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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ennstone Building Products Limited v. Stanger Limited [2002] EWCA Civ 916 (28 June 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/916.html
Cite as: [2002] WLR 3059, [2002] 2 All ER (Comm) 479, [2002] EWCA Civ 916, [2002] 1 WLR 3059
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- This is an appeal by the claimant in these proceedings from a decision by Her Honour Judge Kirkham sitting in the Technology and Construction Court in Birmingham. By her judgment dated 20 December 2001 the judge determined a number of preliminary issues, and it is against the determination of one of those issues that this appeal is brought.
- The claimant was a supplier of stone for use in building work. The defendant provided testing and consultancy services. A problem had arisen in respect of stone supplied by the claimant for the Standard Life building in Edinburgh. The stone, which was sandstone quarried from Stainton Quarry in County Durham, was found to be becoming stained.
- The parties contracted in May 1995 for the defendant to provide professional services, including investigation into the cause of the staining, testing of the stone and reporting on remedial action. The claimant subsequently alleged that the defendant was negligent and/or in breach of contract in the performance of its services. The defendant denied the allegations of negligence in respect of both the contractual and the tortious claims.
- A trial of certain preliminary issues was ordered. It is only necessary to set out the terms of the first three of those issues:
- It is in respect of the judge’s determination of that third issue that this appeal is brought. She concluded that the proper law of the contract was Scottish law and likewise that Scottish law was applicable to any duty of care owed by the defendant in tort. The claimant had contended that English law was the proper law of the contract and governed any duty of care owed. The significance of this dispute in practical terms was and is that under Scottish law it may well be that the claim is statute-barred because of the shorter limitation period applicable, whereas no limitation point arises under English law.
- The defendant was part of the Tarmac Group and was registered, as were all the Tarmac Group companies, in England. The defendant had a number of offices in England, Scotland and Wales. It operated by way of regions, with each region centred around one of the main offices or laboratory complexes, such as the main laboratories and office at Elstree. Environmental services were handled out of an office in London. On-site services were handled from Wales, Birmingham, Manchester and the Scottish office in Glasgow. Each region had its own director and was responsible for its own client base and local operating structure, development, profitability and so on. The Scottish office was the defendant’s main office in Scotland and all substantial orders placed in Scotland, excluding highways work, were placed with it. At all material times when contracting to carry out work for a client, the Scottish office did so directly out of the Scottish office.
- The defendant’s registered office is at Wolverhampton. It is thus an English company. Its principal or main office was at Elstree. The defendant’s central administration was located in Elstree. Although the defendant’s central laboratory was located at Elstree, the Glasgow laboratory was able to undertake all relevant testing except metallurgy. The claimant is also an English company.
- The contract of May 1995 came about after a visit to the defendant’s Scottish office by a representative of the claimant, Mr Marshall, who raised the problem of the staining of the stone used on the Standard Life building. He discussed this with Mr Revie of the defendant’s Scottish office, with whom he had had previous dealings. Further discussions and correspondence followed.
- In April 1995 Mr Marshall asked Mr Revie to provide a quotation for an investigation into the causes of and remedies for the staining. In response, Mr Revie sent a letter dated 27 April 1995, enclosing a proposed investigation programme and budget estimate. The letter was sent from the defendant’s Scottish office and the programme covered investigation at the quarry in County Durham, a desk study of available information, and visits to sites including the Standard Life building itself and to another building in Scotland where similar stone had been used. Laboratory testing would be carried out. The defendant would then report to the claimant with its interpretation and recommendations. There were then to be site trials, including supervision by the defendant of cleaning trials at the Standard Life building.
- After a further meeting at the quarry, the claimant sent an order for the investigation, testing and reports. This was dated 15 May 1995. On the following day Mr Revie replied, thanking the claimant for the order and in effect accepting it. The letter from Mr Revie was on notepaper bearing the defendant’s Glasgow address and it confirmed that a file had been opened where all matters relating to this job would be held. The letter also stated that the Project Manager responsible for the job was Mr Revie. The judge found that the essential terms of the contract were contained in the defendant’s letter of 27 April 1995, the claimant’s order of 15 May 1995 and the defendant’s letter of 16 May 1995. That is not in dispute, save that the defendant emphasises the need to read those documents against the factual matrix of the relevant surrounding circumstances. None of the terms of the contract expressly identified the proper law of the contract.
