England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR JUSTICE VOS
HC10C02085

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/02/2012

Lord Justice Rix :

1. Mr and Mrs Sherdley ("the Sherdleys"), invested in two individual unit-linked life insurance contracts with Nordea Life and Pensions SA ("Nordea"), a Luxembourg entity with its roots in the Nordea Group, which claims to be the largest financial services group in the Nordic region. The contracts were designed to enhance the tax efficient growth of a capital assurance plan. The capital sums invested were obtained from Nordea on the security of the Sherdleys' residential investments in Spain, in other words a form of equity release. At the time of contract, in about June 2006 in respect of the first plan and April 2007 in respect of the second plan, the Sherdleys were living in both Wales and Spain. They were and remain British nationals. The judge, Vos J, found that at the time of contract they were habitually resident in Wales, ie in the jurisdiction of England and Wales; albeit that by the time they commenced these proceedings (on 23 June 2010) they had become habitually resident in Spain. There is no appeal against the latter finding, which was not I think disputed; but the former finding is disputed by Nordea. The Sherdleys' investments have gone disastrously wrong: indeed, they say that their move from Wales to Spain was necessitated by their need to sell up in Wales. They now wish to sue Nordea in England, but Nordea submits that there is no jurisdiction here under the Judgments Regulation (EC No 44/2001). If it is to be sued, it says that it must be sued in Spain, or perhaps Luxembourg. The contractual documents which the parties' transactions have brought into being refer to no less than three law and jurisdiction agreements: for England, for Luxembourg, and for Spain. The Sherdleys, however, submit that there was an initial agreement in favour of jurisdiction in England, as the country of their habitual residence at the time of contract, and that that agreement has never been adequately displaced.
2. The essential facts stated in the opening paragraph are, I suppose, a tribute to a globalised world. However, they might have been designed by a university moot to test its students' knowledge of the jurisdictional arrangements of the European Union. They are no tribute to efficient business transactions.

The Judgments Regulation

3. The primary rule of jurisdiction to be found in the Judgments Regulation is stated in article 2: "Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State". That would entail the Sherdleys suing Nordea in Luxembourg.
4. However, there is a special rule to assist insureds in their disputes with their insurers, to be found in article 9 (of section 3) of the Regulation, which extends jurisdiction to the courts for the country where the insured is domiciled. Moreover, insureds are protected against attempts by insurers to remove that advantage from them: see article 13 (set out below). This is part of a wider concern of the Regulation to protect insureds and other consumers by more favourable rules of jurisdiction: see also article 17 (of section 4) concerning "consumers" in general, and article 21 (of section 5) concerning employees. As recital 13 of the Regulation states:

"In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable than the general rules provide for."

5. Thus articles 8-13 provide as follows:

"Article 8. In matters relating to insurance, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5.

Article 9. 1. An insurer domiciled in a Member State may be sued:

(a) in the courts of the Member State where he is domiciled, or

(b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts of the place where the plaintiff is domiciled,…

Article 12. 1. Without prejudice to Article 11(3), an insurer may bring proceedings only in the courts of the Member State in which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a beneficiary.

2. The provisions of this section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

Article 13. The provisions of this Section may be departed from only by an agreement:

1. which is entered into after the dispute has arisen, or

2. which allows the policyholder, the insured or a beneficiary to bring proceedings in courts other than those indicated in this Section, or

3. which is concluded between a policyholder and an insurer, both of whom are at the time of the conclusion of the contract domiciled or habitually resident in the same Member State, and which has the effect of conferring jurisdiction on the courts of that State even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State, or

4. which is concluded with a policyholder who is not domiciled in a Member State, except in so far as the insurance is compulsory or relates to immovable property in a Member State, or

5. which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 14."

6. Article 14 sets out a series of risks which are designed to distinguish what might be called merchant or "large risks" (see article 14.5) from consumer risks. Articles 17.2 and 20.2 contain language, in favour of consumers and employees respectively, otherwise identical to article 13.2.
7. In the circumstances, the provisions of article 23 (in section 7, headed "Prorogation of jurisdiction") would appear to be of generally less relevance: for any agreement for the exclusive jurisdiction of one jurisdiction would necessarily run foul of article 13.2's protection of the choice of jurisdictions sanctioned in article 9. It would be different in an article 23 agreement which was expressed not to be exclusive (cf article 23.1's "Such jurisdiction shall be exclusive unless the parties have agreed otherwise").
8. Nevertheless, on the hearing of this appeal the Court has received submissions concerning article 23 with barely any mention of article 13.

A brief chronology

9. In 2001, when the Sherdleys were living in Enfield Drive, Barry, in Wales, and had been at that address since about 1993, they bought a first holiday home in Spain, in San Pedro. They used it three to four months a year. In 2003 they sold their home in San Pedro and agreed to buy an apartment "off plan" in Valgrande. This was not, as it happened, completed until 2007. In 2004 they also began to build a house called "Piedra Blanca" in Benahavis in southern Spain. They did this, they say, as a speculative venture, intending to sell it when built. The building work was completed in December 2005 and a licence of occupation was granted in April 2006. It appears that the Sherdleys then moved into it, for it was described as "their home" in their particulars of claim when they met representatives of Nordea there in May or June 2006. However, between the sale of their home in San Pedro in 2003 and the completion of "Piedra Blanca" in 2006, they do not appear to have owned a home in Spain (although they may have rented one). None at any rate has been identified as such.
10. In September 2005 Mr Sherdley was invited by an independent financial adviser based in Spain, a Mr Harris, to meet Nordea's local representative in the latter's offices in Nueva Andalucia, near Puerto Banus. That was Mr Jesper Hertz, described as chief representative of Nordea Private Bank. Mr Hertz explained how Nordea's scheme worked. In November 2005 Mr Sherdley met with two further Nordea representatives, this time at Mr Harris's offices. The representatives, Messrs Bergman and Woideman, had come from Luxembourg, and also described the scheme. They brought with them some promotional material.
11. In May or June 2006 there was a further meeting, this time at "Piedra Blanca", with Nordea's Wendi Andersen, described as an investment manager. She brought "application forms" and other documents which the Sherdleys were asked to sign. No explanations were given as to them, nor did the Sherdleys read them, but, as requested, they signed each page. The application forms contained the alleged English law and jurisdiction clause. "General Conditions", also signed on that occasion, contained the alleged Luxembourg law and jurisdiction clauses.
12. On 16 June 2006 Nordea wrote to the Sherdleys from Luxembourg, acknowledging receipt of the documents signed by the Sherdleys, and enclosing Nordea's "Proposal". The Sherdleys were asked to read it carefully and to sign the "Proposal Acceptance" form. The proposal contained the alleged Spanish law and jurisdiction clause. The Sherdleys signed the proposal acceptance form and it was dated, apparently by Nordea, as of 20 June 2006.
13. Following receipt in Luxembourg of the Sherdleys' proposal forms (and perhaps the first premium) Nordea issued contract documentation, described as "Specific Conditions" referring to a contract number (MCPS040064) and a "date of issue" of 18 July 2006. It appears that this document for the present remained with Nordea. It was signed by an issuing officer and an authorised manager of Nordea, but not by the Sherdleys. It reproduces the proposal's Spanish law clause and an altered version of its jurisdiction clause.
14. On 6 November 2006 Nordea wrote to the Sherdleys from Luxembourg, stating "Enclosed please find a copy of the original contract documentation in respect of the contract mentioned above, which came into force as per 4 July 2006" (presumably referring to the document mentioned in the previous paragraph) and asking the Sherdleys to sign a "Declaration" that "We hereby confirm the safe receipt of contract no. MCPS040064 and that it is in accordance with what has been agreed in the application forms…". The Sherdleys signed the declaration and dated it 14 November 2006. Thus the documentation started and ended with a reference to the application.
15. The Sherdleys went through a similar exercise in relation to the second contract. On this occasion the application forms were dated 5 March 2007, the proposal was issued by Nordea on 14 March 2007, the proposal acceptance was dated 16 March 2007, the contract documentation (for contract no MCPS040072) was posted to the Sherdleys on 23 April 2007, and the safe receipt declaration was signed by the Sherdleys on 9 May 2007. Again, the application forms contained an exclusive English jurisdiction clause, the general conditions contained an exclusive Luxembourg jurisdiction clause, and the proposal contained an exclusive Spanish jurisdiction clause. In the meantime, in November 2006, the Sherdleys had supplied Nordea with what appears to be a poste restante address at Barclays Bank in Marbella. However, the application forms for the second contract, like those for the first contract, had referred to the Sherdleys as having a "Country of Residence" in the UK.
16. It is necessary now to set out the contractual documentation in further detail.

