FINLAY CJ: This is an appeal brought by the defendant against an
order made in the High Court on the 25 February, 1992, dismissing an
application made by the defendant by motion to strike out for want of
jurisdiction the proceedings herein. The application and appeal involve
the question of the interpretation of the Jurisdiction of Courts and
Enforcement of Judgments (European Communities) Act, 1988.
The plaintiff is a limited liability company registered and domiciled in
Ireland and the defendant is a limited liability company registered and
domiciled in the United Kingdom.
By a plenary summons issued in Ireland on the 28 June, 1991, the
plaintiff claimed damages for breach of contract and in so claiming
asserted that the court had power under the Act of 1988 to hear and
determine the plaintiff's claim by virtue of art 5(1) of the Brussels
Convention, 1968, and stated that no proceedings between the parties
herein concerning the same cause of action were pending between the
parties herein in another contracting state.
By statement of claim delivered on the 2 July, 1991, the plaintiff alleged
that by an agreement made between it and the defendant the plaintiff
agreed to manufacture and sell to the defendant, who agreed to buy eight
thousand computers in accordance with the samples thereof submitted
by the plaintiff to the defendant. It is alleged in the statement of claim
that the agreement between the parties was made partly orally, partly
in writing and partly by conduct. The plaintiff then sets out particulars
and details of the writing, oral statements and conduct relied upon, and
claims that "wrongfully and in breach of the said agreement the defendant
has failed and refused and continues to fail and refuse to give effect to or
discharge its obligations or any of them thereunder whereby the plaintiff
has suffered and continues to suffer very heavy injury, loss and damage."
By notice of motion dated the 22 November, 1991, the defendant sought
an order striking out the plaintiff's claim for want of jurisdiction. This
motion was supported by affidavit and affidavits were filed on behalf of
the plaintiff in reply thereto. A number of further affidavits were served
and filed and eventually, upon the matter coming on for hearing before
Lardner J, one of the deponents was cross-examined on his affidavit.
The contention of the plaintiff that it entered into a binding contract with
the defendant to manufacture and sell to the defendant eight thousand
computers is, on the affidavits so far filed, strenuously denied by the
defendant, who asserts that the negotiations, discussions and documents
went no further than a stage in negotiations which might have led to such
a contract, but that it, the defendant, withdrew from the negotiations
before any agreement was made between the parties. It was agreed on
the facts that between August, 1990, and November, 1990, six sample
computer systems were ordered by the defendant from the plaintiff and
that they were paid for. The plaintiff's case is that subsequent to the
manufacture and supply of these sample pieces of equipment, the price,
the precise specifications, the times for delivery from time of order, and
the total number of computers to be supplied in accordance with the
contract, namely, eight thousand over a period of three years, in separate
amounts, were all finally agreed between the plaintiff and the defendant.
The amounts in each of the years concerned were for one thousand units
in the year 1991, two thousand units in the year 1992, and five thousand
units in the year 1993.
Other than the six sample models manufactured, delivered and paid for
prior to the end of the year 1990, by January, 1991, the defendant had
not ordered any further computers to be manufactured and supplied to
it. On query from the plaintiff, the defendant then contended that no
agreement existed, that what had been merely a possible project was now
far various reasons being abandoned, and that it had no further obligation
to the plaintiff. These proceedings were then instituted in June, 1991. In
the affidavit filed to resist the motion to strike out for want of jurisdiction,
Mr K., managing director of the plaintiff company, at para 27, stated as
follows:-
"I believe from the documents to which I have referred and to the
behaviour and conduct of the plaintiff and the defendant herein that a
contractual arrangement exists between the plaintiff and the defendant
and that the contractual obligation which forms the basis of these
proceedings or, alternatively, the characteristic obligation of the contract,
was a requirement upon the plaintiff's part to manufacture computers to
the defendant's specification at his premises in Shannon in County Clare,
with an obligation upon the defendant to take delivery at those premises
following inspection at the Shannon premises by a representative of the
defendant as outlined in the draft agreement submitted."
The learned trial judge having heard and considered the evidence
concluded that if there was a contract for the manufacture, sale and
purchase of eight thousand computers that the term of that contract with
regard to delivery was probably delivery at the defendant's premises in
England. In so far, therefore, as this contention contained in the affidavit
was relied upon by the plaintiff to justify the institution of the proceedings
in Ireland, the learned trial judge rejected it.
He went on, however, in the course of his judgment to consider further
the question as to what was, within the terms of art 5 of the Brussels
Convention, 1968, the obligation in question on the contract which
had allegedly been breached by the defendant and constituted the
plaintiff's cause of action, and where it was to be performed. He reached
a conclusion that the obligation which was to be performed on the
plaintiff's case and which had not been performed, was the obligation
of the defendant to order computers in the numbers alleged, and that
that was an obligation to order them by a communication made to
the plaintiff company at Shannon in Ireland, and accordingly that this
was an obligation to be performed in this country. Having reached that
conclusion, the learned trial judge dismissed the application to strike out
the proceedings.
