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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Chester Hall Precision Engineering Ltd v Service Centres Aero France [2014] EWHC 2529 (QB) (04 July 2014) URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/2529.html Cite as: [2014] EWHC 2529 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice, Strand, London, WC2A 2LL.
		4th July 2014

MRS JUSTICE SLADE:

1. Chester Hall Precision Engineering Limited (the claimant) purchased semi-finished metal products destined for the aircraft industry from Service Centres Aero France (the defendant) over a period between May 2007 and July 2009. The claimant is a company domiciled in the United Kingdom and the defendant a company domiciled in France. The claimant was invoiced a total of US$3,371,703.58 for the products. They paid the invoices in full. They claim that several of the invoices were for the incorrect amount and they overpaid by US$181,851.71. The claimant issued proceedings on 8th January 2014 in the High Court in England claiming that sum. Proceedings were served out of the jurisdiction. On 11th February 2014 the defendant issued an application notice for an order and a declaration that: (i) the claim form and accompanying particulars of claim be set aside, and (ii) the English court does not have jurisdiction to hear the claim, or should not exercise its jurisdiction to hear the claim.
2. At the outset of the hearing of the application Mr Kulkarni, counsel for the defendant, stated that the issue before the court was whether Article 23 of Council Regulation EC No. 44/2001 (the Judgment Regulation) is engaged. If it is not engaged, it is accepted on behalf of the defendant that the English court has jurisdiction to hear the claimant's claim. Mr Woods, counsel on behalf of the claimant, contended that Article 23 is not engaged.
3. Article 23 of the Judgment Regulation provides as follows:

"1. 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; or ...

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned."

The argument before the court focused on Article 23.1(a). Article 23.1(c) was referred to but no argument was developed in relation to it.

4. Mr Kulkarni contended that Article 23 applied because the goods were supplied pursuant to the defendant's written conditions of sale. These included a clause which, in translation from the French, provided:

"Jurisdiction clause. The commercial court of Nantes shall have exclusive jurisdiction regarding all disputes relating to our sales. By accepting our deliveries you are required to comply with this condition."

The defendant contended that Article 23 does not apply. Initially, in a witness statement of the production director of the claimant, Mr Dean David Halsey, made on 18th June 2014, a contention was made that the relations between the claimant and the defendant were governed by the terms of an alleged contract between Aircelle (UK) Limited ("Aircelle"), to whom the claimant supplied the finished aircraft parts made from the semi finished material supplied by the defendant, and Alcan, which was the holding company of the defendant at the relevant time. However, at the hearing before me, Mr Woods on behalf of the claimant abandoned this argument. He submitted that Article 23 did not apply for two reasons. First, the parties were not agreed on an exclusive jurisdiction clause. The documents relied upon by the defendant as constituting the agreement were not shown by the defendant to have incorporated the terms and conditions now relied upon. It was said that they were not on the reverse of the documents relied upon and that the court should not be satisfied on the evidence that the terms and conditions including the exclusive jurisdiction clause were the relevant terms and conditions and were incorporated. Further, it was contended that the requirement in Article 23 that the agreement between the parties on an exclusive jurisdiction clause was not satisfied as to the formalities. It was said that in this case the agreements between the parties were constituted by the acceptance by the claimant of the defendant's terms by conduct. Accordingly, it was said that the agreement as to exclusive jurisdiction was not an agreement in writing and not an agreement evidenced in writing.

5. The relevant legal principles. If Article 23 of the Judgment Regulations applies, a dispute between the parties to a contract is to be heard in the courts of a Member State of the jurisdiction agreed between them. If Article 23 applies so that the courts of another Member State have jurisdiction, the English court has no discretion to continue to hear the claim; it is obliged to give effect to Article 23 by recognising that the English court does not have jurisdiction. In dealing with this application the court uses its own procedural law. According to Dicey, Morris & Collins on The Conflict of Laws, Fifteenth Edition, paragraph 12-120:

"The test to be applied requires the party who alleges that there be an applicable agreement on jurisdiction to have the better of the argument on the materials before the court at the time of the challenge."

