JUDGMENT of Mrs Justice McGuinness:
1. This is a Motion on Notice brought pursuant to Order 16 Rule 8(3)
of the Rules of the Superior Courts seeking the setting aside of third
party proceedings against the first named third party or alternatively the
striking out of these third party proceedings as against the first named
third party on the grounds that by virtue of Article 17 of the Brussels
Convention 1968, which is incorporated into Irish law by the Jurisdiction
of Courts and Enforcement ofJudgments (European Communities) Act,
1988, this Court has no jurisdiction to hear and determine the Plaintiff's
claim against the first named third party.
2. The Action itself is brought by the Plaintiff, an Irish company which
carries on the business of publican and restaurateur at the licensed
premises known as D. N.'s at Bunratty, Co. Clare, against the Defendant,
who is also Irish, and who carries on the business of shop and office
equipment supplier. In broad outline the Action arises out of the sale and
installation of a cash control system at the Plaintiff's licensed premises
which the Plaintiff claims was defective and unfit for the purpose. The
Defendant has by Order of this Court (Johnson J.) made the 9th day of
November, 1998 served third party notices on three third parties the
first of which is T. (UK) Limited, the mover of the present Motion. It is
common case that the said first named third party supplied the Defendant
with cash control computer terminals and related equipment for use in
the Plaintiff's cash contol system (the necessary "hardware"). There is
an issue between the Defendant and the first named third party as to
whether the first named third party had any involvement in the supply
and installation of the "software" involved in the cash control system, but
this is not relevant to the issues before this Court on the Notice of Motion.
3. It is established by the Affidavit of P. D., manager of the reseller
division of the first named third party, that T. (UK) Limited is a company
domiciled in England, and indeed this is not denied by the Defendant.
4. The Defendant in his Third Party Notice relies on Articles 5.1, 5.3 and
6.1 and/or 6.2 of the Brussels Convention to establish the jurisdiction of
this Court to hear and determine the proceedings.
5. The relevant Articles of the Brussels Convention provide as follows:-
"Article 2
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.
Article 5
A person domiciled in a Contracting State may, in another Contracting
State, be sued:
1. In matters relating to a contract, in the Courts for the place of
performance of the obligation in question;....
3. In matters relating to tort, delict or quasi-delict, in the Court for the
place where the harmful event occurred;....
Article 6
A person domiciled in a Contracting State may also be sued:
1. Where he is one of a number of Defendants, in the Courts for the place
where any one of them is domiciled;
2. As a third party on 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;....
Article 17
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 in writing or evidenced in writing or,
in international trade or commerce, in a form which accords with practices
in that trade or commerce of which the parties are or ought to have been
aware....."
6. Counsel for the first named third party submitted that Article 17 took
priority over and excluded the special jurisdiction provided under Articles
5 and 6. In stating this she relied on the judgment of the European Court
of Justice in the case of Galeries Segoura SPRL -v- Bonakdarian [1976]
ECR 1851. In that case the Court stated (at page 1860) in relation to
Article 17:
"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 by Article 2 and the special jurisdictions provided for in Articles 5
and 6 of the Convention."
7. The question has been further considered by the English Courts in
the recent case of Hough -v- P and O Containers Limited (Blohm + Voss
Holding AG and Others third parties) [1998] 2 All ER 978, in which it was
held, as set out in the headnote, that having regard to the use of the
word "may", the special jurisdiction under Article 6(2) of the Convention
was merely permissive. However, Article 17 was expressed in mandatory
terms and therefore had the effect of excluding that jurisdiction. It
followed that, where it applied, Article 17 took priority over Article 6(2).
The learned Rix J. in his judgment (at page 986) stated:
"In my judgment, however, Mr Melville has confused the relationship
between Article 2 and the special jurisdictions within Section 2 of the
Convention on the one hand with the relationship between Article 17,
under Section 6 dealing with prorogation of jurisdiction, and other
jurisdictions under the Convention on the other hand. In the former
case, Article 6(2) is indeed a'special jurisdiction', and where it is properly
applied will override the basic rules set out in Article 2. That, however,
the upholding of a special jurisdiction is permissive and not mandatory
is emphasised by the word 'may' which appears in Articles 5 and 6,
and is well illustrated by the reasoning in Kinnear's case itself. Article
17, however, where it applies, is mandatory ('shall have exclusive
jurisdiction') and the effect of it is to exclude not only the merely
permissive jurisdictions under Articles 5 and 6 but even the mandatory
(but not of course universal) principle of Article 2 itself (where Article
17 conflicts with Article 2, which in the present case of course, it does
not)..... Moreover Dicey and Morris on the Conflict of Laws (12th edition
1993) (4th cumulative supplement 1997) page 51 comments as follows:-
'Article 6(2) would not be applicable if the third party claim is subject to
an agreement to submit to the jurisdiction of another Contracting State'"
8. Counsel for the Defendant sensibly did not raise any particular issue on
this point, so that I conclude that this Court must in the main deal with
the application of Article 17 in the light of the facts of this case and of the
applicable law.