The relevant provisions of the Brussels Convention, 1968
By virtue of art 2 of the Convention, which is made part of the law of
Ireland by the Jurisdiction of Courts and Enforcement of Judgments
(European Communities) Act, 1988, and a schedule thereto, it is provided
as follows:-
"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."
In art 5 of the Convention, which is contained in section 2 under the
heading "Special Jurisdiction", it is provided that:-
"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."
These two provisions have been considered on two occasions by this
Court: firstly, in Unidare plc v James Scott Ltd [1991] 2 IR 88, and
secondly, in Gannon v British and Irish Steampacket Co Ltd [1993] 2 IR
359. Unidare plc v James Scott Ltd concerned a contract by the plaintiffs
to manufacture, sell and deliver to the defendant within the jurisdiction
of the United Kingdom equipment for electricity power lines which were
being erected by the defendant in Northern Ireland. The precise claim
being made by the plaintiffs, who were a public company and a limited
liability company domiciled and registered in Ireland, was for the agreed
purchase price which it alleged was due for the supply of the equipment.
To that claim it would appear that the defendant intended to counterclaim
or set off a claim for alleged defective workmanship. Separate issues
arose with regard to a special agreement concerning the jurisdiction of
the courts, which are not relevant to the present case, and the unanimous
decision of this Court was that the obligation still to be performed in
respect of which the claim was being made by the plaintiffs against the
defendant was an obligation on the part of the defendant to pay the
plaintiffs for the goods supplied. Such a payment, as a matter of ordinary
law, was held to fall to be performed where the creditor was, namely, in
Ireland, and accordingly the institution of proceedings pursuant to art
5(1) was held to be justified. Gannon v British and Irish Steampacket Co
Ltd [1993] 2 IR 359 was a case in which the plaintiff suffered personal
injuries as a result of a road traffic accident which occurred in the United
Kingdom whilst she was travelling in a coach belonging to one of the
defendants, which was a company domiciled in England, and which
was in collision with a vehicle the property of a further defendant, also
domiciled in England. She had booked the trip through X., a company
domiciled in Ireland, which offered a joint ticket for a trip departing by
boat from Dublin to Holyhead, a journey by coach from Holyhead to
Liverpool and a night's stay in Liverpool and a return journey in a similar
manner. The plaintiff justified the institution of the proceedings against
all three defendants in Ireland by virtue of the derogation or exception
contained in art 6 of the Convention, providing that a person domiciled
in a contracting state may also be sued where he is one of a number of
defendants in the courts for the place where any one of them is domiciled.
The decision of this Court in that case was that it was driven to the
conclusion that the sole object of adding X. as a party in the proceedings
was to oust the jurisdiction of the English courts concerning the claim
against the two other defendants and that in those circumstances that
was a case in which the Court must refuse to accept jurisdiction against
those defendants under article 6(1). In the course of the judgment which
I delivered and with which the other members of the Court agreed at p
374 of the report, I stated as follows:-
"Having regard to the importance of the principle laid down that the
provision of this Convention vesting jurisdiction in the courts of the
state of the defendant's domicile must not be called in question by any
interpretation of the derogation or exception contained in art 6(1), it
seems to me that the court in considering a claim for jurisdiction made to
it under art 6(1) must closely enquire not only as to the making of a claim
against a defendant domiciled in this jurisdiction but must also enquire as
to the plausibility of such a claim in a prima facie fashion."
The principle thus laid down was in accordance with the decision of
the Court of Justice of the European Community in Kalfelis v Bankhaus
Schroder, Munchmeyer, Hengst & Co [1988] ECR 5565 in which it was
stated:-
"The principle laid down in the Convention is that jurisdiction is vested
in the courts of the State of the defendant's domicile and that the
jurisdiction provided far in Article 6(1) is an exception to that principle. It
follows that an exception of that kind must be treated in such a manner
that there is no possibility of the very existence of that principle being
called in question."
Applying these principles, as it is necessary to do, to what is the exception
provided for in art 5 of the Convention, and in particular, in art 5(1) which
is what is in issue in this case, I am satisfied that certain conclusions of
principle arise. They are:-
(1) The onus is on the plaintiff who seeks to have his claim tried in the
jurisdiction of a contracting state other than the contracting state in which
the defendant is domiciled to establish that such claim unequivocally
comes within the relevant exception.
(2) In a case of a claim for breach of contract, therefore, what he must
prove is that the obligation in question in that claim is, by virtue of the
terms of the contract or by some generally applicable principle of Irish
law, an obligation which must be performed in Ireland.
(3) It would follow from this that where the evidence adduced by a
plaintiff seeking to have a claim for breach of contract tried within the
jurisdiction of a contracting state other than the state of domicile of the
defendant amounts to no greater standard of proof than establishing
that the obligation which it is claimed was breached could have been
performed in such state, he has failed to establish his entitlement to sue
pursuant to art 5(1), the necessary proof being that the obligation which
it is claimed has been broken by the defendant according to the contract
or according to some general principle of law, must be performed in the
state concerned.