For Article 23 to apply, an exclusive jurisdiction clause does not have to be included in a written agreement between the parties. A means of satisfying Article 23.1(a) is that the agreement between the parties should be evidenced in writing. The parties therefore, have to be shown to have agreed that the court or courts of a Member State are to have jurisdiction to settle their disputes. There must be certainty of agreement as to which Member State or States is or are to have jurisdiction. Such an agreement may be reached by reference to a document which is not in fact read by a party. In the case of 7E Communications Limited v. Vertex Antennentechnick GmBh [2007] 1 WLR 2174, Sir Anthony Clarke, giving the judgment of the court, at paragraph 31, cited the judgment of the Court of Appeal in Credit Suisse Financial Products v. Societe Generale D'Enterprises [1997] CLC 168. He said:

"In that case the contract signed between the parties expressly provided for the application of the terms of the master agreement (to which they were not parties) which contained a jurisdiction clause. After referring to the Soloti case and quoting the second half of paragraph 9, which we have set out above, Saville LJ, with whom Aldous and Simon Browne LJs agreed, said at page 172:

'It seems to me to be clear from the judgment in Soloti that the court considered that a guarantee of real consent does exist where there is an express reference in the written contract by way of incorporation of other written terms which include a term conferring jurisdiction. Indeed, given such an express reference, it seems to me self-evident that the profferee of the written contract by signing without reservation has agreed in writing the incorporated terms (and thus the clause conferring jurisdiction) for the simple reason that the very words of the signed written contract itself are to that effect.'"

Clarke LJ then continued in paragraph 32:

"In that passage Saville LJ thus emphasized two points which are of some importance in the instant case. The first is that what the court in the Soloti case [1976] ECR 1831 had called in the first part of paragraph 9 a guarantee that the relevant party has 'really consented to the clause' exists where there is an express reference to the terms and conditions which include the jurisdiction clause. It is not necessary for there to be a specific reference to the jurisdiction clause itself. The second is that the fact that the relevant party does not have a copy of the terms and conditions or the jurisdiction clause in his possession is not relevant. So, in the Credit Suisse case, although he did not have a copy of the master agreement in his possession or readily available to him, Mr Mossler, by signing the confirmation, was held to have agreed in writing that the terms of the master contract formed part of the contract."

6. The first issue for the court to decide, therefore, is whether the relevant party has really consented to the clause which is relied upon. Real consent can occur by oral agreement or agreement by conduct. Accordingly, I do not accept the proposition advanced by Mr Woods that acceptance of terms and conditions including an exclusive jurisdiction clause does not fall within Article 23 unless it is contained in writing and that acceptance of a contract incorporating such a clause by conduct is insufficient to satisfy the provision of the Article. The first issue to be determined under the Article is whether the parties have really consented to the jurisdiction clause. That, in this case, is whether they have really agreed that the commercial court of Nantes should have exclusive jurisdiction over disputes between the parties. However, to fall within Article 23.1 the formal requirements of the Article have to be satisfied. Those formal requirements can be satisfied by an agreement in writing or an agreement evidenced in writing.
7. The evidence in this case.

The claims of overpayment are made in relation to five purchase orders: PG75061, PG75062, PG77538, PG77992 and PG77997. Those were purchase orders produced in 2008 and 2009. The undisputed evidence before the court relating to how these orders progressed is set out in the statement and exhibits of Mr James Henson dated 10th February 2014 and further amplified in the statement lodged on behalf of the claimant by Mr Halsey, a production director. The evidence is that the claimant sent to the defendant general purchase orders which included the following imprint on the form:

"Chester Hall Precision Engineering Limited's standard terms and conditions of purchase apply. Copy available on request."

On receipt of the purchase order the defendant would send the claimant a printed form in French entitled, "Accuse de Reception", which has been referred to as, "Acknowledgement of receipt/order confirmation." The text at the foot of the Accuse de Reception includes the following:

"Nos conditions generales de vente sont indiquees au verso."

This is translated as:

"Our general conditions of sale are shown overleaf."

The Accuse de Reception form also includes text in English:

"Our sales are indicated overleaf."