The contractual documentation

17. The documentation begins with some promotional literature which was handed to Mr Sherdley in November 2005. The opening paragraph refers to Nordea's seat in Luxembourg and to that nation's "laws governing confidentiality and company operations" as amongst the most stringent in Europe, thus providing the investor "with a uniquely secure investment environment". However a paragraph headed "Governing Law" provided as follows:

"The parties agree to use Spanish law where the contract owner is a Spanish national. A national from another EEA Member State, resident in Spain, may however request either Spanish law or the law of his own Member State."

Mr Sherdley said that he read this as enabling him to elect English law in relation to any proceedings that might be brought. As far as this matter goes, it relates to choice of law rather than of jurisdiction, even if Mr Sherdley understood it as going to jurisdiction.

18. The application forms (separate forms were signed by Mr and Mrs Sherdley respectively) presented to them in May or June 2006 had to a certain extent been prepared in advance by Nordea. Thus the Sherdleys' names and address (in Barry in Wales) had been typed in by Nordea. There was also a box headed "Country of Residence" into which Nordea had typed "UK". On the second page of the form there was a box headed "Declarations and Signature" for the investor. Above the signature appeared the following:

"1. I hereby apply under the standard conditions of Nordea Life and Pensions S.A. and state that all answers in this application are correct to the best of my knowledge. I understand that the statements in the Application Form documents are the basis for a contract between me and Nordea Life & Pensions S.A.

2. I realise that I am solely responsible for the tax consequences in respect of this Contract.

3. I understand that the conditions of this Contract are governed and construed in accordance with the contract law of the country of commitment, subject to any other provisions to the contrary. Any legal suit, action, or proceeding arising out of or relating to this Contract is subject to the exclusive jurisdiction of the country of the commitment.

4. I accept that Nordea Life & Pensions S.A. will retain all personal data related to this Contract, it being necessary for the execution and management of the Contract.

6. I confirm that, as I read and understand the English language, Nordea Life & Pensions S.A. may issue the Contract documents and all associated documentation in the English language."

19. Also presented to the Sherdleys for their signature at this time were Nordea's "General Conditions". They were requested to sign each page of those Conditions, and did so. The Conditions were in three separate parts. There were "General Conditions Standard"; "General Conditions Investment Annex"; and "General Conditions Country Annex Spain". The latter two documents contained nothing of importance for relevant purposes. The General Conditions Standard (the "General Conditions") contained the following provisions:

"Article 1: Definitions

Contract	This shall comprise: the Specific Conditions and any Annexes hereto the Application Form completed by you the acceptance by us of your Application Form
Specific Conditions	The document issued by the Company showing the details that are specific to your Contract
General Conditions	These conditions which form the basis of the Contract between you and the Company…
Commencement Date	The date that the Contract comes into force…
Country of Commitment	The country of your habitual residence at the Commencement Date…

Article 29: Applicable Law and Jurisdiction

1. Resident in an EEA Member State at the Commencement Date of the Contract

Ordinarily, the law applicable to the Contract shall be the law of the Country of Commitment

2. However, when the Contract Owner is a natural person and has his habitual residence in a Member State other than that of which he is a national, the parties to the Contract may choose to apply the law of the Member State of which he is a national.

3. When the Country of Commitment allows a free choice of law, the law of the Grand Duchy of Luxembourg shall apply.

4. Resident Outside of the EEA at the Commencement Date of the Contract

The law of the Grand Duchy of Luxembourg shall apply.

5. Jurisdiction

Any legal suit, action, or proceedings arising out of or relating to the Contract shall be subject to the exclusive jurisdiction of the courts of the Member State of the law applicable to the Contract.

6. Nevertheless, if a case comes before the courts of a Member State the internationally applicable rules of the law of the forum shall apply, irrespective of the law otherwise chosen by the parties."

The numbering of the sub-clauses of article 29 is not in the original but has been inserted for the sake of convenience.

20. It will be seen that under the application forms the applicable law and exclusive jurisdiction are that of the country of commitment, which, as defined in the General Conditions, is the country of habitual residence of the investor as at the commencement of the contract. On the judge's findings, that would be England. However, the application forms also state that the choice of law (and therefore of jurisdiction) is "subject to any other provisions to the contrary". Article 29 also provides for a default provision for the law (and therefore jurisdiction) of the country of commitment (article 29.1); but goes on to state that where the country of commitment allows a free choice of law (as England does), Luxembourg law (and therefore jurisdiction) shall apply (article 29.3). What therefore appears to be a choice of the insured's country for the applicable law and exclusive jurisdiction under the contract ultimately seems to resolve itself into a choice of the insurer's country.
21. It is on the basis of article 29.3 and 29.5 that Nordea submits that, absent the terms of the proposal, there is agreement on exclusive Luxembourg jurisdiction.
22. On behalf of the Sherdleys, however, Mr David Phillips QC, submits that article 29.3, with its choice of Luxembourg law, only applies where the parties have not made a choice for the law of the insured's nationality pursuant to article 29.2; and therefore did not apply in the present case, where the parties had chosen English law, albeit qua the law of the country of commitment. I will return to this submission.
23. Mr Sherdley's evidence is that although he signed the application form and the General Conditions, as requested, he was given no opportunity to read them, and was given no advice as to them. His wife was called in to sign the documents as well. Her witness statement confirms her husband's and that she was in the same position as he was. It was subsequent to the signing of the application forms and the General Conditions that Nordea made its proposal to the Sherdleys. The proposal came forward under cover of a letter, which read in part as follows:

"On the basis of the information provided by you in the above listed documents we are pleased to enclose for your attention our proposal for fixed term Managed Capital Plan – Spain contract, to be issued in your names and on your own lives.