9. The factual background is set out in the Affidavits of P. D. on behalf of
the first named third party and C. G., the Defendant. The present dispute
between the Defendant and the first named third party arises out of an
agreement made in either April or July of 1997 whereby the Defendant
agreed to purchase and the first named third party agreed to supply the
computer terminals already referred to. MrD. in his Affidavit claims that
this contract was governed by T. (UK)'s conditions of sale, which appeared
on the reverse side of the invoice sent to the Defendant. These conditions
of sale provided at clause 19 as follows:
"Jurisdiction and Governing Law
Any contract of which these conditions form part shall be governed by the
laws of England and the buyer hereby submits to the jurisdiction of the
English Courts".
10. In support of this claim he exhibits the invoice itself, together with a
set of standard invoices containing the same clause, which is drawn to
the customer's attention by the statement on the face of the invoice that
"ALL TRANSACTIONS ARE SUBJECT TO STANDARD CONDITIONS OF SALE
OVERLEAF".
11. It appears that the Defendant and the first named third party
began dealing with each during the years 1987 to 1989. There is an
issue between them as to why they ceased to deal in 1989 but it is not
necessary for me to resolve this issue. In or about 1995 the Defendant
again wished to deal with T. (UK) and forwarded an application for credit
terms dated 3rd October, 1995. MrD. avers that further to this 1995
application the Defendant was sent a printed copy of the conditions of
sale which were then applied by T. (UK). Clause 20 of these conditions of
sale provides:
"Jurisdiction and Governing Law
Any contract of which these conditions form part shall be governed by the
laws of England and the buyer hereby submits to the jurisdiction of the
English Courts."
12. The Defendant in his Affidavit states that he has no recollection of
being sent a printed copy of these conditions of sale and that he is unable
to find any record of having been sent such conditions. However, he
accepts that the clause referred to by MrD. appeared on the reverse side
of the invoices which were sent to him in regard to various transactions
and that it appeared on the relevant invoices in regard to the sale of the
computer terminals in question. Mr D. avers that the Defendant had never
at any time taken issue with the conditions of sale offered by T. (UK) and
had never sought alternative conditions of sale. Since 1995 the Defendant
had on a number of occasions purchased equipment from T. (UK) and had
always received an invoice containing on its reverse side T. (UK)'s terms
and conditions of sale, including the clause dealing with jurisdiction and
governing law.
13. The Defendant, Mr G., in his Affidavit states that he never read the
conditions of sale which appeared on the reverse side of the invoices in
detail and that he understood in his dealings with the first named third
party that if any difficulty arose about products provided by it to him in
Ireland he could proceed against the first named third party in the Irish
Courts. He claims that the relevant clause should not be interpreted as
an exclusive jurisdiction clause but if it is capable of being interpreted
as an exclusive jurisdiction clause he says that it did not form part of
any agreement between him and thefirst named third party because
he did not intend to agree and nor did he agree to such a clause. He
would only have accepted a clause which provided an alternative venue
for proceedings in the event that the first named third party wished to
sue him. Mr G. also claims that he has a good cause of action against
the first named third party in tort for misrepresentation and also for an
express or implied indemnity. He states that these claims ought not to be
governed by the jurisdiction clause contained in the conditions of sale. He
also claims that the first named third party was negligent and in breach
of duty in regard to the supply of the system to the Plaintiff. In a second
Affidavit MrD. inter alia denies that T. (UK) supplied "the system" to the
Defendant; it only supplied the computer terminals. However, all these
questions fall to be decided at the trial of the action.
14. When the matter came on for hearing before me Counsel for the first
named third party submitted that the three issues to be decided by this
Court were as follows
1. Is clause 19, the jurisdiction and governing law clause of the conditions
of sale, an exclusive jurisdictional clause?