- The defendant proceeded with its investigation. A report by it in September 1995 suggested treating the Standard Life building stone with oxalic acid. It was, it seems, so cleaned in about January 1996, but by April of the same year staining had once again become apparent. The claimant then engaged a new adviser, whose view was that oxalic acid exacerbated the staining problem. In due course the claimant brought these proceedings alleging that negligently and in breach of contract the defendant had failed to exercise all due professional skill and care in the performance of its services.
- On 5 October 2001 Judge Kirkham dealt with an issue as to jurisdiction and as to the proper forum. She concluded that the English courts had jurisdiction and that they were the appropriate forum both in contract and in tort. She emphasised in her judgment that she reached no conclusion as to the proper law of the contract, but she did hold that “from the limited evidence available at this stage” prime facie the place for performance of the contract would be England. She also noted that the detriment was experienced by the claimant in England, since that was where it would bear any financial loss, and so the judge held that the proper forum for any claim in tort was also England.
- At the hearing of the preliminary issues in December 2001, it was admitted by the claimant that the characteristic performance of the contract was the supply of advice to the claimant by the defendant (see para. 35 of the judgment). It was also common ground that, since the contract was silent as to the choice of law, the proper law of the contract was to be determined in accordance with the Contracts (Applicable Law) Act 1990. It is convenient to set out at this stage the relevant provisions from Schedule 1 of the Act which contains the English text of the Rome Convention. Article 4 deals with the applicable law where the parties have not expressly or impliedly chosen the law applicable. Insofar as material for present purposes, Article 4 provides:
- The judge’s conclusions on the proper law of the contract were set out in paragraphs 46 and 47 of her judgment as follows:
- On the claim in tort or delict it was common ground that the acts and omissions complained of took place before the coming into force of the Private International Law (Miscellaneous Provisions) Act 1995 (“the 1995 Act”). Consequently the rules determining the law governing this claim were those to be found at common law. The judge referred to a number of authorities, including the Privy Council case of Red Sea Insurance Company Limited –v- Bouygues S.A. [1995] 1 AC 190, and then said this at para. 53:
- Those conclusions are now challenged by the claimant.
- For the claimant, Mr Sampson submits that the judge failed to apply the proper test under Article 4(2). She decided that the characteristic performance of the contract was more closely connected with Scotland and said that “therefore Article 4(2) applies”. Yet that is not the Article 4(2) test. Since it is agreed that the contract was entered into in the course of the defendant’s trade or business, the proper law is that of the country in which the defendant’s principal place of business is situated, unless the final part of Article 4(2) applies so as to displace that, or unless Article 4(5) does so. The principal place of business of the defendant is in England.
- Mr Sampson contends that although the claimant dealt with the defendant’s Scottish office, it was not a term of the contract that the research and the report writing be done there. Emphasis is to be placed on the words in the last part of Article 4(2) “under the terms of the contract”. Those, says Mr Sampson, are crucial. It is only where the contract provides by an express or implied term that the performance is to be effected through a place of business other than the principal place of business that the last part of Article 4(2) applies so as to displace the presumption that the proper law is that of the country in which the principal place of business is situated. The claimant argues that it would have had no sanction against the defendant if the latter had done the work contracted for at its Elstree office and laboratory, because it was not a term of the contract that the defendant should perform its side of the contract via any particular office. Nor was the contract in any way personal to Mr Revie. The defendant could have closed its Glasgow office without there being a breach of the contract and likewise there would have been no breach if Mr Revie had been moved to some office in England. Mr Sampson submits that the references in the correspondence to Mr Revie being the project manager and to the file for this job being located in the Glasgow office did not give rise to any contractual obligation requiring the work to be done through the Glasgow office. It may well have been anticipated that that was how the contract would in fact be performed, but that by itself is not enough to bring into play the final part of Article 4(2).