It is against that general principle of interpretation that the evidence
adduced before the learned trial judge in the High Court and his
conclusions therefrom on the issue of the place where the obligation to
order the individual deliveries of computers was to be performed, must be
viewed, so as to determine the issues arising in this appeal.
No appeal was taken against the learned trial judge's conclusion that in
respect to actual delivery the probable interpretation of the contract was
to the effect that it was to take place in England. I am satisfied that no
successful appeal could be taken against that finding, having regard to
the evidence upon which it was based.
The decision reached by Lardner J in the High Court is neatly stated as
to its reason at the conclusion of his judgment, as follows at p 352 of the
report:-
"However, the breach relied upon in the affidavits and in submissions,
though not expressly pleaded, is the failure of the defendant to place
orders for computers in accordance with the alleged contract. In my view,
assuming the existence of a contract of the kind alleged, the defendant
by necessary implication was bound to submit orders to enable it to be
performed. I find this view is supported by the form of the terms and
conditions of supply or trade relied upon by the plaintiff, in section 1
of which there are specific requirements for the placing of orders. The
defendant, of course, denies these terms were in fact agreed. But for
the present purposes I must consider them as part of the basis of the
plaintiff's claim. In my judgment the placing of orders by the defendant
was an essential prerequisite to the performance of the other obligations
under the contract and the obligation to place orders is the particular
obligation, the breach of which is the subject-matter of these proceedings.
Such an obligation is performed by the defendant communicating its
order to the plaintiff at Shannon. I therefore conclude that the Irish courts
have jurisdiction to try the plaintiff's claim and I refuse the defendant's
motion."
I am quite satisfied the learned trial judge was precisely correct in
concluding that the particular obligation which it is claimed was breached
by the defendant, and which gives rise to the entire of these proceedings,
was this obligation to place orders for specific quantities, at specific times,
of the eight thousand computers alleged to be agreed to be manufactured
and sold. The major question which arises, having regard to my view of
the onus which the terms of the Convention place upon the plaintiff in this
context, is the conclusion stated at the very end of his judgment by the
learned trial judge in the following words:-
"Such an obligation is performed by the defendant communicating its
order to the plaintiff at Shannon."
It is clear that the terms and conditions of supply or trade relied upon
by the plaintiff and referred to in the portion of the judgment of the
learned trial judge to which I have referred, contain a number of
provisions concerning the information and particulars to be supplied by
the defendant to the plaintiff in placing orders. Nowhere, however, is
there any provision for the method of placing an order and, in particular,
of course, for the place where that must occur. It is possible to contend
that it would be likely, having regard to the value and quantity of the
goods concerned in this contract, that an order would be placed in writing,
but there is not any requirement contained in the contract for it and it is
not impossible to conceive of a repeat order, for example, communicated
by word of mouth.
The evidence with regard to the negotiations leading to what the plaintiff
asserts was a concluded agreement indicates that much of the oral
discussions which took place took place in the United Kingdom and not in
Ireland; it is not unlikely that representatives of the plaintiff company in a
commercial transaction of this size and description would regularly attend
at the defendant's premises and would there obtain, either in writing or
verbally, orders for the supply of goods.
Furthermore, the conclusion of fact reached by the learned trial judge,
which I have just quoted, that the obligation was performed by the
defendant communicating its order to the plaintiff at Shannon, does not
necessarily and unambiguously answer the precise question as to whether
the obligation of the defendant to place these orders was an obligation to
be performed in Ireland or not. There does not appear to have been any
debate in the court below as to what the legal situation would be, even
if it was unequivocally provided by the contract that the orders were to
be placed by a document in writing, executed in the United Kingdom and
posted or faxed to the plaintiff's premises in County Clare.
Even assuming that the learned trial judge's conclusion must
unequivocally be construed as indicating an act to be performed by
the defendant in Ireland in the placing of orders, I have come to the
conclusion that there was not evidence before the learned trial judge
which justified that conclusion. This conclusion is reached by virtue of
what I am satisfied is the onus, and the extent of the onus, placed by the
terms of the Brussels Convention, 1968, on the plaintiff to establish with
particularity its entitlement to sue otherwise than in accordance with the
primary rule of the Convention contained in art 2, namely, in the courts of
the state in which the defendant is domiciled.
There is no general proposition of law applicable to this question of the
placing of orders under a contract such as this which would deem it
necessarily to be performed in Ireland, analogous or similar to the general
principle of law which was in issue in the case of Unidare plc v James
Scott Ltd [1991] 2 IR 88 concerning the obligation of a debtor to pay the
creditor where the creditor is residing or domiciled.
In these circumstances, I would allow this appeal and grant to the
defendant an order striking out these proceedings on the grounds that
they are not maintainable within the jurisdiction of the Irish courts.
O'FLAHERTY J: I agree.
EGAN J: I agree.
BLAYNEY J: I agree.
DENHAM J: I agree.
DISPOSITION:
Appeal allowed.