2. Was this clause an agreement within the meaning of Article 17 of the
Brussels Convention and could it be shown, in the context of Article 17,
that there was sufficient consensus between the parties?
3. Did clause 19 cover reliefs in addition to those arising directly from the
contract – e.g. tort, indemnity, etc?
15. It seems to me that this correctly states the issues to be decided.
16. With regard to the first question the clause in question firstly states
that the contract is governed by the laws of England. This in itself, of
course, does not decide jurisdiction, since it would be open to the Courts
of Ireland or of another jurisdiction to interpret the contract in accordance
with English law. This procedure may give rise to somedifficulties and
complexities but it is by no means impossible. The clause goes on to
state in boldly general terms. "And the Buyer hereby submits to the
jurisdiction of the English Courts". The English Courts have dealt with
the interpretation of purported exclusive jurisdiction clauses – see, for
example British Aerospace plc -v- Dee Howard Company [1993] 1 Lloyds
Law Reports 368, and Continental Bank NA -v- Aeokos Cia Naviera SA
and others [1994] 2 All ER 540. The Clauses in those cases, however,
were considerably more sophisticated and more carefully drawn. It is,
of course, obvious that the first named third party intended that clause
19 would confer exclusive jurisdiction on the English Courts, but is that
sufficiently clear to the Buyer on the actual wording? Even a simpler
clause, such as that dealt with byGeoghegan J. in Holfeld Plastics Limited
-v- ISAP OMV Group Sp A (High Court, unrptd, 19th March, 1999) which
stated under the heading Competent Courts of Law "In the event of
dispute, the parties shall accept as the Competent Court of Law, the
Courts in the place where the Vendor has his head office" is much clearer
in its intent than clause 19 in the instant case. However, a number of
other factors must be taken in to account. Firstly, the relevant clause
is headed "jurisdiction and governing law", which indicates that it deals
both with the law governing the contract and also with the jurisdiction
to which disputes are to be referred. Secondly, the Defendant asserts in
his Affidavit that, although he never read the conditions of sale in detail,
he"understood in his dealings with the first named third party" that he
could proceed in the Irish Courts. He does not suggest that this was his
understanding of clause 19, or that clause 19 conveyed that meaning,
or, indeed, that the first named third party ever informed him that he
could proceed in the Irish Courts in the event of a dispute. His averment
relates solely to his own"understanding" of the matter and not to any
basis for that understanding. Thirdly, and perhaps wisely, Counsel for
the Defendant did not deal with this as a major point in his submissions.
On balance, therefore, and with some hesitation on account of the loose
nature of the wording, I accept that clause 19 of thestandard conditions
of sale appearing on the invoices and clause 20 of the conditions of sale
document are clauses providing for exclusive jurisdiction.
17. The second issue is concerned with the interpretation of Article 17 of
the Brussels Convention in the context of the facts of the instant case. In
Holfeld Plastics Limited -v- ISAP OMV Group Sp A the learned Geoghegan
considered somewhat similar situation where the Defendant relied on an
exclusive jurisdiction clause which was included in the printed Conditions
of Contract. The Plaintiff argued that at the relevant time he had not read
the terms and conditions which contained the jurisdiction clause. The
learnedGeoghegan J. stated (at page 4 of his judgment)
"If it was simply a matter of interpreting the contract in accordance with
Irish law, I would have no hesitation in holding in favour of the Defendant.
These were two commercial companies dealing at arms length and a
company such as the Plaintiff should expect supplier companies such as
the Defendant to annex to all its sales its own terms and conditions. Both
quotations made it expressly clear that those conditions were to apply and
on any reasonably careful reading of them the Plaintiff would have been
on notice of the exclusive jurisdiction clause."
18. Geoghegan J., however, went on to say:
"However, I am satisfied that it is not correct to determine this matter
by reference to the Irish Law of Contract. In the case of an exclusive
jurisdiction clause, the provisions of Article 17 of the Brussels convention
must be strictly applied and in the course of that application the clause
must be interpreted in accordance with European Community Law".
19. The same approach must, it seems to me, be used in the present
case. The Defendant had been, in terms of Irish law, put on notice
throughout the history of his trade with the first named third party of the
jurisdiction provision contained in clause 19. In addition it seems likely
that in 1995 he had received the printed conditions of sale which included
clause 20 on jurisdiction. Clause 19 had been printed on the reverse side
of the invoice covering the actual transaction whereby the first named
third party supplied the computer terminals used in the Plaintiff's cash
control system.
