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The Impact of the Applicable Law Of Contract on the Law of Jurisdiction under the European Conventions

Published online by Cambridge University Press:  17 January 2008

Christopher Forsyth  and
Philip Moser
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Extract

The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, agreed in Brussels on 27 September 1968 (and generally referred to as the Brussels Convention), has been part of English law since the coming into force of the Civil Jurisdiction and Judgments Act 1982.1 The Convention now dominates the law of jurisdiction in civil and commercial matters as well as the law governing the recognition and enforcement of foreign judgments.

Type
Shorter Articles, Comments and Notes
Information
International & Comparative Law Quarterly , Volume 45 , Issue 1 , January 1996 , pp. 190 - 197
Copyright
Copyright © British Institute of International and Comparative Law 1996

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References

1. The Act was most recently amended by the Civil Jurisdiction and Judgments Act 1991, inserting the Lugano Convention as Sched.3C. Lugano extended the conditions of Brussels (with some variations) to the then EFT A States, viz., Austria, Finland, Iceland, Norway, Sweden and Switzerland (in force in the UK since 1 May 1992: S.I. 1992/745).

2. Art.4(2) Rome, discussed in more detail infra.

3. In non-Convention cases the law of the contract has sometimes been a decisive factor in determining jurisdiction under English conflict of law rules, but the fact that a contract is governed by English law alone will give English courts jurisdiction only where it can be shown that justice could not be obtained in the foreign court, or could be obtained only at excessive cost, delay or inconvenience (see Amin Rasheed Shipping Corp. v. Kuwait Insurance Co. [1984] A.C. 50, 68 (per Lord Diplock); see generally Dicey, and Morris, , The Conflict of Laws (12th edn), pp.331–332).Google Scholar Even under the transitional provisions of the Brussels Convention, there may be English jurisdiction over a foreign domiciliary in a contract case, if the parties had expressly agreed in writing before 1 Jan. 1987 that English law should apply (Art.54(3) Brussels; Dicey and Morris, Idem, pp.332–333).

4. In In re Harrods (Buenos Aires) Ltd [1992] Ch. 72, the Court of Appeal held that English common law rules applied in cases involving non-Brussels Convention countries; a reference was made by the House of Lords to the ECJ to test this ruling, but the case was settled by the parties and the point remains unresolved. The Rome Convention applies regardless of the countries concerned (Art.1(1)).

5. Civil Jurisdiction and Judgments Act 1982, ss.41–46, and Arts.52–53 of the Brussels Convention.

6. Case 14/76 de Bloos v. Bouyer [1976] E.C.R. 1497, particularly at para.13 of the judgment.

7. In Case 12/76 Tessili v. Dunlop A C [1976] E.C.R. 1473 the ECJ said: “It is for the court before which the matter is brought to establish under the Convention whether the place of performance is situate within its territorial jurisdiction. For this purpose it must determine in accordance with its own rules of conflict of laws what is the law applicable to the legal relationship in question and define in accordance with that law the place of performance of the contractual obligation in question.” This approach has been followed consistently since, most recently in Case C–288/92 Custom Made Commercial Ltd v. Stawa Metallbau GmbH [1994] E.C.R.I–2913, discussed more fully infra. The first step for the national court will sometimes be to determine whether an action amounts to a “matter relating to a contract” at all—for a recent example see Alias Shipping Agency (UK) Ltd v. Suisse Atlantique Société d'Armement Maritime SA, [1995] 2 Lloyd's Rep. 188 (broker's right to sue buyer as trustee of the commission money a “matter relating to a contract”, so that brokers could sue in place of performance, being the place of payment of money).

8. See e.g. Case 29/76 LTU GmbH v. Eurocontrol [1976] E.C.R. 1541; on the difference between public and civil/commercial matters see Case 814/79 Netherlands State v. Ruffer [1980] E.C.R. 3807 (claim relating to clearance of a wreck not a Convention matter).

9. Supra n.7

10. The combination of these Conventions is consistent with the harmonisation of EU law, indeed the Tizzano Report on the Protocols on the Interpretation of the Law Applicable to Contractual Obligations, para.22, calls the Rome Convention “the logical complement to the Brussels Convention”.

11. As occurred (in the context of an agency contract) in a Court of Appeal case, decided before the coming into force of the Rome Convention: Mercury Publicity Ltd v. Wolfgang Loerke GmbH [1993] I.L.Pr. 142. The Court allowed an appeal from an order, made under R.S.C. Ord.12. r.8, that the English courts did not have jurisdiction to hear the case between the English company (Mercury) and the German company (Loerke) under the Civil Jurisdiction and Judgments Act 1982. Purchas LJ also held (Idem, p.152) that “to establish jurisdiction all the Plaintiffs have to do is to show that they have a ‘good arguable case’ that the English courts have jurisdiction”. It is suggested that this standard of proof falls short of that set by the ECJ in Case 38/81 Effer v. Kanmer [1982] E.C.R. 825 (at para.7 of the judgment), in the context of whether a court can examine the existence of an alleged contract for the purposes of jurisdiction: “the court called upon to decide a dispute arising out of a contract may examine, of its own motion even, the essential preconditions for its jurisdiction, having regard to conclusive and relevant evidence adduced by the party concerned” (emphasis added). (Although the court need not first satisfy itself that the contract exists if that is the subject matter of the dispute: Tesam Distribution v.Schuh Mode Team [1990] I L.Pr. 149.) Although Mercury is still good law, it is doubtful whether the “good arguable case” test should be followed, as it requires something less than conclusive proof (at least to the civil standard) that the English court is indeed the correct forum for the case under the Brussels Convention, thus contradicting the Convention's aim of legal certainty (see e.g. Effer, Idem, para.6).