- It is also submitted by the claimant that the judge below was wrong in her conclusion that Scottish law is the proper law of the contract because of Article 4(5). The presumption in Article 4(2) is only to be overridden if it is clear that the contract is more closely connected with another country than that arrived at under Article 4(2). Reliance is placed on dicta in Definitely Maybe (Touring) Limited –v- Marek Lieberberg Konzertagentur Gab [2001] 1 WLR 1745, where at para. 7 Morison J. said:
- Mr Sampson draws attention to the earlier ruling of Judge Kirkham in October 2001, where she held that the place of performance of the contract was England. No further evidence relevant on this aspect of the case was before the judge at the December hearing. In those circumstances the evidence did not establish a sufficiently clear indication that the contract was more closely connected with Scotland for the Article 4(2) presumption to be disregarded.
- The case for the defendant is that the last part of Article 4(2) applies in this case so as to make Scottish law the proper law of the contract. Mr Raeside, QC, submits that that provision does not require an express term of the contract as to the place of business through which the performance of the contract is to be effected. It will be sufficient if such a term is implied, and in the present case it was an implied term of the contract that Mr Revie and his professional team at the Scottish office were to be engaged. Mr Revie and his experience were known to the claimant, and it was Mr Revie whom Mr Marshall approached, initially in October 1994, about this work. According to Mr Revie’s witness statement, paragraph 19, Mr Marshall asked him for a programme of investigation and a costing of such a programme “which the Scottish office could carry out.”
- Reliance is placed on BCCI –v- Ali [2001] 2 WLR 735 and Investors Compensation Scheme Limited –v- West Bromwich Building Society [1998] 1 WLR 896 for the proposition that it is necessary to look at all the circumstances surrounding the contract in order to ascertain the intention of the parties. In the present case, all the contract documents on the defendant’s side came from its Scottish office; Mr Revie is referred to in the defendant’s letter of 16 May 1995 as being the Project Manager, and that letter also states that the Scottish office was to be where the file on the job would be kept. Moreover, the work, according to the defendant’s own internal arrangements, was to be done by its Scottish office. It can be seen that it was the intention of the parties that, under the terms of the contract, performance would be effected through the Glasgow office and laboratory, using Mr Revie and his professional team. Given a purposive construction under the Convention, the words “terms of the contract” in Article 4(2) mean what was intended by the parties, rather than what English law would strictly require. Therefore the presumption from Article 4(2) is that Scottish law is the proper law of the contract, and that presumption is not overridden by Article 4(5).
- I propose to deal with these submissions as to the proper law of the contract before turning to the issue of the law applicable to the claim in tort. It is helpful to begin by noting what is agreed between the parties, so as to narrow the matters which are in dispute. First, it is common ground that the characteristic performance of this contract was that of the defendant. Secondly, the contact was entered into in the course of the defendant’s trade or profession. Thirdly, the principal place of business of the defendant is in England.
- On this basis it is clear that a presumption under Article 4(2) of the Convention will arise, subject to the provisions of Article 4(5). Furthermore, it is the second part of Article 4(2) which has to be considered under that Article, because the contract was entered into in the course of the defendant’s trade or profession. That means that, subject to Article 4(5), English law is the proper law of the contract since the principal place of business of the defendant is situated in England, unless the final part of Article 4(2) is applicable. Whether that final part is applicable is the central issue under Article 4(2). That turns on whether “under the terms of the contract” the characteristic performance was to be effected through the defendant’s Glasgow office.