20. Turning to European Community Law, a comparable situation was
dealt with by the European Court of Justice in the case of Galeries
Segoura SPRL -v- Bonakdarian [1976] ECR 1851. In that case the Court
was asked to give a ruling on two questions as follows:
"1. Are the requirements of Article 17 of the Convention satisfied if, at the
oral conclusion of a contract of sale, a vendor has stated that he wishes to
rely on his general conditions of sale and if he subsequently confirms the
contract in writing to the purchaser and annexes to this confirmation his
general conditions of sale which contain a clause conferring jurisdiction?
2. Are the requirements of Article 17 of the Convention satisfied if, in
dealings between merchants, a vendor, after the oral conclusion of a
contract of sale, confirms in writing to the purchaser the conclusion of
the contract subject to his general conditions of sale and annexes to
this document his conditions of sale which include a clause conferring
jurisdiction and if the purchaser does not challenge this written
confirmation?"
21. In that case, on handing over the goods, the vendor delivered to the
purchaser a document described as "confirmation of order and invoice",
which stated that the sale and delivery had taken place "subject to the
conditions stated on the reverse". This document was not confirmed by
the purchaser. In its ruling the Court held that the way in which the first
paragraph of Article 17 of the Convention was to be applied
"must be interpreted in the light of the effective but confirmative
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 consequence 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."
22. In regard to the second question the Court held that a subsequent
notification of general conditions of sale is not capable of altering
the terms agreed between the parties, except if those conditions are
expressly accepted in writing by the purchaser. The Court, however, went
on to distinguish the situation where the contract in question formed part
of a course of trading between the parties, stating (at page 1862)
"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 the jurisdiction
conferred by consent, even if he had given no acceptance in writing."
23. The Court concluded that
"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."
24. The European Court returned to the question of the interpretation of
Article 17 in the case of Mainnschiffahrts – Genossenschaft eG (MSG) -v-
Les Gravières Rhénanes SARL [1997] ECR 1-911. By this time Article 17
had been amended by the 1978 Accession Convention so as to include the
phrase "or, in international trade or commerce, in a form which accords
with practices in that trade or commerce of which the parties are or ought
to have been aware." As a consequence of this, therefore, the Court held
(at page 940) "It must therefore be considered that the fact that one of
the parties to the contract did not react or remained silent in the face of
the commercial letter of confirmation from the other party containing a
pre-printed reference to the Courts having jurisdiction and that one of
the parties repeatedly paid without objection invoices issued by the other
party containing a similar reference may be deemed to constitute consent
to the jurisdiction clause in issue, provided that such conduct is consistent
with the practice in force in the area of internationaltrade or commerce in
which the parties in question are operating and the parties are or ought to
have been aware of that practice."
25. In the submissions made before this Court it was not seriously
suggested that the practice of printing general conditions of sale on
the reverse side of invoices and similar documents, with a reference
on the face of the document to the said conditions, was not a common
commercial practice in the type of international trade with which we are
concerned here. Indeed, from the point of view of practical experience
every ordinary consumer, and still more anyone engaged in trade or
commerce, must be familiar with this type of document.
26. In the instant case the Defendant had regularly traded with the
first named third party both from 1987 to 1989 and subsequently
from 1995 onwards. It is established by the Affidavit of Mr D. and the
exhibits thereto that the Defendant had repeatedly received invoices
which included clause 19, the jurisdictional clause. At no stage had the
Defendant even raised a query in regard to this clause. Still less had he
refused to be bound by it. It seems to me, therefore, that the contract
entered into by the Defendant and the first named third party, whether
it be a written contract or a contract partly in writing and partly oral,
incorporated the terms and conditions set out repeatedly on the invoices
sent out by the first named third party in the course of trade. In these
circumstances the Court must hold that there was consensus between the
parties as to the jurisdictional clause and that it came within the terms of
Article 17 of the Convention.
27. The third question which arises is whether the exclusive jurisdiction
of the English Courts referred to in clause 19 extends to reliefs other than
that of breach of contract. In his third party notice the Defendant claims
negligence and breach of duty against the third parties and also claims
an indemnity against them. In his Affidavit of the 7th May, 1999 the
Defendant refers to a claim of misrepresentation, and this also forms part
of the Plaintiff's original Statement of Claim. Counsel for the Defendant
argued strongly that these claims fell outside the scope of clause 19.