The Proposal which incorporates the General Conditions and the Annex thereto, is being launched from our offices in Luxembourg. Would you please read it carefully to ensure that it accurately reflects your insurance requirements. Then, in order to accept our Proposal, we kindly ask you to sign the top copy of the attached Proposal Acceptance form and return it…"

24. The enclosed proposal began with personal information: stating the names of Mr and Mrs Sherdley and their address in Barry, Wales, and their nominated beneficiaries, their four children, all of whom had addresses in England. Various other clauses followed, including, on page 6, a clause headed "Applicable Law and Juristiction" (sic), which stated:

"The applicable law of the Contract shall be that of Spain.

Any legal proceedings in connection with the Contract shall be subject to the exclusive jurisdiction of the courts of Spain."

A box headed "Taxation Comments" referred to a "summary of the taxation implications in Spain, as it applies to you and your Contract whilst you are resident in Spain".

25. The proposal acceptance, which the Sherdleys signed and returned to Nordea, stated as follows:

"Given

Our Application, signed on 10 May 2006, for a Managed Capital Plan – Spain life assurance contract on our own lives

And

The resultant life assurance Proposal number MCPS0400642 [sic], issued on 16 June 2006 by Nordea…

By signing this Proposal Acceptance below we request that the Company proceeds with the issuing of the Managed Capital Plan – Spain contract in line with the information contained in Proposal number MCPS040064.

DECLARATIONS & SIGNATURE

1. We confirm that we have read and we understand the General Conditions and Annexes as well as the technical information contained in the above-mentioned life assurance Proposal.

2. We confirm that the contents of the Proposal documentation comply fully with the information that we provided to the Company in the above-mentioned Application…"

26. Nordea relies on the proposal and its acceptance as an agreement for exclusive jurisdiction in Spain.
27. As stated above, Nordea sent copies of "the original contract documentation" to the Sherdleys under cover of a letter dated 6 November 2006. That documentation appears to have included "Specific Conditions", which Nordea seems to have issued internally on 18 July 2006. The Specific Conditions set out the proposal terms, as well as the General Conditions. However, the law and jurisdiction clauses were now in somewhat different terms. The clause now read:

"The law applicable to the Contract shall be that of Spain.

Any legal proceedings in connection with the Contract shall be subject to the competent Courts and Tribunals in compliance with the applicable Spanish law."

It is not clear to me what the meaning of this jurisdiction clause is. The judge did not regard it as being materially different from the jurisdiction clause in the proposal; and on this appeal Mr Phillips did not argue otherwise. For my part, however, I would be doubtful whether this clause expressed any, let alone any clear, exclusive jurisdiction in favour of the courts of Spain.

28. The Sherdleys, at Nordea's request signed and returned the "Declaration" confirming the safe receipt of the contract "and that it is in accordance with what has been agreed in the application forms…". As I commented above, the documentation thus ends with a reference back to the application forms.

The Life Assurance Directive 2002/83/EC

29. Some aspects of this documentation is explicable in terms of the Life Assurance Directive 2002/83/EC (the "Directive"). It was an objective of the Directive to open up access to EU insurers across the Community as a whole, subject to a community-wide regulatory regime. The concept of the "country of commitment" comes from the Directive: see article 1 ("Definitions") where 'Member State of the Commitment' is defined in terms of "the Member State where the policy holder has his/her habitual residence". There is nothing in the Directive regarding choice of jurisdiction (which, after all, is the subject matter of the Judgments Regulation and of the Brussels Convention before it), but article 32 deals with "Law applicable" in terms which throws light on the General Conditions' article 29. Thus the Directive's article 32 provides:

"1. The law applicable to contracts relating to the activities referred to in this Directive shall be the law of the Member State of the commitment. However, where the law of the State so allows, the parties may choose the law of another country.

2. Where the policy holder is a natural person and has his/her habitual residence in a Member State other than that of which he/she is a national, the parties may choose the law of the Member State of which he/she is a national."

30. Article 36, headed "Information for policy holders" provides that –

"1. Before the assurance contract is concluded, at least the information listed in Annex III(A) shall be communicated to the policy holder."

Annex III(A) provides at (a)16 that such information shall include –

"Law applicable to the contract where the parties do not have a free choice or, where the parties are free to choose the law applicable, the law the assurer proposes to choose."

Annex III begins as follows:

"The following information, which is to be communicated to the policy holder before the contract is concluded (A) or during the term of the contract (B), must be provided in a clear and accurate manner, in writing, in an official language of the Member State of the commitment."

31. It is possible to see both the information concerning the applicable law in Nordea's application forms and the clause concerning the applicable law in Nordea's proposal as at any rate attempts at purported compliance with the Directive's Annex III.
32. It is also possible to see in the General Conditions' article 29 a reworking of the Directive's article 32. Article 32.1 is reproduced as article 29.1 and 29.3 (with a purported choice of Luxembourg), and article 32.2 is reproduced as article 29.2. The positioning of article 29.2 between article 29.1 and 29.3 suggests that a choice of the law of an insured's nationality within article 29.2 would take precedence over the choice of Luxembourg.
33. It is not in dispute that the provisions of article 32 of the Directive have been implemented in English law by the Financial Services and Markets Act (Law Applicable to Contracts of Insurance) Regulations 2001 No 2365, para 8.

The judgment below

34. The judgment below does not refer to article 13 of the Judgment Regulation, which I therefore assume was not cited or at any rate not made the subject-matter of any submissions, but considers the issues solely through the lens of its articles 9 and/or 23. Article 9 would entitle the Sherdleys to sue Nordea in either Luxembourg (where it was domiciled), or in Spain (where the judge recorded that the Sherdleys had become domiciled). For these purposes the judge suggested no relevant difference between the concepts of domicile for the purposes of the Judgment Regulation and of habitual residence for the purposes of the Directive and the contracts. As for article 23 (ex article 17 of the Brussels Convention), the judge founded himself on the jurisprudence of the European Court of Justice, as stated for instance in Estasis Salotti di Colzani Aimo et Giancarlo Colzani v. RÜWA Polstereimaschinen GmbH (Case 24/76) [1976] ECR 1831 at 1841, para 7, and applied by the Privy Council in Bols Distilleries BV v. Superior Yachts Ltd [2007] 1 WLR 12 at para 23:

"In view of the consequences 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. By making such validity subject to the existence of an 'agreement' between the parties, article 17 imposes on the court before which the matter is brought the duty of examining, first, whether the clause conferring jurisdiction upon it was in fact the subject of consensus between the parties, which must be clearly and precisely demonstrated. The purpose of the formal requirements imposed by article 17 is to ensure that the consensus between the parties is in fact established."