- There seems to be a dearth of authority, whether in domestic or European law, on the meaning to be attached to this final part of Article 4(2). Article 18 of the Rome Convention stipulates that:
- Bearing both the international character of the Convention and section 3(1) of the 1990 Act in mind, it is appropriate to construe its terms as would the European Court, namely by seeking to ascertain the meaning most in accordance with the realisation of the objectives of the Convention. Such a purposive approach requires one to have regard to the objectives of the Rome Convention as set out in its preamble. That refers to the parties being:
- This objective seems to have been appropriately summarised by Plender and Wilderspin in their work on the Convention (The European Contracts Convention, 2nd ed.) as being:
- Article 33 of the Convention also makes it clear that all the approved language texts of the Convention are equally authentic, which means that regard may properly be had to the versions which appear in languages other than English. The crucial part of Article 4(2) in the French version reads as follows:
- It does not seem to me that the French version of the Convention in any way weakens the natural force of the English wording which appears in Schedule 1 to the 1990 Act. It too is looking to the terms of the contract for any provision governing the place of business through which performance is to be effected. Nor does a purposive approach to construction lead to any looser interpretation of the phrase “under the terms of the contract”. The objective of raising the level of predictability as to the applicable law would tend to point towards an interpretation which provides a reasonably clear method of establishing whether or not the country of the principal place of business is to be displayed by some other place of business, and that in turn suggests looking to the terms of the contract, express or implied, rather than to some more vague concept such as what the parties anticipated would happen.
- Section 3(3)(a) of the 1990 Act specifically authorises courts in this country to have regard, when ascertaining the meaning or effect of any provision of the Convention, to the report by Professors Giuliano and Lagarde. Not a great deal of assistance is rendered on the issue in this case by that report, but it is to be noted that at paragraph 3 on page 21 of the English version the report states that Article 4(2)
- Given all these indicators, I conclude that the presumption under Article 4(2) is indeed that, where the contract is entered into in the course of the relevant party’s trade or profession, the country of that party’s principal place of business is to be seen as the most closely connected country, unless the contract terms specify that performance is to be effected through some other place of business. Such an interpretation helps to achieve certainty as to the applicable law. I would accept that an implied term would suffice for this purpose, but unless a term of the contract would be broken by performance through a particular place of business, the last part of Article 4(2) does not bite. In that case the principal place of business of the relevant party would determine the proper law.
- One comes, therefore, to this contract, to see whether the terms of it required performance through the defendant’s Scottish office. Its express terms, as contained in the three documents identified by the judge below, patently did not. Is such a term to be implied? Neither party has put before us any evidence as to how any system of law other than English law would seek to answer that question. The principles of English law on implied terms are well-established. It is not contended in the present case that an implied term that performance should be via the defendant’s Scottish office was necessary to give business efficacy to the contract. Clearly no such additional term was needed – the contract could have been quite efficaciously performed through one of the defendant’s other offices.
- Does the evidence show that the obvious intention of the parties was that the contract required performance through the Scottish office? There can be little doubt that both parties anticipated performance through the defendant’s Scottish office, but that by itself would not suffice. The court has to be satisfied that the parties must have intended that the contract should contain such a stipulation: Hamlyn & Co –v- Wood and Co [1891] 2 QB 488 at 491; Liverpool City Council –v- Irwin [1977] AC 239 at 266. In arriving at a conclusion on such an issue, the court must have regard to all the surrounding circumstances.
- One of those circumstances in the present case is that the two contracting parties were commercial organisations. In addition, the defendant company was an organisation of some size with premises, whether offices or laboratories, in a number of locations in England and Scotland. In that context I cannot see that great significance is to be attached to the identity of the employee of the defendant who was approached on behalf of the claimant and who produced the necessary paperwork. One would not normally imply any contractual term from that requiring that individual employee to be engaged in the agreed work. The defendant chose to tell the claimant that Mr Revie would be the project manager, but this contract was not one requiring his personal involvement. The claimant was engaging the services of an apparently reputable company. Had the claimant wanted any particular individuals to be assigned to the work in question by the defendant, it would doubtless have expressly stipulated that. It is also significant that there is no identification in the “programme of investigation” drawn up by the defendant of who was to be a member of the professional team or to be the “consultant” at various stages.
- The reference to where the job file was to be kept was a natural feature of these arrangements, facilitating efficient communication between the parties. One cannot attach much importance to that reference in the correspondence.
- On the facts of this case, it seems to me that there is force in Mr Sampson’s submission that the claimant could not have sued for breach of contract if Mr Revie had moved to another office in the defendant’s business or if the work under the contract had been performed by personnel from one of the defendant’s offices other than the Glasgow one. That indicates that there was no contractual term requiring performance to be effected through the Glasgow office. It may have been anticipated that that was how the contract would be performed – indeed, I accept that the parties did anticipate that – but there was no contractual requirement to that effect.