They fell to be litigated in this Court and, in order to avoid the undesirable
situation of having differing claims as between the same parties litigated
simultaneously in two jurisdictions, the entire of the Defendant's claim
as against the first named third party should be dealt with by this Court
which was the Court first seised of the matter.
28. Counsel for the first named third party submitted that all the claims
by the Defendant against the first named third party arose in reality
from the same transaction – the contract to supply computer terminals
– and that all aspects of the matter should come under the jurisdiction
of the English Courts. She referred to the case ofContinental Bank NA
-v- Aeokos Cia Naviera SA and Others [1994] 2 All ER 540. In that
case a loan agreement between an American bank and a number of
Greek shipping companies contained a clause which, the Court held,
conferred exclusive jurisdiction on the English Courts. Clause 21.01 of
that agreement provided that the agreement was to be governed by and
construed in accordance with English law and that each of the borrowers
irrevocably submitted to the jurisdiction of the English Courts. It was
argued on behalf of the borrowers that the proceedings which they had
commenced in the Greek Courts fell outside the scope of the agreement.
The Greek proceedings were based on Article 919 of the Greek Civil Code
which provided:
"Whoever intentionally in a manner which violates the commands of
morality causes damages to another is bound to make reparation to the
other for any damage thus caused."
29. Steyn L.J. held that clause 21.01 of the agreement contemplated the
submission of disputes to the English Courts. He went on to say
"But what disputes does it cover? The answer is not to be found in the
niceties of the language of clause 21.02. It is to be found in a common
sense view of the purpose of the clause. We are emboldened to adopt this
approach by the observation of LordDiplock in Antaios Cia Naviera SA -
v- Salen Rederierena AB, The Antaios [1984] 3 All ER 229 at 233 that –
'if detailed semantic and syntactical analysis of words in a commercial
contract is going to lead to a conclusion that flouts business common
sense, it must be made to yield to business common sense...' The only
sensible construction of clause 21.02 is that it is a submission of disputes
in connection with the loan facility to the jurisdiction of the English Courts.
Prima facie, therefore, clause 21.02 covers the Greek proceedings.
But Miss Dohmann submits that the clause cannot be construed as
extending to a claim in tort. It seems to us to be useful on this point to
consider the approach adopted nowadays in the closelyanalagous field
of arbitration clauses. In Empresa Exportadora de Azucar -v- Industria
Azucarera Nacional SA [1983] 2 Lloyds Reports 171 the arbitration
clause covered any dispute arising out of this contract. The question was
whether it covered only contractual claims or also a claim in conversion.
In giving the judgment of the Court Ackner L.J. concluded (at 183): '...
the contractual and tortious claims were so closely knitted together on the
facts, that the agreement to arbitrate on one can properly be construed
as covering the other.' Moreover, if Miss Dohmann is right, it would mean
that a claim for damages for negligent misrepresentation inducing the
contract (a tort) would be outside clause 21.02 but a claim seeking
rescission of the contract on the ground of the same misrepresentation (a
contractual claim) would be covered by it. Ifthe Appellant's contention is
accepted, it follows that the two claims might have to be tried in different
jurisdictions. That would be a forensic nightmare."
30. Steyn L.J. went on to conclude
"The complaint in the Greek proceedings makes clear that the thrust of
the Appellant's case is that the bank performed the loan agreement in
a manner which is contrary to business morality. The issue in the Greek
proceedings is inextricably interwoven with the contractual rights and
duties of the parties. In our judgment the judge rightly concluded that all
disputes in connection with the loan facility are covered by the jurisdiction
clause, and, so construed, clause 21.01 is apt to cover the disputes in the
Greek proceedings."
31. It seems to me that this is the correct approach and is, indeed, in
accordance with business common sense. The Defendant's claims of
negligence, of misrepresentation, and indemnity are "closely knitted" to
the contractual claim, and indeed it appears that very much the same
evidence would be used in support of all the claims. If, as I have held,
the contractual claim falls to be decided by the English Courts under
clause 19, it would be extremely difficult and costly to pursue separate
proceedings in tort before the Irish Courts. In my view all theseinter-
related claims must be tried together.
32. Accordingly, this Court has no jurisdiction to hear and determine the
Defendant's claim against the first named third party, and this Court must
set aside the service of the third party notice upon the first named third
party.