The translator notes that the English text is an inexact translation, but counsel took no point on this. The defendant then sent a delivery note with the goods. The printed form included the same text as that on the acknowledgement of receipt and order confirmation. An invoice was then sent to the claimant which also included the text: "Our general conditions of sale are shown overleaf." Mr Halsey for the claimant stated that the purchase order and acknowledgement of receipt were sent by email. He also stated that the invoices were sent by email. The front page only of the acknowledgement of receipt or confirmation order were sent by the defendant to the claimant. Mr Halsey wrote in his statement:

"It is noteworthy that none of the acknowledgements of receipt or confirmation of order put in evidence by the defendant contain a copy of their alleged terms and conditions of trading. Furthermore, when requested to provide copies of such documents, the defendant has been unable to do so. It has simply included a generic copy of what it alleges were its terms and conditions of trading at the relevant time. It has not provided any evidence to show that those terms and conditions were sent to the claimant or that the terms and conditions exhibited to the witness statement of Mr James Henson were its terms and conditions of trading at the relevant time."

8. The evidence for the defendant and its exhibits identifies all five relevant acknowledgements of receipt. However, no originals or copies of these documents showing what was printed on the reverse have been produced. Nor is there a statement from a witness from the defendant identifying the general conditions of sale, which are included at page 93 of exhibit JRH1 to Mr Henson's statement, as those which were on the reverse of the relevant acknowledgements of receipt/order confirmation, or, indeed, stating that those terms produced now in 2014 were the terms which were applicable in 2008 and 2009 -the relevant dates for these claims.
9. Discussion and conclusion.

Did the parties agree that the Commercial Court at Nantes should have exclusive jurisdiction over the disputes between them? The only evidence relied upon by the defendant is the incorporation by reference of the defendant's general terms and conditions. It is not material that the claimant may not have seen those general terms and conditions. The claimant agreed to accept goods on the defendant's terms and conditions. However, I am not satisfied on the evidence that the terms and conditions produced before the court now were those on the reverse of the relevant forms or even were those applied generally by the defendant at the material time in 2008 and 2009. The defendant contended that the point that the general terms and conditions were not on the reverse of their documentation was raised late by the claimant. This is no doubt correct. However, it is for the defendant to establish that there is an applicable exclusive jurisdiction agreement and that they have the better of the argument on the materials before the court on this application to show that that is the case. It is apparent from the evidence relied upon by the defendant (namely, the statement of their solicitor, Mr Henson) that, as the transactions in issue took place some years ago, the defendant has not been able to locate all relevant documentation; two of the five relevant order confirmations were not available. Neither the originals, nor copies of the order confirmation with terms and conditions on the reverse, were put before the court. This may be unsurprising, as Mr Halsey, the production director of the claimant, stated that only the front page of the acknowledgement of receipt or confirmation order was sent by the defendant to the claimant; no general terms and conditions were sent to the claimant. Whilst it is likely that some terms and conditions of the defendant were available and would have been incorporated by reference in the acknowledgement of receipt which was evidence of an agreement between the parties, I am not satisfied that the terms and conditions produced to the court in 2014 were those applicable to these transactions in 2008 and 2009. There was no evidence from a witness from the defendant to establish that the exhibited terms were those which were incorporated in 2008 and 2009. The defendant has not established the burden of showing that they have the better of the argument that the clause conferring exclusive jurisdiction on the Commercial Court of Nantes was in the terms and conditions incorporated by reference in the agreement between the parties in 2008 and 2009. Whether the application of this test is that the defendant must establish a good arguable case -see the case of Fosby v. Ranovito [2010] Lloyd's Law Reports, Volume 1, page 384, at paragraph 34 -or whether the application of the test is that the applicant must show that the exclusive jurisdiction clause was incorporated on the balance of probabilities, they have failed to do so.

10. The consent of parties to a particular jurisdiction as being the jurisdiction before which their disputes are to be determined is an important matter. As was observed by Hamlyn J in Poskey, at paragraph 39:

"As to the requirements as to formality, these requirements are to be construed strictly because their purpose is to ensure that parties have indeed consented to a clause derogating from the ordinary jurisdictional role -see The Conflict of Laws, paras 12-112-111 to 12-115 and Civil Jurisdiction and Judgments, paras 2.92 to 2.95."

A similar observation is to be made in relation to whether the parties had reached an agreement at all that there be jurisdiction conferred on the courts of a particular Member State. In this case the defendant has failed to do so and the application is dismissed.