The judge also directed himself that in order to sustain jurisdiction in England he had to find that the Sherdleys had much the better argument for each of the matters which they relied on to found jurisdiction here: see Canada Trust Co v. Stolzenberg (No 2) [1998] 1 WLR 547 (CA), [2002] 1 AC 1 (HL) and Bols Distilleries at paras 26-28.

35. The judge then turned to answer three questions which he had set himself. The first was as to where the Sherdleys had their habitual residence at the commencement of the two contracts in June/July 2006 and April 2007. After reviewing the evidence, and all the matters relied on by Nordea as pointing to Spain, he was satisfied nevertheless that the Sherdleys had much the better argument that their habitual residence was at the relevant time in Wales, and was understood by both parties to be so. He concluded (at his para 58):

"What Nordea thought about the specific case is in their application form and the proposal form. Despite the fact that they communicated with Mr and Mrs Sherdley at the Spanish address of their independent financial adviser in 2007, they seem to have been clearly of the view that Mr and Mrs Sherdley were resident in the UK. That is what they, themselves, wrote. That accords with Mr and Mrs Sherdley's own evidence. Mr and Mrs Sherdley may have been resident at times in Spain, but habitually they would have regarded themselves as having their greater ties with the United Kingdom, even if that situation was undergoing some change, and did change after the contracts were concluded."

That finding is disputed by Nordea in its respondent's notice.

36. The judge's second issue asked what was agreed between the parties as to law and jurisdiction. His conclusion was in two stages. He tested the matter by reference to the first contract. Thus, at the initial stage of the Sherdleys' application in May or June 2006 he concluded that there had been what he termed an inchoate consensus on English law and therefore jurisdiction. It was an inchoate consensus because the parties had not yet arrived at a binding contract. For these purposes he took into account that the General Conditions' article 29 was a part of that preliminary consensus, and that article 29.3 provided for a selection of Luxembourg law "in any case in which a choice of law has not been made by the parties". But he seems to have considered that the application forms' reference to the law of the country of commitment, and thus to the law and jurisdiction of the Sherdleys' habitual residence, prevented the fall-back reliance on Luxembourg law and jurisdiction taking place: see his paras 71/72.
37. At the second stage of his analysis, however, the judge had to take into account the proposal's choice of Spanish law and jurisdiction. He considered that had the Sherdleys read the proposal they could have been in no doubt about that proposed choice. He then reasoned as follows:

"75. Reconsidering Article 29 of the General Conditions, the reasonable consumer could have thought one of four things: one, that Spanish law had now been proposed, so that was the final word being the law chosen under Article 29.1; two, that English law had been proposed, and that Spanish law was now being proposed and that since both documents were part of the contract he did not know which law governed; three, that he had previously agreed to English law, but the documents were confusing so that the prior agreement had not been displaced; or four, since there was confusion between the application and the proposal, Article 29.3 applied so that Luxembourg law was agreed as the default applicable when no other law was agreed…

77. Overall, therefore, the reasonable consumer, looking at the documents he was asked to sign and had signed, would simply not be able to say, as between English and Spanish law and jurisdiction at the point of contract, what the applicable law and therefore jurisdiction was. But he would be able to see that he had agreed to Luxembourg as the default. Unfortunately for Mr and Mrs Sherdley, Article 29.3 cannot simply be ignored or argued out of existence in the way that Mr Phillips seeks to do. For these reasons, Article 29.3 of the General Conditions would, if the reasonable consumer had been looking for consensus, be the only consensus he could find. It might not be what he wanted, but he should have raised the matter had he had doubts. I realise that this finding takes no account of the policy of the Regulation that undoubtedly seeks to avoid a choice of law in a standard form contract being forced on a consumer. This is a very odd case, because normally Article 9 would enable people in Mr and Mrs Sherdley's position to sue in the place of their domicile, which was at that time in England and Wales. They have moved that domicile only recently and thereby deprived themselves of an English and Welsh jurisdiction…

81. This is not a case in which the jurisdiction clauses were not brought to the attention of Mr and Mrs Sherdley fairly and properly. They were asked to sign every page of the General Conditions. They were asked to sign the proposal form. They were even asked to sign receipt of the Special Conditions. They signed all of those documents and must be taken to have read them. It would be a travesty of the understanding of consensus for the court simply to ignore what had been signed and to make findings that had no regard to them."

38. At this point the judge appears to have been asking himself, what, as a matter of the true construction of the contractual documents, the parties had agreed as their autonomous, article 23, consensus in fact. And he appears to have come to the conclusion that it was Luxembourg law and jurisdiction. For he went on, separately, to ask his third question, which was: "Have Mr and Mrs Sherdley shown clearly and precisely that the parties agreed to English and Welsh law and jurisdiction?" He answered that additional question, No, in the following terms:

"82. As I have said, Mr and Mrs Sherdley have the burden of showing that they have a much better case for English jurisdiction. I accept, as I have above, that arguments could, as they have, properly be made for all of English, Spanish and Luxembourg jurisdiction having been agreed, but the argument for English and Welsh jurisdiction is not the much better argument. Indeed, it seems to me that it is rather worse than the argument for the Spanish jurisdiction which at least was what the Sherdleys signed up to in the governing proposal document at the point of contract, and was in the Special Conditions. It is, as I have found, also worse than the argument for Luxembourg law and jurisdiction, which I, myself, much prefer. In truth, the argument for English law and jurisdiction depends on stopping the clock before the point of contract is reached. I am not, in saying that, applying an English law principle of offer and acceptance; I am applying ordinary autonomous notions of consensus, as I am required to do by dicta from the Bols case, to which I have referred at length. The consensus and agreement must be at the point that the parties are to become bound."