- In those circumstances, Article 4(2) gives rise to a presumption that the proper law is that of the country of the defendant’s principal place of business, namely England. The next issue is whether that presumption is displaced because of the provisions of Article 4(5).
- Article 4(5) does not, by its wording, give any guidance as to how clearly the closer connection with another country has to be established in order for the presumption under Article 4(2) to be disregarded. The paragraph merely says that the presumption:
- It was the absence of any such verbal guidance that appears to have led Hobhouse L.J. (as he was then) to say in Crédit Lyonnais –v- New Hampshire Insurance Company [1997] CMLR 610 at 617 that Article 4(5):
- The Dutch Supreme Court in Société Nouvelle des Papeteries de l’ Aa –v- Machinefabriek BOA [1992] N.J. No. 750 adopted an even more stringent test for the application of Article 4(5), requiring in broad terms that it be shown that the place of business of the party which is to effect the characteristic performance of the contract has no real significance as a connecting factor. Otherwise the presumption in Article 4(2) should apply. That is in some contrast with the decision of the French Cour d’ Appel de Versailles in Bloch –v- Lima [1992] JCP 21972 where the court seems to have been prepared to allow the rebuttal of Article 4(2) presumption where it was far from obvious that the connecting factors with another country outweighed the presumption.
- I have set out earlier the passage from Definitely Maybe Touring Ltd., where Morison J made the point that, if a wide effect were given to Article 4(5), it would render the presumption in Article 4(2) of no value. That was an approach followed by this court in Samcrete Egypt Engineers and Contractors S.A.E. –v- Land Rover Exports Limited [unreported, Case No. A3/2002/0262, 21 December 2001], where, folowing a review of the authorities on the relationship between Article 4(2) and 4(5) it was said (para. 45) that the presumption should:
- Applying that approach to the present case, one observes that there were here connecting factors both with Scotland and with England. The building experiencing the problem was in Scotland, the quarry from which the stone came was in England. It was anticipated that the investigatory work would be performed in Scotland, but the written advice given by the defendant to the claimant was to be received by the latter in England. That written advice was the vital part of the services to be provided by the defendant under the contract. Both companies were English companies, though it was the defendant’s Scottish office which was in fact involved in doing the work. In these circumstances I cannot see that there was a sufficient linkage with Scotland for the presumption under Article 4(2) to be disregarded by virtue of Article 4(5). I conclude therefore that the proper law of this contract was that of England and that the judge was wrong on this aspect of the case.
- If English law is the proper law of the contract, the issue of the law applicable to the claim in tort or delict becomes of limited significance in practice, since the contractual claim would not be statute-barred. Nonetheless, the matter was canvassed before us and requires to be dealt with, albeit more briefly.
- Both parties are agreed that the issue is to be determined by the common law rules as to the applicable law in the case of torts, because the 1995 Act does not apply. It is submitted by Mr Sampson on behalf of the claimant that the judge was wrong to apply the test of asking which country had the most significant relationship with the occurrences and with the parties. While that derives from the judgment in the Red Sea case, it is a principle relating to foreign torts. When a tort is committed in England, English law is applied by the English courts: see Metall und Rohstoff AG –v- Donaldson Lufkin and Jenrette Inc [1990] 1 QB 391. Therefore the judge should have considered where the tort in this case occurred, applying the test of whether the damage was sustained in England or resulted from an act committed within the jurisdiction.
- The claimant’s case is that the tort took place when the negligent advice was delivered in England. Reliance is placed on the decision in Diamond –v- Bank of London and Montreal [1979] QB 333 where the Court of Appeal held that in a case of fraudulent or negligent misrepresentation the substance of the tort was committed in the place where the representation was received and acted upon. In the present case, that was England, which was also where the claimant suffered the damage, as found by the judge in her earlier judgment of 5 October 2001. Consequently the principles applicable to cases of foreign torts do not have any relevance.