12. Robey & Co. v. Snaefell Mining Co. Lid (1887) 20 Q.B.D. 152; see generally Chilly on Contracts (26th edn). Vol. 1, para. 1530: cf. Royal Bank of Scotland v. Cassa di Risparmio delle Provincie Lombardi [1991] I.L.Pr. 411 (held: the rule does not apply to the relationship between banker and customer); the place of performance can also be specified by the contract. It is interesting to note that if a sale of goods contract governed by English law is silent on place of payment and delivery, and delivery is then effected at the seller's place of business, payment will also have to be effected at that place, since payment and delivery are concurrent conditions unless otherwise agreed: Sale of Goods Act 1979, s.28.Google Scholar

13. See para.269 of the Allgemeines Bürgerliches Gesetzbuch.

14. See e.g. Dicey, and Morris, , op. cit. supra n.3, at pp.358–359.Google Scholar

15. Para.5 states that para.2 shall not apply where the characteristic performance cannot be determined, in which case the contract is governed, according to para.1, by the law of the country with which it is most closely connected.

16. See Dutch courts in Machinale Clasfabriek de Maas BV v. Embaillerie Atsacienne [1984] E.C.C. 123 (sale of goods); Bata v. Beugro N.J. 1984 No.745, 2663 (agency), and Tribunal de Grande Instance, Paris, in S v. K and ors, 3 Feb. 1982, D. 1983 J. 146 (legal services). See generally, Plender, The European Contracts Convention (1991) pp.111–112.Google Scholar

17. E.g. a contract for the purchase of Dorset cider, to be delivered to a yacht off the Dorset coast, paid for by the Liberian company chartering the yacht: should the law of the contract be Liberian?

18. According to the Giuliano–Lagarde Report on the Rome Convention, the country concerned is that in which the company's principal place of business is situated or, if the contract is to be performed through a place of business other than the principal place of business, the country in which that other place of business is situated (Report on Art.4, at para.3).

19. De Bloos, supra n.6. There is an exception in the case of contracts between employer and employee. Thus in Case 133/81 lvenel v. Schwab [1982] E.C.R. 1891 the ECJ held that the “obligation in question” is that which characterises the contract as a whole (see para.20 of the judgment) and in the case of contracts of employment that is work. (The ECJ was influenced by the draft provision of what was to become Art.4(2) of the Rome Convention.) lvenel was, however, firmly restricted to contracts of employment in Case 266/85 Shenavai v. Kreischer [1987] E.C.R. 239. The Court of Appeal in Mercury v. Loerke, supra n.11, determined the type of relationship required to give rise to the lvenel exception as: “those cases of a personal nature in the relationship of master and servant where inequality of bargaining power may well become critical, and in which to allow a jurisdiction in a court other than the place in which the main execution of the work is to take place, might well deprive the employee or agent from the protection of restrictive agreements and from other statutory and union protections which have been negotiated for his benefit”. The lvenel exception is now contained in the second clause of Art.5(1) of the Brussels Convention, as amended by the San Sebastian Convention (given effect in the UK by the Civil Jurisdiction and Judgments Act 1982 (Amendment) Order 1990. S.I. 1990/2591).

20. Case 56/79 Zelger v. Salinitri [1980] E.C.R. 89, para.5 (if such a choice is permitted by the law of the contract).

21. But see infra Section D.

22. Done at The Hague, 1 July 1964; currently being replaced by the UN Convention on Contracts for the International Sale of Goods, done at Vienna on 11 Apr. 1980, which contains in its Art.57 a provision similar to that of Art.59 of the Uniform Law.

23. See Custom Made Commercial Ltd v. Slawa Metallbau GmbH [1993] I.L.Pr. 490,495. This is the judgment of the German Federal Supreme Court: the judgment of the ECJ is considered infra.

24. Case C-288/92 [1994] E.C.R.I–2913.

25. See Digesta 2.3.12; 3.3.19–20; and Codex Iustinianus 3.19.1.3, this last text showing how the forum rei is considered to be at the defendant's domicile.

26. In a judgment of 22 Nov. 1990 in Jeumom-Schneider SA v. Gruppo Industriale Ercole Marelli SpA (rep. at [1994] I.L.Pr. 12), the Italian Supreme Court took an extreme position in holding (at para.11): “Article 59 applies in an overriding and enveloping manner in place of the common provisions of private international law.”

27. See opinion delivered 8 Mar., supra n.24, at p.2915.Google Scholar

28. Idem, p.2933, para.77.

29. Idem, para.78.

30. Idem, p.2934. para.82.

31. Judgment, Idem, pp.2957 el seq., paras.23 and 26. The ECJ also held that place of performance of the obligation is the only criterion to be used to confer jurisdiction under Art.5(1). even where the court which is accorded jurisdiction has no connection with the dispute, because to do otherwise would be contrary to the Convention and mean a return to the criterion of closest connection (Idem, pp.2956 el seq., paras. 16–21).

32. Idem, p.2958, paras.27–29.

33. Although the Convention was implemented by the UK in the Uniform Laws on International Sales Act 1967 (in force by virtue of Uniform Laws on International Sales Order 1972, S.I. 1972/973), the Act provides that the Uniform Law will apply under English law only where the parties have expressly agreed that this should be so (s.1(3): see generally Chitiy, op. cit. supra n.12, Vol.2, at para.4682). Since, in practice, parties rarely so agree, the Convention is seldom applicable in contracts governed by English law.