39. The judge therefore ruled that the English court had no jurisdiction to try the claim.

Submissions

40. On behalf of the Sherdleys, Mr Phillips' principal submission is that the judge erred in his conclusions to his second and third questions, and did so because he failed to ask himself whether his original, albeit, inchoate, consensus in favour of English law and jurisdiction had been displaced by any further agreement capable of amounting to an agreement in fact, clearly and precisely demonstrated, pursuant to article 32 of the Judgments Regulation and the requirements of ECJ jurisprudence, in favour of some other jurisdiction. Mr Phillips submitted that for these purposes, the burden of proving a displacing article 23 agreement lay on Nordea, and that therefore the logic of the judge's own reasoning was in the Sherdleys' favour.
41. Mr Phillips' alternative submission, if he was taken that far, was that article 29.3 of the General Conditions did not result in any agreement for Luxembourg law: since it only arose in the absence of a choice of law under article 29.2. Otherwise, the expression "Ordinarily" in article 29.1 made no sense, for article 29.3 would nearly always operate. I would accept that, where article 29.2 operated, an agreement in favour of the law of an insured's nationality would prevent the automatic agreement of Luxembourg law. However, I do not see how that could arise on the facts of our case, unless of course, Nordea's respondent's notice submission that the judge was wrong to find that the Sherdleys were not habitually resident in Spain at the time of their contracts were to be upheld. For only in that case would it be possible for the hypothesis of article 29.2 to arise, namely that the Sherdleys habitually resided in a member state other than that of their nationality.
42. On behalf of Nordea, on the other hand, Mr Alexander Layton QC submitted that the judge was right both for the reasons which he gave and for additional reasons contained in its respondent's notice. His primary submission was that the Sherdleys could not discharge the burden of showing that they had much the better case of showing an article 23 agreement for jurisdiction in England. The original consensus was superseded at the time of contract by a specific agreement on the proposal of exclusive Spanish jurisdiction, or by the ultimate acceptance of the contract documentation with its Specific Conditions. If anything, however, the judge had overstated the original, albeit inchoate, consensus: since the application forms' reference to the country of commitment could not be understood without reference to the definitions contained in the General Conditions, and those Conditions contained their own exclusive jurisdiction clause in favour of the courts of Luxembourg by putting Luxembourg law and therefore jurisdiction in place of the law and jurisdiction of the country of commitment. Mr Layton's fall-back position, as a matter of fact, was that the Sherdleys had failed to establish that they had much the better of the argument that at the time of their contracts they were habitually resident in England and Wales, rather than in Spain. In this respect only, he positively differed from the judge's analysis.

Habitual residence

43. Although the question of habitual residence was merely Mr Layton's fall-back position, it logically comes first on the Sherdleys' case for jurisdiction in England, and it was therefore the first question to be dealt with by the judge. Mr Layton relied on the same material which the judge had reviewed. In particular, Mr Layton stressed the following points: (i) that Mrs Sherdley's passport had been issued in Spain in 2002 and gave, in the case of emergencies, the name of Mr Sherdley with an address in Spain; (ii) that the same passport mentioned the address in Barry, Wales, only as that of Mrs Sherdley's mother, also named on the page for emergencies; (iii) that all the meetings held with Nordea, at various times of the year, were held in Spain; (iv) that the Sherdleys requested Nordea to send its correspondence to addresses in Spain, not Wales; (v) that Nordea regarded Spain as the country of commitment, as indicated by the incorporation of the General Conditions Country Annex Spain; (vi) that the Sherdleys' own particulars of claim had described Piedra Blanca as their "home"; (vii) that there was what was described as a striking absence of any independent evidence of a habitual residence in Wales.
44. In my judgment, this attack on the judge's conclusions as to habitual residence fails, for the reasons given by the judge which I find persuasive. As to Mrs Sherdley's passport, the judge accepted the evidence about that, to the effect that it was issued as an emergency in Madrid when her current passport was about to expire, and gave emergency contact details in both Spain and Wales so that contact could be established in either place, at a time when Mr Sherdley was working in England managing a golf and country club that he had developed. As to the meetings in Spain, only one of them was held at the Sherdleys' home, correctly described as a home: but even so Nordea did not regard the Sherdleys as habitually resident in Spain, because their own documentation described their country of residence as the UK. Moreover, people habitually resident in one country may always have a home or homes in another country, at which they may spend variable amounts of time. As for the Nordea correspondence, it was presumably more convenient for it to be sent to what it seems may have been the address or poste restante of the Sherdleys' independent financial adviser.
45. As for independent evidence, the point lies ill in the mouth of Mr Peter Jolley, Nordea's chief financial officer and the "authorised manager" who authorised the contractual documentation in this case. He raised this and the other points discussed above in his witness statement. But it is clear that both the Sherdleys and Nordea contracted on the basis that the Sherdleys' "country of residence" was the UK, and that in the first contract's application forms this was typed in by Nordea itself. In the circumstances Mr Jolley's assertion, unsupported by any appropriate evidence from him, that Nordea "did not share the alleged understanding" inter alia that the application forms dealt with the Sherdleys as being habitually resident in the UK, is unimpressive.
46. The essential facts are, as the judge stated, that the Sherdleys had been living in their home in Barry, where Mrs Sherdley's mother lived as well, for a large number of years. Barry was where Mrs Sherdley had been born. The judge accepted Mr Sherdley's evidence that they had lived at their then current address for over 13 years, and that in February 2007 they had moved to another address, Wyndham Street, also in Barry. That was in between the two contracts, a striking fact. Mr Sherdley said that they had been forced to sell their home in Wyndham Street by their straightened circumstances, but in any event that was not until February 2009. It may be that the Sherdleys were spending an increasing amount of time in Spain: but on an essentially factual question "to be decided by reference to the circumstances of each case" by taking into account "the duration and continuity of the residence as well as of the other facts of a personal and professional nature which point to juridical ties between a person and his residence" (see the citation from Dicey Morris and Collins on the Conflict of Laws, 2006, 14^th ed, at 168, set out by the judge at para 53 of his judgment), there is no reason, as it seems to me, to depart from the consensually expressed views of both parties to the contracts, that the Sherdleys' country of residence remained that of the UK, supported as it has been by the judge's own finding that that was so.

Article 23

47. The first question that arises in respect of article 23, especially in the context of consumer contracts with standard wordings, is what is meant by the well-accepted test of a consensus in fact which must be clearly and precisely demonstrated. How does that test work where the contract is signed, but the party to be bound has not read the contract? Is the test objective or subjective? Does the mind have to go with the pen? We are here concerned with the first of the three formal requirements within article 23, namely that such an agreement be "in writing or evidenced in writing".
48. In the course of submissions we have not been taken to the wealth of learning and jurisprudence which has arisen around this question. In the circumstances, for present purposes I would be content to accept the summaries which can be found in Briggs and Rees, Civil Jurisdiction and Judgments, 5^th ed, 2009 at para 2.115, or Layton and Mercer, European Civil Practice, 2^nd ed, 2004, at paras 20.070-076. As it happens, a recent decision in the English courts, Coys of Kensington Automobiles Ltd v. Pugliese [2011] EWHC 655 (QB) (Ramsey J), sets out much of the relevant learning, and summarises it as follows:

"[30] From those decisions I derive the following. (1) Where the jurisdiction clause is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of art 23 is fulfilled only if the contract contains an express reference to those general conditions: see the Estasis Salotti case. (2) Where there is an express reference in the contract itself by way of incorporation of other written terms which include a clause conferring jurisdiction, art 23 is fulfilled even if the party signing did not have a copy of those conditions in their possession or readily available or did not understand what was incorporated: see the Crédit Suisse case [Crédit Suisse Financial Products v. Société Générale d'Enterprises [1997] CLC 168, CA]. (3) It is not necessary for there to be a specific reference to the jurisdiction clause itself for the requirements of art 23 to be fulfilled: see the 7E Communications case [7E Communications v.Vertex Antennentechnik GmbH [2007] EWCA Civ 140, [2007] 1 WLR 2175].

[31] I therefore consider that the central question in this case is whether there was the necessary consensus, on an objective interpretation of the terms of the form, construed against the relevant background."

49. In that case Ramsey J decided that where the defendant had participated in an auction, had bought a car at the hammer price, having previously signed a telephone/commission bidding form which had referred to the auctioneer's conditions of business, one clause of which contained an English law and exclusive jurisdiction clause, she was bound by that clause, even though she had not consulted the conditions of business and claimed to have had almost no understanding of written or spoken English.
50. I would also refer to the concepts of reasonable care and of good faith highlighted by Layton and Mercer and Briggs and Rees respectively. Thus the former's summary at para 20.076 concludes: "(6) In each case, it is necessary that the other party could, by the exercise of reasonable care, have checked the general conditions referred to". The latter at para 2.115 (at pp 177/8) states:

"However, for every case in which formality is insisted on, there will be another in which it is inappropriate to do so. In Berghofer GmbH v. ASA SA [Case 221/84, [1985] ECR 2699] the Court accepted that an oral agreement, later confirmed in writing by one party and not apparently objected to by the other, could in principle be taken to satisfy what is now Article 23, as amounting to an agreement in writing, even though there was no written consent from one of the parties. The basis of this result was thought to lie in the principle of good faith: that it would in those circumstances be bad faith for the party seeking to take a point about the lack of formality to do so. And in Iveco Fiat SpA v. Van Hool NV [Case 313/85, [1986] ECR 3337] it was held that, where parties to a written contract which had contained an agreement on jurisdiction continued to deal with each other without the written renewal which the contract provided for, the agreement on jurisdiction in the original contract continued to bind…

…It is no doubt correct that a printed clause in a document signed by both parties is likely to satisfy Article 23, although even that is not certain: one party may have misrepresented the contents of the contract to the other, so that for him to seek to rely on the clause in those circumstances would presumably demonstrate bad faith. And a written statement that a court is to have jurisdiction, contained in a document not signed by the party to be bound may not satisfy Article 23, but will do so if the principles of good faith require it."

51. Against the background of these principles, which in the absence of relevant submission from the parties I am content to adopt, then, if the argument was to be conducted purely in terms of the judge's own analysis, I would regard his decision, that there was an albeit inchoate consensus in favour of English law and jurisdiction at a time prior to the submission and acceptance of Nordea's proposal, as a critical finding, raising the question whether that consensus had ever been displaced. It is true that the application forms are at a stage pre-contract: however, in my judgment they constitute, on the judge's finding, an agreement that if a contract is ultimately made it will be on the terms agreed in the application forms. It seems to me that on that basis there would be a strong argument that that finding never had been displaced. That would be because, although the Sherdleys had signed the proposal acceptance forms, Nordea had not brought to the Sherdleys' attention that, on page 6 of the proposal, an applicable law and jurisdiction clause was now proposed in a form which departed from the earlier consensus. An insurance contract is a contract of the utmost good faith, and I do not think it is consistent with that required good faith that an insurer should present to an insured an alteration in the previously agreed law and jurisdiction provisions of their proposed contract without making that clear to the insured. That is consistent with the Directive's requirements that the applicable law of the parties' insurance contract should be communicated to the insured before the conclusion of the contract "in a clear and accurate manner, in writing, in an official language of the Member State of the commitment". If, however, there had been no prior agreement on English law and jurisdiction, then I think that a straightforward proposal, in writing, which the insured was asked to read carefully, as the Sherdleys were asked to read Nordea's proposal, before indicating their consent on a proposal acceptance form, would satisfy the requirements of article 23.
52. Where, however, in accordance with the present hypothesis, there has been a prior agreement that the member state of the commitment is the United Kingdom, based on habitual residence in Wales, and thus English is being used, and the insured is being presented with a change from English law and jurisdiction to Spanish law and jurisdiction, without this being expressly pointed out (save that the insured might be able to discover this for himself with sufficient care combined with legal ability), I do not think that Nordea's argument for displacing the previous agreement is of sufficient merit to prevent the Sherdleys being able to say that they have the better of the argument, and, if need be, much the better of the argument in favour of a continuing agreement supporting the consensus already established. After all, Nordea's letter enclosing the proposal begins by referring to the application forms, and stating that its proposal is "On the basis of the information provided by you in the above listed documents". Moreover the proposal acceptance form again begins with "Given Our Application…" and asks the Sherdleys to "confirm that the contents of the Proposal documentation comply fully with the information that we provided to the Company in the above-mentioned Application". Thus the Sherdleys are being asked to approach the proposal on the basis that it is being put before them as in every way compliant with the application form. The hypothesis, however, is that the agreement made in that application form, which continues to be part of, indeed the basis of, the ultimate contract, provides for English law and jurisdiction. Subsequently Nordea issues internally contract documentation described as "Specific Conditions", which contains a jurisdiction clause in different terms from that in its proposal and which (albeit the point has not been made by Mr Phillips) does not say in terms that Spanish courts shall have exclusive jurisdiction. Ultimately, the Sherdleys are asked to sign up to that documentation, after it is sent to them, again without any indication that it may contain language which displaces the original agreement made in the application form, on the basis that these Specific Conditions are "in accordance with what has been agreed in the application forms…".
53. On the other hand, if the matter of the contractual documentation was analysed anew and as a whole, and without the hypothesis with which I have so far approached the matter, I am by no means sure that I would see the matter quite as the judge did. That is because the application form refers to the law "of the country of the commitment, subject to any other provisions to the contrary". To understand the concept of the "country of the commitment", the insured (unless he is already familiar with the Directive) has to refer to the definition provisions of the General Conditions. That would tell him that the country of commitment was the insured's country of habitual residence. However, the General Conditions would also tell him in its article 29 that although prima facie ("Ordinarily") the applicable law was the law of the country of commitment (article 29.1), where that law (ie English law) allows a free choice of law, Luxembourg law "shall apply". I would not therefore be inclined to agree with the judge's reasoning (at para 71 of his judgment) that article 29.3 had to yield to the agreement expressed in the application form. That consensus was only that the law should be governed by the law of the country of commitment "subject to any other provisions to the contrary". One only reaches Luxembourg law through the law of the country of commitment. Therefore, there must be a strong argument that article 29 of the General Conditions and the provisions of the application form are not inconsistent, resulting however in a choice of Luxembourg law. That, after all, was ultimately the judge's preferred view, at a subsequent section of his judgment (para 77), even if that does not lie down altogether easily with his earlier passage.
54. On that basis, the subsequent question would be whether the Spanish law and jurisdiction clause of the proposal (etc) displaced the choice of Luxembourg law and jurisdiction at the application form stage. In any event, it would be difficult to see that the Sherdleys could show a better argument in favour of English law and jurisdiction. In sum, whatever might be the true construction of this complex series of documents, it does not provide a clear route to a single choice of exclusive jurisdiction of which it could be said with the necessary confidence that it represented what was in fact the clearly and precisely demonstrated consensus of the parties.
55. That said, there is nevertheless something very unhappy about an insurer's conditions for a consumer contract laying down these tortuous steps of a dance between the law and exclusive jurisdiction of the country of habitual residence (where that country is accepted in the application form as being the UK, with an address in Wales), the law and exclusive jurisdiction of Luxembourg (which is of course where the insurer is domiciled), and the law and exclusive jurisdiction of Spain (where Nordea seems to prefer to be sued). Mr Layton seeks to reconcile these inconsistencies by submitting that at any rate Nordea regarded Spain as being the country of the Sherdleys' habitual residence and therefore the country of commitment. I have to say, however, that I can find no evidence (other than Mr Jolley's mere assertion) to that effect, and it is flatly inconsistent with its own documentation in respect of the application forms.
56. Mr Layton submits that it is beside the point to have any concern about any failure on the part of the Sherdleys to make a much better argument in favour of exclusive English jurisdiction: for they retain the option of article 9 of the Judgment regulation to sue in either their own or Nordea's domicile. It just so happens that they have changed their domicile to Spain before commencing this litigation. There is no appeal against the judge's statement that they had changed their domicile (see his para 77, cited at para 37 hereof above).
57. That however takes one back to articles 9 and 13 in circumstances where article 13 has not been considered by the judge, and has been the subject-matter of no material submissions at the hearing of the appeal in our court. Nevertheless, article 13 appears to ring-fence the article 9 jurisdictions and thus to prevent any agreement of exclusive jurisdiction. How does this work? Nordea submits that there is here an agreement for exclusive Spanish jurisdiction. What would happen if the Sherdleys were to sue Nordea in Luxembourg? Would Nordea say that it must be sued, if at all, in Spain? And if the Sherdleys were to sue Nordea in Spain, would it say that it must be sued in Luxembourg, as the judge would have favoured that argument? Following the hearing, and on consideration of our judgments, we requested the parties to address written submissions to us concerning article 13 and thus the concept of article 9 domicile which it preserves.