- The defendant submits that it was required to do more than just provide advice. It was engaged to provide consultancy and testing services, as the particulars of negligence pleaded show. Those services were provided essentially in Scotland in order to resolve a problem affecting a building in Scotland, which is where the detriment was in reality suffered. Therefore, the common law rules applicable to a foreign tort are engaged here. While those rules, including the principle of double actionability, might generally point to the lex fori, this was a case where the test referred to in the Red Sea case was applicable, namely which country had the most significant relationship to the occurrence and the parties. This was the test applied by the judge. Moreover, the tort and the contract are intimately connected in this case and the law applicable to the tort claim should follow the contract, rather that have inconsistent findings as to the law applicable in tort and in contract.
- I accept Mr Sampson’s point that one needs to determine where the alleged tort occurred, so as to decide whether this is a case of an English tort or a foreign tort. In a case such as this, where the defendant was engaged to provide certain services, that will be affected by what it was essentially that the defendant was to do for the claimant, since its duty of care must relate to that activity. The order dated 15 May 1995 from the claimant was for the carrying out of “investigation, testing and reports” on the stone. Much of this work on the defendant’s side took place in Scotland. But the fundamental feature of what the defendant was to do was to advise on a solution to the problem of staining. All the investigating and testing was directed towards that end, so that the defendant could use its professional skill to tell the claimant how it could best cure the problem with the stonework. Moreover, the crucial breach of duty on the part of the defendant, on the facts as alleged, was its recommendation to use oxalic acid to clean the stone. That advice was ultimately contained in its report of 30 September 1995 sent to the claimant at its premises in County Durham. That report stated on its third page:
- Where the tort consists in essence of the giving of negligent advice, that tort is committed where the advice is received: see Diamond –v- Bank of London and Montreal, page 346G. On that basis I would regard the alleged tort in this case as having been committed in England, in which case English law would apply.
- If (contrary to the view I have formed) this were a foreign tort committed in Scotland, the lex fori (English law) would still normally apply so long as the double actionability test was met (see Boys –v- Chaplin [1971] AC 356), particularly since an issue as to the limitation of actions would normally be regarded as a procedural matter: see the Foreign Limitation Periods Act 1984, section 1(2) and Metall und Rohstoff (ante) page 438H. There is of course a well-established exception to the general rule, referred to in Boys –v- Chaplin and endorsed in the Red Sea case, which allows the court to apply the law of the country which has “the most significant relationship with the occurrence and with the parties” (see the Red Sea case, page 206). It is, however, an exception which the Privy Council accepted would not apply in most cases. Indeed, their Lordships expressly approved (at page 206D) the statement of Lord Wilberforce in Boys –v- Chaplin that:
- For my part, if this were to be seen as a foreign tort, I cannot see that clear and satisfying grounds have been shown for applying Scottish law to this tortious claim or to the issue of the limitation period. It is true that most of the work was done by the defendant in Scotland, but the advice was rendered in England, with both the parties being English companies. The grounds for applying Scottish law in those circumstances are not clear. For that reason, even if this were to be classified as a foreign tort, I would not conclude that Scottish law should be applied.
- It follows that in my judgment this appeal should be allowed, both in respect of the claim in contract and that in respect of tort.
- I agree.
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
BIRMINGHAM DISTRICT REGISTRY
Royal Courts of Justice Strand, London, WC2A 2LL | ||
B e f o r e :
and
LORD JUSTICE KEENE
____________________
| Ennstone Building Products Limited(Formerly Natural Stone Products Limited | Appellant | |
| and Stanger Limited(Formerly TBV Stanger Limited) | Respondent |
____________________
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr. M Raeside QC (instructed by Gateley Wareing, Birmingham B2 5JR.) for the respondent
____________________
AS APPROVED BY THE COURT
Crown Copyright ©
Lord Justice Keene:
Issue 1: What are the essential terms of the contract between the claimant and defendant and its characteristic performance?
Issue 2: What, if any, is the basis of any duty of care that the defendant may owe to the claimant?
Issue 3: What is the proper law of the contract and of any duty of care found in issue 1 and/or 2?
“1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected. Nevertheless, a severable part of the contract which has a closer connection with another country may by way of exception be governed by the law of that other country.
2. Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or un-incorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other that the principal place of business, the country in which that other place of business is situated.
5. Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.”
“46. Performance of the contract by the claimant was payment of fees. That, however, is minor when considered against the performance required of the defendant. It is clear, as the claimant accepts, that the characteristic performance was the provision by the defendant of professional services. I accept that it is likely that the claimant wanted Mr Revie in particular to be involved with the work. The services were to be, and in fact were, undertaken substantially in Scotland. The fact that reports were to be sent to England carries little weight.
47. In the light of all the available evidence, in my judgment the performance which is characteristic of the contract is more closely connected with Scotland than with England. I conclude therefore that Article 4(2) applies and that the proper law of the contract is Scottish law. If I am wrong on the question of characteristic performance, then the position is that the contract is more closely connected with Scotland than with England so that Article 4(5) would apply.”
“The overall picture is that the necessary skill and care were to be exercised by the defendant substantially in Scotland. The defendant was properly to undertake a desk exercise, carry out laboratory tests and analysis, prepare reports, conduct cleaning trials, supervise the claimant’s contractors in carrying out remediation work. The investigations at the quarry and the delivering of reports to the claimant are a minor element of the whole. Weighing all relevant factors and following the dicta of Lord Slynn in Red Sea, in my judgement, Scotland is the country which has the most significant relationship with the occurrences said to give rise to the claims and with the parties. It follows that the proper law relating to the duty of care which the defendant owed to the claimant is Scottish.”
The claim in contract:
“Paragraph 2 must have been inserted to provide a ‘normal’ rule which is simple to apply. Giving wide effect to paragraph 5 will render the presumption of no value and represent a return to the English common law test of ascertaining the proper law, which places much less weight on the location of the performer and much more on the place of performance and the presumed intention of the parties.”
“In the interpretation and application of the preceding uniform rules, regard shall be had to their international character and to the desirability of achieving uniformity in their interpretation and application.”
“Anxious to continue in the field of private international law the work of unification of law which has already been done within the Community, in particular in the field of jurisdiction and enforcement of judgments,
wishing to establish uniform rules concerning the law applicable to contractual obligations.”
“To establish common rules for the purpose of ascertaining the system of law applicable to certain contractual obligations, thereby raising the level of predictability in international commercial transactions and contributing to the development of the Community’s internal market.” (para 2-02)
“... ou, si, selon le contrat, la prestation doit etre fournie par un etablissement outre que l ’etablissement principal, celui ou est situe cet autre etablissement.”
“greatly simplifies the problem of determining the law applicable to the contract in default of choice by the parties ... According to the last part of paragraph 2, if the contract prescribes performance by an establishment other than the principal place of business, it is presumed that the contract has the closest connection with the country of that other establishment ” (emphasis added)
The French version of the report uses the phrase:
“si le contrat prescrit que”,
which would normally be taken to mean “stipulates” or “prescribes”.
“shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.”
“formally makes the presumption very weak.”
That is not generally how the relationship between Article 4(5) and the presumption in Article 4(2) has been approached. The view expressed by Dicey and Morris: Conflict of Laws (13th ed.) para. 32 – 123 is that:
“It is suggested that it would be inconsistent with the scheme and purpose of Article 4 for the presumptions to have no role except where other factors are evenly balanced, and that for the presumptions to be displaced, it must be shown (which probably means clearly) that the contract has a closer connection with some other country.”
“only be disregarded in circumstances which clearly demonstrate the existence of connecting factors justifying the disregarding of the presumption in Article 4(2).”
I agree. If the presumption is to be of any real effect, it must be taken to apply except where the evidence clearly shows that the contract is more closely connected with another country.
The claim in tort/delict:
“It is possible to remove the form of staining observed on the Standard Life building as it reacts readily with dilute organic acid. The acid indicated to be most successful in treating the stained stone is a dilute solution of oxalic acid.”
“The general rule must apply unless clear and satisfying grounds are shown why it should be departed from and what solution, derived from what other rule, should be preferred.”
Conclusion:
Lord Justice Potter: