstereimaschinen GmbH to suppose that what the Court
was there concerned with was laying down that clauses appearing to
fall within the scope of Article 17 of the Brussels Convention should be
strictly construed generally or that it was the function of a court before
which an issue arose as to whether a clause fell within the scope of
Article 17 to enquire into what the parties in fact envisaged and intended
by their agreement of the clause in question. All I think that the Court
was concerned with in that case was to emphasise that, if a clause was
to be held to fall within Article 17, it was important that it satisfied
the requirements as to form set out in the Article. If it did, that was
conclusive as to the intentions of the parties. In the passage from the
judgment which I have quoted what the Court said was to be strictly
construed was not the clause in question but "the requirements set out in
Article 17". The Court went on to refer to the duty of the court to examine
whether the relevant clause "was in fact the subject of a consensus
between the parties", but it seems to follow that if, as the Court said,
"The purpose of the formal requirements imposed by Article 17 is to
ensure that the consensus between the parties is in fact established", all
the court before which an issue comes as to compliance has to consider
is whether a particular clause meets the formal requirements of Article
17 or Article 23 of the Regulation, as the case may be. I therefore reject
the submission of Mr. Cox that a strict approach must be adopted to the
construction in this case of the Forum Clause.
37. I come, then, to what seems to be the heart of the main issue,
whether the Forum Clause should be construed as an agreement falling
within Article 23, that is to say, as an agreement that any dispute
between Ba. and BF, no matter where arising or in what circumstances,
should be litigated in Forli.
38...
39. I have already commented that I must address the question of the
proper interpretation of the Forum Clause, in the light of the decision
of the European Court of Justice in Powell Duffryn Plc v. Petereit, as an
independent concept. I have also commented that Mr. Adamyk submitted
that in addressing that question it was legitimate to have regard to the
law of Italy, as the proper law of the Gearbox Contract. I was shown no
guidance from the European Court of Justice as to the detailed principles
to be applied in construing the clause. No reference was made either by
Mr. Adamyk or by Mr. Cox to the jurisprudence of any Member State other
than Italy or England.
40. It seems to me that, although I must not interpret the Forum Clause
simply by reference to "the national law of one or other of the States
concerned", that is to say, the law of Italy or the law of England, the
starting point, at any rate, in the process of construction, is to consider
the meaning of the relevant clause under the law which is the proper law
of the contract. In formulating its opinion in the terms that "the concept
of "agreement conferring jurisdiction" should not be interpreted simply as
referring to the national law of one or other of the States concerned", I do
not think that the European Court of Justice was intending to indicate that
those national laws should be excluded from consideration or that it was
inappropriate to consider the proper law of the relevant agreement. In
this case the proper law of the Gearbox Contract is the law of Italy. Under
that law, as I have indicated in citing the opinion of Professor Ballarino,
although "competenza" and "giurisdizione" are in theory different
concepts, a choice of a court which is selected as having "competenza"
automatically operates as a choice of that court as having "giurisdizione".
Therefore, if and insofar as it were necessary under Italian law for the
issue of "giurisdizione" as well as that of "competenza" to be dealt with
in a forum clause, if that clause were to be effective, it was dealt with
implicitly by dealing expressly only with the question of "competenza".
That seems logical. There would seem to be no point in choosing a court
with "competenza" to determine disputes if that court did not also have
"giurisdizione" to do so. However, the Italian text of Article 23 of the
Regulation uses the expression "competenza", and not "giurisdizione",
in dealing with agreements falling within its scope. Professor Ballarino's
view, at its most straightforward, was that under Italian law the Forum
Clause fell within Article 23 simply because by it the parties chose a court,
that of Forli, as having jurisdiction. At any rate, under Italian law, in
Professor Ballarino's view, the conclusion was plain that the Forum Clause
fell within the scope of Article 23.
41. Having considered the position under the law governing the Gearbox
Contract, it seems appropriate, next, to consider what the position
would be under English law, if that were the law governing the Gearbox
Contract. One has to recognise that the language of the contract as made
is Italian, and so to consider the position under English law as though
the contract were an English contract, the relevant Italian words need
to be translated into English. Fortunately in this case it seems that there
was no issue as to the correct translation of the Forum Clause. Under
English law a clause providing that "For any dispute, the court of exclusive
jurisdiction is that of Forli" would seem to be effective in accordance
with its terms. The possible theoretical difficulties in Italian law of the
differences between "competenza" and "giurisdizione" are not mirrored by
any equivalent potential problem in English law.
42. The position thus seems to be that from the perspective of whichever
of the great legal traditions of the European Union, the civil law or the
common law, one might choose, the answer to the construction of the
Forum Clause is the same and is that the clause falls within Article 23 of
the Regulation.
43. Logic and common sense seem to support the same conclusion. If it
is important to parties to a contract to select, on grounds of convenience,
a particular place within the national territory of a Member State at which
any disputes which may arise concerning the contract are to be litigated,
it would seem even more important that that choice should be given
effect when otherwise the parties might be at risk of being compelled to
litigate anywhere within the European Union. The suggestions of Mr. Cox
that, on the contrary, parties who wished to make specific provision as to
the forum within a national territory for resolution of disputes might have
been indifferent to the forum if there was an international element, or
even anxious to litigate abroad, seem to me, with great respect to him, to
be fanciful. In my judgment, the only sensible commercial interpretation
to place upon a clause like the Forum Clause is that it is intended to
identify the forum for resolution of all disputes which may arise, whether
or not having an international dimension.
44. I draw some comfort in reaching that conclusion from the preliminary
expression of views of Aikens J in the Provimi Ltd. case. Aikens J did not,
in that case, have the benefit of argument from English Counsel. However,
as a reflection of that, he also did not have to reach a final conclusion
on the point with which this section of this judgment is concerned. I do
not have that luxury, but it has assisted me to be able to consider the
immediate reaction of Aikens J to the issue as set out in the arguments of
Professor Wolf in that case.
The appropriateness of Part 20 proceedings
45. The conclusion which I have stated at the end of the preceding section
of this judgment is sufficient to dispose of the application presently before
the court by an order in the terms sought on behalf of BF. However, it is
appropriate to consider an alternative argument of Mr. Adamyk which, if
well-founded, leads to the same conclusion if I had reached a different
conclusion on the main issue.
46. That argument depends upon the power of the court under Part 20.9
(1) of the Civil Procedure Rules to require a Part 20 claim to be dealt with
separately from the claim by the claimant against the defendant. The
point is a short one. As articulated by Mr. Adamyk in his written skeleton
argument it was put like this:-
"36. The fact that the English Courts may have jurisdiction in principle
under Art. 6(2) does not require the English Court to exercise that
jurisdiction: whether or not the English Court does so is a matter for the
procedural rules of the English Court...Kongress Agentur Hagen GmbH v.
Zeehaghe BV, Case No. C-365/88, [1990] ECR I-1845).
37. The procedural rules of the English Court as to whether or not a Part
20 claim should be required to be dealt with separately from the Main
Claim, are contained in CPR 20.9. The Main Claim came to a complete
stop on 28.10.04 when a consent order was entered. It has not even been
stayed in Tomlin form – the action has completely terminated. There will
therefore be no determination whatsoever of the rights and wrongs of the
allegations in the Main Claim. Furthermore, the claims by Ba. SAS and Mr.
Ba. are both based exclusively on Italian law. It is therefore submitted
that the English Court, applying its own domestic procedural rules, should
require the Part 20 Claim to proceed as a separate claim. The effect of
this would be to remove the jurisdictional ground of Art. 6(2)."
47. In Kongress Agentur Hagen GmbH v. Zeehaghe BV [1990] ECR I-1845
the principal issue was whether a Dutch court seised of litigation was
bound to grant permission under Article 6(2) of the Brussels Convention
to a party which wished to sue a third party on a warranty or guarantee.
That issue was divided into two, referred to in the report as "the second
and third questions". The conclusions of the Court were:-
"21. Accordingly, an application for leave to bring an action on a warranty
or guarantee may not be refused expressly or by implication on the
ground that the third parties sought to be joined reside or are domiciled
in a Contracting State other than that of the court seised of the original
proceedings.
22. The answer to the second and third questions must therefore be
that Article 6(2) must be interpreted as meaning that it does not require
the national court to accede to the request for leave to bring an action
on a warranty or guarantee and that the national court may apply the
procedural rules of its national law in order to determine whether that
action is admissible, provided that the effectiveness of the Convention
in that regard is not impaired and, in particular, that leave to bring the
action on the warranty or guarantee is not refused on the ground that the
third party resides or is domiciled in a Contracting State other than that of
the court seised of the original proceedings."
48. Mr. Cox accepted that I had a discretion as to whether to order that
the Part 20 claim against BF be dealt with separately from the main
action. However, he submitted that I should not exercise that discretion.
49. In fact the main debate between Mr. Cox and Mr. Adamyk in relation
to this alternative argument of Mr. Adamyk turned on the question of
the current status of the main action. Mr. Adamyk submitted that, in the
light of the judgment by consent for a money sum, which money sum
has been paid, the main action is at an end. Mr. Cox submitted that the
main action continued in existence until dismissed or discontinued. He
sought to support that submission by reference to the decision of the
Court of Appeal in Rofa Sport Management AG v. DHL International (UK)
Ltd. [1989] 1 WLR 902. However, it seemed to me that that submission
was misconceived. The comments in the judgment of Neill LJ as to the
circumstances in which an action could come to an end need, it seems
to me, to be viewed against the background of the facts of that case and
not as intended as exhaustive. After all, they omitted a not infrequent
circumstance in which an action comes to an end, by judgment for a
claimant, which judgment is satisfied.
50. In my judgment it was appropriate for the debate to be about whether
the main action in the present case had come to an end, because if it
had not, it seems to me that the effect of the judgment of the European
Court of Justice in the Kongress Agentur Hagen GmbH case is that I could
not exercise my discretion under CPR Part 20.9 so as to prevent the Part
20 claim in the present instance from continuing, as to do that would
impair the effectiveness of the Regulation. There would be no ground for
exercising my discretion in favour of separate treatment of the Part 20
claim in this instance, if the main claim were still live, other than the fact
that BF was domiciled outside England. However, as the main action is no
longer live there is no discretion to be exercised. If the Part 20 claim were
to continue in England, it would be as a separate claim simply because
there is no main action to be carried forward. Thus the requirements of
Article 6(2) of the Regulation are simply not met as matters have turned
out.
Conclusion
For the reasons which I have given the application of BF succeeds and
I grant the relief sought. I do that without regret. It seems to me that
it would be a serious indictment of English and European Union law if
a dispute between Italian parties arising under a contract made and
performed in Italy, expressed in the Italian language and governed by
Italian law were to be compelled to be litigated in England simply as a
result of the historical accident that the goods the subject of the contract
were subsequently incorporated in the Press, which was sold to an English
company and then failed. Now that the main action has been finally
resolved there is nothing remotely English about the dispute between
Ba. and BF. Every conceivable aspect of the dispute is Italian. Perhaps
the ultimate irony is that the Forum Clause was not put forward initially
by the party now seeking to rely upon it, BF, but by the party seeking to
resist its application, Ba.