Article 13

58. I repeat for convenience the critical words of article 13:

"The provisions of this Section may be departed from only by an agreement:

1. which is entered into after the dispute has arisen, or

2. which allows the policyholder, the insured or a beneficiary to bring proceedings in courts other than those indicated in this Section…"

59. Article 13.1 does not here apply, so we are concerned with article 13.2. The provisions of article 13.2 prima facie appear to prevent the article 9 jurisdictions from being bartered away by any agreement prior to the outbreak of a dispute. An exclusive jurisdiction clause in favour of Luxembourg or Spain would infringe on article 9: the Luxembourg clause would prevent the insured bringing proceedings in the country of his domicile; and the Spanish clause would prevent the insured bringing proceedings in Luxembourg, the insurer's domicile at the time of these proceedings. Moreover, if the validity of the agreement has to be capable of being viewed as at the time of contract, rather than as at the time of proceedings, then the Spanish clause would prevent proceedings not only in Luxembourg, but also in England which, as at the time of contract, was the country of the insured's domicile.
60. Briggs and Rees comments as follows (at para 2.89):

"…there is little room for a court to manoeuvre within the straitjacket of article 13 when dealing with a choice of court clause in an insurance contract…

Where this [article 13.2] is the case, the chosen jurisdiction can hardly be an exclusive one; and an agreement which purports to require the claimant to sue in the nominated court will, therefore, fall outside the ambit of this rule."

61. Layton and Mercer comments as follows (at para 16.061):

"The court chosen must, for this paragraph [article 13.2] to apply, be a court which would not otherwise have had jurisdiction under Art.8-12. The clause must widen the choice available to the claimant, and this paragraph should not be read as limiting the choice…

Article 13 affects only the applicability of a jurisdiction agreement, not its validity. So even if the clause is not expressed to be for the benefit only of the policyholder, insured or beneficiary and is not severable, it makes no difference. But it may only be relied on to the extent that it complies with Art.13."

62. The latter treatise suggests that the agreement may be valid but inapplicable; the former does not comment on this aspect of the matter. I am not sure that I see the difference between validity and inapplicability. Moreover article 23.5 of the Judgments Regulation provides:

"Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 13, 17 or 21, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22."

It would seem therefore that an exclusive jurisdiction clause "contrary to" article 13.2 "shall have no legal force". That also seems to have been the view of the Jenard Report (at 33): "Article 12 [as article 13 was then numbered] relates to agreements conferring jurisdiction. Agreements concluded before a dispute arises will have no legal force if they are contrary to the rules of jurisdiction laid down in the Convention."

63. In any event, an agreement which does not fall within article 13.2 (or any other provision of article 13) clearly cannot be enforced against the insured. It follows that the Luxembourg clause (article 29.5) could not be effective to prevent the Sherdleys suing in the country of their domicile. It may, however, be argued to be effective to prevent Nordea suing the Sherdleys in the country of their domicile? However, it is difficult to see why a mutual clause which cannot be mutual should be binding on either party: it would have been agreed in error. Moreover and in any event, a clause which cannot operate according to its own terms hardly seems like a strong candidate to contend with other arguably competing and inconsistent terms.
64. As for the Spanish clause, this could not prevent the Sherdleys suing in Luxembourg; nor could it have prevented the Sherdleys suing in England at any time prior to their change of domicile. However, were it to be binding at any rate on Nordea, it would prevent it suing in Luxembourg or, prior to the Sherdleys' change of domicile, in England. Again, it is difficult to see why such a clause would not have been an error; or why it should be regarded as a strong candidate to contend with other arguably competing and inconsistent clauses.
65. As for the original consensus found by the judge in favour of exclusive English jurisdiction, consideration of article 13 provides a new focus for the argument. As of the time of contracting, it could not validly prevent the Sherdleys from suing Nordea in Luxembourg if they had wanted to: so similar comments can be made in relation to this candidate as I have made above in relation to the Luxembourg and Spanish clauses. As of the time of the commencement of these proceedings, however, the clause, if it had been binding on Nordea, would have permitted the Sherdleys "to bring proceedings in courts other than those indicated in this Section". That, however, would merely be the consequence of the post-contractual change of habitual residence.
66. In sum, it would seem that none of the exclusive jurisdiction clauses canvassed in these proceedings could survive article 13.2. For this reason, and subject to any question of the Sherdleys' current domicile (see below), I would conclude that this appeal must be in any event dismissed, albeit on different grounds from those of the judge. Moreover, even if an exclusive clause could survive so as to bind Nordea as distinct from the Sherdleys, it would seem that to do so such a clause would still have to comply with the requirements of article 23 (see Briggs and Rees at paras 2.89 and Layton and Mercer at paras 16.055 and 20.108; and the Schlosser report at para 161a): even though the rationale of those requirements may be principally to protect the consumer rather than the commercial proferens. In such circumstances, and even if, in the light of article 13.2, such a clause could possibly survive as amounting to an agreement for non-exclusive jurisdiction, then as at the time of contract only the Spanish clause would make sense as extending the scope of the Sherdleys' rights of jurisdiction against Nordea. In any event, for the reasons explained above, I would be unable to conclude that the Sherdleys had the better of the argument in favour of a clearly and precisely demonstrated agreement for English jurisdiction.

Domicile and article 9.1(b)

67. This is subject to any question of the Sherdleys' current domicile. "Domicile" for the purposes of the Judgments Regulation may not be what that word ordinarily means in English law, but neither is it necessarily the same as habitual residence. This was made clear, for instance, in the Jenard report (chapter IV.A.3). A party may, it seems, have more than one domicile for the purposes of the Regulation (Briggs and Rees at para 2.135). However, this case had not been argued under articles 9 and 13 and it appears that the Sherdleys had not advanced a case that, whatever their current habitual residence, they still retain a domicile in the United Kingdom.
68. However, the Sherdleys now submit, for the first time, in response to the court's post-hearing enquiry (see para 57 above), that they can rely on their domicile in (England and) Wales. They appear to do so on three alternative bases. The first is that what counts, or at any rate what counts in the alternative, is their domicile at the time of contract. The second is that the change of their habitual domicile from Wales to Spain was only temporary and therefore did not amount to a change of their domicile. Thus they have informed the court, albeit for the first time in their post-hearing submissions, that they returned to reside in Wales on 24 October 2011 "and are now domiciled in the United Kingdom". The third basis (perhaps) is that they are therefore now domiciled in the United Kingdom.
69. As for the first submission, that domicile at the time of contract would suffice, a pure point of law albeit one that could always have been taken, I would reject it. Article 9 states where an insurer "may be sued", and looks to the time of suit, not to the time of contract. Article 9's "may be sued", allowing for the option contained in the article, reflects article 2's "shall be sued", which operates at the time of suit. Special jurisdiction "in matters relating to a contract" is granted by article 5.1, but that makes no special jurisdiction available by reference to the time of contract, and in any event is not reproduced in article 9.
70. As for the second submission, that is an entirely new point and is inconsistent with the way in which the jurisdictional dispute has been previously argued. At the time of the hearing before the judge (he gave judgment on 23 May 2011), the Sherdleys accepted that they were habitually resident in Spain. The judge said (at para 31 of his judgment): "It is accepted that Mr and Mrs Sherdley now have a habitual residence in Spain…". The judge was speaking of the time after the Sherdleys had sold their home in Wyndham Street, in February 2009, and had moved "full-time" to Spain: for the judge had just said (in his previous sentence of his para 31): "Also in February 2009 Mr And Mrs Sherdley say that they began to live full-time in Spain in the Valgrande apartment where, as far as I understand the position, they still reside." It is now said that the Sherdleys moved back to Wales on 24 October 2011, but this was never relied on by way of a respondents' notice or even mentioned at the hearing in this court in December 2011.
71. In my judgment, it would be wrong to allow the Sherdleys to make a new factual case at this very late stage to the effect that, at the time of commencement of suit, their domicile for the purposes of article 9 was in the UK because their (habitual) residence in Spain was only temporary. If their residence in Spain was intended to be only temporary, that was a case which could have been advanced in the court below, even before the move back to Wales in October 2011. As it was, the Sherdleys' form N510, required for service of their claim form out of the jurisdiction, relied only on the article 23 ground of jurisdiction for establishing jurisdiction in England, and that has been the sole way in which the question of jurisdiction has hitherto been argued. Thus at para 77 of his judgment (cited above but repeated in relevant part here) the judge said:

"This is a very odd case, because normally Article 9 would enable people in Mr and Mrs Sherdley's position to sue in the place of their domicile, which was at that time in England and Wales. They have moved that domicile only recently and have therefore deprived themselves of an English and Welsh jurisdiction."

72. Thus the judge regarded the Sherdleys as having moved both their habitual residence and their domicile. There has been no respondents' notice in respect of this finding, which may indeed have been common ground. This may well be because either the significance of article 13 was simply missed, or, as I believe is perhaps more likely, the point about article 9 and UK domicile may have been deliberately discarded. This is because the concept of domicile in the UK is defined (in paragraph 9 of schedule 1 to the Civil Jurisdiction and Judgments Order 2001, SI 2001/3929) as requiring "residence" in, as well as a substantial connection with, the UK.
73. As for the Sherdleys' third submission, it is, perhaps, that they can now rely on the fact that they are again currently domiciled in Wales. It is not even clear that this submission is intended to be relied on. There is no evidence to support it. The issues raised by a change of domicile between the time of commencement of suit and the time when the court considers the question of jurisdiction have not been canvassed. I would conclude that they cannot be considered now. If the consequence is that the Sherdleys would be unable to rely on their present domicile to sue Nordea here in reliance on article 9.1(b), that would be a consequence of their choices, both as to where they live, and as to how they have conducted their litigation. I do not consider that it would be just to permit the issues to be raised in this way in these proceedings.

Conclusion

74. I would therefore dismiss this appeal and confirm that the Sherdleys lack jurisdiction to sue Nordea in the courts of England and Wales. I regret this conclusion, because I am unable to see how, on the complex contractual documentation of this case, all of which is of Nordea's own making, it befits the insurer to take such a point against its consumer insureds; and particularly where the Directive seeks to vindicate for the insured the possibility of agreeing the proper law of their own nationality (which in practice would have carried English jurisdiction with it). As was made explicit to the judge below, a principal reason why the Sherdleys preferred to sue in this country was because they were able here to take advantage of a conditional fee agreement with their solicitors which would not be available to them in Spain or Luxembourg. At the end of the day, however, Nordea was entitled to say that there was no jurisdiction to sue it in England, although the article 9 jurisdiction (to sue it in either Spain or Luxembourg) remained; and that the costs advantage available here to the Sherdleys was neither a relevant nor a legitimate reason for departing from the strict requirements of the Judgments Regulation.

Lord Justice Etherton :

75. I agree.

Master of the Rolls :

76. I, too, agree that the appeal should be dismissed for the reasons so clearly given by Rix LJ and only add that I also share his regret at having to reach that conclusion.